Biofuels

With permission, Madam Deputy Speaker, I would like to make a statement on biofuels.

There is widespread agreement in this House and the country that we must step up efforts to tackle climate change through dramatic and global cuts in greenhouse gas emissions.

One of the most difficult challenges we face is the use of fossil fuels for transport.

Our cars and other forms of transport are the third largest source of carbon dioxide emissions in the UK.

That is why the use of a clean, renewable energy which can partly replace carbon-based fuels was seen by experts, environmental campaigners and Governments around the world as a welcome and practical way of slowing emissions growth.

After four years of encouraging biofuel use, in March 2007, the EU went further and set an ambitious target of 10% of transport fuel from renewable sources by 2020.

In the UK, the Government brought in the Renewable Transport Fuel Obligation which came into force earlier this year.

This requires biofuels to make up 2.5% by volume of road transport fuel sales in the UK, increasing by 1.25% a year to 5% by 2010/11.

The UK has also been at the forefront of global efforts to develop robust - and workable - sustainability standards for biofuels.

As part of the RTFO, we introduced a requirement that transport fuel suppliers should report on the environmental performance of their biofuels.  This will give us evidence on the impacts of biofuels as well as creating an incentive on suppliers to source the best biofuels.

We also committed to introducing at the earliest opportunity legally enforceable standards which will ensure biofuels are produced in a sustainable way. 

In recent months, however, increasing questions have been asked about the more intangible indirect effects of biofuels on food supplies and prices, on deforestation and on their overall impact on greenhouse gas emissions.

I am sure the House will agree that our policy on biofuels should be based on the best possible science.

So in February I asked Professor Ed Gallagher, the Chair of the Renewable Fuels Agency, to examine the latest available evidence.  

I welcome publication of his report today and want to thank Professor Gallagher and his team for their thorough work in this highly complex area.

Let me outline Professor Gallagher's main findings.
 
Overall the report confirms that biofuels can play a role in tackling climate change and that "there is a future for a sustainable biofuels industry".

It finds that by 2020 "biofuels have the potential to deliver annual global greenhouse gas savings of approximately 338 to 371 million tonnes of carbon dioxide".

But Professor Gallagher also concludes that there is a risk that the uncontrolled expansion and use of biofuels could lead to unsustainable changes in land use - such as the destruction of rainforest to make way for the production of crops.

This might, in turn, actually increase greenhouse gas emissions as well as contributing to higher food prices and shortages.

The Gallagher report therefore concludes that the introduction of biofuels should be slowed until policies are in place to direct biofuel production onto marginal or idle land, and that these are demonstrated to be effective.  The detail of these control mechanisms would need to be agreed internationally.

The report, however, rejects calls for a moratorium on biofuels. It concludes that "a moratorium will reduce the ability of the biofuels industry to invest in new technologies … [and] will make it significantly more difficult for the potential of biofuels to be realised".

In short the report concludes that "the Government should amend but not abandon its biofuel policy".

Madam Deputy Speaker, the report recommends that in the UK the rate of increase in the RTFO should be slowed to 0.5% per annum so that the RTFO reaches 5% in 2013/14 rather than 2010/11 as currently planned.

At the EU level the report concludes that a mandatory 10% renewable transport fuel target is not presently justified by the scientific evidence, but that a target of 10% by 2020 could be possible if a number of important conditions are fulfilled. These conditions include sufficient controls on land-use change being enforced globally as part of a new climate agreement, and new evidence providing further confidence that the target can be met sustainably.   In the meantime, he says that a more appropriate range for the 2020 biofuel target would be around 5 - 8% by energy.

Madam Deputy Speaker, I agree with these key findings.

Given the uncertainty and potential concerns Professor Gallagher sets out, I believe it is right to adopt a more cautious approach until the evidence is clearer about the wider environmental and social effects of biofuels. We also need to allow time for more sustainable biofuel technologies to emerge.

So I intend to consult formally on slowing down the rate of increase in the RTFO, taking the level to 5%, as Gallagher recommends, by 2013/14. 

And this would be subject to further confirmation in 2011/12.

Professor Gallagher's findings are particularly significant in the context of ongoing debates about biofuel targets across the EU.

To help ensure that the issue of sustainability is put at the heart of those debates, the Environment Secretary and I are today jointly sending a copy of the Gallagher report to the relevant European Commissioners and to all EU Environment and Transport Ministers.

And in response to those concerns - including over rising global food prices - the Prime Minister has today been pushing for the G8 to work to develop new global benchmarks for sustainable biofuel production and use.

The Government believes the EU target of 10% renewable transport fuels by 2020 can remain an overall objective but subject to clear conditions.

I would like to set these out now.

First, the EU level sustainability criteria currently being negotiated must address indirect, as well as direct, effects on land use.

Second, the 10% target must be subject to rigorous review, in the light of the emerging evidence, so that we can mak an informed decision at EU level in 2013/14 about whether the target can continue in place. 

As Professor Gallagher also suggests, I agree that we should aim to target support on the development of lower carbon and other so-called 'second generation' biofuels.

Looking ahead we will continue to work with our international partners and the scientific community to decide what further work needs to be done to reduce the uncertainties in the science and ensure that the right biofuels are supported.

We will also continue to investigate other technological solutions that have the potential to deliver a low carbon transport system, such as hybrid and electric vehicles.

Madam Deputy Speaker, I believe that the approach I have set out today is the responsible one. 

It acknowledges that biofuels can have an important role in reducing carbon emissions and combating climate change. 

But it also recognises that we need to proceed cautiously until we can be certain that their expanded growth and use maximises the benefits and minimises the risks to our world.

And as I have demonstrated today, I will not hesitate to alter our policy if that is what the science suggests to be appropriate.

I commend this statement to the House.

Delivered: 07 July 2008