Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Nigel Adams (Selby and Ainsty) (Con)
I beg to move,
That this House has considered biomass as a source of renewable energy.
It is a pleasure to serve under your chairmanship, Mr Crausby. I am delighted to have secured this important and timely debate. I am also thrilled that, at this early hour, lots of colleagues from across parties and borders have come to participate.
It has been less than a year since the Conservative party secured a clear mandate from the British people to govern. One of the core commitments that we made in the run-up to the general election, which we repeat regularly, is that it is important to keep energy bills as low as possible for consumers and to promote competition in the energy market. Indeed, those same themes featured in the speech given by my right hon. Friend the Secretary of State for Energy and Climate Change to the Institute of Civil Engineers in November. It was referred to as the “reset” speech because it set out the Government’s direction of travel on energy policy over the coming years.
The two themes of affordability and competition are at the core of today’s debate. Like many of us, I am fully committed to ensuring that my constituents have an energy grid that is secure, reliable and affordable. The question, of course, is how we go about achieving that. Last week NERA, an independent economic research consultancy, and Imperial College London published a significant and insightful piece of research that considered the very issues we are discussing. The research was commissioned by Drax, which, as many Members will realise by now—if they do not, they have not been listening very hard for the past six years—operates a power station in my constituency. I grew up looking at the cooling towers. Drax power station generates between 8% and 14% of the UK’s electricity and, perhaps surprisingly, it is the UK’s single largest source of renewable energy thanks to its gradual conversion away from coal to sustainable biomass generation.
The report revealed that around £2 billion-worth of savings could be passed on to the consumer if the Government allowed biomass to compete in future renewable auctions. That £2 billion would equate to an average saving on each and every household bill throughout the land of between £73 and £84. That saving, which I believe any reasonable person—energy expert or otherwise —would argue is significant, stems from the fact that on a whole-system cost basis, biomass is without doubt the cheapest form of renewable energy available to us today. The concept of whole-system cost is important. It has attracted a lot of interest and discussion in recent months and, on that basis, merits further consideration today.
Much of current Government policy is skewed towards assessing the affordability of different technologies based on what is known as the levelised cost, a narrow metric that only captures the cost of an energy project from construction through its lifetime. However, as the NERA report highlights, a number of globalised costs sit outside the umbrella of levelised costs and are not currently captured by Government policy. I think I can fairly describe them as hidden costs. They are associated with more and more intermittent renewable technologies, such as wind and solar, coming on to the grid, and are ultimately passed on to our energy bills. For example, when the wind stops blowing and the sun stops shining, which it tends to do on these islands, the energy generated by wind and solar drops significantly. That forces the hand of National Grid, the system operator, to pay a back-up generator—usually gas—to switch on and generate power to fill the void. Clearly that action comes with an associated cost.
Because intermittent renewables are unreliable, they require much larger amounts of back-up than traditional coal or nuclear power stations, which have far greater control over how much electricity they generate and when. Again, that comes with an associated cost. The failure to capture those costs when evaluating the price tags of different renewables is doubly disadvantageous. On the one hand, intermittent technologies benefit by looking cheaper on paper than they really are; on the other hand, technologies that are more flexible and reliable and have higher availability are handicapped by not being able to demonstrate the financial benefits and value they bring to the system. That is unquestionably the very definition of a perverse outcome.
If the associated costs, which are great, were added up properly and allocated proportionately to the technologies that generate them, the NERA-Imperial report shows that one renewable technology emerges as considerably more affordable than any other: biomass generation. I should say that I shall focus my comments largely on power generation. I understand that colleagues may wish to discuss the heat side of biomass, which is just as important, but if they will forgive me, I will confine my remarks to the generation side.
The report shows that if a renewable auction was held later this year and the Government allowed biomass to compete with other renewables on a level playing field, it could deliver a strike price that was between £8 and £13 per megawatt-hour cheaper than onshore wind, and £43 per megawatt-hour cheaper than offshore wind. Why is biomass so much cheaper than other technologies when the hidden system costs are taken into consideration? One of the principal reasons is that biomass energy is a flexible source of generation, which can ramp up or down the levels of electricity it produces at short notice in response to the demands of the energy grid. Having that flexibility in place, on the scale that a full power station provides, is hugely important. In fact, the more flexibility we have in the system in the coming decades, the lower will be the costs we incur as more and more intermittent renewables come on to the grid.
The Committee on Climate Change, an independent and well-respected voice on energy issues, stated in its recent report on the future of the UK power sector:
“Flexibility can help to meet the challenges of integrating low-carbon technologies. Flexibility can provide low-carbon sources of system reserve and response to minimise the need for partloaded unabated gas plant, with associated emissions savings. Flexible systems also allow renewables and nuclear output to better match demand by shifting demand…supply…or both”.
In the UK, only one other technology can provide the same level and scale of flexibility as biomass, and that is gas generation. However, as its usage has demonstrated over recent years, biomass has a far lower carbon footprint than gas on a life-cycle basis. Furthermore, as many colleagues will be aware, because of low commodity prices the market conditions are currently sufficiently challenging that the economics of building new gas-fired power stations from scratch does not stack up. There has been a dearth of new plants coming forward.
That brings me to the second reason why biomass is so much cheaper on a whole-system costs basis. Unlike many of the options touted as the solutions to our energy future—such as new nuclear, new gas, new wind and new solar—biomass generation re-uses the infrastructure we already have in place by converting and upgrading power stations to use compressed wood pellets instead of coal. Some colleagues present are old enough to remember the Central Electricity Generating Board building coal power stations, which are scattered all around the country—or rather, at least some of them are left. I vividly remember Drax B being built; in fact, members of my family were involved in its construction. Using such assets, which the taxpayer has already paid for, negates the need to build expensive new transmission lines or spend money to make existing transmission infrastructure more resilient.
All that is particularly pertinent given the fact that we are going through a volatile period when coal power stations are closing across the country. Eggborough in my constituency announced its intention to consult on closure, and Ferrybridge, just across the border, is going. In recent months, Fiddlers Ferry and Rugeley announced their intention to close or, at best, to operate on a very limited basis. I am delighted that my hon. Friend the Member for Cannock Chase (Amanda Milling) is here, as she represents Rugeley and is very concerned about the future of that plant and its workforce.
Such closures are terrible news for the communities in those areas and for the UK’s energy security. Since the beginning of this year, 2.5 GW of coal closures have been announced on top of the 4.9 GW announced last year, so a significant amount of power is coming off the grid. Those closures are creating genuine concerns about security of supply, and in recent months have forced National Grid to rely on expensive emergency measures to manage the grid and keep our lights on—the most recent event was in November. I am sure colleagues will be in equal measure surprised and concerned to hear that Drax is the last power station in the UK, and the only station between Yorkshire and Iceland, that can provide a black-start service, which is effectively a kick-start to the grid in the event of a blackout.
If the Government are committed to taking coal off the grid by 2025, as they have indicated, the quickest and most affordable way to do so is to enable more coal power stations to convert to biomass. That is not only the quickest and cheapest way to decarbonise our power sector, but a means of keeping existing stations on the grid, thereby ensuring that the communities that have enjoyed the social and economic benefits from those power stations for many years can continue to do so. There is a clear and compelling case, based on the analysis by NERA and Imperial College, for the Government to look hard at whole-system costs when considering which technologies to back or to allow to bid. I understand that the Department commissioned Frontier Economics to do work on that topic, which is very welcome, and that the Minister committed to publishing the results of that report in the first half of this year. That is unquestionably a step in the right direction and I thank her for it, but will she assure hon. Members that her Department will utilise the body of research on whole-system costs to inform Government policy?
The Secretary of State said clearly in her reset speech in November that,
“we also want intermittent generators to be responsible for the pressures they add to the system when the wind does not blow or the sun does not shine. Only when different technologies face their full costs can we achieve a more competitive market”—
hear, hear. Does the Minister agree that this issue can be sensibly addressed through the policy options outlined in the NERA-Imperial report? It states that we should introduce either an administrative solution that handicaps renewable technologies in future contracts for difference auctions based on their systems cost, or a market-based solution that allows renewables to bid into the capacity market and CfD auctions, thereby exposing them to market prices that better reflect their true system costs.
Will the Minister allow biomass to compete in upcoming CfD auctions, either on a level playing field—which seems perfectly reasonable—or on the terms I just described? Alternatively, for the sake of simplicity and expediency, will she work with the existing CfD pot structure that she inherited from the coalition? The CfD auctions are designed around three pots: one for established technologies such as onshore wind, one for less-established, higher-risk technologies such as offshore wind, and one for biomass. Why do the Government not simply transfer a portion of the funding allocated to pot 2 to the dedicated biomass pot in this autumn’s CfD auction? The Department could do that very simply without any significant regulatory or legislative changes. It would complement, rather than undermine, the Government’s strategy for supporting offshore wind by producing the system benefits that I described, which would benefit all generators in the system. That solution would also mean that fewer power stations have to join what one industry analyst recently referred to as
“the Strategic Balancing Reserve dole queue”—
an absurd situation in which renewables are rewarded for forcing coal off the grid, while National Grid has to pay through the nose for an SBR contract to ensure that coal power stations remain available as a contingency option.
As I said earlier, up to £2.2 billion-worth of savings could be passed on to the consumer by allowing just 500 MW of further biomass conversion—effectively one unit. The greater flexibility that biomass provides to the system will make it cheaper to integrate other intermittent renewables, such as wind and solar, into the grid, if that is the Government’s strategy.
David Mowat (Warrington South) (Con)
My hon. Friend is making a very important speech about biomass and the fact that it is the only dispatchable renewable. Will the Minister address the fact that the Government removed all subsidies from biomass stations unless they are 100% biomass? Fiddlers Ferry on my patch was keen to combine coal and biomass in the same unit, but there is no subsidy for that. Is there not a risk that the Government are making the perfect the enemy of the good?
Nigel Adams
My hon. Friend makes a very sensible point. Many of the stations that generate from biomass—certainly Drax, two of whose units now generate solely from biomass—have used coal firing as a way of learning about the technology. That is a perfectly sensible thing for a power station to want to do. I, for one, would like to see support in that area, so that is a particularly good point.
Converting stations to biomass is the quickest, most affordable way to get coal off the system and achieve what the Department says it wants to achieve. In less than three years, Drax has become the largest decarbonisation project in Europe; previously, it was called the dirtiest power station in Europe. It generates 12% of our renewable energy. I am delighted that the company has managed to protect the 850 or so jobs that are currently based in the power station, although colleagues may have read a Telegraph article this week that appears to imply that half of the station is under threat. I hope the Minister and her Department noticed that, because such threats are not normally hollow.
The company re-skilled its employees in the use of that exciting new renewable fuel in the place of coal, and invested hundreds of millions of pounds in a supply chain that includes new import facilities, four of our ports and 200 new rail wagons, which I had the pleasure of launching at the National Railway Museum. Those rail wagons, which hon. Members will have seen adorning and adding to the beauty of the north and east Yorkshire countryside, were purchased from Britain’s last independent rail wagon manufacturer, WH Davis. It really does add value to the UK economy. The Chancellor often refers to the northern powerhouse. The UK biomass industry is unquestionably the power behind the northern powerhouse, and it will continue to power it for many years to come.
These issues are at the core of a number of concepts that I hold dear as a Conservative: competition, security and fairness. The clock is ticking, so the Government must take meaningful and decisive action. They have committed to holding three CfD auctions between now and 2020, the first of which is due at the end of the year. For the reasons I have outlined, if the Government allow biomass to compete in those auctions on a level playing field with other technologies, they could save taxpayers billions of pounds and make the UK energy grid more secure in the process. To continue with the status quo would be inconsistent with my party’s oft-repeated commitment to securing the country’s renewable future at the least cost to consumers. I urge the Minister and the Government to think carefully about this issue.
Mr David Crausby (in the Chair)
Four Members have indicated that they wish to speak. I intend to call the Front-Bench spokespeople at around 10.30 am, so if Members can keep their contributions to around 10 minutes, I would much appreciate it.
Ronnie Cowan (Inverclyde) (SNP)
It is a pleasure to serve under your chairmanship, Mr Crausby. I thank the hon. Member for Selby and Ainsty (Nigel Adams) for bringing forward this debate and for his continued work on biomass and renewable energy. I hope we can put cross-party pressure on the Government to do the right thing by the electorate of the United Kingdom.
It will be apparent to everyone present today that unabated climate change presents a major challenge to legislators in the UK and across the world. We must address the environmental health of our planet and the decarbonisation of our energy supply as priorities. Tackling the problem will require an unprecedented level of international co-operation. In some instances, our best course of action is to provide a positive example for other nations to follow, and I am proud of what Scotland has been able to achieve so far.
The Scottish Government are on track to meet their 42% emissions reduction target by 2020, and around half of Scotland’s current energy consumption is supplied by renewable wind power. We have also outperformed the UK on total emission reductions from a 1990 baseline in every year since 2010, and Sweden is the only European Union state to have outperformed Scotland. Professor Jim Skea, a member of the UK Government’s Committee on Climate Change, said:
“If you divide where Scotland is now, versus where it was in 1990, it is actually among the world leaders. That is unambiguous.”
The Scottish Government aim to have 100% of our electricity consumption generated from renewable sources by 2020. If we are to meet that ambitious target, biomass must play a key role in that transition. I welcome the Scottish Government’s strong commitment to this energy source.
Thanks in part to that support, over 2,000 jobs in Scotland are now based in the biomass sector, and Scottish Renewables believes that the industry has
“massive potential for growth in the future.”
West Coast Woodfuels, a company located in my constituency of Inverclyde, is one such organisation, and it shows the potential for growth in the biomass sector. Founded by farmer Alastair McIntyre, it produces woodchip that is dried in specialised kilns and stored on site. The raw timber for the operation comes primarily from local and sustainable sources. The rise in demand means that the company is now selling its product to a range of public and private sector customers. The example of West Coast Woodfuels shows that biomass is most efficient as a source of energy when the producer and customer are located close to each other. The environmental benefits of biomass are reduced if stocks of wood are hauled great distances across the country to be turned into woodchip, only to be transported on as a source of fuel. A strong local market for biomass fuel, close to producers, minimises carbon emissions and is a healthier option for our environment.
The economic benefits to our local economies should also be self-evident. Biomass plants create jobs in the construction, operation and maintenance of facilities. Employment opportunities are also created in the supply chain, not only through transportation but in growing and harvesting raw materials. The benefits extend beyond the biomass industry and into the wider renewables sector. A report issued by NERA and Imperial College London concluded that biomass
“is a reliable and flexible power source that provides firm capacity. Including biomass as part of the generation mix is likely to lower the costs associated with adding more wind and solar power to the system. This means that it can enable the integration of other intermittent renewable technologies (by providing back up generation), and help to facilitate the phasing out of old coal-fired power stations, whose closure is putting pressure on security of supply.”
If we are to continue enjoying the benefits of the biomass sector, adequate support must be forthcoming from the UK Government.
I share the concerns of those in the renewables sector that the decline in UK Government support not only prevents the industry from meeting its full potential, but damages investor confidence. Had the UK Government maintained their previous levels of support, the viability of many projects would not be in question. The cuts undermine Scotland’s renewables ambition, they are bad for our environment, and they are hurting businesses and consumers in my constituency.
David Simpson (Upper Bann) (DUP)
Does the hon. Gentleman agree that there was widespread disappointment at the Government’s bringing forward of the closure date for the renewable heat incentive? It has caused problems for the poultry sector and major difficulties for many farmers, who will not be able to avail themselves of the scheme.
Ronnie Cowan
The hon. Gentleman has either read my mind or read my speech over my shoulder, because I was about to move on to the renewable heat incentive. I was particularly disappointed by the Chancellor’s announcement that spending on the RHI would be some £690 million less than previously forecast by the Office for Budget Responsibility. The UK Government’s own reports have shown that the RHI has been an important tool in pushing forward the decarbonisation agenda. Data issued by the Department of Energy and Climate Change found that two thirds of users would not have installed renewable heat technology without the RHI. It is therefore difficult to understand why the UK Government feel it necessary to make these changes, which are being imposed against expert industry advice and to the detriment of jobs, investment and the environment.
I regret that we can only scratch the surface of this broad subject in the time available today. I would like to discuss a range of further issues given the opportunity, including how best to incentivise biomass use, address air quality concerns and ensure biomass producers are fairly treated through the tendering and procurement process. Most importantly, I want to see the UK Government abandon their policy of managed decline in support for renewables.
David Mowat
The hon. Gentleman has a list of things that the UK Government need to do to enable Scotland to meet its ambitious renewables targets, but, as of this morning, we have a fiscal framework. Is he aware that the Scottish Government intend to put money into such schemes? Presumably they can now do that.
Ronnie Cowan
I have not read the entirety of the fiscal framework at this point in time, but there are some issues that are reserved and will have to be handled through Westminster.
David Mowat
Maybe I am misinformed, but my understanding is that this is a reserved matter, but the Scottish Government will be free to invest in their own choices. If this was one of those choices, they could do so.
Ronnie Cowan
The Scottish Government will now have more powers to raise taxes and spend tax revenue as they feel fit for the benefit of the people of Scotland.
Callum McCaig (Aberdeen South) (SNP)
My understanding of the devolution framework is that when something is within the competence of the UK Government, the Scottish Government are unable to invest in it. There are specific exemptions in the Scotland Bill for topping up benefits, but there is nothing about energy. We are talking in a purely hypothetical way about something that is impossible.
Mr David Crausby (in the Chair)
Order. It is not really in order to intervene on an intervention, unless Mr Cowan allows you to do so. Are you allowing Mr Mowat to intervene, Mr Cowan?
Ronnie Cowan
I was simply slow in getting back to my feet; I have absolutely no issue with the hon. Gentleman intervening. It is a topic of conversation, but when Scotland is independent, we will then take care of our own energy resources and will use them in a way that is most efficient for the people of Scotland. Until that time, there are certain issues that will remain reserved to Westminster and we will have limited power over what we can do about it.
Most importantly, I want the UK Government to abandon their policy of managed decline in support for renewables. Scotland is ambitious and we take the responsibility to tackle climate change seriously. It is time for the UK Government to do likewise.
Amanda Milling (Cannock Chase) (Con)
It is an incredible pleasure to serve under your chairmanship, Mr Crausby. I congratulate my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on securing the debate and on providing such a compelling argument for the benefits of biomass.
I will talk a little about coal-fired power stations and then about biomass conversion. Rugeley, in my constituency —and where I live—has been generating power since the 1960s; Rugeley A opened in 1961, taking coal from the local Lea Hall colliery, and Rugeley B was commissioned in 1970. Iconic power station cooling towers have therefore dominated our skyline for decades. In fact, I grew up looking at cooling towers, as my hon. Friend did, but along the Trent, and today I look out at them in Rugeley.
Rugeley A was decommissioned and demolished in the 1990s, leaving Rugeley B as the last remaining power station in the town; it continues to be coal-fired. Earlier this month, however, its owners, Engie, announced the probable closure of Rugeley B in the summer. That is incredibly disappointing news and a major blow to Rugeley and our community and, in particular, to the 150 employees, the contractors and the wider supply chain. Our immediate focus must be on support for all those affected at such a difficult time.
That news came only a week after the announcement of the scaling back of the coal-fired power station at Fiddlers Ferry in the constituency of my hon. Friend the Member for Warrington South (David Mowat). Furthermore, over the past few months, as my hon. Friend the Member for Selby and Ainsty mentioned, about five of the small number of coal-fired power stations in the country have announced that they will close or partially close. The Government have already declared their intention to phase out coal-fired generation by 2025, but the closure or part-closure of those power stations demonstrates the real challenges that we face in the short term, let alone the medium term. The potential closure of Rugeley is a function of deteriorating market conditions in recent years, with a combination of a fall in power prices and an increase in carbon costs.
The Rugeley closure will see 150 employees and at least the same number, if not more, of contractors losing their jobs. There will also be a negative impact on the broader supply chain, not only for the Rugeley area in Staffordshire and the midlands, but going wider to include ports and the freight industry. The closure not only puts jobs at risk, but puts further pressure on energy security—simply keeping the lights on—because Rugeley B alone provides electricity for about 0.5 million homes. Consider that in the context of the other possible power station closures in the country.
I appreciate the desire to move towards renewable energy such as wind and solar, but it does not necessarily offer the same reliability or flexibility as other forms of energy. As my hon. Friend the Member for Selby and Ainsty said earlier, we are reliant on the wind blowing or the sun shining for those forms of renewable energy, but biomass, as a low-carbon renewable energy source, provides both reliability and flexibility. To date, however, the benefits of biomass unfortunately do not appear to have been fully recognised, although, as my hon. Friend outlined, biomass has huge benefits. Biomass, though, is not necessarily playing on a level playing field versus wind and solar, because the whole-system costs are not being considered.
The owners of Rugeley B investigated the conversion from coal to biomass fuel in 2012 but made the decision in 2013 not to pursue the option. Given the closure of coal-fired power stations throughout the country, I believe that there is a real need for the Government to revisit their biomass policy, and quickly. Such power stations provide the infrastructure for potential conversion to biomass, and their workforces have the specialist skills required to operate a power station.
Business rates are incurred up until the point at which a power station is demolished, so there is no incentive to retain the infrastructure—in fact, quite the opposite, because the incentive to demolish quickly is the key issue. Once the power stations are closed and demolished, that’s it, because the infrastructure that could otherwise be used to support alternatives such as biomass is gone. I therefore have a question for the Minister. At a time when market conditions seem to be accelerating the closure of coal-fired power stations, what are the Government doing to fully investigate biomass as a realistic alternative to other renewables, and to create policies to encourage and incentivise the conversion of those last remaining coal-fired power stations before they are gone forever?
Albert Owen (Ynys Môn) (Lab)
It is always a pleasure to serve under your chairmanship, Mr Crausby. I congratulate the hon. Member for Selby and Ainsley (Nigel Adams)—
Albert Owen
He has it three times on the record—that’s important.
Along with the hon. Gentleman, I share a constituency interest in biomass and a general interest in energy. It is important to have the debate at this time, because we need to get a proper energy mix back on the agenda. We need that balanced agenda and I disagreed with the hon. Gentleman’s opening remarks when he talked about intermittent wind, because we need wind as part of the mix.
We have had this debate before, but we need to have periods when we have to switch some of our generation off. Although I hope for a long, hot summer with no wind, which many of us want for the tourism industry and everything else, one of the best ways to do things is to have wind as an intermittent back-up system, because it is cheaper to switch wind generation off than it is to switch off gas, biomass or nuclear-powered power stations. We need to start talking, and to build a consensus on a balance of energy sources for the country. We had such a consensus in the 1990s and right through until recently.
I worry about that, and the Minister knows my views, because I genuinely want to achieve the Government’s goal of an affordable, secure and low-carbon energy economy. To achieve it we need the broadest suite of energy sources. Biomass has huge potential to be part of that mix, and that is what I will talk about. There has been uncertainty with solar and uncertainty created on onshore wind, which damages not only energy production but the supply chain in the country. We need a forthright debate on the long term, yes, but we still need long-term policies for the renewables sector.
I am by choice pro-nuclear, pro-renewables and pro energy efficiency. I see no contradiction in that, because we need the three of them. One of the reasons why Scotland is reaching its low-carbon renewables target was not mentioned by our colleague from Scotland who spoke before me—I did not catch his constituency either, so he might want to intervene to name it—and that is that nuclear back-up and the extension of nuclear are helping to get emissions down.
Nuclear is an important part of the mix. In my constituency we have had 44 years of safe nuclear generation, although it has now come to an end, with high-quality jobs and a helpful contribution to the country’s energy security. With Hitachi and the Horizon project, we are proceeding with a new nuclear build in my constituency. I hope that that, too, will provide decades of quality jobs and of help to the country’s energy security.
I am disappointed that carbon capture and storage is off the agenda, because clean coal and gas could also play their part in the transition to a fully low-carbon economy. However, CCS is not on the agenda. What is on the agenda is the opportunity to have co-firing biomass plants for the future and I very much support that.
My constituency has been dubbed the energy island, a concept that I support, because we had early prototypes of onshore wind—they were much smaller than is proposed now. We have also had safe nuclear generation for 40 years, and we have projects in the pipeline for tidal power as well as the biomass project that I will talk about in my remaining time. It is a £1 billion project for not just a biomass station but an eco-park. Under the proposal we will have 299 MW produced from biomass and linked to that will be aquaculture, with a large fish farm and the opportunity to produce fertiliser at the farm for use in food production. It is a very forward-thinking project, so when we talk about building power stations in our areas, we should build eco-parks and link them into district heating systems in the future, so that there is no waste. Such areas really would be low carbon, with heat retained in them, which limits the effects of climate change.
The food part is important. There will also be research and development at the eco-park and it is important that we do the R and D in this country and do not just import that from other countries. We need to work at the cutting edge of new technologies, and biomass and eco-parks are one way forward.
The 299 MW plant—a very large plant—will be five 60 MW units in a module form that will be gasified on site. I understand that biomass sourcing is controversial. Orthios is working with DECC, which has already given consent for the project, which is under way—I was there at the launch of the site. In his opening remarks the hon. Member for Selby and Ainsty talked about using existing infrastructure. The project is on the site of a former large Anglesey aluminium smelter, so it is an industrial site that is linked to a jetty that can bring in the biomass from abroad, but I am told that it will use locally sourced biomass from the UK as well. The biomass to be brought in will be managed waste from forests and other areas, which is less controversial than just cutting down trees and burning them. Biomass must be managed. I understand that the opponents of biomass feel that it causes deforestation, but there are ways of using waste materials that can be converted into biomass.
I realise that there is a time constraint, and that another hon. Member wants to speak, but there is the jobs aspect, which was touched on. New green energy jobs can be created if we go forward with biomass technology, many of which can be for retrained people as well as for apprentices. As I said, they can be in research and development. In the construction phase of the Orthios project in my constituency there will be 1,200 construction jobs and then 550 permanent jobs.
I was at the launch a couple of weeks ago with apprentices who have already been taken on, and with young people from the schools. We must say to the young people that climate change is real—they get it even if many other generations do not—and there is a future for them in producing green, low-carbon energy. The United Kingdom can be world leaders, and Wales and my island of Anglesey in particular can pioneer many of the technologies.
I commend what the Scottish Government have done in wind because that project was not popular, but I would add that the renewables obligation allows the Scottish Government to top up renewables funding. They have done that as a way to entice companies in the first place.
Callum McCaig
That was allowed under the previous regime, but the power over the renewables obligation was brought back to Westminster and the scheme has been closed prematurely despite an explicit promise. While that was a sensible way of dealing with things that allowed for different development, unfortunately that opportunity is now closed.
Albert Owen
I was involved in some of the Government talks when the renewables obligation was set up and it did have that flexibility, so it is a shame if that has been taken away, because the devolved Administrations could pioneer their own sources and technologies. They and the UK could work together to make the UK a world leader in technology. I accept the hon. Gentleman’s point, but the flexibility was there. I am glad for the correction.
We need to have low-carbon energy going forward and biomass is a huge part of that. I say to the Minister that the auctions are a complicated process. I sat on an Energy Bill Committee in the previous Parliament in which many of us—including the Ministers, who are no longer Ministers in that Department—found them confusing and complicated. We need to simplify them, because if we do not we could lose out on innovative schemes and that worries me. As the hon. Member for Selby and Ainsty said, we need a level playing field for biomass, or indeed a special category for it so that we can develop the technology to play a part in the mix going forward. We need a truly consensual approach to our energy policies, with them not determined by five-year electoral cycles. They need to be in the long-term interest and work towards climate change.
I was at the COP 21, where there was a mixed reaction to Britain. Yes, the Secretary of State was trumpeting the fact that we are closing down our coal stations, but there was also real concern about the cuts to our renewables. What I want to see is real investment in low-carbon energy going forward. I repeat that that should be in new nuclear, in renewables and in energy efficiency measures so that, on climate change, the United Kingdom can hold its head up proudly and say, “We are world leaders.” I want to see biomass as part of that and I hope that when the Minister responds she will give special consideration to biomass, because the project I have outlined in my constituency and what we have heard from other hon. Members is good for Britain and good for climate change.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
It is a pleasure to serve under your chairmanship, Mr Crausby. In contrast to the hon. Member for Selby and Ainsty (Nigel Adams), I will focus more on combined heat and power, which he mentioned earlier. I thank him for bringing the debate on this critical issue to the House. I am glad to see it getting the attention that it so richly deserves.
The Scottish National party is highly supportive of the increasing role that biomass heat and combined heat and power schemes are playing in reducing CO2 emissions. Biomass has played a vital part in putting Scotland on track to meet its 42% emissions reduction target by 2020 ahead of schedule, which was touched on eloquently by my hon. Friend the Member for Inverclyde (Ronnie Cowan). Of course, biomass is the oldest source of renewable energy.
Biomass is the only other naturally occurring, energy-containing carbon resource known that is large enough to be used as a substitute for fossil fuels. Unlike fossil fuels, biomass is renewable, in the sense that only a short period of time is required to replace what is used as an energy resource. Biomass is also held to be carbon neutral, in that the amount of carbon absorbed in growing it is equivalent to the amount produced when burned for energy. The intermittency of solar and wind and the role that biomass can play in our overall energy solution have been well commented on, so I will not take them further than that.
The Scottish Government have shown a strong political commitment to biomass as a renewable energy resource. The UK’s largest biomass combined heat and power plant in Markinch, in the kingdom of Fife, received significant funding from the Scottish Government. The plant not only is an asset to Scotland but will help deliver the target of 11% of non-electrical heat demand by renewable sources by 2020, yet the UK Government’s decisions continue to undermine the UK’s and Scotland’s renewables commitments—more on that later.
The Association for Decentralised Energy has provided information on CHP, CfDs and the RHI, which are issues that have been touched on by speakers today. Combined heat and power can use renewable and non-renewable fuels. No matter the fuel, CHP represents the optimal use of that fuel, reducing fuel use by 10% to 30%. Biomass CHP plants are most commonly used in industrial processes where their energy efficiency helps the user to improve competitiveness and reduce carbon emissions. However, biomass CHP is suffering a significant investment hiatus, because of a lack of policy certainty with respect to both the contract for difference and the renewable heat incentive. Only 20 MWe of the potential 440 MWe in biomass CHP projects have reached financial close. Most others are on hold or cancelled, or have been converted to power-only sites.
Under the contract for difference, new build biomass projects must be CHP, as the hon. Member for Selby and Ainsty mentioned. However, the industry currently views biomass CHP as largely uninvestable—if that is a word—under the contract for difference, because the CfD scheme’s design is not fit for purpose. The CfD biomass CHP tariff will need to be changed before we can expect the biomass CHP opportunity to be captured. To make the CfD investable for biomass CHP, the Government must allow biomass CHP to receive CfD for its electricity over the full 15 years of the contract, even if its heat customer closes. The Department for Energy and Climate Change has been considering that necessary change for close to two years, and there is now a risk that the regulations that are needed will not be in place before the next CfD allocation round, which is expected late in 2016. We might contrast that with the Hinkley C nuclear strike price of double the current rate, guaranteed for 35 years.
Albert Owen
I am not trying to trip up the hon. Gentleman against his party, but does he welcome the extension of nuclear plants? We have safe generation there that will produce low-carbon energy for up to an extra five years.
Philip Boswell
As the hon. Gentleman well knows, we have two ageing nuclear power stations in Scotland, and while they have played their part, we do not see nuclear as what we require to advance in the long-term future in Scotland. In fact, we do not need it. It is a choice that England has made and that it unfortunately seems to be forcing on us.
Philip Boswell
And Wales—I concede that point.
The debate pack provided by the House of Commons Library states:
“Following its commitment to increase funding for the RHI to £1.15 billion in 2021, the Government published a series of RHI review documents in February 2016, in advance of an expected review of the scheme in 2017. The Government concluded that ‘the RHI had been wholly positive in its influence on the renewable heat technology market’”.
Many, including myself, would disagree with that statement.
While the industry welcomes the decision to extend funding for the renewable heat incentive up to 2020, reforms are needed to increase certainty within the scheme if it is to be successful in delivering large-scale renewable heat projects. Investors do not know the RHI’s value when they plan and then make an investment decision, as happens under other large-scale renewable electricity mechanisms, such as the renewables obligation, which has been much covered in other debates. The Association for Decentralised Energy therefore recommends that DECC should implement a tariff guarantee under the RHI to bring forward lower-cost, large-scale renewable heat such as biomass CHP. With tariff guarantees, the Government would allow a developer to lock in their RHI tariff when the project reached financial close. I agree entirely with the ADE about that.
The House will doubtless note that the only constant with UK Government energy legislation is change—moving the legislative goalposts and destroying investor confidence via uncertainty. I suppose they are at least consistent about moving the goalposts, with more than 18 changes in oil and gas legislation in 15 years, the removal of the renewables obligation removal one year early for onshore wind, withdrawal of the £l billion fund for carbon capture, solar energy subsidy cuts and the scrapping of large-scale solar energy projects, and plans to privatise the green investment bank just as it is flourishing. Those renewables cuts are made because of the UK Government’s focus on the “rash dash for gas”, or fracking, and their prioritisation of nuclear energy, which shows the true direction of their energy policy.
The hon. Member for Selby and Ainsty spoke of a black start capability constraint, and that is made all the more pertinent by the closure of Longannet next month. I put the blame for that squarely with the Government, because of their prejudiced transmission charge regime.
The hon. Member for Selby and Ainsty and my hon. Friend the Member for Inverclyde touched on the reuse of existing energy infrastructure. The SNP believes that the UK Government should be more flexible about legislation, to make a smoother transition to renewable energy from fossil fuel use possible. I maintain that biomass has a key role to play, and I urge increased use of it, especially given DECC’s own figures for electricity generated by renewables and as a percentage of gross consumption, which show a meagre increase of biofuel as a percentage of overall renewable energy, from around 4.1% in 2009 to 4.7% in 2013. However, in line with the Government’s advice, I would introduce a word of caution, because that industry often competes with other types of land use such as food and raw materials production, and of course with the vagaries of crop prices we should also be careful about the availability and price of sufficient sustainably resourced biomass.
Albert Owen
The hon. Gentleman makes an important point, which is why waste areas are relevant. Many parts of the world have shrub overgrowth. That can be used and the land can return to agricultural use, helping less developed countries.
Philip Boswell
That is certainly an option that any sensible leader would consider when thinking about future policy. I agree that it is vital to retain a sensible balance.
The hon. Gentleman mentioned how critical research and development is to the development of the industry. I understand that the Government are doing something about that. Indeed, the UK Government set out policies to support the use of biomass in energy generation in their UK biomass strategy published in 2012, which noted:
“It is widely recognised that bioenergy has an important role to play if the UK is to meet its low carbon objectives by 2050. Excluding biomass from the energy mix would significantly increase the cost of decarbonising our energy system—an increase estimated by recent analysis at £44 billion. As set out in the 2011 UK Renewable Energy Road map, bioenergy is also an important part of the Government’s plans to meet the Renewable Energy Directive objectives in 2020.”
Nevertheless, biomass, like all other proven renewable energy sources, is being neglected for the UK Government’s preferred options of nuclear and unconventional gas, which of course means we will not meet our climate change targets as set out in the Climate Change Act 2008.
David Mowat
The hon. Gentleman and his colleague, the hon. Member for Inverclyde, both made the point that Scotland has outperformed many parts of Europe—everyone except Sweden, I think we heard—with its decarbonisation initiatives, yet we also hear that that is a reserved matter, so such policy is for the UK Government. I am interested to understand how in that case the credit for doing so well is due to the Scottish Government, not the UK Government. I would point out, as the hon. Member for Ynys Môn (Albert Owen) did, that, of all the devolved Administrations and England, Scotland has the highest percentage of electricity generated from nuclear. It is a long road to replace that.
Philip Boswell
I concede that the hon. Gentleman is perfectly right—energy is more widely reserved. We in Scotland are keen to play our part in the UK as part of an overall national solution for energy. Our choices may be different, and our choices and powers are constrained. In fact, during the debate on the Energy Bill, the Government rejected our calls for CfD devolution, which is the most popular mechanism we would have for making inroads.
As I mentioned, we will not meet our targets under the Climate Change Act 2008, so I urge the Minister to revise legislation to enable biomass to play its part in achieving our renewable energy targets on time.
Callum McCaig (Aberdeen South) (SNP)
It is a pleasure to sum up for the SNP in this debate, which has been interesting. It has perhaps been a different debate from the one I anticipated, as the majority of contributions have been on the transfer of existing coal power plants to biomass, but I completely understand why that is. I add my congratulations to the hon. Member for Selby and Ainsty (Nigel Adams) on securing the debate. It is good to get a hearing on this issue.
I met with Drax quite early on in my role as the SNP’s energy and climate change spokesperson and very much commend what it has done on shifting away from coal to biomass. There are issues around such large-scale production, which have been touched on, but if it is done right and done well—as I think it broadly is by Drax—it has a large role to play.
The hon. Gentleman mentioned research that suggested that converting just 500 MW of coal to biomass could save £2 billion for consumers, when looking at the whole-system cost. That is quite a remarkable piece of research to suggest such a level of savings.
One theme in the debate has been the need for both a level playing field and a long-term plan for biomass technology. I know the Government are very fond of their long-term economic plan. It is perhaps time they got a long-term energy plan—I note that that has the same acronym, so it could be used interchangeably. The two plans are tied together rather neatly: to have a long-term economic plan, we need a long-term energy plan. As we have heard, we very much require that plan to include biomass if we are to meet our decarbonisation targets.
The hon. Gentleman talked about the hidden costs of intermittent technologies; that is fair. His comment was that that is the “definition of a perverse outcome”. My definition of a perverse outcome would be applying the climate change levy to green energy production. I was surprised that that did not feature in his speech, given that when the levy was introduced in the Budget, Drax’s share price fell by 25% overnight.
Nigel Adams
I am grateful to the hon. Gentleman for raising that. If he looks back in Hansard, he will discover that I raised that issue at the time—quite vociferously, in fact. It was the first time that I voted against my own party, to my regret, so it was a deeply held view.
Callum McCaig
I thank the hon. Gentleman for that. I would gladly check Hansard, but I have no requirement to do that as I will take him at his word. That is a point well made—touché, as they say.
UK energy production faces significant challenges due to the move away from coal. Significant power stations and traditional behemoths of energy production are coming off the market. The hon. Member for Cannock Chase (Amanda Milling) said that ensuring we get the policy structure right before those power plants close is fundamental. She made a valid point about the incentive for the plants to be demolished. Once the power stations are gone, there is no going back.
The reuse and recycling of the existing transmission line infrastructure is a powerful point. We will get one opportunity to do this, and that opportunity is closing by the day as the power plants close. I would impress upon the Minister that if she and her Government think biomass has a role to play, as it is clear a number of hon. Members do, time is pressing to get the framework right to enable that to happen. I repeat: once the power stations and the transmission lines that take the power from them are down, the cost of establishing biomass on that kind of scale will be astronomical in comparison with what it was.
My hon. Friend the Member for Inverclyde (Ronnie Cowan) talked about the positive benefit of biomass at a smaller, more localised level than the large-scale power plants on which other Members focused. He mentioned the 2,000 jobs in biomass in Scotland and the potential for more. The link between proximity of supply and production of energy through biomass is also important. While there will be a role to play for biomass in large-scale production, the use of it in a decentralised manner is very much a part of the future.
My hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell) talked about combined heat and power being a real and credible part of the future of biomass technology. In my own constituency, Aberdeen Heat and Power Company Ltd delivers heat, hot water and electricity through biomass to a number of my constituents and others across the city of Aberdeen. Its programme has resulted in a 56% reduction in emissions and, perhaps more startlingly, a reduction in bills of 50%.
Combined heat and power is used well elsewhere in the world, in particular on the continent. It has always struck me as perplexing that we have never utilised it on the same scale, because it is a pretty simple technology. It stops the wastage of electricity because it is converted into heat. If we can get that level of savings—by and large in deprived communities in Aberdeen—that is a win-win situation. I am pleased to see the Scottish Government looking at how combined heat and power can be ramped up as we look to meet our climate change commitments. We have discussed the different ways that the devolved Administrations and the UK Government can work. A lot can be learned from that example, and we would welcome that.
Albert Owen
In my contribution, I mentioned combining food and power. Does the hon. Gentleman have a comment to make on that, as a Front-Bench spokesman for his party? Does he see that as something that could be taken forward in different parts of the UK?
Callum McCaig
I thank the hon. Gentleman—I was coming on to his contribution. He made a number of interesting comments, several of which I agreed with. We will come to the nuclear issue, where there is a degree of disagreement. Combining food and power is an interesting way, particularly when looking at the more decentralised model. Agriculture is clearly a huge industry right across these islands, and there are significant waste products that can be used in different ways. I know there is huge potential for using the by-products of our agricultural production to produce energy through both biomass and biofuels. That requires an awful lot more investigation through research and development.
The conflict of land use in biomass was touched on. If, as the hon. Member for Ynys Môn (Albert Owen) suggested, we focus on primarily using waste resources or sub-optimal land—shrub and suchlike—that would allay a number of the fears of those who doubt the viability and compatibility of biomass as a way of achieving carbon reduction. The hon. Gentleman also mentioned the requirement for a level playing field, and the fact that we require renewables, nuclear and energy efficiency to do that.
There was some debate about the apparent discrepancy between the SNP’s position on nuclear and our welcoming the extension of nuclear power plants in Scotland. On the face of it, that seems sensible, but one has to remember that there is an astronomical bill for decommissioning nuclear. Putting that out as long as possible, sweating those resources and ensuring we get the greatest return on them before we decommission them is sensible. The significant difference between biomass and nuclear, in terms of the benefit, is that the by-product from biomass will not be radioactive for 100,000 years and require billions of pounds to decommission.
The time is now. As with so many of the issues around energy and climate change, if we are to decarbonise, we need a sensible framework. A number of Members have pointed out where there are gaps in terms of biomass. They need to be closed, but the gaps in our energy policy more widely also need to be closed.
Dr Alan Whitehead (Southampton, Test) (Lab)
As hon. Members around the Chamber this morning have made clear, biomass has a substantial role to play in the move towards a low-carbon energy economy. Indeed, not only does it have a substantial role to play, but we should encourage the proper fulfilment of that role over the next period—I will come to that in a moment. We should also be clear about where biomass stands in the move towards a low-carbon economy and the extent to which it can play a role. In that respect, we need to be clear that, given the extent to which reasonable levels of feedstock can be provided to biomass over the next period—and, indeed, over the longer period, up to 2050—it can probably achieve penetration in the UK energy market of perhaps 12% or so.
I take that estimate from the Government’s UK bioenergy strategy, which the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) mentioned. We need to be clear that it is not the case that there is no strategy; there is a strategy—at the moment. Whether the present Government consider it to be their strategy now is another question, bearing in mind our discussions on the recent Energy Bill, for example, about the extent to which things that happened under the last Government really were or were not part of the Government’s strategy. Before we end proceedings this morning, I would be interested to know from the Minister whether she feels that her Government wish to continue to pursue that strategy, or whether she is in the process of writing a new bioenergy strategy for the future.
The existing strategy clearly places limits on the extent to which biomass can play a role in the move to a low-carbon economy. As my hon. Friend the Member for Ynys Môn (Albert Owen) emphasised, that underlines the fact that biomass has to play a role as part of a suite of technologies in order to provide the widest possible mix of energy over the next period.
We also ought to be clear that, as a low-carbon energy technology, biomass has to be just that: sustainable. As my hon. Friend and the hon. Member for Coatbridge, Chryston and Bellshill both mentioned, sustainability is not just about where we get our biomass feedstock from, but about how we use land for biomass production, and the extent to which biomass production may push out other forms of production, or, as my hon. Friend the Member for Ynys Môn mentioned, the extent to which it takes place on marginal land. In the UK, Drax, for example, is encouraging the planting of short rotation coppicing production, Miscanthus grass and various other things, which can provide a sustainable source of biomass for those undertakings. It is important that biomass is fully sustainable, and of course that comes into play in ensuring that imports of biomass are fully certified across the board, as far as their origin and how they are produced are concerned.
Having said that, biomass certainly can play a clear and substantial role and can perhaps produce 10% to 12% of the UK’s energy requirements in future. That also emphasises the point that biomass should not be set against other forms of renewable energy. In that context, I was a little concerned about the suggestion from the hon. Member for Selby and Ainsty (Nigel Adams) that biomass should, as it were, be advantaged against other forms of renewable energy, because of its relationship to system integration costs, as far as the network is concerned.
Nigel Adams
I apologise if that is how my remarks came across. What I actually want for biomass generation is a level playing field—for the industry to be able to bid on an equal basis, taking into consideration the full system costs of all technologies. That is all I want: an opportunity for the industry to be able to bid on a level playing field, in a fair way.
Dr Whitehead
I thank the hon. Gentleman for that clarification, but perhaps I can also make a little clarification for him. He mentioned the NERA and Imperial College London report about system integration costs. That is an important report, but he should also know that a similar report from NERA and Imperial College London was produced about three months before the report that he mentioned. It so happened that the client for the other report was the Committee on Climate Change, as opposed to Drax. The questions that were asked in the two reports, which had identical authors at almost identical times, were slightly different and therefore produced fairly different results for overall system integration costs. Essentially, one looked at how biomass would relate to the system as it stands; the other looked at how it might relate to system changes.
One thing I am sure the hon. Gentleman would endorse is the extent to which system changes have to take place to ensure that those changes in the mix are integrated into the system as a whole—so, the periods over which energy is sourced, and what happens with transmission charges and how they may be levied in future for a particular location.
David Mowat
I hear what the hon. Gentleman is saying. Does he not accept, though, that it is a fact that intermittent forms of energy require back-up and that there is an associated cost that is not reflected in the CfD structure at the moment, which I think is the point that was being made?
Dr Whitehead
The hon. Gentleman is absolutely correct. There are system integration cost differentials between different forms of renewable energy. My point is that, depending on which report people read, those are not the same as they might appear to be between renewables. Indeed, what is undertaken in how the system works as a whole can substantially mitigate the different costs, so that, as we evolve the system, we can be in a much better position to ensure that the suite of different renewables—which, as my hon. Friend the Member for Ynys Môn mentioned, is so important for future low-carbon deployment—can properly be deployed happily alongside one another, as a suite of measures to ensure that we move towards a decarbonised economy.
I recognise that we have limited time this morning, so I want to turn briefly to the point the hon. Member for Selby and Ainsty made about the level playing field that is necessary for biomass. It is undoubtedly the case, given the measures that are in place at the moment for the enhancement of renewable energy, that there is not a level playing field. There is an overall problem with that suite of measures because of the levy control framework and the extent to which hardly anybody is likely to get a contract for difference for their project over the next period. Indeed, the hon. Gentleman will be aware that some biomass plants got contracts under the early investment decisions, prior to the new form of CfDs coming into being. However, when it comes to the efficiency of biomass, allying that with CHP schemes to ensure that biomass can get 15-year contracts under the CfD arrangements, even if the heat source is not there for 15 years, is an important change that would need to be made to CfD arrangements for the future.
As for the renewable heat incentive, the fact that there are no guarantees for tariffs between commencement and completion of a project if a biomass plant is trying to go for RHI seems to be an omission for the future that should be rectified as far as their admission to those arrangements—
Mr David Crausby (in the Chair)
Order. Dr Whitehead, if we are not careful, we will not hear the Minister, and I really want to hear her.
Dr Whitehead
I appreciate that, Mr Crausby. I will bring my remarks to a close immediately.
My view is that it will be necessary to ensure a level playing field in the future arrangements for low-carbon energy; indeed, whether biomass should be accessible to the capacity market as part of those arrangements might be a consideration the Minister is thinking about. I will be interested to hear from her what arrangements may be made for CfDs and RHI for that level playing field to ensure that biomass plays the role that all of us here this morning want it to play in the future of renewables.
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
I congratulate my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on securing this debate and, in particular on being such a champion of Drax. He and I have had many conversations about it. I am delighted to see my hon. Friend the Member for Cannock Chase (Amanda Milling) here supporting Rugeley, which is absolutely right. I have enormous sympathy for the people affected by yesterday’s incident at Didcot, which was a long-standing and good source of energy for the UK. It was a great tragedy.
Every hon. Member here will know that our priorities are to move to decarbonisation at the lowest cost while ensuring that lights stay on. This debate has shown that there are many ways of achieving that. I am grateful to the hon. Member for Ynys Môn (Albert Owen) for pointing out that a balanced energy policy is needed—the shadow Minister also made that point. It cannot be all or nothing.
The installed biomass capacity of all biomass technologies at the end of 2014 was 5.4 GW, which is no small capacity. Of that, biomass combustion was about 3 GW, landfill gas was 1 GW and energy from waste was coming up to 1 GW. That is impressive and the technology certainly plays its part, from potentially low-carbon dispatchable energy to uses in heat and transport biofuel applications and from extracting energy from waste products to injection of low-carbon gas into our gas grid.
It has been pointed out that we cannot go ahead without careful consideration of the effects, both positive and negative, that biomass can have on the wider environment. Unlike other renewable technologies, biomass cannot rely on an inexhaustible fuel like the wind, tides or sunshine. The fuels on which biomass is dependent need to be sourced responsibly and sustainably, and in a manner that realises the carbon and greenhouse gas savings that biomass is capable of delivering. Our renewable energy policy seeks to balance those considerations.
My hon. Friend the Member for Selby and Ainsty asked about CfD auctions. He will know that, in November 2015, the Secretary of State announced that if, and only if, the Government’s conditions on cost reductions are met, we will make funding available for three contracts for difference allocation rounds in this Parliament. The first, for less established technologies, is expected to take place by the end of 2016, and the technologies included will be offshore wind, wave, tidal stream, advanced conversion technologies, anaerobic digestion, dedicated biomass with combined heat and power, and geothermal. That is where we are right now. We will set out our further thoughts on that as soon as possible.
My hon. Friend asked whether I agree with the proposals in the NERA report regarding whole-system costs. I am often asked, and I understand why, whether Department of Energy and Climate Change is familiar with the full-life costs of biomass compared with other technologies. I assure him that we are very aware of the costs of balancing the grid from intermittent technologies that are not incurred from electricity generated from biomass. It is dispatchable, can be base load, is controllable and is very valuable. I confirm that my Department is looking carefully at whole-system costs, but the reports that he and the hon. Member for Southampton, Test (Dr Whitehead) mentioned consist of a subset of technologies and we must look carefully at whole-system costs.
My hon. Friend the Member for Warrington South (David Mowat) asked whether subsidies can be available for co-firing. I assure him that subsidies are still available through the renewables obligation. Fiddlers Ferry in his constituency has previously co-fired under the renewables obligation and can take advantage of that scheme until 2027.
My hon. Friend the Member for Cannock Chase asked how the correct mix should look going forward. I assure her that we recognise there are implications when looking at proposals to end coal generation. It is important to have clear consultation on that, which we will announce shortly. In particular, we will look at how that might impact on coal-fired power stations that are currently co-firing.
The hon. Member for Inverclyde (Ronnie Cowan) raised his proud point that Scotland is doing so well on renewables, but I remind him that, as my hon. Friend the Member for Selby and Ainsty pointed out, over 20% of the support under the renewables obligation as a whole goes to Scotland with far less of Great Britain’s population. Scotland received 24% of RO payments in 2014-15 and will receive significantly more than its per capita share, so it would be fair if the hon. Gentleman credited the UK Government and Great Britain’s bill payers with the Scottish Government’s achievements in renewable energy.
Andrea Leadsom
I am sorry, I will not give way.
The hon. Member for Inverclyde asked why the Government are cutting RHI support. The RHI budget to cover renewable heat schemes has been confirmed to March 2021, rising each year to a total of £1.15 billion. The hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) referred to biomass CHP. We are considering our proposals for that for the forthcoming RHI consultation. We will refine our current policy so that it delivers improved value for money to taxpayers and targets biomass in line with the Government’s long-term approach to heat decarbonisation, focusing on large biomass and biomass for process and district heating, and to encourage deployment that is sustainable without subsidy in future.
The hon. Member for Southampton, Test asked about the bioenergy strategy published by the previous Government in 2012. It set out a direction for biomass and recommended supporting sustainably produced biomass to deliver real greenhouse gas savings cost-effectively and taking account the wider impact across the economy. A great deal has happened in the industry since it was written, but those recommendations remain compatible with our current intentions.
Finally, as many hon. Members have pointed out, bioenergy contributes to the UK economy, creates jobs in the fuel supply chain in harvesting, processing and transport, and creates opportunities for foresters, farmers and UK ports and railways. It remains and will continue to remain important, bringing many benefits to the UK in decarbonisation, security of supply and economic benefit. I remain of the view that, when sourced responsibly, biomass can provide a cost-effective, low-carbon and controllable source of renewable energy.
Question put and agreed to.
Resolved,
That this House has considered biomass as a source of renewable energy.