Energy and Climate Change CommitteeWriten evidence submitted by Estover Energy Ltd (BIO27)

Bioenergy has the potential to make a real and appreciable contribution to the UK’s energy policy and the wider economy.

Bioenergy can be controversial. As the bioenergy strategy makes clear—bioenergy is not automatically low carbon, renewable or sustainable.

However at the right scale and with appropriate application bioenergy has enormous potential.

Above all a coherent and strategic bioenergy policy that supports domestic biomass supply chains is a huge opportunity, not just to meet decarbonisation targets but to stimulate investment and diversification in the forestry and farming sectors and to allow manufacturing industry to be competitive on the world stage.

A bioenergy policy, which supports domestic supply chains, would allow money to circulate within the rural economy and make best use of UK land resources to maximise productivity within sustainable rotations. In order to maximise the carbon balances, a bioenergy strategy must be one that makes best use of residues, wastes and by-products without harming biodiversity or compromising the fertility of the land.

1. Background to the submission—Estover Energy Ltd.

Estover Energy is developing a portfolio of biomass Combined Heat and Power (CHP) plants.

Biomass CHP plants have several advantages:

They have a wide tolerance of fuel specification and a reliable year round demand, which stimulates a diverse biomass supply chain.

By producing electricity and heat, they make best use of the fuel, offering the highest carbon savings and generating the most amount of revenue per tonne of fuel.

At the right scale they are small enough to be supplied by their local area, but large enough to stimulate significant investment along the supply chain.

They are the most effective plants for decarbonising energy intensive manufacturing industry, making industry more competitive on the world stage and keeping jobs in the UK.

They allow money to circulate locally—money spent on energy in a manufacturing process feeds directly into the surrounding forestry rather than being spent on imported gas or oil.

The two biggest challenges in developing biomass CHP projects are (i) finding reliable and secure local fuel supplies and (ii) matching that fuel supply to industrial energy demand.

1.1 Estover Fuel Supplies

Estover has developed a consortium structure, bringing groups of local forestry growers together to get the critical mass required to supply their local CHP plants. Crucially the growers are supplying their local CHP plants with a proportion of the low-grade material produced through on-going forestry management. Providing a local and reliable market for this low-grade material is vital to give forestry owners the certainty required for long-term forest management and enable investment along the supply chain. These plants are able to source all their fuel requirements from an average 50 mile radius on a sustainable basis. Estover has more than 200,000 acres of forestry in consortiums around the UK and understands exactly what incentives growers need to invest in biomass production.

1.2 Estover and Manufacturing Industry

Manufacturing industry in the UK is desperate to decarbonise, not only to improve their environmental credentials, but to reduce their exposure to the increasing volatility and rising costs of energy. Energy is often the single biggest overhead for manufacturing industry. An Estover CHP plant produces low carbon electricity and heat—piped as high pressure steam directly into industrial manufacturing processes.

Government strategy should reflect these challenges; support should focus on helping supply chains develop for the most appropriate feedstocks, to be used in the most appropriate energy installations.

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

There are a wide range of bioenergy applications and technologies, from anaerobic digesters, to steam turbines and biodiesel engines for the production of transport fuels, electricity or heat or both.

Of all the different renewable energy sources, bioenergy alone is the most cost effective means of producing readily deployable, low-carbon baseload electricity and low-carbon heat.

The resources available are however limited and must therefore be used for the most appropriate energy generation. Government expectation and investment in bioenergy should be underpinned by data on fuel availability and appropriate application.

To set the level of expectation, further work is needed to build on the “hierarchy of use” work which has already begun on the carbon balances of different feedstocks employed in different applications1 to determine which scenarios have the highest economic, social and environmental benefits.

At the heart of this hierarchy approach should be an understanding of how the production of bioenergy feedstocks should compliment the production of food and other fibres and materials. Bioenergy sourced from wastes, residues and co-products can not only be used to substitute fossil intensive energy, but support production of other materials and fibres that can themselves be used to substitute fossil fuel intensive materials in construction and manufacturing. Understanding these dynamics and weighing the carbon balances of different feedstock uses and energy applications alongside a comprehensive understanding of the interplay between carbon flows and land use should form the basis of developing the bioenergy strategy further.

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

The single biggest step towards achieving the Strategy’s 4 guiding principle—ensuring that bioenergy maximises the carbon savings at an affordable price and has positive knock on effects in the wider economy and minimises adverse pressure on food production or biodiversity—is to understand biomass not as a single crop in itself but seen as a co-product of other farming or forestry operations.

3.1 UK Forestry

To take biomass sourced from forestry operations as an example. Sustainable long-term woodland management should be geared to the production of high value sawn timber for construction, furniture and other wood products. Management of woodland to this end has many ancillary benefits; regular thinnings and a diverse age structure increase the health of the forest as a whole, as well as supporting a wide diversity of associated flora and fauna.

Production of high-value sawn timber produces a significant proportion of by-products. Thinnings remove small trees unsuitable for sawmilling and at final harvest there is a large proportion of branches and timber, which fail to meet a sawmilling specification. This can typically represent around 30% of the tree. Once the sawlog has been delivered to a sawmill—the milling process will produce offcuts, sawdust and woodchips, reducing the sawlog by around 50%. This means that to produce one unit of high-value sawn timber between 2 and 4 units of low-grade fibre will also be produced from the forest and in the sawmill. A reliable local market for this fibre is crucial to underpin management.

Only half of the UK’s woodlands are actively managed, this represents a huge opportunity cost in terms of carbon balances, biodiversity management, employment opportunities and productive potential. The Forestry Commission and the recent government response to the Independent Panel on the Future of England’s Forests have set ambitious targets for bringing these areas of woodland into management, to foster a woodland culture and to increase the area of woodland in the UK; bioenergy is the single biggest opportunity for meeting these goals and making the UK’s forests as productive as possible.

The graph below shows the carbon benefits of using forestry to produce a mix of products and bioenergy. The carbon gains made by substituting wood products for fossil derived alternatives make a compelling case for bringing woodlands into productive management.

3.2 UK Farming

Bioenergy has huge potential for the farming sector as well. Not least because financial support from Europe through the Common Agricultural Policy is becoming increasingly uncertain and there is a political preference for diversifying land use and farming types. Any biomass can be processed and pelletised for energy generation.

An holistic view of bioenergy should inform this strategy. The reality of encouraging new planting of specific monocultures of energy crops is controversial and costly. Farmers and landowners on the whole are reluctant to invest valuable land, tie up capital in crop establishment and risk being priced out of the market by cheaper substitutes at the time of harvest several years down the line.

The biggest net wins require investment in domestically sourced feedstocks, which arise as part of ongoing management for higher value timber or food. These biomass sources do not compete with other land uses and can diversify farmer’s and forester’s markets and allow money to circulate locally. These feedstocks also provide the biggest carbon wins, by encouraging local supply chains, they minimize the embedded emissions along the supply chain and make sure that each hectare of land is fulfilling its highest carbon sequestering potential.

Clear market signals for a range of biomass types can allow contractors and growers to invest in appropriate equipment for bundling, baling, pelletising and distribution.

The biggest gains are to be made by making best use of existing land resource—in the same way that renewable energy investment is being driven to conversion of existing coal fired power stations rather than building expensive new dedicated biomass plants—so too should investment be geared towards managing existing resources, controlling invasive species and promoting the harvest of diverse vegetation types for use as biomass. The hundreds of thousands of miles of hedgerows, hundreds of thousands of hectares of moorland and heathland, as well as the millions of hectares of woodland all have the potential to make a significant contribution to local energy provision, as well as increasing biodiversity and contributing to food security.

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

Clear support and policy incentives from Government are the only mechanism for overcoming the considerable barriers to encouraging investment and stimulating supply chains.

The scaling up of biomass use in the UK should be strategic and objective. Government should encourage the sector to grow organically and allow the right level of investment matching biomass availability and supply, with demand. Overinvestment and overcapacity, which would stimulate too high a demand, is the single biggest risk to undermining the four key principles of the bionenergy strategy.

A bioenergy policy that supports widescale planting of energy crops at the expense of wider stewardship and landscape objectives, is likely to be controversial and ineffective. Many rural interest groups see energy crop production to be in direct competition with other objectives. Often the production of biofuels or energy crops is seen to be at the expense of food or biodiversity.

Policy should instead reward the production of biomass that supports food production by stimulating a market for crop residues and by-products. In addition to this, encouraging supply chains for many native perennial species such as grasses and reeds, bracken, heather and other shrubs and woody species would be of enormous ecological value.

Many of our most threatened birds, plants, butterflies and other insects have lifecycles dependent on the rotational management of these perennial species. The decline in their management has lead to catastrophic species loss. Stimulating a market for these vegetation types offers a huge opportunity to modernize traditional management practices, especially at a time when the chemical control of these species is becoming less acceptable.

Government support informed by supply availability and a clear hierarchy of use and application should provide the right signals for investment at the appropriate scale.

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

A Bioenergy strategy needs to be data driven. The data needs to inform decisions on fuel availability, carbon balances and sound economics. DECC, DEFRA, the NNFCC and the Forestry Commission are working in the right direction to ensure correct levels of investment are channelled into the most appropriate technologies, that the right feedstocks are used and that carbon balances are maintained.

The Forestry Commission forecasts and data should underpin the level of ambition required in the domestic forestry biomass sector.

The current UK harvest of wood stands at just under 10 million tonnes each year. Of this just under 6 million tonnes was delivered to sawmills, which produced around 3 million tonnes of co-products and 3 million tonnes of sawn timber. Around 7 million tonnes of low-grade fibre was therefore available for panelboard manufacture, fencing, paper production and energy generation.

The annual UK harvest of softwood is forecast to rise to just under 14 million tonnes over the next 25 years, markets for high-value and low-grade timber need to expand accordingly.

This forecast does not include unmanaged coniferous trees (estimated at around 42 million tonnes of standing timber), harvesting residues—the lop and top—which typically adds around 10% of harvestable fibre, nor does it include any of the broadleaved woodlands—around 55% of our woodland cover.

There is clearly huge scope for expansion and investment. Forecasts and yield models are the best and most objective way of informing this expansion.

6. 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?

This submission is specifically related to domestically sourced biomass, the sustainability of which is well understood.

The key to sustainable production and harvest is to incorporate biomass production into forestry and farming rotations. Cyclical rotations are by definition sustainable; that which is removed is replaced.

Rotations are the fundamental underpinning of sustainable forestry and farming systems, where different areas of perennial crops are harvested and planted on rotations ranging from 2 to 100 years. An holistic bioenergy policy designed to encourage and support perennial rotations whether it be in woodlands through coppicing, on moorlands and hills for heather or bracken management and on heathlands for scrub clearance is an enormous opportunity for bringing areas of land into productive management as well as managing those landscapes for biodiversity, food and other fibres.

Conclusions

Bioenergy offers a huge opportunity for stimulating much needed investment in the forestry and farming sectors.

Bioenergy can make a real and meaningful contribution to government energy objectives and decarbonisation targets.

The two biggest challenges for all bioenergy feedstocks are (i) stimulating supply, by encouraging primary producers; and, (ii) allowing demand to emerge, to make best use of that supply.

Government strategy should reflect these challenges, giving the certainty required for suppliers to be able to adapt their rotations and invest in appropriate harvesting equipment and for energy users to make significant investment in their infrastructure.

Bioenergy has the greatest potential for meeting carbon reduction commitments and benefitting the wider economy when used not just as a substitute for fossil fuels, but when used to support the production of other low carbon foods and fibres which themselves are used to substitute fossil fuel intensive alternatives.

Bioenergy is not without its risks and significant resources should be channelled into understanding feedstock availability and developing “hierarchies of use” which support land use scenarios that encourage the most sustainable levels of food, fibre and fuel production without compromising the fertility of the land.

May 2013