Aviation Policy

Lord Teverson Excerpts

Monday 14th May 2012 Lords Chamber

[Earl Attlee]

My Lords, that is a rather detailed question and I do not know whether I will be able to get the answer even by writing, but I will try. I should emphasise that Heathrow is still well connected to the rest of the world, especially China, if you take into consideration direct flights to Hong Kong, which is connected to 45 other Chinese cities.

[Lord Teverson]

My Lords, will my noble friend the Minister reassure me that the British Government will resist efforts by China, the United States and other nations outside Europe to opt out of the EU emissions system, which is there to control carbon emissions for the whole aviation industry in a non-discriminatory manner?

[Earl Attlee]

My Lords, my noble friend asks a good question, although it is slightly wide of the Question on the Order Paper. We support the ETS scheme, but my noble friend will understand that there are difficulties with it as well.

Renewable Transport Fuel Obligations (Amendment) Order 2011

Lord Teverson Excerpts

Monday 5th December 2011 Grand Committee

[Earl Attlee]

My Lords, the draft Renewable Transport Fuel Obligations (Amendment) Order 2011 will give legal effect to changes to an existing scheme that requires suppliers of fossil fuel for road transport to ensure that a proportion of the fuel that they supply comes from renewable sources. This is the renewable transport fuel obligation, or RTFO. The legislation before us is of key importance in our efforts to tackle climate change and will implement the transport elements of the EU renewable energy directive, or RED.

Biofuels are the only alternative to fossil fuel in transport that presently can be delivered on the scale required to meet our immediate environmental challenges. They will play a key role in allowing us to keep within our forthcoming carbon budgets and to meet our European renewable energy targets. However, biofuels are not the silver bullet that some once believed. There remain legitimate concerns about the sustainability of some biofuels. With this in mind, I make it clear that we are not setting out a new trajectory for increased biofuel targets beyond those already set under the current RTFO. The order is about making biofuels more sustainable; it is not about supplying more biofuel.

Given the environmental concerns and the need to consider how best to deploy biofuels across transport sectors, there is no proposal to increase the obligation levels already set under the 2007 order, which requires the level of biofuel to reach 5 per cent by volume of the total fuel used for road transport in the obligation year that starts in April 2013. The target will remain at these levels for subsequent years. This order would place a duty on the Secretary of State for Transport to keep under review the obligated levels set under the 2007 order. It is our intention to consult in 2012 on possible increases to the percentage of biofuel that will have to be supplied in the period 2014 to 2020.

It may be useful for me to provide a brief overview of the current regulatory framework so that the changes we are considering today can be better understood. Suppliers of fossil fuel for road transport have an obligation to supply a small percentage of biofuel alongside the fossil fuel: currently 4 per cent. Suppliers of biofuel are awarded a certificate for each litre of fuel that they supply. The renewable transport fuel certificates—RTFCs—can be traded on the open market. This means that entities supplying biofuels that do not have an obligation to do so may still benefit from helping obligated suppliers to meet their targets as they can sell their certificates to those suppliers that require them to meet their obligation. The buyout mechanism is in place to provide a safety valve that protects both industry and the consumer from spikes in the cost of supplying biofuel. Presently, industry also reports the performance of its biofuels against voluntary sustainability criteria. However, if we pass this order, the UK will reward only sustainable biofuel. This is the key issue today.

This amendment will introduce the mandatory sustainability criteria set out in the RED. This means that for the first time there will be a legal obligation on industry to supply biofuels that demonstrably reduce carbon emissions and can be shown to have been produced from feedstocks whose cultivation did not threaten areas of high biodiversity or damage carbon stocks. Suppliers must therefore be able to prove that their claims of sustainability are true. These sustainability data must be verified to the internationally recognised limited assurance standard by an independent third party before participants in the scheme receive the renewable transport fuel certificates that are used to demonstrate that their obligation to supply sustainable biofuel has been met. If companies continue to supply biofuels that do not meet these environmental standards, those biofuels will count as fossil fuels for the purposes of the RTFO and as such will serve to increase the supplier’s obligation to supply sustainable biofuel accordingly.

Another important driver behind this amendment is to further encourage biofuels made from the most sustainable feedstocks. Fuel made from wastes and residues will be eligible for double counting, receiving twice as many certificates by volume as biofuels made from other sustainable feedstocks. This double counting would also apply to biofuels made from lignocellulosic material and non-food cellulosic material; that is, woody matter as well as stalks and the like left over from agricultural crops.

We remain concerned that there are significant indirect impacts from some biofuels that are not currently addressed by the renewable energy directive. Earlier this year the UK published research on the scale of these impacts and we have written to the European Commission reiterating our belief that this is a pressing issue that must be addressed robustly at a Europe-wide level. As the directive currently stands, it does not take into account these indirect effects. While the extent of these impacts remains uncertain, there is robust evidence that widespread use of some biofuels can lead to significant indirect greenhouse gas emissions through the process known as indirect land use change, or ILUC.

The Government take the issue of ILUC seriously. Earlier this year the Department for Transport published research on the scale of indirect land use change impacts and we are continuing to lead work on how to tackle these, as well as encouraging the European Commission to address this issue on a Europe-wide scale with a robust solution. My honourable friend Norman Baker, the Parliamentary Under-Secretary of State for Transport, has written to the European Commission twice, expressing the Government’s concerns regarding ILUC and pressing for robust and proportionate action to be taken to address the associated impacts.

We have also been consulting on guidance that will help suppliers and others with an interest in this industry to understand better how we take technical decisions in accordance with the order and how they are expected to comply with this legislation. This RTFO guidance will update existing guidance on process, carbon and sustainability reporting, verification and process-related issues for fuel suppliers.

I will now briefly summarise other key changes that would be delivered through this order. It would require suppliers to provide additional sustainability information. It would extend the RTFO so that biofuel suppliers, as well as those supplying fossil fuel for road transport, are obliged to register with the RTFO administrator and report on their biofuels. Small suppliers will still be outside the scope of the obligation in the light of the minimum supply threshold of 450,000 litres per annum, which will continue to apply. It would expand the RTFO so that all liquid and gaseous renewable fuels of biological origin that are for use in road vehicles are eligible for RTFCs.

This approach would enable more renewable fuels such as biomethanol, and partially renewable fuels, to be eligible for reward under the RTFO.

In order to allow maximum flexibility for industry while ensuring that the sustainability criteria are met, we are allowing suppliers to carry over RTFCs from one obligation period into the next, where the fuels associated with these certificates would have met the minimum greenhouse gas requirements in both periods.

This order will remove the duty on the RTFO administrator to report annually to Parliament. This is because the administration of the scheme is now carried out by a central government department rather than by a non-departmental public body, as had previously been the case. It is therefore subject to the usual ministerial oversight of departmental business, rendering additional reporting unnecessary. We are also proposing to amend the suite of civil penalties available to ensure compliance in order to reflect the changes made to other aspects of the order.

The changes before the Committee today are intended to ensure that biofuels used on Britain’s roads deliver real carbon savings and can demonstrate their sustainability. Through double counting, they will also encourage industry to seek out ways of delivering the most sustainable fuels. I therefore commend the order to the Committee. I beg to move.

[Lord Teverson]

I am happy to start, my Lords, as this is a very important area. I will start what I am about to say by showing how important it is. If you are a believer that global warming is one of the greatest challenges to this planet and to mankind, then this order is of particular importance. We often forget that transport accounts for 35 per cent of energy usage within the United Kingdom, so in order to meet our renewable energy targets of 15 per cent in 2020, and our decarbonisation targets of 80 per cent for the economy as a whole up to 2050, we obviously have to succeed in this area. If we do not, then we stand no chance of meeting our other targets. We know, however, that this has been one of the most contentious areas.

Sometimes those of us who get involved in debates about wind farms and nuclear energy think that it is one of the areas where there is most division and angst among Members of the House and the public at large. However, this is one of the areas where we are asking what is and what is not a sustainable biofuel, and whether biofuels are good or bad. As we go on, that division—which seems to have got wider—is of great importance.

We therefore have to make sure that we solve issues in this area. The renewable energy directive requires that we reach 10 per cent by 2020, and on this scale we get to 5 per cent by volume—but that is of course only 3.5 per cent by energy content in terms of that target.

I looked at one of the reports of the Committee on Climate Change. It is useful to remind ourselves as background that in terms of decarbonising this sector, as the Minister said, renewable liquid fuels are pretty well the only option in the short term. What are the alternatives? I note that the Committee on Climate Change is looking for 1.7 million electric or hybrid vehicles by 2020, which will be 16 per cent of all purchases of vehicles by that time. Frankly, we will be very lucky if we get anywhere near that figure, and we are not on the trajectory to achieving the target of having almost completely electric vehicles by 2030.

The other alternatives are hydrogen fuel, which seems to be a long way off, or second-generation biofuels. Since I have been involved in this debate, second-generation biofuels—let alone third-generation ones—have been talked about as if they are around the corner, and yet those debates have been going on for three or maybe five years, and they are still not here. What research and development and real impetus—by Europe, through the framework initiatives, and through our own government-sponsored research— is being put into these second-generation biofuels? Until we move on to those, I do not think that this issue is overly solvable.

--- Later in debate ---

[Lord Davies of Oldham]

My Lords, this has been a fascinating debate. The Minister has quite enough on his plate in terms of issues to tackle without me adding a great deal to his burden. I have some sympathy for him; he is well aware of the fact that the Merits Committee of the House expressed some criticism of the amendment order. Clearly there is also, among those in the affected industries who are directly interested in the issues, a belief that a considerable amount of backsliding by the Government is going on. This is a pretty modest measure against the background of the Chancellor's denial of environmental issues last week, and the clear indication that the Government are going to soft-pedal on planning issues, reduce subsidies to the solar panel industry and offer subsidies to some of the most polluting industries. The measure must be seen in that context. Therefore, I will give an element of reassurance to the Minister; we on this side support the measure, inadequate though it is. We hope that it will be the basis on which in due course something more constructive can be developed.

The Minister must know about the concerns of the industry. The issues raised by the order around verification and reporting are complex, and there is a danger that if people get it wrong and biofuels prove not to conform to the requirements, the industry will get into further trouble. However, we should look at how little notice the industry has from the period of consultation to the implementation of the order, which is only a week and a half from being part of the requirements.

The industry also indicated that there are areas to which it seems no consideration at all has been given. For example, the development of hydrogen fuel with regard to motor transport is not considered in relation to the order. From what we can see, the Minister's general perspective is that the Government will keep the issues under review. That is a long way off definitive policy, which is what the order is meant to represent. The industry deserves better from the Government. As the noble Lord, Lord Bradshaw, indicated with regard to the production of biodiesel, it is important that people know the parameters within which they will work. How can we expect them to invest, particularly in these very difficult times, against a very uncertain perspective?

I heard what the noble Lord, Lord Reay, said and I hope that the Minister will give some response. When 97 per cent of the world's scientists who are interested in this area regard climate change as moving apace and as a threat to the world, the concept of deindustrialisation may be emotive but we certainly have to change. Without change, we will face a catastrophic future.

[Lord Teverson]

Does the noble Lord agree that there is a big difference between decarbonisation and deindustrialisation? Probably the greatest deindustrialisation in this country was in the 1980s. Since then, industry has probably improved and got better.

[Lord Davies of Oldham]

My Lords, I could not put it better myself—in fact, I did not put it better myself and I am grateful to the noble Lord, Lord Teverson, for pointing that out to the Committee. The Minister must recognise that investor confidence in the industry is low. One plant has effectively has been mothballed—this represents almost one-third of the industry—and we surely need to give some stimulus if we are to hit the targets set for 2020. Of course, the Minister will appreciate just where the industry is at present: about 250,000 tonnes of bioethanol and 330,000 tonnes of biodiesel are being produced. Yet we need several millions of tonnes in order to hit the target, which is only eight years away.

I have come along, as I always do, with words of comfort for the Minister: we support this measure. However, we regard it as inadequate and we want indications from the Government that the inadequacies will be repaired.

EU: Financial Stability and Economic Growth

Lord Teverson Excerpts

Thursday 3rd November 2011 Lords Chamber

[Lord Teverson]

My Lords, I welcome this debate as well. The crux of it is the Government’s and the United Kingdom’s ability to help financial stability and growth in Europe. That is a natural role for us because the United Kingdom is self-evidently part of Europe. We are part of it geographically and economically—as has already been described in the debate—and, absolutely, culturally. I was thinking about this area in particular. Contrast with this country the Obama healthcare reforms in the United States and how they have been received by the media culturally, and all the difficulties that that has caused in terms of ideas of socialism—and that is moving nowhere near to universal healthcare. Here, we have a health Bill going through where even what are seen as contentious propositions guarantee universal delivery, free at the point of need, and competition but not price competition. It shows that there is a big gulf culturally with the Atlantic, and that Britain is very much a European-style nation in the way that it looks at a number of things.

The only way that Britain can contribute towards that economic and financial stability is if it is able to have and promote that influence. My noble friend Lord Newby has already talked about some of that, but I want to emphasise it in the financial regulation area, which is part of the debate. I fully understand why the Financial Services Authority has to be abolished in that it was seen to fail very strongly in its strategic prudential regulation over the last few years. However, there is concern that, in its division into the financial conduct authority and the prudential authority, we could lose our single voice within the new economic and financial structures—in Brussels, the ESMA and the banking authority. I am sure the Minister is also concerned about that area as a high priority. I would be interested to hear the Government’s view.

The other area I mention is the one my noble friend Lord Newby raised, which is parliamentary influence. In the last European elections, I would say there were two major winners. One was the Conservative Party. Out of our 72 seats on an assembly of some 730 Members, 26 Conservatives were elected, 13 UKIP Members—a great result for UKIP—with Labour equal on 13, and the Liberal Democrats slightly below with 11. Yet in the European Parliament itself, which post-Lisbon has very literally equal powers with the Council of Ministers in terms of legislation and therefore British interests, the European People's Party dominates in terms of numbers with more than 200 Members—it is the largest party—with the Socialist Group below that at 184, and then the liberal group well below that at 84. Those are the three parties with real control. As in this Parliament and any other Parliament, in the European Parliament—unless one is in the point of balance—power depends on numbers. That is where influence is. I greatly regret that my coalition partners in Europe are in a group that is roughly equal with the Greens, and has absolutely no influence in the power structure of that Parliament at all. I would love to see it change. We have to keep that influence in Europe to ensure the stability that we are looking at there.

The IMF has been mentioned. I was not going to talk about the IMF loans particularly in this debate, but I will spend my last minute on a short excursion on that. I went to New England for the first time this summer, though I have been to the United States many times. I went to New Hampshire and, being a bit of an anorak and an economics student, I noticed that Bretton Woods, which is a minute settlement at the top of New Hampshire, was within striking range. I made my own pilgrimage to the Bretton Woods Washington hotel. Give it its credit: it still has the pictures there of John Maynard Keynes and the other people who came together to put together the post-war financial system. That system—the IMF side of it—has largely survived. It would be a great regret, as that change and that strategy was largely led by Britain, if we were not a participant in carrying forward those obligations.

We have a great role in Europe. Ironically, during the Delors/Thatcher time we pushed Europe forward more than has been done over the last few decades. We must, in this country, make sure that that momentum continues. We must not be marginalised.

Electricity Market Reform

Lord Teverson Excerpts

Tuesday 12th July 2011 Lords Chamber

[Lord Marland]

The noble Lord, Lord O’Neill of Clackmannan, is an expert in his field. He also knows that I am responsible at the moment for leading the negotiation on carbon capture and storage. I am delighted to make the Statement in your Lordships’ House because it withdrew me from the negotiation process where we are in something called lock-in at the moment. I will not venture to suggest the outcome of the negotiations. They are extremely determined and it is a very complex programme. At the moment, we have three energy providers and me in one room at different times trying to bottom out where we can get to. I have been set the task of achieving this in operation by 2016. We may or may not get there. I am not going to predict one way or the other because it is a quantum leap. We must not underestimate the extent of that.

The noble Lord is quite right that a number of our energy policies are predicated on carbon capture and storage—but by no means all of it. The fact is that the EPS provides for gas. As my noble friend Lord Lawson would ask me to say, gas is fundamental to the future. I completely support his view on that. It is much less carbon intensive, will be fundamental to our electricity generation going forward and will be a large proportion of it.

[Lord Teverson]

My Lords, I generally welcome this Statement and the reforms that are there, in two areas particularly. We have often said in the House that if we had a proper carbon price that managed, in the jargon, to internalise the externalities of the cost of carbon we could then just let the market get on with it. Unfortunately, the EU ETS has not managed to deliver on that sufficiently. I understand that we only have a carbon price floor here for electricity generators. At least that is a move in that way.

I also particularly welcome the emissions performance standard. I have argued for that for ages and could never understand why, if we have emissions standards for cars and various other implements that we buy, we do not have them for the largest energy users such as power stations as well. I am not so concerned by a short-term dash for gas as long as that supply is diverse rather than concentrated in terms of our energy security.

I want to ask the Minister two things. He is absolutely right that the real risk to pricing is fossil fuels but it is also to a degree market concentration. How will these reforms make sure that there is less concentration of market power in the energy industry and how are we going to make sure that there are new entrants that can grow substantially to challenge that existing power? In terms of the market mechanisms, is he confident that there will be enough liquidity in the markets to make sure that these contracts for difference and that whole mechanism will work, so that we are able to deliver the policy objectives as he wants?

[Lord Marland]

My noble friend Lord Teverson has always asked the apposite question. First, we want to get away from the language of a “dash for gas”. Gas will be fundamentally important. We are not dashing for it. We have to make sure that we separate the price of oil and gas. Gas is now a very competitive energy product, as we have noticed in the USA where shale gas has been discovered. We do not want to call it a dash for gas. It is long-term support for gas.

As to the market mechanism, Ofgem will be tasked with bringing liquidity into the market as the regulator. It has got to show some teeth in generating regulation. You get there by people generating their own electricity and feeding into the market on the one hand, and on the other requiring less from the electricity providers by having energy-saving products such as the Green Deal and smart meters—part of the programme that we have been pretty unified in wanting to adopt.

Transport: Penzance and Isles of Scilly Ferry Service

Lord Teverson Excerpts

Tuesday 22nd March 2011 Lords Chamber

[Earl Attlee]

My Lords, the Question was about the shipping link but I have asked about the helicopter link. I understand the difficulties with it and its viability.

[Lord Teverson]

My Lords, the proposed vessel for the crossing will operate all the year round. This is a major improvement for the islands’ opportunities. Cornwall Council, of which I am a member, has now put its money where its mouth is by backing this scheme. Will the Minister now concentrate on the scheme that is being put forward, rather than the many others that are less well informed, so that this decision can go forward positively and rapidly?

[Earl Attlee]

My Lords, we are concentrating on Cornwall’s proposals. Noble Lords should understand that this issue is not just about the ship. There are also proposals for the improvement of the harbours at Penzance and St Mary’s. I understand that St Mary’s harbour has some health and safety issues because mechanical handling equipment gets too close to pedestrians. There is an obvious safety risk that genuinely needs to be addressed. The noble Lord makes very good points.

Climate Change: Cancun

Lord Teverson Excerpts

Monday 13th December 2010 Lords Chamber

[Lord Teverson]

My Lords, I think that the contrast between this year and last year has been absolutely excellent, and I am sure most of the House would echo that, but may I press the Minister on one or two areas? I should like to have a little more detail on verification, which many of us believe is one of the most important areas that was discussed. Has China in particular now agreed that verification procedures are not just permissible but something that it will encourage, and that they will be part of any future regime and will no longer be resisted?

On REDD and deforestation in general, we are all aware of the still huge rate of deforestation. It might not be quite as great as it was in the past few years, but it is still there. Will the Minister indicate when this regime will come in and when deforestation will start to decelerate in a very major way, given that these forests will not be replaced? Once they are gone, they are gone.

Lastly, I always understood that these UN agreements had to be unanimous for them to work. Will the Minister explain why Bolivia stood against this agreement, and how that leads the agreement? The great lesson to me is to keep one’s expectations low and then maybe enlightenment will come somehow and things will be delivered. Whether this will happen for Durban next year is, of course, the next question, but I add my congratulations to the ministerial team and to the Mexican Government on the excellent outcome.

[Lord Marland]

My Lords, I agree with my noble friend. I have always kept my expectations low throughout my life; it is a very good starting point for anything. Look where I am now—noble Lords might ask where.

My noble friend quite rightly asked three very valuable questions. I will, if I may, deal with forestry and deforestation first. The agreement was to map out the extent of forestry at the moment so that we had a baseline from which to start discussions in Durban and the period running up to it. It set a formula and a place to start from.

Secondly, even though I was not there, I understand that Bolivia did not agree to the target because its commitments and targets are much more aggressive. I understand that it is looking for no more than a 1 degree-Celsius increase in emissions, and I think it felt that it had a more aggressive timetable.

Thirdly, the verification system is a commitment from all 193 countries that subscribed to verification—so China is included in this—to set a framework and a platform over the four-year period and be transparent about the standards that they are setting in their own countries. The plan is to be able to verify every four years.