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Renewable Transport Fuel Obligations Order 2007

My Lords, as one of the gang of four who managed to persuade Her Majesty’s Government to accept the renewable transport fuel obligation, I am delighted to support the order, but with a few reservations. I declare an interest as a failed investor in a biofuel company in the north-east of England and as a producer of oilseed rape, all of which is exported and made into biodiesel. As the noble Lord, Lord Hanningfield, emphasised, the new energy crop scenario is complicated, to say the least. I strongly believe that this obligation must be kept under constant review, particularly given that crude oil prices are nudging $90 a barrel. If one is to believe the noble Lord, Lord Bradshaw, it might reach $200 a barrel. According to the European Commission, even a 10 per cent biofuel target will not disrupt agricultural markets. We must not forget that in the United States of America there is already a 10 per cent level for bioethanol in all gasoline sales, which will rise to 15 per cent by the end of next year. It is worth remembering also that the pump price in the United States is a quarter—I repeat, a quarter—of what it is here. It has always worried me that this country is way behind in biofuel production in comparison to most of its European partners. The recent high fuel prices here have produced a staggering £240 million-a-month windfall for the Treasury, as the AA said at the weekend. Her Majesty's Government must do more to kick-start the home biofuel industry. As other noble Lords have said, it is sheer madness to cut down the Brazilian rain forests to grow sugar and export the ethanol three-quarters of the way around the world. All noble Lords would agree that biofuels must be produced from wholly sustainable resources and that the fuel duty rebate must be kept at least at 20p per litre for the foreseeable future. I sincerely hope that Her Majesty's Government will look very carefully at the crucial buyout price. I have long advocated that at 15p per litre it is far too low. If we really want to kick-start our home industry, the rebate ought to be increased by at least 5p per litre. The market desperately needs confidence and I fear that only Her Majesty's Government can create that confidence. I sincerely hope that they will do their best to do that.