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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 965-iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENT, FOOD and RURAL AFFAIRS COMMITTEE
CLIMATE CHANGE: ROLE OF BIOENERGY
Wednesday 19 April 2006 SIR BEN GILL and MR DAVID CLAYTON Evidence heard in Public Questions 154 - 201
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee on Wednesday 19 April 2006 Members present Mr Michael Jack, in the Chair Mr David Drew James Duddridge Patrick Hall Lynne Jones David Lepper Mrs Madeleine Moon Mr Dan Rogerson David Taylor Mr Roger Williams ________________ Witnesses: Sir Ben Gill, leader of the Biomass Task Force study, and Mr David Clayton, secretary to the Biomass Task Force Study, gave evidence. Q154 Chairman: Good afternoon, ladies and gentlemen. Can I welcome formally, in a new starring role before the Committee, Sir Ben Gill in his position as the leader of the Biomass Task Force study? Ben, I am delighted to see that you are wearing a pink shirt and a pink tie. I now understand clearly why you have done this, because I notice from the photograph in the Biomass Task Force Report that you are wearing exactly the same tie and shirt, and this was clearly done so that we would not forget who you were! It is clear that the shirt and tie have stood the test of time. You and David Clayton, the secretary to the Biomass Task Force, are both welcome. Can I start by passing an observation on the report, which I have had a look at. The thing that particularly caught my eye was in the appendices, page 66 of the report, in which you describe the multiplicity of grant schemes and programmes which various people have over time initiated in an attempt to get biomass, biofuels off the ground. It struck me that the whole area is a bit of a mess. There are lots of little bits going on. There is a lack of coordination, a lack of clear strategic objectives. Would that be a fair summary of what you found? Sir Ben Gill: Thank you, Chairman, for the invitation to come. The significance of the pink shirt is twofold: first, to show sustainability and reusability and, second, to indicate the emphasis of the closest I have got to something red which indicates an association with heat and the ignorance that pervades on heat, and I have to reinforce that point. I think you have very succinctly put your finger on the key element of all that came out of our work: the lack of coordination, the lack of understanding, and, when I do presentations I use one word, "ignorance" - ignorance not to be confused with ignorant, the pejorative meaning of it, but ignorance (which in the OED means lack of knowledge or awareness) about where we are in regard to all these issues. Irrespective of all these grants, which confuse people as to what they should apply for, some are switched on, some are switched off, some come from different bodies that will interlink and some do not. There is a confusion of advice, which is quite frightening, and there is confusion amongst the experts in the industry. If I can illustrate with one simple example, shortly after we completed our report a city institution that was sponsoring one of the new city academies approached me because they wanted to put a biomass boiler in to heat the new city academy but had been somewhat frightened off by the contractor, who said, "If you want to do that, the initial cost of a gas boiler will be £170,000". As big as the city institution was, they felt that was a little excessive and they asked me to look into it. When I did the research I found that the actual additional cost for a biomass boiler as compared to gas was not £170,000 - the contractor was quoting 155,000 too much - it should have been £15,000. I suspect what had happened was common place, where the contractor thought, "I do not understand this but I am not going to tell my client this", passed it to a consultant who said, "I will sort it", but did not understand it, passed it to another consultant who again did not understand it and at each stage 100 per cent contingency was put in place to wrap the figure up. This ignorance, which is pervasive, about what is happening in biomass, what is happening in renewables, is comparative and fits into the point you have made about the plethora of avenues down which to go where there is no single approach. The single message coming from the various parts of government, which is another point in itself, we see clear emphasis, and I do not mean you to take this that I am trying to be particularly inclining one way or another, but Defra actually are seeking to do something about biomass, but you might as well bang your head against a brick wall with some of the other government departments. We see the Prime Minister is talking about trying to join things up, but their ability to join things up, their desire to do so, is woefully lacking and is in urgent need of someone to knock their heads together and make them realise the practical consequences of what they are doing and the solutions that they are missing. Q155 Chairman: Have you seen in the Climate Change Programme Assessment, which has just been published, any evidence that the Government has understood the line of observations that you have just put before the Committee? Sir Ben Gill: The aspect of communications is one, I think, that certainly has been picked up and commented on in the communications of the Climate Change Review, but, unless there is a willingness in the key government departments, and particularly by officials, to recognise that, then the Government can say all it wants about wanting to communicate but the actual practical delivery is impaired by a lack of willingness to do this. If you look, the Climate Change Review is proposing to have a grants team meet. That is going to be funded totally by Defra. Where is the DTI money? As we make the comment in the report, given the three elements of renewable energy - electricity, road transport and heat - heat is the bigger fraction of those three and yet has gone unaccounted for, lamentably so, over the years. While we have talked about renewable obligations to gas and electricity and we have talked about renewable transport fuel obligations, we have done virtually nothing about heat. The most ridiculous fact, I think, that has really got to be addressed is that in the fifties we built a system of electricity generation in this country which was right at the time but today wastes enough heat to heat the whole country for free. If we are serious about energy efficiency and saving energy - and there has been some talk about it in the media this weekend just passed - then, instead of rebuilding a similar number of mega gas powered stations - coal, clean coal or nuclear - nuclear does not produce the heat, but in terms of coal or gas or biomass, to actually build smaller localised ones, as has been exemplified works effectively by Woking Council, for one, who I think have set the example. Q156 Chairman: Do you get the impression that the Energy Review is going to give any comfort to your line of thinking? Sir Ben Gill: I am more focused in the short-term on the response that will come from Government to the Biomass Task Force Report which will come out next week. The indications are that the vast majority of the recommendations we have made will be agreed to. I cannot give that as cast-iron, obviously, until the report comes out, but the indications are positive that they have picked up on this, but again it comes down to across government implementation and picking up on exemplars, where there are exemplars, of best practice. Chairman: Thank you very much for those introductory observations. Q157 David Taylor: It was an interesting anecdote with which Sir Ben started his evidence, but I am not totally surprised. I am not quite sure whether it is the lack of joined-upness behind what you described or whether it is the approach of the city technology colleges who are getting a rather startlingly good deal and want to capitalise on that. In the county of Leicestershire there is a project based on the heating of public buildings from wood pellets. I do not want to step on the toes of later questioning, Chairman, but the problem that there seems to be in the biomass systems of this kind is in the incentives to have innovative generation technology and also to develop supply chains. In the Government scheme to support biomass, they have announced that they are going to give ten to 15 million over the next two years as part of a five-year commitment. I would have thought that that later period is not sufficient to stimulate much extra interest - it is not a long enough period - and the amount seemed rather small. What is your attitude to that? It is your recommendation they are responding to. Sir Ben Gill: What you have done is raised one other point in my mind when you mentioned the colleges. There is also a potential simple clash of basic government organisation, in that very often the capital fund comes from one pocket and the revenue expenditure comes from another pocket, and so, if you have to spend more on capital to save revenue, they are not bothered. Q158 David Taylor: Exactly. Sir Ben Gill: This is a major anomaly. You can have a pay back on that capital spend in a very short time, but, because it requires additional capital, no recognition of that pay back is given. In Leicestershire---- Q159 David Taylor: You need not relate it specifically to Leicestershire, but there is a general point. Is this a long enough period over which to allow them to provide an incentive and are the amounts on offer anywhere near enough to generate interest in new generation technology? Sir Ben Gill: We spent a lot of time looking and trying to project how things would go, and during the period of the study, which was 12 months from October 2004 to 2005, the dynamics of the energy market changed quite dramatically. We were just reflecting on it as we were waiting to come in. Over the period when we started the study oil prices were down and had been down in the mid $20. What that meant was that economic dynamics were very different. Oil was trading at 25, 30, 35 dollars per barrel. What has happened, with oil prices going up remorselessly and this week touching around 72, 80, I think, the rate it is currently at, that has altered the dynamics factors in there with gas prices following as well. When we started the study heat would have a realistic value of about a penny halfpenny per kilowatt hour. By the time we were finishing the study heat was already valued, particularly in off gas grids, at about four pence per kilowatt hour. If you factor that into the situation with regard to heat alone, boilers, if we want to take heat as both combined, what we determined was that the revenue economics were actually revenue positive. What was wrong was that there was a big up-front capital burden of the type I have mentioned that needed addressing, and people were concerned that even if the revenue position may be cash positive at the moment, there was a lot of talk six months ago that oil prices are going to come back down again. Indeed, we saw some studies that have been submitted to Government that suggested that oil prices could be back down to $30 to $40. That is something I do not believe will happen, but that was in people's minds, and when you are investing in a boiler that is going to last for 20 years you will take that into account. That was the justification, therefore, for having an up-front capital grant system that kick-started and energised the position to get people into the position of used to biomass boilers, whatever the market says, and that actually served another function. It creates scale in the manufacturing capacity for boilers in this country and there were indications from boiler manufacturers that we talked to that, once that scale had built, the capital cost in itself would fall negating the future needs of the capital grant. We said two things further that you have not referred to: (1) we said not that the Capital Grant Scheme should end at year five, but we proposed that it should be reviewed at the end of year four to determine what the economics of the systems were at that stage, and, given the dramatic changes that have happened in the last 18 months, we felt that was prudent to ascertain because we thought, if the economics had changed, it may no longer be justified; and (2) we said that in the meantime the Government should give urgent consideration to what mechanism should be put in place to give fair compensation for the carbon saved by the use of biomass heating systems in a simple and effective manner. Q160 David Taylor: One brief and final point which ends my section, Chairman. The Renewable Energy Association - and I know you will recognise this quote - told us, and they will have said similar things to you, that the Bioenergy Capital Grant Scheme has "failed to contribute either to the advancement of biomass generation technology or the development of a biomass supply chain". Both of those areas are things that concern me because of local examples particularly. Do you agree with that observation? It would suggest that you do from some of your earlier remarks. How does what you are suggesting address the problems that they identify? Sir Ben Gill: First, the point is this. To compare what has happened with the Capital Grant Scheme two, three and four years ago with where we are today, because of the economics, is not a fair comparison. We were moving into the new scenario and we wanted to take account. Second, I think it is unfair to say that nothing is happening. It has happened where you have had entrepreneurs. You have in Oakham, in the Rural Energy Trust, a shining example of one individual, Richard Harvey, who has taken the subject on and driven this forward and, with the use of grants, is promoting the use of biomass treatments and continues to do so very effectively as a shining light in the years to follow. Q161 Chairman: Could I just ask for some clarification, because there is one item that is confusing me and I have been searching for the references in the report. You mentioned a moment ago that within the grant scheme there should be some recognition of the value of the carbon saved. In paragraph 2.2 on page 18 you make a case for intervention and you talk about what is described as the "social cost of carbon current within Whitehall", and you quote a range from £35.00 to £140.00 per tonne of carbon, and, if I remember rightly, somewhere else in the report you also comment about what the Emissions Trading Scheme (within the UK) prices come in at and what the prices for the same scheme in Europe come in at; so we end up with three or four different prices of carbon. I have to say, I am now completely confused. How do you derive a value for the carbon and what does this term "the social cost of carbon" actually encompass? Sir Ben Gill: I can further add to your confusion by pointing out that some people talk in terms of carbon, some people talk in terms of carbon dioxide. If I remember rightly, the Emissions Trading Scheme, the EU Emissions Trading Scheme, is based in carbon dioxide, and, of course, carbon dioxide is 44 units of atomic weight to carbon's 12. You have to multiply the carbon value by 44 twelfths to get that; so you get a different set of figures. The attribution of value to tonnes of carbon is very much a social economic calculation, and there have been a variety of experts who have come up with figures for that. Perhaps the most noticeable one was about four years ago when they came up with a base figure of £70 per tonne of carbon which would then inflate with each year's inflation. This is very nebulous. What we then looked at was the cost of the various schemes by looking at the element of subsidy going into it. If you look at, say, the cost of ROCs, and I believe you have looked at some of that, and certainly the Environmental Audit Commission has looked at that, that would suggest a figure rather in the order of £270 per tonne of carbon is the transfer figure cost in there. If you look at what we are suggesting in terms of the Capital Grant Scheme and you put that on tonnes of carbon saved, given a particular scenario, we could be achieving carbon savings there for as low a cost as £20 per tonne of carbon. It depends on what system you are at, why you are getting this variation and what assumptions you are putting into it. Chairman: I think we are going to have to probe this with those in Government who have set these prices: because it is often quoted that investment decisions in the energy scenario forward from now will depend upon what the price of carbon is but, I have to say, I am still fuzzy, and it is a failure on my part to fully understand how this money value has been put, particularly when a term like the "social cost of carbon" has been put forward. Q162 Lynne Jones: As to the amount of investment that is needed, you said that you were hopeful that the Government would accept your recommendations, but you were recommending grants. You said that the cost of your recommendations would be ten to 20 million pounds a year and you were talking about a five-year programme with a review after four, whereas the Budget announcement was just ten to 15 million over two years, and I cannot imagine there is going to be any extra money. Can I put that in context? We had some evidence from Jeremy Woods from Imperial College that if you wanted to supply ten per cent of the heat market you would need 200,000 50 kilowatt units over ten years, which would cost about £85 million a year. Obviously, once you had got the programme going, you would hope that the economies of scale would bring the cost down, but does it not demonstrate the Government's response is rather pathetic at the moment? Sir Ben Gill: There are two elements to this. Firstly, when we set that figure over the five-year period per annum, if you look at what we have done, we have not put a linear take-up on the technologies. We believe it will be slower in the first part through to 2010 and then the rate of take-up will be greater, and we think it will be double, so it is back-end loaded in that sense. Second, Defra informed me that there have been some problems with the EU state aids, and so, whereas we have worked on 40 per cent of the total capital cost, the EU state aids registration has restrained them to 40 per cent of the margin of additional cost over what it would be as a base figure. Therefore, if you have a gas boiler you have to put a biomass boiler in, and that is down to state regulation. In that sense there is a variation from what we recommended because we were advised that is the EU state aid law. Mr Clayton: Chairman, just to clarify, the ten to 15 million for two years, I understand that actually relates to a five-year scheme but the spending rounds mean that there can only be a commitment for the first two of those years, but there is an expectation that there will be an issue of funding for at least a period of three years. Q163 Chairman: Can I clarify one other little point. When I asked my initial questions about the nature of the policy in this area what do you think the Government's objective is in giving support to the sector? Is it some reference to energy security, is it dominated by climate change or is it a bit of both? Sir Ben Gill: One does not speak for Government, Chairman. You must not ask me to do that. They must speak for themselves. Q164 Chairman: Do you get the sense from having discussed it with Whitehall, in inverted commas? Sir Ben Gill: The arguments I deployed were climate change is to me an overarching issue that transcends everything. As a farmer, someone who works on the land, I am concerned when I see different climatic factors, not only on my own land but you have just got to look around to see all the different factors that are hitting us every day when you look at the floods in central Europe again this year, and they had them, if you remember, in the last two weeks of August last year, if you if look at the drought in southern Europe, if you look at the drought in Kent, the south coast, if you look at the problems just last week in China where the Gobi Desert again took up sand and moved it a thousand miles, and you can go on and on. These things have to be tackled and we need to tackle them now, but that in itself stands as one argument. Even if that was not the argument, I think there is a very strong argument on energy security that we need to use sensibly the raw materials we have. To go back to the point I made earlier, it is just plain crass stupid the way we use our raw materials. We waste as much heat as we could use. We make the point in here in terms of reclaimed timber; we are currently putting into landfill four to five million tons per annum. That is the equivalent to half a million hectares of land that we are putting into landfill when we know landfill is struggling because the rules have got in the way. The incentives are perverse. This needs to change. Look at the hiatus there was last autumn about tallow. It was classified as waste under the Animals By-products Directive and then, because it had been put in there, I suspect without anyone realising what that meant to the Waste Incineration Directive, we had to classify it is a waste product. It got out of the system. We could not burn it sensibly. All these things need bringing together, and energy security becomes a very important issue, not least because we are at the end of the gas pipeline and we are not self-sufficient in gas any more. Q165 Mr Drew: I have a new obsession, one of many, as some of you will know, that we ought to be turning the heat down in some of our buildings, because our response to global warming has always seemed to be to put the central heating up a little bit more. I was a bit taken aback, slightly tangential to the link within the Renewable Heat Obligation, that you did not think very much of it. To paraphrase the argument, you saw it as rather complicated and long-winded, plus you saw the pressure on the supplier rather than the purchaser. It is a bit depressing in the sense that I think that we completely underestimate, as you have already said in some of your initial remarks, that we do not do enough with heat. It is terrible when people are cold, but we are not cold. Global warming means we should be turning everything off at an earlier and earlier date and we could save some of this energy and try and do something with the heat that we have got to be much more creative. Is there any chance that you might rethink your objection and opposition to the Renewable Heat Obligation? Sir Ben Gill: Like you, I have an obsession also with turning room temperatures down. I take my jacket off in here because it is actually too hot in this room, it is ridiculously hot, but I would cancel one thought. Global warming does not necessarily mean that Britain will get warmer. We have to remember that we are on the same line of latitude as Quebec, and Quebec regularly has temperatures, I think, (and I hesitate with the Canadian High Commission behind me and staring in my back) of -20 and -25, which we still have not experienced on a regular basis in the UK; so it may mean that we get colder weather, but that is immaterial to the point. I also have a thing about bottled water, but I will not go into that. I am very keen to have tap water and seek to change that policy wherever possible. I notice that you have bottled water in this revered place. In that sense I agree with you on the terms of turning temperatures down. It is amazing, if you look at it in any establishment, just turning thermostats down one degree centigrade can have quite a dramatic effect. Interesting also is when we went to Sweden (and we talked to them there because they had taken the decision a decade ago, if I remember correctly, to put a tax on heat from fossil fuels which meant that the good residents of Sweden for ten years have been paying four pence per kilowatt hour for heat) I said: "How do you cope with fuel poverty?" given that they have a colder climate than us already. They said, "What? Would you explain what this concept of 'fuel poverty' is? We do not have it." Of course the reason they do not have it is because they have had proper building regulations, proper building standards put in place and properly implemented for some considerable time, and they recognise the fact that each one of you is like a kilowatt bar on your heater with a little bit of variation depending upon your body mass, and if you put a dozen of you in here, that is 12 kilowatt bars. These are all heat factors that can be done. We did visit Bedshead in southern London, which sought to demonstrate that you need no heating in a room with insulation. You can do much better in that scenario. On the renewable heat topic, the fundamental difference between heat and electricity is that in electricity the conversion efficiencies - if you are doing electricity at best it is 35 per cent efficient and at worst 25 per cent efficient - leave a revenue deficiency, even with the prices we have got today, whereas with heat, as I have already said, there is no revenue deficiency. I am well aware of some entrepreneurs who are selling not biomass but megawatts of heat that has come from biomass that are deriving a very realistic market price that is superior in return per hectare in terms of virgin crops to wheat at this time. Given that is the case and given, for example, that even in some boilers you could burn wheat to create heat, and if you take the energy content of wheat and you equate that across to the energy content, say, of burning oil (and I have to admit I have not filled mine up in the last couple of months but I think the last time my wife filled it up in her property it was 37 pence a litre), that would give you a price for your feed wheat, on a revenue basis, in excess of £120 per dry matter tonne. I have recently sold my wheat from last year's harvest at £71 a tonne. That is the difference in the revenue. The point I have made to many people in the farming community is that farmers above anybody else know the problems that have been derived by complex subsidy systems. We are just getting out of that with a decoupled CAP. We do not want to get back into it again when there is a market system there that will deliver a sustainable business in its own right. Q166 Mr Drew: What happens if everybody starts producing heat? That is the danger, is it not? Sir Ben Gill: No, I do not think it is a danger because the real situation with energy security and energy demand is such that we are going to need to use every opportunity we can, every source of energy, and if you look at the various demands for biofuels or for electricity and for heat, anything we can do to reduce our dependence on gas, which peaked at over 200 pence a therm recently, that is putting industry way out on a limb. If you look at it, the security that can be delivered from a sustainable source of biomass is far greater. If anything, we have suffered in this country from a problem that in the early part of this millennium, in the early part of this decade, the end of the last decade, energy prices were far too low because we had North Sea reserves and we abused that. Those countries that have had higher prices for energy have sought to diversify and have been sheltered from it. If you look at the EU statistics, for example, for 2003, the average domestic price of electricity in Germany for 2003 was ten pence per kilowatt hour. We have only just got there, and it was in 2003 in Britain less than half that. Q167 Mr Drew: Are you not a bit timid then? I know this is not necessarily directly relevant to heat, but what you have said about the building regulations, again it was not necessarily in your brief, but I would entirely concede the point that you have made that we are so neutral in our approach to the way in which we expect developers to do good things, whereas we all know that if every new housing development was made energy efficient and was actually forced to use heat by local heating schemes rather than some of the completely mad ways in which we still expect each house to be an island in terms of its own heating provision, that would drive biomass production forward quicker than anything else, would it not? Sir Ben Gill: I would not disagree with that. I think you have almost answered the point yourself, David, that the terms of the remit of the Biomass Task Force did not go into that aspect. I strayed outside my grounds in a number of ways, and I did in fact also write a side-letter on a number of issues outside the technical remit of the group to the Chancellor, to the Secretary of State for Trade and Industry and the Secretary of State for the Environment, Food and Rural Affairs. One of the issues I raised was the subject of district heating or communal heating schemes, because they strike me as so much more efficient. We came across one example of a 2,000 house new estate in which the developer, through ignorance, specified that each house should have individual gas-fired central heating. The total capacity of the individual gas boilers put in was 23 megawatts, the maximum gas uptake measured was two megawatts; so you have an over capitalised investment of 21 megawatts. But go a stage further - and this comes back to joined up - you could have put one central heating facility in, over spec it by 50 per cent at three megawatts and you would still save 20 megawatts at Government expense. The cost of laying in the pipe work when you are putting in pipes for new houses for electricity and water is minimal in any case. People put up barriers. They say, "Oh, the cost of meters." I am saying you do not need meters. If they are new houses, you build to the proper spec and you can estimate pretty accurately what the heat demand will be. Just as you have a water charge, you have a heat charge perhaps. Then think of something else. Think of the fact that 2,000 houses, if they are on gas, each boiler for true safety reasons has to be inspected every year. Two thousand times £67.00 per year is £134,000. But, even further than that, one of the companies that did the inspection told me that on average they spent a further £400 per house on ten per cent of the houses just getting access because people were not there (repeat visits). Ten per cent of 2,000 is 200 times 400, is another £80,000. Therefore, the cost of maintaining all those boilers is in excess of £200,000 a year. You could pay a pretty good engineer full-time to look after one boiler for that. What we saw in Sweden was one engineer looking at, I think it was, 36 different heating schemes using remote telemetry, and one other benefit. Imagine the scenario: in the middle of winter, the cold snap we have postulated happening, the first time you notice the heating is not working is when you wake up in the morning, and, then, with two parents working, "Who is going to stay at home for the boiler engineer?" who does not come. If you have got a district heating scheme, as we saw in Sweden, by remote telemetry the man has fixed it before you even wake up. Nobody joins this together: because the developer is not worried about the running costs and conceptually it is not seen as convenient. This is why information, the removal of ignorance, is actually at the core of our thinking about renewability, sustainability, energy efficiency and the use of biomass in particular. Q168 David Lepper: You have just talked again about the lack of joined-up thinking and you began by commenting on that. I am asking to you to speculate on the response from the Government next week. Do you think there is likely to be anything in the response which you feel goes some way towards remedying that lack of joined-upness, or would you prefer not to answer that? Sir Ben Gill: I am hopeful that there will be some indications that we can start persuading the councils to look at targets for renewable applications. I have to say, from my own personal business front I have had some frustrations. I was recently involved in a planning application where I wanted to put biomass heating in and we put the whole sustainability issue at the top at considerable additional expense and the council were not interested, which I thought was quite despicable. That is not the same of all councils - there are variations, some councils are quite good - but trying to bring all the councils together and understand renewability is an issue in itself, and, no matter what government does, essentially it is the issue of taking the horse to water and you cannot make it drink necessarily. It is getting the awareness up and getting examples, which is why we think perhaps the most constructive example is for central government, the biggest owner of building stock in the country, to lead by example. They have said in the 2003 Energy White Paper they would do that. They have yet to do it. They have a massive school build programme, they have a significant hospital programme; so we would make two suggestions: (1) in the school build programme why do they not put in biomass boilers, and then the parents, who are the most susceptible population who think that biomass is dirty, inconvenient, inconsistent and unsustainable, would see that it works and the head teacher does not have to go down, as one person suggested to me, and stoke the boiler every half hour and get his or her hands dirty, but you demonstrate it; and (2) why do we not turn on its head the concept of hospitals, hospitals that interestingly have a pretty steady heat and power load 365 days a year? The heat may be reverse heat in the summer, so you can use reverse heat to cool, and put in combined heat and power plants in the hospitals and use the grid as the back up, which in some parts of the country is probably more secure. Woking Council, for example, told me that they had had eight power failures in their town centres last year, or they would have done, but, because they had their own the CHP facilities, there was no power failure; so there is a benefit to it. Those CHP units, given the technologies that are emerging using gasification processes, could be quite safely part-fuelled on their own clinical waste, which saves transporting it, and you suddenly turn clinical waste, which has a gate fee for disposal of £200 a tonne, into something that could have a value and you turn the economics round. It is a win, win, win potentially. Q169 David Lepper: So we go way beyond the old dichotomy we have seen so often in this country between Defra's approach and the DTI's approach. You are talking about a far wider remit of Government departments? Sir Ben Gill: It is Defra, it is DTI, it is ODPM, it is Department for Transport. I have to say we have found the Department for Education very positive and very supportive given the financial constraints, but they did not come down to the regions and we did spend a lot of time talking to the regional development agencies and, in the main, we did engage them quite sustainably in what they are thinking; but again you get mixed messages in the counties. We did come across some counties where you could almost see what had happened. The county officer thought: "This is an important issue. What should we do? I know; we will appoint somebody to oversee this." What happens? You are asking somebody to be a jack of all trades, and you, Chairman, highlighted at the start that they cannot master all those details. It is impossible. What happens is that they get confused messages coming out to the people who are thinking about it and the whole system fails. That is why we want something simple, quick, efficient and clear-cut in what we all want. Q170 David Lepper: David Drew has asked about the renewable heating issue already, but before we leave that completely and taking up your comment just now that we need something that, among other qualities, is quick, one of the reasons why I think your task force did not go with the idea of the Renewables Obligation is that you were saying, in effect, the time is too short to prepare and implement in view of the need to tackle climate change urgently. I think the Royal Commission on Environmental Pollution did suggest that the Renewable Heating Obligation would be something worth considering; so does the Renewable Energy Association. They are calling for an analysis of the feasibility of such a thing. Do you think there is any point in spending time on that? Sir Ben Gill: At the launch of our report two representatives of the Royal Commission on Environmental Pollution were there taking part in the study, and they actually spoke - they reported of their own volition, I did not ask them to - and made the point that since they had published their report, which predated ours, I think, by 18 months, the economic dynamics that I have talked about already had changed so dramatically. They recognised that things had changed and they accepted the point that we made, and I think this is the point. We have to recognise that we need to join up all the various bits. I am still amazed, as I go round the country talking to groups, that people are surprised that they have not picked up on what has happened as a consequence of the dramatic rise in oil and gas prices (and nobody is forcing that), not helped, I must say, by the DTI at times insisting that contractors who do studies for them do it on the basis that by 2010 gas prices will be back down to where they were a year ago. Mr Clayton: The need for legislation for a renewable heat obligation would inevitably mean at least two to three years before a system could be put in place, and one of the things that the task force had in mind was that the biomass sector really had suffered from almost a burn-off(?) approach from government and therefore they did not really want to see that sort of delay built into any future development. Q171 James Duddridge: I am a little bit confused. I was going to ask about how to reduce capital costs for bioenergy, but you seem to be saying they are already quite cheap. I am confused because the Renewable Energy Association said that, whilst on a field by field comparison to fossil fuels biomass is competitive, however, owing to the immaturity of the market, capital costs are still nearly three times those of fossil fuel alternatives. I would appreciate it if you could clarify that and also touch on why investors are not recognising the economic impact longer term? Sir Ben Gill: I am sorry if I have given you the impression I believe that capital costs are cheap. Capital costs are greater than gas or an oil boiler, and some of that is in related kit, although that need not be as dramatically---- Q172 James Duddridge: You are talking £15,000 for a city academy, which in the greater scheme of things is not a lot. Sir Ben Gill: No, but it is a factor. Remember that when people are building in quotes of 170 quite often, that is a barrier in itself, and when I got to the bottom of it, I got to the bottom of it by talking to one of the UK's leading manufacturers in this, and he said, "This is common place. I have this regularly happening", were his words to me, because the intermediaries do not understand. If you are used to dealing with a system, you prefer to deal with that than going to something new. It is second nature. This is what happens, so people build in. On a parallel story, we came across, I think it was, Southampton Council, who had insisted on a district heating scheme going in. The developer, Barratt, had resisted it because it did not want to do it, but having done it found it was cheaper and wanted to do it the next time round of their own volition. They were resisting it even though there were figures there that said it worked. That is part of the inertia: something different. Part of the inertia is, "It is all right you, Gill, saying you will supply to biomass, but you might not be there next year. Where are we going to get the supply from?" We have to tackle that. I think we tackle that by the Government flagging up front we are going to do this because we are aware of the point the Chairman has made about climate change and energy security. We are going to create this demand and we are signalling that two, three, four years down the road we are going to want it so there is the market. You go on and produce it. It will not be a single market supply, it is going to be a diverse market supply with a mixture of virgin biomass - that is short rotation coppice, miscanthus, straw - coupled with non-waste biomass. You could look at aspects of reclaimed pallets, waste timber or you could go into municipal solid waste, reclaimed fuels, or you can go into wet wastes. We waste as much food in this country as we eat. It is a startling statistic, but if we are serious about sustainability, should we not be able to do something about that? Q173 James Duddridge: We will come to wet waste, if that is okay, later on. If we take the city academies, I have got this picture of big lorries trundling through with feed stock for a burner. How have the Danish overcome the associated transportation costs for biomass and processing costs and what lessons can we learn from the Danish? Sir Ben Gill: You are quite right; biomass does not lend itself to be transported from one end of the country to the other. That would be nonsensical, although there are some nonsensical transport practices that go on at the moment in terms of how we transport coal that is imported from one side of the country to the other rather than importing into the right port, but that is another issue. What we need to do is mirror local supplies with local energy needs and put them altogether, and we recommend in the report that the Government and the regions in particular should have maps. For example, one county council I talked to in the south-west, I suggested that they look at their industrial parks. As a county council they assess what is the energy need of those industrial parks in terms of gas and electricity; they then look at what refuse they have and estimate what is the energy capability of that, what is their other biomass availability, put the two together and act as facilitator. They have to deal with the rubbish. They can go into partnership with the industry perhaps to buy the energy if it wants the energy and it becomes that more efficient. You are putting it altogether to develop it in that sense, and so we think that that is a sensible way to go ahead. I have lost the thread of the question now. Q174 James Duddridge: It was about the Danish example and what can we learn from them? Sir Ben Gill: I think by siting the facilities you can get round a lot of them. Remember that in cities as well there is a base load of aboricultural arisings - these are tree surgeons' chips - which amount to about half a million tonnes a year. You have got all sorts of things that you can add up and put into it. You can do it with municipal waste. It can be done there. I understand in London in the Lee Valley they are going to bring wood in on the canal. It is using innovatively. The better way is to use and generate it nearby. Having said all that, I think you have to recognise that biomass cannot supply all the heat in the country, so we use it to teach it where it is best used most efficiently. Q175 James Duddridge: One last question. There are issues around people being ignorant of the opportunity and, second, there are issues around having a long-term security of feed stock. You seem to be saying that if the Government through some major project like city academies and through its own efforts will actually generate a sufficient demand, the public will have reassurance and come in off the back of that. How much demand does the Government need to create in order to maintain momentum for private sector investors to have the security of buying a Barratt home knowing they are still going to be able to buy this stuff after five years rather than having to plumb in a new gas boiler? Sir Ben Gill: Mr Clayton will answer the question on Denmark that I forgot to answer the second time first. Mr Clayton: I think in Denmark what was particularly successful was community ownership of schemes and therefore there was a commitment by the community to see them work effectively, and that was underpinned by a co-operative approach from farmers, particularly the feed stock supply, the emphasis being, as Ben has said, on supply from the local area. Those two aspects are really what made a success of district heating in Denmark, set in the wider context where there was the tax on fossil fuels that subsequently evolved when there was a change of government and there was some doubt introduced into the market about the future of the funding schemes. Essentially within Denmark it was the community ownership of the district heating underpinned by very strong co-operatives on the local farming side. Sir Ben Gill: I am sorry, can you put the question again. Q176 James Duddridge: The final point of the question is really how much demand does the Government need to generate in order to be able to give Joe Public and Barrett Homes the confidence that there is going to be security of supply? Sir Ben Gill: We thought there were two elements: one is clearly in the new-build programme - there is clearly a very good opportunity there - but, second, we suggested that, in terms of public buildings, the normal life expectancy of a central heading boiler is 20 years. Given the amount of buildings the Government ought to be reviewing and all the boilers that are up for replacement, they should actively consider the introduction of a biomass boiler. That is not as Draconian as it sounds. If you take Barnsley Metropolitan Council, for example, people had all their boilers based on coal, for historical reasons. They have changed them over to biomass already, and so it is relatively easy to do. If you are putting in a new biomass boiler we believed there was an argument - because there could be if Government wished - that you could have a significant uptake of the new boilers, and not necessarily one in 20, we think for economic reasons you could probably accelerate that to one in 15 and you could have a significant uptake of biomass demand in government buildings. I have not the figures to hand, but we could work them out for you. Q177 James Duddridge: It would be useful if you could. Mr Clayton: The issue alongside that, Chairman, is how much the Government does. There is also a message that comes from the Government - the point, Chairman, that you made right at the beginning. The whole list of grant schemes in the annex really says that the approach has been fragmented. If alongside the development there is actually that consistent strategic message from government saying that it wants to develop biomass energy in all its forms, that is absolutely crucial. Again, going back to Denmark, part of the success in Denmark was over a period of probably eight or nine years a very strong consistent message saying, "We want to develop biomass energy. There will be this support that goes in to get the industry up and running", which then subsequently, with the change of government, actually promoted that message, but the key point is that alongside the practical development needs to be the strategic message and the commitment to the development in the longer term. Q178 Lynne Jones: Can I first of all ask you, Sir Ben, were you as passionate about these issues before you were appointed to the task force? Sir Ben Gill: I believe very strongly in what I am doing. No, I was not. I learnt a lot. Q179 Lynne Jones: You are a good example of the education. Sir Ben Gill: Indeed so. It is also correct to add that the dynamics of the whole thing changed. Having said that, I planted my crop of short rotation coppice nine years ago. Chairman: I will suspend the committee for ten minutes while we go to vote. The Committee suspended from 4.24 p.m. to 4.40 p.m. for a division in the House Q180 Lynne Jones: I want to ask some questions about how we maximise carbon saving from the remitted limited resources available, particularly land. A little earlier, Sir Ben, you said that you had already yourself been growing short rotation coppice, but there is a problem with that, because you do not get the rewards from the planting of coppice and miscanthus, as I understand it, for three or four years, and that may be a deterrent. We also have mixed signals coming in terms of renewable fuel obligations, and so on, and we know that there is a greater carbon saving from using biomass for heat and power than for fuel, and yet all the green signals are saying biofuels are the way to go. How can we ensure that what biomass is produced is being used in the most carbon-efficient way, and what role do you think research and development has got? I notice you have a whole section of recommendations on research. How important is that and what signals do you think the Government is giving? We have heard, for example, that some research institutions are being closed down. It is not mentioned in your report, but what potential do you think there is for marine-based biomass? Sir Ben Gill: I did email to the secretariat yesterday one of the presentations I had been given, and in that were some figures that touch on some of these issues. One of the slides that I used is: "How do we derive maximum value and efficiency from biomass?", and I tried to produce it to fundamental principles. I said first of all we find a process that extracts the maximum percentage of the implemented value of the product. You have got to look at this. Do you go through a process that gives you 20 per cent efficiency extraction or 90 per cent? If you are into combined heat and power or if you are into heat only, some of the most efficient boilers now can give you 90 per cent efficiency for energy extraction. If you are putting it through an electricity only plant you are down at 30, 35 per cent. Drax will tell you they may do 37 per cent efficiency; so it is logical how much you can pay for it. Once you have done that you should seek to do it with the minimal amount of capital investment that is necessary and with the minimum amount of energy losses, efficiency losses, in the transformation while identifying the maximum market value for that product. Those are simple and quite obvious guiding principles but they are ones that perhaps are ignored sometimes when we go hell bent down one road rather than looking at the fundamental points. I think the specific answer to your question, and one of the concerns we pick up in the report, is how are we going to determine which is the most carbon efficient when there is no internationally accredited basis for setting up proper life cycle analysis? Before I give you the example there, we did visit Aija, a plant in Ottawa, and one of the questions I asked them was about life cycle analysis, and they said, "Oh, yes, it is very good." I said, "Tell me what value you put on the cost of your raw material, your maize stow", or in this case it was wheat straw. They said, "We put nothing on that because it has all gone in the sea." There was a dilemma here. I understand the dilemma, and it is not black and white, but I do not think it is equitable in life cycle analysis to say there is no carbon cost to straw as a by-product or maize stow as a by-product just because you use the seed. It should be a green basis of apportionment of assumptions on which we do things to get carbon accreditation. In terms of carbon efficient, we need to look at that and have an agreed set of life cycle analyses, and I still come across this, even most recently as two weeks ago when I was talking to a scientific community in the UK and they were raising the issue. There is no independently validated life cycle analysis basis for assumptions on which we can ground proper meaningful comparisons at every stage. I talked to OECD and they said, "Oh, you should talk to the International Energy Agency", and they pass you on. Somebody should be doing something about this. Who should it be? I think the Government should be pushing this. The Government is the only body who can push it, either within the G8 or within the UN, I do not care which framework, so that we do not just bandy figures. Q181 Lynne Jones: We cannot wait until all that is sneakily sorted out. We have to have some broad thrust of going forward in a rational way. We have our own scientific advice and expertise. How are we going to approach this? We want clear policy signals that will maximise the carbon savings from the kind of technologies that we encourage. Sir Ben Gill: If you are going to maximise the carbon savings, you must use the most efficient system of transformation from one to the other. If you are looking at growing a crop, you are looking at energy balances. The energy balance of growing biofuels, depending on the use of the byproducts, is two or two and a half to one. You get two or two and a half for every one you put in. It varies between which crop it is and the system. That is in this country. If you are looking at miscanthus or short rotation coppice, it could be in the high twenties to one. I put that in context. Much has been made of the potential for using oil that is going to be extracted from the oil sands in Canada. The energy balance there is only three to one, three out for one in, because you have to steam out the oil from the tar sands. A lot of energy goes into steaming it out. In that sense, it is comparable but in terms of production per hectare it makes you look at what you are doing with the crop yourself. Using it for heat is a simple process. It is minimal capital investment and it is quickly achievable because the boilers are there. The research and development element is a very important point. We visited Finland and we were very impressed by the organisation called VTT, a part state funded body. From memory, it had funding of around £200 million per year and it is part industry. It performs a role that was destroyed in this country 20 years ago in the mid-eighties in the Rothschild review of research that deemed that government should not be involved in any applied research at all. All too often we see to this day basic research is done and there is no joined up application. I started growing coppice nine years ago for the failed Arborough Project. We talked to the scientists in the VTT equivalent. They said, "If we had been approached, we could have made that project work. We know what is wrong with it", but nobody joined it up. We do not have that applied research capability, that join up, in this country. The need to join it all up, to understand the transformation technologies, is rather critical in going forward, as is the need to join up and understand the agronomics of the crops we are going to grow and the research also into another area that we have not touched on yet, which is using plant products as general radioactive waste materials for industry, something that I believe is incredibly important. We did see in the National Research Council laboratories in Ottawa, state funded again in conjunction with industry, a product that had been derived from maize starch with a derivation of polylactic acid which is already widely used elsewhere in the world for the casings in laptops, for example. They were patenting it at that time and they believed it would be quite capable of replacing the steel in a motor car. If you think about what that means in terms of potential for our society, it is quite amazing. I did mention it to the retired chief executive of Toyota UK. He went into eulogies of thought. The car becomes lighter. The fuel efficiency rises. There is the renewability. At the end of the vehicle life, you can chip the vehicle chassis and use it as a heat source or an energy source or put it into some other secondary use. We do mention in the report changes of utility in the revision document, which is what we are talking about here but we need the coordinated research into these areas. We have the basic research to take it through so we can not get into the simple Joe Bloggs end but into the real added value end to the benefit of the country as a whole. Finally, on marine biomass, marine biomass has enormous potential to harness the sunlight. A lot is talked about that. I am afraid I am not sufficiently up to speed to answer the question in any detail. It is something I have read just at the margins in the newspapers. The biomass amount is substantial and it could be harvested and potentially be used. Q182 Lynne Jones: We have the Biosciences Federation and they have raised that and the use of chemicals in the chemical industry. Do you envisage one day that we might have a situation where you can take a crop and different bits of that crop will be used for different purposes, so it could be used for food, for biomass or biofuels? One of the areas we heard about when we were in California was the use of enzymes and cellulose digestion. I think even George Bush mentioned it once in a speech. Have you any thoughts about this? Sir Ben Gill: I do. I concur with that vision very strongly. The developments that have been made in science in developing ways of taking cellulose products and converting them into energy in the last year alone have been significant, as indeed have some of the research findings on the production of hydrogen use in bacteria. In the States, they have quadrupled the output in the last year. The whole business of the plant is what I call the natural biorefinery. Rather than using the plant to take the product and put it through a complex industrial process to get what you want, you take the plant and change the plant to produce the products you want to start with. You breed wheat to produce higher starches or even to do something else. That leads into another question which is very controversial: GM. You can very easily take the plants to produce whatever products you want in a much more environmentally sustainable way than anything else. To go back to your question, I see that the plant will be fractionated. You use parts of this, whatever is opportune at that time. The byproducts will go directly into energy. Straw may go into energy from the wheat in the field and so on. If you look at the classic example, it is sugar cane in Brazil. They fractionate the crop. The best part goes into sugar; the next part goes into bioethanol. The residues go into the energy generating plant on the site that creates all the energy for the plant and the residue from the energy generating plant goes back as fertilizer on the land. Q183 Lynne Jones: What, if anything, should the government be doing to fast track these technologies? Sir Ben Gill: What frustrates me, not just on this but on the whole gamut of what we are talking about, is the lack of strategic overall vision, tying together all these points of climate change and energy security, coupled with the issue of food security in the future, because we have a finite amount of land. Some people have told me I should not be talking about this but I am going to ignore them. When you look at what is happening in the world, the ability to produce, with water becoming a restricted factor, with the increased dependence in China on imports of food as they move people to fuel their industrial revolution - GDP up by ten per cent in the last quarter - by moving people from rural farming there is going to be a big challenge about how we use our land and it is coming sooner than people realise. Unless the governments of the European Union and the world as a whole recognise this, we are in for big trouble. Q184 Chairman: On the question of use of land, in your report on page 12, Vision for Biomass, you say, "We have assumed that around one million hectares of land may be available for non-food uses." I may be wrong but I think the National Farmers' Union quoted a million and a half hectares in the context of biofuels on the liquid side. Have you added up all the various competing claims for what land is available for biofuels of different types? Can you put it into some kind of proportional context because you also made the telling point about food and food security. There have been some concerns expressed that developments of biofuels in the generic sense represent a point of competition, notwithstanding what Lynne Jones has just said about fractionating plants, for land that could be used for fuel. Sir Ben Gill: That competition is very real. Before I answer the substantive question, I will give you an example. If you go onto the BBC website, if you go into markets, more markets and commodities at the bottom and look on sugar futures, there are two sugar lines there. There is number 11 which is the New York futures on raw sugar and number 14 which is the refined sugar prices. If you click on that line at the bottom it will come up and show you the prices over the last 12 months. You can see a drop down box and the graph over 12 months. You will see the price in both of those has more than doubled in the last 12 months. It was in the papers today. I read it this morning as I was sat in the car park known as the M1 for two hours, coming here. Refined sugar is up to $480. Interestingly the new intervention price has come down because of the conversion to bioethanol. It is one product going two ways: energy and food. There is not a shortage of sugar. It is driving it up and, as oil prices go up, the sugar price goes up. Q185 Lynne Jones: Bioethanol is not a very good way of saving carbon. Sir Ben Gill: It depends which process you are using and which country you are doing it in and the same for biodiesel, which country you are doing it in and which way you are doing it. I think we will have to look at this holistically, not just from a British or European viewpoint but from a world viewpoint. If you take the EU objective, not the British government's, of 5.75 per cent by 2010 and you assume the current trend lines in the popularity of diesel at the expense of petrol, that would suggest that the demand for diesel in 2010 would be just short of 25 million tonnes and just under 20 million tonnes for petrol. On standard yields, to grow that, if we were to grow it all from rape which we cannot because you have other factors coming in you would require approximately just under a million hectares of rape. I would assume that you would still want us to go on growing half the million hectares of rape we grow for food use. There is immediately a question then of one and a half million hectares of rape in our total arable capacity in the UK of 4.7 million hectares. That is not sustainable agronomically. Q186 Chairman: You were talking about the total, 45 million tonnes, of diesel? Sir Ben Gill: No. 25 million tonnes of diesel. Q187 Chairman: 25 million tonnes of diesel takes four and a half million hectares? Sir Ben Gill: No. 5.75 per cent of 25 million tonnes is 1.43 million tonnes of biodiesel. That would not happen because you would reuse chip fat and imported but I would put that into context. Particularly in Britain, where we are a very heavily populated island, the amount of land to the population is not very great compared to, say, France or Germany. For bioethanol, the figures are different. For petrol, if you put bioethanol with petrol, you get the same figure. If you do it by wheat, you would need to produce 1.1 million tonnes of bioethanol. For wheat, you would need just under half a million hectares of land. If you did it by sugar beet, you would need about 275,000 hectares of land. We are talking here of either one and a quarter or one and a half million hectares of land if we are going to do it all, just to meet the 5.75. Nobody is suggesting we are. We need to think very seriously about this given water pressures, given the report that appeared yesterday from ADAS about the problems of achieving nitrates levels and the suggestion that we may have to start grassing down parts of the country, something that would be totally ridiculous, I think, but we have to think of these contexts. If we were to go further to a target, as the Commission has been talking about, it would be about ten per cent. It is a balance and it comes back exactly to your question about life cycle analysis. We need to have a handle on the life cycle analysis of where all the options of our energy come from so that we can factually compare them and not do it on emotion. There is emotion in this particularly with some of the imported biofuels when they attach it to the degradation of rain forests. That should not happen. To assume that all biofuels come from degraded rain forests is equally wrong as is saying that none does. I hope that answers your question. Q188 Chairman: It does. Do you happen to know what the cultivatable area for food crops in the United Kingdom is? Sir Ben Gill: It is about 4.7 million hectares of arable land and about another five million hectares of rotational grassland and another block of permanent pasture, but of course you cannot plough permanent pasture out any more under the CAP rules and cost compliance. We will still need large elements of that rotational grassland in there. That is without talking about biomass itself. If you start putting in biomass for heat and electricity on top of that, you are adding to that demand on land. Hence you see why I become concerned. Q189 Chairman: Given all of these factors, is it rational for the European Union to have this 45 euros a hectare grant for growing energy crops on set aside land? Sir Ben Gill: I do not think it is rational that we still have set aside, full stop. I argued against the retention of set aside in the 2003 reform. The only reason we got it as far as I could tell was because the French needed something to hang onto because they lost so much face. I would expect that when our Secretary of State goes into the debate on the mid-term review in a couple of years' time that would be top of the agenda to get rid of. It is a nonsense. Q190 Chairman: £12 an acre seems to be neither here nor there in agricultural terms. Sir Ben Gill: It is ridiculous and the bureaucracy and paperwork that go with it are destructive. Q191 Lynne Jones: In the context of the effect of the renewable fuel obligation and the reliefs available for that compared to what grants you are suggesting should be put up for biomass, what are the equivalents in terms of per hectare of biomass, the subsidies for the two systems? Sir Ben Gill: In terms of what we have suggested alone for heat grants it is very minimal in comparison. We worked it back on per tonne of carbon. It was £20 per tonne of carbon saved and that was a pretty conservative figure, which was far more effective than anything else. Heat is the best kept secret. It is the lowest hanging fruit and we have got hooked up on everything else largely because a lot of other countries have and we have ignored heat. We need to do that. Think of the resources. The best area to use renewable heat is in the more remote areas of our country that are off the gas grid. We could rejuvenate our forestry. Think of which is the region of the British Isles which is the most heavily wooded. Whenever I ask this question in public people say, "It cannot be Scotland. It is too obvious." It is the south east of England. People forget that. It is quite possible to manage those woodlands, to improve the biodiversity of the woodlands and the recreation capacity of the woodlands and to create an economic income stream. That has to be good news because you are creating positive income streams by managing things properly. Think of the forestries where suddenly you have created chains that have valuable woodchip. At £60 I am told it becomes economic if it is environmentally sustainable even to harvest tree roots. Think of the jobs you are creating. They are real and it is sustainable and we just sit here. Q192 Mr Rogerson: On that very subject in terms of waste wood, the government have claimed that an additional one million dry tonnes of wood fuel could be sourced every year if barriers to active management were removed. In the task force report you say that a lot more could be done in terms of waste wood. What is the difference? Mr Clayton: In terms of availability, good numbers were quite difficult to come by but the broad assumption we came to was that there were about seven million tonnes roughly of wood waste that was going into landfill. In terms of different uses that could be made of that, our conclusion was that three million tonnes could quite readily be diverted into biomass uses. It probably was one of the significant statistics that came out of the study that this material is going into landfill when there is an industry which is capable of transforming it into a usable product. It takes you into the whole area of definitions of waste, when waste ceases to become waste and the thematic review that is taking place in Brussels on that very issue. The challenge of using that material seems to us to be an obvious one that could be taken up quite easily. Q193 Mr Rogerson: You are quite right to flag up the problems around definitions of waste and in different contexts we have talked to people about composting and the issues around that. Under the renewables obligation, the 98 per cent rule that has now been moved to 90 per cent, waste wood has not been eligible but under the planning and policy statement 22 definition of biomass it is included. What are the implications of the problems of those two different interpretations? Mr Clayton: In terms of waste wood, there is an exemption in the Waste Framework Directive as well that allows for waste wood to be used as a product. The message we had from industry was that, when there was discussion of various percentages of contamination in the material, do not move to 95 per cent if we can achieve 94. The move to 90 was very welcome. It meant that this sort of material could be taken in. The whole issue of eligibility for rocks and the implications of that are quite serious. That move to 90 was significant for the use of that waste material. Sir Ben Gill: There is very clearly a need to move understanding and thought about the use of waste. There is still a fear that emanates from the period when there were problems with emissions, most notably the dioxin emissions from the coalite plant in Derbyshire. There is around the country something which I call the chimney aversion. There is public resistance to big companies coming in and putting in chimneys because they are fearful of what comes out of those stacks. When we talked to the Environment Agency - indeed, at the public launch of our paper - the public responded. They were very clear in their minds. The controls on the emissions from these stacks are absolutely better than anything else and better than they are for many other processes that we have. We can go a stage further. We saw a company at Avonmouth, Compact Power, who put together a mixture of porosis of carbon and intergassification that, without any stack, is very effectively transforming clinical waste into heat and power. That could be put in place very sensibly and its economics stack up now. It is ignorance again. Q194 David Taylor: Would you agree that there is a parallel oddity happening in terms of recovered fuel oil? You may have noticed that in the last few months it has not been collected as systematically as it was because a lot of it has been used in the road stone coating industry. The Waste Framework Directive ruled it out for consideration and therefore virgin fuel oil is being burnt to coat the roads because they cannot get their act together. Were you aware of that? Sir Ben Gill: I was aware of the whole issue of sustainability and the fact that the regulations and the definitions employed in waste have acted against sustainable change rather than facilitating it. The major one I have referred to already which is power. Q195 Chairman: In recommendation five you say, "Government should continue to fund, at an appropriate level, the work of the Waste Technology Data Centre at the Environment Agency." Is that body under some kind of risk in your assessment or is it inappropriately funded at the present time? If so, what does it do? Sir Ben Gill: The Environment Agency is dependent upon central government funding largely, to ensure that we have this performance data available to rebut the claims that still come out - we had a press launch with the Daily Telegraph correspondent there - that these chimneys were just pouring out pollution everywhere. It is important that we can inform the public of the reality so that they feel comfortable with it. I think it comes back to the point that David made earlier. The difference between what we have had in Britain and the Danish example was that elsewhere public ownership is taken of these schemes. Where a lot of people have gone is they have sought to come in and impose it rather than take public opinion. When public opinion has been taken first, you have a very different approach. We need to keep the information available. Q196 James Duddridge: I would like to return to anaerobic digestion because the task force, I understand, recommended a better strategy for anaerobic digestion of wet biomass and conducting a full economic and environmental assessment of biogas in particular as a substitute for diesel. Yet, looking into it, the government has merely pledged an international seminar on methane emissions. Are you content that the government is doing enough in this area, given the urgent action needed on climate change? Mr Clayton: The issue of methane is an important one given the damaging nature of methane in climate change terms. That has to be a welcome step by the government. Beyond that, we know very little about what the government might say in response to the recommendations, but our feeling on anaerobic digestion was that, whilst the UK has a number of anaerobic digestion plants linked to human sewage, there had been very little development in on-farm systems particularly. In Germany there has been significant development. There has been support to develop systems but based on a sort of one stage technology. The advice we were given is that there could be much more efficient methods of pursuing anaerobic digestion. Given the limited time that we had to do the study, we were not able to get into the detail of that. Hence the recommendation that there needed to be a very close look at the best way of taking AD forward. We were aware of some work that the Environment Agency were doing for Defra at the same time. What the task force was saying was that AD certainly has potential in terms of energy generation but we need to make sure that, if there is funding going into it, it does not go into, in effect, the existing technology that is less efficient than the developing technology. Q197 James Duddridge: What are the Environment Agency doing? Mr Clayton: At the time we were undertaking this study there was a review by a couple of people that were seconded from the Environment Agency to Defra to look at the whole AD question. Sir Ben Gill: It is perhaps one of the hidden secrets of the country that in the heart of England we have the largest sewage farm in Europe. It is not based in some remote outlet; it is based in the corner between where the M42 hits the M6 toll road in Sutton Coldfield. I do not believe the good people of Sutton Coldfield realise they have it there. It takes all the sewage from Birmingham and substantial parts of the Black Country. Through a bank of anaerobic digesters, it converts it into gas which then goes into a row of electricity generators which feed the plant and feed into the grid. The heat is used to heat up the anaerobic digesters and all the buildings on the site. The digestate is then marketed as a fertilizer. We potentially run risks again about what the designations of all these products are and we have to be very careful. This is a sensible approach. On farms we could look at cattle slurry, as has been done elsewhere. Cattle slurry has a slight problem is that it is not a 365 days a year production system. Most cattle will go out in the summer period and the slurry is not available. Pig slurry is available 365 days a year. You could mix it up with the other forms of wet biomass, food waste. Pig waste works better, I am told reliably by an expert, in an anaerobic digester than cattle waste. If you add in food waste, it works even better. You are beginning to get the sense of putting everything together to get valuable fertilizer. People need to look at this in the round because they need to focus on the fact that it is quite feasible that nitrogen fertilizer will soon be over £200 a tonne. You then need to factor in the value of the digestate. I find in some limited work I have done since we published the report that nobody is pulling all this together properly yet. This is what we need to do. All points need to be drawn together to give a vision. Q198 Lynne Jones: Who runs the Sutton Coldfield plant? Is it Sutton Energy? Sir Ben Gill: Yes. Q199 Chairman: One question that has been intriguing me is the question of cofiring and rocks. I received representations from those who run DRAX arguing that the drop in the value of the rocks was bad news for cofiring. One of the arguments that they put forward in the correspondence was that the government had changed its mind on this because it did not want to inhibit a generation of other forms of renewable power. I struggle to understand why, when cofiring seemed like a good idea, you did not simply encourage as much of it as you could and, at the same time, encourage other things. Can you explain to me why did the government change its mind? Was it a correct policy choice or not? Sir Ben Gill: I do not believe the government reacted suddenly. They flagged up this change some considerable time beforehand. I have had communications with the business sector with regard to the changes and similar assertions have been made to me about the changes in rocks, although I have asked of evidence of the change of value for rocks and there seems to have been no option since the change over date to substantiate it at this stage. It needs to be substantiated. Why did we not focus more on rocks? We were on the horns of a dilemma. One of the major criticisms we had of government which we made in some of our earlier progress commentaries was that the whole renewable energy sector had suffered from continually changing government directions. This confused people. Industry in particular will want to invest substantial sums of money with a payback that will probably take a long period and the government have changed policy drivers. We were torn. If we made substantial comments about cofiring we may be achieving criticisms of a government that we were saying were wrong anyway. We looked at rocks. Bearing in mind they are currently time limited and will fall out of the system with regard to biomass largely by 2015 because the coal fired power stations are going to drop out, we then looked at where we were. It comes back to the principles that I described about maximum efficiency of process. I was a grower for Arborough. The group that I belong to has put wood into DRAX. When you look at what you have to do to put wood into a coal fired power station, it is important to realise that the wood has to be in a similar form to coal and the coal goes in as dust. It is ground through mills. To get the wood down to that form is quite costly. It is almost akin to putting a square peg in a round hole. Notwithstanding that, the use of the cofiring initiative has stimulated a supply chain which is commendable, but the ability to pay a price for that product is restricted by the inefficiency of the process compared to a heat only process so we sought to major on the heat only process alone. Q200 Chairman: At the domestic level, the Energy Saving Trust has indicated that there could be a three per cent reduction in household carbon emissions if biomass was used. Do you think that consumers realise this? What kind of supply chain could they look to if they were to embrace the use of biomass? Is that an area that ought to be looked at, notwithstanding your comments earlier that you are strongly in favour of district heating systems - in other words, biomass in bulk - as opposed to biomass in little bits and pieces? Sir Ben Gill: The efficiencies of district heating are there to be seen. You cannot ignore the fact that a lot of the biomass will be in regions that are remote from large conurbations so there will be a need to look at smaller systems. The development that I am doing on my own farm in north Yorkshire will be built with a biomass boiler. I will use my own biomass commercially on site. The case for smaller ones needs to be taken through though as the supply chains develop. I am aware of certainly one business that is producing a very high quality wood chip that will work in a number of boilers today and could be bought at a variety of stores just as you might buy a bag of coal and would fire accordingly. You could tip it into a hopper. We saw in Finland one domestic residence that was not quite completed. It was being built by an engineer and he had put in the garage a small building. Where you might have seen the oil tank he had his hopper. He was using wood pellets but you could, with the quality of wood chips that is achievable now, put the wood chips in there and it fed automatically into the system. There are boilers now marketed in the UK - Baxi technologies, for example - that can be powered either by wood pellets, wood chips or even wheat. It is computer controlled and you just programme in what the product is. The market is there. What we believe will happen is that the government demonstrates by example. You have these supply chains built and other people will build on them. Q201 Chairman: Thank you very much indeed. It has been a fascinating insight into this area. You have lost none of the enthusiasm you demonstrated in your previous incarnation as the president of the National Farmers' Union for trying to explain to people sometimes very complex subjects. I do not think I am left in any doubt that this is still a complex area but I think you have identified clearly where you think the best results could be obtained by the use of biomass and, to that extent, the Committee is very grateful to you for your presentation, for your evidence and obviously the report you produced for a wider audience. Thank you both very much for coming. Sir Ben Gill: Thank you. I am very clear in my mind that it is not going to be a matter of doing this or that. Do we do biofuels or biomass? Do we do virgin or waste materials? We are going to need every opportunity. There will be strategic needs to do biofuels but they need to be put into a holistic picture that is adequately and properly communicated to the country as a whole as part of a strategic plan with a vision for the use of the UK, European Union and world land mass as a whole.
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