10 March 2003

The EU imports 50% of its energy needs. This will rise to 70% by 2030. It is important, therefore, that we exploit all possible indigenous sources of energy as well as promoting greater diversity of energy sources.

By developing biofuels and other renewable energies we are contributing to increased security of supply. In Scotland, we have the materials and know-how to be able to develop this industry and are eager to put these proposals into action. We are also hoping to improve our environment with better air quality and a reduction in greenhouse gases. In the blending of biofuels into conventional transport fuel we can introduce these changes in a simple way that will not require vehicles or filling stations to be adapted. Biofuels also promise to create new jobs in rural communities through crop production and in the construction and operation of processing plants. This will provide a well-needed boost to flagging rural economies.

But biofuels remain uncompetitive without significant government tax breaks. A 50% reduction of tax to match conventional fuel prices will mean subtracting a hefty chunk from Member State exchequers. How many of our governments are prepared to lose this revenue?

We are also concerned that the proposals as they stand will not necessarily result in any real environmental benefits. Production methods for most biofuels use substantial amounts of energy and create high carbon dioxide emissions. We may also see higher inputs of chemical fertilisers and pesticides. Member States must decide to promote only biofuels which give an overall cost-effective benefit to the environment. Most importantly we must also invest in research to improve the cost-effectiveness and environmental benefits of biofuel crops in the future.