Biofuels Watch: October 2009

Friday, October 30, 2009

biofuelwatch-The Independent letters on palm oil

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The Independent Letters
Saturday, 31 October 2009

The perils of palm oil plantations

Your coverage of the issues surrounding palm oil production is most welcome (report and leading article, 28 October). But simply scoring companies on whether they are using "sustainable" palm oil, as WWF have done, is rather oversimplifying things and assumes the existence of truly sustainable palm oil.

Greenpeace has capably demonstrated that plantations and companies are being certified as sustainable while still converting forests to palm plantations, albeit in other regions or under different subsidiary names, and Friends of the Earth categorically stated that "the vast scale of palm oil production means that it cannot be sustainable".

Claiming that palm oil can simply be grown on existing "marginal" land ignores the reality that much of the land designated as marginal is actually vital to local people who use the land for growing food or collecting materials for crafts such as boat-building.

I have spent time with the Orang Rimba tribe in Indonesia and seen first-hand how their culture, way of life and very means of survival are threatened by encroaching palm plantations. War on Want has also documented how increased demand for palm oil from Colombia has led to mercenaries forcibly evicting people from their land to clear the way for the palm industry. Palm plantations provide very little in the way of jobs and are more likely to displace people and deprive them of their traditional livelihoods and food security.

Until we cut the global demand for palm oil and switch to a broad spectrum of edible oils, much of which can be grown on existing agricultural land, and ensure that companies are not simply buying the cheapest oils on the global commodities market, then these problems will persist.

Andrew Butler

Campaigns Manager, Lush Cosmetics, Poole, Dorset

You are right to highlight the environmental damage caused by the monoculture plantations which are invading virgin rainforest at an accelerating rate to grow the world's cheapest vegetable oil. But you fail to mention the human cost of this increasingly lucrative commodity.

Christian Aid supports several small farming communities in Colombia who have been driven off their land by violence or threats of violence. A few years later, that same land, which they had been using to grow food, is covered in African palm plants from which the valuable oil is extracted.

In July this year, riot police removed 123 families from land they were farming to make way for a new plantation run by a company which supplies several UK retailers.

Colombia has had a higher proportion of its population forced to flee their homes than anywhere in the world, apart from Sudan. Palm oil cultivation is only making this problem worse. Certification of sustainable plantations is not protecting people who rely on the land to feed themselves. It is time to question the whole direction of palm oil production.

Jonathan Glennie

Colombia Country Representative, Christian Aid, Bogota

It is the ultimate irony that the climate change negotiations at Copenhagen now contain a clause permitting virgin rainforest to be felled and replaced by commercial palm oil monocultures because these plantations can be classed as "forests". This is like saying that it is OK to destroy a priceless Leonardo Da Vinci painting as long as you replace it with a poster.

The tropical rainforests act not only as the lungs and heart of our planet's weather system but contain a host of irreplaceable genetic bio-diversity. If these ancient forests, and their indigenous peoples and diversity are destroyed, the Copenhagen talks will be no more than hot air and will give us no hope. Never was the saying that "The road to hell is paved with good intentions" more apt.

Alison Hunt

West Didsbury, Manchester

[Excerpt]

http://www.independent.co.uk/opinion/letters/letters-the-nimrod-crash-1812294.html

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biofuelwatch-George Monbiot replies to Andrew Mercer on Guardian online

Why growing virgin vegetable oil to burn is crazy

The chief executive of Blue-NG implies he's greener than the Greens – but the argument for his grotesque trade falls flat

Growing rapeseed oil for power stations harms people and the environment. Photograph: Christopher Furlong/Getty

What makes more sense, burning virgin vegetable oil in car engines, or burning it in power stations? The answer is neither. In both cases you are snatching food from people's mouths.

But Andrew Mercer, chief executive of Blue-NG, the company which owns the UK's first power station running on vegetable oil, appears to believe that he is doing the world a favour.

In arguing the case for his grotesque trade, Mercer begins by maligning the Green party. He contends that "The Green party toured the country this summer during the European elections campaign in a bus fuelled by UK-sourced rapeseed biodiesel". Because this is a less efficient use of virgin rapeseed oil than burning it in power stations, he is greener than the Greens (or so he says). That someone else has allegedly done something even more damaging is hardly a persuasive justification. But is it true?

I spoke to the Green party this morning, and discovered that Mercer had left out a crucial piece of information. The biodiesel used in its bus was made from waste cooking oil, not virgin oil. As I've been arguing since I first started attacking the practice of feeding cars rather than people, used cooking oil is currently the only sustainable feedstock for biofuel: once it is unfit for human consumption it can only be dumped or burned. It makes sense to burn it in place of fossil fuels. The Green party has now published a response in the comment thread and is requesting a correction.

Burning virgin vegetable oil is an entirely different matter. In doing so, you are directly commissioning farmers to do one of two things: divert cropland which would otherwise have been used to grow food, or break land which would otherwise have been left fallow. In either case you are harming people or the environment.
Mercer says: "There are millions of hectares of land lying idle across the EU". Another way of putting it is that there are millions of hectares currently supporting wildlife and storing carbon. If farmers bring them back into production to fuel power stations like his, there would be dire consequences for wildflowers, butterflies, songbirds and other wildlife. Were it a choice between preserving this wildlife and feeding the hungry, I could understand the need for a pay-off. But the only reason that it's commercially viable to burn virgin vegetable oil in power stations in this country is that the government is perversely offering a massive subsidy. It gives generators two renewable obligation certificates for every megawatt hour of electricity they produce, which is twice as much as you get for onshore wind. I refuse to accept that the EU's wildlife must be sacrificed for what looks like a grant-harvesting operation.

As two papers published last year in Science show (here and here), the carbon released by ploughing idle farmland to grow biofuels takes many years to repay. If we're to have a high chance of preventing climate breakdown, the major cuts must be made today, so this policy makes no sense at all.

When you consider the other greenhouse gases produced by growing crops it looks even dafter. The Nobel laureate Paul Crutzen has estimated that emissions of nitrous oxide – a greenhouse gas arising from the use of nitrogen fertilisers – wipe out all the carbon savings biofuels produce (pdf), even before you take the changes in land use into account. It's significant that Andrew Mercer talks only about CO2. Even then he doesn't say how he has produced his figures – I strongly suspect that he doesn't take land use change into account. Were he obliged to consider all greenhouse gases from all sources, I suspect he would discover that burning virgin vegetable oil is far more polluting than burning fossil fuel.

Mercer then contends that oilseed rape is roughly the same price as it was 10 years ago. This isn't true either, as you can see from the IMF figures reproduced here. In October 1999, oilseed rape cost $398/tonne. Last month the average price was $857. Prices this year have consistently been about twice those of prices ten years ago. The idea that oilseed rape is just a "break crop" is risible. It is a major international commodity, grown because it makes money.

The notion that you can draw any conclusions about commodity trends from a single year's production in one small country is equally daft. It's as stupid as saying, for example, that a cold snap in the United Kingdom shows that global warming isn't happening. And no one would be dumb enough to do that, would they?

The reality is that whenever there's a global shortfall in rape production, as there was last year, palm oil helps to fill the gap. Compare this graph of palm oil prices to this one of rape oil prices and you'll see that the price trends are almost identical.

So while Mercer boasts that he is not burning palm oil in his power station, whenever his trade helps to cause a shortfall in rapeseed stocks, the result is likely to be an increase in the sales of palm oil. Growing rapeseed to burn is crazy, growing oil palm to fill the gaps is madness on a different scale altogether, in view of the massive impacts on climate, indigenous people and wildlife when the forests of Indonesia and Malaysia are cleared to plant it.

Like Biofuelwatch and other green groups, I will keep putting pressure on the government to drop its perverse subsidies. I'm offering Andrew Mercer a £10 bet that if we succeed, Blue-NG will stop burning virgin vegetable oils. This is what happened in the Netherlands: as soon as the Dutch government stopped paying companies to make electricity from food, the business ground to a halt. Let's bring this obscene, subsidised trade to an end here too.

Monbiot.com

http://www.guardian.co.uk/environment/georgemonbiot/2009/oct/29/oil-climate-change

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Q+A-Palm oil planters, buyers and NGOs face off at roundtable

28 Oct 2009 00:00:19 GMT

Source: Reuters

By Niluksi Koswanage
KUALA LUMPUR, Oct 27 (Reuters) - The palm oil industry confronts critics and consumers in a meeting next week in Malaysia as it looks to beef up green standards that already include commitments to preserve rainforests and wildlife.

The Roundtable on Sustainable Palm Oil (RSPO), whose members include buyers and NGOs, wants to discuss standards on greenhouse gas savings that palm oil should achieve before the Copenhagen climate change talks in December.

But with European firms reluctant to take up pricier palm oil certified under RSPO and a longstanding tussle between environment groups and the palm oil industry over its green credentials, the meeting may fall apart, observers say.

Here are some questions and answers on the issues that will be raised during the RSPO meeting, the seventh since 2001:

WHAT'S THE ISSUE WITH CO2 EMISSIONS?
Palm oil producers have been at loggerheads with green groups over how the tropical oil's impact on the environment should be calculated as they try to counter criticism that the industry fuels climate change. [ID:nKLR516987]

Planters in top producers Indonesia and Malaysia say that oil palm estates can act as a carbon sink and that a major CO2 saving can come from capturing methane, a powerful greenhouse gas emitted during processing. [ID:nKLR465113]

Environmentalists say any expansion of plantations should be stopped as chopping down and burning rainforests produces the most emissions in the life cycle of oil palm estates.

Both groups agree that expanding into carbon-rich peatland forests found mostly in Indonesia are a no-go, a rare consensus that may help them to hammer out an agreement for an industry standard on palm oil's greenhouse gas savings.

HOW ABOUT MAKING GOVERNMENTS ACCOUNTABLE?
The Malaysian and Indonesian governments are not a part of the RSPO and their own development policies for the industry make it difficult for planters to become eco-friendly.

For instance, Indonesia ended a freeze on new permits for developing estates on peatlands early this year as it seeks to expand the industry, a key revenue earner. [ID:nJAK331843]

Planters who are RSPO members have pledged to stay away from peatlands and other natural forests but say they will lose valuable expansion opportunities to other companies who do not belong to the RSPO.

WHO WILL BUY PRICEY GREEN PALM OIL?
Price-conscious shoppers in Europe, a key palm oil consumer, have found it difficult to stomach higher-priced palm oil that has been certified under RSPO as the global economy takes its time to recover. [ID:nKLR402481]
Much of the extra cost comes in hiring auditors to ensure palm oil is produced without harming wildlife and oppressing local communities as well as building new storage tanks and processors to "green" the supply chain.
Producers say their efforts have been wasted as European supermarkets are just passing the costs to the consumers without sharing the burden and warn that they might turn their backs on the RSPO. [ID:nKLR32745]

Some European buyers have tried offering discounts although they say that food demand has been weaker across the board due to the economic crisis. [ID:nKLR402481]

But many European retailers and manufacturers have yet to take up green palm oil in a big way, a scorecard by WWF has shown. [ID:nKLR461328] (Editing by Michael Urquhart)

http://www.alertnet.org/thenews/newsdesk/KLR418102.htm

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Thursday, October 29, 2009

Biofuels debate in UK parliament

[David Taylor in the Chair] — Biofuels

Westminster Hall debates, 27 October 2009

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Tami.)

9:30 am

Anne Main (St Albans, Conservative)

It is a delight to serve under your chairmanship this morning, Mr. Taylor.

This is a niche debate and has been described by some people as chip fat and bonkers anomalies in regulations. I am hoping that we can move on somewhat from that, as the debate concerns a valuable fuel source that we should be considering as a contribution to reducing our carbon footprint and meeting some of our stringent obligations.

There is some dispute about the environmental impact of producing some biofuels, and Friends of the Earth raised some concerns in April, pointing out some worrying information that it had come up with during research on biofuels. Soy crops from the United States, Argentina and Brazil are used in the most common UK biodiesels and all contribute to the deforestation problem. The Friends of the Earth study assumed that 10 per cent. of the food crops displaced by biofuels would be pushed on to land created by clearing forests. The researchers allocated the additional land to various agricultural uses and calculated the resulting extra emissions using established models. For example, clearing 1 hectare of Amazonian rain forest can release up to 1,000 tonnes of carbon dioxide into the atmosphere, according to the United Nations Intergovernmental Panel on Climate Change.

In response to those concerns, a spokesman for the Department for Transport recognised that there was some controversy and, while acknowledging that the biofuels evidence is evolving, said:

"What is not in dispute is the need to develop new, cleaner fuels and break our dependence on oil if we are to tackle climate change.

Some biofuels have the potential to help us achieve this. So whilst there is no case for pushing forward indiscriminately on those that may do more harm than good, it would be foolish to ignore any potential they do have.

We have always been clear that biofuels can only make a useful contribution to mitigating climate change if they are sustainably produced."

That is the crux of today's debate. Are we foolishly ignoring a potential biofuel that is indeed extremely sustainable and sustainably produced?

Few would argue that the production of biodiesel through the recycling of used cooking oil of UK origin is not a sustainable way to produce energy. We have only to look at our high streets to see how many restaurants and fast food premises use large quantities of cooking oils and fats, which then become a waste product—quite a tricky waste product, which is costly to deal with and dispose of. Within the manufacturing industries, the use of fats and oils is also huge. Significant quantities of waste food oils result from processing. It cannot be stressed too often that those oils have already been produced and used for food, and have become a waste product. In the domestic environment they are often literally poured down the drain, much to the annoyance of plumbers and other people who have to come and unblock those drains.

Oliver Heald (North East Hertfordshire, Conservative)

Is my hon. Friend aware that in Royston, in my constituency, a flood was caused by a build-up of fats, oils and greases, as she describes? It caused misery to many people, and Anglian Water has now started a fats, oils and greases campaign in Royston, to encourage people to recycle their cooking oils exactly as she suggests.

Anne Main (St Albans, Conservative)

I thank my hon. Friend for that welcome intervention, because I was not going to major on the domestic aspect of cooking oil. If the technology were to take off, waste cooking oils and fats from households could easily be collected. After all, we are all being encouraged to recycle as many as possible of the putrescibles and other products of family living. My hon. Friend is right; pouring the oil down the drain can cause enormous problems, and if we can get the technology to take off and become sustainable, we can end those problems at the same time. That would be a win-win for all.

I am sure that few hon. Members would disagree that simply disposing of the waste oils—I am thinking mostly of the commercial side of things—is not the best use of a valuable recyclable resource. To discuss the issue, I recently met Richard O'Keefe, the director of Green2Go—a company established in 2007 to provide renewable and sustainable heat and power solutions. Green2Go is a key proponent of the method of using recycled cooking oils that I am discussing. It estimates that about 250 million litres of used cooking oil is available from commercial sources, leaving aside the domestic sources that my hon. Friend has referred to, which also produce significant amounts. Green2Go pointed out that the oil could be used to generate about 1 billion kWh of electricity a year. That is a significant amount of energy and would make significant carbon savings, and that potential is mostly wasted at the moment.

I was shocked, when the figures were explained to me, at the sheer volume of cooking oil that appears to be available to us as a resource. We may think of the chip pan fryer at home and say that we do not use it any more; many of us do not, because of oven chips and the like. However, there is no getting away from the fact that commercial production of crisps, biscuits and other products routinely found in supermarkets and in high street takeaways and fast food outlets results in masses of used cooking oil. Under current legislation, that oil is not fully utilised.

Martin Horwood (Cheltenham, Liberal Democrat)

The hon. Lady identifies an important point. Does she agree that a ludicrous aspect of the situation is the fact that not only do we import unsustainable biofuel, but companies such as Green Fuels in Gloucestershire that provide the technology to convert the enormous wealth of surplus cooking oil into a sustainable biofuel, find that their UK market has collapsed, and they are exporting the technology as well?

Anne Main (St Albans, Conservative)

I thank the hon. Gentleman for pointing that out. I was not going to go too much into the collapse of the biofuel industry, but the point is a valuable one. Germany formerly had full tax exemption on liquid biofuels, and now, because the Government wanted to go back to getting the tax on it and increased it, the technology is starting to collapse. Unless there is a sustainable market, and where something is becoming price-sensitive, things will happen exactly as the hon. Gentleman said. We shall export the technology and oils and will not have a market here. In Germany, since 2009 and the Government's decision to take the retrograde step of imposing high taxation on biofuels, more German biodiesel plants have faced closure. We must be sensitive to the impact on an industry that I am sure the hon. Gentleman would want to grow in his constituency. It would be a great thing for his constituency and the UK as a whole if we were not to export that resource and technology and if we were not to do anything to jeopardise that growing industry. Waste oil is not fully utilised because of current legislation.

Biodiesel manufactured from used cooking oil is a particularly sustainable renewable fuel. It can reduce life cycle carbon emissions by 90 per cent. As used cooking oil is a genuine waste product, which would have to be disposed of by professional collectors, at significant cost, it does not cause any additional deforestation, such as that which caused concern to Friends of the Earth. Neither does it lead to changes of land use in developing countries, away from the crops that they should be growing for their own use and towards fuel crops, which is another effect about which concern has been expressed. Consequently, the fuel is one of the lowest-carbon forms of biodiesel available to us. Converting used cooking oil that might otherwise have gone to landfill to biodiesel is an excellent example of the production of a truly sustainable biofuel. It contributes to reducing carbon emissions and minimising waste and landfill, which I hope we are trying to move away from.

John Leech (Manchester, Withington, Liberal Democrat)

Does the hon. Lady agree that what she proposes would be a good way to try to reduce the dumping of oils? I am sure that in her area, exactly as in mine, many unscrupulous people dump used oil in the drainage system, polluting the water system, rather than paying for its disposal.

Anne Main (St Albans, Conservative)

We are somewhat beset by fly-tipping in St. Albans, but thankfully, we do not have that problem. However, it is something that has been brought to my attention. Used oil is not only poured down the drains, but left in cans by the side of the road and dumped in inappropriate areas. That is a big problem. In these hard-pressed economic times, we are likely to see more fly-tipping and—I hate to say it—unscrupulous outlets that use cooking oil may be tempted to do what the hon. Gentleman mentions, instead of paying to have used oil taken away.

As I say, used cooking oil is a waste product; there is no resulting pressure on land use and no impact on food prices, and vital resources are not diverted from a valuable existing use. The Renewable Fuel Agency calculates that the default carbon saving from using it is about 85 per cent. That is much higher than the saving of 46 per cent. realised from using palm oil or American soy, which are often used as biodiesel in the UK. Ensuring that used cooking oil is collected and used as a biofuel will, as hon. Members have pointed out, do away with the considerable cost to utility companies of clearing drains and sewers that have been blocked with improperly disposed of oil.

Biodiesel production in the UK in 2007 stood at 484 million litres against that year's diesel market of 24 billion litres. Approximately 40 million litres of biodiesel are currently produced from UK cooking oil every year. Methanol is commonly used to produce biodiesel from used cooking oil. However, in March 2009, Ofgem reversed an earlier decision, ruling that using methanol made from natural gas in the production of biodiesel would prevent that fuel from being included in the renewables obligation scheme. That is the rub, and the reason for today's debate. As Martin Horwood pointed out, anything done to jeopardise the making of biodiesel from sustainable fuels, such as cooking oil, will have the same effect as in Germany and biodiesel production will collapse.

Ofgem's 2009 ruling, made following consultation and discussions with the Department of Energy and Climate Change, results from the presence of a small proportion of fossil fuel in some biodiesels derived from methanol. The ruling is based on a literal interpretation of the law, which classes the entirety of biodiesel produced in that way as a fossil fuel, even though the proportion of fossil fuel within the blend is small. Under our interpretation of article 9 of the renewables obligation, it is entirely a fossil fuel, despite the fact that the fossil fuel element is potentially only 11 per cent. by mass: nearly 90 per cent. is a truly sustainable and reclaimed resource.

The UK biofuels industry believes that Ofgem's ruling on biodiesel is likely to have a significant effect on the UK industry and that it will have ramifications for the future domestic supply of renewable energy. That is the crux of today's debate. Are we truly committed to moving away from fossil fuels? If so, why are we standing by? We can see the fuel's potential, but if nothing happens, the industry will collapse.

UK energy production has been set ambitious long-term targets for renewable sources, yet many feel that the renewables obligation, or at least Ofgem's interpretation of it, offers no incentive for using that form of renewable fuel in the generation of electricity and heat. Without incentives, I doubt whether any of us would do anything in life. We cannot expect people to make the investment necessary for making renewable fuels if there is no incentive for people to use them.

The renewables obligation came into effect in April 2002 to support renewable electricity projects. Under the obligation, suppliers are required to meet their obligations by presenting sufficient renewable obligation certificates—ROCs. They are green certificates issued to accredited generators for the eligible renewable electricity that they generate. The 2008 consultation by Ofgem that led to its 2009 decision focused on the detail that the methanol used in the process was normally derived from natural gas—itself a fossil fuel. Ofgem therefore said that it was difficult to view biodiesel made in that way as a renewable fuel. That is where we are now.

Given that Ofgem cannot treat the biofuel as being renewable, as set out under the Electricity Act 1989 and in specific parts of the 2007 renewables obligation order, the fuel is not eligible for a ROC. Instead, Ofgem argued that biodiesel produced from that reagent would, in turn, fall within the term "fossil fuel" under article 9 of the renewables obligation. It concluded that biodiesel produced in that way should be classed as fossil fuel generation under articles 9 and 18. That is a technical and literal interpretation, but the man in the street would say that it was nonsense. The public would not want such a waste product—something that we pour down the drains, and cannot wait to dump, get rid of or export—suddenly to be turned into what many would regard as something that could have been dug out of the ground or that had cost a lot of money to find.

Ofgem's ruling stated that, if fossil-fuel derived alcohols are used, no renewable obligation certificates will be issued, even for the biomass-derived portion of the biodiesel. That is illogical. We should allow 90 per cent. of the ROC, because 10 per cent. had not been made from reclaimed fuel. To have nothing at all makes a nonsense of the situation. Electricity generators therefore cannot receive renewable obligation certificates on electricity produced from recycled cooking oil, despite the fact that the fossil-fuel element of the fuel produced in that way is comparatively small and that the majority of the fuel is from a recycled waste stream.

There was widespread industry reaction to the Ofgem ruling, based on the fact that exclusion from the scheme would not encourage the generation of renewable energy, and Ofgem concluded that its ruling ran counter to the desires of the majority of respondents to the 2008 consultation. Again, the public will wonder why on earth there should be consultation when what is done runs counter to it; they will ask what was the point of consulting. Ofgem has further admitted that the issues raised by many of the respondents were policy decisions of the Department of Energy and Climate Change and outside Ofgem's remit in its role as administrators of the scheme. I think of the greenhouse gas and societal benefits that biodiesel can claim over fossil fuel.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

I am not a chemist; nevertheless, I know that the methanol on which Ofgem has ruled is not 100 per cent. renewable, as it comes from natural gas, which is at source a fossil fuel. Is there not a renewable source of methanol that the industry could use in place of that produced from natural gas?

Anne Main (St Albans, Conservative)

I am not a chemist either. However, it has been pointed out to me—this point comes in my brief in about three lines; the Minister anticipates my speech—that there are such bioethanols, but that it costs five times more to use them. There are alternatives, but that takes us back to the German example. If we start making such fuels totally cost-inefficient, it will not happen. The alternatives are costly, which will add pressure to the industry.

Renewable companies have made extensive efforts to address the requirements of the Ofgem ruling with attempts to source recycled methanol—itself a waste product. The use of recycled methanol is encouraged elsewhere in Europe and certified by the European Union as a sustainable second-generation fuel. However, the Ofgem ruling excludes the biodiesel from the renewables obligation scheme despite contributing to renewables generation and waste re-use. The recycled methanol is not acceptable either.

I raised the matter only 10 days ago at a meeting of the Select Committee on Energy and Climate Change, which was discussing low-carbon technologies in a green economy with Greg Archer of the Low Carbon Vehicle Partnership. Mr. Archer did not hold back, describing the situation as a "bonkers anomaly". He is not the only expert who has misgivings about the situation. The Renewable Energy Association—the industry body for renewables in the UK—agreed that the anomaly could be counter-productive. It stated in its response to the Ofgem consultation that, even if those substances could be interpreted as fossil fuels under the legislation, it

"does not make them fossil fuels. It simply demonstrates that the legislation is poorly drafted."

The association went on to criticise the drafting of the legislation on the matter, pointing out that

"The ceasing of issue of Renewables Obligation Certificates for a fuel that was formerly regarded as renewable (and for which Renewables Obligation Certificates have been issued in the past) undermines investor confidence in the Renewables Obligation... Any continued adherence to poor drafting, when it has been demonstrated to be poor drafting, undermines investor confidence in the Renewables Obligation".

There we have it—poor drafting and the bonkers anomaly have undermined investor confidence. Energy producer E.ON backed that view and stated in its response to the consultation that it is

"considered an anomaly that these fuels should be classified as fossil fuels when they are almost entirely of biomass origin. However, it is accepted that the existing legislation can be interpreted in this way. Excluding these biomass fuels from the Renewables Obligation would reduce their utilisation within industry, and could potentially hinder the advancement of novel technologies... The ultimate aim of the Renewables Obligation is to incentivise C02 emissions reduction, but the exclusion of these fuels could in fact lead to C02 emissions increases, as less fossil fuel would be displaced by biodiesel and/or glycerol.."

EDF Energy's response to the consultation also supported that view. It stated:

"We would support amending the legislation to allow biodiesel to be treated as 100 per cent. biomass within the Renewables Obligation legislation."

The Renewable Energy Association also raises questions about the ability of the ruling to interact with the draft renewable energy directive from the European Commission. It stated:

"It is questionable whether it will be permissible for the RO to exclude biodiesel...after April 2010."

In July, in a response on this very issue to Norman Baker, the Under-Secretary of State for Energy and Climate Change was somewhat evasive when he stated—

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

Is that me you are talking about?

Anne Main (St Albans, Conservative)

In the nicest way.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

On a point of order, Mr. Taylor. Is it parliamentary language to describe me as evasive?

David Taylor (North West Leicestershire, Labour)

If the hon. Lady wishes to withdraw or amend that remark, it might be helpful to the Chamber.

Anne Main (St Albans, Conservative)

If it helps the Minister, I will amend my remark and say that he was somewhat unclear when he stated:

"In practice the ruling by Ofgem is not expected to alter the production of biofuels from used cooking oils to a great extent."

Therefore, he did not expect it to happen, but the industry is telling us that it did. However, it was at least acknowledged by the Minister, who was being somewhat unclear, that the Government

"are currently considering whether the implementation of the Renewable Energy Directive into national law has implications for the treatment of biodiesel under the Renewables Obligation."—[Hansard, 21 July 2009; Vol. 496, c. 1625W.]

So it is obvious that the Government are fully aware of the anomaly surrounding biofuels from cooking oils, yet they do not appear to have any great impetus behind wishing to alter that unsatisfactory anomaly, and that is restricting the UK's ability to maximise the use of a genuinely sustainable resource: used cooking oils. That indecision on behalf of the Government to alter the Ofgem ruling is not without cost to the renewable energy industry. I am told that the Ofgem ruling is already having a significant effect on the UK's renewable energy industry that, alongside other challenges, could cause many small innovative producers to go out of business.

Although producers have moved ahead with the use of biomethanol and bioethanol, which are allowed under the Ofgem ruling, it is a much more costly alternative, which adds further pressure to the already struggling industry and has led to a significant number of microgeneration schemes being halted. I cannot believe that the Minister did not expect it to have a poor effect on the industry. If he can hear from the industry itself that a significant number of microgeneration schemes are being halted, are struggling or are worried about their future, I hope that today he may give us the impetus that is lacking. The negative effect of the ruling is, I am told, putting the UK at a competitive disadvantage, which is surely something that none of us want in these difficult economic times. By comparison, other countries, such as Germany and the United States, are committed to supporting their domestic renewables industries.

I understand from talking to the industries that are interested in using such biofuel that British used cooking oil is being exported at considerable cost and use of resources. I seem to be going right back to the beginning of my speech. We are importing soy and palm oil and other oils into our country to turn into biofuel, and we are exporting what is our own resource in this country. Many companies on the continent or elsewhere are not affected by the ruling. Germany's decision was of its own making. I understand that approximately half the biodiesel used on UK roads is being produced outside the UK and mainly in the US.

It seems to me that Ofgem has been criticised for the current situation. However, it has only been interpreting the legislation as it stands. As we have learned, used cooking oil can produce significant carbon savings and is an excellent way to use a waste product and to create energy. However, it seems that it is uneconomic for many producers to do so at present, because of the bonkers anomaly that has been pointed out. I therefore wonder whether the Minister would consider re-examining speedily—in fact now—the legislation that covers the treatment of biodiesel produced from used cooking oil. We need to iron out the anomaly. Pushing it into the long grass is, in effect, condemning this emerging industry to failure.

I should welcome a statement on the implementation of the renewable energy directive into national law. I also feel that there is an argument for a much clearer distinction between sustainable and non-sustainable biofuels in Government policy and for the Government to incentivise the production of the latter group more effectively, such as through the new proposed feed-in tariffs for electricity generation.

I want to conclude this debate by restating the views of the Department for Transport. In April 2009, it said that

"there is no case for pushing forward indiscriminately on those that [biofuels] may do more harm than good, it would be foolish to ignore any potential that they do have."

I do not believe that the Minister today wishes to be, in the words of the Department for Transport, foolish, or indeed, in the words of the industry, bonkers. I believe that he wishes to be incisive and decisive and to cut through this vague anomaly. I should like to hear from him that UK biofuels from recycled cooking oils have a rosy future and that we can look forward to a greener future, because action has been taken to do away with something that was never intended in the drafting of the legislation.

9:57 am

Oliver Heald (North East Hertfordshire, Conservative)

I want to make one brief point in support of my hon. Friend Anne Main, whom I congratulate on obtaining this important debate. It relates to what happens if we do not recycle cooking fats, oils and greases. In my constituency in Royston, we have a thriving night-time economy. There are 30 places in which one can go out to eat a meal. In fact, there is one for every day of a typical month. Many of the restaurants, particularly the newer take-aways, use fats not just for chips but for any manner of stir frys and other meals. The proprietors of such establishments do not want to cause any environmental problem and would like to be responsible, but the issue is not something that has been adequately highlighted.

In Royston, the main town drain became very blocked with fats, oils and greases. About two years ago, we had a flood that damaged a number of homes. A number of people had to leave their houses while they were repaired. When the blockage was investigated, it was found that there had been a build-up of fats, oils and greases and 10 tonnes were removed from the pipes at the end of the town drain. That is an issue that has now been highlighted.

Anglian Water put a great deal of effort into looking into what happened and seeing what the way forward was. It has promised to monitor that particular area of piping annually, which is welcome. Moreover, it has started a major campaign on fats, oils and greases to persuade and explain to people who own restaurants and take-aways that they can dispose of the fats and greases responsibly. Companies have come to Royston and offered to take away the fats, oils and greases and to recycle them.

Gregory Barker (Shadow Minister (Environment), Energy and Climate Change; Bexhill & Battle, Conservative)

My hon. Friend highlights the important issue of the illegal or careless disposal of cooking fats and greases—what one might call fly-dripping. Ultimately, those costs will not be picked up by Anglian Water, or another water company, but will be socialised and paid by all people who have a water utility bill. Has Anglian Water estimated the cost of such clean-up activities in my hon. Friend's constituency?

Oliver Heald (North East Hertfordshire, Conservative)

My hon. Friend makes a useful point, which I will investigate. I do not know what the figure is, but I know that this problem has happened elsewhere. I believe that in Southend, a fats, oil and greases campaign was needed to tackle the problem of the night-time economy. In general, the citizens of Royston, including me, are relatively responsible in how we dispose of our fats, but there is a case for wider public information.

About a year ago, I was at the launch of a campaign that demonstrated ways in which the domestic user could use their fats to create food for birds, for example, or at least dispose of them in a way that would not block the drains. This is an issue of solidarity between people in a town. If the result of a build-up of fats, oils and grease is that people's homes are flooded, everybody has a duty to act responsibly. If we can help the environment at the same time by recycling those products, that is better still. I just wanted to make a short contribution in support of my hon. Friend the Member for St. Albans, and to say that it is important to look at ways of avoiding such build-ups and floods.

10:01 am

Mark Hunter (Cheadle, Liberal Democrat)

Let me say what a pleasure it is to have the opportunity of contributing to the debate under your chairmanship, Mr. Taylor. I also want to compliment Anne Main on securing this important debate.

This is not the first time that the House has addressed these issues, and I dare say it will not be the last. In June last year, I contributed to a debate in Westminster Hall following the production of a report by the Environmental Audit Committee on biofuels. I think I was the only person present on that day who is present in the Chamber today, and I will repeat one brief comment that I made, because it gives a clear indication of the Liberal Democrat position on this matter.

At the time, the Environmental Audit Committee called for a moratorium on biofuel development. Our stated position was not to support that call, because we believed that there was an important role for good, sustainable biofuels to play in the UK transport fuel market. Abandoning targets completely, which was being proposed at the time, would have been a step backwards for the UK's sustainable energy industry and its ability to control its carbon footprint.

That was in June 2008, but things have moved on. That debate was quickly followed by the Gallagher review, which has already been referred to. My hon. Friend Norman Baker said in July 2008, after the publication of that review that

"the broad conclusion that we should not abandon but amend the policy on biofuels is correct. Clearly, some biofuels are being produced unsustainably, but we should not throw out the biofuel baby with the bathwater, as some apparently would wish."—[Hansard, 7 July 2008; Vol. 478, c. 1173.]

I would like to make three comments. The first is on the distinction between first and second-generation biofuels, which is hugely important. The second point concerns the 20p tax differential, which is key to the debate, and my third point is on the desirability of consistency in Government policy.

I will start with the distinction between first and second-generation biofuels—a distinction that is sometimes lost in the wider debate. Those of us interested in biofuels, who have attended the debates and done the research, understand that there is a hugely important difference. As we have heard, some first-generation biofuels, such as biodiesels, are produced from animal fats. There is also rapeseed oil, palm oil and bioethanol, which is produced by fermenting any kind of food stock, including cereals such as wheat, barely, sugar cane and maize. Those are the most controversial types of biofuel, and the Liberal Democrats have said that much more research is needed on them.

There are concerns about many of the first-generation biofuels. They contribute to higher food prices due to competition with food crops. They are an expensive option for energy security, if one takes into account total production costs when Government grants and subsidies are excluded. They do not meet the claimed environmental benefits, because the biomass feed stock might not always be produced sustainably. In many cases, they accelerate deforestation, and there are other possible indirect effects on land use to be accounted for. They have a potentially negative impact on biodiversity, and they compete for scarce water resources in some regions of the world.

Therefore, there are many serious questions to ask about first-generation biofuels. That is why it is important to distinguish them from second-generation biofuels—about which we now hear much more—which are those biofuels produced from crop and forest residues and non-food energy crops. Second-generation biofuels include those from recycled substances, such as those that feature in this debate. In my opinion and, I guess, in that of most hon. Members, they are far less controversial. We are supportive of second-generation biofuels, not least because they do not compete with other crops.

Anne Main (St Albans, Conservative)

The hon. Gentleman makes a valid point about the distinction between the two types of biofuel. Does he believe that the public have enough information? Have they been buying into the headlines that we have seen screeching about some of the non-sustainable biofuels? Could the public be more educated about the differences between the two? It is an important difference that I am not sure is always highlighted as well as he would like.

Mark Hunter (Cheadle, Liberal Democrat)

The hon. Lady makes a fair point. When I introduced the distinction between first and second-generation biofuels, I said that I do not think that it is widely understood by the great public out there, who have many other concerns to occupy them. It is an important distinction, and I think that more could be done. I look not only to the Government, but to industry and to all of us. We share responsibility for trying to educate the public about the distinction between first-generation biofuels, where the case is not satisfactorily made, and second-generation biofuels, which most of us in the House would agree have a future. Her point was well made.

My second point relates to the 20p tax differential. As we know, the Government have decided to abolish the current 20p per litre duty differential for biodiesel in 2010. That will make biodiesel significantly more expensive than road fossil fuels, and therefore it will become commercially unviable in many instances. In short, it will hinder the development of the biofuel market as a whole, when we should be doing more to encourage it.

Since coming into effect in 2002, the 20p mechanism has enabled the commercial supply of some biofuels to the UK market. That has given many consumers the opportunity to run their vehicles on biofuels or biofuel blends. In combination with other measures, which include regional capital grants, that has led to the construction—and planned construction—of some biodiesel plants. There are indications that the product might be exported abroad. Sales of biodiesel rose dramatically following the introduction of that incentive, but since early 2003, they have been relatively static, fluctuating between 1 million and 3 million litres a month.

The key point is that it depends on the biofuel. We oppose the abolition of the 20p differential where genuinely sustainable—that is, second-generation—biofuels are concerned. In our view, it will not help the biofuel industry to grow and might hinder its development, which will not help in the long term.

My third and final point relates to consistency in Government policy and the stopping and starting that has gone on over many years. It is fair to say that the Government's biofuels policies have chopped and changed constantly in the past couple of years. The 20p differential is one instance, and the Gallagher review is a second. I emphasise that point. My hon. Friend Martin Horwood, who is not, sadly, in his seat any longer, mentioned a drop in UK sales for companies involved in the manufacture of equipment for biodiesel plants. The statistics ought to scare all of us. GreenFuels Ltd, the world's largest small-scale biodiesel equipment manufacturer, has seen a drop in UK sales of more than £1 million in the past 12 months and is now focusing primarily on exports. That is a sad statement, but it is true.

The Government cannot keep stopping and starting. It is not fair to the industry. We need more consistency. It is time for the Government to decide their line and to stick to it.

10:11 am

Gregory Barker (Shadow Minister (Environment), Energy and Climate Change; Bexhill & Battle, Conservative)

It is a pleasure to serve under your chairmanship, Mr. Taylor. This has been a short but excellent debate. I praise my hon. Friend Anne Main not only for securing this debate but for clearly articulating the issues in a way that will be readily understood by people outside Westminster and the narrow biofuels debate as involving obvious and common-sense points. That is greatly to her credit, and is perhaps overdue in the debate on this issue generally. I congratulate her.

We have heard two other likewise worthwhile and sensible contributions. My hon. Friend Mr. Heald highlighted the damage that wasteful or thoughtless disposal of cooking fats and greases can do. It is often inadvertent, not deliberate, but fats build up over time and can end up not just doing damage to our sewerage infrastructure, which is crumbling in many places and could well do without the added stress, but welling up and giving rise to floods that inflict misery and financial damage on families. I know that my hon. Friend has done a lot of work in his constituency to ensure that such families get the help that they need. I am also sympathetic to the sensible points made by Mark Hunter, who highlighted a number of issues that must be addressed.

I hope not to go over the same ground too much but to examine some of the issues behind this debate. [Interruption.] The reason why I am struggling is that I am trying an environmental innovation by printing my speech on both sides of the paper. If I keep getting confused and muddled as I go through, Mr. Taylor, I hope that you will understand that this rather fumbling performance is due to a commitment to the environment rather than just my ineptitude.

We hear increasingly frequently from politicians and the media about the opportunities of climate change, the benefits from a shift to a low-carbon economy that will come to investors, innovators and entrepreneurs alike and the dangers of climate change if we do not act decisively. It is easy to imagine that the starting gun has only just been fired in the scramble to beat climate change and develop new low-carbon business sectors, but that would overlook the small but world-class UK cooking oil recycling business, which has been going for quite a long time. As my hon. Friend the Member for St. Albans said, it produces approximately 40 million litres of biodiesel from spent cooking oil each year. Entrepreneurs up and down the country have seen the opportunities that lie in exploiting clean, safe energy from waste technology.

I believe that in the 21st century, resource efficiency—by which I mean the careful and efficient economic use of all resources, including waste resources—will be a key benchmark of a globally competitive and successful economy. Many of the wasteful business practices of the last century simply will not be sustainable economically, let alone environmentally, in this century. I hope to have the chance to put a couple of innovators into the context of the broader challenges and look ahead to their future.

Ultimately, both ethanol recycled from industrial processes and biodiesel recycled from cooking oils perform the same essential functions: to extract the energy value of what would otherwise be waste products, reduce fossil fuel-derived emissions and make a profit. It must be worth while. Whether it involves reclaimed energy from household waste through anaerobic digestion, which the national grid estimates could supply up to 50 per cent. of our space heating needs, or wood pellet-fired heating and electric generation—a by-product of the timber industry that is undergoing huge growth—energy from waste will have a large part to play in decarbonising our economy.

Recycling cooking oil and ethanol has little potential for the controversy that many energy-from-waste technologies seem to attract. It is just a no-brainer. I am told that buses powered by cooking oil may emit a faint but pleasant aroma—perhaps of Mum getting the tea on—rather than the heavy and poisonous diesel fumes that they replace. UK companies are now marketing products to allow large institutions such as schools to recycle their waste oil on site to power things such as minibuses and lawnmowers. If we could end up with fully or partially closed-loop energy economies, what a step forward it would be.

Such technologies also weigh favourably in the biofuels debate. The Conservatives have supported the renewable transport fuel obligation and would consider a more progressive extension of its obligations given satisfactory sustainability criteria, which has been a concern. We understand that investment in the development of the all-important second generation of biofuels needs optimism and boldness in our approach to the first. We all know that the first generation has not been without its problems, but that is not the endgame.

The Government's launch of the sceptical Gallagher review only months after the start of the RTFO did much damage to the growing sector and caused untold damage to a field of research and development in which the UK has a genuine global lead. However, land use and agriculture are increasingly at the forefront of international climate change debate. They form the focus for much of the disagreement around the Waxman-Markey Bill in the US Congress, and at the Copenhagen summit next month rainforests will be an issue which is one of the most important and hardest to pin down. It is clear that we do not fully understand the carbon dynamics of large shifts in global agricultural production and land use. As a result, biofuels will continue to be a highly controversial and challenging policy area globally.

However, recycling our ethanol and cooking oil sidesteps all those bigger and wider concerns. It is simply not part of the same debate. Perhaps the only sustainability question it poses involves how much fried food we consume as a nation, but that is a question for another day. Biofuels will become a key technology in aviation and industrial petrochemicals only through the widespread adoption and requisite understanding of less high-tech biofuel technologies such as recycled cooking oil. When will the Minister respond to the Industrial Biotechnology Innovation and Growth Team report that was launched earlier this year by the First Secretary of State? Biofuels and the nascent use of bio-feedstocks in the chemical industries must play a vital role in a decarbonised UK economy. We must not lose sight of the importance of that.

The development of transport biofuels must not be used as a vanity shield for a lack of clear direction and leadership on electric vehicles. Only the Conservative-controlled Westminster council has delivered a serious number of electric vehicle charging points. The Mayor of London is driving that agenda at a citywide level. Meanwhile, the much-needed plan to implement a nationwide network of charging points has disappeared from the Government's list of priorities.

Despite the successes in the recycled biofuel sector, progress is being stymied by red tape and onerous regulation. The certification of waste storage and the handling of waste substances can be hugely bureaucratic. Rather than encouraging the uptake of the systems, that can put off enthusiastic newcomers. What steps is the Minister taking to streamline those processes? How is he encouraging public institutions such as schools and prisons to adopt such systems? How many councils offer or support local cooking oil recycling schemes? How is he helping them to put pressure on local transport providers, such as bus contractors, to use such products where possible? There is no point in trying to expand the market further when regulatory and fiscal constraints are pushing the market in the other direction.

Anne Main (St Albans, Conservative)

Does my hon. Friend agree that the public will fail to understand why the matter is being dealt with in the way it is? They are being asked to alter their lifestyles and to pay ever-higher taxes on things that are not sustainable and that pollute. They will therefore wonder why we are dealing with the sustainable fuel that we have in this way. It seems mad. As he said, this issue is a no-brainer.

Gregory Barker (Shadow Minister (Environment), Energy and Climate Change; Bexhill & Battle, Conservative)

My hon. Friend has put her finger on it. It does not make sense to ask for schemes to encourage the uptake of low-carbon fuel while refusing to make sensible minor changes to its fiscal treatment so that it makes commercial sense to produce it. Her suggestion of a 90 per cent. renewables obligation certificate would be a sensible way to reflect the fossil fuel element in such fuel.

The role of Ofgem in this matter must be questioned. I am meeting Alistair Buchanan this afternoon and will put it to him that Ofgem's position runs contrary to common sense. Although it can be argued that recycled cooking oils are not a purely renewable source of fuel, they are undoubtedly a low-carbon alternative to fossil fuels. We must embrace that. It is not a purist ideology but a route map to a low-carbon economy. There will be not a totally carbon-free economy but we could have a low-carbon economy.

Either the Government are hiding behind Ofgem and failing to provide the clear policy leadership that we have a right to expect on this important topic, or they are taking the jobsworth, pedantic, apathetic approach that is typical of all Governments who have run their full term. The failure to grip something that is commonsensical is symptomatic of that third-term malaise. I assure my hon. Friend the Member for St. Albans that we will grasp this issue. It is a no-brainer, it is not a big deal and it ought to be a key part of the low-carbon economy. It will be addressed in our energy Green Paper. I hope that the Minister will respond positively and that we will not have to wait for a change of Government to get the common-sense change thatj we need.

10:25 am

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

I have 35 minutes, which hon. Members may use to examine this issue in detail. However, I do not plan to waffle just to fill up that time. Hon. Members are welcome to intervene if they want to explore particular points.

I congratulate Anne Main on securing this important debate at an important time in the development of policy on this issue. She showed a tremendous command of her subject. I was planning to say that she put her case sensibly and reasonably, but I revised my view when she carried out an unjust personal attack on me. I have lost any sympathy for her and the case that she made. However, let us continue to examine the issues, devoid of personality.

The hon. Lady focused on what she called the "bonkers anomaly". I accept that there is a debate to be had about part of the policy in this area. However, she did not mention any of the good things that have been done. The industry has reached the position it is in because of the support that has been mentioned, but no credit has been given to the Government for giving that support. The Government's future direction in this area is consistent, makes sense and hangs together. I would have liked some credit for the way in which this country virtually leads the world in reporting requirements for sustainability in this sector. We have one of the best systems and are trying to encourage the rest of the world to adopt similar standards.

We established the Gallagher review when concerns were expressed about sustainability. That is a valuable resource. I am not sure whether Mark Hunter was criticising the Government for setting up the review or for responding positively to its conclusions, but I think that both were the right things to do. We slowed down the progress of the road transport fuels obligation in response to Ed Gallagher's report. "The UK Low Carbon Transition Plan" and the renewable energy strategy that we published in July show a consistent and stable pattern for Government policy.

Gregory Barker (Shadow Minister (Environment), Energy and Climate Change; Bexhill & Battle, Conservative)

There have been questions over the sustainability of biofuels and ethanol that are imported from the developing world and over whether they are farmed at the expense of natural rain forests. Does the Minister agree that those issues are a million miles away from the sensible and pragmatic reuse of waste cooking oil? It is an almost entirely separate debate.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

At several points in the debate, hon. Members have raised the sustainability of the international bioenergy industry, the importance of protecting the environment by diversity and the food supply. I agree with those points. I will not go into those areas in this debate, but refer hon. Members to the well-informed Adjournment debate in the Chamber on 13 October, which was secured by my hon. Friend Barry Gardiner. I dealt with those issues during that debate. The Government are worthy of credit for chairing the working group of the Global Energy Partnership that is developing the sustainability criteria for the future of biofuels throughout the world.

The hon. Lady's complaints are a tale of two regulators. She mentioned the description of used cooking oil as a waste product. She said that it is a tricky product to dispose of. I agree. The regulator responsible for the safe disposal of tricky waste is the Environment Agency. It has made decisions about the definition of waste that have caused difficulties in the industry—I accept that. However, it is an independent regulator set up by Parliament to make such decisions. Who am I to try to override or second guess its judgments? We have to work with the agency's conclusions, and we have tried to do so in relation to this matter by developing a series of end-of-waste protocols that are acceptable to the industry. Those protocols enable the industry to get around the obstacles put in its way by the Environment Agency's rulings, and are acceptable in terms of our international obligations, including under European Union law.

Anne Main (St Albans, Conservative)

In response to the Minister saying, "Who am I," I am delighted to say that the Minister is the Minister. I would love to think that if the Environment Agency is putting obstacles in the way of the Government and he wishes to deal with the matter differently, with his good offices, he could sit the agency down and say, "This is what we wish to achieve. Please don't put obstacles in our way."

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

No, I am sorry. The Environment Agency is not putting obstacles in my way; it is putting obstacles in the way of people who might dispose of tricky wastes in unacceptable ways. That is a public good and I want it to do that. However, I do not want the agency inadvertently to get in the way of good businesses that we want to support—hence the development of the end-of-waste protocols, which are currently in train. That is something I am doing now, as the hon. Lady asked me to.

The Environment Agency is one regulator. The hon. Lady mentioned the other regulator—Ofgem—which is the guardian of the renewables obligation system. When we in this House make our decisions about promoting renewable energy in this country, it is important that we can reassure the public and give them confidence that they are, indeed, renewable sources of energy. On the use of methanol derived from natural gas, it is true that, last year, Ofgem made the decision that it is from a fossil fuel source and therefore is not a renewable source. Ofgem is an independent regulator and is responsible to Parliament. It made that decision and ruling after taking independent expert advice and consulting with the industry and the public at large. Again, I say who am I to overrule the decision of the regulator?

Gregory Barker (Shadow Minister (Environment), Energy and Climate Change; Bexhill & Battle, Conservative)

I am concerned that the Minister seems to be a bit confused about who he is. Let me tell him who he is: he is the Minister in the Department that should have policy oversight. Is he telling us that the Department of Energy and Climate Change and his ministerial team have ceded responsibility for strategic direction, policy and decision making to unelected quangocrats? That does not come as a great surprise because that is what it feels like, but I am surprised to hear him admit it in Westminster.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

With respect, I think it is the hon. Gentleman who is confused. Parliament sets the law on waste disposal and on renewable energy, and it establishes independent regulators to uphold the law for us. If they uphold the law for us, we should not complain when they do their job properly. If as a result of their conclusions, we think that the law needs to be changed, this is the place in which to do it. I welcome the hon. Lady's suggestion that there is one change of one law that might benefit a particular industry, and we will debate that later during my contribution. However, I want to assert the independence of regulators to do their job free of political influence, when we, the politicians, have given them a job to do.

Oliver Heald (North East Hertfordshire, Conservative)

If we take together the removal of the 20p advantage for biofuels and the effect of the Ofgem bonkers anomaly, how much extra revenue does the Treasury get?

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

I have no idea what the answer to that question is. I will examine whether I can get such a figure from the Treasury, and if I can, I will write to the hon. Gentleman with an answer to his question.

While we are on the subject of the 20p differential—there is a train of thought in my mind, but I have been diverted to deal with this—although no credit for the measure has been given to the Government by hon. Members, people are now complaining that it will come to an end. The decision for it to come to an end was taken in Budget 2008 and the judgment was made that, by the time it came to an end, the industry would be sustainable without it. It was thought that replacing the differential with the road transport fuels obligation for transport power and the renewables obligation for heat and light energy would be sufficient to take the strain in terms of giving support to the industries concerned. We also recognised that there was a sustainability issue, and the RTFO and the renewables obligation both include mandatory reporting of sustainability standards, whereas, clearly, an across-the-board 20p reduction in duty has no such requirement.

Mark Hunter made an intelligent point about whether we could in some way modify the duty differential perhaps to take account of particular subsections within the industry that we thought were particularly desirable and had continuing support for. That is a good point to make as a Budget representation, and I shall pass it on to my right hon. Friend the Chancellor. So the duty point is certainly not simply about clawing in lots more money; the decision was made in the Budget two years ago.

On the question about the bonkers anomaly, I would like to ask whether it really is an anomaly. If Ofgem's conclusion that a source of the reagent for converting the biomass into a biofuel is methanol produced from natural gas—a fossil fuel—is reasonable, are there alternatives to methanol from a natural gas source that could do the job just as well? The hon. Lady said that there is a recycled methanol and that Ofgem would also claim that that was not eligible for the renewables obligation. I think that she is wrong about that, but I will check the point with Ofgem. It seems that if we have a recycled methanol source, instead of a methanol from natural gas, which is a fossil fuel, the objection that Ofgem has to that particular reagent would be overcome and there would not be an obstacle. So, as I said, I think she is wrong, but I will check the matter with those who know.

Anne Main (St Albans, Conservative)

I would be delighted if the Minister could seek clarity on the matter. However, whatever the source of the methanol, it is a small proportion of the product—about 10 per cent. Does he agree with Ofgem that having a small proportion of something derived from a fossil fuel in a product makes it entirely fossil fuel? That is the bonkers anomaly that most people do not think is reasonable.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

The point is that we are talking about renewable energy and Ofgem has concluded that that particular biofuel is not 100 per cent. from a renewable source. What are we going to do? Should we make an exception for that one source but not for others where fossil fuel is mixed or is part of the process for producing a renewable energy? Are we going to make an exception just for this one industry, or are we going to say that sources other than renewable are acceptable for support from a renewables obligation? We might want to do that and we could do so if we wanted.

Anne Main (St Albans, Conservative)

I was asking the Minister what his opinion was about the fact that 90 per cent. of that particular biofuel is thoroughly renewable.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

My current opinion is that the renewables obligation supports 100 per cent. renewable sources, not less than that. However, as I said, I am open to the argument being made in the debate, and I will take away the hon. Lady's suggestion of, for example, a 0.9 renewable obligation certificate, because it is 90 per cent. I will consider that suggestion, because it is constructive.

On a more general point, the hon. Lady mentioned that we will be implementing the European Union's renewable energy directive in 2010. We intend to draw up a national action plan to show how we will implement that directive by June next year. Everything we have said in the debate will inform the preparation of that national action plan, which will be done across Government and will include contributions from the Department for Transport, the Treasury and my Department. This debate has also been valuable for that reason.

My final direct response to the points made relates to the hon. Lady's comment that she wanted me to hear from the sector itself. I am perfectly willing to meet sector representatives if they want to talk to me about their concerns and make constructive suggestions. I hope that that is helpful to her.

I want to say something about bioenergy generally. It does, indeed, have a hugely important role in delivering the UK's renewable energy and climate goals. We expect that the majority of the UK's 10 per cent. renewable transport target for 2020 will be met from biofuels, and that about 30 per cent. of the overall UK renewable energy target could be delivered through biomass heat and electricity. Taken together, those figures equate to about half of the UK's overall 15 per cent. renewable energy target for 2020 being met from bioenergy. We certainly see that as a considerable, substantial and mainstream contribution to renewable energy. Bioenergy offers exceptional opportunities for the UK. It can create new business and green jobs, particularly in the agriculture, forestry and distributed energy sectors. It can provide greater diversity for the UK's energy mix, and so increase our energy security. It can also make a large contribution to the UK's ability to meet its carbon budgets.

Before I get to the main body of the speech, let me explain the terminology. I am taking the European Commission's approach that biofuel refers to transport fuel made from biomass, and that bioliquid refers to liquid fuels that are made from biomass and used for electricity or heat generation. Fuel made from recycled cooking oil or recycled ethanol may be a biofuel if used for transport but a bioliquid if combusted for electricity or heating. Bioenergy is a flexible catch-all phrase that covers solid, liquid and gaseous biomasses and their use for any energy purpose—transport, heat or electricity.

First, let me address the potential use of bioliquids for electricity generation. The renewables obligation is the Government's main mechanism by which to support renewable electricity generation. It places a requirement on licensed electricity suppliers annually to provide Ofgem with a certain number of renewables obligation certificates or to pay a buy-out price for any shortfall against that target. The obligation increases year on year. Since its introduction in 2002, it has successfully tripled the level of renewable electricity in the UK from just 1.8 per cent. to 5.4 per cent. last year.

Before April this year, the renewables obligation offered a flat-rate support of one tradeable ROC per megawatt-hour of eligible renewable electricity generated. However, in response to changing circumstances and representations that were made to the Government, and in order to make the obligation a more effective and efficient mechanism, in April this year we made changes. The main change was the introduction of banding to provide differentiated levels of support to different technologies and to offer a greater incentive to those that are less well developed and further from the market. It is that mechanism which enables the hon. Lady to argue that we should differentiate for the technology we are discussing. At the same time, we introduced mandatory sustainability reporting for all generators above 50 kW that use biomass for electricity generation.

The mandatory reporting criteria for renewables are as follows. Generators have to report available data on a range of criteria, including the source and format of the biomass, the volume used and the country of origin, as well as details of any environmental standard that has been met and land use change. Those data will provide necessary information on the type of biomass being used in the UK and whether it comes from sustainable sources.

Secondly, I want to discuss the Government's main mechanism of support for renewable transport and biofuels—the renewable transport fuel obligation. The RTFO, which was launched in April 2008, places an obligation on fossil fuel suppliers to produce evidence that a specified percentage of their road transport fuel in the UK comes from renewable sources such as biodiesel and bioethanol. That annual obligation will increase in stages. The RTFO for 2009-10 is 3.25 per cent. of total fuel supplied. In light of Professor Gallagher's recommendations in his 2008 review, we have slowed down the planned rate of increase to 4 per cent. in 2011-12 and 5 per cent. in 2013-14. As the hon. Member for Cheadle has said, there were calls for support to that industry to stop completely because of concerns about sustainability. His Committee resisted those calls, and so did the Government, and I think that we responded proportionately to Professor Gallagher's concerns.

The RTFO includes mandatory reporting on carbon and sustainability, making the UK one of the first countries in the world to establish a reporting system for the sustainable performance of our biofuels. Current data show that 99 per cent. of British biofuels are meeting our voluntary sustainability standards and are achieving average greenhouse gas savings of 47 per cent. The UK was instrumental in successful agreement being reached on the renewable energy directive, with its challenging overall target for the whole EU of having 20 per cent. renewable energy by 2020. In particular, we played a significant role in setting mandatory sustainability criteria for biofuels and bioliquids in the directive. Those criteria include minimum greenhouse gas savings, good agricultural practices and controls on land use change.

We recognise that land is not a boundless resource, and that population growth and lifestyle changes in both the developed and developing world mean that the demands on our planet are greater than ever. Sustainability is at the heart of Government policies and actions to build a competitive low-carbon bioenergy sector in the UK. We aim to maximise the many benefits of that to biodiversity, farming, forestry, rural communities and employment, while also managing and minimising any risks to the environment both in the UK and worldwide.

Let me address the other support that the Government will give to those sectors. By December, we will consult on our proposals for a renewable heat incentive. The Energy Act 2008 allows the incentive to provide financial assistance to generators of renewable heat and to producers of renewable biogas and biomethane. Our aim is to make the incentive as accessible, flexible and user-friendly as possible to potential investors in renewable heat at all scales, from industrial to domestic. We intend to introduce the incentive in April 2011.

Gregory Barker (Shadow Minister (Environment), Energy and Climate Change; Bexhill & Battle, Conservative)

Given what the Minister has said about the term "renewable", does his use of it here mean entirely 100 per cent. renewable, or does he mean low carbon?

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

In contrast to the renewables obligation, we are considering allowing all forms of biodiesel to be eligible for the renewable heat incentive. That would allow homes that currently use heating oil—about 9 per cent., many of which are fuel-poor—to switch very quickly and at a relatively small cost to a less carbon-intensive fuel when the RHI is introduced. In a sense, the hon. Gentleman is making the point that we have listened to past criticisms and are doing something different for heat. However, there is also a policy priority here. Heat generation is the least well-developed when it comes to the renewable sources that we need to take up for the future.

Gregory Barker (Shadow Minister (Environment), Energy and Climate Change; Bexhill & Battle, Conservative)

It rather looks as though one hand does not know what the other is doing. We have the sensible adoption of a policy that recognises the low-carbon nature of biofuels, whereas other parts of the Minister's Department either do not have access to the same thinking or are not capable of following the same decision-making process. Why are there two strands of thinking in one Department? I thought we were supposed to be getting beyond such things.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

That is a totally unfair characterisation of the position. There are strong policy reasons why we ought to go the extra distance that I have described for a renewable heat incentive in 2011. By that time, arguments such as those that we are having today might have brought about change to the renewables obligation criteria, and the two might be consistent by then. At the moment, however, only the renewables obligation is before us. The hon. Member for St. Albans has made the case that there is an anomaly in the legislation that we could do something about. She has made some sensible suggestions for alterations that we might make, which I shall consider. That does not mean that I am not aware that there are differences or that I do not appreciate how we might overcome them.

Anne Main (St Albans, Conservative)

I appreciate the Minister's complimentary words. Cooking oil could also be used for district heat and power if we decide to go down the route of ensuring that facilities are built to use that technology. That could dovetail nicely into what the Minister wishes to achieve, using a source that is infinitely preferable to some of the biofuels that are currently utilised.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

I agree, and let me be more helpful. If that step were taken—this issue is still subject to consultation, so let us see what people think—and we designed the renewable heat incentive in that way, it would help the heating oil industry to diversify, with a move towards renewable fuels, by blending heating oil with biodiesel. The industry's technical body, OFTEC—the Oil Firing Technical Association—is currently conducting trials and has operational plants running with a 15 per cent. blend. It hopes to have a 30 per cent. blend available by 2010 and a 100 per cent. blend by 2015. That is exactly the point that the hon. Lady was making.

Mark Hunter (Cheadle, Liberal Democrat)

I would like to take a slightly different tack. The Minister has spent the past few minutes talking optimistically about the future for biofuels, which is good to hear. The whole debate has been conducted in a non-partisan manner, and I am particularly grateful that he accepted my earlier point about the 20p duty differential. However, despite his generous offer to forward that to the Treasury so that it can be looked at for the Budget, I am still a little concerned that the optimistic future he talks about could come too late for many of the companies that produce biodiesel—

David Taylor (North West Leicestershire, Labour)

Order. Interventions are to be brief.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

I hear what the hon. Gentleman says. As policy makers, how often do we hear dire warnings of disaster if something happens? The Treasury is weighing up the warnings from the sector on the effect of the complete removal of the 20p duty differential next April, and I am sure that my right hon. and hon. Friends at the Treasury have that at the forefront of their minds—it was certainly at the forefront of the Chancellor's mind when I spoke with him about it on Monday evening. With regard to the RTFO, when the 20p differential is due to disappear, the buy-out rate for the RTFO will increase from 15p a litre to 30p, which in our judgment compensates for that loss.

Mark Hunter (Cheadle, Liberal Democrat)

Does the Minister understand that most producers of biodiesel from waste products produce between 2,000 and 20,000 litres a day and that the UK's biodiesel production is heavily reliant on that 20p reduction in duty?

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

I understand that and refer the hon. Gentleman to my earlier comments about how that was weighed up at the time of the 2008 Budget, and I have said that that will be taken into account between now and the 2010 Budget.

By December 2009, the European Commission is due to report on the need for sustainability criteria for solid biomass used for electricity and heat generation, so keeping the thread that I have described about the reporting of sustainability criteria. We are looking ahead, and in April 2010, which is not so far away, we will introduce the feed-in tariffs that will provide support to renewable electricity generators of up to 5 MW. Our consultation proposed including generation from biomass in dedicated electricity plants, combined heat and power plants or for anaerobic digestion. The consultation recently closed, and we received more than 750 responses, which we are currently analysing. That is a very large number, showing the keen interest in the subject.

We hope that the increased certainty that feed-in tariffs will provide will encourage a wide range of people and organisations, such as householders, community groups, businesses, schools, hospitals, universities and all the examples the hon. Member for Bexhill and Battle mentioned to consider installing low-carbon electricity generation.

Gregory Barker (Shadow Minister (Environment), Energy and Climate Change; Bexhill & Battle, Conservative)

The Minister has been extremely generous in allowing interventions, and I promise that this will be my last as he is running out of time. The feed-in tariff is a welcome development, although one that the Government were not very keen on initially. Can he confirm that, unfortunately, it appears that the Government anticipate that only 2 per cent. of the UK's total electricity generation will be supported by feed-in tariffs by those methods by 2020, and is not that a pathetically unambitious—

David Taylor (North West Leicestershire, Labour)

We are wandering a little from the core topic of the debate.

David Kidney (Parliamentary Under-Secretary, Department of Energy and Climate Change; Stafford, Labour)

To bring those points together, by December 2010, we are due to bring the sustainability standards applied to biofuels under the RTFO and to bioliquids under the renewables obligation into line with the requirements of the renewable energy directive, and that is where the national action plan that I mentioned earlier comes in.

On the specific points made about recycled cooking oils and recycled ethanol, the use of waste and residues for energy is promising. With our concerns on direct and indirect land use change, it is a clear no-brainer, as everyone has said, to do much more with what we already have and to capture more of the UK's organic waste and residues that currently end up in landfill or, worse still, being disposed of illegally in rivers, as was recently exposed by a court case in Watford that concerned an incident last year in Welwyn Garden City. Instead, that waste should be used for bioenergy, whether for transport, heat or electricity. Next year, we will consult on potentially banning some organic waste from landfill, so that such materials can only be reused, recycled or used for energy generation.

Bioliquids, which are 100 per cent. renewable, are rewarded through the renewables obligation. It is not the purpose of the renewables obligation to support fuels that are directly or indirectly derived from fossil fuels. Therefore, biodiesel produced using methanol derived from natural gas is not eligible for renewable obligation certificates, but it is eligible for support under the renewable transport fuels obligation, given the more limited potential sources of renewable transport fuel.

The Government are keen that our package of financial incentives for bioenergy provides coherent and appropriate long-term signals to the market. With the planned introduction of the feed-in tariffs and the renewable heat incentive, which will join the renewable transport fuels obligation and the renewables obligation, we are looking carefully at how we can best achieve that.

In conclusion, achieving our ambitious targets on renewable energy and on emissions reduction will require the participation of all parts of our society. The Government are working hard to support the wide range of emerging technologies, such as advanced biofueld and bioliquids, and remain vigilant that the UK's biomass supplies are sourced sustainably. We hope that, in the coming years, everyone from the largest multinational company to the individual householder will play a full and rewarding role in the UK's move to a low-carbon economy.

I have finished my prepared text and do not want to waffle to fill time, and I have taken a large number of interventions, which I hope has been reasonable, so if it is all right with the hon. Member for St. Albans, I would prefer to finish early.

David Taylor (North West Leicestershire, Labour)

As the Member who has secured the next debate and the Minister who will respond to it are both present, we will move on.

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