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The Parliamentary Under-Secretary of State for Transport (Ms Nusrat Ghani)
It is a pleasure to serve under your chairmanship, Mr Gapes, and I must get it out into the open that I am not the Minister responsible for roads, and neither have I been promoted to that position. Unfortunately, the Minister of State, Department for Transport, (Jesse Norman) is taking part in a debate on a statutory instrument, and I am doing my best to step in. I know it was a bit of a disappointment to one of our colleagues to find that I am not a he but a she.
I congratulate the hon. Member for Scunthorpe (Nic Dakin) on securing this debate. Low-carbon fuels such as bioethanol play, and will continue to play, an important role in meeting the UK’s carbon budgets. During this debate, and in parliamentary questions, Members with constituencies in and around Hull and Teesside have made clear the wider economic benefits of UK bioethanol production, and the environmental benefits of deploying bioethanol as a transport fuel. Some may consider that to be a niche matter, but the contributions we have heard today show that it is a nationwide issue.
I had not realised that there was a Teesside collective, but now I see how powerful that force is. I thank the hon. Members for Stockton North (Alex Cunningham), for Sedgefield (Phil Wilson), for Kingston upon Hull West and Hessle (Emma Hardy) and for Redcar (Anna Turley), and my hon. Friend the Member for Cleethorpes (Martin Vickers) for their passionate contributions and representations on behalf of the bioethanol industry and their constituencies. I believe that I will cover many of the issues that they raised, but if I do not address them all, the Minister of State will no doubt respond in writing.
The Government understand the potential benefits of the bioethanol sector, and we stressed the benefits of E10 when advancing draft legislation last year—legislation that doubled targets for the supply of renewable fuel between 2018 and 2020. That provided space for a roll-out of E10 should suppliers choose to deploy it. Concerns about not having a clear legal mandate for E10 are well understood by the Department. In September last year, we concluded a call for evidence on whether and how E10 might be introduced in the UK, and if introduced, how it could be done in a way that addresses the concerns of retailers, fuel suppliers and motorists. The Department has now analysed the responses to that consultation and hopes to publish the Government’s response soon. We are continuing to work with the bioethanol industry. Indeed, I understand that the Minister of State hopes soon to meet the hon. Member for Scunthorpe and representatives from the bioethanol industry, and I believe that a date for that has been set in the diary.
Dr Paul Williams
The Minister said that the Government hope to publish a response to the consultation soon, but that is not particularly helpful for people working in the industry who have a mothballed plant and are waiting for a Government decision on the future of their industry. Is there any possibility of the Minister being a little more specific about what “soon” might mean?
Ms Ghani
The hon. Gentleman spoke passionately about the Ensus plant in Wilton in his constituency. I cannot make that commitment here and now, but a meeting is due to take place—it is in the diary—and there will be further clarification after that. As has been said, that meeting will be open to all those who wish to attend. I cannot give that confirmation right now, but we are committed to working with the sector to ensure that the plants are open and running as soon as they can be.
Plant closures were discussed throughout the debate. The hon. Member for Kingston upon Hull West and Hessle made a very passionate contribution, but I must take her up on one point. I know that she wants this debate to be as respectful as possible, because we do not want to reflect what is happening in the main Chamber on all occasions. She mentioned a Government promise, but I would argue that it was never a promise—we must be clear if something is a Government intention and how that should be perceived, as it is very different from the word “promise”. We must ensure that we are honest in our contributions.
Emma Hardy
The words I was using were those of the industry, so if the Minister has an issue with a promise being made by the Government, perhaps she should take that up with the industries involved. There is no way that any industry would invest many millions of pounds on a mere suggestion that the Government might be interested in it in future, and if they had not been led to believe that it was indeed a Government promise.
Ms Ghani
An interpretation of how a Government may respond and a promise are two very different things. The Department is working closely with the sector and will do what it can to support it. We must ensure that we understand the difference between what is and is not a promise.
We heard passionate contributions about the bioethanol sector and businesses in Members’ constituencies, and the halting of bioethanol production at Vivergo Fuels and Ensus plants last year is saddening and regrettable for all those impacted. I understand the frustration of those calling on the Government to act quickly to mandate the introduction of E10.
Dr Paul Williams
Does the Minister accept that the sole reason for the closure of the Vivergo plant and the halting of production at Ensus was the Government’s procrastination?
Ms Ghani
That is an interesting way of responding to how the business environment is dealing with global issues beyond what the Government may or may not have intended to do, so I do not accept that point.
It is clear that UK producers of bioethanol from wheat have faced challenging market conditions, due in part to high wheat prices following a hot summer, and a low bioethanol price—that may in some way answer the hon. Gentleman’s question. However, it is by no means clear that an E10 mandate would address all the challenges that the UK bioethanol industry has faced. It is also clear that the introduction of E10 is not without barriers, including the need to take into account the concerns of a significant number of owners of vehicles that are not compatible with E10—that point was raised earlier in the debate. To be successful, it is vital that any introduction of E10 is backed by fuel suppliers and consumers alike.
Since its inception, the policy on biofuels in the UK has been complex and not without controversy. Immediately after the renewable transport fuel obligation scheme—RTFO—was set in law in 2007, the Gallagher review into the indirect effects of biofuel production was published. It became clear that to maintain faith in the emissions reductions achieved and to retain consumer buy-in, we would have to address the negative indirect effects of certain biofuels. To reward fuels that may perform worse than the fossil fuels they replace would have undermined the rationale of a scheme designed to reduce greenhouse gas emissions.
It was with those challenges in mind that the Department jointly established a transport energy taskforce with the Low Carbon Vehicle Partnership, to consider how biofuels can contribute to meeting our climate change commitments in the context of measures introduced to address the negative indirect impacts of some biofuels.
Alex Cunningham
The Minister said a few minutes ago that some cars might not be compatible with E10 or even E5. Of course that is the case, but there are always alternatives at the petrol stations pump: diesel, fuel with bioethanol included or ordinary unleaded petrol. I cannot see that as the barrier that she described.
Sir Greg Knight
I think the point made by the hon. Member for Stockton North is a good one: a choice of fuels available at the pumps needs to remain, and those fuels need to be properly labelled so that owners of cars not compatible with E10 are made aware.
Ms Ghani
Indeed; that is why the consultation took place. As the hon. Gentleman knows, he can take up those issues further with the Minister of State, which is why we need to ensure that when we respond, we take into account all the issues raised in this debate.
The taskforce report to Government noted not only the potential benefits of E10 in helping the UK to meet our renewable energy targets, but the barriers and risks associated with its introduction, not least in respect of ensuring consumer acceptance. It is clear that UK suppliers, including of bioethanol, have made great progress in ensuring that renewable fuel delivers reductions in greenhouse gas emissions.
Since the RTFO was introduced in 2008, savings in greenhouse gas emissions have increased significantly from 46% to 70% in 2014-15. Latest data suggest that current biofuels provide an average 71% reduction in greenhouse gas emissions even when land use change impacts are included, but it has always been essential to evolve the policy on biofuel. That way, we maintain the integrity of the schemes that promote its use, such as the RTFO.
Following the work of the taskforce and building on the success of the RTFO, in September 2017, the Government set out a 15-year strategy for renewable transport fuels. The strategy established an investment platform to develop sustainable advanced fuels for automotive, aviation and road freight. I am proud to say that, as part of our strategy for renewable fuels, in March 2018, regulations were agreed that make the UK the first to set targets for renewables in transport beyond 2020, all the way to 2032; and the first and only country to set development fuel targets to drive a market for advanced low carbon fuels. For the first time, we have made aviation fuels eligible for reward under the RTFO. Our 15-year strategy for renewable transport fuels is designed to maximise the industrial opportunities to be gained for the UK while maintaining public confidence in the value of renewable fuels.
The hon. Member for Scunthorpe has previously shown support for increased biofuel supply targets in the 2018 regulations. He has also been clear in calling for a mandated introduction of E10. As I said, I am not in a position here and now to update colleagues on when we will publish a response to last year’s consultation on whether and how to introduce E10, but E10 is our main focus in the biofuels policy area. We are working hard to publish the Government response as soon as possible.
Dr Paul Williams
I understand that the Minister is not in a position today to tell us when the response will be published, but if I were the owner of a mothballed plant, probably trying to persuade my bank and investors, I would need some kind of certainty. Would the Minister pledge to write to us in the next week to give us a date on which the consultation response will be published, just to help the businesses that need certainty to make future decisions?
Ms Ghani
The hon. Gentleman once again champions the employers in his constituency very well. As I said, I do not believe that the time it has taken to ensure we make the right decision on E10 via the consultation is the only reason those businesses are in a challenging position. As I mentioned, a meeting is due to take place; that meeting will be the best time and place for a letter to be forwarded. The hon. Gentleman will be in the best place to challenge the Minister of State and get the responses he needs.
Anna Turley
I am deeply frustrated that the consultation closed such a substantially long time ago. Can the Minister identify the barriers in the civil service and the ministerial process to getting a decision? In the light of today’s debate, was there not some kind of briefing, impetus or a rocket put under this urgent issue? Will the Minister confirm that, following this debate, a rocket is under it?
Ms Ghani
The Teesside massive, as I will call them, have no doubt put this issue back firmly on the Minister’s agenda, although no doubt it was already there. We always want to ensure that any consultation we undertake provides a good response to all involved—not just the sector providing the fuel but those putting the infrastructure in place and owners of classic or older cars.
There was mention of the impact on international roll-out. I was reflecting that the roll-outs in Europe have been quite mixed: in some places, they have done well and in others they have not fared as well as one might have assumed. We have to ensure that we get this right. I am hearing, and no doubt the Department is too, frustration at getting a response. That is why a meeting was agreed.
Emma Hardy
I am sure the Minister understands how frustrated everyone feels, including businesses. To go back to the central point of my speech, does the Minister not acknowledge that trust in the Government will be undermined, potentially undermining investment in areas such as ours, where it is desperately needed?
Ms Ghani
When Government make rash decisions that are not fully thought through, when a sector is involved, that further undermines trust in Government. That is why it is our responsibility to ensure that we get the right decision. Unfortunately, on occasion, that can take time. The hon. Lady’s frustration has no doubt been noted. It is absolutely right that if and when we roll out E10, we do so in a successful way, not least for EU bioethanol suppliers.
Given the barriers to introduction, it is right that we have taken time to learn from the experiences, good and bad, of the roll-out of E10 in other countries. If a decision were taken to mandate E10 further to last year’s call for evidence, we would also need to test the costs and benefits against firm proposals, ensuring that all those with an interest, including fuel retailers and motorists in particular, have an opportunity to submit evidence. If E10 is rolled out in future, the Government remain committed to ensuring that E5 remains available and that any introduction of E10 is well managed, with information on compatibility made available to vehicle owners.
Anna Turley
I appreciate the Minister giving way—she is being extremely generous with her time. I want to pick up the point about costs. We know that the cost of ethanol is lower than oil; unfortunately, bioethanol is currently more highly taxed than petrol, which makes E10 fuels about 1p more expensive—about £20 per year for the average motorist. Tax incentives are extremely important to incentivise behaviour. Are the Government looking at tax incentives to encourage the roll-out?
Ms Ghani
The Government will be looking at all issues to ensure that, if a roll-out is suggested, it is an option favourable to those pulling into petrol stations. That is why it is interesting to learn what has happened in Europe. In France, I believe, the roll-out was more underwhelming than had been expected and in Germany it did not deliver the impacts that had been hoped, so it is important that we look at this closely.
Dr Paul Williams
Is the Government’s view that they need to mandate the roll-out or that the industry should lead the roll-out itself, without a Government mandate?
Ms Ghani
The hon. Gentleman is trying to tease out a statement from me, when he knows that he has to wait for the consultation to get the response that he wants. I thank him for his tricky intervention, but he will have to wait for the consultation response to get the answer.
The Government agree that the aim must be to reduce emissions and that low carbon fuels must play a part. The regulations made last year introduced a greenhouse gas reduction obligation on suppliers and incentives for the development of fuels capable of delivering higher greenhouse gas emissions reductions. These allow us to reward low carbon fuels because of the emissions reductions they deliver. We have also made £20 million of match capital funding available under the future fuels for freight and flight competition. In the wider context, the Government have recently published two major strategies focused on combating climate change and improving the UK’s air quality. Our Road to Zero strategy sets out a clear pathway to zero emissions vehicles by 2050, and this week we have published our clean air strategy. The pathway is not just about driver behaviour and electrification. Low-carbon fuels will continue to play a vital role in reducing greenhouse gas emissions from the vehicle fleet.
The renewable transport fuel obligation, as amended last year, is expected to save nearly 85 million tonnes of CO2 over the 15-year period from 2018, which represents around a third of transport’s projected contribution to UK carbon budget savings during the 2020s. In achieving those savings there is an opportunity to increase the amount of bioethanol in petrol, from 5% today up to 10%.
Alex Cunningham
The Under-Secretary is doing a grand job stonewalling on behalf of the Minister of State. If there is one message that we would ask to be taken back, it is that we desperately need a date and we need that certainty. Will she commit to go to the Minister and say, “Look, these guys are going to bash your door down if you do not actually make a decision and make it soon”?
Ms Ghani
That meeting is in place with the Teesside massive, as I am referencing them now. I completely understand the frustration about not having a date, but we need to make sure that we get this absolutely right. A meeting is a place and that can be raised directly with the Minister.
It is not agreed that there is conclusive evidence to show that switching from E5 to E10 will have a significant impact on air quality but I would like to assure Members that, as with all policy on low-carbon fuels, we will continue to assess our policies and support against the ambitious targets we have set to improve air quality and reduce carbon emissions.
If we were to mandate E10, it could give suppliers an opportunity to meet those carbon budget targets in a more cost-effective way. That is why the Department has consistently made clear its desire to work with industry in considering an E10 roll-out. The Government are mindful that rolling out E10 is a huge change to the UK petrol market. If such a roll-out were not managed well, it could impact on motorists across the UK. It is important that we prioritise consumer acceptance and ensure the vehicle fleet, consumers and retailers are ready. As was raised throughout the debate, that is a big responsibility for Government to undertake. We need to make sure that everybody is ready and any decision we make is not rushed.
I would like to thank everyone who contributed to the debate for taking the time to further inform our thinking on E10. I must not forget the intervention made by the hon. Member for Strangford (Jim Shannon).
Ms Ghani
Forgive me. I know that the hon. Gentleman has spoken very positively about the bioponics of E10. The bioponics will be accounted for in our response to the consultation when it is published.
I thank everyone for contributing to the debate. The use of biofuels is and will remain a challenging policy area. However, this must never stop us from finding the right balance between maximising the contribution that low-carbon fuels can make to reducing greenhouse gas emissions and taking into account the interests of consumers.