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8.42 p.m.

Lord Palmer: My Lords, I, too, am grateful to the noble Lord, Lord Dubs, for so eloquently introducing this, to my mind, perhaps one of the most important debates ever to take place in your Lordships' House. I must declare an interest. I am a farmer in the Scottish Borders and I grow industrial oilseed rape, most of which goes to France and Germany and is converted into fuel.

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Why do I say that this debate is so important? First, farming is in one of the worst recessions ever. Secondly, there have been no major discoveries in the North Sea in the past decade. Thirdly, OPEC will soon be back in control, and that can only lead to rampant inflation.

Every time in the past five years that we have debated agriculture in your Lordships' House, I have implored both this Government and the last one to spend more money on research and development for alternative fuels that can be more efficient and environmentally friendly. My pleas, sadly, have always fallen on deaf ears.

It is pathetic that we spend just £1.9 million per year--half of what Germany spends--on research and development. Only biofuels (biodiesel and bioethanol) recycle carbon. Cutting the penal tax rate on biodiesel, imposed illogically by the previous government, would be the obvious way to achieve crisply a useful environmental and political gain.

The price of fossil oil has more than doubled in the past year, with Brent crude currently standing at 24 dollars per barrel. It has in the last six months been as high as 30 dollars per barrel. It may be wise now to establish even a small domestic renewable source of diesel fuel prior to what seems an inevitable price hike when OPEC once again takes control of world sales and prices. It is demonstrably true that biodiesel energy life cycles and emissions are both better than those for fossil diesel taken overall.

On researching information for this debate, it is quite fascinating to realise that 100 years ago one-fifth of the farmland of England was given over to transport fuels. I refer to oats and hay for horses. In view of the changing structure of British agriculture today and the current nonsense of "set aside", it is quite possible to foresee a similar amount of land being used again for energy crops. There are about 30 million acres of farmland in England. Currently some 1 million acres are used for oilseed rape, which is used mainly for cooking oil and other food applications.

The best growers can achieve a yield of around a tonne per acre. Therefore, 500,000 acres could be put into industrial cropping for biodiesel to produce 500,000 tonnes of biodiesel itself, making valuable use of the land, the sunshine and indeed the rain to produce energy from our current account, rather than living off our fossilised capital account. Judging by the strange terms of a letter sent to BABFO recently from the Head of New Crops and Sugar Division, MAFF has no grasp of the reality of this matter but wanders into realms that would not seem to be the proper concern of an agricultural ministry. Here again, I make a plea for more funds to be made available for research and development.

In practical terms, within five to seven years British farmers could produce half a million tonnes of diesel from fields which might be relatively unproductive. This would be a 3 per cent start to tackle the problem of how to cope when the mineral oil runs short, as indeed it surely will. Given an appropriate tax regime,

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such production is likely to start very quickly in either Hull or Liverpool, both of which are areas in need of a vast amount of extra employment. Biodiesel cooking oil is also likely to be boosted by purification and recycling of used cooking oil, and this could amount to perhaps 50,000 tonnes per year, solving a tricky waste disposal problem at the same time. I implore Her Majesty's Government to take this on board.

The public likes the concept of clean, green road fuels and wishes them to be available. The present so-called "green" fuels are, by and large, phoney, as they merely reduce emissions while leaving the main greenhouse gas problem untouched. They are finite and polluting. Biodiesel and bioethanol, by contrast, are renewable, sustainable and biodegradable. Promoting these fuels would be a widely understood and popular move in the bear garden of the current debate on road fuel taxes.

The wisdom of British governments, however, has been far more damaging to our pockets, let alone the environment. Although it was Lloyd George who first taxed fuel in 1908, the increase in fuel taxes, compared with the increase in the retail prices index, did not appear unreasonable until the early 1980s. By 1993, in my view it was unacceptable, and since May 1997 it has become outrageous. Every £10 that we spend on fuel includes £8 going straight to the Treasury. Our fuel is already among the most expensive in the world and I believe passionately that expensive road fuel is the ignition light for inflation.

When Rudolf Diesel demonstrated his engine of that name in Paris back in 1908, he ran it on peanut oil. Peanut oil was effectively the first biodiesel fuel and it is pathetic what little progress has been made in the past 92 years. Biodiesel in this country is mainly derived from oil seed rape and sunflower oil. It has a sister called bioethanol derived from wheat, potatoes and sugar beet.

Although presently costing more to produce than fossil fuels, they are less toxic than table salt, less harmful to the skin than soap, are biodegradable in water, contain negligible sulphur, do not contribute to global warming and yield significant reductions in the most harmful of emissions. The tail pipe emissions from bioethanol are particularly low which make it an ideal fuel for inner-city low emission zones.

Currently eight European cities use biodiesel in public transport systems. It is growing (in both senses) in popularity in the United States and is sold at over 700 filling stations in Germany. Virtually all diesels can run on it with little or no modification, but you will not find it here because in 1995 the last government imposed full duty on it, making it uneconomic to produce, and the present Government, sadly, have kept the status quo.

If we were to reduce the duty to 10 per cent of present levels, production of this cleaner, renewable fuel would be achievable. It would reduce our dependence on the Saudis and perhaps do something to restore this Government's reputation among farmers. My Lords, does that make too much sense to be part of any British government's transport policy?

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By producing environmentally friendly fuels, everyone will benefit and I urge Her Majesty's Government to take action by pump priming tax derogation now and spending more on research and development before it is too late.

8.52 p.m.

Lord Beaumont of Whitley: My Lords, I too thank the noble Lord, Lord Dubs, for initiating this extremely important debate this evening.

Some of the cleanest and most environmentally friendly transport is powered, as has already been said, by electricity. Of course, the true measure of how friendly it is depends on how the electricity is generated. But now that more and more of it is powered by wind and waves and other clean sources, transport which can use that electricity is important.

I want to take up with the Minister this evening--and I have given him notice of this--the matter of the financial and bureaucratic blocks being experienced by the Bristol electric railbus, which is one of the most promising developments in that field. I have no interest to declare except a lifelong friendship with the person behind it, Mr Jimmy Skinner, who was also for a long time a colleague of mine in the Liberal Party.

The Bristol electric railbus uses 34 per cent of the energy of a conventional roadbus and runs on an easy-to- build lightweight track. Its unique feature is a steel flywheel which acts as a rechargeable source of energy. It has been running reliably now for three years along a half-mile length of track, and its proponents, who have sunk a lot of their own money in it from a sense of public duty--I can vouch for that as the reason--and Bristol now want the opportunity to use it on a longer and eventually commercially viable track.

One of the ways in which that could be done without noticeable extra expense is by the use of derelict track owned by Rail Properties Ltd and, therefore, under the direct control of the Government, and the objections so far seem to be of a purely bureaucratic nature. I ask the Minister to see what can be done to resolve that.

On the wider scale Bristol is applying for extra money for development, but the doctrine, sound in principle, that local authorities should be responsible for their own transport systems has blocked progress. Mr Rickett, head of the Integrated Transport Task Force--another of these hybrid animals--has said,

    "The government is not going to change its policy that local authorities should decide what forms of transport are best suited for their area".

I should say in passing that I am far from clear what authority he has for saying that the Government will or will not change their policy. I should have thought that was up to Ministers. But in any case, we are not asking for that policy to be changed; we are asking for a policy of backing innovative clean transport and research, experiment and deployment for local authorities that want it to be funded centrally for the good of all.

I say that the doctrine that it should be done locally is sound in principle, but local authorities are strapped for cash and innovative systems which could have a

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national, and indeed an international, use should surely be funded nationally. I understand that when Glenda Jackson was the Minister responsible there was such a fund but that it appears to have disappeared.

When publicly minded individuals and firms come up with ideas which they test satisfactorily and which everyone except the immediate competition--in this case buses--can see is a very good thing, it is appalling that those ideas should be frustrated.

In addition to my first question about the use of rail owned by Rail Properties Ltd, I make a further plea to the Minister that he will apply himself to seeing that the main principle is addressed. He has a reputation in this House and far beyond for being a man not tied down by shibboleths and bureaucracy. I beseech him to urge the Government to apply themselves to the realities of progress in this field.

8.56 p.m.

Lord Stoddart of Swindon: My Lords, I too thank my noble friend Lord Dubs for raising this very important Question. Indeed, I hope that the Government will listen to what he said and take heed of his suggestions and, indeed, of the many other suggestions which have been made by other noble Lords this evening.

There is no doubt that traffic fumes from all sources are certainly a health hazard and, indeed, some estimates have put the annual death toll from traffic fumes at some 10,000 in London alone. So there is certainly a health aspect to this problem which should be addressed. Indeed, on that count alone, the issue is important.

Traffic fumes also create a smelly, unpleasant environment which interferes with people's enjoyment of facilities, and especially shopping in towns. Let us take Oxford Street, for example. Oxford Street is probably one of the finest shopping streets in Europe, if not in the world. Cars are banned. But large numbers of buses and taxis belching diesel fumes make shopping for many, especially asthma sufferers and others with breathing problems, a nightmare indeed.

That is a place where we should certainly be using environmentally friendly fuels of various sorts, or at least of one sort. The electric fuel is the one which I favour. A start should be made in converting to environmentally friendly fuels for all vehicles.

Many suggestions have been made this evening. Liquid petroleum gas--my noble friend Lord Dubs mentioned it--is certainly a fuel which should be considered as an alternative. Of course, biofuels should also be considered, as was suggested by the noble Lord, Lord Palmer. All I would like to say to him is that I believe that in Reading there was an experiment with one of those fuels in the public transport system and the whole town smelt of fish and chips. Of course, some people like fish and chips; others do not. Nevertheless, it is an idea which certainly needs consideration.

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