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Carbon Fuels

Volume 401: debated on Thursday 20 March 2003

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What action she is taking to lessen use of carbon fuels. [103884]

On 24 February, we published a White Paper that puts climate change at the heart of our energy policy. We have accepted the recommendation of the Royal Commission on Environmental Pollution to reduce carbon dioxide emissions by 60 per cent. by 2050 and to be on a path to that by 2020. The White Paper sets out the measures needed to achieve that target.

Tragic events in the middle east have, once again, highlighted the fact that we need to reduce our reliance on fossil fuels, such as oil, and even gas, as our major energy sources. Does my right hon. Friend agree that we need to invest significantly more in renewable energy sources, such as wind and tidal power, in order to secure energy resources for future generations, in addition to meeting our Kyoto commitments?

I entirely agree with my hon. Friend that we need to do far more, not only on renewables but also on energy efficiency. We have set out in the White Paper exactly how we shall do that. In particular, we are investing a third of a billion pounds over four years in capital grants for new renewable projects, including wave and tidal power. I am pleased that the United Kingdom has the first—indeed, the only—commercial wave power station in the world. With that, and with the expertise that we have in wind power and offshore technologies, we will be able not only to achieve our CO2 targets, but to create a new renewables manufacturing industry that will deliver new jobs and new exports for Britain.

Given the fall in farm incomes by more than two thirds over the past six years, what discussions has the Secretary of State had with her counterpart in DEFRA about the possibility of producing fuel through alcohol? Is she aware that in Brazil more than two thirds of the fuel that is used is alcohol fuel, which is generated from crops? Why cannot we do that here in the United Kingdom?

There is no reason at all why we should not do that. Indeed, the White Paper to which I referred was a joint production by my right hon. Friend the Secretary of State for Environment, Food and Rural. Affairs, me, and the Secretary of State for Transport. As I am sure the hon. Gentleman knows, we are investing substantially in helping farmers and other members of the rural community to diversify. There are clearly huge potential benefits to the farming community, as well as to the whole country, in helping to increase the production of fuel from biomass and bioethanol. Of course, my right hon. Friend the Chancellor is assisting in that through differential fuel duties.

:Friend accept that although the ambitious measures in the White Paper in respect of renewables and energy efficiency are extremely welcome, they are not matched by the ambitious scale of investment that is needed? Does not energy efficiency provide the quickest and easiest way to cut carbon emissions, and will she assure the House that there will be increasing support for energy efficiency measures in the next few years?

I entirely agree with my hon. Friend. We say in the White Paper that energy efficiency is by far the cheapest and simplest way of meeting all our policy goals in this area. If I may say so, however, he somewhat underestimates the scale of the investment that is being made. I have already referred to the third of a billion pounds over four years, and we shall have to see what we achieve in future spending reviews. By 2010, the renewables obligation, which is central to the policy, will deliver support to the renewables industry that is worth some £1 billion a year. On top of that, by 2005–06 we will have put in place a new carbon emissions trading scheme, which will create further strong incentives for much greater energy efficiency and more investment in renewables.

The Secretary of State will know David Green, who is a member of the Government's energy advisory panel, and who said:

"There is a complete absence in the White Paper of any significant new measures to reduce the damage done to Britain's green generators over the last three years by weak and inconsistent delivery of the Government's policies".
How on earth has he come to that conclusion?

The energy White Paper not only confirms the Government's commitment to the target of installing 10,000 MW of good quality combined heat and power by 2010, but sets out several new measures to support CHP. State aid approval for the exemption of CHP electricity from the climate change levy—a policy for which David Green strongly pressed—has now been given. It is frustrating that it took some time to get that state aid exemption, but it will undoubtedly help. Although I well understand the frustration of CHP producers—although not necessarily consumers—about falling electricity prices, we are on target to meet the 2010 target for good-quality CHP.