Memorandum submitted by Scottish Renewables
Forum (Bio 11)
1. Please find enclosed our views relating
to the Environment, Food & Rural Affairs Select Committee
Inquiry into "Climate Change and the Role of Bioenergy".
2. Scottish Renewables is Scotland's leading
renewables trade body, representing over 160 organisations and
individuals involved in the development of renewable energy projects
in Scotland. Our membership ranges from community groups and sole
traders, up to major Scottish utilities and international plcs.
Between them they are active in the development of biomass, hydro,
solar, wave, wind and tidal energy projects. Further information
about our work and our membership can be found on our website.
3. This response, formed through consultation
with our members, focuses primarily on biomass for the heat and
electricity sectors, reflecting the membership and expertise of
Scottish Renewables. However, many of the points made have similar
implications for the biofuels sector.
4. We recognise that the UK Government is
responsible for energy policy, however there is a role for devolved
administrations in specific areas of largely reserved matters.
In this case the Scottish Executive has responsibility for the
promotion of renewable energy, including bioenergy. This response
recognises that different levels of government have separate responsibilities
and that, in responding to the inquiry, we have preferred to make
a more substantive submission indicating how co-ordinated actions
across the UK are important in ensuring that renewable energy
policy is effective.
5. In summary,
(a) Scottish Renewables regards bioenergy
to be a central part of the UK's energy future and recommends
that the Scottish Executive and UK Government act with urgency
to establish a mixture of revenue and capital grants to support
the deployment of first generation bioenergy schemes around which
infrastructure can assemble or from which other projects can evolve.
(b) Furthermore, the Scottish Executive should
set a target for renewable heating at a minimum of 10% by 2020.
(c) Schemes such as the Energy Efficiency
Commitment should be adapted and a Renewable Heat Commitment developed,
with the Executive matching supply company payments to help incentivise
installation of renewable heating measures in households. Such
a scheme should complement a UK wide system to prevent two conflicting
support structures.
We will now address each question in turn.
Q1. What is the real scope for biomass and
biofuels to contribute to tackling climate change? What proportion
of the UK's energy and transport fuel needs could they provide?
6. The bioenergy industry is central to
the delivery of the UK's international obligations on climate
change. The use of biomass material to displace energy production
from fossil fuels will have a beneficial impact on carbon emissions
and the encouragement of energy schemes using local timber will
result in lower transport emissions.
7. As reported by the FREDS Biomass Energy
Group (BEG), [22]
Biomass, particularly wood fuel, is accepted
as carbon neutral. It can have a positive effect on the environment.
It is also a predictable and firm source of energy supply and
therefore an important contributor to a diverse energy mix, which
is vital to security and continuity of supply.
8. Scottish biomass is uniquely placed within
the UK to contribute to both Scottish and UK renewable targets
by 2010. This is because, as FREDS reports, Scotland has a substantial
existing and expanding resource from managed woodlands and sawmill
products which can be accessed for wood fuel almost immediately.
The GB wide forestry resource is predicted to grow well in excess
of demand over the next three decades, and around 60% of that
resource is located in Scotland. According to FREDS, the future
harvest level is likely to be around 5.5 million cubic metres
above current use, and the minimum size of the biomass electricity
market in Scotland could be as much as 450 MW of installed capacity.
Other factors, such as the growing of energy crops may greatly
increase these figures. [23]Furthermore,
this capacity figure would be significantly greater if the use
of biomass materials for heat is increased.
9. From the work that FREDS has undertaken,
alongside the findings from reports by the Biomass Task Force,
24[24]
Sustainable Development Commission[25]
and the DTI/Future Energy Solutions, [26]it
is clear that there is considerable impetus to develop biomass
as a renewable fuel. Scotland is well placed to derive benefit
by developing a new business arena for the forestry sector and
by improving the Scottish economy through reducing dependence
on external fossil fuel supplies and related uncontrolled energy
prices.
Q2. How cost-effective are biomass and biofuels
in comparison with other sources of renewable energy?
10. The costs relating to different renewable
energy technologies vary depending on many factors specific to
each project and technology. At present, hydro and wind are the
most advanced forms of renewable energy in the UK in terms of
sector development. Bioenergy is at an earlier stage of development
in the UK than more mature renewable technologies so requires
initial financial support until necessary infrastructure is in
place and the market has developed to a viable scale.
11. Furthermore, as bioenergy is the only
form of renewable energy that requires the purchase and transportation
of fuel, there are additional costs to be incurred. FREDS reported
that transporting wood fuel is a major issue for the development
of a biomass industry in Scotland. Transport costs can be a limiting
factor in the price and financial viability of biomass as a fuel.
Well located biomass projects, including co-location of integrated
energy users of electricity and heat, and innovation in the supply
chain present opportunities to reduce cost. [27]
12. It is important to note, however, that
wood fuel for heat has recently been reported as now becoming
cost-competitive with conventional fuels. However, the capital
costs and limited infrastrucuture remain barriers to development.
13. In order to meet both Scottish and UK
climate change targets, not to mention the economic and employment
benefits of different renewables, it is important to encourage
a mix of renewable energy technologies at a range of scales.
Q3. How do biofuels compare to other renewables,
and with conventional fossil-fuels, in terms of carbon savings
over their full life-cycle?
14. Provided that the resource is managed
sustainably, bioenergy is generally carbon neutral as the biomass
resource absorbs the same amount of carbon dioxide (CO2)
during its growth as it releases during combustion.
15. There are, of course, additional carbon
emissions produced during the construction of the plant and processing
and transportation of the fuel. All renewable energy projects
produce a minimal amount of emissions during construction; however
these are offset over a relatively short period of time. By encouraging
the use of biofuels in related transport, these emissions could
be further reduced. In the meantime, FREDS recommends that journeys
by road should be minimised wherever possible, and alternative
means of transport should be utilised where available.
16. The Royal Commission on Environmental
Pollution reports that these emissions are more than offset by
the very low conversion emissions, in comparison to coal and natural
gas. [28]Nevertheless,
it remains important that all steps possible are taken to reduce
the distances over which the fuel resource is transported.
Q4. Not all biomass is equal—potential
carbon savings depend on, for instance, farming practice. What
can be done to ensure energy crops are sustainably produced?
17. As asserted in the FREDS report, the
use of local wood fuel in biomass plant located in or close to
areas of supply will offer the most sustainable way forward for
Scottish biomass development. There may also be opportunities
to develop integrated sites where wood processing and generation
using co-products can be encouraged to co-locate. This also fits
with the Government's wider aims to reduce carbon emissions by
discouraging long distance transportation of fuel and to encourage
the use of combined heat and power (CHP) to maximise energy conversion
efficiency. [29]Furthermore,
as highlighted in point 3 above, the increased use of biofuels
in transportation would further offset net CO2 emissions.
Q5. What impact will UK Government and EU
actions have in increasing demand for, and production of, biomass
and biofuels?
18. The setting of renewable electricity
targets and the introduction of the Renewable Obligation/Renewables
Obligation (Scotland) have already had a very positive impact
on the development of biomass projects within the electricity
generation sector. However, the RO is technology blind, and so
favours the most established renewable technologies such as wind
and hydro.
19. Furthermore, Scottish Renewables welcomes
the announcement made in November 2005 to introduce a Renewable
Transport Fuels Obligation, and set fuel providers with a target
for biofuels sales. Likewise, the renewable heat sector now requires
a target and support mechanism to stimulate the market and supply
chain. These recommendations are detailed further in point 6 below.
Q6. What level of financial and policy support
do bioenergy technologies require in order to achieve the Government's
targets for renewable energy?
20. It is Scottish Renewables' view that
the FREDS report carries much good analysis of support necessary
for biomass generation, which we would recommend to you for adoption.
21. In particular the report notes:
The economic appraisal carried out for BEG
identifies a strong case for Government support for the biomass
sector. Without it, it is unlikely that the private sector would
be willing to invest in new biomass power plant and economic potential
would be lost. The [Scottish] Executive's objective of meeting
its renewable electricity targets through a mix of renewable energy
technologies would also be undermined. [30]
22. The report goes on to discuss funding
issues in further detail, but the inference is clearly on public
sector support from the Scottish Executive and UK Government to
assist in delivery of biomass generation projects.
23. It is Scottish Renewables' view that
early development of biomass generation will be best supported
by two basic means: firstly through a mix of revenue and capital
grants to support deployment of a first generation of schemes
around which infrastructure can assemble or from which other projects
can evolve, and secondly by grants to provide necessary infrastructure
(for example chipping, pelletising, harvesting, transport) to
establish the necessary parts of the biomass supply chain outlined
in the FREDS report.
24. Scottish Renewables has been working
closely with the Scottish Executive to encourage the introduction
of a funding mechanism which combines capital and revenue support.
To avoid destabilising and reducing confidence in the RO we recommend
that any revenue support scheme should be separate. A precedent
has already been set by the proposals for the Marine Renewables
Deployment Fund (MRDF). A biomass support scheme modelled on similar
lines should have the following key attributes:
(a) The mix of support should be project
specific.
(b) The total level of grant assistance for
each project should be capped with an underlying cap on capital
grant payments. This arrangement mirrors the MRDF.
(c) Revenue support should be available as
a mechanism to improve the bankability of projects. We believe
that the level of support required will be in the range £25-£40
per MWh. This support should be available for a minimum of seven
years.
(d) Funding support should be targeted at
projects which are of a scale, location and technology type that
fits the types of scheme recommended by BEG and which are, or
have the prospect of, securing planning consent and—for
electricity projects—grid connection.
25. Support for capital investment in the
sector has been identified as essential to facilitate projects.
It is Scottish Renewables' view that revenue support is also required
for many projects to reduce (the cost of) risk in the wood supply
chain and uncertainty in the value of the annual Renewables Obligation
recycle fund.
26. Furthermore, action is needed from the
UK Government and Scottish Executive in developing a renewables
target for the heating sector, and in establishing appropriate
support mechanisms for an emerging renewable heat market. Scottish
Renewables has recommended to the Executive that it should set
a minimum target of 10% of heating to come from renewable sources
by 2020. We would recommend that the UK Government investigates
and sets an equivalent target. In addition, there is a role for
the public sector in taking the lead when renovating and building
new public buildings to investigate renewable energy, including
biomass, for heating.
27. The Biomass Task Force[31]
conclusion that a Heat Obligation would not be the most suitable
mechanism for supporting the heat market is one that we support.
We are therefore supportive of development of grant based systems
that can assist delivery of a heating market, backed up by a target
and underpinned by more appropriate market support mechanisms.
Such a market should be established to support a range of renewable
heat technologies, including solar thermal and heat pumps.
28. It is worth thinking about the likely
heat market that might evolve. In Scotland we foresee that the
major market will be for small or medium sized fuel users. Initially,
these installations will need to be clustered to aid creation
of a fuel supply chain linking fuel producers, distributers and
users. Another key issue is that development is likely to be led
from rural or semi-rural areas, and that it is these areas of
Scotland that also tend to be outside the mains gas network. This
will mean they rely on more expensive, more polluting forms of
fuel. Interestingly though, a significant proportion of this rural
population live in hard to heat homes that cannot easily be made
efficient. There is therefore much scope to assess how grant support
for installing renewable heat technologies like biomass stoves,
heat pumps and solar thermal panels could assist in reducing domestic
fuel poverty in these rural areas.
29. It is also worth considering how funding
might be generated to cover a renewable heat scheme. We would
like to see more consideration of how existing mechanisms could
be used. In particular we would like to see closer investigation
of the Energy Efficiency Commitment schemes whereby supply companies
must fund installation of energy efficiency measures amongst their
consumers. The EEC scheme allows use of innovative measures like
heating systems, but take up has generally been poor. It is up
to the supply companies to choose how best to utilise EEC funds,
so it would not be appropriate to change this and give direction.
30. Instead, available government monies
could be used to partially match this funding and therefore incentivise
supply companies to invest more of their EEC funding on heating
based schemes. This would be particularly appropriate in rural
areas with difficult to heat homes away from the mains gas network.
31. Adapting and supplementing the EEC would
facilitate use of currently available monies, and avoid creation
of new funding streams. Also, it would create incentives for supply
companies to act on renewable heat, by providing them with new
methods by with their Energy Efficiency Commitments can be met.
They further benefit by knowing that the funding is used to install
measures in their customers' homes (where the funding came from
and where they should receive recognition and the associated benefits
of customer loyalty).
32. Our recommendation to use the EEC is
to avoid creating an Obligation System that is the mirror of the
RO. Given our recommendation that the EEC should be used we would
urge the Scottish Executive and UK Government to consider establishing
a "Renewable Heat Commitment". We feel that this
better describes such a system.
33. Furthermore, where CHP schemes provide
heat to households (for example through district heating networks)
they could also benefit through use of the system outlined above.
Larger scale CHP systems can also be supported through changes
to the EU Emissions Trading Scheme, as recommended in the Biomass
Task Force report.
34. In terms of delivering grant funding
to small and community scale biomass schemes, this has already
proved reliable through the Energy Saving Trust's Scottish Community
& Householder Renewables Initiative (SCHRI) and the DTI/BRE's
Clear Skies initiative. Therefore, we would recommend that existing
networks and funding mechanisms such as SCHRI should be utilised/adapted.
35. Finally, it is worth noting that for
bioenergy the fuel stock must also be purchased (as well as the
equipment). This means that bioenergy has other additional issues
that need to be overcome compared to solar thermal and heat pump
technologies. In the past this has created a market barrier because
capital investment is required not only in boiler plant but also
in the fuel supply chain. It has been recognised in Scotland that
a key issue is how to help support establishment of this wood
supply chain. It is our view that grants must be put in place
to help fund establishment of initial infrastructure that supply
chains and installations can cluster around.
Q7. What impact might an increase in energy
crops in the UK and the rest of the EU have on biodiversity, production
of food crops and land use and the environment more generally?
36. We have no comments to make on this
point.
Q8. Does bioenergy production constitute
the best use of UK land for non-food crops? Should UK and EU policy
focus on increasing domestic production of energy crops and biomass,
or are there merits in importing biomass for energy production,
or raw feedstock or refined biofuel, from outside the EU?
37. The biomass resource in Scotland is
mainly in the form of forestry, although energy crops also have
role. If there is a market, farmers will supply into it. The creation
of new woodlands is already a policy at the EU, UK and Scotland
levels. New woodland sequesters carbon and the sustainable removal
of biomass from the woodland provides an ongoing supply of carbon
neutral fuel. Importing bioenergy is less desirable as it reduces
the carbon neutrality of the resource.
Q9. What more can be done to make more efficient
use, as an energy source, of the by-products of agriculture and
forestry (eg wood waste and other organic waste)?
38. It should be noted that wood is not
"waste"—there are secondary markets for these
materials. The classification of biomass fuels as "waste"
could be regarded as the biggest "own goal" to have
yet been scored by Government. All biomass products, if managed
sustainably, can be used in the production of renewable heat and
electricity. By encouraging the use of biomass for energy, secondary
forestry and agriculture products (such as tree thinnings and
brash) will become more widely used rather than left on the forest
floor. This can be done by overcoming the market barriers that
currently exist, including a lack of awareness, few secure supply
chains, perceived risk and a lack of skilled engineers willing
to install and maintain biomass boilers.
Q10. What lessons can be learned from other
countries' experience in the production and use of bioenergy?
39. Biomass is a proven and practical source
of energy in many European countries. The FREDS Biomass report
highlights:
The role that biomass might play is likely
to be highly significant since it already provides approximately
64% of total EU renewable energy utilisation. Biomass provides
approximately 9% of "green electricity" across Europe.
[32]
40. Although the biomass market for renewable
energy in the UK is at an early stage of development, the technology
is mature and proven in other European countries, including Austria,
Sweden and Finland.
41. As FREDS also points out, the development
of power and CHP plants could serve to accelerate the development
of supply chains which would be useful in the development of heat
plants. To become a properly mature market there is a need to
focus on bioenergy of all forms and scales, from small scale heat
to CHP and larger scale power plants. The use of biomass for electricity
and CHP, including co-firing, is one of the factors that could
stimulate a viable heat sector. [33]
42. I hope that the above information is
of assistance to you in your inquiry. If you would like further
information, or would wish us to present our views to the Inquiry
itself, we would welcome the chance to assist you further.
Scottish Renewables Forum
February 2006
22 Forum for Renewable Energy Development in Scotland
(2005), Promoting and Accelerating the Market Penetration of Biomass
Technology in Scotland, Scottish Executive, para 3. Back
23
FREDS (2005), para 15-19. Back
24
Biomass Task Force (2005), Report to Government. Back
25
Sustainable Development Commission (2005), Wood Fuel for Warmth. Back
26
Future Energy Solutions (2005), Renewable heat and heat from
combined heat and power plants-study and analysis, DTI & Defra. Back
27
FREDS (2005), para 37. Back
28
Royal Commission on Environmental Pollution (2004), Biomass
as a renewable energy source, para 4.26. Back
29
FREDS (2005), para 42. Back
30
FREDS (2005), para 52. Back
31
Biomass Task Force (2005), Report to Government. Back
32
FREDS (2005), para 2. Back
33
FREDS (2005), para 7. Back
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