Draft Green Gas Support Scheme Regulations 2021

Jerome Mayhew Excerpts

Wednesday 3rd November 2021 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The subject that we are

talking about this morning is, as the Minister mentioned, green gas and how we can best incentivise the processes by which it is produced, which is primarily anaerobic digestion. He mentioned that biogas plants and biomethane plants are predominantly situated in rural areas. Indeed, a fair amount of the biogas produced in this country essentially comes from farm AD plants. Those who follow “The Archers” will remember the considerable controversy about a biogas plant around the village. Essentially, it is an arrangement whereby waste—farm waste, food waste and a number of other processes—can contribute through a biodigestion process, which does not involve burning or emissions in the sense that incineration has previously, and can be converted into biogas, which can, under many circumstances, be injected into the system.

As part of my exciting life as shadow energy Minister, I visited a large anaerobic digestion plant near Poundbury that has for a number of years very successfully processed food waste particularly and crop waste, which I will come on to in a moment, into biogas, which is then injected into the system, initially around Poundbury but covering quite a lot of the grid on a good day. The system works really well and, as the Minister said, produces substantial carbon savings by the process of injecting biogas into the system, thereby replacing the gas that is going into it at the moment. I therefore thoroughly endorse the intention behind the green gas support scheme, designed to bring on further those anaerobic digestion plants, which can substantially replace elements of our gas distribution system by the process that I described.

I do not have many criticisms of how the scheme has been set up, save for two potentially important ones. The scheme is set to last, as the Minister said, until March 2041, and the individual support that it will produce will be for 15 years, so the producers will have a good line of support in green gas plants as they build them and production gets under way. However, as he also mentioned, that is being underpinned by what we might say is yet another levy. The Minister mentions that the cost of the levy will be perhaps £2.50 a year on gas bills. This is a gas bill levy for green gas production, which sounds a fairly neat connection, but in practice the vast majority of bill payers pay a dual fuel tariff for energy, so in that instance, a levy is a levy is a levy; it will go on that dual fuel bill in exactly the same way as the substantial levies that are already on electricity bills.

I understand that the Government are considering a migration of levies from electricity bills to gas, but this is not a migratory levy; it is a new levy. Some while ago, the Government told me that that would not happen—there would be no new levies. Indeed, I have had some fairly arcane discussions in Committees and elsewhere about what is a new levy and what is not. The principle that we should not continue to put levies on customer bills as a way of funding new schemes was reasonably well established in those discussions. However, here we have a new levy. By the way, this afternoon, as I am sure the Minister is absolutely aware, we will discuss a possible further substantial levy for new nuclear build. We have a situation in which levies on customer bills are pretty substantial. I appreciate the Minister stating that this is not what he might call a serious and heavy levy, but it nevertheless represents a not insubstantial increase on customer bills over the period.

The previous support scheme—the non-domestic renewable heat incentive—which at least to some extent supported anaerobic digestion production was not a levy; it was funded from general taxation. I would be grateful if the Minister briefly expanded on the decision to make this transfer from general taxation, as was the case for the renewable heat incentive, to the levy that we are discussing. On reflection, the Minister might consider that, certainly in the long term, this scheme might be best funded through general taxation, rather than continuing with the levy.

My second question for the Minister is rather more detailed and relates to the purpose of the levy, which is to produce biomethane for injection into the grid. The explanatory notes for the draft regulations state that support payments will only be made for biomethane injected into the grid. That sounds fairly straightforward, but we need to reflect on two things. First, biomethane does not necessarily go exclusively into the grid. That is a substantial part of its purpose, but it has a number of other destinations as well. Biomethane can and is being used to fuel gas engines for district heating schemes as a replacement for the gas going into the engine, so the replacement arrangement is exactly the same as if that green gas went into the grid, but it is going into a mini-grid, as far as district heating is concerned.

There are a number of instances whereby methane is being used on-plant for purposes related to industrial commercial activity. Near my constituency, there is a biomethane plant that is associated with a water company’s sewage treatment arrangements, which produce biomethane that is used in the plant to continue the water company’s activities. As the Minister will know, the gas grid by no means covers the whole country. There are a substantial number of properties that are off grid and there is certainly the beginning of an industry where biomethane can be supplied as a replacement for tanked or bottled gas going into those properties for heating purposes.

Important as those categories are for reducing carbon emissions, driving out traditional gas and replacing it with low-carbon gas in exactly the way the scheme intends, none of them would, in my understanding, qualify for support because of the suggestion in the guidance that only direct injection to the grid would qualify for support. Can the Minister reflect on that and let me know whether he is prepared to consider—not necessarily today but for the future—a review of those arrangements so that where biogas is being produced and is not necessarily going into the gas grid, it can nevertheless remain supported or be supported? I think we can all agree that the direction of the biomethane is essentially the same. It is a scheme that undertakes reduction of emissions through biogas production in substitution of gas.

[Jerome Mayhew (Broadland) (Con)]

In support of that latter argument, I draw attention to British Sugar’s Cantley factory for sugar-beet processing in my constituency, which wants to put in an anaerobic digester. It is on the gas grid but it is a mile away from the main pipe. It is currently faced with the prospect of building a new pipe for a mile to connect the anaerobic digester to the grid, then take it back off the grid a hundred yards further down the pipe and bring it a mile back to the factory.

[Dr Whitehead]

The hon. Member emphasises the point that I was making, which is that quite a lot of biomethane production cannot easily be categorised as simply going into the grid. He has given a good example near his constituency, which substantially underlines my point.

The other matter that I want to raise briefly is the definition of feedstock for anaerobic digestion plants. According to the guidance notes, biomethane producers will be required to produce

“at least 50% of their biomethane from waste or residue feedstock.”

I assume that that means primarily food waste, but also farm waste and other residues. However, as I am sure the Minister understands, it is a little difficult accurately to determine what is and is not waste in relation to those categories. For example, I assume that forest trimmings, which can be used in certain circumstances for biomethane production, would be regarded as waste, but chopped-up wood would not be regarded as waste. Food waste, as the Minister will know, can be categorised both as proper food waste and as food waste that actually has not been used for food production but could quite well be used for food production in different circumstances. Therefore I wonder whether the Minister is satisfied that the definitions that there are in the scheme adequately determine what is and is not waste in relation to the 50% requirement.

I support the 50% requirement, because we do not want to see crops that could go into other activities being used to feed biodigestion either because the supply of waste is not good enough or just because people want to put the crops into the biodigester as an easy way of producing bioenergy, at the expense of feedstock that could be used for other purposes. It is a question of ensuring that the scheme is as well defined as it can be. I wonder whether the Minister has any comments to make on that in order to ensure that we get off to the best start possible with the scheme.

Other than having those hopefully brief and not very taxing questions, the Opposition support the green gas support scheme and we support that scheme starting as soon as possible in order to ensure that biodigestion takes its proper place in the panoply of measures that can lead us towards net zero in a coherent way.