Renewable Transport Fuel Obligations (Amendment) Order 2013

Baroness Worthington Excerpts

Wednesday 27th February 2013 Grand Committee

[Baroness Worthington]

My Lords, I am pleased to be here to talk to this order. I have to say, though, that it is rather a miserly order. I happen to be a great supporter of renewable energy of all forms, and we as the UK have got challenging, legally binding targets to significantly increase the amount of renewable energy we use in our energy systems. These are energy targets, not just electricity targets, which means that the 15% we have to reach applies to transport, heat and electricity. Currently we have one policy that supports renewable fuels in transport and that is the RTFO.

Currently the RTFO is asking for 5% of the fuel supply to be made up of renewable sources and the Government have frozen that level. We know that we are going to need more than 5% in order to hit our targets, yet we have a policy that is frozen in time, with no longevity or future certainty, stuck at 5%. Now we have an order in front of us that is reducing this market further—not increasing it, not providing growth for that industry, not supporting new jobs, not providing UK farmers with new opportunities for selling products—no, freezing it and reducing it.

What is going on? It is almost as if those legal obligations did not exist. Yet they do, so what are we going to do? We will have to scurry at the end to try to build an industry which is there at the moment but is at severe risk of being undermined, of jobs being lost and investors fleeing, because of this continual undermining through these miserly orders that reduce the size of the market for this industry. I am very disappointed to see this coming forward.

It has been said before that you have to think of this in terms of volumes of litres of fuel sold, not just in percentages. Overall, fuel sales in this country are going down, so the percentage is also going down. So when the Government say, “We have to reduce this to 4.7% so that there are not more biofuels being sold”, that is nonsense. Actually that 5% is less and less every time the total fuel sold in this country goes down. Can the Government please explain their logic? They are talking about reducing the size of this market, and I find it particularly objectionable that they would use so-called green credentials to do this.

Apparently, the Government are very concerned about the sustainability of these sources. Yes, that is a very valid concern, which we share. But the UK has the best standards for biofuels of any country; they are world class, yet we are providing only 12% of this market. Why is that? Because there is no certainty, there is no confidence and there is no backing from the Government. This is yet another nail in the coffin of this industry. It is truly regrettable.

The renewable heat incentive also prevents the use of liquid biofuels for the gaining of credits in that market. Are the Government seriously saying that they support this industry? Absolutely not, they are doing everything they can to shrink it and to prevent it from growing. Presumably this is because they are protecting vested interests, because I do not believe that the arguments put forward on sustainability criteria really hold water.

We have had other commentators here. My noble friend Lord Berkeley has raised issues, as has the noble Duke, the Duke of Montrose, and the noble Lord, Lord Bradshaw, has talked about the need to recycle cooking oil. I hope the Minister will come back with answers and, above all, I hope he will explain to us why the Government see fit to keep capping this industry, reducing its market share, and how they expect to generate investment, growth and jobs in the country if they carry on in this way.

[Earl Attlee]

My Lords, I thank all noble Lords who have contributed to this short debate. The noble Lord, Lord Berkeley, talked about non-road mobile machinery, particularly the railway industry and locomotives, and the emissions regulations. I would like to point out that this order deals with the carbon intensity of the fuel. His point is not actually directly relevant, although I had a very interesting discussion with the officials at the Department for Transport who are directly responsible for this issue. It is quite close but not exactly on the subject. I will write in detail to the noble Lord about where we are on the emissions regulations for railway locomotives.

[Earl Attlee]

My Lords, I should imagine that technically they are inextricably linked, but the order deals with the RTFO and carbon intensity. The noble Lord is more worried about the emissions regulations on oxides of nitrogen and particulate emissions from railway locomotives. I have to say that some railway locomotives can best be described as filthy.

The noble Lord also questioned whether the ILUC proposals will harm renewable energy investment, and the noble Baroness touched on the same point. We are keeping levels of biofuels the same due to the ongoing ILUC concerns. We are actively negotiating this issue in Europe, and when the ILUC problem is resolved, we will be able—

[Baroness Worthington]

I have heard this response before. Perhaps I can talk it through in simple terms. If the total volume of fuel sales is declining, the percentage in volume terms will also decline. Does the Minister accept that the market share in terms of the number of litres of renewable fuel that can be sold declines as fuel sales decline?

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[Earl Attlee]

Noble Lords opposite know perfectly well that a range of factors affect the demand for transport. Demand for the fuels which propel that transport will fall during a recession, but when we get back to a period of growth, demand for all forms of transport will rise, as will the demand for fuel. That is inevitable. This is not a change in government policy.

[Baroness Worthington]

Except that we have increasingly tight standards on vehicle efficiency, which is another contributing factor to the fall in overall fuel sales. Our fleet is becoming more efficient as vehicles become cleaner. The Minister says that volumes have to be kept steady because the Government are worried about the environmental impact, but what I am saying is that we want greater volume. The Minister’s logic suggests that the volume should be kept steady, but it is not remaining steady, it is declining, and as a result the environmental impacts are declining.

[Earl Attlee]

I accept the point about the improving fuel efficiency of all transport equipment, and that is desirable. I also accept that we want to increase the amount of biofuel in order to reduce CO₂ emissions. We have the same objectives. However, we also have to be careful not to do something that looks really good but gets us in a position where we are using very large amounts of biofuel while indirectly creating land use change in other parts of the world. I will come back to that in a moment.

The noble Lord, Lord Bradshaw, raised the point about used cooking oils, which now get two RTFCs. As he said, that does not equate to the 20 pence duty differential. The department recognises the importance of biodiesel made from UCO. We have committed to review the RTFO this year, but we cannot do so until we have had a full year of data on what is going on in the market. Because of the way that the market works, RTFCs can be issued quite late in the cycle. We must get the correct data.

At Question Time the noble Lord, Lord Kennedy of Southwark, raised with me a point regarding the dual obligation. A problem can arise whereby we might take a large import of ethanol and that adversely affects the used cooking oil market. I undertook to raise this issue with my right honourable friend the Secretary of State and I have done so. However, we cannot expect any changes until we have properly analysed the year’s trading.

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[Earl Attlee]

My Lords, I have spent a lot of time discussing this very issue with my officials. I will be honest: it will be necessary to make sure that the fuel is circulated in the tanks. If fuel has been in your tanks for several years, you will experience problems. However, I would expect boating magazines to write up what needs to be done. Technical advice will be available. I have to be honest and admit that this is an issue, but it is manageable.

The noble Baroness seems to be reluctant to accept my ILUC point. If we just want to look pretty and massively increase the amount of biodiesel that is produced just to look good—that is, increase the obligation level—and get our percentages right so that the graph goes straight to the desired end-state, we could change the rules on tallow and say, “Okay, all grades of tallow are waste and therefore will get double certification”. That would look great, but the only snag is that the better grades of tallow are also used for making soap. Therefore, there would be less high-grade tallow available for making soap, the people making soap would have to find something else with which to make it, and they would go for palm oil. An increased demand for palm oil would result in indirect land use change impacts. We would look wonderful—

[Baroness Worthington]

With all due respect, if there is a problem with the environmental impact of soap manufacturing, surely you should address that through regulations which directly affect soap manufacture. You cannot second-guess everything that will happen in a globally traded market in commodities.

[Earl Attlee]

My Lords, the noble Baroness has her views but the European Union takes this issue very seriously. We are trying to work out what the correct course of action is to avoid indirect land use changes. It is simply no good us increasing the demand for biofuels without having any regard to indirect land use changes in other parts of the world. I am surprised that the noble Baroness appears to be willing to ignore what is going on in the rest of the world just so that we can have good figures.

[Baroness Worthington]

I am not ignoring what goes on in the rest of the world. Clearly, criteria around the sustainability of biofuels are of the utmost importance. What I am concerned about is that the industry needs to reach its targets for 2020, which are legally binding, and the Government seem to have such disregard for that that they are not listening to its complaints. The Government do not seem to understand that the industry has had an increase in its market share up to April 2013, which is mere weeks away, but from that point on there is no future trajectory, no sign of when there will be a future trajectory, no clarity from the Government and no words of support, just order upon order that whittles away at the market. Of course the industry lacks confidence, and of course its investors are seriously concerned. What are the Government doing to address this? Are they consulting the industry? What can the Government do to reassure it?

[Earl Attlee]

My Lords, we remain very concerned that studies and impact assessments have demonstrated that some biofuels actually produce greater carbon emissions than fossil fuels when indirect land use change is factored in. The UK must in law comply with the EU renewable energy directive—RED—which contains a target for the UK to source 15% of its overall energy, and 10% of energy used in transport, from renewable sources by 2020. However, we are not prepared to move so fast that we create indirect land use change problems in the mean time. I am sorry that I have not been able to satisfy the noble Baroness. I am very disappointed; I will have to try harder in future.

Civil Aviation Bill

Baroness Worthington Excerpts

Wednesday 7th November 2012 Lords Chamber

Moved by

[Baroness Worthington]

3: Clause 1, page 2, line 17, at end insert—
“( ) the need to work with NATS, the Secretary of State, the Committee on Climate Change and air transport service providers towards meeting the United Kingdom’s greenhouse gas emission reduction obligations as set out in the UK’s Carbon Budget, including the UK’s share of international aviation emissions,”

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[Baroness Worthington]

My Lords, I praise the Government for listening and taking on board the very serious concerns we have about integrating environmental concerns into the work of the CAA. This part of the Bill relates to the regulated airports, but this amendment addresses a specific aspect of environmental legislation and regulation, which is working towards meeting legally binding carbon budgets. It inserts a new clause that requires the CAA to have regard to the need to work with air traffic control, the Secretary of State, the Committee on Climate Change and airport transport providers to help to meet the UK’s greenhouse gas reduction obligations.

We single out this issue of greenhouse gas reductions because, as noble Lords will be aware, aviation has an odd status within the Climate Change Act—domestic emissions are in, international emissions are not. We know that the Government are under some pressure to clarify the situation and that they have, under the terms of the Act, until the end of this year to make a decision on whether to put international aviation into the budgets.

A specific clause making reference to greenhouse gas targets is necessary to demonstrate that we do not see the addressing of climate change as simply an add-on—a desirable thing—but as something that is essential. It is fundamental to the future of this industry and sector. The amendment outlines how we would want the CAA to work in the future, under the regime of the carbon budgets, and who it should work with. We hope that this will be a useful additional part of the Bill, to clarify that greenhouse gases are a huge issue. The three regulated airports are significant sources of greenhouse gases as are the airlines and the transport service operators which operate out of them.

This is an important issue. Aviation currently occupies an odd, different place in our climate change legislation. I hope the Government grasp this opportunity to make it absolutely clear that this sector will play its full part in helping us reach our climate change targets. I beg to move.

[Lord Clinton-Davis]

I find it quite astonishing that, as far as I know, the Bill makes no mention of greenhouse gas emissions. It is vital that an industry which is often attacked for not having sufficient regard to environmental considerations should not be so exposed, and including the amendment would have that effect. The Minister has been very generous so far. Will he continue that generosity?

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[Earl Attlee]

My Lords, I am grateful to the noble Baroness for her explanation of this amendment, which we debated at length in Grand Committee and in the other place—although there is no reason why we should not look at it in detail again. The noble Lord, Lord Clinton-Davis, remarked that the Bill does not cover greenhouse gases, which, of course, is right. However, the reason is that that is not in the Long Title and that the main function of this part of the Bill is regulation of the airports. It does not deal directly with the problem of greenhouse gas emissions, but that does not devalue the importance of the issue.

I cannot accept this amendment for two reasons. Let me try to explain why. First, the amendment is unnecessary. Both the Government and the CAA already take environmental matters very seriously and the Government’s approach is to ensure that the aviation sector makes a significant and cost-effective contribution towards reducing global emissions. The emphasis therefore is on global action as the best means of securing this objective, with action at European level after this and action at national level where it is appropriate and justified in terms of benefits and costs.

The noble Baroness set out her view of the operation of the Climate Change Act, which requires the Government to set out the circumstances and extent to which emissions from international aviation should be included in domestic greenhouse gas emissions targets before the end of 2012, or explain to Parliament why they have not done so. In April this year, the Committee on Climate Change advised that aviation emissions should indeed be included. The Government are considering this advice, along with other available evidence, and will make a decision as soon as this process has been completed. In the aviation policy framework consultation document the Government recognised that if airport capacity is allowed to grow, the aviation industry must continue to tackle its noise impact. The Government consulted on an objective to limit and, where possible, reduce the number of people in the UK significantly affected by aircraft noise.

The consultation document sought views on a variety of proposals to incentivise noise reduction and mitigation, encourage better engagement between airports and local communities and ensure greater transparency to facilitate an informed debate. These included more realistic noise limits linked to penalties which incentivise noise reduction and reflect the severity of noise disturbance, complemented by more independent monitoring and enforcement; effective use of non-regulatory instruments, such as differential landing fees; the development of noise envelopes around airports to incentivise noise reduction and share the benefits of technological improvements; and further use of noise abatement operational procedures. The consultation closed on 31 October and the final aviation policy framework is due to be adopted by March 2013. It will be informed by this extensive consultation.

Not only is Amendment 3 unnecessary, I fear that it is also technically flawed. Although I appreciate the noble Baroness’s aim that the listed parties should work together with the CAA towards meeting the UK’s greenhouse gas emissions targets, Part 1 is not the right vehicle to address her underlying aim. As your Lordships will be aware—I think that the noble Baroness recognises this—Part 1 deals with the economic regulation of our major airports and the CAA has various functions under this part applicable to this objective. My noble friend Lord Caithness queried whether the noble Baroness has placed her amendment in the correct part of the Bill.

The CAA’s general duties in Clause 1 govern how the CAA should go about carrying out these functions. As noble Lords are doubtless well aware, these duties are focused on furthering passengers’ and cargo owners’ interests in the provision of airport operation services at the airport. Against that background, it does not seem clear to me how the CAA would usefully go about using these airport economic regulation functions to work with NATS and others to meet the UK’s greenhouse gas emissions targets.

If there was a need for such a duty—I hope that I have persuaded noble Lords that there is not—it would be neither sensible nor fair to apply it to the regulation of just these three airports, particularly as the majority of the aviation sector’s contribution to greenhouse gas emissions does not come directly from the activity of the airport operators but from the activity of airlines, which this part does not have a remit over.

I hope I have convinced the noble Baroness that this amendment is unnecessary; and if not, I hope she appreciates the flaws that I have highlighted. If that is the case, I hope she will be willing to withdraw her amendment.

[Baroness Worthington]

My Lords, I thank the Minister for his considered response. There is a great sense that there is something lacking in the Bill as a whole—that climate change and greenhouse gas in particular are largely absent. Given everything that we know about climate change and the urgency of the problem, that is a failing of the Bill as it stands. However, I have listened to the arguments that this is perhaps not the right place to make this amendment. I urge the Government to listen to my noble friend’s comments that perhaps there is still time for the Government to put climate change at the heart of policy-making and to bring forward another amendment to do that in the general duties part of the Bill.

[Earl Attlee]

Unfortunately, I can make no undertaking to come back on this at a later stage in the Bill.

[Baroness Worthington]

I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

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Moved by

[Baroness Worthington]

60: Before Clause 100, insert the following new Clause—
“General environmental duty
In carrying out its functions, the CAA must, where possible and appropriate, have regard for the effect on the environment and on local communities of activities connected with the provision of airport operation services and air transport services.”

[Baroness Worthington]

My Lords, I must apologise. I have just come back from a foreign trip and picked up a rather bad cold; I am sorry about that. I wish to speak to Amendment 60 because we had an excellent discussion in Committee about environmental issues in the Bill. This evening, at the start of our debate, we touched on the importance of environmental issues. We acknowledge again how grateful we are for the Government accepting our earlier amendments because we think that it is important that we get this one right.

Amendment 60 would place a general environmental duty on the CAA requiring it, in the process of carrying out its functions,

“where possible and appropriate, have regard for the effect on the environment and on local communities of activities connected with the provision of airport operation services and air transport services”.

We covered the subject in some detail in Committee, and I was delighted that we received considerable support for Amendment 69, as it was numbered then. I am sad that the noble Earl, Lord Cathcart, is not here this evening to contribute to this debate, because he made such an excellent contribution to our Committee discussions. He pointed out, and I repeat, that in 2007, when Sir Joseph Pilling conducted a strategic review of the CAA, he noted that it would be a “notable gap” if there were not a general environmental duty placed on the CAA, that,

“the CAA’s responsibility is to safeguard the general public interest, which is broader than the aviation community”,

and that,

“a general statutory duty in relation to the environment”,

would be a good idea. That is what we sought to achieve in Committee and seek again to do here with Amendment 60: introduce a general environmental duty.

It has been said before, but I will say it again: there are precedents for such regulation. Our other economic regulators have such duties. The Office of Rail Regulation’s duties include,

“to have regard to the effect on the environment of activities connected with the provision of railway services”

and,

“to contribute to the achievement of sustainable development”.

Ofgem’s duties include to,

“have regard to the effect on the environment”,

of activities connected with, the generation and supply of electricity. There is something similar in the duties of Ofgas and Ofwat. Pretty much all the economic regulators which govern sectors with an environmental impact have that duty. Why should we not have such a duty in the Bill? There is widespread support for it and I think it is essential.

In its response to the Committee, the Minister said that he did not see the need for an environmental duty because it would apply to only three airports in the country. That may be true of the clauses that we discussed earlier, but in this case, when we are talking about general duties on the CAA, it would apply to the whole sector. That is very important. I wait to hear the noble Earl’s response to the amendment.

I finish by reiterating what I said earlier. Aviation is an important sector. It has a unique position in its environmental impact. Some of its activities are included in our carbon budgets, some are not. We look forward to the Government deciding whether they will move to include all aviation emissions in the carbon budgets. At the moment, not to include a general environmental duty in the Bill would seem weird compared to the duties that exist for other regulators. We had widespread support for this proposal in Committee, and the Minister said that he would come back and that he hoped that we would not be disappointed before the end of our proceedings. We are reaching the final stages; currently, we are still disappointed, although we recognise the concessions made this evening. We hope that a general environmental duty will be included; that is the strongest signal that we can send that we take these issues seriously and place a great deal of importance on them. I beg to move.

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[Earl Attlee]

My Lords, I thank the noble Baroness for expressing once again the reasoning behind her amendment. I also recognise the contribution from my noble friend Lord Deben. However, I fear that I cannot accept the amendment. I urge noble Lords to consider the positive work that this Government have already set in train to address the underlying general environmental concerns. Indeed, earlier this afternoon, on an environmental supplementary duty in respect of the CAA’s airport economic regulation functions, I referred to some examples of the action taken by this Government to ensure that the sector makes a significant and cost-effective contribution to mitigate the adverse environmental effects of civil aviation in the UK. I also urge your Lordships to consider the merits of the amendments we have already agreed to address the specific concern of the impact of the airport economic regulatory regime on the environment.

Let me now address this amendment, which seeks to provide the CAA with a general environmental duty. The previous Government consulted on giving the CAA a general environmental objective, alongside proposed safety and consumer objectives, in December 2009. The responses were mixed, with airport operators in favour but airlines opposed. The majority of airline respondents felt that it was for the Government to set the direction of environmental policy but for the CAA to regulate, and that giving the CAA an environmental objective would blur the boundary between policy and regulation and could create additional costs on the industry. They felt that it was not appropriate for the CAA to have to make environmental judgments on noise or emission levels at airports but instead that it was more appropriate for it to regulate the impacts in line with government environmental policy. We talked earlier about the difficult policy issue of Heathrow Airport, the background to which is of course an environmental issue regarding what the environment can tolerate. However, these issues are a matter for central Government.

Since the consultation, the CAA has included an objective in its Strategic Plan: 2011 to 2016:

“To improve environmental performance through more efficient use of airspace and make an efficient contribution to reducing the aviation industry's environmental impacts”.

I will come back to that in a little more detail in a moment. Additionally, the information, guidance and advice duties and powers in the Bill are now stronger than those that were consulted on. The CAA has a duty to secure publication of appropriate environmental information. Environmental impacts have been defined very broadly in Clause 84 to include noise, vibration, emissions and visual disturbance from aircraft as well as the “effects from services” and facilities “provided at civil airports”.

The knock-on consequences for human health are also covered by the information provisions in Clause 84. This is a very important issue for some communities and one where additional information could provide a valuable contribution to an informed debate. Noble Lords should be in no doubt that there are real benefits to be gained through the collection of good quality environmental information that can be presented in a consistent way to help passengers and freight owners judge the environmental impact of their travel choices. In addition, the CAA will be able to publish guidance and advice with a view to the sector limiting or controlling the adverse environmental effects of civil aviation in the UK. I suspect that the environmental effect that most concerns the noble Baroness is that of CO₂ emissions.

The CAA is also already undertaking and supporting a number of actions to deliver positive environmental outcomes. Two examples of that include, first, the CAA’s work on implementing the Single European Sky initiative to enhance the design, management and regulation of airspace across the EU by moving from airspace divided by national airspace boundaries to functional airspace blocks. It is estimated that since 2008, the UK-Ireland functional airspace block has provided approximately £35 million of savings, including around 150,000 tonnes of CO₂. Under the EU’s Single European Sky legislation, the environment is considered to be as important as safety and efficiency and there are EU-wide performance targets on the environment. The CAA has reflected this additional emphasis on the environment in its regulatory approach to the provision of air traffic management services.

Secondly, the CAA is also continuing to develop and take forward the future airspace strategy to modernise the UK airspace system. Again, I have organised a presentation for your Lordships to understand the work that is going on. This includes a clear driver to implement air traffic management improvements that reduce emissions from aircraft and contribute to minimising aviation’s environmental impact. These include enabling more direct routes and optimal vertical profiles, continuous climb and descent procedures and reduced reliance on stack holding, which all reduce greenhouse gas emissions. Both these developments will be positive for CO₂ emissions; indeed, that is one of the drivers for them. I hope that the House will agree that we have struck a good balance on the environment, since we have already agreed some useful amendments today, and that the CAA will be better placed than ever before to take environmental matters very seriously, as we would expect it to do. I hope that in due course the noble Baroness will withdraw her amendment.

[Baroness Worthington]

My Lords, I thank the Minister for his comments but I am disappointed. It is fine to list all the wonderful things that the CAA, the aviation industry and the Government are doing but the fact of the matter is that environmental issues are absolutely crucial. We must always remember that everything else, such as the economy, is a subset of the environment. If we wanted a reminder of that, we need look no further back than two weeks ago when Hurricane Sandy blew into New York and its stock exchange closed for two days because some things are even more important than our economy.

It is very regrettable if the wisdom of putting a duty into this Bill about the environment cannot be seen. Clearly, this is a sector with a large environmental impact. The measures that the Minister has listed arise because of the significance of its impact. I cannot see why this sector should have a regulator that does not have an environmental duty when all other sectors appear to have one. I do not think that the Minister provided a clear rationale for why this should be the case and aviation should be singled out. If anything, his list of the measures being undertaken makes me consider that there ought to be a broad environmental duty to give the CAA cover for undertaking all these activities. How can it be that we have introduced all these environmental aspects but not given the broad framework from which they may hang? I am afraid that I am not persuaded.

[Lord Deben]

Does the noble Baroness agree that the fact that the airlines are unhappy about this should not necessarily be the closing remark and that, in most cases, those who are to be regulated would prefer not to be so? We have to be a little careful about taking that as a final sum.

[Baroness Worthington]

Absolutely. I was going to comment on that very fact, because the Minister began by commenting that responses were mixed. Of course they were mixed. It actually pleases me that the airport operators were in favour. We are really just listening to turkeys when we want to talk about Christmas, which is never a good way to start thinking about making comprehensive and sensible legislation and regulations. As I hope your Lordships can tell, we are very disappointed on this side. This is not a partisan issue; there has been cross-party support on this question all the way through the process. The House will not be satisfied by the arguments put forward, I think, and we will come back to this. However, at this stage, with regret, I beg leave to withdraw the amendment.

Amendment 60 withdrawn.

Civil Aviation Bill

Baroness Worthington Excerpts

Wednesday 27th June 2012 Grand Committee

Moved by

[Baroness Worthington]

4: Clause 1, page 2, line 10, at end insert—
“( ) the need to ensure that the holder of a licence under this Chapter complies with applicable planning laws,”

[Baroness Worthington]

My Lords, in moving Amendment 4, I will speak also speak to Amendments 6, 7, 13A and 69, which have been grouped under the title of environmental amendments. I seek to reinstate environmental duties into the Bill. These amendments are not new and were tabled in the Commons. We have received some responses from the Government that have quite frankly been disappointing. The Bill, as noble Lords will know, started out under the previous Government. When we issued our consultation document in 2009 and our decisions document in December of that year, we made very clear that we intended to use such a Bill to introduce an environmental duty on the CAA.

It was, therefore, with great regret that we noticed that the current Bill does not contain such a duty. We understand that the Minister in the Commons Committee has given reasons why she believes that it should not be included, although it is rather odd for the so-called greenest Government ever to renege on or move away from environmental commitments. We would have thought that they would take every opportunity possible to introduce these duties, so it seems a little odd and the reasons given are not convincing.

The first reason given is that a primarily economic regulatory Bill is simply not the place to put environmental regulations. To that, I simply say that there are obvious precedents for creating environmental duties within economic regulatory instruments. Other bodies that have an impact on the environment such as the ORR, Ofgem, Ofgas and Ofwat all have secondary duties to take into account environmental concerns and sustainable development. As an example I will read the duty put on Ofgas, which has a duty to,

“have regard … to the effect on the environment of activities connected with the conveyance of gas through pipes … and to contribute to the achievement of sustainable development”.

It is, obviously, primarily an economic regulator, but it has, nevertheless, an environmental duty, because it is an activity that brings with it environmental issues. I do not see, therefore, that that reason holds, and it would be very good to hear from the Minister on whether the Government accept that there is no real difference between the CAA and other economic regulators, and to get an explanation of why it cannot also have an environmental duty.

The other reason given in response to some of these amendments might be that they apply only to the dominant airports. That is why we have included Amendment 69, which will come later, ahead of Clause 100, to give a general duty. We agree that it should not just be a matter for the dominant airports, but should be across the industry.

Yet another reason given for not accepting these amendments is that they are simply not needed. In fact, there are many people who disagree with that. When we were in government, we did not agree; as I have stated, we made it clear that we would put such duties into the Bill. Also, the Department for Transport’s press release of November 2011 did not seem to agree either. That—rather erroneously, as it turns out—stated that such a duty would be included, so it seemed odd that when the draft Bill was published it did not contain these environmental duties. Most recently, in January 2012 the Transport Committee made it clear that it also believed that it should be included. It stated:

“Without giving the CAA a supplementary duty on the environment in relation to its economic regulation role, there is some risk that airports may be reluctant to invest in improving environmental performance. Whilst, as the Minister says, there may be ‘absolutely no doubt’ about measures taken to comply with statutory environmental obligations, there remains a doubt about whether the costs of discretionary measures, such as improved public transport access, can be recovered by airports in charges to airlines”.

The crucial point is that we need to take discretionary spending into account here. There will be examples—civil groups such as Airport Watch have provided them—where airports may want to undertake voluntary measures to improve their environmental performance, but will seek to recover those costs. We need to maintain the CAA’s flexibility to allow them to do this. It is a very important point. We do not want to see a race to the bottom through cost-cutting at the expense of environmental measures. It is, therefore, important that these duties are established and, as I said, many people agree with us on this.

I turn now to Amendment 6, which relates not to the broader environmental duty to have regard to the environment, but is more specifically to do with carbon budgets. In this debate about aviation we cannot ignore the fact that this sector has a considerable environmental impact, that climate change is a real problem, and that there is cross-party consensus that we need to tackle it. So it is clearly important that we enlist all those sectors that contribute to our carbon budget to help in reducing it. It is absolutely imperative that we follow the advice of the Committee on Climate Change on including aviation in our carbon budgets. Having done that, we then need an industry and regulatory body that has environmental concerns and the meeting of those carbon budgets at its heart.

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[Earl Attlee]

The noble Lord makes a very good point, and I am sure that my officials will not let me go too far. However, I am willing to consider Amendments 5, 7 and 13A in greater detail, with a view to returning to the matter on Report. I would find further meetings with noble Lords extremely valuable.

While I appreciate the spirit in which noble Lords have proposed these amendments today, as I have said, there are a few reasons why I am hesitant to accept them now. Interested parties have made it clear that the CAA should not be the environmental regulator. If such duties were to be imposed, I also believe it would be desirable to specify some or all of the environmental effects to which the CAA must have regard. With the assurance that I will consider this matter in detail ahead of Report, I hope that the noble Baroness and other noble Lords will be able to withdraw and not to press their amendments.

[Baroness Worthington]

I thank the Minister for his comments. I am encouraged that he anticipates that I will not be disappointed and that he will consider further a number of the amendments. I come back to a few of the things that he mentioned. It would seem odd not to introduce such a duty because it would apply to only 55% of the market and not 100%. Clearly, 55% is better than nothing. I know that he will say that it is about competitive distortions, but let us be honest—I think that the noble Earl, Lord Cathcart, made this clear—those three airports have a distinct advantage over the others in terms of scale. They are off the scale in comparison to the other airports. There are many other environmental regulations that have this differentiation between the smaller and larger, dominant operators. There are often lots of de minimis thresholds put into regulations to account for the difference in scale. I really do not see that as a problem, and I urge the Government to go through with the 55% if they are very keen on environmental issues, which they say they are.

I wonder—and this may be something that we can meet about—whether Amendment 69 does not help to address this question by creating a more general duty that would cover all of the CAA’s operations. I can understand the question of how CAA would operationalise it, given that it does not license the other operators, but I am sure that it is not beyond our wit to be able to work through that.

The Minister talked about planning and said that he could not understand what it would be used for. I echo the noble Earl, Lord Cathcart, in saying that we are trying to prevent a legal challenge and to give the CAA cover if it chooses to apply its discretion and include discretionary spending within the regulated asset base. So it would be used as a defensive measure against being forced not to include environmental measures. There are other things that relate specifically to planning. Often planning approvals include Section 106 agreements—additional obligations to which a developer voluntarily agrees. So they might not be caught within a very strict interpretation of the law, because they are very often quite loosely worded. So there are some questions there about planning.

I pay tribute to my noble friends and other noble Lords who have contributed to the debate. It has been a good debate and I am very encouraged. We all recognise, as my noble friends Lord Clinton-Davis, Lord Soley and Lady McIntosh have accepted, that the aviation industry should not be singled out for not embracing the environment. It clearly does move forward on a voluntary basis. That is exactly what we are trying to say here: we want to enable and allow this voluntary move towards a more efficient, cleaner and more environmentally responsible industry. We do not want this Bill to stop that. That is a very important point. We are not saying the sector does not wish to move. I am sure it does, given all the pressures that it is under.

My noble friend Lord Berkeley raised the point, which we have made before, that other sectors are regulated with environmental duties. He specifically mentioned rail as an example. Rail often competes directly with the aviation sector when it comes to short-haul flights and it seems odd that rail should have an environmental duty but aviation not. The noble Lord, Lord Jenkin of Roding, raised some very important points about other elements of the Bill, in particular Clause 84 and how that relates to the duties that we hope will be created. My noble friend Lord Clinton-Davis talked about the fact that the aircraft and aviation industry wish to respond. I hope I have captured most of the contributions and I thank the noble Earl for his encouraging words. I look forward to something being brought forward by the Government and beg leave to withdraw my amendment.

Amendment 4 withdrawn.

Renewable Transport Fuel Obligations (Amendment) Order 2011

Baroness Worthington Excerpts

Monday 5th December 2011 Grand Committee

[Lord Palmer]

My Lords, I thank the noble Earl very much for his, dare I say, easy-to-understand introduction of this order. This subject is becoming more and more complicated, and when the original band of four—the late Lord Carter, the noble Lord, Lord Ezra, the noble Lord, Lord MacGregor, and myself—persuaded the Government to accept the original RTFO, little did we think that the waters would become so muddied, and the UK biodiesel industry would be in such limbo.

This is such a complex subject, covering three different government departments and, of course, not to be forgotten, the Treasury. The noble Lord, Lord Teverson, made the point about used cooking oil, so I shall not repeat that by saying what I intended to say. But it must not be forgotten that investment in manufacturing for UK biofuels has been well over £500 million in the past five years. I declare an interest as a grower of industrial oilseed rape, albeit that my wife is a fossil-fuel explorator.

Investors are ready and waiting to invest a further £200 million at least in the next year, and more thereafter, if they can get clarity on the pathway to reach the renewable energy directive target of 10 per cent by 2020. This is private sector money, and the industry does not, and will not, rely on government subsidies. It must not be forgotten that UK biofuels are among the most sustainable in the world and provide a vast array of jobs for United Kingdom citizens, most especially in the deprived area of the north-east of England.

The lack of clarity in policy—in particular, a dead stop in the UK’s renewable transport targets at 5 per cent by April 2014—is sending a negative signal to investors and I strongly believe that we must get a commitment beyond 2014. We know that we can supply up to 80 per cent of the 10 per cent target and it is incredibly important that these are all from home-made biofuels that are sustainable. I hope the noble Earl will take this on board. If we turn investors away, we will condemn the UK road transport sector to be the greatest carbon emitter in the country for the next 20 years. Is this really what we want? I urge the Government most strongly to confirm the 10 per cent target and the pathway to reach it before investors disappear completely and the RTFO is in utter shreds.

[Baroness Worthington]

My Lords, it is a great pleasure to speak on this subject. I also want to make a general comment about how this order was introduced. I worked for Friends of the Earth when the original Bill was being promoted in the House of Lords, and the reason that Friends of the Earth supported this Bill then was because we could see that the overriding priority was climate change and that we needed to seek renewable energy use in all forms of energy, not just electricity but heat and transport. So this was an important part of a suite of measures to address climate change.

In general, the order put forward today is very welcome. It is necessary to have sustainability criteria. I echo the noble Lord’s comments that when we started out on this track no one could anticipate the degree of complexity that would come from this order, but measures are being taken to address problems as they arise. One way to address problems more easily could be by focusing more on indigenous use, growth and production of renewable fuels in the UK, where we can control the sustainability far more clearly. I would like to see more from the Government about how we can promote UK-grown biofuels.

The great weakness in the order at the moment is, as has been mentioned, the cliff face where we have no trajectory beyond 2014. It was interesting to note that the noble Earl seemed to be presenting it as something to be proud of that we have not committed to a trajectory. That is questionable and really damages investor confidence. The obligation is phrased as a percentage of overall fossil fuels sold. This means that not only do we have no growth in the percentage but we could have a declining volume of fuels being provided from this order because vehicles are getting more efficient and we are seeing a reduction in overall fuel use in this sector, especially as we move towards electrification of vehicles.

The Government’s own modelling should show declining use of fossil fuels, which therefore means that the percentage in this order is also declining. We are not even standing still. This is a really serious issue and I would like the noble Earl to address this when he responds. All the reasons given for not committing to a trajectory are to do with the volume of fuels expected because of concerns about sustainability impacts. However, because it is a percentage, you could have the same volume but just growing in percentage terms. That does not really work and we need to see more clarity on why there is no trajectory and the damaging effect that this has on the investment community and UK business. I really want to see something from the Government to put these fears to rest at a time when we should be seeking to encourage all investment into renewable and sustainable forms of energy.

[Viscount Eccles]

My Lords, this is a very difficult subject, as the noble Lord, Lord Palmer, said. It is of interest that the department has not produced its statistics up to April 2011—although we are in December. I also have a perception that the department has come to this instrument with a certain amount of reluctance—I do not think it likes it very much. The reason why it does not like it is absolutely understandable. The information upon which the order is based is very sketchy indeed. I used to be on the Merits Committee, and I probably spoke on another order on this subject some time ago. When I was on the Merits Committee I do not remember there being five impact assessments—all done during the summer holidays, I notice. That must be close to a record.

Before getting on to the instrument itself I wanted to make two points. The first one is about a holistic approach. It does not make sense, in the context of climate change, to talk only about fuel, and not about fuel consumption or about emission control coming out of modern cars. There needs to be a much more rounded approach. The European instruments which have been put into place, no doubt agreed by ourselves in a Council of Ministers, are not at all fit for purpose. In fact, I am pretty sure that they are completely unfit for purpose. There needs to be a much more radical look at how we look at the whole picture.

My second point follows up what the noble Lord, Lord Palmer, said about UK production. I think I am right in saying that at the moment, of the biofuels that we use in this country, 90 per cent is imported and only 10 per cent is produced in the United Kingdom. Those are the Department for Transport’s own statistics. The great majority of that is produced from tallow and waste cooking oil. On Teesside—I come from the north-east and reject the description of it being “deprived”, which is not right—there is a quarter of a million tonne plant—

--- Later in debate ---

[Earl Attlee]

My Lords, the noble Viscount is asking me searching questions of great detail, and I will have to write to him.

I am just going through the questions asked by the noble Viscount. He says that we do not know where 16 per cent comes from. These are the latest published statistics for April 2010 to April 2011. He asked how we can trace biofuels and ensure that they are sustainable. Currently the RTFO has voluntary reporting in place. This reporting has enabled many suppliers to demonstrate that they can trace the production of biofuels, and that they are sustainable. This verification work has been taking place since the RTFO was introduced in 2008. It is carried out by independent, reputable companies, as I have previously mentioned.

The noble Viscount, Lord Eccles, and the noble Lord, Lord Reay, asked why the Government are supporting biofuels when doing so can push food prices up. The analysis by Her Majesty’s Government concludes that biofuels were not a particularly significant driver of the 2008 food price spike, with other factors such as the price of oil and adverse weather conditions being greater contributors. However, some biofuels will put upward pressure on prices for those agricultural commodities used in biofuel production.

My noble friend Viscount Eccles also asked what the Government are doing now to ensure that the promotion of biofuels does not result in land grabs in developing countries. The Government agree that biofuel production must be socially and environmentally sustainable and should not adversely impact on food prices and availability or on local people’s access to land and other natural resources in developing countries. The scale and complexity of this issue mean that it is most effectively addressed at the EU level. He also asked about the impact of biofuels on food availability. Under the RED, the European Commission must monitor and report every two years on the impact of biofuel policy and the increased demand for biofuel on social sustainability. This will include reporting on the availability of foodstuffs at affordable prices, particularly for people living in developing countries.

Many noble Lords have asked why there is no target after 2014. We need to await the conclusions of a number of pieces of work before we can set biofuel targets beyond 2014. The research we are waiting for is the report of the Committee on Climate Change on renewable energy, and the Government’s bioenergy review. We expect to consult on targets for 2014 to 2020 next year. There have been shifts in biofuel policy in the past. We need to ensure that policy decisions going forward are robust and stable. This is an important point for industry, as many noble Lords have pointed out during our debate.

[Baroness Worthington]

My Lords, the point I was trying to make was that this is a percentage-based target that actually translates into volumes of litres of product. The modelling for the total volume of litres of petrol to be sold suggests that that there could be a declining volume of renewable fuels. I want the Government to acknowledge that we might not be maintaining the volumes of sales but might actually be decreasing them if we stay as we are. The important factor is that if you write a target as a percentage, you have got to think about the litres of product to enable the industry to plan. Perhaps I could have an answer on that.

[Earl Attlee]

My Lords, I confess that I do not fully understand the point made by the noble Baroness, but I will undertake to discuss it with my honourable friend Mr Norman Baker, the Parliamentary Under-Secretary of State for Transport.

Many noble Lords are concerned about ethanol from the United States, and what support exists for British ethanol producers. UK farmers and biofuel producers have historically been able to demonstrate strong sustainability performance for their products, which should put them in good stead once the mandatory sustainability criteria of the RED come into effect. This should help their competitiveness. Ethanol producers in the UK have also had concerns that US imports are exploiting a tariff loophole. A European Commission draft regulation addressing the loophole was considered and agreed by the EU Customs Code Committee on 12 October, and should be published soon. The mandatory sustainability criteria will allow only sustainable biofuels to be financially rewarded in the UK.

The noble Lord, Lord Berkeley, asked about oil sands. The fuel quality directive seeks to reduce the life cycle of greenhouse gas emissions of fuels used in land-based transport. We want a methodology that is able to account for the greenhouse gas emissions of all crudes, including oil sands and oil shale, and which is based on robust and objective criteria. The evidence is that fuel derived from oil sands has a high intensity of greenhouse gas emissions. However, the same is true of a number of other crude sources, such as Nigerian and Angolan crude, with their associated flaring, and Venezuelan heavy crude oil.