Climate Change Bill [HL]

My Lords, my noble friend Lord Davies of Oldham has just commented that that is a tough one and the noble Baroness is right to a certain extent. This issue is so complicated that the note I have on the purpose and effect of the amendment runs to more than six pages, but my speaking note is three pages long. I make no criticism of anyone, but it is an incredibly complex area and the House would not thank me for going through all the purposes and effects at this time of night. I shall stick to the speaking note which I hope will address most of the central issues that have been raised. The amendment proposed is designed to place a new duty on the administrator of the renewable transport fuel obligation to ensure that only biofuels that deliver carbon savings and that contribute to sustainable development and the protection of the environment generally should be eligible under the RTFO for certificates. In Committee I said that the sentiments behind the amendment are ones with which the Government wholly agree. I also outlined why the Government believe that this is not something the UK could readily do in a way which is consistent with European Union or World Trade Organisation trade rules. We do not have agreed standards for sustainability or an agreed methodology for calculating the carbon savings of biofuels. If the UK imposed its own standards those are likely to be challenged. Our preferred approach has been to lobby the European Union to introduce a mandatory sustainability framework. In part it is due to these efforts that the draft renewable energy directive, published on 23 January this year, contains a sustainability requirement and criteria as well as a greenhouse gas saving requirement and methodology. The Government will continue to negotiate at EU level to ensure that these requirements are as robust as possible. The proposed amendment will not be needed in order for us to implement the renewable energy directive when it is adopted. Nor do we think that it will work as intended to provide an interim carbon and sustainability regime during the period before the directive is implemented. The proposed new Section 125A(3), which the amendment would insert into the Energy Act 2004, imposes a duty without defining what is meant by sustainability or how carbon emissions are to be calculated. To avoid uncertainty, the RTF order would need to be amended to clarify the criteria for sustainability and carbon saving. The new section and the amendments to the order would have to be notified to the European Commission under the technical standards directive and would be subject to a standstill period of delay. The initial standstill period would, we believe, be 12 months because the UK legislation would concern a matter covered by the draft renewable energy directive. The standstill period would be extended to 18 months if the Council adopts a common position on the draft directive. By the time that the standstill period is over, the renewable energy directive is likely to have been adopted and the directive provisions would supersede the proposed UK legislation. In addition to the standstill required by the technical standards directive, further delays might arise from compliance with the Government’s obligation under the Energy Act to consult on the required amendments to the RTF order and with the affirmative resolution procedure applicable to the amending order. With the delays described, in reality the choice is either to continue with the renewable transport fuels obligation we have now, with a reporting mechanism rather than mandatory standards, until the directive, containing sustainability and greenhouse gas saving requirements, is implemented, or to revoke the order and withdraw the renewable transport fuels obligation until the directive is implemented. It is better to continue with the RTFO and its reporting mechanism, which will encourage the development of information supply chains. This will help the development of mandatory standards in the future. On a couple of points that were also raised, it is worth putting on record that the definition of a sustainable biofuel and the methodology for calculating carbon savings are rapidly evolving. Trying to impose standards before any consensus is reached will be difficult. The RTFO carbon and sustainability reporting mechanism is an important first step towards mandatory standards. The renewable energy directive will, when adopted, provide mandatory standards on an EU-wide basis. We hope and believe that this will be generally welcomed. UK officials will be working hard in the detailed negotiations to ensure that the standards will deliver the right results. The Government are taking seriously the concerns about the sustainability of biofuels. On 21 February the Government announced a review, led by the Renewable Fuels Agency, of the emerging evidence of the indirect impacts of biofuel production and what these mean for future biofuel policies and targets. The review will take into account recent studies that have suggested that the indirect or displacement impacts of biofuels have not been properly taken into account in earlier carbon-saving calculation methodologies. Initial analysis will be provided to Ministers as soon as possible, with a full report to follow over the summer. The review should help to ensure that we have the right evidence base to support decisions on the future of the renewable transport fuel obligation scheme and longer-term targets and, we hope, cover exactly the kind of example that the noble Baroness, Lady Miller, gave of land being swapped for one purpose to avoid having the certificate and used for another purpose—in this case, chopping down the trees and growing food—that does not require the certificate. Clearly, the whole chain is not right; it is not consistent with what we all understand as sustainable biofuels. The issue here is serious. My two notes cover the very point that the noble Baroness has raised, so she has scored a bull’s-eye there. We hope to cover that with what we have announced. I cannot defend the delays, by the way. That is the procedure under the EU for this legislation, and there is no way we can change it. These enormous delays are due to the technical standards directive. In a way, one can see why that process is there: if you come along with a EU-wide standard, you do not want all 27 members going off and doing their own thing. You would end up with a standstill. The alternatives are that we pull back from what we have been doing and do nothing, which would not send the right signals, or that we do what we have been doing to create a reporting mechanism and gather some better information. Of the two courses the latter is preferable, and that is the one there would be consensus for.