Examination of Witnesses (Questions 180
- 199)
WEDNESDAY 12 JANUARY 2005
MS GAYNOR
HARTNELL, MR
PHILLIP COZENS,
MR JOHN
STRAWSON AND
MR MARK
CANDLISH
Q180 Joan Ruddock: A wind farm, as
we understood it, was the lead.
Ms Hartnell: It has the greatest
capacity to grow. Landfill gas, for example, is limited by the
size of the landfill gas resource. With wind, you do not need
to worry about the size of the resource, you need to worry about
how much you can actually take onto the system; it is not resource
limited.
Q181 Joan Ruddock: Let me ask the
question again then. Is it the most economic source of renewable
energy per unit of electricity generated?
Mr Candlish: Of renewable energy?
Q182 Joan Ruddock: Yes.
Mr Candlish: At the moment, yes.
To set the context of that, onshore wind in particular has taken
the greatest advantage of the grant systems available for the
last 15 years and so is the most advanced. I think it would unfair
to say that that does not mean there are any other developments
in other technology sectors, but the rules that have changed in
co-firing and so on have created a great deal of uncertainty for
the sort of entrepreneurs who are trying to develop biomass-fired
power stations for instance. We commissioned a 10 megawatt energy
from waste plant which was combined heat and power as well. That
project took 10 years from conception to completion and when you
get rule changes coming out every year in a market in which there
are currently no developers in the UK and a very uncertain economic
background, I think it would be harsh to say that that is representative
of the potential of that technology to deliver. Onshore wind could
make the economics successful under the schemes which preceded
the Renewables Obligation. Under the Renewables Obligation, contracts
are not currently available to enable these longer lead time projects
to emerge.
Mr Cozens: I think it is also
important to understand that under the Renewables Obligation as
it is currently written, there are certain technologies which
are proscribed effectively as potentially contributing to renewable
energy. I talk particularly about energy from waste, for example.
To obtain energy from waste and qualify for a Renewables Obligation
certificate, you must go through a qualifying technology which
is prohibitively difficult. What we do see is a strand of opportunity
within the energy sector which is not amenable; we cannot get
to it because of the rock mechanism that we currently have. There
is a locked up resource that we are not exploiting.
Q183 Joan Ruddock: So you are saying
that are lots of stumbling blocks to creating diversity in the
renewables field.
Mr Cozens: Yes, there are and
I feel that many of them are self-inflicted in policy terms.
Q184 Joan Ruddock: What does that
mean?
Mr Cozens: For example, within
the Renewables Obligation, we see a qualifying technology as the
route to being able to get energy from waste; you must go through
gasification or pyrolysis or one of these processes. That is too
much of a stumbling block really; the value is in the fuel not
in the conversion technology. I would argue that a more rational
approach would look at the value of the resource as a resource,
waste biomass, rather than the means by which you turn it into
power. The market ought to be able to determine that.
Q185 Mr Lazarowicz: I appreciate
that this answer will vary considerably from one type of power
generation to another, but I get the impression from what you
are saying that the biggest single stumbling block to the development
of other renewable power technologies is the Renewables Obligation
and the way it is structured combined with the lack of the kind
of mechanism that you are going to tell us about which would encourage
presumably a stability of market for technologies other than wind
power. Is that fair or have I over-simplified too far?
Mr Candlish: The Renewables Obligation
is, in many ways, the right mechanism and certainly from an operator
and developer's point of view, we would like to see as little
change to it as possible. It is trying to introduce new technology
to this country on the sort of scale which this country has not
developed on before. We are talking about a large raft of smaller-scale
projects and using technologies that we currently do not have
a significant presence to develop. To get that sort of emerging
market to work needs entrepreneurs and risk-takers, because the
power industry is littered with the companies who tried it first
and who went bankrupt. The large vertically-integrated players
who administer the Renewables Obligation, who effectively collect
the funds, will not take those sorts of risks; they will not invest
in unproven small-scale technologies. The problem is: how do they
engage the entrepreneurs into the market to take those risks?
That is a fundamental issue that the RO needs to address: the
big companies need to be hungrier to engage these entrepreneurs
to go out and take the risks and do these early projects. We are
looking at a development time of maybe 10 to 20 years to help
these industries to emerge; they are not going to appear overnight.
With a lot of the things here, when we talk about wave power and
so on, we are talking about leading the world in these sorts of
developments. Things like biomass have been already successfully
done, as I believe you have heard already, in Scandinavian countries,
so they are more proven technologies but with no real development
base in the UK.
Q186 Mr Lazarowicz: Do we really
lead the world in wave power? Yes, we are at the cutting edge
in some respects to take one example, but my understanding is
that there are other countries in Europe like Portugal and so
on who are also very heavily involved in this area, probably in
advance of what we are doing. How come they do it and we do not?
Ms Hartnell: In Portugal they
have introduced a kind of "market pull" mechanism to
encourage developers actually to build wave energy devices and
put them in the sea. We have invested more in the research and
development and indeed we are leading the world in terms of the
device developers and this is true in tidal stream as well. We
really do have a very strong advantage. We would like to see a
"market pulll" mechanism of the kind I have described
in the proposal we have made, to enable them to build on that
success. The longer it is left with us not having that kind of
mechanism, the more risk there is that those technology developers
will move overseas.
Q187 Mr Lepper: I am just wondering
what thoughts you have about encouraging domestic take-up of renewable
energy. We have talked a lot about production and earlier we talked
about encouraging the domestic interest in energy efficiency schemes.
What about take-up of renewable energy from the home owner's point
of view?
Ms Hartnell: That is certainly
something that has great potential to deliver carbon savings.
There was mention of building regulations earlier. The ODPM Part
L regulations consultations have really pointed out the advantages
that can be realised from that. We have a capital grant programme
at the moment, for the domestic scale, but the funds are due to
run out fairly shortly and there is talk of replacing that with
a technology-blind mechanism which would be for energy efficiency
and renewables. Building regulations play a role, education plays
a role, we just do need to bring these things out and get on with
the job.
Q188 Mr Lepper: Is there more the
government could be doing?
Ms Hartnell: There is. There is
a Private Member's Bill which is being tabled today in the House
of Commons on stamp duty rebates for households which have invested
in energy efficiency measures and those could easily apply to
renewable energy equipment as well and indeed we shall be encouraging
them to see that opportunity. There are many fiscal measures;
the VAT regime at the moment is not helpful. John I know has been
involved in trying, indeed with some success, to get households
and small schemes to take up biomass projects.
Mr Strawson: Yes, we have supplied
a number of boilers more to the school size rather than domestic
size, but we have one or two of our own members and also our own
house is heated by a biomass boiler. Actually the advantage and
the reason why we can sell that as working is because the fuel,
in domestic terms, is actually the cheapest form of fuel. Woodchips
from energy crop or forests are actually the cheapest form in
energy value on that level. So already the market is an advantage
for us. If there were some government forces to help that along,
because the initial capital cost is the hindrance with household
biomass boilers in that they are very reliable, they are very
automated, but they are four to 10 times the cost, depending on
what size you are looking at . . . There are capital grant schemes
in place, but they are so complicated. If somebody identifies
they have a market and they want to put a boiler in, you cannot
budget on getting any grant and you might not know for six months
whether you have the grant or not. What you need to do on that
level is to look to countries like Austria, which has a very easy
grant system. You can budget on getting the grant, a 50% capital
grant on the boiler if you are primary producer, thereby being
able to pay yourself back at the forest a decent return for the
woodchip. Other people can get grants, but only probably at a
level of 25% if they are not a primary producer. In Austria it
works at that level and in the large CHP and power station and
district heating size, I would suggest you look at Scandinavia.
Their systems in there are very simple again, but they rely on
fossil fuel taxes in the main to make it worthwhile. While I am
on, Mr Chairman, you asked earlier whether wind is the cheapest.
I agree that probably at the moment, it is the simplest, it is
the easiest. It is less bureaucratic for an energy company to
start producing renewables, because they do not have to worry
about buying produce from a supply body and they know they can
just get the electricity on the meter and they do not have to
go through lots of hoops. It is the simplest: I would not say
it is the cheapest. Offshore possibly, yes, is the cheapest but
onshore I would say is not. If you look again to Scandinavia,
and that is the reason I thought this, in Denmark for instance,
it is saturated with wind and they only have the same amount of
forest area as we in the UK at 10%, but 70% of their renewables,
and they produce nearly 30% of their power from renewables, comes
from biomass and not from wind, even though they are saturated
by wind. So, let us please concentrate more on biomass. We have
had the failing of ARBRE, we are working hard, we are nearly there.
In the next few weeks you will start to see co-firing material
going to two major power stations in the UK which we have got
up, dependent on whether the processing machinery works through
the commissioning, but that should now happen in the next weeks.
Let us see some more emphasis please, not so much on wind but
do not forget biomass is a big player.
Q189 Mr Drew: As far as I understand
it, talking to the farmers who wish to grow various materials
which would be useful to you, the biggest problem has been the
stability in the marketplace, which obviously government could
help overcome by making it clear that any subvention would be
there for a period of time. In terms of looking at things like
single farm payments, how much work have you done to see how you
can stack up a variety of different means by which payments can
be accommodated to ensure that there is a good return even if
the price does not edge up, which obviously one would hope for
producers, it would do.
Mr Strawson: The decoupled single
farm payments opened the door to now supplying whatever crop we
believe there is a market for. We do not now have to grow wheat
or oil seeds to claim subsidy. We as farmers can now grow anything
where we believe there is a market and that is a fantastic opportunity
which coincides with the impetus behind renewables; that is one
reason why we think farmers can really embrace it. We think there
could be extra help with certain crops which offer an extra environmental
benefit. For instance, willow is not particularly monoculture
in its normal thought-of way and its biodiversity is far greater,
plus it is giving carbon savings. We feel we ought to be eligible
for some entry level scheme type payment that Defra is working
on and that would be another big impetus through Defra which could
give us an extra payment specific for an environmental crop like
willow as against miscanthus. There is a lot of tinkering yet
that we could still work on and I believe we should be doing,
but basically we are about there. The Renewables Obligation is
now a big driver which is beginning to work, we believe that is
now having an effect on the marketplace. Our problem is that you
need to be providing the power stations with the sustainability
of the ROCs, so they can budget on it in the long term and they
can, in turn, hand long-term contracts to us. It is the long-term
contracts that we need to plant a long-term crop.
Q190 David Taylor: May I move you
on from biomass to waste, but in passing say that I found what
Mr Strawson had to say very interesting and very thought provoking?
There are some biomass sources of energy which are in a sense
also waste products and I was thinking about things like wood
pellets. In Leicestershire several schools are heated from wood
pellets and I switched on the boiler at one Castle Donnington
school just some weeks ago. There seemed to be great potential
there for it to be using biomass in the national forest in which
Leicestershire sits, but let us move on to waste. Our Committee
has spent a lot of time looking at the Landfill Directive and
the government is in a bit of a bind on this; realistically it
is doing what is can, but recycling rates are not increasing at
a rapid enough rate and things like waste minimisation and re-use
are not producing the goods either. So they are soft-shoe shuffling
towards incineration, which is now being entitled energy from
waste. I should like to ask Mr Cozens in particular to tell us
how many energy-from-waste projects are actually running in the
UK at the moment approximately.
Mr Cozens: There are approximately
a dozen what you would call municipal energy-from-waste plants
running now; approximately. There are one or two under development,
but effectively we are seeing the barriers to entry of more of
these plants so high that people are looking for other ways of
solving the problem.
Q191 David Taylor: Is Edmonton your
largest?
Mr Cozens: Yes, Edmonton is the
largest, followed closely by Allington, which is under construction.
Q192 David Taylor: So there are about
a dozen at the moment.
Mr Cozens: Yes; roughly.
Ms Hartnell: We could provide
a list.
Q193 David Taylor: On a significant
scale.
Mr Cozens: In scale everything
from about 120,000 tonnes of waste a year to half a million. In
the context of energy from waste, I think the debate needs to
move on really. The origins of energy from waste were perfunctory
really. Waste was perceived as a problem, burning it was seen
as way of solving the problem; energy recovery was not really
on the horizon. More recently, energy from waste was called thermal
treatment by some people; again the context is something you do
to the waste to get rid of it or to stop it being a nuisance.
We have got to get over that as well. We have to be able to move
towards a much more sensitive understanding of resource efficiency
in the economy that we run.
Q194 David Taylor: You said earlier
on Mr Cozens that we should not focus on the mechanism for converting
the potential of the waste into the energy, we should ensure that
we do in fact utilise it. Do you want to move us away from the
concept of incineration and focusing on that? Is that the argument?
Mr Cozens: Yes, that is correct.
When you look at the whole question of resource efficiency, and
Joan Ruddock is one of the stars in my firmament with her on a
recent Bill, but there is more to resource efficiency that recovering
materials. If you think about the sort of materials that we go
to such pains to recover, they are not in fact rare. We recycle
iron, we recycle aluminium, glass, they are the most common things
you can find in the earth's crust. It is not their rarity that
makes it worth recycling them. What makes it worth recycling them
is the energy we save by doing that. There is a very interesting
inter-reaction between energy and materials' recovery. There comes
a point when effort spent on increased materials' recovery becomes
counter-productive. We also have the parallel things which come
through legislation, the Landfill Directive which you mentioned,
which seeks to limit the harm done to the environment by landfill,
the fugitive emissions of methane because of its greenhouse gas
potential. At the moment, diversion of biomass from landfill is
the big news in the waste industry. It is what is driving everybody
with the prospect of huge fines for those local authorities which
cannot comply. It ought not to pass our attention that that huge
problem we are looking at, the diversion of biomass, and we are
not talking about things that you could recycle here, we are talking
about waste biomass, in the one context it is a problem, in another
context it is a huge opportunity that we are blind to. There are
enormous synergies with biomass production as an energy crop.
Again, you need to look no further than Scandinavia to see how
intelligent solutions to these problems have emerged. If we go
back in time to the first oil price shock and how the Swedish
economy behaved, I think you will see there a blueprint for the
way we are going to need to live in the next 20 years. They looked
at their indigenous resources to see how they could best optimise
their use. If you look at a combined heat and power plant in Scandinavia,
you will see a magazine of fuels in the bunker. There will be
fuels which have been derived from waste, combustible elements
of, you will see forestry wastes, sawmill wastes etcetera. The
plant operator will use those opportunistically according to the
economics of his business; when it gets colder, he might even
be burning coal or oil. We need to look at our own resources in
those ways. In particular, I think we should start to see energy
from waste not as something which you would do maybe on a local
scale to solve a local waste management problem, but something
we should look at in terms of the fact that we have these materials,
what is the best use to which we can put them and where can we
best take them to realise that best use?
Q195 David Taylor: But some of the
by-products of obtaining energy from waste by incineration are
less desirable, are they not, dioxins, particulates, things of
that kind? Are you saying that times have moved on and we do not
need to be alert to the concerns that we have and local communities
about that?
Mr Cozens: We need to be concerned
about that, not just for combustion of waste but combustion of
anything. If you look at the incineration plants which were running
in the period up until 1996, you could produce dioxins by burning
coal or oil in those plants, but the production of dioxins is
not a function of the fuel. The precursors to dioxin production
in such a plant can be found in many fuels, most of which are
quite acceptable. It is the way you burn them that is important.
In modern incineration plants, dioxin emissions are not a problem.
It is the method of combustion that is the issue.
Q196 David Taylor: I know we have
given biomass and biofuels a good run through, but looking at
biofuels, we are lagging behind dramatically, are we not? Is it
the case that France and Germany have some sort of figure like
100,000 tonnes a year of biofuels and we are only at about 10%
of that rate at the moment? Are those figures about right? Why
are we lagging so far behind?
Ms Hartnell: Are you talking about
liquid fuels for transport here?
Q197 David Taylor: Yes.
Ms Hartnell: We are behind. There
is a lot of interest in promoting biofuels for transport and there
has recently been consultation on the best mechanism for doing
that, whether that might be differential fuel duties or a renewables
transport obligation. There are powers in the Energy Act which
have given government enabling powers to introduce some form of
obligation. We are actually going to be making progress on that,
but you are right to say we start from some way behind.
Mr Cozens: We should not neglect,
in the same context, the potential of waste biomass to contribute
towards a solution of that problem. This is an area where I feel
the Renewables Obligation is somewhat misplaced. Taking Mr Lazarowicz's
point, the Renewables Obligation is about 98% right. There is
not a lot wrong with it, so it is well-intentioned and it is fairly
well-conceived; a bit of tweaking and it will be fantastic. However,
what it does not recognise in advocating the use of advanced thermal
treatments like pyrolysis in gasification is that to use a product
of those processes just as a way of generating electricity is
actually to throw away the major part of the opportunity. Those
two processes are the route to convert biomass into transport
fuels and the potential to do that is vast.
Ms Hartnell: We have mentioned
the Renewables Obligation for electricity, we have mentioned now
the potential for an obligation for transport fuels, we have not,
although we sent in evidence about it, really mentioned much on
the aspect of renewable heat. When we were talking earlier about
different cost-effective forms of renewables, we did not really
mention that renewable heat is really a very cheap and cost-effective
form of renewable energy. Really, we are missing a trick if we
do not reward renewable heat and that is why we have been working
hard on our proposal for that.
Q198 David Taylor: The wood pellet
example I gave.
Ms Hartnell: Yes; very important.
Mr Cozens: On the question of
gasification of waste biomass, we have had some hesitant interest
out of two oil companies who look at that as a route of providing
additional hydrogen to existing refineries. Hydrogen in refineries
is what you need to make lighter fuels. So the concept of being
able to take a waste material and return it to the economic environment
as a transport fuel is alchemy, but it is doable. There is a plant
in Germany which does that, Schwartzpump. They take urban waste
biomass, they gasify it and it returns to the productive economy
as methanol. It is doable.
Q199 David Taylor: You are using
biomass as shorthand for biodegradable municipal waste as well
as the biomass that we would more normally—
Mr Cozens: To me, it is the same
stuff.
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