Biomass Energy

Philip Boswell Excerpts

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.

[David Mowat]

The hon. Gentleman and his colleague, the hon. Member for Inverclyde, both made the point that Scotland has outperformed many parts of Europe—everyone except Sweden, I think we heard—with its decarbonisation initiatives, yet we also hear that that is a reserved matter, so such policy is for the UK Government. I am interested to understand how in that case the credit for doing so well is due to the Scottish Government, not the UK Government. I would point out, as the hon. Member for Ynys Môn (Albert Owen) did, that, of all the devolved Administrations and England, Scotland has the highest percentage of electricity generated from nuclear. It is a long road to replace that.

[Mr David Crausby (in the Chair)]

Order. That is a long intervention.

[Philip Boswell]

I concede that the hon. Gentleman is perfectly right—energy is more widely reserved. We in Scotland are keen to play our part in the UK as part of an overall national solution for energy. Our choices may be different, and our choices and powers are constrained. In fact, during the debate on the Energy Bill, the Government rejected our calls for CfD devolution, which is the most popular mechanism we would have for making inroads.

As I mentioned, we will not meet our targets under the Climate Change Act 2008, so I urge the Minister to revise legislation to enable biomass to play its part in achieving our renewable energy targets on time.

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[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

I congratulate my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on securing this debate and, in particular on being such a champion of Drax. He and I have had many conversations about it. I am delighted to see my hon. Friend the Member for Cannock Chase (Amanda Milling) here supporting Rugeley, which is absolutely right. I have enormous sympathy for the people affected by yesterday’s incident at Didcot, which was a long-standing and good source of energy for the UK. It was a great tragedy.

Every hon. Member here will know that our priorities are to move to decarbonisation at the lowest cost while ensuring that lights stay on. This debate has shown that there are many ways of achieving that. I am grateful to the hon. Member for Ynys Môn (Albert Owen) for pointing out that a balanced energy policy is needed—the shadow Minister also made that point. It cannot be all or nothing.

The installed biomass capacity of all biomass technologies at the end of 2014 was 5.4 GW, which is no small capacity. Of that, biomass combustion was about 3 GW, landfill gas was 1 GW and energy from waste was coming up to 1 GW. That is impressive and the technology certainly plays its part, from potentially low-carbon dispatchable energy to uses in heat and transport biofuel applications and from extracting energy from waste products to injection of low-carbon gas into our gas grid.

It has been pointed out that we cannot go ahead without careful consideration of the effects, both positive and negative, that biomass can have on the wider environment. Unlike other renewable technologies, biomass cannot rely on an inexhaustible fuel like the wind, tides or sunshine. The fuels on which biomass is dependent need to be sourced responsibly and sustainably, and in a manner that realises the carbon and greenhouse gas savings that biomass is capable of delivering. Our renewable energy policy seeks to balance those considerations.

My hon. Friend the Member for Selby and Ainsty asked about CfD auctions. He will know that, in November 2015, the Secretary of State announced that if, and only if, the Government’s conditions on cost reductions are met, we will make funding available for three contracts for difference allocation rounds in this Parliament. The first, for less established technologies, is expected to take place by the end of 2016, and the technologies included will be offshore wind, wave, tidal stream, advanced conversion technologies, anaerobic digestion, dedicated biomass with combined heat and power, and geothermal. That is where we are right now. We will set out our further thoughts on that as soon as possible.

My hon. Friend asked whether I agree with the proposals in the NERA report regarding whole-system costs. I am often asked, and I understand why, whether Department of Energy and Climate Change is familiar with the full-life costs of biomass compared with other technologies. I assure him that we are very aware of the costs of balancing the grid from intermittent technologies that are not incurred from electricity generated from biomass. It is dispatchable, can be base load, is controllable and is very valuable. I confirm that my Department is looking carefully at whole-system costs, but the reports that he and the hon. Member for Southampton, Test (Dr Whitehead) mentioned consist of a subset of technologies and we must look carefully at whole-system costs.

My hon. Friend the Member for Warrington South (David Mowat) asked whether subsidies can be available for co-firing. I assure him that subsidies are still available through the renewables obligation. Fiddlers Ferry in his constituency has previously co-fired under the renewables obligation and can take advantage of that scheme until 2027.

My hon. Friend the Member for Cannock Chase asked how the correct mix should look going forward. I assure her that we recognise there are implications when looking at proposals to end coal generation. It is important to have clear consultation on that, which we will announce shortly. In particular, we will look at how that might impact on coal-fired power stations that are currently co-firing.

The hon. Member for Inverclyde (Ronnie Cowan) raised his proud point that Scotland is doing so well on renewables, but I remind him that, as my hon. Friend the Member for Selby and Ainsty pointed out, over 20% of the support under the renewables obligation as a whole goes to Scotland with far less of Great Britain’s population. Scotland received 24% of RO payments in 2014-15 and will receive significantly more than its per capita share, so it would be fair if the hon. Gentleman credited the UK Government and Great Britain’s bill payers with the Scottish Government’s achievements in renewable energy.

[Philip Boswell]

Will the Minister give way?

[Andrea Leadsom]

I am sorry, I will not give way.

The hon. Member for Inverclyde asked why the Government are cutting RHI support. The RHI budget to cover renewable heat schemes has been confirmed to March 2021, rising each year to a total of £1.15 billion. The hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) referred to biomass CHP. We are considering our proposals for that for the forthcoming RHI consultation. We will refine our current policy so that it delivers improved value for money to taxpayers and targets biomass in line with the Government’s long-term approach to heat decarbonisation, focusing on large biomass and biomass for process and district heating, and to encourage deployment that is sustainable without subsidy in future.

The hon. Member for Southampton, Test asked about the bioenergy strategy published by the previous Government in 2012. It set out a direction for biomass and recommended supporting sustainably produced biomass to deliver real greenhouse gas savings cost-effectively and taking account the wider impact across the economy. A great deal has happened in the industry since it was written, but those recommendations remain compatible with our current intentions.

Finally, as many hon. Members have pointed out, bioenergy contributes to the UK economy, creates jobs in the fuel supply chain in harvesting, processing and transport, and creates opportunities for foresters, farmers and UK ports and railways. It remains and will continue to remain important, bringing many benefits to the UK in decarbonisation, security of supply and economic benefit. I remain of the view that, when sourced responsibly, biomass can provide a cost-effective, low-carbon and controllable source of renewable energy.

Question put and agreed to.

Resolved,

That this House has considered biomass as a source of renewable energy.