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The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Mr. David Jamieson): I congratulate my hon. Friend the Member for Peterborough (Mrs. Brinton) on securing the debate. She has taken much interest in environmental matters and has always brought her considerable experience to debates such as this, as she has done tonight.
In answer to one of my hon. Friend's latter questions, I can assure her that, while I am in this job and my hon. Friends are in their jobs, transport policy will be informed by environmental concerns.
My hon. Friend made important comments on transport and traffic, underlining the issues addressed in the 10-year plan. I am pleased to be responsible for cleaner fuels and vehicles in the Department of Transport, Local Government and the Regions, and, like my hon. Friend, I have a personal conviction about the potential to raise transport quality as well as improve the environment. We can do that by reducing air pollution and the resulting health problems, making vehicles quieter, enhancing local liveability, helping to bring about an urban renaissance, cutting greenhouse gases and opening the way for haulage to operate more flexibly.
My hon. Friend raised the issue of liquid petroleum gas, which is better known as LPG, but that is only part of the Government's agenda. I welcome the opportunity briefly to outline that agenda and its underpinning strategy. The components are to secure the maximum take-up of today's environmentally friendly fuels, bring forward the next generation of green fuels and lay the foundations for the United Kingdom to benefit from the longer-term prospects for fuel-cell propulsion and the low-carbon economy.
That means using the right mix of measures, including, as my hon. Friend mentioned, appropriate taxation of the different fuels and types of vehicle, in line with the Government's statement of intent on environmental taxation. The strategy includes grants to provide incentives and support for motorists and businesses in buying green vehicles, action to promote information and
I have briefly described the structure and sinews of the strategy, but I want now to fill out the picture. As my hon. Friend said, LPG is here now and is already delivering. That success follows the action taken by the Government, who have put in place the low duty for LPG and compressed natural gas, or CNG. The rate is 6p per litre, compared with 45p for petrol and diesel, which means a pump price of about 40p. We have established the Powershift grant and promotion programme, and increased the scheme's funding substantially in the 2000 comprehensive spending review, giving it a firm three-year forward budget of £30 million.
The oil companies have responded with impressive forecourt investment. As my hon. Friend said, there are now more than 750 LPG outlets and the number is growing daily. We have a strong and high-quality conversion industry. The car companies are now starting to offer LPG models as standard, off-the-assembly line options, so that buyers do not have to arrange separate conversion. That further establishes LPG as a mainstream vehicle option. However, technology does not stand still. Conventional fuels and vehicles have become much cleaner in the past few years, which challenges the gas technologies to raise their environmental performance in the same way.
My hon. Friend noted that the Government are currently consulting on the future direction of the Powershift programme. We are maintaining the funding for LPG grantsthere is no question about thatbut we have suggested that grants should now focus on the conversion of light-duty goods vehicles, as the biggest air quality benefit now comes from displacement of diesel. Hence the proposals to switch resources progressively towards such vehicles. Some responses argue that refocusing of the grants should be taken more slowly. That view and all comments will be carefully considered.
The Government also want to push hard on CNG, which is the other main gas fuel that is now available. It has huge potential to make heavy goods vehicles significantly cleaner and, importantly, quieter. We have put the economic parameters in placeguaranteed low duty for CNG, plus the grants available through the Powershift and CleanUp programmesto assist HGV operators in investing in new CNG-fuelled vehicles and in converting existing vehicles. There is still a chicken-and-egg problem with the fuel network: there are not many CNG vehicles, so there are not many outlets, and vice versa. We have begun two pilot initiativesone with the London Mayor and Transport for London and another with Manchester city councilto demonstrate how a local agency can break into the circle by bringing together prospective CNG users and suppliers.
The second strand of the strategy is introducing the next generation of fuels. As my hon. Friend said, we are considering hydrogen and biofuels, which can start to decouple mobility from climate change. That is crucial. My hon. Friend mentioned biofuels, which are practical and can replace and be blended with fossil petrol or diesel in existing engines. When compared with fossil fuel, the carbon saving is highest when the biofuel is made with waste or recycled material. It is less when the feed stock is specially grown using fertilisers and energy.
We intend this country to be a leader in biofuel technologies. The Chancellor launched the greener fuels challenge in last year's pre-Budget report to identify the most promising fuels for tax treatment. That led to the 20p per litre reduction in duty for biodiesel in the Budget. That will encourage biodiesel, which is produced in the UK with used vegetable oil.
In the Finance Act 2001, we took powers to set low duties for pilot projects aimed at bringing forward other new fuels. Companies will shortly be invited to introduce their proposals, and we aim to announce the successful pilots later this year.
Bio-ethanol made from agricultural waste material or from municipal refuse is especially interesting. It delivers double benefits: a new source of farm income, and a better option for waste disposal. It is a productive alternative to incineration or landfill. The potential is obvious.
I am aware of the arguments that there should be an even larger duty cut for biodiesel to open the way for biodiesel made from virgin rapeseed, and that biodiesel duty should be on a par with LPG or CNG.
As my noble Friend the Under-Secretary of State said in the other place, the Government will continue to keep all biofuels under review, including biodiesel production from rapeseed. Doubtless, continuing developments will occur in technology and rapeseed cultivation. The case for even lower duty on biodiesel, on a par with LPG and CNG, was addressed in the debate on the Finance Bill. My hon. Friend the Financial Secretary explained that the prime purpose of the low duty on LPG and CNG was to help combat air quality problems. Experts generally agree that biodiesel is no better than fossil diesel on the most important emissions. Rapeseed biodiesel offers some carbon savings compared with fossil diesel, but the benefits are fairly limited because of the amount of fertilisers and energy used in growing rapeseed.
If we look even further ahead, there is the firm prospect of electric drive vehicles running on fuel-cell technology. That opens the way for a clutch of benefits. They include higher vehicle efficiency, better in-car amenities, zero tailpipe emissions and lower carbon emissions. Carbon emissions will be almost zero when the hydrogen is renewably generated.
We want this country to be out in front. In the autumn, my Department and the Department of Trade and Industry will produce a discussion document, entitled "Powering Future Vehicles." It will set out our strategy for promoting the development, introduction and take-up of fuel cell and other new technologies, and for ensuring that the United Kingdom automotive industry is fully engaged in that process. That will open an extremely important discussion, with great significance for the whole automotive industry and the environmental footprint of transport.
In the time available, I have ranged widely on the subject, and I hope that that has been useful. I am grateful to my hon. Friend for initiating this evening's debate and for her presentation of the case. If she believes that any issues have not been covered in adequate detail, I will ensure that my officials provide a response shortly. I am glad that the matter has been aired and I look forward to discussing it in future.