Biodiesel

Earl Attlee Excerpts

Tuesday 18th October 2011 Lords Chamber

[Lord Palmer]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and, in so doing, declare that I am the unpaid president of the transport division of the Renewable Energy Association.

[Earl Attlee]

My Lords, in a recent consultation on the renewable energy directive, we proposed amendments to the renewable transport fuels obligation. These proposals included providing twice the financial support to waste-derived biofuels as will be provided to conventional biofuels through the award of two renewable transport certificates per litre of waste-derived fuel. Crop-derived biofuels will continue to receive one certificate per litre and biofuels that do not meet the required sustainability standards will receive no support.

[Lord Palmer]

My Lords, I thank the noble Earl for that lengthy reply. This is a very complex issue. I know for a fact that if the 20p per litre rebate is abolished, an enormous number of current users will revert to fossil fuels. Is this what the Government really want?

[Earl Attlee]

My Lords, Treasury Ministers confirmed at the 2011 Budget that the duty differential for biodiesel produced from used cooking oil will end on 31 March 2012, as was always intended. It is appropriate that support for waste-derived biofuels in transport will be provided through double rewards as part of the renewable transport fuels obligation. That, of course, has a sharper sustainability focus. By providing two renewable transport certificates per litre of waste-derived fuel, the UK is moving away from the guaranteed return of 20p provided by the duty differential for biodiesel produced from used cooking oil and moving towards an environment where the competitive market decides the price that will be awarded for each renewable transport fuel certificate. But each RTFC will still be worth around 20p.

[Lord Bradshaw]

Will the noble Earl turn his mind to the fact that the renewable transport fuel certificates, to which he has referred, are tradable assets? They have been often been of no value at all. Anyone investing money in this young industry of processing used cooking oil and other waste products face the possibility that they are being asked to invest money with no guarantee of a return whatever.

[Earl Attlee]

My Lords, my noble friend is absolutely right. RTFCs were traded at a nil value but that was because of an error in the drafting of the original RTFO by the previous Government. That problem has been rectified and will not recur.

[Lord Davies of Oldham]

My Lords, the Minister is reading his brief excellently today to the great advantage of the House. I appreciate the fact that this Question probably should be directed rather more at Her Majesty’s Treasury than the Department for Transport. But the noble Earl failed to answer the crucial point made by the noble Lord, Lord Palmer. What is the Government’s response to the clear signal that many companies which are benefiting from this position at present and are pursuing the policies, which we would all endorse with regard to this sustainable fuel, are indicating that they will drop out from this position and return to fossil fuels unless the Government take a different view?

[Earl Attlee]

My Lords, I answer for Her Majesty's Government and not for any particular department. This policy is following the perfectly sensible trajectory set by the previous Government.

[The Duke of Montrose]

My Lords, will my noble friend the Minister say whether tallow is currently processed in such a way as to qualify as a FAME biofuel? Is it in use as a transport fuel or can it be seen as such?

--- Later in debate ---

[Earl Attlee]

My Lords, there is a difficulty with tallow because it can have unintended consequences. Tallow is also used to make soap. If we reduce the supply of tallow for making soap, palm oil will be substituted. That can have sustainability issues because the increased use of palm oil will result in deforestation.

[The Lord Bishop of Blackburn]

In the northern and very rural part of my diocese of Blackburn, the very high cost of diesel and fuel is inhibiting the stimulus to economic recovery. Will the noble Earl tell us what plans Her Majesty's Government have for helping such communities, especially in the light of the modest reduction in global oil prices?

[Earl Attlee]

My Lords, I fully appreciate the impact of very high fuel prices—I buy a considerable amount of fuel myself—but it is a little wide of this particular issue.

[Lord Hughes of Woodside]

My Lords, will the Minister explain to the House, for my benefit, as well as everybody else’s, what exactly his answer to my noble friend was, because I do not understand it?

[Earl Attlee]

My Lords, perhaps I will run over it again. The answer is that there is plenty of incentive from the issue of the renewable transport fuel certificate to suppliers to continue to supply biodiesel into the market. It is just a different way of achieving the same policy and complying with the renewable energy directive.

[Lord Soley]

There is a deeply worrying lack of clarity about the Government’s policy and, as the noble Earl claims to be answering for the Government now, rather than just the Department for Transport, it would help to have a bit more clarity. I would like to hear the Government’s view on the use of algae as a sustainable fuel. Research is very advanced in other countries and this country would be well placed to pursue it, yet he has not even mentioned it. Could we have a more detailed answer, even if it has to go in the Library at a later date?

[Earl Attlee]

My Lords, the noble Lord mentioned algae. I am afraid I was not aware of that possibility. However, suppliers could use that technology if they wanted to. The incentive scheme is not specific about what feedstock is being used. They can use whatever they want. If they can make algae work in a competitive environment, that is fine.