Martyn Day
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Martyn Day (Linlithgow and East Falkirk) (SNP)
It gives me great pleasure to take part in this debate on clean energy. I start by applauding the right hon. Member for Don Valley (Caroline Flint) for securing this timely debate.
My constituency of Linlithgow and East Falkirk has quite a reputation for energy firms of one sort or another, particularly around Grangemouth, the location of INEOS—perhaps that should be firms with quite a reputation. Today, however, I will comment on perhaps one of the lesser known success stories in the area: a positive, environmentally friendly firm called Verdo Renewables. I first visited the firm about five and a half years ago, accompanying the then First Minister of Scotland on a tour of the plant not long after it opened, and I made a return visit earlier this month.
I have therefore seen for myself the development of the firm’s Grangemouth operation and the success of its business growth, and a significant contributing factor has undoubtedly been the support of the renewable heat incentive. In case people do not know, Verdo produces grade 1 premium wood pellets and briquettes suitable for burning in multi-fuel stoves, log burners and open fireplaces, all made from locally sourced sustainable timber. Verdo has another plant in Andover. The firm has made a £53 million investment in the UK with a turnover of around £25 million. After several years of losses, it is now making a profit, producing 120,000 tonnes of high-quality, sustainable wood fuels. Verdo proposes further investments, but those investments are dependent on UK energy market conditions. RHI tariffs or similar support will be needed to maintain the firm’s current progress.
On my recent visit. I was pleased to see that, with current orders, the Grangemouth plant is at manufacturing capacity, and the firm has a number of plans to expand further by addressing the layout of the factory, developing adjacent land, increasing the number of production lines and storage capacity and, of course, generating vital local jobs. Unfortunately, those expansion plans are subject to uncertainty on whether RHI will come to an end. RHI has been critical in kick-starting the biomass heat market, and further efforts are needed to decarbonise the heat market if we are to meet EU and UK targets. Biomass heat offers a low-cost route to saving CO2 compared with other sources of energy. Cost reductions in biomass installations are being achieved, and further cost reductions in installations and fuel are now possible but only if sustained RHI support is available, whereas cutting all subsidies would potentially kill the biomass heating market. Industry sources believe that the UK pellet market needs to triple from its current annual 500,000 tonnes to be sustainable and commercially viable—
