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Volume 447: debated on Thursday 15 June 2006

We are strongly committed to supporting the development of biofuels in Britain. The Budget announced an extension of the 20p per litre discount on both biodiesel and bioethanol and that will run until at least 2008-09. The Chancellor also made a range of announcements to bring into force a renewable transport obligation.

Several weeks ago, I had the pleasure of launching one of the country’s first bioethanol pumps at a filling station in Lowestoft. This is a symbol of our determination in East Anglia to lead the way on biofuels. We have new biofuel plants coming on stream, but is my hon. Friend satisfied with the present rate of progress? Does he think that the process needs more encouragement? What discussions is he having with motor manufacturers to ensure that we have vehicles that can use bioethanol and petrol in the same tank—as they have in Brazil—ready for the new bioethanol revolution?

I welcome the introduction of the new bioethanol pump in my hon. Friend’s constituency. East Anglia is taking the lead in many ways. One of the first bioethanol plants is likely to be set up in Wissington, close to my hon. Friend’s constituency. The industry is being given great support and encouragement by the package of measures that the Chancellor announced in the Budget. That will give greater certainty about the development of the market. Clearly, even to reach the level at which 5 per cent. of our road fuels are derived from renewable sources—which is the level of the obligation—will involve a huge step up. However, I am confident that we now have in place the sort of package that will lead to that sort of development. The development of engine technology and of the technical specifications for fuel will be part and parcel of our ability to push well beyond 5 per cent. after 2010-11.

In an earlier response to a question about bioethanol, the Chancellor mentioned Mozambique. Does the Minister acknowledge that there are many sugar beet farmers around this country, not least in Shropshire, which has 600, with 200 in my constituency alone? They would be more than willing, able and keen to assist the Government in meeting their climate change targets, if only there were a guaranteed market, and incentives rather than a stick. Will the Minister send out a message today to Shropshire farmers—rather than just Mozambique farmers—about how the Government will encourage them to get into the bioethanol market?

I am not sure that the hon. Gentleman has looked at the package of proposals put in place by my right hon. Friend in the Budget. Nor am I sure that he has looked at the reaction of the industry to those measures, or at the plans for the new bioethanol plants in this country. The purpose of our policy is to develop the biofuels market in Britain, which will provide new opportunities for British farmers. However, we are not providing a fresh form of subsidy for British production. We are interested in building the biofuels market and gaining the environmental benefits from it. The managing director of Losonoco, one of the firms due to set up two bioethanol plants in the UK, has said that, from the firm’s perspective, it was a good Budget and that the support that the Government is giving to the biofuels sector was very encouraging.

We now have in place all the right economic instruments, including the reduction in fuel duty, the capital allowances for new developments and the proposed renewable transport fuel obligation. Does my hon. Friend agree that what we need now are home-grown entrepreneurs to come forward to make the most of home-grown fuels?

My hon. Friend is right. The Government can go only so far. We have put in place the framework of incentives and support for the development of the market, but, in the end, it requires private investment and private enterprise. The signs are good, but private industry and investment must now do the heavy lifting.