Teesside could be the loser unless we act on biofuels now

Apr 15 2008 by jez Davison, Evening Gazette

Today was hailed by the Government as a major step forward in the campaign to protect our planet against global warming. On Teesside - home to one of only two biofuels clusters - that boast had a hollow ring. Rising US biodiesel imports, dented investor confidence, and a Prime Minister who appears less than committed to protecting our industry, have hammered producers here. If we want a green future for Teesside, it’s time to tackle the issues head on. SPECIAL REPORT by JEZ DAVISON, ALAN PLEWS & SUE SCOTT

THE biofuels industry on Teesside is standing on shifting sands.

Tony Blair’s apparently emerald green commitment to environmentally friendly policies in the UK has been muddied by Gordon Brown, whose record in the Treasury was less than exemplary when it came to promoting green industry. All credit that he stood by the Government’s commitment to introduce today’s Renewable Fuel Transport Obligation, but we mustn’t forget he also approved the removal of tax incentives for biofuels producers at a crucially important moment in their young history - axing a long-term incentive just when investors needed a confidence boost.

Europe, meanwhile, appears poleaxed by the thought of taking any action against the US that might be construed as protectionism - even though France and Germany have both taken limited unilateral action to protect their producers.

Surely, the UK - even within its fiercely liberal regime - could find a similar framework. Without some hefty political welly, backed by serious PR, Teesside could be the long-term loser and it needs concerted action now, both in Westminster and Brussels, to prevent its green shoots wilting.

Last week, Ensus said plans to expand into northern Europe after developing its £250m bioethanol plant at Wilton, due to be commissioned later this year, could be jeopardised because of the “misconceptions” that have been allowed to dog the biofuels debate - views that have gone largely unchallenged by Government. It has now ordered a review of biofuels’ impact on the environment, despite an 18-month study it had already commissioned from North East Biofuels, which demonstrated massive environmental savings. Within days of Ensus’ warning, pioneering global operator D1 Oils confirmed it was looking to close its Middlesbrough refinery and concentrate on biodiesel production in other parts of the world because it was no longer economic to process here.

Both blame the US for the bad press associated with environmental exploitation by biofuel producers and the so-called “splash and dash” policy that has seen American biofuel dumped in Europe, heavily subsidised by both the US and the EU.

Having been the focus for an emerging and globally important sector, which will have seen £500m invested in the region by the year end, Teesside could see its biofuels industry stifled by political inertia.

Conservative MEP for the North-east, Martin Callanan - who sits on Europe’s Environment, Public Health and Food Safety Committee - is actively lobbying the European Commission to tackle US subsidies head on. He says they are putting the livelihoods of UK farmers and biofuel producers at risk.

He also believes the Government should commission more research into second generation biofuels, which are produced from different parts of the crop and result in a higher output of usable material, thereby countering much of the bad press associated with biofuels. But, again, there is no publicly funded research into British biofuels that could help put Teesside ahead.

“The UK government should invest more in second generation biofuels than in wind farms, which are comparatively inefficient and funded by the British taxpayer,” said Mr Callanan.

Chief executive of Ensus, Alwyn Hughes, believes passionately that “good” biofuels could still be produced at a profit on Teesside and reduce carbon emissions by as much as two thirds of those generated by fossil fuel.

His views are echoed by John Seymour of North East Biofuels, which was commissioned by the Government under Tony Blair to research the carbon savings that could be achieved by a local supply chain that linked farmers and the petrochemical industry on Tees.

The farmers he represents would supply 1.25m tonnes to Ensus if the plant reaches maximum output. While not in his interests to defend alternative green crops, such as palm oil, he dismisses the food versus fuel debate as “a nonsense”. If it is, it’s powerful nonsense - strong enough to unnerve Chancellor Alistair Darling just prior to a budget trailed as being biofuels friendly, but which, in the end, delivered little.

David Hugill, a farmer and former chairman of the National Farmers’ Union’s North Riding and Durham branch, still believes the twin demands on farmers to produce food and fuel could galvanise Tees agriculture and reduce reliance on cheap imports.

He said: “Biofuel can boost income for farmers by giving them another market. This income can then be re-invested back into the farming process. The Ensus plant will help local farmers and service Teesside’s biofuel needs. It is not sustainable to rely solely on soy and palm oil imports.”

If a political solution is found, the North-east biofuels industry could be worth more than £1bn by 2027.

Energy and environment manager for regional development agency One NorthEast Ray Thompson said: “We have the infrastructure, process expertise and strong rural capacity to offer the entire process from seed to tank. The Renewable Transport Fuels Obligation guarantees a minimum market for biofuels.

“It’s a chance for local producers to help meet the demands of that market, given that suppliers will be scrutinised on the sustainability of the fuel they are selling.”

It’s not an offer that Teesside can afford to refuse, but neither can it rise to the challenge with one hand tied behind its back.

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