Biomass Power Generation

John Hayes Excerpts

Wednesday 20th March 2013 Westminster Hall

[Ian Swales (Redcar) (LD)]

I congratulate the hon. Member for Selby and Ainsty (Nigel Adams) on not only securing the debate, but his comprehensive review of the industry, and its opportunities and issues. My speech will be short because I was aware that, given his expertise, he would cover many of the points that I might make.

There is no doubt that biomass should be an important part of our energy mix. It is the fourth largest energy resource in the world after coal, oil and gas, and of course none of those is renewable, so it is the largest source of renewable energy in the world. However, this is yet another area in which the UK is playing catch-up. The Renewable Energy Association estimates that the industry employs about 2,000 people in the UK, compared with 60,000 in France and 68,000 in Germany. The technology is well established and many countries are exploiting it fully.

My constituency is in the Tees valley and, rather like the hon. Gentleman’s, it is becoming something of a Disneyland for green technology. Specifically on biomass, the advanced manufacturing technology centre, the Centre for Process Innovation and the Department of Energy and Climate Change are part-sponsoring anaerobic digestion research there, and Northumbrian Water has built a £60 million anaerobic digestion plant in the constituency. We have the largest bioethanol plant in Europe working on wheat. At the large Wilton chemicals site, Sembcorp has converted its power station to burn mostly timber. Across the river, Air Products is building a gasification of waste plant and is already planning its next one to make biofuels and even chemicals.

This morning, I was at the Department for Business, Innovation and Skills meeting Korean investors, including Jang Do-soo, the president of Korea South-East Power, which wants to invest in a 300 MW biomass power plant at Teesport. That will involve spending £500 million and follows the signing of a memorandum of understanding in Seoul some months ago, which was attended by a Foreign Office Minister and the UK ambassador. So far, so good, but we keep hearing inconsistent messages from DECC.

I could not attend the meeting of the all-party group on biomass on 26 February, but I was very impressed by the comprehensive notes arising from it—that is another compliment to the hon. Member for Selby and Ainsty, who chairs the group. At the meeting, the Minister repeated his belief that a new-build dedicated biomass plant is more likely to use domestic rather than imported biomass, yet at the same meeting, he referred to 700 million acres of forest in the US alone. The meeting was attended by the Virginia Secretary of Agriculture and Forestry, who is keen for exports. I have been lobbied by the US industry, which is desperately looking for greater use of its commercial timber plantations, as we heard earlier. Surely there is a place for efficient port-based biomass investment to support our base load of electricity in this country. I accept that that might be limited, but surely we should have one or two such facilities.

Some commentators do not seem to understand that wood is a crop just like any other. Sustainable forestry is no different from any other sort of farming; it simply has longer time scales. The industry needs sustainable supplies, because if it puts a substantial amount of capital on the ground, it cannot go round the world looking for spot purchases. A sustainable operation needs a source of sustainable feedstock because the investment is very long term.

I am disappointed about today’s announcement on carbon capture and storage. Teesside came third on a list of two in the CCS competition, but I still believe that it will eventually get a network.

[The Minister of State, Department of Energy and Climate Change (Mr John Hayes)]

I appreciate my hon. Friend’s disappointment, but I assure him that while we have taken two projects forward, we remain extremely committed to carbon capture and storage generally. I had a meeting this morning specifically to look at how we can work with the other projects involved. There must be a feeling among all those involved in CCS that everyone is a winner.

[Ian Swales]

I thank the Minister for his intervention, which is exactly the sort of response that the Teesside consortium is looking for, so I am sure that his comments will be noted. I thought that the weight of process industry on Teesside was unlikely to be given due regard in the competition, because that was not one of the criteria, but as we have 18 of the largest 30 carbon emitters in the country, excluding energy, a Teesside project should go ahead at some point. I am pleased by the Minister’s response and I believe that there will be another meeting on the matter with his Department on Friday.

CCS leads me to talk about something that I do not think the hon. Member for Selby and Ainsty mentioned. Biomass with carbon capture and storage is one of the very few technologies that can sequester carbon dioxide from the atmosphere for carbon-negative power. If we think about the problems we have in the world, how big a prize is that? We should seriously consider that combination of biomass with CCS, and the resulting sequestration.

I know that the Minister wants investment in infrastructure, which is a key aspect of current Government policy. The Teesport biomass plant is shovel-ready—I met the investors again this morning. I hope that it will receive his full support, but if his Department wants to cap such investments, will it please provide absolute clarity to investors so that time is not wasted, and we can all move on and think of something else to do? I repeat that the investors in such projects are receiving mixed messages.

--- Later in debate ---

[Jackie Doyle-Price]

Yes, the RSPB’s comments are welcome, but it really needs to join things up. As we know, a little knowledge is often a dangerous thing, and it does not take much investigation to realise that some of the fears put out by the so-called environmental lobby, once they are unpicked—

[Mr Hayes]

I am grateful to my hon. Friend for raising the issue of wood panels, as other Members have. I am determined to do right by the wood panel industry. The Government are engaged with the industry and I shall say a little more about that, but it is right that we listen to the industry, take into account its circumstances and ensure that our policy has no unintended consequences. However, as far as the other people that my hon. Friend mentioned are concerned—I sometimes describe them as bourgeois liberals, do I not?—their malevolent, malign, mischievous opinions will be isolated by this Minister.

[Jackie Doyle-Price]

I thank the Minister for those comments. I agree that we need to take the wood panel industry with us. I suspect that, with more understanding and dialogue, it will come with us, because the case has been made that we can supply the demand for biomass without impacting the industry’s supply unduly.

--- Later in debate ---

[Glyn Davies]

Perhaps I will take even less time.

Whenever I hear that there is to be a debate about energy, I feel an almost irresistible force within me demanding that I rant about the desecration that onshore wind will cause in my constituency. I am sure that you, Mrs Main, and the Minister will be pleased to hear that I do not really want to do that today, although I will say that that power forces me to take a great interest in all other forms of energy, because one cannot be just against things.

I want to raise two constituency concerns about biomass, but that is in the context of my huge support for it in general. The first matter has a great constituency impact and comes into the category of unintended consequences. There are two anaerobic digestion plants in Shropshire that use maize, and they are devastating Montgomeryshire dairy farmers’ ability to access maize land, so their traditional way of farming will have to change. Those farmers have dairy herds and have either rented land to grow the maize, or have bought the crop wholesale to feed their stock. They can no longer afford that, because they are being driven out of the market by plants that burn maize crops in England. When we consider biomass use, we must be careful about the unintended consequences for other important industries. Of course, the ability to feed the nation is a huge part of what must always be Government policy in Britain—indeed, the same thing would apply throughout the world.

My second point relates to a constituent, Mr Clive Pugh, of Bank farm in Mellington, who is a huge enthusiast for biomass. Twenty years ago, he built an anaerobic digestion plant on his farm. It uses waste, and for 20 years it has been profitable and successful, but now he finds that because he has a payment subsidy through renewables obligation certificates, the support he gets is nothing like what it would be under the feed-in tariff regime. There are competitors all over Shropshire, in brand new plants, who probably get 11p or 12p a kilowatt-hour for the energy that they produce. Many of them are producing that energy from products that can be used for other purposes, but Mr Pugh simply uses waste products—and nothing but waste products. That helps the fertility of his land, which does not need so much fertiliser, and it does not even need so much weed killer because the process kills the weeds. However, he is being driven out of business.

When I wrote to the Minister about that, I received the reply that someone such as Mr Pugh really should have asked for his payment regime to be transferred before 2011. However, small business people such as Mr Pugh do not realise that, and now he finds that he is no longer able to transfer—there was a cut-off date. New plants are going ahead elsewhere, and Mr Pugh will be driven out of business, but he is the pioneer. He was the man who established the examples and showed us how the process could work, yet he is the one who will be driven out of business.

[Mr Hayes]

I shall deal with this matter through an intervention now, if I may, to save time later. I will ask my Department to look at the particular case of Mr Pugh, which my hon. Friend has done a great service to the House by raising, and that of others like him. Clearly we need to do something that is consistent and coherent. None the less, my hon. Friend has raised an important matter and I will ask for it to be dealt with.

--- Later in debate ---

[Tom Greatrex]

Indeed, and I was about to quote from its figures. The hon. Gentleman is right and he makes the point about the different interpretations. In debates about different aspects of energy policy, sometimes differences of view are over-interpreted and elaborated on by people with an ideological objection, which is regrettable. In this case, if we go into the detail of the different sets of data, to establish exactly what the impact is, it would be good for the industry and good for the energy supply going forward.

The last time we discussed this, in a Committee, I asked the Minister some questions. He gave a commitment, but he did not answer other questions precisely or completely, so I would like to give him the chance to do so, because there is a slightly different audience this afternoon. When he met the all-party group, he agreed to write to generators requesting information on their biomass sourcing intentions for the next five years. I want to press him again on whether the correspondence has begun and whether the information is back from the generators. They are important data, particularly, as he knows, in relation to the differentiation between imported and indigenous supply, which brings us back to the points the hon. Member for Hexham made about the industry.

The Minister said that he will look again at the option of differentiating support for imported and indigenous products. Will he come back to that point? He also said that he would establish a working group with the wood panel industry and that the letters would go out before the end of the month. We are not quite, but almost at the end of the month, and he made the commitment at the beginning of the month. Has he been able to do it yet?

[Mr Hayes]

I have indeed written to the large-scale users of biomass for information about the kind of product they use. My Department is analysing that information and will follow it up in the way I said I would. In addition, my Department has been in touch with the wood panel industry to arrange a date for the workshop I want to put on, to ensure that we are comparing like with like and that the data we have received are in line with the industry’s data. I take the hon. Gentleman’s point about mismatch and the difficulties of definition.

[Tom Greatrex]

I thank the Minister for that response. I am sure that those who have expressed concerns will welcome his clarification. I do not have an objection to biomass, but it needs to be employed properly, which is about sustainability and transparency in sourcing.

--- Later in debate ---

[The Minister of State, Department of Energy and Climate Change (Mr John Hayes)]

It is a great pleasure to serve under your chairmanship, Mrs Main, and I congratulate my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on securing this important debate on a topic that, as we move to a large proportion of our energy needs being met by renewables, is vital. John Ruskin said that it was always

“more difficult to be simple than to be complicated”.

An aim of the debate on energy strategy and policy is to make it more straightforward, for when we make it esoteric, we not only confuse most of the public, but I suspect we may confuse ourselves.

My mission is to bring a straightforwardness to energy policy, and at the heart of that straightforwardness, as the hon. Member for Blackley and Broughton (Graham Stringer) said, is that there is no imperative more significant than that of energy security—ensuring that supply meets demand. All the other considerations may have value, and some may have great significance, but unless a Government, though Governments do not do it all themselves, of course, can bring about a set of conditions and establish a framework in which that can be assured, they are failing, which is why biomass, and particularly coal conversion, is so important. It is, as my hon. Friend the Member for Thurrock (Jackie Doyle-Price) argued, a reliable, predictable and secure means of helping to ensure energy security. It is as plain—in Ruskin’s terms—and simple as that, but the debate deserves more than that, and I want to talk a bit more about the detail.

I recognise that there are many pros and cons involved, and to balance them the Department has set out four guiding principles for our biomass energy policy. They are that biomass must be sustainable, that it delivers genuine greenhouse gas savings, that it is cost-effective and that its unintended consequences on other industries are minimised. All those issues have been mentioned during the debate. The hon. Member for Stretford and Urmston (Kate Green) talked about sustainability, the hon. Member for Blackley and Broughton raised the issue of greenhouse gas savings, and my hon. Friend the Member for Brigg and Goole (Andrew Percy) and others mentioned cost-effectiveness. I see my role as ensuring that the principles are applied pragmatically and consistently.

I would like to set out why I believe biomass is an important part of the energy mix.

[Kate Green]

Does the Minister agree that it is important that there is absolute transparency about whether the principles are being complied with, particularly when there are anxieties about the environmental impact of plants?

[Mr Hayes]

We should not underestimate that. It is important that it is properly considered. The hon. Lady will know that the Government are committed to sustainability in those terms. If I have time, I will say more about that, but if I do not, I would be more than happy to write to her with the detail.

The hon. Lady is right that it would be wrong to be cavalier about that, just as it would be wrong—and I say this to my hon. Friend the Member for Hexham (Guy Opperman), who is a great champion of the wood panel industry, and rightly so—for us not to take into account unintended consequences. The unintended consequence for farmers, as my hon. Friend the Member for Montgomeryshire (Glyn Davies) mentioned, can also be profound, and it is about straw too. Pigmeat farmers, for example, are concerned about the effect on straw prices of its use in biomass. My hon. Friend raised the issue of dairy farmers. I take that point, and we will consider the matters. It is important that there is no displacement effect. The unintended consequence is as significant as the virtue of what we are trying to achieve.

But the virtue is a profound one. We are talking about a proven source of energy. At the end of the third quarter of 2012, the total electricity generating capacity of biomass electricity generating stations was 3.5 GW, which was an increase of more than 900 MW over the previous year. It may not be known that landfill gas is 1 GW of that capacity. For many years it has been an important source of energy, predating some other technologies that get more airtime, perhaps because they are perceived to have greater glamour.

With the right criteria in place, by 2020 as much as 11% of the UK’s total primary energy demand—for heat, transport and electricity—could be met from sustainably sourced, biologically derived biomass. Most of it would be from wood, and our analysis indicates that that can be done without significant effects on food production or the environment. Biomass can, therefore, play a greater role, but I am mindful of displacement and sustainability. Biomass also offers controllability and predictability, as I suggested earlier, so it can provide both base-load generating resource and peak power energy as required.

It is important to recognise that biomass conversion is a cost-effective and quick means of decarbonising our electricity supply. In July last year we announced our revised levels of support for biomass under the renewables obligation and set out new bands to support the conversion of coal-powered stations, as we have heard. I recognise the challenge of Tilbury and I am happy to work, along with my officials, with my hon. Friend the Member for Thurrock to ensure that we do what we can to facilitate the process. There is, of course, a commercial decision at the heart of that, as my hon. Friend well knows, but the Government will do what they can to ensure that the process is as equitable as possible. I appreciate that my hon. Friend has been a great champion of Tilbury because she knows that the issue is not only about energy; as so many hon. Members have reported, it is about jobs and skills too.

My hon. Friend the Member for Selby and Ainsty made that perfectly clear in respect of his constituency. My goodness, I have met him a number of times to talk about this subject, including about Eggborough and Drax. I am pleased to say that my Department has recently written to Eggborough power station, as he knows, and set out the process by which it can take its ambitions further forward. I hope that that has been helpful; it has certainly added clarity to the circumstances the station is in. There are further steps to be made, and I assure my hon. Friend that they will not be unduly lengthy and that they will be clear to Eggborough. We will advise and support the process that he is so passionate about ensuring comes to a happy outcome. I am grateful to him for giving me the opportunity to put all that on the record.

I am also grateful to other Members, including my hon. Friend the Member for Redcar (Ian Swales), for allowing me to say a brief word about carbon capture and storage. I want to affirm what I said in an intervention, which is that taking forward the CCS projects, with the £1 billion competition, will do so much to change our assumptions about future energy—CCS can give a long-term future to gas, of course, and to coal I hasten to add. I want to make it clear that the projects that have not made the final two are of considerable interest to us and that we will maintain a dialogue. I will speak to my hon. Friend personally about some of the details later today.

Sustainability matters too though, and we have put in place demanding criteria for the supply of fuel. The hon. Member for Stretford and Urmston has emphasised sustainability a number of times and the shadow Minister, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), was right to draw it to our attention in reference to the renewables obligation statutory instrument that we debated a week or two ago. It is right that we look at the supply of wood and that we take account of the definitions of what waste wood really is. I have already said that that work is ongoing, but I am very happy to share it with the House at all opportunities and to continue to an outcome with which the wood panel industry, in particular, is happy.

The work we are doing on sustainability requires ongoing consultation. The sustainability controls that we have put in place are still the subject of further discussion. Many hon. Members have raised that matter with me when we have debated such things in the House, and I can confirm that we are tightening our thinking in this area. We intend to ensure that we can move ahead with confidence, because we think that biomass is so important.

Biomass must, however, also be cost-effective. We make no apologies for insisting that we must deliver value for money for the energy bill payer, maximising the amount of renewable energy and carbon reduction we receive for our investment. Coal conversions offer, perhaps, the best means of ensuring that value for money, and using waste to generate electricity also provides a cost-effective route, as long as we can accurately define what waste is. Let me just say this on waste: it seems that the location of this kind of biomass plant should be close to the source of supply, and ideally close to the source of demand, too. They are industrial plants with an industrial purpose, and I want to emphasise that.

I thank my hon. Friend the Member for Selby and Ainsty again for drawing this matter to the House’s attention. I confirm that the Government are entirely committed to biomass and to its role in our energy mix. I am glad that we have had the opportunity to talk about this, and while I am the Minister, and while I am driving the policy, Ruskin’s advice, about being straightforward about our objectives, will be not only my view, but the Government’s view.