Biomass Energy

Debate between Albert Owen and Philip Boswell

Wednesday 24th February 2016 Westminster Hall

[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.

--- Later in debate ---

[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.

[Albert Owen]

And Wales.

[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.