Renewables Obligation (Amendment) Order 2014

Baroness Worthington Excerpts

Monday 17th March 2014 Grand Committee

[Viscount Ridley (Con)]

My Lords, I declare an interest in various forms of energy as detailed in the register, including both coal and forestry. I welcome what the Minister said about improvements to the requirements on auditing, sustainability and reporting, but I draw her attention to a report in the Mail on Sunday last weekend on exactly where the fuel for Drax biomass is coming from in the Carolinas. It is clear that whole trees are being logged for that. I draw her attention also to a report that came out last month from the International Council on Clean Transportation, which stated:

“Consistent with earlier studies, we find that pathways based on whole-tree logging in forests offer little or no climate mitigation over 50 years. We also show that reduced impact logging does not deliver GHG savings within 50 years. These bioenergy feedstocks are not good candidates from a climate policy point of view”.

I would just continue the debate with those points.

[Baroness Worthington (Lab)]

My Lords, I am grateful to the Minister for introducing these changes to the RO. They cover two issues: the non-duplication of being able to receive funding through both the RO and CFDs, which seems eminently sensible and an important tidying-up. On the sustainability of biomass, this is obviously a complicated issue, but I say in response to the comments made by the noble Viscount, Lord Ridley, that we have to keep a sense of proportion about this. There is a danger that we start to confuse the CO₂ emitted from the chimney of a biomass plant with the fossilised CO₂ that comes from the burning of fossil fuels. One is a function of the flow of biospheric carbon, meaning that trees absorb carbon while they are growing and then emit it when they are burnt. This has been happening since man crawled out of a cave and is not of the order of magnitude that we see with the fossil-fuel impact, whereby one is taking carbon stored over many millennia and releasing it into the atmosphere. I am glad that the noble Viscount made reference to the article in the Mail on Sunday because there is a real danger that we are slipping into a misunderstanding whereby we equate CO₂ from a chimney with adding to the stock in the atmosphere. That would be regrettable, because biomass does not contribute in the same way as fossil fuels.

However, we are of course keen that all biomass should be sustainable and I think that we all agree that its best use is probably not in power generation but in the generation of heat. Therefore, CHP plants and use of biomass in district and smaller-scale heating is probably the most sustainable use. We also face the great challenge of reducing the carbon intensity of our power sector. There are sustainable sources of biomass out there from well managed forestry. We have used forestry to a far greater extent for paper production. While that is decreasing, we are now seeing an increase in use for energy to displace fossil fuels. That cannot be something that we want to stop; it is something that we want to manage, with good, strong reporting. It creates livelihoods; it creates income. Management of forests is a well established form of economic activity and we should not seek to stop it.

It strikes me as slightly odd that the Minister should state that municipal waste has a lower sustainability impact, because much of the calorific content of municipal waste comes from plastics, which are obviously a fossil fuel. I am trying to avoid the singling-out of biomass for special treatment when other forms of energy are not perhaps treated in the same way. It is true that biomass should be under scrutiny because it is a less energy-dense form of material and its upstream emissions can therefore have a disproportionate impact, but it is also true that we do not add on the life-cycle emissions to gas—LNG, for example, has a different carbon intensity if taken on a whole well-to-wheel basis from natural gas or fracked gas. We do not load our normal carbon accounting to those fuels, yet we do with biomass. I am arguing in favour of proportion and trying to get the balance right.

This is especially important in the UK as we consider how we are to meet our targets at 2020. I am sure that the demise of a couple of high-profile biomass projects—the Eggborough project and the REA’s dedicated biomass project—will not have escaped the Minister’s attention, both signalling that they are no longer seeking to pursue renewable options. That raises questions, because it means that we might be more reliant on more expensive forms of renewable power. It would be regrettable if that were the outcome: that an overzealous approach to biomass forces us into ever more expensive options. With offshore wind, we have the added cost of having to make sure that we have security of supply and back-up. Biomass has at least one very strong benefit, and that is its firm power. It can be stored, it is reliable and it will be there when the wind is not blowing and the sun is not shining. As I said at the beginning, we are keen that all biomass is sustainable, so we welcome the proposals. It is all about getting the proportion right and treating biomass fairly, relative to other sources.

I want to raise just one other issue. The noble Baroness referred to the fact that we have further changes to the RO coming forward. I have had representation from the Low Carbon Finance Investment Group that DECC has recently raised the possibility of introducing competition into the RO and that, in line with the desire to move towards competitive auctions in the CFD, it was mooted that we might require some form of competition in the RO. This would be a significant change and not one that would be welcomed, because it would almost certainly be retroactive in its application.

Therefore, I would like some reassurance from the noble Baroness that, although it has been put out that we might seek to do this to the RO, this is not the case. I am sure that it would significantly change the way in which the instrument operates to its detriment. Those are the comments that we see. This is an order that we welcome because it is tidying up, but it raises some concerns and I hope that the Minister will be able to make some reassuring statements.

[Viscount Ridley]

Before the noble Baroness sits down, I may have misunderstood what she said, but as far as an infrared beam is concerned, is there really a difference between a carbon dioxide molecule that came from burnt gas and one that came from burnt wood?

[Baroness Worthington]

No, absolutely not. It is about the flow, compared to the stock. I am sure that CO₂ values differ throughout the year and a large part of that depends on how much foliage we have. CO₂ is not permanently in the atmosphere, it is sucked in and out, depending on the atmosphere and the biosphere and how those interrelate. What we are doing with fossil fuel, as noble Lords will know, is extracting carbon that was once stored and releasing it very rapidly into the atmosphere, which is changing its composition. Concentrations in the atmosphere are now at record levels, touching 400 parts per million, and they have not been at that level for many hundreds of thousands of years.

[Baroness Verma]

My Lords, I am grateful for the support of all noble Lords—my noble friends and the noble Baroness—for the changes that we are making. A couple of questions have been raised that I will endeavour to answer quickly. My noble friend Lord Teverson asked if other member states were doing similar things, in line with our standards. We are aware that the Netherlands, Denmark and Germany are introducing their own criteria, but imports from the EU would be required to meet our standards here. We propose to notify these standards under the technical standards directive to ensure that we can insist that fuels used under the renewables obligation meet our standards. I think that should reassure my noble friend that we are maintaining our standards.

My noble friend Lord Ridley mentioned the Mail on Sunday article. Unfortunately I did not read it but will take my noble friend’s word about its content and the argument that biomass is dirtier than coal. We need to reflect that in all the debates we are having around bioenergy—biogas and alternative sources of fuel. We need to ensure that we work towards a cleaner availability of fuel. There will be debates either way, and we need to discuss it fully and properly.

It is absolutely right that there are questions still to be answered and which need a proper and thorough debate. I am sure noble Lords are all up for that debate but would say to my noble friend that the argument that biomass is dirtier than coal is only based on the model assumption that all wood removed from the forest, including the high-value, high-quality sawlogs used in energy, does not make it any dirtier. Perhaps that is a debate for another day.

The noble Baroness, Lady Worthington, asked about early RO closure and competition. My notes say that no decisions have been taken on any changes to the RO, and the Government would obviously seek to protect companies that have made significant financial commitments from the impact of any changes. However, we will have consultations on this and will invite comment on whether and how to make any changes that might affect stakeholders. I am sure we will reflect on that and then respond on that basis.

I thank noble Lords for their contributions. I will read Hansard very carefully tomorrow because we go into the extreme of technicality when I discuss anything like this with the noble Baroness, Lady Worthington. If there is anything outstanding, I of course pledge to write to all noble Lords. I think that we are seeing two very important changes today, the first on transition and the second regarding biomass, to encourage a greater delivery of carbon savings. On that note, I commend the order to the Committee.