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The noble Lord said: My Lords, when I tabled this Question I was assured by the powers that be in my own Whips' Office and elsewhere that it would probably come on before half-past six. In my naivety I thought that meant half-past six last night, not half-past six in the morning. But here we are discussing this rather important issue at two o'clock in the morning. That is partly because we had a Statement earlier and partly because of the very important debate we had on European matters. Bearing in mind the agreement reached by the House recently on the report of the Procedure Committee that Members taking part in a set debate should at least stay for the winding up speeches, I have noticed that at least two Members--there may have been others--who made lengthy speeches indicated that they had no intention of staying. It seems to me that the alternative on these occasions is to withdraw one's name from the List of Speakers in the interest of the proceedings of the House, but there we are. I feel particularly sorry for the Minister who is to reply, the noble Lord, Lord Whitty, who must be feeling very uncomfortable with his recent injury and at being kept up at this late hour. I apologise on behalf of others for that inconvenience.
A little noticed part of the Chancellor's Budget was a tax reduction of 29 per cent. on road fuel gas while, as everybody knows--particularly those who were in central London today--other fuels suffered a whacking increase. There was an increase of 4.25 pence a litre on leaded petrol; 3.79 pence on unleaded petrol; ordinary diesel went up 6.14 pence; and ultra low sulphur diesel by 2.79 pence. In answer to my Question, I suppose the Government would argue that the Budget is itself encouragement for the use of road fuel gases in motor vehicles.
I must admit that my interest in this topic is very recent. Like most noble Lords, I have been concerned at the unhealthy pollution of the air in our cities. One has only to cross the road in Parliament Square from the building which I used to inhabit, which is the Commons' external office building to the main Chamber, to get a very high dose of poisonous fumes. Apart from the unhealthy nature of that pollution we are also increasingly aware of the cumulative effect of global warming.
It was only when I went with the all-party motor industry group on a recent visit to Buckingham Palace where the Royal fleet of motor cars have been pioneers in gas conversion, that I discovered how far behind the United Kingdom is compared with other countries. For example, Italy heads the league table with 1.4 million gas-fired vehicles on its roads. Australia has nearly half a million, North America 440,000; Argentina has 400,000 and the Netherlands 360,000. Even little New Zealand has 25,000 gas-fuelled vehicles on its
There are problems in advocating the use of gas-fuelled vehicles. The main one is the present costs. It takes over £3,000 to convert the average private car or van to use gas as well as ordinary fuel. I commend three manufacturers and in particular Vauxhall Motors and close behind, Ford and Volvo who offer dual fuel installations from new at a rather lower cost of under £2,000. The Government offer environmental grants towards these extra costs and they are used mainly by fleet owners. The cost for each individual vehicle is still substantial and the money which the Government offer in the way of environmental grants is cash limited. The two measures which the Government are taking are the tax on the fuel itself plus the grants. As I say, from the comparative figures internationally it is quite clear that the combination of tax incentive and grants is not enough.
A second problem in the use of gas is the amount of storage space taken up by the extra gas tanks. Most vehicles on the roads of Britain today are equipped to run on gas, petrol or diesel at the flick of a switch. On huge machines such as refuse collectors that does not matter, but the average private car can lose up to half its boot space--not everybody has Rolls Royces the size of Her Majesty's. The solution of course is to have vehicles running solely on gas with storage replacing the space occupied by the fuel tanks. I noticed that the Duke of Edinburgh has just taken delivery of a new taxi cab fuelled solely by gas for use in London to replace his dual-fuel one.
That brings me to the third and main problem and the reason why I tabled this debate; namely, the lack of filling stations. It is a chicken and egg dilemma. Owners will not buy gas-fuelled vehicles until there are enough retail outlets for refuelling them; and manufacturers will not provide outlets for refuelling until there are enough vehicles to use them. That is why it is up to the Government to break that difficult cycle.
I urge the Government to introduce legislation, or at any rate to encourage local authorities and other public operators to require buses and taxis in our major cities, to replace existing vehicles with gas-fuelled ones. That would automatically result in far more refuelling sites and a great reduction in city pollution. London has nearly 20,000 taxi cabs, plus all the belching buses. Those taxi cabs, I understand, are replaced at the rate of roughly 20 per cent. each year so that, if such a measure were undertaken, they would be replaced in around five years' time entirely by gas-fuelled taxi cabs. All our major cities would benefit. For example, Edinburgh has some 1,200 taxies. That is not pie in the sky. In Japan almost all taxis in the entire country are gas-fuelled and the city of Vienna has been using gas-fuelled buses for three decades without a single mishap, and now its entire fleet of 400 buses runs on gas.
My noble friend Lady Thomas of Walliswood will outline some of the steps taken by the Liberal Democrat-controlled council in Sutton. The fact is that some local authorities have pushed forward by using gas-fuelled vehicles themselves. Much more could be done, not just with buses and taxis but with those agencies which are directly controlled by the Government; for example, the Post Office and the police authorities. And what about the Government car pool? I know that a start has been made, but it would be interesting to hear the latest figures from the Minister.
I have not mentioned in this debate and deliberately have not dealt with the question of electric vehicles; their technology is still uncertain. But the technology for the use of gas is already proven and widely used internationally. However, one problem on which I should like to hear the Minister concerns the choice between the two different gases. LPG is currently the most viable alternative fuel for everyday vehicles because CNG requires the storage of gas at higher pressures and current tank technology requires the use of heavily pressurised tanks for CNG. The range in that is more limited in comparison to LPG. On the other hand, it may be that the CNG available resources are stronger and it would be helpful if the Government could give some kind of policy guidance or direction on that issue.
On 23rd December last the Government issued their response to the Royal Commission on Environmental Pollution's 20th report, and agreed with the commission about the benefits of gas as a road fuel. But the question is: what are they constructively going to do about it to change these appallingly low figures? It would be in the interests of the nation's health if they were to make further moves. Gas produces 48 per cent. less carbon monoxide than petrol; 78 per cent. less oxides of nitrogen than diesel; 87 per cent. less particulate matter than diesel; and 20 per cent. less carbon dioxide than petrol. The use of gas could cut global warming overall by 9 per cent. compared with diesel and by 17 per cent. compared with petrol. For the sake of the health of us all, the Government need to take more urgent measures to encourage its use.
Baroness Thomas of Walliswood: My Lords, I am grateful to my noble friend Lord Steel of Aikwood for raising a subject not often discussed in your Lordships' House, even in the context of frequent general transport debates. I spent last Friday and Saturday in Liverpool and Manchester, studying their traffic control plans and actions.
In Manchester, a large light railway system has been introduced and the hope is that it will be extended. Liverpool is moving into the contracting process for a rather less expensive method of rapid transit-guided buses. Both systems are designed to tackle pollution or congestion by transferring journeys from cars to another mode and have proved quite successful--certainly in the case of Manchester.
The success of that borough and of other boroughs and cities in Europe that are contributing to the Zeus project is evidenced by the reducing price of some vehicles for conversion to gas power. The proportion of the Sutton fleet that is fuelled by natural gas is about 37 per cent. When more replacements have been made, that will rise to 40 per cent. next year and to 47 per cent. in 2002. The borough is making itself into an exemplar of how to change a fleet from one type of fuel to another.
The cost to the local authority has been rendered acceptable by the grants it has received. The programme supports the council's policy aim of reducing the environmental impact of local traffic and is supplemented by the installation of a gas refuelling station that is said to be the largest in the country. My noble friend referred to the necessity of introducing vehicles and refuelling stations at the same time. That project and the financial support for it has been made possible by the Zeus project, which has secured funding from DG7 and contributions from the Energy Saving Trust in this country. Zeus involves cities and towns throughout Europe. Margareta Olofsson, the vice-mayor of Stockholm, described the project at a conference in Brussels last June. She said:
The city of Bremen is, interestingly, comparing the various national policy frameworks for achieving environmentally friendly transport, including such matters as fiscal regimes, clean air policies and traffic regulations.
Clearly the Chancellor's reduction of tax on vehicle gas in the Budget is part of a national policy stance. I should be interested to hear--as I think would many others who will be able to read it tomorrow--if the Minister could tell us more about the specifics of the policy approach which lies behind this initiative. For example, what estimates has the DETR made of the relative contribution of a wider use of low or zero emission vehicles to reducing pollution from vehicles compared with other policy options such as the ones in Liverpool and Manchester? What goals and targets do the Government have in relation to the wider use of such vehicles? What additional mechanisms might encourage their wider adoption?
It is clear that the local authorities involved with the Zeus project see themselves as major players in creating a market in low emission vehicles. Do the Government also accept such a role for national government? On the
I have on a number of occasions expressed my conviction that it is not enough to rely just on local authorities to take all the initiatives and the risks and to initiate the new programmes that will lead eventually to a more environmentally friendly transport system. It is for government to lead. The Government indicated their general willingness to do so in their White Paper. I hope that tonight, in respect of gas-fired vehicles, the Minister will be able to enlighten us as to how the Government see themselves pursuing this lead in practice.
The Earl of Winchilsea and Nottingham: My Lords, I, too, am grateful to my noble friend for introducing this topic, which seems to be often and strangely overlooked in the UK, in sharp contrast to many other countries around the world.
The use of natural gas, either LPG or CNG already in use in this country as a fuel for vehicles, is lamentably and laughably low. There are some highly commendable exceptions such as Royal Mail and the Gas Board, and indeed some government cars are being run on it. I am delighted to hear about the London Borough of Sutton. However, public service vehicles lag way behind.
Some noble Lords will know of my longstanding connection with the licensed taxi trade. Both the manufacturers of dedicated taxis in the UK--London Taxi International in Coventry, and Metrocab in Tamworth--have undertaken extensive research into this important subject. This has resulted in considerable engineering developments being made by both of them, and this continues. I spoke to the person at Metrocab who has been working on this project since its inception, Stephen Ferris, and he told me that Metrocab has been working closely with the Ford Motor Company on a two-litre petrol/LPG engine for some time, and it is available now for installation in its taxis on the production line. As my noble friend said recently, it delivered a gas-powered taxi to Buckingham Palace for use by Prince Philip as his regular car.
London Taxi International has looked at both the natural gas possibilities, LPG and CNG, and has had one of its taxis plying for hire on the streets of London for years running on LPG with the tank stored in the boot. It delivered me to your Lordships' House one day. But it is the only one. It would seem from what I have been told by Metrocab that it makes much more sense for cars, vans and taxis to run on LPG rather than CNG because of the time it takes to fill the tank, always supposing you can find a garage that has this facility. Apparently it takes less time to fill a tank with LPG than it does to fill a taxi tank with diesel, but it takes far, far longer to fill the same size tank with CNG. I was also told that the achievable mileage on a tankful of either gas is not quite what it would be with diesel or petrol because the tank can only be filled to 80 per cent. of its capacity due to gas expansion.
Perhaps it could be said that vehicles of all types running on natural gas can do so better and more economically in metropolitan areas rather than in rural districts because of the much longer distances involved. But, wherever they run, surely they must be given the very highest of incentives by the Government. Surely if the Government are serious about doing something about our damaged environment--I believe they are--what could be a better way of showing it than giving their support to this as a matter of urgency.
For many years I have been receiving in my post publications from London Transport called London Lines and On The Move. I am sure other noble Lords are familiar with them. Never have I seen in any of them even a passing reference to natural gas as a possible fuel for any of its buses. I wonder why this is so. The publications are full of articles entitled "Into the Millennium; The Future of London's Buses", which talk about the grand plans it has, but there is not a mention anywhere about natural gas. Not only do I think this astonishing, but very alarming.
I can understand the difficulty of using natural gas on double-decked buses because where does one put the large fuel storage tanks required? They certainly could not go on the roof as they do elsewhere in the world where they are used on single deckers. But they certainly could be used to great effect on the large numbers of single-deck buses operating in London and elsewhere at present.
This brings me to the city of Atlanta in the USA. I go there two or three times a year and I have noticed that it runs considerable numbers of its buses on natural gas. I spoke to its bus procurement officer on Friday to find out what I could. He told me that it has a total of 750 buses in its fleet; 118 run on CNG and it has a further 82 on order with the manufacturers, Nu-Flyer of Winnipeg, Manitoba, which has another factory in the USA at Minnesota. So heavy is the demand for these buses, and so successful are they, that there is a two-year waiting list for them. MARTA--which stands for Metropolitan Atlanta Rapid Transit Authority--is so delighted with them that it is seriously thinking whether instead of splitting its order for 206 new buses between 82 gas-powered and 124 diesel-powered it should not go for all 206 being gas-powered. As all its buses are single-deckers, the fuel tanks are on the roof and are filled when the vehicle returns to the depot at the end of its shift. The operating costs for CNG and diesel buses are about the same but gas-powered buses cost 40,000 to 50,000 dollars more than the conventional ones. However, this is reduced by a massive 80 per cent., the amount which is covered by the Federal Government in Washington, which leaves MARTA only liable to cover 20 per cent. of the total
If we are to continue to enjoy the luxury of having our own individual transportation tin box at our instant disposal, we must be prepared to pay the environmental price. We have not begun to do that. By this I do not mean charging the motorist more in taxes than he already pays. I mean the lead being taken by the Government in aggressively encouraging the use of natural gas as a vehicle fuel. Whatever we do needs to be done quickly. Otherwise it will simply be too late to save our tottering environment.
Lord McNair: My Lords, like my two noble friends who have just spoken, I am grateful to my noble friend Lord Steel for raising this important matter. I should also like to draw attention to the stellar performance on these Benches on this matter.
My personal experience of LPG goes back to the 1970s when I had a Ford Popular engine running a three-phase generator which I attached to a propane cylinder. It was a simple conversion and it worked very well. So I have my personal recommendation to add to the words of my noble friends.
When I decided to speak in the debate, I contacted Shell because I wanted to find out whether a massive conversion of buses to LPG would unbalance the production and supply of LPG and other petroleum products. It appears that that is unlikely. Sixty-two per cent. of our LPG comes direct from the gasfield where it is found in conjunction with methane, which itself requires enormous compression to liquify and thus is not so suitable for the application we are discussing tonight. But 3 to 4 million tonnes of LPG are exported from the United Kingdom annually and would be available for use in buses in this country. The balance of 38 per cent. of the UK's production of LPG is produced in refineries where it represents about 5 per cent. of the total contents of the barrel. There is in fact huge scope for increasing the production and consumption of LPG. That certainly has the support of Shell, but I have not spoken to other oil companies.
The Budget was good for LPG in general, but apparently not so good for bus operators in particular. The reason for this, which I think I understand, is that, although the rebate on the duty on LPG is 100 per cent., the problem is that in terms of volume per calorific value it is a much lighter fuel than even low sulphur diesel and so operators of LPG-powered buses find themselves still at a disadvantage vis-a-vis diesel buses. In Germany, the government have recently introduced an adjustment of fuel duty that slants the figures favourably in the direction of LPG.
I am told that there are between 400 and 500 LPG- powered buses in the European Union, but at present only two in the United Kingdom. We are lagging behind, but not for long I hope. At Watford, Arriva has
What is needed by the bus operators from government is rather more enthusiastic capital support for changing over from diesel to LPG. Daf has produced an 8.6 litre spark ignition engine which is a modification of an existing diesel engine. Since diesel engines operate at a much higher compression ratio than petrol engines, a spark ignition engine using a diesel engine block should prove to be very reliable and long lasting.
Lord Redesdale: My Lords, I begin by thanking my noble friend for initiating this debate, even at this late hour. It is one of the few debates in which I have taken part in which I can be so friendly with all those who have spoken before me. Most of those concerned about this issue are speaking from these Benches.
My interest in natural gas vehicles was sparked as a result of my membership of the Science and Technology Committee and the report that we produced on low emission vehicles. It seemed that the only realistic solution for low emission vehicles in the short term had to be natural gas. The recent reduction in tax on gas fuels in the Budget is most welcome. It indicates that the Government have recognised the merits of gas fuels in reducing vehicle pollution.
It is important to define gas fuels natural gas as the gas that we receive through the mains into our home. Liquid petroleum gas (LPG) comes as a by-product from the petrol refining process. Natural gas in vehicles can take two forms: compressed natural gas and liquefied natural gas (LNG). I should declare an interest as I am currently president of the Natural Gas Vehicle Association. However, I assure the Minister that it is a non-pecuniary position.
I distinguish between LPG and natural gas because there are different levels of emissions, performance, availability and costs. LPG is mainly used in the conversion of petrol engines, and can show improvements in emissions over petrol. The fuel in natural gas vehicles, on the other hand, has a high octane rating--100 to 125--and is low in volatile organic compounds, making it ideal for reciprocating engines and thus an appropriate fuel for vehicle and engine manufacturers to optimise reductions in emissions.
It is appropriate to consider natural gas as the third global fuel, alongside petrol and diesel for worldwide usage. It is the most realistic and practical solution to reducing vehicle pollution, as was pointed out by my noble friend Lady Thomas, and is available worldwide.
Before turning to the environmental benefits, perhaps I may explain the other benefits of a strong home market for natural gas vehicles. With some 1,200,000 natural gas vehicles now in operation, the worldwide growth in such vehicles is expected to exceed 25 million over the next 15 years. Will British industry be in a position to compete--I put that question to the Minister--
UK manufacturers and development centres have more than demonstrated the advanced technology that is present here in the UK. Yet by comparison with countries such as Germany, Sweden, Italy, the United States and Japan, the number of natural gas vehicles on the road is very small. For British technology and industry to compete in this new and expanding global market, there need to be economies of scale resulting from greater uptake at home.
The development work in this industry has continued to produce significant improvements. The cost of vehicle and refuelling infrastructure is high. That is due in part to the sophistication of the technologies and to diseconomies of scale.
An evaluation undertaken in January this year by an independent test house on manufacturers' warranted vehicles compared diesel, LPG and natural gas. The results again demonstrated the very significant reductions in emissions and the contributions that NGVs make to improving air quality and to a reduction in global warming.
Such is the level of reduction in emissions from passenger cars to heavy goods vehicles and buses that NGVs are capable of achieving considerably lower emissions than any other fuels and are well within those proposed in the Euro 4 standards for 2005. It means that we can have that level of improved air quality now. It is interesting to consider what would be the reduction in NOX and particulates in London's atmosphere if all the taxis and buses were converted today.
I mentioned earlier the high cost of entry for natural gas vehicles and refuelling stations which I believe must be addressed in the way the Government provide incentives to encourage greater take-up of NGVs. The economics are not yet right for the natural gas vehicle; therefore attention needs to be given to establishing the cost benefit of NGVs based on emissions, business opportunities and reduced balance of payments, for example. An appropriate differential over other fuels is needed and, sustainable over a period of time, will help to encourage investment in their use and for the vehicle manufacturers to do likewise.
Setting the fuel duty for natural gas at the EU minimum for a sustained period of five years would be a significant recognition of the major contribution NGVs will make to improving air quality. One of the problems I foresee is that in the future we will be using a lot more natural gas vehicles, but unfortunately due to the hesitancy of the Treasury in producing the economic incentives for taking up the technology, the UK will lag behind. That will have a detrimental effect on the people who live in London, in urban areas, especially those who suffer from asthma.
Earl Attlee: My Lords, I am grateful to the noble Lord, Lord Steel of Aikwood, for asking this fascinating Unstarred Question. I am glad that he widened it to include CNG and LNG. I am only sorry that we are not
The noble Lord, Lord Steel, raised the problem of the lack of gas filling stations. While I am extremely sympathetic and attracted to gas vehicles, I am not sure that I would like to follow the noble Lord's route of compulsion to run certain vehicles on gas. I believe that it would be far more preferable to lay down exactly what pollution limits, including noise limits, would apply to certain vehicles. The limits may become tighter and tighter as technology improves. The Euro 1, 2 and 3 are good examples of this process and the noble Lord, Lord Redesdale, referred to Euro 4.
As many noble Lords have rightly observed, the taxation environment in which gas-powered vehicles operate is as important as their benefit to the environment in which they operate. The Chancellor, in his recent Budget Statement, reduced the duty on gas for CNG, LNG and LPG and we welcome it. The signals that the Government send out and their reception by operators are important. I share the view of the noble Baroness, Lady Thomas, regarding the need to encourage private operators and not just the public sector. But can the Minister say whether the rate of duty is now at the EU minimum and if not, how much duty would the Chancellor be forgoing if it were?
Another important component of the signal to operators is the differential between fuel costs when taking into account fuel duty, VAT and fuel consumption. Operators of vehicles and filling facilities need to be sure that this differential will be maintained for the whole life cycle of the vehicle or filling station equipment. That point was made by the noble Lord, Lord Redesdale, and others.
One of the major advantages of gas-powered vehicles is their much lower emissions of particulates, CO 2 emissions and, most importantly, noise. I think that particularly for urban operations, it is important to remember that the emissions, including noise from diesel engines on start up from cold, are nowhere near as good as for gas engines.
Many noble Lords have concentrated on cars or car-derived vans, but I have been speaking to manufacturers and operators of larger vehicles. Enthusiasm and experiences appear to be mixed. What is clear is that vehicles built to run on gas by an original equipment manufacturer (OEM) are much more reliable than a conversion. OEMs will make a judgment as to whether to offer a gas-engined option if they are certain about the lifecycle costs to which I have already referred. The noble Earl, Lord Winchilsea, referred to an OEM (Ford Motor Company) offering an original fit.
The maximum benefits of gas will be obtained from use in urban and return-to-base operations, which obviously obviates the need for a petrol tank as well. Unfortunately, the economic benefits arising from lower duty rates may not be compelling because of the low mileages that these vehicles cover. Thus, the lower running costs may not repay the extra investment required for gas. Therefore, encouragement needs to be given by the vehicle excise duty regime. That point was covered in the consultation document, Reform of Vehicle Excise Duty to Ensure a Cleaner Environment. The noble Lord, Lord Redesdale, explained why government policy is important to exporters in our manufacturing industry. I support his comments in that regard.
What is the view of the Minister as to the appropriate balance between the encouragement of gas-powered vehicles through VED, fuel duty and VAT? Does he agree that the arrangements overall should be tax-neutral? Alternatively, does he have available some other mechanism to offset the higher capital costs of a gas-powered vehicle?
The Unstarred Question of the noble Lord, Lord Steel, is important. It is unfortunate that it could not be taken at a more convenient time, as he had hoped. I look forward to the Minister's reply to the noble Lord's suggestion about compulsion to choose gas for certain vehicles.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, like the noble Earl, Lord Attlee, and the noble Lord, Lord Steel, all of us hoped that this debate could have taken place earlier. The first line of my speech refers to this as a timely debate. In a macro sense that may be true but in a micro sense it does not really feel like it. Nevertheless, I thank the noble Lord, Lord Steel, for introducing this interesting debate and pay tribute to the level of expertise and commitment demonstrated by noble Lords who have contributed to it. We are all very much aware that air pollution and how we deal with it is today a central issue of public concern. This Government are heavily committed to improving the quality of the air we breathe. As soon as we were elected we endorsed the national air quality strategy but on the basis that it would be reviewed at the earliest opportunity with a view to delivering it more quickly.
It is true that road transport is responsible for a significant proportion of air pollution, especially in urban areas. Over 90 per cent. of all London's carbon monoxide emissions and three-quarters of benzene emissions come from road transport. Road transport, in particular diesel vehicles, are also responsible for a significant proportion of pollutants for which objectives will be most difficult to meet, in particular nitrogen dioxide and particulate matter. Even the significant emission reductions arising from the introduction of tighter emission standards will not be sufficient to meet the objectives for these pollutants at all levels. That is why the Government are very keen to encourage the early introduction of cleaner vehicles. We envisage road fuel gases such as LPG and CNG having an important
It was for all these reasons that the Chancellor introduced in the Budget a 29 per cent. reduction in the duty on road fuel gases, it having been frozen in his previous two Budgets. This cut, coupled with the real increase in diesel duty also announced in the Budget, means that the differential in favour of gas vehicles has never been greater. Indeed, that differential is now the biggest in Europe. As the noble Earl, Lord Winchilsea, indicated, it is not a marginal difference.
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