Memorandum submitted by Shanks
We welcome the opportunity to provide input
into this inquiry on the translation of the recommendations and
implications of the Stern Review into Treasury policy. Our submission
is focussed upon one of the criteria specified within the consultation
document namely, "other aspects of environmental tax and
incentive policy."
Shanks would like to take this opportunity to
make the committee aware of the issues surrounding the potential
development of fuels from waste so far as they relate to Treasury
policy. (Details about the Company and its current interests in
relation to renewable energy and the production of alternative
fuels can be found at the end of this document.) References to
fuel in this submission relate to Solid Recovered Fuel (SRF) which
is manufactured from residual municipal solid wastes following
the extraction of recyclable materials.
The scope of use for SRF are in essence, two-fold;
as a direct replacement for fossil fuel feedstock within a variety
of processes and secondly, as a renewable source of power, through
an intermediary process, whether via conventional combustion systems
or through novel or advanced thermal treatments such as gasification.
When used within such advanced thermal systems
or within qualifying Combined Heat and Power (CHP) schemes, the
biomass fraction of SRF will, as a result of changes in the Renewables
Obligation made in January 2006, now be eligible for Renewable
Obligation Certificates (ROCs). This change has been welcomed
although the potential difficulties and complexity surrounding
the delivery of such benefits through eligible systems in the
UK should not be understated. This change, whilst welcomed, does
not provide sufficient incentive for the development of the use
of fuels of this type.
If it is recognised by Government that this
type of renewable fuel could provide a legitimate contribution
to the overall future energy mix for the UK, then additional,
less circumspect signals should be given to give confidence to
encourage investment in this emerging field.
As in the 2005 Review of the Renewables Obligation,
Shanks has sought commitment from Government in the latest Review,
to reconsider its stance on the adoption of a "waste neutral"
approach for SRF and waste derived fuels whereby ROCs earned through
the combustion of "pure" biomass would not be lost if
"co-fired" with fuels derived from mixed waste. This
change would enable a wide variety of existing installations designed
to utilise biomass fuels to take advantage of the technical and
economic benefits of SRF without financial detriment to their
existing business.
The Company also engaged in discussions over
the introduction of an "enhanced capital allowance scheme"
for SRF utilisation schemes in 2006 and although we understand
that no recent announcements have been made on this subject, news
on any progress on this issue is eagerly awaited from Government.
We believe enhanced capital allowances to encourage demand for
SRF would make a useful contribution to the range of measures
being taken by the Government to tackle climate change.
January 2007
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