Combined Heat and Power Quality Assurance (Temporary Modifications) Regulations 2021

Baroness Bowles of Berkhamsted Excerpts

Wednesday 19th May 2021 Grand Committee

[Baroness Bowles of Berkhamsted (LD) [V]]

I thank the Minister for introducing this statutory instrument. She has already touched on some of the topics that I wanted to pursue a little further.

As has been explained, the instrument temporarily modifies the certification process for the combined heat and power quality assurance scheme, which certifies energy-efficient combined heat and power plants and gives access to financial incentives, including environmental tax exemptions. As with many businesses, the pandemic and lockdown have given rise to a highly abnormal year, so some schemes that would normally have qualified for incentives may not, because their 2020 operational data does not qualify them. Where those businesses can show a direct effect from the pandemic, the Government are allowing use of their 2019 data instead of the anomalous Covid-impacted 2020 data for the purposes of qualifying for the financial incentives in 2021.

That is a logical approach, and this is not the first SI that I have seen which makes adjustments because of the pandemic. I am pleased to see that the safeguard is there: there has to be a direct effect of the pandemic, rather than the ability to choose 2019 data automatically if it was better, potentially for other reasons. Therefore, I agree with the changes and I hope that the Minister will indulge me as I use some of the time available to ask a few general questions about combined heat and power, and indeed energy from waste.

One thing I noticed in the Explanatory Memorandum was the use of the expression “Good Quality” CHP, which is what the incentive is about. That is key, and it set me wondering where CHP sat in the context of net zero more generally. The Minister explained that much depended on carbon capture and the development of hydrogen for the future, but there are also problems—such as how to utilise the heat, especially in the domestic environment—that have restricted how well CHP developments have proceeded to deliver on not wasting the heat. What are the Government doing to help in that?

It seems that, in some ways, CHP as a technology has not quite fulfilled its promise in terms of uptake and utilisation of what was otherwise waste heat. I am aware that some of the incentives are now closed to new entrants. I am not sure whether that is to discourage less environmentally friendly types of CHP or that it reflects a cost or “job done” situation, such as with solar feed-in subsidies. What types of CHP plant are presently encouraged? In the future, for example, will gas CHP systems be phased out, as is planned for new domestic boilers, and what is the timescale? I appreciate that I formulated that question before the Minister made the comments about carbon capture, so that is a part of it, but ultimately we probably cannot solve everything that way.

I also want to explore the situation with energy from waste. As I understand it, pretty well all recent energy-from-waste plants are CHP-ready, but there are challenges of using the heat. Given that the financial success of energy-from-waste plants does not hinge on using the heat, what incentives are there for plant owners to overcome the various legal and technical problems—and, indeed, reluctance from the public—to address those issues?

Energy from waste is of course a high carbon-footprint method of generation, as indeed is biomass at the point at which it is utilised, although both run on the basis that they are less bad than the alternatives. But it will be important to stop the release of that carbon, no matter whether there is—as in biomass—a good history of there being some carbon absorption during the process of growth. How does that play out in trying to solve the heat distribution issues? Are these technologies seen as insufficiently long-term projects to make sorting it out worth while? If they are not, they really are not living up to the promise of what the combined CHP, in its wider sense, is meant to do. Indeed, looking to the future and potential nuclear microgeneration, is solving the heat distribution problems not also key for that to be successful?

I appreciate that these questions are beyond the subject of this regulation, but my curiosity was piqued. If there is not information to hand right now, I would be happy for the Minister to write or direct me to the relevant documents that give the answers or provide more information. As I have said, I have no objection to the regulation.