Renewable Transport Fuel Obligations (Amendment) Order 2011

Debate between Viscount Eccles and Earl Attlee

Tuesday 6th December 2011 Lords Chamber

[Viscount Eccles]

My Lords, I do not often find myself in agreement with the noble Lord, Lord Davies of Oldham, but on this occasion he is about 110 per cent right.

[Earl Attlee]

My Lords, I accept the thrust of what noble Lords are saying. Regrettably this order is on a very tight timescale for a variety of reasons. I would like to make it clear that I very much value what noble Lords are saying. Yesterday, in Grand Committee, the noble Lord, Lord Davies of Oldham, said, at col. GC 160 of the Official Report, that the Opposition support the measure “inadequate” though it is. By using the word “inadequate”, I take it that he meant that the order deals only with sustainability and not the trajectory of biofuel take-up. I did of course deal with that point yesterday, and was very happy to do so.

With regard to the issue of used cooking oil, I recently answered an Oral Question on that and I agreed to write on a number of points. I am not known for speaking at length, but I spent 23 minutes responding to the debate yesterday despite the pleading looks from my noble friend Lady Verma. Relevant letters are nearly ready despite their complexities. My expectation is that I will send out all the letters strictly relevant to the order by the end of the week at the latest and some may well be sent tomorrow. I accept that the timescale is tight, but I think it is better to agree the Motion now rather than go right up to the wire later. I beg to move.

Renewable Transport Fuel Obligations (Amendment) Order 2011

Debate between Viscount Eccles and Earl Attlee

Monday 5th December 2011 Grand Committee

[Earl Attlee]

My Lords, this has been a useful discussion on a subject that generates a wide variety of views. I will try to address some of the key points that have been raised. The number of noble Lords addressing the Committee clearly shows the importance of this order.

The noble Lord, Lord Teverson, asked me if I would agree that not one litre of biofuel should come from the United States. He tempted me but I remind the noble Lord that of course we have the 35 per cent reduction in greenhouse gas emissions test. Although I cannot meet his aspiration, the effect of the order will be very beneficial. The noble Lord, Lord Bradshaw, teased me about whether I would invest my own money in a biofuel plant. The Committee will know that I am a classic impoverished earl and I have no money. However, I am convinced that the order, as amended, will provide a good commercial and environmental incentive.

It is recognised that greater assurance of the sustainability of biofuels will help to address some of the uncertainties in this policy area. This improved auditing will simultaneously address a number of concerns about the potentially negative impact of some biofuels, while providing industry and investors with increased reassurance that the instruments to incentivise sustainable biofuels will be in place for the foreseeable future, providing the certainty needed to plan ahead. In response to the noble Lord, Lord Davies of Oldham, we are building on the work of the previous Administration, as I am sure he would accept.

Double rewards for biofuels from wastes and advanced biofuels will replace the 20p duty differential for used cooking oil, or UCO, which will expire at the end of March next year. This will mean that industry has an incentive to explore ways of delivering any of the fuels with the very best sustainability credentials, rather than incentivising it to focus on a single feedstock. This amendment will allow us to meet our EU obligations in this area and is needed to set in law the sustainability criteria required by the renewable energy directive. As an EU obligation, the same criteria will apply in all other European member states.

We recognise that the issue of ILUC is not currently addressed by the RED and are working both within Government and at a European level to ensure that proportionate and robust action is taken to address this. However, I remind noble Lords that this amendment is a continuation of our current trajectory towards increasingly sustainable biofuels. That trajectory was set out following the Gallagher review of biofuels in 2008, which highlighted the potential impact of ILUC and recommended that the rate of increase of the targeted volume of biofuels in place at the time should be reduced. It said that higher targets should only be implemented beyond 2014 if biofuels are shown to be demonstrably sustainable, including avoiding indirect land use change.

I have a number of points to cover in answer to noble Lords. Some touched on fuels other than biofuels; for example, hydrogen and the use of electricity. The Committee will forgive me if I just cover biofuels. A recurring question from many noble Lords was how industry will prove its fuels meet the new criteria. The answer is that independent verifiers will check the claims made by suppliers that recognised voluntary schemes that certify fuels as RED-compliant are in place. Suppliers will need to have the information that they supply to the scheme's administrator independently verified to the internationally recognised standard known as limited assurance. It is expected that many will provide evidence through certification from one of a number of voluntary schemes set up by private organisations and recognised by the European Commission. Verification has taken place since the RTFO was launched in 2008. The schemes involve companies such as Ernst & Young and PricewaterhouseCoopers.

[Viscount Eccles]

Does my noble friend have any information about the cost of verification? It must be enormous if it is being done properly.

[Earl Attlee]

My Lords, I would not imagine that it impacts greatly on pump prices. I will see if inspiration comes to me in due course. However, the cost is in the impact assessment.

The noble Lord, Lord Palmer, asked how we could support UK production. The RTFO seeks to increase biofuel use. We want sustainable biofuels. The RTFO allows sustainable biofuels to count. We cannot exclude biofuels because they come from outside the UK. If we did, we would face competition issues from the WTO and no doubt from the European Commission as well. Also, such anti-competitive behaviour would be against the interests of UK consumers. The key is sustainable feedstock.

[Earl Attlee]

My Lords, it is up to the supplier to convince the authorities that their fuel is sustainable.

Many noble Lords asked about advanced biofuels. A number of commercial activities are developing advanced biofuels. BP is involved in a joint venture to develop biobutanol. Double counting of waste-derived biofuels and advanced biofuels will increase the financial incentive to invest in advanced biofuels.

My noble friend Lord Eccles asked number of questions. Many of them are key to the debate, so I will go through them and I hope that the answers will cover many other noble Lords’ concerns. He asked about UK production. The UK is currently the largest single supplier to our market. Volumes from the UK have increased over the years. The market share is currently around 23 per cent. The detail is on the department’s website. The noble Viscount asked whether our 10 per cent was not all tallow, et cetera. Tallow and used cooking oil account for a significant proportion of UK feedstocks. Some fuel comes from agricultural feedstocks. Again, the detail is on the website. He asked what happens to our oilseed rape production. We do not have the figures to hand. The statistical data are on our website.

[Viscount Eccles]

How will my noble friend deal with the fact that the website is madly out of date?

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[Earl Attlee]

My Lords, I will have to write to the noble Viscount on that point. I confess to my shame that I have not personally studied the website.

The noble Viscount suggested that sustainability was immeasurable. Some sustainability is relatively easy to track. That is what we are mandating today. The issue of ILUC is unresolved and we are pushing to have it addressed.

[Viscount Eccles]

Perhaps I might have one more go. One of the problems is primary forest. That is forest or other wooded land of native species where at any point in time, in or after January 2008, there has been no clearly visible indication of human activity, and where the ecological processes have not been significantly disturbed. Is my noble friend suggesting that there is anywhere, in any forest, where nobody has ever been?

[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.

Postal Services Bill

Debate between Viscount Eccles and Earl Attlee

Wednesday 6th April 2011 Lords Chamber

[Viscount Eccles]

My noble friend has referred extensively to Schedule 9 covering the transitional arrangements, to which the amendment moved by my noble friend Lady Wheatcroft also refers. Those arrangements are very necessary because it has been agreed by Postcomm itself that its present regulatory system is dysfunctional, although to be correct, I think the words used were “not fit for purpose”. We are therefore moving from a regulatory system which is not fit for purpose to another one by another regulator. Of course I agree strongly with my noble friend in what she said about regulatory creep. So we are moving from an unsatisfactory situation into the unknown.

I have a second and rather more important point to make. My noble friend on the Front Bench keeps referring to Ofcom, which is absolutely right, but Schedule 9 gives the Secretary of State three order-making powers. Given that, we must ask the Government just to think through what they might say at the Report stage about this transitional period. It is all very well to say that Ofcom will do this and Ofcom will do that, but it is accountable to the Secretary of State who in turn is accountable to Parliament. If Ofcom makes a recommendation, it may have the power to make an order itself. It does in certain circumstances, although on many occasions it does not have it without the approval of the Secretary of State. What I think Members of the Committee on all sides are interested in is not just Ofcom’s attitude towards regulation, but the Government’s attitude to the system of regulation which is laid out in tremendous detail in the Bill and which, earlier in the day, my noble friend Lord De Mauley said would be given further consideration.

I am not sure that I have put it terribly well, but I think we still need to understand the basic attitude of this Administration towards a regulatory system for which, as it also said in Postcomm’s February paper, the building blocks have yet to be constructed.

[Earl Attlee]

My Lords, it may be helpful to the Committee if I explain the extra flexibility that “substantially the same effect” clearly gives Ofcom compared with the wording of the amendment. Where possible, Ofcom should be trying to make the initial conditions compatible with the new regime. There may be circumstances where an existing licence condition is not technically capable of transferring to the new regime, but it is possible to create a new regime requirement that has substantially the same effect. I think that that would be a desirable outcome.

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[Viscount Eccles]

I intended no criticism of the individuals in Postcomm. We need to remember that regulators have only a limited amount of independence. We are inclined to talk as though they had a rather larger amount of independence than they actually have. When I look at the 2000 Act and think about the policy intentions behind it and the interpretation of them, I am not entirely surprised that Postcomm got itself into what it admits is a very difficult position. In any evaluation of how the present situation comes about, we have to remember—and that is exactly why I intervened on Schedule 9—that the Government of the day are in the final analysis the accountable body and Parliament with it, and the regulator is trying to carry out their wishes as it interprets them, with a certain amount of independence, but only a certain amount.

[Earl Attlee]

My Lords, I must confess to never having read The Hitchhiker’s Guide to the Galaxy, but I do have my own personal copy of the law of unintended consequences, which was passed many aeons go. I am happy to have further discussions with the noble Lord offline and we take on board his comments about Postcomm.