As the Government prepares to unveil its bioenergy strategy, a fierce debate is raging over the future of biomass — and in particular wood — as a renewable energy source. Caroline Hand reports.
The Government is faced with a difficult balancing act as it determines the future level of subsidies for biomass burning. On the one hand, the power industry is eager to promote a seemingly sustainable and adaptable alternative to fossil fuels which is currently subsidised by the Government under the Renewables Obligation. On the other, Britain’s furniture and paper manufacturers perceive a serious threat to the survival of their industries as wood prices rise in response to increased demand.
The biomass boom
While wind turbines may be the most visible form of “green energy”, in fact wood is the primary source of renewable energy in Europe, accounting for nearly half in 2009. While the UK figure for wood burning is much lower (16.3% of renewable energy in 2009), the use of this fuel is rising rapidly. The UK’s Renewable Energy Roadmap shows that around 30% of our total renewable energy in 2020 could come from biomass heat and electricity. “Biomass” includes cultivated energy crops such as miscanthus but is primarily wood, some from established forests or plantations and some, such as willow, grown specifically as a fuel.
There are sound environmental reasons for burning biomass as a substitute for fossil fuels. Trees are, of course, a renewable resource, and the new trees planted to replace those harvested take up carbon dioxide from the atmosphere. This means that, in theory at least, emissions of greenhouse gases are reduced by burning wood in place of coal, oil or gas. Critics point out that much of the UK’s biomass fuel is imported, meaning that transport emissions must be taken into account, and the energy used in cultivating and harvesting an energy crop can also be significant. In recognition of these factors, the Government has ruled that biomass generation only qualifies for support under the Renewables Obligation if it achieves a minimum 60% greenhouse gas emission saving relative to fossil fuel burning.
Biomass also has the advantage of being an adaptable fuel for electricity generation. Unlike nuclear or wind power, it can be used for both base and peak load generation.
Impact on the market
Biomass boilers are able to burn waste wood and by-products of the timber industry such as woodchip, shavings and thinnings. The vast majority of the wood burned as fuel is woodchip, sourced from Canada and the USA; less than 10% is British in origin. Nevertheless, the rising demand for wood for energy generation is driving up the price of wood in the UK, and this is creating problems for other wood-using industries. The furniture industry reports that the cost of wood has risen by 55% over the past five years. Manufacturers are unwilling to pass on the price rise to their customers and risk losing business to overseas competitors.
More recently, the paper industry has also voiced its concern about the rising prices of wood pellets. Along with the furniture manufacturers, the paper makers are campaigning for an end to the subsidising of biomass generation.
The rising demand for wood is raising concerns about the future availability of supplies. A recent report, Wood Fibre Availability and Demand in Britain 2007–2025, describes how the balance between supply and demand “has tightened to the present situation where there are significant pressure points” and attributes the rising demand to the Government’s climate change policies and associated incentives.
In response to the projected shortfall in timber availability, the Forestry Commission launched a Woodfuel Implementation Plan in 2011, setting out actions to bring forward an extra two million tonnes of UK wood per year by 2010. Additional resources could come from increased use of forestry residues and waste wood, and more purpose-grown energy crops.
Last year, the demand for biomass looked set to increase dramatically, with several new generation projects in the pipeline. Since April 2011, the power industry has announced planned and confirmed investments totalling at least £1.6 billion for biomass technologies. One of the largest proposed projects was a new 299 MW dedicated biomass plant at Selby, to be built by Drax. However, there has been a recent turnaround, resulting in the withdrawal of this and other proposals, since the Department of Energy and Climate Change (DECC) mooted a reduction of the subsidy in the autumn of last year.
Biomass burning receives Government support under the Renewables Obligation. At present, dedicated biomass plants receive 1.5 Renewables Obligation Certificates (ROCs) per megawatt hour. This means that the power generators can afford to pay higher prices for the available wood, and prices are rising in response.
Additional support for biomass burning is available through the Renewable Heat Incentive (RHI), administered by DECC. The domestic element of this scheme has been delayed but will eventually provide support for biomass burning, focusing particularly on smaller-scale combined heat and power schemes and domestic heat.
Changes to ROC and CCA
In the autumn 2011 consultation paper referred to above, DECC revealed that it intends to cut support for biomass electricity projects from April 2016. The subsidy for dedicated biomass plants will drop from 1.5 ROCs per MWh to 1.4. This, it is thought, will be insufficient to support new large plants, although smaller plants and co-firing (of biomass and fossil fuel) will still be economic.
Furthermore, recently announced changes to the arrangements for Climate Change Agreements reduce the incentive to expand biomass generation. In the future, biomass generation will count towards energy targets, although it will continue to be classified as “zero carbon”.
DECC’s concern in proposing these changes is to reduce dependence on imported biomass, and hence strengthen our energy security, rather than help the paper and furniture manufacturing industries. The main consequence of the proposed drop in ROCs for biomass is that Drax has dropped its plans to build a dedicated biomass plant, and instead intends to increase co-firing. If it raises the amount of wood co-fired to 20%, it will qualify for extra ROCs under the new proposals, as an “enhanced co-firer”. This outcome is in line with the recommendations of the Committee on Climate Change which, in view of the wood supply constraints, wishes to see a shift away from large biomass plants to co-firing and smaller scale units.
The current situation
As the Government puts the final touches to its bioenergy strategy, the opposing campaigns of the furniture manufacturers and power generators are becoming more vociferous. The furniture manufacturers have found an energetic ally in Stephen McPartland MP, chair of the All Party Parliamentary Furniture Group, which has launched a petition. As well as pleading for its industry and employees, the Group argues that burning virgin timber is less sustainable than incorporating the wood into products. It fears that the forthcoming Renewable Heat Initiative will not cover its own use of wood waste in boilers, thus placing it at a further disadvantage compared to the energy generators.
On the other side is the Back Biomass Campaign, run by the Renewable Energy Association (REA) (which is supported by Drax and other power generators). The REA argues for the expansion of biomass as a sustainable, renewable energy source which will help the UK to achieve its climate change targets. An expansion of biomass will also improve forestry by placing a real economic value on wood and incentivising better management of woodland.
The task of weighing up these opposing viewpoints falls to DECC but the newly launched Biomass All Party Parliamentary Group will also subject the arguments to detailed scrutiny. The likelihood is that subsidy levels may be more modest than those for other renewable fuels, but biomass will continue to substitute for fossil fuels as part of the drive to reduce greenhouse gas emissions. DECC will no doubt take into account commonsense proposals such as the call to burn more waste wood, and to expand small-scale CHP (combined heat and power), which has always been recognised as an efficient option. The new waste hierarchy guidance, which seeks to divert waste wood from landfill and recommends energy recovery for lower grade wood, may have a helpful impact here.
Biomass — a saviour to counter climate change or a pariah in the making?