New Clause 3 - Fuel duty differential for biodiesel

Part of Finance Bill – in a Public Bill Committee am 8:30 pm ar 26 Mehefin 2012.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Stephen Williams Stephen Williams Democratiaid Rhyddfrydol, Bristol West 8:30, 26 Mehefin 2012

I beg to move, That the clause be read a Second time.

It is a great pleasure to move one of the last items of business in this year’s Finance Bill Committee. I am sure that members of the Committee will be pleased that I actually have my notes this time, unlike for my performance on clause 180, which will be remembered as the highlight of our deliberations in recent weeks. I will not be flying entirely by the seat of my pants for the next few minutes.

The new clause gives me and the Minister an opportunity to put on the record our views about the biofuels industry. It relates to the biodiesel produced from waste cooking oil, which is probably better known as chip fat. It is not Friday, so none of us is looking forward a traditional meal of fish and chips this evening. I know that my hon. Friend the Member for North East Somerset is an admirer of British culinary traditions, and—as a man of the people—is frequently to be found outside the chip shop in Midsomer Norton high street with his bag of chips. The new clause is all about making sure that the by-product of that culinary delight is used to meet some of our climate change obligations.

In the 2009 pre-Budget report—the last one given by the right hon. Member for Edinburgh South West (Mr Darling)—the Labour Government announced the introduction of regulations on biodiesel produced from waste cooking oil. Having been brought in by statutory instrument No. 984 of 2010, the regulations were to cease on 31 March 2012. Just for once, a statutory instrument had a sunset clause, and that sunset clause has caused problems for the industry. The statutory instrument introduced a 20p per litre duty differential for biodiesel that has an element of waste cooking oil, but the problem is that the differential ceased on 31 March and the statutory instrument is no longer in force.

The industry is very new, having been brought into being by those regulations. Thirty small businesses up and down the country are now making better use of waste cooking oil and employing more than 1,000 people. One of them is Uptown Oil, which is just across the river in the constituency of my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes). I know that he has met the Economic Secretary and written to the Chancellor about this issue.

In the two years that the statutory instrument was in force up to April 2011, 99 million litres of waste cooking oil was put to productive use. The previous Government’s intention was that, once the 20p per litre differential was abolished in April 2012, the industry would instead be sustained by renewable transport fuels obligation certificates. In practice, however, the industry has found that RTFO certificates have simply not been tradable at sufficient value in the market. They were expected to fetch a price of up to 24p per certificate, but some businesses have not been able to sell them and the industry has predicted that, even after five years, the certificates may be worth only 12p. That means that many of the businesses are now struggling and are making losses, and many of them are predicted to fail unless action is taken.