Greener Road Transport Fuels

Fiona O'Donnell Excerpts

Tuesday 15th October 2013 Westminster Hall

[John Pugh]

I assume that my hon. Friend the Member for Redcar (Ian Swales)will be joining us shortly, but I think we can be less concerned about the timing of the debate, thanks to that interruption, Mr Weir.

I was trying to make the point that the most environmentally sustainable thing to do is probably not to move around at all, but for most of us in the 21st century, the daily commute, the school run, the journey to work and so on, are likely to be part of our lives for some time to come. Everyone in the room is surely familiar with that, as they surely are, too, with the constant need to refuel the vehicles that they use.

Everyone with a conscience in these times, when they are standing in the forecourt, probably thinks of two things: they consider price, primarily, but they also think of pollution. The Government, reflecting voters’ views, think not only of pollution and price, but of one other thing: revenue. It has long been a Government axiom that they are prepared to sacrifice revenue to achieve an environmental effect, because we all recognise that individuals by themselves are unlikely to bring about major environmental change. A community problem has to be solved on a community basis.

The fundamental problem presented by our travelling—that is, apart from noise, disruption and the permanent possibility of accidental death—relates to air quality and emissions from vehicles. We can address that locally through things such as the congestion charge, which, in London, has been a great success in improving air quality, and in a small-scale way through pedestrianisation, but that does not, by itself, do anything about the cumulative national, international and global impacts of transport.

The obvious remedy—not the only obvious remedy, but certainly one of them—is to make fuel less polluting or to make less polluting fuels, and to persuade, or alternatively, to coerce drivers to use them. A number of alternatives are clamouring for our attention. This list is not complete, but I put down hydrogen, bioethanol, biofuels, biogas—anything beginning with “bio”—electricity and electric cars, liquefied petroleum gas and compressed natural gas. There are exotic alternatives, too: I am aware that my hon. Friend the Member for Birmingham, Yardley (John Hemming) runs his rather large car on chip fat, which is one of the more exotic possibilities. None of them, particularly chip fat, is wholly unproblematic.

I want to put the case for LPG, particularly, as the least problematic alternative and the most worthy of Government support. By support, I mean fiscal support, rather than support in the form of further research and so on. I do not think LPG, as a mode of propelling cars, needs any further research. It can obviously been made more efficient over time, but the technology is well understood and well implemented.

I would like briefly to deal with some other candidates and my reasons for sidelining them in this debate. I am sure that other colleagues will wish to do otherwise and will perhaps want to highlight them. On hydrogen briefly, I think that we have to put that aside. People talk of conspiracy theories about the influence of the oil industry; there have been a good number of stories going back decades about how any promising research into hydrogen propulsion has been sat on, bought up or, in some way, scotched by the oil industry. I do not know whether that is true, but even advocates of hydrogen as a fuel would probably acknowledge that it is not yet a mature, scalable technology. More research is needed, and I hope that the Government will engage with those who research in this field, even if they do not actively support it.

Biofuels are further down the track, but consideration of biofuels and their mandatory mixing with conventional fuels, or their use as a substitute for conventional fuels, leads us to a series of what appear to be complex debates. The obvious debate, held at length in the Daily Mail, is about whether they will add to transport costs. Another debate, particularly on the continent, is about whether they are compatible with all forms of engine development—I understand that the German car industry has reservations and has blocked progress at EU level. There are debates about whether they will threaten food security or raise food costs, and about whether they will have a detrimental effect on land use as land use changes.

[Fiona O'Donnell (East Lothian) (Lab)]

The hon. Gentleman said that there is a debate about whether biofuels can affect food security. I quote the report from the Select Committee on International Development, which said that

“the FAO, the OECD and the World Bank”

all agree and that it is rare for so many organisations to agree on a fact such as that biofuels are a threat to food security.

[John Pugh]

This debate is swirling around the European community and effecting some progress, along the lines of putting a great amount of biofuel into ordinary fuel.

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[Fiona O'Donnell (East Lothian) (Lab)]

I congratulate the hon. Member for Southport (John Pugh) on securing the debate. I do not know whether he is aware of this, but it is particularly appropriate that we should be having this discussion today, given that the European Council will vote tomorrow on the extremely important issue of the cap on the use of food products in biofuels.

There are two main reasons why I wanted to attend the debate. The hon. Gentleman gave us an incredibly wide-ranging and well informed opening speech. He touched on air quality, and findings published today show that poor air quality can contribute to low birth weight. There is, therefore, still much to discover. However, that is not what I wanted to speak about.

My first main reason for wanting to speak is that I tabled a parliamentary question to the Department for Transport, which was due for answer yesterday. I thought I might be able to elicit an answer by turning up in person today. What representations have the Government made among other members of the EU in relation to the UK’s support for the 5% cap? I do not do this often, but I want to praise the Government for their support for that cap.

I also want to speak as a member of the International Development Committee, which recently published a report on food insecurity. We found that biofuels were a major contributor to food insecurity across the globe and especially in developing countries. In his opening remarks, the hon. Gentleman said their net effect would be to further impoverish the world, but we spoke in far stronger terms in our report, and we are not alone in doing so.

I am talking not just about the usual NGOs, which campaigned on biofuels during the recent IF campaign—I am sure the hon. Gentleman often wore the wristband and took part in photo opportunities, and he possibly responded to constituents in support of that campaign. A key part of it was to call on countries to act on biofuels and, in particular, to seize the opportunity to act in the EU.

When the Committee took evidence, however, it was disappointing that the Under-Secretary of State for International Development said that biofuels were not an issue the Government were engaging in at the G8 level. The issue needs to be pushed up the agenda, because the current situation is a shame. At one evidence session, however, we had encouraging evidence from the then Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker). He expressed his enthusiasm for algae-based biofuels. Some people might say, “Get a life”, but I thought it was very encouraging.

The hon. Member for Southport also talked about using waste cooking oil; we have until 2020 to meet our EU targets for biofuels use, and I urge the Government to invest more and to consider more alternative sources of biofuels that do not use food-based products. It is not only a question of using food; land and water are also used, and in developing countries those are scarce and vital resources.

I have come here with not just two reasons for speaking, but millions. There are millions of people in developing countries whose lives are put at risk by the rush for land on which to grow biofuels. Unfortunately, in developing countries where the law about registration and ownership of land is not too strict, it is all too easy for land to be grabbed and used for biofuels production.

The Select Committee report found that there was an increased risk of hunger, and that between 25 million and 135 million more people might suffer hunger, in Africa alone, as a result of the world’s efforts to produce more biofuels. There is also a worrying link between food prices and energy prices. We know all too well in this country how volatile energy prices are, and anything that links food and energy prices is a reason for concern.

I should welcome reassurance from the Minister about what the Government are doing at EU level to campaign on the issue. We need to think about the price rises I mentioned. There are competing claims, but we found in our evidence that prices for oil seed could rise by 20%, those for vegetable oil by 36% and those for maize by 22%. As the hon. Member for Warrington South (David Mowat) mentioned in an intervention, wheat prices could rise by 13% by 2020. We know what food insecurity means in this country, but at least here we have enough food—it is just that people do not have the money to buy it. In the developing world, there is a huge threat to food production.

I hope that my speech has been short and to the point, and that in addition to dealing with the many issues that the hon. Member for Southport raised, the Minister will take the time to talk about food insecurity in developing countries. There can be no issue more important.

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[Mr Goodwill]

Yes, I am sure they are. I am concerned that one means of addressing the range anxiety problem is to have fast-charge cars. Electric cars work well when they are charged overnight with renewable energy or nuclear energy, but once we start fast-charging cars at filling stations, we will have a major problem not only with generation capacity but with the grid’s ability to carry that amount of electricity.

However, not all modes of transport can be easily electrified. Aviation and heavy goods vehicles are likely to continue to require liquid fuels for decades to come. It is therefore essential that we develop the technologies to produce low-carbon liquid fuels.

Biofuels are renewable transport fuels created from organic matter and offer one way of creating low-carbon fuels. However, biofuels—and bioenergy more generally— also present complex challenges. Last year, the Government published a strategy for bioenergy, which recognised its important role in allowing the UK to meet its climate change objectives. It concluded that by using bioenergy, we could cut the costs of decarbonising the UK by £44 billion.

[Fiona O’Donnell]

I thank the Minister for giving way and take the opportunity to welcome him to his new role. Does he agree with his predecessor, the Minister of State, Home Department, the hon. Member for Lewes (Norman Baker), who has perhaps gone to a better place now, that some forms of biofuels are worse for the environment than fossil fuels?

[Mr Goodwill]

I have seen analysis of some of the bioethanol produced in the United States which indicates that that is the case. I will comment on the particular impact of fuels as I make progress in my speech.

The Government published a strategy on bioenergy, which concluded that by using bioenergy we could cut the cost of decarbonising the UK by £44 billion. Other reports have estimated that the biomass industry could provide 50,000 jobs. There are clear opportunities for the UK in the global race for growth driven by science and innovation, and it is an industry that we need to develop. However, the strategy also made it clear that bioenergy had its risks. If it is not managed properly, bioenergy can actually increase greenhouse gas emissions and put at risk key objectives such as food security. It is therefore essential that we proceed with care and develop systems that use bioenergy only where it is genuinely sustainable.

We have already taken important steps on the path to genuinely sustainable biofuels. In 2008, the Renewable Transport Fuels Obligation was established. For the first time, biofuel was required to be blended into road transport fuel. In 2011, the UK introduced mandatory sustainability criteria to the RTFO. Those changes meant that biofuels could no longer be sourced from areas of high biodiversity, such as rainforests or wetlands. In 2011, we also saw the introduction of double rewards for advanced biofuels, also referred to in this debate as second generation biofuels, and biofuels made from waste. Such changes have led to encouraging trends in the fuels supplied under the RTFO. The average carbon savings of biofuel supplied under the RTFO when compared with fossil fuel have increased from 46% in 2008 to around 68% in the latest statistics.

One example of the feedstocks behind this trend is used cooking oil. The hon. Member for Southport may be aware of the Olleco biodiesel plant in Bootle, which is the country’s largest purpose-built plant dedicated to producing biodiesel from used cooking oil, and is not too far from his Merseyside constituency.

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[Mr Goodwill]

Indeed. We have a big chip factory in my constituency, which occasionally has the same effect. Used cooking oil offers carbon savings of around 80% compared with those produced by fossil fuel, and the latest data suggest that last year around a third of biofuels supplied in the UK came from used cooking oil. We are very much on the case of ensuring that used cooking oil is indeed used cooking oil, and the Department is currently monitoring the situation closely because of the allegations that have been flying around. Certainly, the UK should not be criticised in that regard.

There is still more to do to ensure the sustainability of biofuels. In particular, we are concerned about the impact of indirect land use change. Studies have demonstrated that, due to ILUC, some otherwise sustainably produced biofuels can end up causing greater carbon emissions than fossil fuels.

[Fiona O’Donnell]

The Minister is being very generous in giving way again. Does he not agree that that perhaps is what the hon. Member for Redcar (Ian Swales) missed in his contribution—while the products that may be used in his constituency are not fit for human consumption, they still use up valuable resources of land and water?

[Mr Goodwill]

The issue of displacement—the ILUC situation—is one that we are well aware of. It tends to be more of a problem with biodiesel than with bioethanol, but it is an issue that we need to address through negotiations and agreements at the European level.

The European targets that the UK has agreed to are legally binding. Therefore, the UK needs to work within the European framework to produce a biofuel policy that reduces the environmental and social impacts of biofuels. As part of this process, it is imperative that ILUC is properly addressed at European level. Negotiations are ongoing in Europe, and we are pressing for an ambitious outcome to the ILUC situation. The 5% figure is certainly the figure that we are negotiating towards.

As we have heard in the debate, there are also concerns about the impact of biofuels on food prices. Food versus fuel is an issue that I take very seriously. The primary goal of agriculture should remain food production, and the production of biomass must not undermine food security or increase food prices. It is accepted that increased demand for biofuel has played a role, but Government analysis has shown that although increased global crop prices have resulted from biofuel production there has only been a modest rise in food prices.

I must point out at this stage that there is only 10p worth of wheat in a loaf of bread anyway, so there are many other factors that come—oh dear, I have mentioned that I am a farmer again. However, I recognise the seriousness of even a small impact on food prices, as well as the potential for biofuel support policies to increase crop price volatility. Nevertheless, I am confident that our position on the ILUC negotiations, if it is successful in limiting crop-based biofuels and incentivising those produced from wastes and residues, should reduce the direct competition for food feedstocks.

I will turn now to advanced fuels. Resolving the issue of ILUC remains the main barrier to setting out the clear pathway to achieving our 2020 targets, which I know industry and investors need. However, in the meantime we can set out some markers for the longer-term path to more sustainable biofuels. That is likely to be achieved through the use of non-land-using feedstocks, such as agricultural residues and municipal waste. However, use of these feedstocks requires advanced conversion processes that have not yet been commercialised. These processes are an exciting technology, which can turn unwanted waste products into valuable transport fuel. A number of countries have already established production facilities for these advanced biofuels, although there are none as yet in the UK. However, with the UK’s world-class research capabilities we have the potential to become a global player in this sector.

That is why earlier this year the Government announced a £25 million competition for an advanced biofuel demonstration contest, which aims to deliver up to three demonstration-scale advanced biofuel plants in the UK. Later this year, we will also be announcing a call for evidence on advanced fuels. We will invite industry’s views on what more the Government should be doing to develop these essential technologies, which will be needed long into the future to allow us to reduce the carbon footprint of road travel and, increasingly, other transport sectors.

However, not all non-land-using biofuels rely on advanced technologies. For example, biomethane made from waste demonstrates some of the highest carbon savings of any biofuel, and the technology for its production is well understood. Indeed, I visited a BMW car plant in the United States, which was powered by biofuel from a nearby waste dump.

[Mr Goodwill]

I will not digress too far into the area of aircraft but we certainly need to ensure that the quality of aircraft fuels is consistent, and currently we do not put biofuel into aviation kerosene for safety reasons. However, more research could lead to some progress in that area.

Biomethane represents a particularly compelling opportunity for heavy goods vehicles, which have few other options for decarbonisation. Biomethane currently represents less than 1% of renewable transport fuel, so there is clear potential to expand its contribution to reducing emissions in the UK. However, biomethane cannot be used in transport without the vehicles that are able to use it, and there are currently fewer than 1,000 natural gas vehicles in the UK. The Government are supporting the early uptake of gas-fuelled vehicles through the low-carbon truck demonstration trial. This £11 million project to trial low-carbon trucks and supporting infrastructure will support almost 350 natural gas trucks.

I am aware of industry concerns about the adequacy of incentives for the use of biomethane in transport, particularly when compared with other Government support schemes for the use of biomethane in electricity and heat. These issues will be considered as part of our forthcoming call for evidence, and we will then be in a position to propose the changes that we think will be needed to the RTFO in order to strike the best balance of incentives. With luck, we will then be able to introduce those incentives alongside agreed European proposals to address ILUC.

I turn now to some of the points made in the debate. I again welcome the shadow Minister, the hon. Member for Birmingham, Northfield (Richard Burden), to his role. In many ways, we are on the same page. The renewable energy directive targets are still in place for 2020; under those targets, 10% of transport energy will be renewable. I am sure that he will be pleased to know that those targets have not changed as a result of our recent negotiations.

The hon. Member for Southport raised the issue of liquefied natural gas, which is the same as methane or biogas. As a transport fuel, natural gas has lower carbon emissions than diesel; it produces about 15% lower emissions. Natural gas also diversifies our fuel supply, increasing energy security, and it can improve local air quality. In addition, natural gas benefits from a lower duty rate than diesel. I should point out that matters regarding duty rates should be addressed to the Chancellor of the Exchequer.

Liquefied petroleum gas vehicles have some environmental benefits. On a lifecycle basis, LPG vehicles produce about 14% less carbon dioxide than petrol vehicles do. However, LPG is not as good as diesel. LPG cars deliver similar air quality emissions to petrol cars, and better air quality emissions than diesel, although the gap has narrowed with the introduction of Euro 5 and Euro 6 cars.

The hon. Member for East Lothian (Fiona O’Donnell) asked about the 5% food crop cap. I hope that I have reassured her that we are sticking with that, and we have certainly made it clear to the European Commission, the European Parliament and all other member states in the Council of the European Union that the UK supports the 5% cap.

[Fiona O’Donnell]

Can I press the Minister further and ask what discussions he has had with the German Government, who would be key to gaining support for the 5% cap?

[Mr Goodwill]

I met my German opposite number in Luxembourg last Thursday. Although the discussion did not veer into that area, I am sure that we will have a good working relationship with the Germans. Of course, the Germans are currently in the process of forming a new Government, so I look forward to hopefully meeting my new colleague, or perhaps his replacement if there are changes to the Government. The hon. Lady is absolutely right—Germany is key to almost everything in Europe, and we certainly have a very good working relationship with our colleagues from the German Federal Republic.

Regarding electric vehicles, the point was made that the market for them is very much a niche one. We are happy with the take-up of ultra-low emission vehicles. We are working across Government with the industry and we have introduced a range of ambitious measures to make the UK a premier global market for these vehicles.

My hon. Friend the Member for Warrington South (David Mowat) made a point about the energy mix in terms of electricity generation. It is the case that electric cars—ultra-low emission vehicles—already produce lower emissions than conventional vehicles, and as the grid decarbonises their environmental performance will improve further. I am keen to see more renewable energy being produced, not least off the coast of my constituency. Also, as a keen fan of nuclear power, I know that we can use the electricity that nuclear power produces at night-time to trickle charge electric vehicles.

I was asked whether the Government are committed to plug-in car grants. We have announced £500 million of support for the period from 2015 to 2021, and shortly we will launch a call for evidence to inform how we will achieve the best value for that investment.

The issue of hydrogen was raised. The Government launched the UK H₂ Mobility project in 2012, which was a joint undertaking with industry. The project will evaluate the potential for hydrogen as a fuel, developing an action plan for a roll-out to consumers from next year if the evaluation is successful.

I think that I have responded to most of the points that were made in the debate. If I have missed some points, I apologise and I will certainly write to respond to them, as time is pressing now.

To conclude, I thank everyone who has contributed to this debate for taking the time to consider this important issue. The use of biofuels and non-conventional fuels is, and will remain, complex and controversial. However, that must not stop us from finding the right balance between producing the fuels we need for a low-carbon future and protecting the livelihoods of the most vulnerable, both here and in the developing world.