Energy and Climate Change CommitteeWritten evidence submitted by the Department of Energy and Climate Change (BIO22)

1. The Government welcomes the inquiry into bioenergy.

2. Our policy is defined by the four principles and the low risk pathways for the use of biomass for energy as set out in Government’s 2012 Bioenergy Strategy. This means our focus for bioenergy is on:

its use in heat and combined heat and power (CHP);

transport fuels where little alternative for decarbonisation exists;

using residual waste to generate energy; and

coal-to-biomass conversions, which deliver a shorter-term cost-effective means of decarbonising coal.

3. Bioenergy has a role to play in enhancing security of supply and meeting our renewable energy targets. It can be a relatively cost-effective source of low carbon energy, and also offers predictability and controllability in the energy it supplies.

4. The Government provides financial support to bioenergy technologies through the Renewables Obligation (RO), the Renewable Heat Incentive (RHI) and the Renewable Transport Fuel Obligation (RTFO). In addition, the Feed-in Tariffs Scheme (FITs) supports anaerobic digestion.

5. This memorandum will address each of the questions raised by the committee in turn.

Q1. What contribution can biomass make towards the UK’s decarbonisation and renewable energy targets? Are the Government’s expectations reasonable in this regard?

Bioenergy already makes a significant contribution to the UK’s targets. For example, in 2011 electricity generation from bioenergy was 13 TWh (38% of all electricity generation from renewables). Heat generated from bioenergy in 2011 was a further 12 TWh (including 5 TWh of domestic use). This level of generation has been achieved without significant impact on other sectors.

As described in our Renewable Energy Roadmap, we expect to require 230 TWh of renewable energy generation (ie from wind, biomass, solar and other sources) across electricity, transport and heat in 2020 to meet our renewable energy targets. We have not set specific technology targets. However, bioenergy has the potential to make a significant contribution towards the UK’s targets. Modelling for the Renewable Energy Roadmap indicates that we could deliver up to 50 TWh of biomass-derived electricity by 2020, as well as 50 TWh from biomass heat.

Our analysis indicates that, although uncertain, approximately 150–210 TWh of sustainably–sourced bioenergy fuel (primary energy1) could be available to the UK in 2020 (8–11% of primary energy supply), and 280 TWh in 2050 (11% of expected primary energy). These estimates have taken into consideration sustainability requirements, impacts on other sectors and a range of other criteria so can be considered as cautious estimates.

Q2. How well have the Government’s bioenergy principles (set out in the 2012 Bioenergy Strategy) been translated into policy?

The Bioenergy Strategy set out, in April 2012, four principles upon which to base bioenergy policy. These are that policies should:

1.Deliver genuine carbon reductions.

2.Make a cost effective contribution to UK carbon emission objectives.

3.Maximise benefits to the overall economy and minimise detrimental impacts on non-energy sectors.

4.Support other policy objectives, for example relating to food security, bio-diversity, and international poverty reduction.

These principles have been followed by the Government in identifying the lowest risk pathways for the use of biomass for energy for a range of biomass feedstocks. These principles and pathways have then been used to determine how Government should structure support under the RO and RHI.

Q3. Are genuine carbon reductions being achieved?

We have put in place minimum greenhouse gas saving criteria for bioliquids in the Renewables Obligation and for transport biofuels in the Renewable Transport Fuel Obligation.

We have also consulted on introducing greenhouse gas savings and other sustainability criteria for solid biomass and biogas in the Renewable Heat Incentive and Renewables Obligation.

These greenhouse gas savings methodologies compare the life-cycle emissions from the planting, harvesting, processing and transport of the biomass to the EU fossil fuel comparator.

The Department recently consulted on tightening the sustainability criteria for solid biomass used in electricity, proposing a tightening trajectory of GHG savings. We will be publishing our final decisions on this shortly.

Q4. Is bioenergy making a cost effective contribution to carbon emission objectives?

Since publishing our Bioenergy Strategy we have made a number of decisions which improve the cost effectiveness of biomass support in relation to carbon emissions through changes to support levels within the Renewables Obligation.

As outlined above, we are introducing minimum greenhouse gas saving standards for solid biomass, which means financial support will only be available where significant carbon reductions are made, increasing cost effectiveness per tonne of CO₂ abated.

We announced in our Biomass Affordability proposal that we would focus policy on conversions of former coal power stations to operate on biomass, both on a unit-by-unit basis and for entire plants. Conversions are one of the quickest and cheapest ways to decarbonise electricity generation previously provided by coal. Awarding 1 Renewable Obligation Certificate (ROC) per MWh to unit or station conversions provides good value-for-money under the Renewables Obligation for the renewable energy provided.

We are also introducing a non-legislative 400 MW cap on new build, dedicated biomass generating capacity that can expect grandfathered support under the Renewables Obligation. At 1.5 ROCs per MWh (falling to 1.4 ROCs for accreditations after April 2016), this is, in carbon terms, one of the more expensive renewable technologies, and limiting grandfathered support reduces the potential cost to the consumer through the RO budget. This cap does not apply to dedicated biomass with combined heat and power plants, which have higher overall systems efficiency than electricity-only plants and therefore offer higher carbon savings.

Modelling conducted by the Energy Technology Institute indicated that without biomass in the energy mix, by 2050 the total system cost of meeting low carbon objectives could be £44 billion higher without biomass compared to their estimate of £294 billion2. In addition to cost effectiveness, biomass also offers despatchable generation that can provide base load or peak load power, and is a reliable and secure source of energy.

Q5. Is support for bioenergy maximising the overall benefit to the economy?

Bioenergy policy has led to jobs being created in the bioenergy industry across the supply chain, from development jobs (eg design and specification) to construction, operation and maintenance and UK feedstock supply (both in agriculture and forestry). A recent study commissioned by the Department3 estimated, based on survey results, that 4 jobs are created over the lifetime of the plant for each megawatt of new biomass electricity capacity built, and 2 per megawatt of biomass heat capacity (without turbine or boiler manufacture being taken into account).

Furthermore, by diverting many wastes (such as waste wood and the biodegradable fraction of municipal waste) which would previously have gone to landfill, biomass for energy increases the resource use efficiency of the economy. As outlined in the Government’s Anaerobic Digestion Strategy and Action plan, use of farm residues such as manure and slurry in anaerobic digestion can bring significant economic benefits to farm businesses such as creating alternative income through sales of power and use of waste heat for on-site processes such as crop drying.

Use of biomass for energy could impact other parts of the economy. The Department continues to review impacts on other wood using sectors in the economy. Analysis undertaken for the Bioenergy Strategy indicated that, although demand for virgin wood for fuel has been increasing, that additional demand has been met from increases in the overall supplies (wood supplies increased by 7% between 2007 and 2010), rather than from a reduction in demand for wood from sawmills or other wood users. This has been possible as a result of the increasing annual supply of wood available from maturing 20^th century plantings and other sources of wood fibre. Wood prices are affected by a complex range of factors and as wood is sourced and traded globally many of these are driven by international forces. Exchange rates, changing patterns of demand, the general level of economic activity and new technologies affect the levels of supply and demand and prices. Isolating and quantifying the impacts of any one factor domestically is therefore difficult.

Q6. Is sufficient attention being given to potential impacts in other areas, such as food security and biodiversity?

Under the current sustainability criteria set out in the Renewable Energy Directive, biofuels and bioliquids must deliver a greenhouse gas saving of at least 35% compared to fossil fuel and not be grown on land of high biodiversity or high carbon stock or on land that is protected for nature conservation. As part of the Directive, the European Commission must monitor and report every two years on the impact of biofuel policy and increased demand for biofuel on social sustainability. This will include reporting on the availability of foodstuffs at affordable prices, in particular for people living in developing countries. If necessary the Commission must propose corrective action.

Regarding bioliquids used for electricity and solid and gaseous biomass, the response to question 9 provides further detail on how these other impacts are being managed through sustainability criteria.

Q7. What challenges are there to scaling up the use of biomass in the UK (ie regulation, feedstocks, sustainability, supply chain and financing)?

In the 2011 Renewables Roadmap, the Department outlined the challenges to scale up the bioenergy industry across electricity, heat and transport and the priority actions to meet those challenges. Some of these are as follows:

Biomass electricity—minimising investment risk. The Renewables Obligation banding review has been completed and the amending legislation has now been passed. This provides greater certainty to investors on the Renewables Obligation Certificate (ROC) rate for the remaining years of the scheme, including grandfathering the ROC rate at the point of accreditation and de-risking the ROC rate from future policy change.

Biomass electricity—de-risking the supply chain for sustainable feedstocks. The Department will shortly be publishing its decisions on the implementation of mandatory sustainability criteria, which will provide generators and feedstock suppliers with the standards that they must meet in order to receive ROCs. Ofgem has also published a biomass and biogas carbon calculator to support greenhouse gas monitoring: http://www.ofgem.gov.uk/Sustainability/Environment/RenewablObl/FuelledStations/bbcc/Pages/bbcc.aspx

Biomass heat—technology cost and extending financial support. The Renewable Heat Incentive was launched in November 2011. 869 biomass boilers with a capacity of 198 MWth have been accredited to the scheme to date. It is now being extended to further capacities and technologies and to domestic participants.

Biomass heat and electricity—develop fuel supply chains. Scaling up the fuel supply available to the UK requires improving forest management, increased fuel processing activity and investment in transport infrastructure such as ports and railways in order to service fuel imports. Investment is being made by the private sector in these areas, supported by Government action such as the Woodfuel Implementation Plan for England.

Q8. To what extent will UK be able to provide its own biomass and how much is likely to be imported?

Work carried out for our Bioenergy Strategy suggested that to increase electricity generation from solid biomass, a greater share of imports will be required (by 2020, 90% of the solid biomass used in electricity may need to be imported).

Biofuels used in transport are currently sourced from countries across the globe. The most recent data which was collected as part of the Renewable Transport Fuel Obligation found the UK supplied around 12% of the total biofuels used domestically for the period April 2011 to April 2012: this was the second highest country by source. It is likely however, that an increase in biofuel use going forward, would coincide with an increased percentage of imports.

Q9. What factors will have to be addressed to ensure that biomass is sustainable and to what extent is it possible to assess the sustainability of imported biomass?

The main factors relate to ensuring greenhouse gas savings compared to fossil fuels, and that land is managed so as to ensure that carbon stocks, biodiversity and other ecosystem benefits are protected.

Bioliquids for electricity generation

Under the Renewable Energy Directive, sustainability criteria are also in place for bioliquid fuels used to generate electricity. These cover both land criteria and greenhouse gas saving criteria.

To comply with land criteria, biomaterial used for bioliquid production must not be from land that:

At any time during or after January 2008 was primary forest.

At any time during or after January 2008 was land designated for nature protection purposes (unless production of that biomaterial did not interfere with purposes for which this land was designated).

At any time in January 2008 was peatland (unless the cultivation and harvesting of biomaterial did not involve the drainage of previously undrained soil).

At any time in January 2008 was a continuously forested area (unless that land is still a continuously forested area).

At any time in January 2008 was a lightly forested area (unless that land is still a lightly forested area, or unless the resulting bioliquid meets the GHG emission criterion when the GHG emissions from land use change are included and the relevant percentage is calculated using actual GHG values).

At any time in January 2008 was wetland (unless that land is still a wetland).

To comply with the greenhouse gas saving criteria, a bioliquid used for electricity generation needs to demonstrate that the GHG emissions arising its use (including the growing, harvesting, processing and transport) are 35% lower than those GHG emissions associated with the use of fossil fuel. From 1 January 2017, this threshold will be subject to increases, rising to 50–60% in 2018 depending on when the installation started producing bioliquid.

Solid and gaseous biomass sustainability criteria

Under both the Renewables Obligation and Renewable Heat Incentive, generating stations using solid or gaseous biomass are required to provide sustainability information to Ofgem on the type, origin and amount of fuel used, as well as other information. We have consulted on introducing greenhouse gas saving and environmental protection criteria to both schemes.

In the Renewables Obligation, we have consulted on a requirement that forestry practices for solid wood-fuel should meet the UK Government’s public procurement policy for wood as well as maximum greenhouse gas life-cycle emissions of 240—285 kg CO₂ per MWh of electricity. The UK Government’s public procurement policy covers all aspects of sustainable forestry management, including sustainable harvest rates, carbon stocks, deforestation, biodiversity and social concerns.

April 2013