Biomass task force blows cool on renewable heat obligation

A Task Force set up to advise the Government on how to develop renewable energy from biomass sources has poured cold water on calls for a renewable heat obligation. The body says an obligation would be too complex and burdensome, and instead pins its hopes on capital grants and public sector targets.

The Biomass Task Force, led by Sir Ben Gill, former president of the National Farmers Union, published its draft recommendations on how to develop the UK's biomass industry at the end of July.1

The body was set up last October partly as a response to a report by the Royal Commission on Environmental Pollution, which described the UK's policies on energy from biomass as "fractured and misdirected" (ENDS Report 352, pp 11-12 ). Although electricity from renewables has increased, the production of heat from renewables has fallen since the mid 1990s.

The Task Force reckons that using biomass resources which are currently available - including municipal solid waste - to displace fossil-fuelled heat generation could reduce the UK's CO2 emissions by up to 21 million tonnes annually.

However, it says that the Government's "exclusive emphasis on renewable electricity" has "placed no carbon value on, and therefore excluded, the development of biomass heating". Despite this, the Task Force notes that heat-only systems could have efficiencies "far in excess" of those that produce electricity alone.

The Task Force recommends a 6-7 year capital grant programme along with "market pull" mechanisms such as biomass heat targets for the public sector. It proposes that public bodies should switch to renewable heat, electricity and on-site combined heat and power systems, and that regional development agencies should set targets for developing biomass supply chains.

Other recommendations would bring biomass into line with high efficiency gas boilers by reducing VAT to 5%, and remove barriers to biomass in current building regulations.

However, the Task Force comes out against the idea of a renewable heat obligation - an option backed by the Royal Commission and the Renewable Energy Association.

An obligation would be similar to those operating in the renewable electricity market and proposed for road transport biofuels (see p 38 ). It would require suppliers of fossil fuel for heating to replace part of their supply with biomass or pay a buyout fee.

But the Task Force concludes that an obligation would be "complicated and administratively burdensome", and that it would be wrong to commit to "considerable effort" to develop it when "so many of the underlying features of the market are moving in favour of biomass". Instead, the Task Force calls for a streamlined capital grant scheme, valuing carbon savings at £70 per tonne of CO2, providing up to 50% of capital costs for domestic, industrial and commercial projects, including the heat aspect of CHP plants.

Philip Wolfe of the Renewable Energy Association said the Task Force had done a "good job of stating the problem" but had "got it wrong" on the heat obligation. "We accept that an obligation is not perfect, but it has proved a reasonably good way to get a step change in the electricity market and we need a similar step change for heat," he said.

Mr Wolfe fears that capital grants would not be taken up. Moreover, they would not address existing plant - including CHP units that are running with an inefficient electricity/heat balance because the heat output is not incentivised. Mr Wolfe noted that a capital grant scheme would require new money and is unlikely to be up and running for several years, given that a two-year spending round has just been completed. In contrast, with an obligation "the money comes out of the market".

The DTI has commissioned a report on renewable heat alongside the current review of the renewables obligation. This has not yet been published - but Mr Wolfe says "it's just a scoping study looking at the size of the potential heat market. It doesn't even address what type of support mechanisms might be used." The Renewable Energy Association is now pinning its hopes for a heat obligation on two Private Members' Bills, presented by Labour MPs Alan Whitehead and Mark Lazarowicz, which are due to receive their second readings in November.

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