Renewable Transport Fuels and Greenhouse Gas Emissions Regulations 2018 — House of Lords, 2018-03-06
Topic: Energy
Elizabeth Sugg (Conservative, Centre-right): My Lords, I thank all noble Lords for their contributions and for their broad welcome and support for these regulations. The noble Baroness, Lady Randerson, mentioned the delay in passing them, and I acknowledge that there has been a slight delay. The regulations have been informed by extensive consultation with industry experts and NGOs and they represent a complex set of changes. We felt that it was right to build consensus wherever we could in this area The noble Baroness asked how we can help new suppliers, particularly to aviation, get from the demonstration scale to the commercial one. Under our second competition, up to £22 million of government funding will be matched by private sector investment to construct a first-of-a-kind fuel production facility in the UK which will enable the demonstration of technical and commercial viability, including for aviation fuel. She also asked why we did not propose a target in 2018. Time would have been tight for a 2018 target. During the consultation there was little support for targets before 2020 and we therefore decided not to introduce one for this year The noble Baroness raised the point about the crop cap and asked whether the percentage we have set is correct. It is different from that in other member states. We have taken into account the consultation responses to the regulations and we have set the cap at 4% in 2018; it will be reduced gradually from 2021 to 2032. To put the figures into perspective, total UK bioethanol production capacity at the moment is equivalent to a little more than 1% of the transport energy requirement, and the current proportion of crops being used to produce biofuels is equivalent to less than 2% of the UK fuel supply. As I say, I acknowledge that the cap is lower than that set in some member states, but they are already using more crop-derived biofuels. The changes proposed in the regulations continue to support our existing bioethanol industry by encouraging future investment in waste-derived fuels. We think that a higher crop cap in the UK could result in more fuels being supplied that can cause an increase in greenhouse gas emissions The noble Baroness asked whether we will deploy E10 fuel. I hope that the Government have been clear that deploying E10 fuel is an option for suppliers in meeting their obligations and it may well be the best and most cost-effective option, but at this stage the regulations do not mandate E10 fuel in the sense of requiring that petrol should be blended with 10% bioethanol. The regulations provide the flexibility for fuel suppliers to determine how best to meet their obligations, and we think that flexibility will enable the costs to be kept down and allow suppliers to react to changes that impact on the market. On exiting the European Union, I can confirm that the Government have no plans to change their policy in this area and the amendments have been designed to achieve our domestic carbon budget commitments and provide UK industry with the long-term investment certainty it needs, but as with any policy, we will keep it under review to ensure cost-effectiveness. On the question raised by the noble Baroness on the generation of electricity for electric vehicles, with her permission I would like to consider further how we can address this in the AEV Bill, and I will write to her on the issue The noble Lord, Lord Berkeley, raised the issue of compatibility of the various different engine types with this new fuel. We recognise that the owners of vehicles, be they regular cars, vintage cars or indeed boats, will ask whether they will be compatible with E10 and indeed E5 fuel. We are committed to working with industry to ensure that any rollout of E10 is carefully managed and that information on compatibility is made available to vehicle owners. We intend to consult very soon on proposals that will require that E5 fuel remains available to motorists, and how best to provide information on it. I am not aware of the detail concerning boat engines, so I will write to the noble Lord The noble Lord, Lord Tunnicliffe, talked about the long-term proposal. Obviously, as we transition to ultra-low emission vehicles, we will continue to need low-carbon liquid and gaseous fuels for decades to come, particularly in the aviation sector. In the absence of new measures and given the expected growth in the aviation sector, emissions are likely to increase, so low-carbon fuels such as biofuels are considered the only viable source of energy available to significantly limit aviation emissions by 2050. Electric airplanes are in development, but I think they are some years off. The UK aviation industry has for some time advocated its eligibility for an award under the RTFO because it would help to provide the support needed, as the noble Baroness, Lady Randerson, also mentioned, to kick-start the use of aviation biofuels which at present are not produced or supplied in the UK. The regulations before us will enable renewable aviation fuels to receive RTFO incentives for the first time, and we hope very much that that will encourage the industry to grow The noble Lord asked about the availability of waste feedstocks and the number of fish and chip shops both in this country and abroad, given that we import some of our feedstocks. We have carried out scenario testing to look at different waste supply potentials. Stakeholders have been helpful in confirming that the volume of waste feedstocks we think we will need to meet the higher targets is likely to be available, and we therefore continue to assume that the waste feedstocks can be supplied. There is some uncertainty over exactly which feedstocks will be supplied—noble Lords have mentioned cooking oil and tallow—but we anticipate that much of the increase will come from the waste already being used to make biodiesel. Furthermore, given the post-consultation changes to the crop cap, which, as I said, will start at a high percentage and gradually reduce towards 2032, we consider that the risk of waste biofuels becoming more expensive than the buyout is reduced. The development fuels sub-target is also designed to increase the diversity of feedstocks used to produce fuels I hope I have answered all noble Lords’ questions; if not, I will follow up in writing. I thank noble Lords for their contributions to the debate. The regulations are needed to support investment in sustainable advanced fuels for automotive, aviation, road freight and maritime; to provide certainty to UK producers and the farms that will supply them that existing bioethanol capacity will be fully utilised; and to help us meet our climate change commitments. In meeting our commitments, low-carbon fuels will be needed for decades to come, not least in the sectors that are harder to decarbonise through electrification, such as heavy goods vehicles and aviation. We feel that the targets in these regulations are ambitious and will provide an important contribution to UK carbon budgets. The amendments build on the success of the RTFO to date in delivering significant greenhouse gas emissions reductions. I hope your Lordships will agree that the regulations are the best way to proceed with our renewable transport fuels strategy. I beg to move.