Nicholas Dakin
Main Page: Nicholas Dakin (Labour - Scunthorpe)Department Debates - View all Nicholas Dakin's debates with the HM Treasury
British Bioethanol Industry
Nicholas Dakin Excerpts(5 years, 7 months ago)
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Nic Dakin (Scunthorpe) (Lab)
I beg to move,
That this House has considered the future of the British bioethanol industry.
It is a pleasure to serve under your chairmanship, Mr Gapes, and it is good to have the opportunity to discuss the future of the British bioethanol industry when other matters today are focusing people’s minds. I am pleased to see so many hon. Members of different parties here to contribute to the debate.
The bioethanol industry is, regrettably, in a state of collapse. Should this collapse be complete, the industry is unlikely ever to come back again. We are at a seminal point in its life in the UK. I hope that we can convince the Minister to take, on behalf of the Government, the urgent steps needed to secure the future of this important industry. Should we lose it, there will be significant implications not only for the agricultural and transport sectors, but for the wider economy and the UK’s decarbonisation and renewable targets.
I particularly thank the hon. Member for Hereford and South Herefordshire (Jesse Norman), who unfortunately cannot be here to respond on behalf of the Government. He has agreed to meet the British bioethanol industry and me next week. Hopefully this debate will assist in setting out and examining the current issues, including the compelling case why his Department urgently needs to make E10 fuel mandatory at UK petrol stations. Next week’s meeting can get straight to how we can make that happen as soon as possible in 2019 in order to reverse the recent collapse in confidence, production and job losses and secure the future of this important industry.
Sir Oliver Heald (North East Hertfordshire) (Con)
Will the hon. Gentleman be willing to let Members who are here today know the outcome of his meeting with Ministers? I remember attending a meeting on the subject of E10 fuel, which I think he organised. I thought that quite a compelling case was made, and it would be interesting to have some feedback.
Nic Dakin
The Minister has agreed to meet MPs of different parties who have an interest, particularly a local interest. I would certainly be very keen to update the right hon. and learned Gentleman on the outcome of that meeting. Should he be available and want to join us, I am sure that would be possible.
Sir Greg Knight (East Yorkshire) (Con)
I declare an interest as the owner of several older vehicles. Is the hon. Gentleman aware that the Government are right to be careful in introducing E10, which is not compatible with vehicles manufactured before 2000, so it is essential that E5 or less remains available?
Nic Dakin
Nobody is arguing that E5 should not be available. There was an excellent Radio 4 “File on 4” programme just before Christmas that featured Tony Wood, who runs a garage and owns 3 MGs. The reporter Simon Cox asked him about the impact of E10 fuel on older cars such as Wood’s MGBs:
“And if they brought in that E10 fuel, what effect—if any—do you think it could have on it?”
Mr Wood replied:
“Well, of course the jury is still out on that, because nobody really knows, but we’ve been running E5 for a number of years and there were stories when E5 came in of the sorts of effects it would have on your fuel hoses, but in real terms E5 has not proved to be much of a problem because most cars have already had their fuel lines changed at some point or another for more modern materials.”
Mr Cox then asked:
“So if the concern with bringing in E10 was the effect on old cars, it sounds like that doesn’t really stack up.”
Mr Wood replied:
“Well, in my opinion it’s probably less of an issue than it has been made out to be.”
Everybody would hope that that would be the case.
Sir Greg Knight
The hon. Gentleman is being very generous, and I hear what he is saying. Will he take it from me that there are cases of E10 dissolving sealants in fuel tanks and blocking fuel lines, which could be very dangerous in some cases?
Nic Dakin
I am drawing on the expertise in that “File on 4” programme. Obviously, any serious issues need to be looked at properly. Nobody wants the introduction of a new fuel to have disadvantages for people. It is very important that E5 remains available, as the right hon. Gentleman indicated.
The British bioethanol industry is perhaps not as widely known as it should be, but it is something of a British success story. Over £1 billion has been invested in the past decade, allowing British workers using British-grown produce to produce British bioethanol to help fuel British vehicles and feed British livestock, while reducing the UK’s carbon footprint and putting fewer pollutants into the atmosphere.
Until very recently, the UK had two of Europe’s biggest bioethanol plants: Ensus created a state-of-the-art facility on Teesside with an initial £250 investment in 2010, and Vivergo Fuels created a £400 million plant in Hull in 2013. Both distilled locally grown wheat to produce bioethanol, with protein-rich animal feed created as a by-product. The Ensus plant could produce 400 million litres of ethanol a year, and Vivergo Fuels 420 million litres. Each employed over 100 people directly as well as supporting a further 6,000 supply-chain jobs, including farmers and hauliers. The UK also has a further plant in Norfolk owned by British Sugar, which can produce 70 million litres a year.
As the Minister is well aware, Vivergo announced in September that it was closing its plant in Hull, and Ensus announced that it was pausing production at its plant on Teesside in November. It is not an overstatement to say the industry has collapsed in only a matter of months, and its future is dependent on the Government taking urgent action on the introduction of E10.
John Howell (Henley) (Con)
I want to know—the hon. Gentleman might be coming on to this—whether he has done a calculation of the effect on the savings on air pollution that these fuels will have. Maybe he could tell us what that is.
Phil Wilson (Sedgefield) (Lab)
I congratulate my hon. Friend on securing this debate, which is really important for Teesside and the south Durham area. I want to raise an issue about farming. The National Farmers Union has put out a report on the importance of bioethanol. My constituency covers 150 square miles and is an agricultural area of County Durham. Does my hon. Friend understand what the NFU has briefed on the implications of this for climate change? It could lead to 700,000 cars being taken off the road. We require an infrastructure that can secure that, especially in the agriculture industry, where we can grow the appropriate crops for this kind of industry to prosper. We are missing an opportunity should we not invest in it.
Nic Dakin
My hon. Friend makes the point very well and begins to answer the question from the hon. Member for Henley (John Howell) about the 700,000 cars that would be taken off the road if E10 were introduced, and on the impact on both air quality and carbon reduction. The bioethanol industry makes an important contribution to farming across the country.
In 2005, the Labour Government gave a very clear message to investors that they would support a substantial growth in demand for renewable fuels, announcing that 5% of petrol sold in the UK would come from renewable sources by 2010. The subsequent coalition and Conservative Governments retained these commitments. On the back of that, large scale investments of over £1 billion were made to ensure that the UK could produce high-quality and sustainable bioethanol to meet forecast demand. During the following decade the Government reduced target levels for renewable biofuels while addressing questions on the sustainability of biofuels. The installed capacity, which was put in place to meet the Government forecast of demand, was substantially higher than demand. Producers have suffered regular and sustained losses, which have led to recent plant closures. Higher demand has not materialised, because at present only E5 petrol with a 5% blend of bioethanol is available at British petrol stations, which is insufficient to support a viable British bioethanol industry as it currently exists.
There have been signals from the Department for Transport that suggested that E10 would be introduced imminently, giving the sector further false hope. The Department’s transport energy taskforce recommended lifting the blend level and reintroducing E10 in 2020. The industry interpreted that as meaning that the Government were fully behind it. Nearly four years on, the Government have still to act on that recommendation.
The Minister’s Department issued a consultation and call for evidence on E10 in June last year. The consultation closed in September, but the Department has yet to publish its response to the submissions. Unfortunately, the consultation did not propose to mandate the introduction of E10. Instead, it proposed the introduction of a protection grade requirement to ensure the continued availability of E5 petrol, representing 95% of all petrol sold today. If implemented, that may be a disincentive to move to E10.
David Simpson (Upper Bann) (DUP)
Will the hon. Gentleman clarify, if possible, how competitive the fuel is, compared with diesel, petrol and so on? Is the pricing competitive?
Nic Dakin
Yes, it is competitive. It is probably slightly more expensive, but it is a very small expense. Most of the increase in expense would be from taxation.
The call for evidence on ideas to encourage the introduction of E10 was included in the consultation, but again that signalled only further discussion and delays. It is therefore not surprising that the industry appears finally to be losing faith. The Vivergo closure and the Ensus announcement demonstrate that jobs and investment in the bioethanol industry and the agricultural sector are hanging in the balance. When the Government announced the consultation, they said:
“This government is ambitiously seeking to reduce the UK’s reliance on imported fossil fuels and cut carbon emissions from transport. But drivers of older vehicles should not be hit hard in the pocket as a result”
of the introduction of E10.
On the cost, which the hon. Member for Upper Bann (David Simpson) mentioned, almost all cars built since 2000, and 95% of all cars on the road, are warranted to run on E10, and every new petrol car sold since 2011 is fully warranted to use E10, so about 5% of cars on the roads may have an issue. That includes classic cars, about which the right hon. Member for East Yorkshire (Sir Greg Knight) raised concerns. Any motorists uncomfortable with using a new fuel can always use the premium brands, which need to remain available.
When the fuel is introduced, the industry would be happy to work with the Department to support a public information campaign about E10, including a website with the compatibility details of all car makes and models. That information would also need to be provided at petrol pumps.
The cost of E10 would depend largely on tax levels. It is predicted that it would cost no more than 1p more per litre at the pump, or about £20 per day. Most of that is made up from taxation, rather than the additional cost. The Government could consider a reduction in vehicle excise duty to compensate for any small increase in running costs resulting from using the more premium fuel, so there is a way through this dilemma. There are straightforward solutions to the possible fuel price issue, but the Minister’s Department might be reluctant to introduce E10 due to concerns from a very small minority of motorists whose vehicles are not fully warranted to use E10. I hope that the Minister will clarify that.
On greenhouse gases, there are broader environmental issues to consider, as has been said. Transport represents 24% of total greenhouse gas emissions—higher than any other sector in the UK economy. It is 1.3% higher than it was in 2013. Bioethanol should be seen as a vital tool in helping to decrease those emissions. The UK is currently failing to reach its statutory targets on the amount of renewables used in transport, in line with the renewable energy directive and the UK’s Climate Change Act 2008. Bioethanol is one of the quickest, easiest and most cost-effective ways of meeting those targets. As has been said, the introduction of E10 would take the equivalent of 700,000 cars off the roads.
Up to its closure, Vivergo Fuels was working on projects with the University of Hull and Bangor University to explore the development of even more advanced biofuels, which would have delivered even greater environmental benefits. Ensus has been working with one of the winners of the Government’s advanced biofuel competition grants, Nova Pangea, to produce ethanol from biomass waste products. Unfortunately, the failure of the UK’s investments in first-generation bioethanol puts at serious risk further investments.
The introduction of E10 would also improve air quality by reducing particulates and carcinogens. In the light of the Environment Secretary’s recent announcements, it would make sense for E10 to be embraced. Benzene and butadiene emissions, both of which are highly carcinogenic, decrease with higher levels of ethanol blending in fuel. Additionally, the oxygen contained within ethanol helps the fuel to burn better and increases the efficiency of the engine, reducing the hydrocarbons that are released. E10 is clearly better for the environment than the current grades of petrol sold in the UK. The concerns over diesel have resulted in motorists moving back to petrol, and the growth in petrol hybrids means that addressing the carbon dioxide emissions from petrol cars is even more urgent.
Although a range of technologies, including electric cars, may play a complementary role in decarbonising transportation and improving air quality, the reality is that electric vehicles represent only a small percentage of overall car sales in the UK—currently around 6% of annual sales—and most are hybrid, so in the short to medium term bioethanol and E10 would make a significant contribution. To have the same environmental impact as the introduction of E10, we would need to replace 2 million petrol cars with electric vehicles immediately.
On foreign imports, the closure of the UK’s domestic production of bioethanol will mean a greater reliance in future on imports of bioethanol and soya bean meal, as a substitute for the high-protein co-product DDGS—distiller’s dried grain with solubles—animal feed, which is a by-product of the bioethanol process. Before its closure, Vivergo was the country’s largest single production site for animal feed. It delivered 500,000 tonnes of high-protein feed to more than 800 farms across the UK—enough for about 20% of the UK’s dairy herd. Incidentally, the fermentation process used at the Vivergo plant also made it the UK’s largest brewery.
Soya bean imports are already at about 1.8 million tonnes a year. The majority comes from non-EU countries, and therefore it is likely that it is from genetically modified crops. There will also be a negative impact on the domestic feed wheat market, as a valuable floor for farmers across the UK, which also enables a premium price in the north-east, will be removed. If Vivergo and Ensus were in full operation with mandatory E10, we would have a comprehensive bioethanol industry underpinning UK environmental progress and agricultural sustainability.
Without a British bioethanol industry, the UK will likely become increasingly reliant on imported bioethanol and bioethanol equivalents, predominantly using cooking oil, which is itself shipped many thousands of miles to the UK from China and the US. By contrast, Vivergo sourced its wheat an average of 34 miles from its plant in Hull, which supported sustainability by minimising transportation. The fact that more and more countries are starting to use their own wastes locally calls into question the long-term strategy of being very reliant on imported waste materials from across the planet to meet our decarbonising challenge. A greater reliance on imports will not just represent a missed economic opportunity.
Having addressed some of the clear economic and environmental benefits of introducing E10, I would like to reflect on where the UK sits in comparison with the rest of the world. E10 is already widely available across continental Europe, including in France, Germany, Belgium and Finland, and further afield in the USA, Australia, New Zealand and Brazil. In a real sense, the UK is lagging behind the rest of the world when it comes to the use of bioethanol-blended fuel. In some countries, including the USA and Brazil, much higher versions are available, including blends of up to 85%—E85—so the steps we are asking the Department to take are in no way radical or untested.
At a time of increasingly uncertain international trading circumstances, and in the context of leaving the European Union, E10 increases domestic supply for feed and fuel while lessening Britain’s reliance on foreign markets for both. The introduction of E10 would bring certainty to British businesses, investors and arable and dairy farmers, while supporting economic growth and securing thousands of existing high-skill, high-STEM jobs, and the creation of many hundreds more. Further research could make Britain a world leader in even cleaner and greener bioethanol.
The sustainability concerns over E10 are now resolved, and the renewable transport fuel obligation has resumed its trajectory and has doubled this year. Bioethanol is the cheapest means of meeting the renewable transport fuel obligation, but its contribution is constrained due to the fact that the UK has not yet introduced E10. Although a transition from E5 to E10 is regarded as inevitable and environmentally desirable, it has not yet happened, and the industry has endured years of delay. The DFT’s consultation process late last year did nothing to accelerate it and reassure the industry.
UK-produced bioethanol has excellent environmental credentials and makes an important contribution to the agricultural and food sectors. Without E10 in the British bioethanol industry, the UK will become even more reliant on imports of fuel, proteins and liquefied CO2, recent shortages of which, particularly during the World cup, have exposed the UK’s precarious supply position.
British motorists should have the freedom to make greener choices at the petrol pump. Any remaining concerns at the Department can be resolved and addressed with relatively simple solutions—getting the most polluting cars off our roads can only be a good thing. Many other major developed countries around the world either have already implemented E10 or plan to, and its introduction in the UK has been widely anticipated since 2013.
I urge the Government to now support the sector and mandate the introduction of E10 as a matter of urgency. If not, there is a real risk that the environmental and economic benefits, along with the significant investment and associated jobs created by the UK’s bioethanol industry, will be lost.
Several hon. Members rose—
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.
Ms Ghani
Indeed; that is why the consultation took place. As the hon. Gentleman knows, he can take up those issues further with the Minister of State, which is why we need to ensure that when we respond, we take into account all the issues raised in this debate.
The taskforce report to Government noted not only the potential benefits of E10 in helping the UK to meet our renewable energy targets, but the barriers and risks associated with its introduction, not least in respect of ensuring consumer acceptance. It is clear that UK suppliers, including of bioethanol, have made great progress in ensuring that renewable fuel delivers reductions in greenhouse gas emissions.
Since the RTFO was introduced in 2008, savings in greenhouse gas emissions have increased significantly from 46% to 70% in 2014-15. Latest data suggest that current biofuels provide an average 71% reduction in greenhouse gas emissions even when land use change impacts are included, but it has always been essential to evolve the policy on biofuel. That way, we maintain the integrity of the schemes that promote its use, such as the RTFO.
Following the work of the taskforce and building on the success of the RTFO, in September 2017, the Government set out a 15-year strategy for renewable transport fuels. The strategy established an investment platform to develop sustainable advanced fuels for automotive, aviation and road freight. I am proud to say that, as part of our strategy for renewable fuels, in March 2018, regulations were agreed that make the UK the first to set targets for renewables in transport beyond 2020, all the way to 2032; and the first and only country to set development fuel targets to drive a market for advanced low carbon fuels. For the first time, we have made aviation fuels eligible for reward under the RTFO. Our 15-year strategy for renewable transport fuels is designed to maximise the industrial opportunities to be gained for the UK while maintaining public confidence in the value of renewable fuels.
The hon. Member for Scunthorpe has previously shown support for increased biofuel supply targets in the 2018 regulations. He has also been clear in calling for a mandated introduction of E10. As I said, I am not in a position here and now to update colleagues on when we will publish a response to last year’s consultation on whether and how to introduce E10, but E10 is our main focus in the biofuels policy area. We are working hard to publish the Government response as soon as possible.
Nic Dakin
I thank all hon. Members who contributed to the debate. As the hon. Member for Kilmarnock and Loudoun (Alan Brown) pointed out, 11 Members contributed in speeches and interventions. I have underlined the importance of the industry for high-quality jobs, green jobs, farming, air quality and carbon reduction targets. It is a very important issue, which has been properly underlined.
I welcome the fact that in her conclusion the Minister said that she and the Government want to work with the industry to deliver an E10 roll-out, if that is what comes out of the consultation. I hope she heard my hon. Friend the Member for Redcar (Anna Turley), who asked her to take a rocket from the debate, so we can get a date and know what is happening. I look forward to meeting the Minister of State next week, with colleagues across the House and representatives of the British bioethanol industry. We will further the argument and hopefully get good responses from him, on behalf of the Government, so we can go forward effectively and make sure that the British bioethanol industry is one not only for now, but for the future, and will contribute significantly to what is happening.
Question put and agreed to.
Resolved,
That this House has considered the future of the British bioethanol industry.