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John Pugh
I am certainly surrounded by people who are far more learned than myself in the field, but I shall have the temerity to continue.
Even if the biofuels issue has moved on to the discussion of what are called second generation biofuels, where people talk about not using virgin land or crops but municipal waste and algae, technical questions about the reliability of supply remain, particularly if whole-scale, mandatory use in other fuels is considered an option. I am simply pointing out that there are problems, and I think hon. Members’ interventions have helped me to illustrate precisely that point.
In some ways, electric cars seem a perfect solution, until one considers the production costs, which are currently high. There are issues with the battery, such as its weight, life and endurance, and with how the electricity itself is produced; the electricity might not have been produced in a carbon-neutral way. There is also the issue of flexibility of use, which I think is well understood by anyone who considers the topic for a second or two: what happens when battery life is exhausted?
I recognise that electric motors can be made to become more efficient; that battery technology can be increased; and that we can have charging points across the country—in fact, grants are, I believe, available at the moment and points are appearing—but there is still some way to go. One of my constituents, who died over the weekend, had been progressing with the Department for Business, Innovation and Skills some new development that would make electric motors a lot more efficient and batteries a lot more effective. Developments will be made in that field, but my best guess—this is borne out by conversations that I have had with the motor industry—is that despite Government investment and considerable Government enthusiasm, from some Ministers at any rate, electric cars will probably remain a niche market, extending only as the use of hybrids becomes more popular.
Even were electric cars to take off for the motorist, we will not see electric buses, unless we call them trams, and to be fair, the electric lorry is some way off. Lorries necessarily travel long distances, and the cost of that and the weight of carrying batteries to enable them to do that would probably be wholly prohibitive for quite some time to come.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
Does my hon. Friend agree that one of the greatest challenges to the roll-out of electric vehicles is addressing what is called range anxiety, where drivers are worried that they will, like the Duracell rabbit, run out of power in an unfortunate place?
John Pugh
Yes. I think that, to some extent, the worry is misplaced. I think the range is greater than people imagine, but that underlying anxiety makes it difficult to sell purely electric cars, as opposed to hybrid cars; it is a lot harder ask of the consumer. In any case, when it comes to value for the consumer, electric cars are head to head with the new generation of the ever more efficient and quieter diesels. Looking at what is happening with car market sales, one can see the result. However, even with lower emissions, more diesels clocking more miles in bigger cars, which is what we seem to be seeing at the moment, will not significantly reduce the nation’s carbon footprint in the long term.
In the short term, there is also the added complication of more particulates being released into the air, which could have some negative short-term effects on people’s health. Some particulates are carcinogenic, and certainly none of them are particularly good for people’s respiratory system. Some people say that air pollution at the moment, particularly from diesels, is as dangerous as passive smoking. That brings me to LPG and CNG.
LPG creates fewer emissions—15% less than petrol and 40% less than diesel. It has no production problems; we make LPG vehicles in this country. Sadly, they are mostly left-hand-drive and exported, but they are made in large numbers in this country. It is a mature technology. It is being scaled up throughout the continent, and we have in place a distribution network—something like 14,000 points minimum, with most of the major supermarkets providing an obvious port of call for people.
An LPG vehicle can be easily converted—at the flick of a switch—to a petrol vehicle without detriment to its engine or its performance. However, when we look at what is happening with LPG in this country, we see stagnation, with very limited production. Granted, there are some post-production adaptations, but even when we think about that, it is a Catch-22 situation.
I have looked into the issue. I own two old cars, both of them about 16 or 17 years old. Both have fairly large engines, are quite expensive and could benefit from being converted. However, the cost of conversion probably now exceeds the cost of purchasing both cars, so someone in that sort of situation is unlikely to do so. The real issue with an older car is that, having done the expensive conversion, can anyone guarantee that the car will not fail in some other respect?
Equally, if someone is thinking about converting a new car, which makes an awful lot of sense over the lifetime of the car, they will run into issues regarding the guarantee on the car and its servicing. The garage from where the car was bought may not be happy to deal with it once it has been converted. The guarantee and service issues are enough to deflect all but the most determined purchaser.
Either way, there is a problem. The solution is for us to produce and use more LPG vehicles, but we are going backwards here. If anyone looks at the second-hand LPG market, as I have, they will find second-hand Vectras and Astras, but those cars are about seven or eight years old—vintage—simply because cars of that sort are not being produced for the UK market anymore. However, Opel, which is virtually the same company, is producing the Opel Adam, a new LPG car, as a brand leader. We therefore have the phenomenon where, in an allegedly not-so-developed country such as Turkey, there is a 20% uptake of LPG, while in England, the figure is 0.5%.
If the situation is poor with cars, it is probably worse with freight, where the whole-life cost of lorries—lorries are surprisingly expensive—have to be factored in by hauliers. In terms of cost per mile, it would benefit an enormous number of hauliers to convert, as long as they can predict the cost over a period, but to do so, they must have some sort of guarantee that the financial environment that they are in will remain somewhat similar.
We can see how a change in the financial environment has made a difference. At one time in the north-west, quite a few LPG buses were running around—they were very clean indeed—but changes in the bus grant and the subsidy bus companies got on their diesel simply destroyed the network, and firms such as Arriva rapidly withdrew from providing them. Initially, I thought it was an issue of reliability and so on, but that turned out not to be the case.
That is the problem. We have a solution, a partial solution or an off-the-shelf solution, which we can implement now, but we are not making any headway, while the rest of Europe is. Why is that the case? Given that we have a solution—it is not the sole solution, and it may not be the long-term solution, but we can do something appreciable to reduce emissions—why has it not been implemented? I think that it is because the Government are not creating a sufficiently certain economic environment.
It is often said that two things in life are certain: death and taxes. The problem is that taxes to provide fiscal environmental incentives are not that certain. There is a differential between LPG and petrol, but it is agreed annually. When the Government are pressed by Members to do more, they respond with a formula—it is in the debate pack—that goes something like this:
“The Chancellor keeps…under review and takes into account all relevant fiscal and economic impacts when taking decisions.”—[Official Report, 13 November 2012; Vol. 553, c. 176W.]
On the face of it, that sounds rational, until we recognise that long-term investment requires at least medium-term predictability. My worry is that, without predictability, many green technologies are destined to tread water. That is not speculation; we just need to compare the UK with other parts of Europe and to look at what happens there. The empirical evidence is clear: where there is a more far-sighted, more determined fiscal climate, LPG and, I dare say, other forms of green transport expand.
I can understand the Treasury view—it is anal, it is perhaps sound accountancy and it is prudent—but it is self-evidently a lousy business strategy, and it simply has to be challenged. When I raised the issue during the passage of the Finance Bill, the Treasury Minister—he is now the Financial Secretary to the Treasury, and I am assured that he is going places—replied:
“I hope he will understand that the Government need to balance the provision of certainty with the ability to respond to economic and fiscal developments. We can provide a degree of certainty…but I hope he”—
that is me—
“will take into account that there needs to be a certain degree of fiscal flexibility.”––[Official Report, Finance Public Bill Committee, 13 June 2013; c. 526-27.]
I appreciate that, but if there is such uncertainty, it prevents consumers, councils and businesses from thinking ahead and doing energy deals over many years. What is to prevent the Treasury from making a decision on the differential that contains caveats to protect against unpredictable, massive future volatility?
An agreement could be established that gives the Treasury some comfort and investors in LPG who would like to invest further some confidence that they will get some return on their investment. Is it not better to try to achieve that outcome than to have what we have at the moment, which is a fiscal incentive that, if the facts are to be believed, does not act as much of an incentive? If that incentive was working, I simply would not be here. There is no point in me or the Treasury acting in a wholly futile way. If the incentive does not do the job, we have to look at it again.
We need critical mass if LPG is to be the force it might be. Members can probably recall a time when diesels lacked critical mass. They were associated, particularly in the passenger car market, with clouds of black smoke, noisy, rattling engines and slow acceleration. The tipping point came when one neighbour could look at the shiny car in the other’s drive, discuss it with them and find that the car, which did not appear to be belching black smoke or rattling, was actually a diesel. As a result, diesels took off to a great extent in this country. The same can happen with LPG, but we still have some way to go.
In 2005, all the political parties talked about Mondeo man. I actually live next door to him, in so far as my neighbour has bought a P registration LPG Mondeo estate on eBay for a modest price. He swears by its reliability and economy, and he gets a huge mileage. He has found a rare pearl and an unusual buy, because there are not many cars like that.
For many people, it would be desirable to have a vehicle that is reliable, economical to run and environmentally less bad than a diesel, but that simply will not happen until two things come about. First, the Department for Transport needs to listen a bit harder to the industry, and I hope this new Minister has an open mind and will listen. However, he has a bigger task: to ensure the Treasury listens much harder to the Department for Transport.
Ian Swales (Redcar) (LD)
It is a pleasure to speak in the debate. I congratulate my hon. Friend the Member for Southport (John Pugh) on securing it and giving it an imaginative title, which allows us to range over the subject with abandon.
There is an important distinction between greener transport fuels and making transport greener, and I think that my hon. Friend made several points about the latter issue. There is no doubt that vehicle manufacturers and many others, such as fuel manufacturers, have contributed to an enormous reduction in the amount of fuel used for road transport. The car that I drive gets more than 60 miles to the gallon, which would have been unthinkable when I was tinkering with cars in my early 20s. We have heard about the possibility of switching fuels, but although liquefied petroleum gas may reduce fuel use, it is, as its name suggests, a fossil fuel.
I want to talk about fuels that I think of as greener than fossil fuels. There are three basic sources: liquids, gases and electricity. The important thing is to think about where they come from, and many contributions today have been about that. As my hon. Friend said, there are many sources of electricity, and some could well be more polluting than putting petrol in the car. For example, electricity may be generated in a coal-fired power station, then go down a line with the associated line losses, and into a car that is plugged in, but that is an incredibly inefficient way to fuel a vehicle.
An important point about electric cars is where the electricity comes from. Just last week a car went all the way across Australia entirely on solar power. Unfortunately, we do not have the weather here to see that as a long-term solution, but at least it proved that it is technically possible. The journey was 2,000 miles in six days, so that was pretty good mileage. Electricity is clearly an option for greener fuel.
There are gas possibilities, of which hydrogen is the most obvious. The subject is bedevilled by different views of science, statements from NGOs and so on. In an intervention, hydrogen was linked to crops, but the biggest source of hydrogen in my constituency is the ethylene cracker. Plastics are made by extracting hydrogen from gases, essentially, and there is a hydrogen surplus in Teesside, which comes entirely from the petrochemical industry—not from crops at all.
There are many sources of hydrogen, and the most likely one in future is surplus electricity from renewable electricity generation. It is technically fairly simple to use surplus electricity from wind turbines, for example, to generate hydrogen, which could become fuel for vehicles. There are many technical possibilities for hydrogen generation, without necessarily using crops. Hydrogen is an incredibly powerful fuel.
It is an amazing fact that splitting a water molecule into hydrogen and oxygen gives the fuel that sent rockets to the moon. It is necessary only to recombine them, and that can send rockets into space; it is the perfect fuel because it produces water again as a by-product. Hydrogen must be on the long list of future fuels for that reason, if no other.
There are many liquid biofuels, some more controversial than others. One is used cooking oil, which my hon. Friend the Member for Birmingham, Yardley (John Hemming) is keen on. That is clearly a good environmental use for oil that would otherwise be thrown away. However, the amount of what is called used cooking oil throughout Europe is many times the amount actually used for cooking.
Imports of palm and other oils, which the hon. Member for East Lothian (Fiona O'Donnell) mentioned, are driven partly by the market for so-called used cooking oil. A great deal of policing of the source of the material is needed, because there are loopholes and many traders who run rings round the industry. Equally, however, many small-scale collection facilities produce fuel, and they have a role in the future.
I want to talk now about crop-based biofuels. I must declare an interest, because Europe’s largest bioethanol plant is in my constituency. I challenge the idea that we can have either food or fuel. We are still paying farmers in this country not to grow things—including 6 million tonnes of sugar beet, which is potentially a fuel for a bioethanol plant. The idea that the issue is all about land does not always stand up to examination. There are many political, economic and agricultural reasons why there are food shortages in the world, and, when overall world land use is considered, land is quite far down the list. Perhaps that is controversial.
Mr Goodwill
The hon. Gentleman should be aware that the current EU set-aside requirement is zero. When land is set aside it is usually, currently, because of some environmental arrangement that the farmer has entered into. The amount of set-aside in the UK is dramatically less than it was 10 years ago.
Ian Swales
I thank the Minister for that response. I recognise his special expertise in this area.
I want to talk about the sustainability of the bioethanol made in my constituency. It is made from animal-feed wheat, not human-grade wheat, and at the other end we get three products: bioethanol; carbon dioxide, which is captured for use in the food and drink industry in a separate plant; and crucially, high-grade animal feed. All the protein in the wheat ends up in high-grade animal feed, which is highly prized in the agricultural industry, to the point that there are times when those at the plant tell me that it is an animal feed plant with a bioethanol by-product, rather than a bioethanol plant with an animal feed by-product.
The high-protein animal feed replaces imports mostly from South America, mostly based on soya and mostly grown on former rainforest land. Far from being unsustainable, that high-grade animal feed, a by-product of the bioethanol business, is in effect replacing the use of rainforests in South America. A cradle-to-grave view of the sustainability of all greener fuels needs to be taken, because there are an awful lot of misconceptions about how some of the businesses work.
Mr Goodwill
My hon. Friend will be aware that the by-product from those plants is suitable only as ruminant feed. Much of the grain in South America is produced to fuel the chicken and pork industries, which seems to be the big demand in the developing world.
Ian Swales
I recognise that the Minister has a special expertise, but I know that there is demand in the marketplace for the feeds, which form only part of the overall mix. Having enjoyed the product of a ruminant in my cup of tea earlier this afternoon, I know that they have a place in the final food chain.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
I am pleased, Mr Weir, to be here today. I congratulate the hon. Member for Southport (John Pugh) on securing this debate. He touches on a key issue for my new Department, which is how we can build a low-carbon transport system for the 21st century. Let me briefly mention my own interest in this, which was alluded to by the hon. Member for Redcar (Ian Swales). As a farmer, I produce wheat. Indeed two loads of it went to the Hull plant last year to produce bioethanol. I must admit to feeling guilty when I saw perfectly good wheat, which could be used for animal feed or biscuits, going to produce ethanol, so I was reassured to hear from the hon. Gentleman that the residue is not wasted but used as a ruminant feed.
Although I am new to this role, I am not new to the issue or the subjects raised in today’s debate. Way back in 2008, I was fortunate to be called by Mr Speaker to ask a question of the then Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who I understand is still a Member of this House, about the impact of biofuels on food production. My interest in the issue remains to this day. The question I asked went something like this: is it better to put ethanol in a Range Rover’s tank or food in an African child’s stomach? I must say I did get quite a good answer from the then Prime Minister. Before that, I was a Member of the European Parliament and served on the environment committee as a deputy co-ordinator for the European People’s Party group and was involved in much of the European legislation that we are using now to clean up our vehicle fleet and the atmosphere.
Many hon. Members will have seen the recent UN report on the latest science of climate change, which clearly reveals the costs of failing to address the dangers of climate change. The Government are committed to building a low-carbon energy system that avoids such risks, and transport must play its part in the challenge.
Transport accounts for around a quarter of UK carbon emissions, and the share is rising. It is essential that we act now to reduce the impact of transport on our environment. Last month, the Government published their strategy for electric vehicles, which is a key element of our plan for a low-carbon transport system. The Government’s vision is that by 2050 almost every car in the UK will be an ultra-low emission vehicle. As well as cutting carbon, electric cars have the potential to reduce our reliance on foreign energy imports and to clean up the air in our towns and cities.
The Government are determined to seize this opportunity, and to place the UK at the forefront of the design, development and manufacture of ultra-low emission vehicles, and I am sure that we will work with the Automotive Council to do just that.
Ian Swales
Does the Minister feel that his colleagues in the Department of Energy and Climate Change, who are worried about the lights going out this winter, are factoring into their work on future power generation the electrical demand that he is talking about?
Mr Goodwill
Yes, I am sure they are. I am concerned that one means of addressing the range anxiety problem is to have fast-charge cars. Electric cars work well when they are charged overnight with renewable energy or nuclear energy, but once we start fast-charging cars at filling stations, we will have a major problem not only with generation capacity but with the grid’s ability to carry that amount of electricity.
However, not all modes of transport can be easily electrified. Aviation and heavy goods vehicles are likely to continue to require liquid fuels for decades to come. It is therefore essential that we develop the technologies to produce low-carbon liquid fuels.
Biofuels are renewable transport fuels created from organic matter and offer one way of creating low-carbon fuels. However, biofuels—and bioenergy more generally— also present complex challenges. Last year, the Government published a strategy for bioenergy, which recognised its important role in allowing the UK to meet its climate change objectives. It concluded that by using bioenergy, we could cut the costs of decarbonising the UK by £44 billion.
Fiona O’Donnell
I thank the Minister for giving way and take the opportunity to welcome him to his new role. Does he agree with his predecessor, the Minister of State, Home Department, the hon. Member for Lewes (Norman Baker), who has perhaps gone to a better place now, that some forms of biofuels are worse for the environment than fossil fuels?
Mr Goodwill
I have seen analysis of some of the bioethanol produced in the United States which indicates that that is the case. I will comment on the particular impact of fuels as I make progress in my speech.
The Government published a strategy on bioenergy, which concluded that by using bioenergy we could cut the cost of decarbonising the UK by £44 billion. Other reports have estimated that the biomass industry could provide 50,000 jobs. There are clear opportunities for the UK in the global race for growth driven by science and innovation, and it is an industry that we need to develop. However, the strategy also made it clear that bioenergy had its risks. If it is not managed properly, bioenergy can actually increase greenhouse gas emissions and put at risk key objectives such as food security. It is therefore essential that we proceed with care and develop systems that use bioenergy only where it is genuinely sustainable.
We have already taken important steps on the path to genuinely sustainable biofuels. In 2008, the Renewable Transport Fuels Obligation was established. For the first time, biofuel was required to be blended into road transport fuel. In 2011, the UK introduced mandatory sustainability criteria to the RTFO. Those changes meant that biofuels could no longer be sourced from areas of high biodiversity, such as rainforests or wetlands. In 2011, we also saw the introduction of double rewards for advanced biofuels, also referred to in this debate as second generation biofuels, and biofuels made from waste. Such changes have led to encouraging trends in the fuels supplied under the RTFO. The average carbon savings of biofuel supplied under the RTFO when compared with fossil fuel have increased from 46% in 2008 to around 68% in the latest statistics.
One example of the feedstocks behind this trend is used cooking oil. The hon. Member for Southport may be aware of the Olleco biodiesel plant in Bootle, which is the country’s largest purpose-built plant dedicated to producing biodiesel from used cooking oil, and is not too far from his Merseyside constituency.
David Mowat
The Minister makes the point about how these things are alternatives to fossil fuels, but does he accept that not all fossil fuels have the same amount of carbon? If we were to replace petrol with gas or liquefied natural gas cars, as opposed to liquefied petroleum gas cars—there are 15 million LNG cars in the world and 3 million in Pakistan—we would halve the amount of carbon being produced from the transport sector. That technology exists already. I repeat the point that I made to the shadow Minister that electric cars are not a panacea for as long as we continue to produce the electricity from fossil fuels, particularly coal.
Mr Goodwill
My hon. Friend is absolutely right. Methane, or biogas, is CH4, so for every molecule of carbon dioxide produced there are four molecules of water, so it is a big improvement over fossil fuels such as LPG.
John Pugh
I was not aware of the cooking oil development plant in Bootle, but I was once the leader of Sefton council, which covered Bootle. The major environmental issue that we had was the strange smell that used to permeate households in the area, and that was regarded in those days as an environmental hazard. This environment is a complicated thing to deal with.
Mr Goodwill
Indeed. We have a big chip factory in my constituency, which occasionally has the same effect. Used cooking oil offers carbon savings of around 80% compared with those produced by fossil fuel, and the latest data suggest that last year around a third of biofuels supplied in the UK came from used cooking oil. We are very much on the case of ensuring that used cooking oil is indeed used cooking oil, and the Department is currently monitoring the situation closely because of the allegations that have been flying around. Certainly, the UK should not be criticised in that regard.
There is still more to do to ensure the sustainability of biofuels. In particular, we are concerned about the impact of indirect land use change. Studies have demonstrated that, due to ILUC, some otherwise sustainably produced biofuels can end up causing greater carbon emissions than fossil fuels.
Fiona O’Donnell
The Minister is being very generous in giving way again. Does he not agree that that perhaps is what the hon. Member for Redcar (Ian Swales) missed in his contribution—while the products that may be used in his constituency are not fit for human consumption, they still use up valuable resources of land and water?
Mr Goodwill
The issue of displacement—the ILUC situation—is one that we are well aware of. It tends to be more of a problem with biodiesel than with bioethanol, but it is an issue that we need to address through negotiations and agreements at the European level.
The European targets that the UK has agreed to are legally binding. Therefore, the UK needs to work within the European framework to produce a biofuel policy that reduces the environmental and social impacts of biofuels. As part of this process, it is imperative that ILUC is properly addressed at European level. Negotiations are ongoing in Europe, and we are pressing for an ambitious outcome to the ILUC situation. The 5% figure is certainly the figure that we are negotiating towards.
As we have heard in the debate, there are also concerns about the impact of biofuels on food prices. Food versus fuel is an issue that I take very seriously. The primary goal of agriculture should remain food production, and the production of biomass must not undermine food security or increase food prices. It is accepted that increased demand for biofuel has played a role, but Government analysis has shown that although increased global crop prices have resulted from biofuel production there has only been a modest rise in food prices.
I must point out at this stage that there is only 10p worth of wheat in a loaf of bread anyway, so there are many other factors that come—oh dear, I have mentioned that I am a farmer again. However, I recognise the seriousness of even a small impact on food prices, as well as the potential for biofuel support policies to increase crop price volatility. Nevertheless, I am confident that our position on the ILUC negotiations, if it is successful in limiting crop-based biofuels and incentivising those produced from wastes and residues, should reduce the direct competition for food feedstocks.
I will turn now to advanced fuels. Resolving the issue of ILUC remains the main barrier to setting out the clear pathway to achieving our 2020 targets, which I know industry and investors need. However, in the meantime we can set out some markers for the longer-term path to more sustainable biofuels. That is likely to be achieved through the use of non-land-using feedstocks, such as agricultural residues and municipal waste. However, use of these feedstocks requires advanced conversion processes that have not yet been commercialised. These processes are an exciting technology, which can turn unwanted waste products into valuable transport fuel. A number of countries have already established production facilities for these advanced biofuels, although there are none as yet in the UK. However, with the UK’s world-class research capabilities we have the potential to become a global player in this sector.
That is why earlier this year the Government announced a £25 million competition for an advanced biofuel demonstration contest, which aims to deliver up to three demonstration-scale advanced biofuel plants in the UK. Later this year, we will also be announcing a call for evidence on advanced fuels. We will invite industry’s views on what more the Government should be doing to develop these essential technologies, which will be needed long into the future to allow us to reduce the carbon footprint of road travel and, increasingly, other transport sectors.
However, not all non-land-using biofuels rely on advanced technologies. For example, biomethane made from waste demonstrates some of the highest carbon savings of any biofuel, and the technology for its production is well understood. Indeed, I visited a BMW car plant in the United States, which was powered by biofuel from a nearby waste dump.
Ian Swales
May I ask the Minister a question about a detail in his speech? He mentioned “other transport sectors”. It is already technically possible for biokerosene to fuel aircraft. Some aircraft have flown—including, I believe, a Virgin aircraft—powered purely by biokerosene. Will the Government do anything about aircraft fuels?
Mr Goodwill
I will not digress too far into the area of aircraft but we certainly need to ensure that the quality of aircraft fuels is consistent, and currently we do not put biofuel into aviation kerosene for safety reasons. However, more research could lead to some progress in that area.
Biomethane represents a particularly compelling opportunity for heavy goods vehicles, which have few other options for decarbonisation. Biomethane currently represents less than 1% of renewable transport fuel, so there is clear potential to expand its contribution to reducing emissions in the UK. However, biomethane cannot be used in transport without the vehicles that are able to use it, and there are currently fewer than 1,000 natural gas vehicles in the UK. The Government are supporting the early uptake of gas-fuelled vehicles through the low-carbon truck demonstration trial. This £11 million project to trial low-carbon trucks and supporting infrastructure will support almost 350 natural gas trucks.
I am aware of industry concerns about the adequacy of incentives for the use of biomethane in transport, particularly when compared with other Government support schemes for the use of biomethane in electricity and heat. These issues will be considered as part of our forthcoming call for evidence, and we will then be in a position to propose the changes that we think will be needed to the RTFO in order to strike the best balance of incentives. With luck, we will then be able to introduce those incentives alongside agreed European proposals to address ILUC.
I turn now to some of the points made in the debate. I again welcome the shadow Minister, the hon. Member for Birmingham, Northfield (Richard Burden), to his role. In many ways, we are on the same page. The renewable energy directive targets are still in place for 2020; under those targets, 10% of transport energy will be renewable. I am sure that he will be pleased to know that those targets have not changed as a result of our recent negotiations.
The hon. Member for Southport raised the issue of liquefied natural gas, which is the same as methane or biogas. As a transport fuel, natural gas has lower carbon emissions than diesel; it produces about 15% lower emissions. Natural gas also diversifies our fuel supply, increasing energy security, and it can improve local air quality. In addition, natural gas benefits from a lower duty rate than diesel. I should point out that matters regarding duty rates should be addressed to the Chancellor of the Exchequer.
Liquefied petroleum gas vehicles have some environmental benefits. On a lifecycle basis, LPG vehicles produce about 14% less carbon dioxide than petrol vehicles do. However, LPG is not as good as diesel. LPG cars deliver similar air quality emissions to petrol cars, and better air quality emissions than diesel, although the gap has narrowed with the introduction of Euro 5 and Euro 6 cars.
The hon. Member for East Lothian (Fiona O’Donnell) asked about the 5% food crop cap. I hope that I have reassured her that we are sticking with that, and we have certainly made it clear to the European Commission, the European Parliament and all other member states in the Council of the European Union that the UK supports the 5% cap.
Fiona O’Donnell
Can I press the Minister further and ask what discussions he has had with the German Government, who would be key to gaining support for the 5% cap?
Mr Goodwill
I met my German opposite number in Luxembourg last Thursday. Although the discussion did not veer into that area, I am sure that we will have a good working relationship with the Germans. Of course, the Germans are currently in the process of forming a new Government, so I look forward to hopefully meeting my new colleague, or perhaps his replacement if there are changes to the Government. The hon. Lady is absolutely right—Germany is key to almost everything in Europe, and we certainly have a very good working relationship with our colleagues from the German Federal Republic.
Regarding electric vehicles, the point was made that the market for them is very much a niche one. We are happy with the take-up of ultra-low emission vehicles. We are working across Government with the industry and we have introduced a range of ambitious measures to make the UK a premier global market for these vehicles.
My hon. Friend the Member for Warrington South (David Mowat) made a point about the energy mix in terms of electricity generation. It is the case that electric cars—ultra-low emission vehicles—already produce lower emissions than conventional vehicles, and as the grid decarbonises their environmental performance will improve further. I am keen to see more renewable energy being produced, not least off the coast of my constituency. Also, as a keen fan of nuclear power, I know that we can use the electricity that nuclear power produces at night-time to trickle charge electric vehicles.
I was asked whether the Government are committed to plug-in car grants. We have announced £500 million of support for the period from 2015 to 2021, and shortly we will launch a call for evidence to inform how we will achieve the best value for that investment.
The issue of hydrogen was raised. The Government launched the UK H2 Mobility project in 2012, which was a joint undertaking with industry. The project will evaluate the potential for hydrogen as a fuel, developing an action plan for a roll-out to consumers from next year if the evaluation is successful.
I think that I have responded to most of the points that were made in the debate. If I have missed some points, I apologise and I will certainly write to respond to them, as time is pressing now.
To conclude, I thank everyone who has contributed to this debate for taking the time to consider this important issue. The use of biofuels and non-conventional fuels is, and will remain, complex and controversial. However, that must not stop us from finding the right balance between producing the fuels we need for a low-carbon future and protecting the livelihoods of the most vulnerable, both here and in the developing world.