Renewable Transport Fuel Obligation

Thursday 13th December 2012 Lords Chamber

Question

11:22

Asked By

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what plans they have to review the Renewable Transport Fuel Obligation in order to support businesses that make biofuels from locally sourced waste and sell it close to where it is produced.

[Earl Attlee]

My Lords, the Government strongly believe that the renewable transport fuel obligation delivers effective and sustainable market-based support to the biofuels industry. The RTFO provides additional support for biofuels made from waste by awarding two renewable transport fuel certificates for each litre supplied. The Department for Transport has committed to a review of the double certificate scheme and the support provided by the RTFO in 2013.

[Lord Kennedy of Southwark]

I thank the noble Earl for his response. There is a real problem here in that small, green businesses making biodiesel from waste products collected locally and sold from their premises are just not getting a fair deal. Will he agree to raise the matter with the Secretary of State for Transport, and will he facilitate a meeting for me with the Secretary of State and relevant officials on this matter?

[Earl Attlee]

My Lords, one of the concerns I have identified in private conversations with the noble Lord is the possibility of distorting the market in UCO and biodiesel by importations of ethanol. I will happily raise that with my right honourable friend the Secretary of State.

[Lord Palmer]

My Lords, as one of the instigators of the RTFO, is it not a scandal that our commitment is met by only 11% from home-produced fuel in this country? I must declare an interest as president of the transport division of the Renewable Energy Association.

[Earl Attlee]

My Lords, I understand the point that the noble Lord is making but we are bound by the WTO trade rules and EU state aid rules.

[Lord Bradshaw]

Does my noble friend agree that there really are two types of renewable fuel? There is that produced from food crops, which are converted, and that which is collected as waste products from places such as fish and chip shops. There is a much greater utility in the second type than in the first. I somehow feel that the Government must go to the World Trade Organisation and the EEC, or somebody else, and make a clear distinction so that they can reward properly the people who are doing a service in stopping the deposit of waste into drains and onto land.

[Earl Attlee]

My noble friend is largely right. That is why fuels derived from waste products get two renewable transport fuel certificates, whereas short rotation first generation crops get only one certificate. However, there is a difficulty and the policy needs to be designed so we do not get indirect land use change problems. My honourable friend Mr Norman Baker is working closely with the European Union to get a solution to that problem.

[Lord Whitty]

I understand this global concern about using what was previously food production land for biofuels. However, when we first proposed the obligation, about 50% of the market was expected to be met from waste using the kind of operation that my noble friend Lord Kennedy is concerned about. There is also the separate problem that British Sugar has planted new land and made a substantial investment. If we renege on or reduce the obligation, it will not bring any return to a major investor in some of our important rural areas.

[Earl Attlee]

My Lords, the noble Lord makes the point that we need to give producers certainty and clarity. Next year we will look at how this obligation-year worked. We cannot start that process until later in the year, because the trading period is to April and certificates can then be issued until August. So we are looking at quite late next year before we have a full data set that we can analyse to see how the market is working. However, I understand the points that the noble Lord makes.