British Bioethanol Industry

Alex Cunningham Excerpts

Wednesday 16th January 2019 Westminster Hall

[Alex Cunningham (Stockton North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on securing the debate, and it is lovely to be in the Chamber to see three Labour Teesside MPs, as well as other Labour colleagues, leading the charge for farmers and of course jobs.

We have already heard that the bioethanol industry is worth about £1.5 billion to the UK economy annually and supports 6,000 jobs, including apprentices and graduate programmes. However, the industry has been hit by job losses. I will highlight briefly that measures can be taken—the Minister has already heard what they are—to protect jobs and to help growth in the industry, creating future jobs and helping my constituency.

I am sure fellow Members are aware of the thousands of jobs that have been lost around the country by the recent closure of Vivergo and the cuts at Ensus. Northern towns have been hit hardest by the closures, including my area. However, bioethanol is used in making E10 petrol, and legislating for the mandatory introduction of E10 would create jobs. It would also put stability into some of our communities where energy companies are based and be hugely beneficial for the environment. Indeed, many of my constituents have contacted me. Bioethanol is the last thing I expected my constituents to contact me about, but many of them did and they asked me to speak on their behalf today.

[Nic Dakin]

It was a nice change.

[Alex Cunningham]

It was indeed—better than Brexit.

As we have already heard, legislating for E10 would bring us into line with other European countries, including Germany, France, Belgium and the Netherlands, and other countries much further afield such as Canada, Australia and New Zealand. Others have talked about the advantages of E10, which are numerous and clear and have been outlined very well by my hon. Friend the Member for Scunthorpe. I will reiterate some of the things he said.

Transport is the biggest offender when it comes to greenhouse gas emissions, contributing 28% of the UK’s total, but that figure can easily be reduced. With regards to emissions, in 2013, the use of biofuels was equivalent to taking hundreds of thousands of cars—some say as many as 1.35 million—off the road, and it is predicted that many more could come off the road as well.

E10 produces fewer carcinogens, lower particulate matter and fewer nitrogen oxides, and helps to improve air quality. The public health benefits are massive. All those things have a direct impact on my constituency, where there are seven farms. When people think of my constituency, they see industry and pipes and things, but it is quite rural and seven of my farms—I do not own them personally—sold their wheat to the Vivergo plant, which produced bioethanol, but has closed. The farmers were paid a £10 a tonne premium compared with what they would have got on the export market, so many of my constituents are losing money from the industry’s decline. They have to find new markets abroad, which are generally less stable for them because of currency fluctuations—we have had plenty of them of late—demand, and even Brexit.

The Navigator Seal Sands storage facility, where Ensus stores and redelivers its ethanol, is also in Stockton North, as are Intertek Cargo and analytical assessment branches that provide services to Ensus. In the neighbouring constituency of Middlesbrough, Stockton North employees are employed by a logistics organisation, AV Dawson, which provides supply chain services for the industry. So the people I represent have quite a stake in any decision by the Government to move to E10 and allow that industry to be redeveloped, with a tremendously positive impact on jobs and farmers’ income.

Mandating the use of E10, as we have already been told, would help us fulfil our commitment to the Climate Change Act 2008, in which the UK led the way in a legally binding 2050 target to reduce emissions by at least 80%. Furthermore, the EU renewable energy directive set a target for the UK to produce 15% of its energy from renewable sources by 2020.

The Government launched a consultation on E10 last summer and evidence was submitted on whether and how to best introduce E10 petrol. However, the consultation ended four months ago and still the Government have not stated whether they will support it. The perception is that the Government have been dragging their feet on this issue. For me, implementation of E10 is a no-brainer, as it is for others. Support for fuel with a higher bioethanol content is widespread, from farmers and car manufacturers to environmental campaigners and motorists. It is a puzzle to me why the Government have not made it mandatory at UK pumps before now.

The National Farmers Union also supports the call for E10 as it provides vital opportunities for thousands of farmers, including the seven in my constituency. Without the bioethanol industry, farmers who sell crops for bioethanol production would be forced to export their crops and they would lose, as I said earlier, £10 a tonne if they did that. There are plenty of reasons for the Government to stop dragging their feet and make a positive decision to benefit people in my constituency and further afield, and hundreds of jobs could be created in my constituency.

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[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Gapes. I too congratulate the hon. Member for Scunthorpe (Nic Dakin) on bringing forward the debate, as well as on his work as chair of the all-party parliamentary group on British bioethanol. He has campaigned on the issue for a long time, and I commend him for that work.

The debate is clearly important for many hon. Members, given today’s turnout and considering everything else that is going on. There is a big debate on the motion of no confidence in the UK Government, yet six Members have intervened and there have been five Back-Bench speeches. That is testament to the importance of the subject and the Minister needs to take heed of that. I note that the six Members who intervened have not hung around to hear the Front-Bench speeches—perhaps I am not a draw in this debate—but they got their points on the record.

The hon. Member for Scunthorpe highlighted the critical state of the industry—the partial collapse that has already happened, the job losses to date, and the fact that it is four years since the Government seemed to be going down the route of making E10 mandatory. Obviously, real frustrations come with that situation. He made an excellent opening speech and raised the key issues. In discussing concerns about the effect on cars, he highlighted the fact that only 5% of cars now on the road are likely to have issues with E10, and confirmed that E5 would not have to be phased out but could remain as a fuel for classic cars. I like the suggestion that tax measures could be used to offset costs for people who might be affected. Considering how we treat classic cars for tax purposes at present, that seems a reasonable suggestion.

As always, we heard from the hon. Member for Strangford (Jim Shannon). All the other Members who spoke concentrated on direct jobs, but he focused on farming and the benefits to be gained for all. I do not think anyone could argue with that philosophy. The hon. Members for Stockton South (Dr Williams), for Stockton North (Alex Cunningham) and for Redcar (Anna Turley)—it is not the first time I have seen the Teesside Collective in action—rightly spoke about jobs in their constituencies, how important the financial hit taken by those constituencies is, and what it means for the wider UK economy. The hon. Member for Redcar mentioned that the area has suffered other job losses, and that it cannot afford to continue to suffer such losses. That is something else that the Minister needs to consider.

[Alex Cunningham]

The way we understand the Teesside Collective—besides as my colleagues and myself—is as the organisation that has led the way on carbon capture and storage on Teesside. Of course we are hopeful that there will be an amazing plant there. Will the hon. Gentleman join me in commending the collective for the work it has done to secure the plant for Teesside?

[Alan Brown]

I am more than happy to commend it for that. It is important work on an important environmental issue. When we think about it, that is what we are considering—environmental improvements with E10. Carbon capture and storage would certainly do likewise, and I hope that the work will reach its conclusion.

I am a member of the all-party British bioethanol group and have signed the pledge on E10. I urge any hon. Members who have not yet signed it to do so, and to show cross-party support. The hon. Member for Scunthorpe, talking about the future of the bioethanol industry, highlighted the critical stage that things have reached. We have heard about the job losses to date. Government action is required. It could be argued that there is an issue of vested business interests when the bioethanol industry campaigns for mandatory E10. However, as other hon. Members have pointed out, there are clear merits in the E10 proposals, so it makes no sense that the UK Government have been dragging their heels. I hope that the Minister will tell us today why they have done that so far, and what they will do to move things forward positively. She has listened to the speeches, but have she or the Government estimated how many jobs are at stake? How many could be created if Ensus were to get back up and running, and what would the long-term future be with respect to developing mandatory E10?

Transport accounts for approximately a quarter of energy demand, but it lags behind other energy sectors in carbon reduction measures. The bioethanol industry estimates that the introduction of E10 would deliver something equivalent to taking 700,000 cars off the roads, although, interestingly, the hon. Member for Stockton North gave an upper estimate of 1.35 million cars. Have the UK Government done any analysis of what introducing E10 would equate to, in relation to carbon reduction measures?

The hon. Member for Stockton North highlighted the fact that bioethanol blended with petrol reduces carcinogens and particulate matter and can reduce nitrogen oxide emissions, and commented on what that means for air quality. As a doctor, the hon. Member for Stockton South highlighted the medical issues associated with air quality, and we now know that 40,000 premature deaths a year arise from air quality issues. The UK Government have lost in the High Court three times in proceedings about their air quality plan, so what consideration have they given to the air quality benefits and the long-term impact on health of the mandatory introduction of E10?

Has the Minister considered the benefits of E10 that other countries have assessed? It accounts for 95% of petrol sales in the US and is the biggest selling petrol fuel in France, Belgium, Australia and Canada, among others, so it is commonplace in all the other developed countries. Why is the UK lagging behind? Cars are now designed to run on E10, so new cars running on E5 are running inefficiently. Why would we want that? It means greater fuel use and greater emissions. Let us get E10 and make today’s cars more efficient.

The Government may see electric vehicles as a decarbonisation silver bullet but, given that average sales of those vehicles still hover around the 1% bracket, we are a long way from the critical mass of electrical vehicle use that would make a huge difference to carbon reduction. If the Government will not invest enough to get electric vehicle uptake to that critical mass, they need to consider such transitional decarbonisation measures as mandatory E10 and liquefied petroleum gas.

One welcome UK Government measure is the staged increase in the renewable transport fuel obligation from 4.75% to 8.5%, from this month. It is therefore counterintuitive for them not to introduce E10 as a mandatory measure. I would like the Minister to comment on what seems to be disjointed thinking, and what the Department for Transport will do to rectify it.

Hon. Members have talked about the importance of E10 for jobs, air quality and the environment. Why would we want to rely on imports of biofuels in the future, when we could have a fantastic industry in the UK? I make the same plea that everyone else has made, to bring forward E10 as a mandatory measure.

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[Ms Ghani]

That is an interesting way of responding to how the business environment is dealing with global issues beyond what the Government may or may not have intended to do, so I do not accept that point.

It is clear that UK producers of bioethanol from wheat have faced challenging market conditions, due in part to high wheat prices following a hot summer, and a low bioethanol price—that may in some way answer the hon. Gentleman’s question. However, it is by no means clear that an E10 mandate would address all the challenges that the UK bioethanol industry has faced. It is also clear that the introduction of E10 is not without barriers, including the need to take into account the concerns of a significant number of owners of vehicles that are not compatible with E10—that point was raised earlier in the debate. To be successful, it is vital that any introduction of E10 is backed by fuel suppliers and consumers alike.

Since its inception, the policy on biofuels in the UK has been complex and not without controversy. Immediately after the renewable transport fuel obligation scheme—RTFO—was set in law in 2007, the Gallagher review into the indirect effects of biofuel production was published. It became clear that to maintain faith in the emissions reductions achieved and to retain consumer buy-in, we would have to address the negative indirect effects of certain biofuels. To reward fuels that may perform worse than the fossil fuels they replace would have undermined the rationale of a scheme designed to reduce greenhouse gas emissions.

It was with those challenges in mind that the Department jointly established a transport energy taskforce with the Low Carbon Vehicle Partnership, to consider how biofuels can contribute to meeting our climate change commitments in the context of measures introduced to address the negative indirect impacts of some biofuels.

[Alex Cunningham]

The Minister said a few minutes ago that some cars might not be compatible with E10 or even E5. Of course that is the case, but there are always alternatives at the petrol stations pump: diesel, fuel with bioethanol included or ordinary unleaded petrol. I cannot see that as the barrier that she described.

[Ms Ghani]

I do not think I described it as a barrier but a challenge. We must understand needs and impacts on consumers, which is why we should not rush, but ensure that what we do has a positive impact on all people.

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[Ms Ghani]

The hon. Gentleman is trying to tease out a statement from me, when he knows that he has to wait for the consultation to get the response that he wants. I thank him for his tricky intervention, but he will have to wait for the consultation response to get the answer.

The Government agree that the aim must be to reduce emissions and that low carbon fuels must play a part. The regulations made last year introduced a greenhouse gas reduction obligation on suppliers and incentives for the development of fuels capable of delivering higher greenhouse gas emissions reductions. These allow us to reward low carbon fuels because of the emissions reductions they deliver. We have also made £20 million of match capital funding available under the future fuels for freight and flight competition. In the wider context, the Government have recently published two major strategies focused on combating climate change and improving the UK’s air quality. Our Road to Zero strategy sets out a clear pathway to zero emissions vehicles by 2050, and this week we have published our clean air strategy. The pathway is not just about driver behaviour and electrification. Low-carbon fuels will continue to play a vital role in reducing greenhouse gas emissions from the vehicle fleet.

The renewable transport fuel obligation, as amended last year, is expected to save nearly 85 million tonnes of CO₂ over the 15-year period from 2018, which represents around a third of transport’s projected contribution to UK carbon budget savings during the 2020s. In achieving those savings there is an opportunity to increase the amount of bioethanol in petrol, from 5% today up to 10%.

[Alex Cunningham]

The Under-Secretary is doing a grand job stonewalling on behalf of the Minister of State. If there is one message that we would ask to be taken back, it is that we desperately need a date and we need that certainty. Will she commit to go to the Minister and say, “Look, these guys are going to bash your door down if you do not actually make a decision and make it soon”?

[Ms Ghani]

I believe that the door has already been bashed down, because a meeting is set in the diary.