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Energy Bill

One of the delightful aspects of speaking late in a debate is that one has heard so many wonderful speeches. However, the theme that has typified the speeches today is that the Bill is lacking in many respects—that it is a light Bill. A Labour Member, who is not present now, described his own comments as a constructive whinge. I had thought that it was up to the Opposition to produce constructive whinges, so it was good to hear so many of them, and to hear a long list of things that should have been in the Bill but—as has been freely admitted—have not been included because time constraints made it impossible to include anything of note. I can think of a few measures that could easily have been included, as they touch on the theme of the Bill, but sadly they are not there. One involves the production of biodiesel from used cooking oil. I drew this to the attention of the Under-Secretary of State for Energy and Climate Change in a Westminster Hall debate in October. It was a very lively and well-attended debate, and he said he would reflect on the point. I therefore hoped he might have inserted some constructive measures into the Bill, but I am sorry to have to say that there are none. That debate was about the production of biodiesel by recycling used cooking oil of UK origin. That is a highly sustainable way to produce energy. We have hundreds of restaurants, fast-food premises and commercial food producers, all of which use large quantities of cooking oils. When used, they become a waste product, and they can be both costly to deal with and difficult to dispose of. Within manufacturing industries, huge quantities of fats and oils are used, with significant quantities of waste food oils resulting from processing methods. When recycled properly, it can be a truly sustainable fuel, and we all want to increase our use of such fuels as much as possible. The Bill should have gone a little further in this regard, because it is ridiculous to dispose of such waste oils when they are ultimately a valuable recyclable resource. If we are worrying about the lights going out and shortages of fuel, it is also ridiculous that, despite the fact that the huge amount of waste from used cooking oils could be used highly efficiently as a truly recycled product, people are paying to get rid of it. Earlier this year, I discussed this matter with Richard O'Keefe, director of Green2Go. He was the inspiration behind our having the debate in October. His company was established in 2007 with the express intention of providing renewable and sustainable heat and power solutions. We are hearing a lot about dirty solutions, such as coal, having to be made greener, but this is a green solution. Green2Go is a relatively small company, but it is a key proponent of this effort. It estimates that there are currently 250 million litres of the waste product of used cooking oil available from commercial sources and significant further amounts from domestic sources. In areas that pride themselves on trying to increase recycling, such as St. Albans, we are also getting rid of this product on the domestic level. Biodiesel, which can be manufactured from used cooking oil, is a particularly sustainable renewable fuel, whose use can reduce lifecycle carbon emissions by up to 90 per cent. If we were to use that fuel, it would help us deliver on our challenging energy targets. Used cooking oil does not cause additional deforestation, as it is a waste product that would otherwise have to be disposed of by professional collectors at significant cost—in the debates on this, it has been mentioned that sometimes it is not disposed of properly and it goes down into rivers and drainage and there is then the high cost of cleaning that up as well. Certain green pressure groups have great worries about whether the steps we are taking to try to ensure that the lights do not go out are green, but this is certainly green. It does not cause any land-use change, and the fuel is consequently one of the lowest-carbon forms of biodiesel. Converting used cooking oil that might otherwise have gone to landfill to biodiesel is an excellent example of a sustainable biofuel. The Under-Secretary of State agreed with all this in our earlier debate. As he said it was a valuable debate, I am hoping I shall hear some more from him about the issue today. This type of biofuel contributes to reducing carbon emissions and waste minimisation. As it uses a waste product, there is no resultant pressure on land use and no impact on food prices. There is a big concern about third world countries that should be growing crops to eat but that are instead exporting crops for making biofuels. This does not contribute to that concern. Vital resources are not diverted from a valuable existing land use. Methanol is commonly used in the process of producing biodiesel from used cooking oil. However, in March 2009—not very long ago—Ofgem reversed an earlier position and ruled that the use of methanol made from natural gas in biodiesel production discounts the fuel from being included in the renewables obligation scheme. That cannot be right. Many right hon. and hon. Members who are present have served on the Select Committee, and I see its acting Chairman, who will remember when the Committee was discussing this part of our energy remit. I raised the discounting with a witness who was giving evidence to the Committee, and he described it as a "bonkers anomaly". A bonkers anomaly was introduced under this Government's watch in March 2009. As the Government are aware of this bonkers anomaly, I would have thought that they would have taken the opportunity in the short time left to them to address it. The ruling was made following consultation and discussion with the Department of Energy and Climate Change. As a result of the presence of that very small portion of fossil fuel derived from methanol in some biodiesels, we have this bonkers anomaly. The ruling is based on a very literal interpretation of the law, which classes the entirety of the biodiesel produced in such a way as a fossil fuel under article 9 of the renewables obligation, despite the fact that the fossil fuel element of the fuel, made from used cooking oil, is relatively small—about 11 per cent. by mass. Members of the UK biofuels industry believe that the Ofgem ruling on biodiesel is likely to have a significant effect on the UK's industry and would have ramifications for our future domestic supply of renewable energy. That is what the Bill should be considering, to ensure that we have domestic supplies of renewable energy so that the lights do not go out. That is why there is a real missed opportunity in the Bill. I hope that we will have a chance to raise that issue in Committee. Energy production in the UK has been set extremely ambitious long-term targets for renewable sources, yet many feel that the 2009 legislation—or at least Ofgem's interpretation of it, and I note that Ofgem is mentioned regularly in the Bill and it should have its attention drawn back to the anomaly—does not offer any incentive to use such a form of renewable fuel in the generation of electricity and heat. When I mentioned that to the Under-Secretary, I was encouraged. He agreed to meet representatives of the industry who had raised the anomaly with me to discuss it in more depth. I had heard that they were having trouble getting hold of him and I hope that he will tell me tonight that they have met. I would love to hear any update about any meeting that he has had with them. If he has not met them, I press him to renew that commitment tonight to meet them. The renewables obligation came into effect in 2002 to support renewable electricity projects in the UK. Under the obligation, suppliers are required to meet their obligations by presenting sufficient renewables obligation certificates—it is a mouthful, so I shall call them ROCs—which are green certificates issued to an accredited generator for eligible renewable electricity generated. The 2008 consultation by Ofgem, which led to this decision, focused on the detail that the methanol used in the process was normally derived from natural gas, itself a fossil fuel. Ofgem therefore set out that it was difficult to view biodiesel made in that way as a renewable fuel as set out in the Electricity Act 1989 and in specific parts of the Renewables Obligation Order 2006 (Amendment) Order 2007. Instead, Ofgem argued that biodiesel produced from the reagent will in turn fall within the term "fossil fuel"—that is, the whole of the biodiesel—under article 9 of the renewables obligation and concluded that biodiesel produced in such a way should be classed as fossil fuel generation under articles 9 and 18. I believe that the Government do not want this anomaly and that, in October, the Minister saw that the argument in favour of it was nonsense. Given that the ruling stated that where fossil fuel-derived alcohols are used no ROC will be issued, even for the biomass-derived portion of the biodiesel involved, will he—or whoever speaks on behalf of the Government—take up the suggestion that we made in October to have 0.9 of a ROC to recognise such a truly renewable biofuel and the greenness of the energy provided by it? Electricity generators cannot receive the renewable obligation on electricity that is produced from that fuel. That is despite the fact that the fuel element is so comparatively small and despite the fact that the majority of the fuel is truly recycled from the waste stream and would have no other purpose. There was widespread industry reaction to the Ofgem ruling on the basis that exclusion from the scheme would not encourage the generation of renewable energy—something that we have talked about at length tonight. Ofgem itself has concluded that its ruling ran counter to the desires of the majority of respondents to the 2008 consultation. Ofgem has further admitted that the issues that many such respondents raised are policy decisions that are the responsibility of the Department of Energy and Climate Change and are outside the remit of Ofgem's role as the scheme's administrator. I have raised this issue in a sitting of the Energy and Climate Change Committee, in which we discussed low-carbon technologies in a green economy—I note that our acting Chairman, the hon. Member for Sherwood (Paddy Tipping), is nodding. When I raised it with Greg Archer of the Low Carbon Vehicle Partnership, he did not hold back; as I have said, he described the situation as a "bonkers anomaly". He is not the only expert who has misgivings about the situation. I hope that the Minister will update me regarding the possibility of introducing a 0.9 ROC. He has agreed to investigate that idea, and I am sure that he will have made some progress in that regard. Used cooking oil can produce significant carbon savings and is an excellent way of using a waste product to create energy, but it currently seems to be uneconomic for many producers to do that. Will the Minister re-examine the legislation covering the treatment of biodiesel that is produced from used cooking oil to see whether anything can be done to iron out the anomaly? I would also welcome a statement on the implementation of the renewable energy directive.