In my pre-political career, I spent four very happy years with United Distillers/Guinness plc (now Diageo), in Korea and Singapore. Indeed I was “Mr. Johnnie Walker” in Korea. In the course of my time with United Distillers, I visited a number of distilleries, both malt and grain, in Scotland.
So it came as rather shock today, in a meeting with representatives of the bio-ethanol business, to realise that in essence, the bio-ethanol production process is simply an analogue of a grain whisky distillery.
Thankfully, they start generally with wheat (not malting barley), and with sugar. They ferment it. They distil it. And the result is – well – vodka without the water. (It is the malt whisky and the barrel ageing that give whisky its distinctive character).
I’ve always been a sceptic about bio-fuels. They add cost. They reduce performance. They use land that we could be using for food. So I was impressed to find that UK bio-ethanol, made from British wheat or sugar, doesn’t quite match my expectations.
First, the wheat we grow in the UK is largely soft wheat, unsuitable for bread-making. Second, the land use for wheat is three-quarters offset by the value of the main by-product (or as we have to say these days, co-product). The spent grains, after fermentation, become high-protein animal feed, which we need anyway, and which displaces imports of (typically American) soya beans. And of course the ethanol displaces imports of fossil fuels. There is a substantial two-way balance-of-payments benefit.
The industry also claims that it reduces CO2 emissions, even allowing for the energy inputs along the way – though we in UKIP are less obsessed with that aspect.
But the game-changer for me was the claim that bio-ethanol is now price-competitive with regular petrol, and doesn’t require subsidy. Is there any other renewable (except hydro) which can say that? And the icing on the cake: bio-ethanol is high-octane, and doesn’t reduce engine performance. It may even enhance it.
The difficulty facing the industry is that they have invested £750 million in the UK based on the earlier mandated 10% figure for the proportion of bio-fuels in transportation. Recognising the land use change implications (known as “ILUC”) for bio-fuels generally, the EU institutions are now proposing to reduce that figure. The Council wants a 7% cap for bio-fuels – and fails to take into account the fact that bio-ethanol is benign in terms of land use. It doesn’t have a significant ILUC issue.
We need to get this idea through to the UK government. Otherwise a £750 million investment, and several thousand jobs in the North of England, are at risk.