Renewable Transport Fuel Obligations (Amendment) Order 2011

Lord Bradshaw Excerpts

Monday 5th December 2011 Grand Committee

Nevertheless, we and the rest of the European Union stand quixotically alone, insanely trying and thankfully failing to lead the world in the practice of economic suicide. Eventually this policy will collapse around our heads—and the sooner the better.

[Lord Bradshaw]

I will concentrate my remarks on the used cooking oil industry, which gets a rather raw deal from the Government under these proposals. We have to remember that the business is sustainable, which even my noble friend Lord Reay would admit. Basically, it uses waste products from the cooking industry to make biodiesel. It is a new business—it only really began in about 2007—so is not an industry with any great roots. It is made up mostly of SMEs—small and medium-sized enterprises—and is not dominated by big corporations. There is a real threat that the growth of the industry will be not only stopped but reversed by the passage of this legislation.

Used cooking oil is actually very green compared with fossil fuels—and with many grown crops, particularly if we are not certain of their source. One of the biggest problems in judging whether a crop has been grown in a sustainable way is that the certificates of origin provided by many suppliers are highly suspect. I ask noble Lords to reflect on the last time they bought a piece of teak garden furniture with a label on it saying, “Sourced from sustainable forests”. I would say, “How do you know what went on in Indonesia?”—and I am sure that the suppliers do not, either.

We are talking about recycling a waste product, and the industry works on very tight margins. It is not an industry that has any room for manoeuvre. The Minister replied to a Written Question of mine about the price of a road transport fuel obligation certificate. I believe that the prices he quoted in his Answer were from a few big dealers, whereas most of the trading takes place between small industries, which we do not know anything about. However, the figures that he quoted, which indicated a doubling of the price of certificates, should be contrasted with the fact that on some occasions the certificates are worth nothing. Twice nothing is nothing, so doubling the price has not had a great effect.

This is a retrograde piece of legislation in respect of the treatment of the used cooking oil industry. I say to my noble friend that we are going to risk more unemployment and less expansion of the industry, which has the capability of expanding because there is still plenty of used cooking oil to collect and refine. I have one last question for him and I would be very interested to hear his answer. In view of the withdrawal of the tax differential and the uncertainty over the value of the tradable certificates, would he put his own money into this industry?

[Lord Grantchester]

I recognise the importance of this order for transport and meeting our climate change obligations. Its sustainability provisions are entirely to be welcomed. However, the lengthening of the timescale from 2011 to 2014 is a further example of the Government dissipating the momentum of the last Labour Government. This is impacting further on the confidence of the investor market, as has been identified across the renewable industry in its relationship with this Government.

I have one specific query. I understand that elements of the sustainability criteria are currently being consulted on. The consultation is set to end on 15 December, the date the order becomes operable. I understand that the UK Petroleum Industry Association has lobbied on the penalty of 30p a litre for non-compliance, stating that there is not sufficient time for its supply chains to meet the standards. The association asks that any fines should not apply before 1 April 2012, to allow supply chain purchases and contracts to catch up with the certification process for the biofuel products. The UKPIA states that it does not know whether biofuel products already contracted will meet the certification process and standards. This seems an understandable request. Can the Minister clarify his department’s position?

--- Later in debate ---

The noble Lord, Lord Bradshaw, asked why we have removed the duty incentive in respect of cooking oil. A duty incentive offers no mechanism for addressing concerns about the sustainability and sourcing of the biofuel supplier. Because it rewards both sustainable and unsustainable biofuels equally, it does not give sufficient long-term certainty for potential investors in biofuel production or an infrastructure that helps support a market for more sustainable biofuels. That is why the Government have committed to remove the duty differentials on biofuels.

[Lord Bradshaw]

I believed that the 20p incentive was paid to the people who refine used cooking oil. Now the noble Earl is saying it is available to a wider group of people. It has probably got through to him that the Committee is not overjoyed about this piece of legislation. Will he go back, check this and consider whether producers should be guaranteed to get at least 20 pence? If they get more, that can be offset, but they want a guaranteed floor price.

[Earl Attlee]

My Lords, I will write in detail to the noble Lord on the issue of used cooking oil and see if I can draft a letter that will meet his concerns. At the moment I am convinced that this is a sensible policy.