Climate Change Bill [HL]

As the noble Lord, Lord Taylor, said, this is an incredibly important amendment. While the Government cannot accept it, we agree with the sentiments behind it, although it would involve some practical difficulties. The amendment would place a new duty on the administrator of the renewable transport fuel obligation to ensure that only biofuels that delivered carbon savings and contributed to sustainable development and the general protection of the environment should be eligible under the obligation for certificates. We agree that it is important that the obligation does not lead to the supply of unsustainable biofuels and delivers carbon savings. The Energy Act 2004 already allows the issuing of certificates to be linked with carbon saving and sustainability. In addition, we propose in paragraph 2 of Schedule 6 to introduce a new duty on the administrator of the obligation scheme. The Renewable Fuels Agency, as administrator of the scheme, will have a duty to promote the supply of renewable fuel which delivers carbon savings and contributes to sustainable development or general environmental protection. Action that promotes good biofuels will have the effect also of discouraging biofuels that have a negative environmental impact. The amendment would oblige the administrator to refuse certificates for some biofuels. The Renewable Fuels Agency would be required to judge whether biofuels were eligible for certificates by applying complex criteria and methodologies to determine their environmental and sustainability characteristics. Unfortunately, there are not yet sufficient international standards to create consensus on what criteria and methodology are appropriate. If the agency were to refuse certificates on the basis of its own criteria at this stage, it would be likely to lead to challenges by suppliers who did not agree with the criteria or the way in which they were applied, and to difficult questions of compatibility with European Union law and World Trade Organisation rules.  Also, in some cases not all of the necessary data are likely to be currently available to suppliers and it will take time to develop the required information supply chains from feedstock producers. It would be wrong to penalise suppliers in the mean time. We are taking steps to address the concerns about the carbon savings and sustainability of biofuels. The obligation will include a reporting requirement from day one of the obligation, under which any transport fuel supplier wishing to claim a certificate in respect of any biofuel must submit a report detailing its environmental impacts. The Renewable Fuels Agency has published the detail of these reporting requirements and the reports will include information such as the carbon intensity of the biofuel, origin of the feedstock, any environmental or social standards in operation during the cultivation of the feedstock, and changes in the land use—a very important point. Last June we announced our aim to reward biofuels under the obligation in accordance with the carbon savings that they offer from April 2010. We also announced that it is our aim to reward biofuels only if the feedstocks from which they are produced meet appropriate sustainability standards from April 2011, by which time we expect to see the development of such international standards. Both aims are subject to important provisos concerning compatibility with World Trade Organisation rules and EU technical standards requirements, and consistency with the EU policy framework for biofuels. As has been said, the European Commission has proposed a binding sustainability framework for biofuels as part of the Renewable Energy Directive published in draft a few days ago on 23 January. The UK Government will continue to negotiate at EU level to ensure that this framework is as robust as possible. The sentiments behind the amendment are ones with which the Government agree, but for the reasons I have given it is not possible to accept it at this stage. The noble Lord asked about the European Commission’s proposal to define qualifying biofuels as those delivering at least 35 per cent carbon dioxide savings and whether we would incorporate those into the renewable transport fuel obligation. The answer is yes. We will need to amend the renewable transport fuel obligation to incorporate the sustainability criteria in the draft Renewable Energy Directive when it is agreed. We are pressing for those criteria to be as robust as possible; that is an important point. Basically, we are with the noble Lord on the amendment. We have to overcome the technical and international rule difficulties but we are pushing to get this agreement in place so that we can proceed in this direction.