Good stock

Incoming sustainability legislation will demand higher standards for biomass feedstocks, or subsidies won't be paid. Matthew Aylott explains.

Biomass is a low-carbon way of meeting peak grid demand and can prolong the life of existing coal-fired power stations if they are converted to accommodate it. Around 71 per cent of renewable energy fuel used to generate electricity came from biomass in 2011, the equivalent to around 4.4 million tonnes of oil. In the short term the dominant role of biomass seems unlikely to change and the bioenergy industry is seeing year-on-year growth of around 10 per cent.

This growth has been driven by attractive incentives and easy access to feedstocks. Despite delays to implementing new policies, the government remains committed to energy from biomass. Earlier this year, prime minister David Cameron said: “We should increase support for an expansion in sustainable biomass generation, which is reliable and cost effective, and will help us to meet our renewable targets.”

So it looks as though energy from biomass is here to stay and will play an important role in meeting the UK’s vision of generating 30 per cent of electricity from renewable sources by 2020. In fact, NNFCC predictions suggest that installed capacity could increase from a little over 3GW today to more than 6GW by 2020, given the right incentives.

However, as we move forward, sustainability criteria for biomass will get tighter and companies will need to ensure supply chains are compatible with new legislation to remain eligible for subsidies.

Under the European Union’s Renewable Energy Directive, member states are required to ensure that biofuels meet certain sustainability criteria to be counted under the directive’s targets. Bioenergy was not included in these requirements, but the European Commission gave member states the option to introduce national targets and recommended these be in line with those used for biofuels.

Last year, the UK adopted the EU’s recommendation and mandatory reporting against the Renewable Energy Directive sustainability criteria was introduced in April 2011 for solid and gaseous biomass. After a two-year transition period, meeting these sustainability criteria will become a requirement for all generators above 1MWe capacity if they want to continue receiving Renewables Obligation Certificates.

Demonstrating compliance with the sustainability criteria can be done through any voluntary schemes recognised by the European Commission or UK government, such as the UK Biomass & Biogas Carbon Calculator.

From April 2013, the new legislation will require that no biomass feedstocks be grown on land with high biodiversity value; land with high carbon value (namely land that was wetland or continuously forested areas); or land that was peat land as of January 2008. Solid and gaseous biomass must also reduce greenhouse gas emissions by more than 60 per cent compared with fossil fuel.

Meeting the 60 per cent greenhouse gas emissions saving should not be a particular problem for generators using EU sourced wood chips and pellets or dry agricultural residues. However, tropical wood resources are likely to be problematic.

There is also a risk that the EU could reduce the value of the fossil fuel comparator after 2015 due to the introduction of carbon capture and storage and the impact of the Large Combustion Plant Directive, whereby plants opting out of compliance (predominantly large coal-fired plants) must close by the end

of 2015.

Since the publication of the Renewable Energy Directive, there has also been much debate around the indirect land use change (ILUC) impact of biofuels and more recently bioenergy. This is where the activity displaced by biomass cultivation is moved, causing environmental impacts elsewhere.

The Commission has tried to quantify the impact of ILUC so that it can be accounted for in greenhouse gas emissions. However, to date it has proved difficult to effectively quantify and so the Commission has decided that no reporting against ILUC factors will currently be required.

This could soon change when the Commission publishes an impact assessment on ILUC associated with biofuel production, possibly accompanied by a legislative proposal to amend the Renewable Energy Directive.

In the UK, there is currently no requirement in the Renewables Obligation for generators to supply information on, or take account of, any ILUC impacts. However, the government is keen to ensure that ILUC factors are taken into account when assessing the greenhouse gas impacts of supply chains. Therefore there is a risk that changes in sustainability requirements and a call for additional monitoring and audit will be implemented in future, and this will increase costs and may affect future feedstock sourcing decisions.

So how can generators and utility companies improve their supply chain to conform to the new sustainability standards? Feedstocks sourced from within the Baltic regions, east coast Canada, southeast US and Brazil should safely achieve the required greenhouse gas savings to be eligible for UK support under the Renewables Obligation.

Feedstocks sourced from western Canada, or transported in small volume ships, may struggle to meet the sustainability requirements and hence steps should be taken to optimise the greenhouse gas saving potential from these regions by reducing transport distances where possible and improving the energy intensity of the transport modes used (such as through larger volume bulk shipping).

It is vital that energy generators and utility companies develop robust supply chains that conform to the necessary sustainability criteria set in law for bioenergy. It is equally important that they are prepared for future policy changes. Failure to do so could leave energy generators with a big bill to pay and one almighty headache.

Matthew Aylott is a writer at bioeconomy consultant NNFCC

This article first appeared in Utility Week’s print edition of 31 August 2012.

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