Supplementary memorandum submitted by
the Energy Crops Company Ltd (Bio 06a)
These comments relate to the apparent discrepancy
between my own apparent optimism regarding the prospects for Biomass
Heat, expressed during my evidence before the committee on the
8th of March, and the more pessimistic views of the REA in their
evidence one week earlier.
The latter pessimism was characterised by the
Chairman of the committee in Q56 as verging on the "all too
difficult".
I feel there are a number of reasons for our
different views, broadly split into the following categories.
1. The members of the REA are understandably
reluctant to abandon existing support mechanisms without some
certainty of new support.
We have the benefit of starting with a clean
sheet of paper, looking at the underlying competetivity of biomass
fuel with fossil fuels today.
2. Despite their frustration with Government
constantly gravitating to Electricity as at the expense of other
energy uses such as heat, much of the evidence reverts to examples
on electricity, CHP, district heating and the like.
There is a huge market for pure, efficient heat
at the point of consumption which may be served by biomass, this
is often lost in inefficient or expensive district heating models.
We believe that biomass boilers, and the uses
to which they are put should be assessed separately.
3. In similar vein to 2, above, it seems that
some secondary support is envisaged by community or public bodies
championing the use of biomass. This betrays an underlying problem
of looking at everything from a "project" perspective,
where the business models, financial security and often physical
design are "bespoke" to a fairly large degree.
We believe that the future lies in developing
a mainstream offer, where biomass boilers will be standardized,
and homogeneous pellet fuel will be offered with the security
and convenience equivalent to heating oil today, but at lower
cost.
4. Financial security is often raised as a big
issue. In other markets this is dealt with by processing or consolidation
companies buying from small suppliers, and supplying a wide range
of end consumers. The biomass model often envisages micro supply
chains with small woodland owners supplying large hospitals for
instance. This will create financial, risk and quality issues.
We intend to offer secure affordable supply
to satisfy large and small customers, from a range of suppliers.
While incurring a small energy and cost penalty, this will create
a homogeneous fuel to encourage customer confidence, backed by
large company logistics and financial security.
5. Existing grants are delivered via installers,
and ensure that equipment works. This system does not promote
efficiency or fuel supply. Grants are given equally to boilers
which work on rare occasions in a country house and to a municipal
swimming pool where usage, fossil fuel displacement and carbon
saving would be much higher. Similar problems bedevil infrastructure
grants, witness Welsh Biofuels.
I have sympathy with the REA members who have
worked for many years to develop the industry, with projects only
viable after grants, and understand why 40% grants seem preferable
to 22%.
We would like to see a continuation of the adequate
existing grants, with a forward reduction in their per cent level
encouraging greater standardization. In addition we would like
to see some shift to market mechanisms based on unit carbon savings,
ie tied to the amount of fuel supplied through a supported facility
or to a supported boiler.
We believe this will allow reduced costs, and
use of consolidated savings within mechanisms such as the European
Trading System in future.
Overall, by concentrating on displacing heat
from oil at the point of use, with a commercial approach, and
existing technology, we believe biomass can become self sufficient
and universally available in short order.
A mainstream approach, and professionally consolidated
fuel supply will help to trigger this move.
The Energy Crops Company Ltd
March 2006
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