A central rationale for the renewables obligation was that it would support a range of indigenous energy technologies. But, while developers are falling over themselves to bring forward onshore and offshore wind projects, biomass has been left far behind.
Biomass was seen as one of the renewable technologies with the biggest potential, and the vision was for dedicated plants burning mainly energy crops.
However, the sector was dealt a double blow by the recent demise of the Arbre gasification plant (ENDS Report 341, p 9 ). Farmers growing crops for the plant were left high and dry after it was sold by liquidators to a US company, undermining confidence in the farming community in planting energy crops for dedicated plant which might never materialise or fail to work.
Co-firing of biomass in existing fossil-fuelled plant has been presented as a way of squaring the circle - enabling an indigenous biomass fuel supply industry to be built up, based mainly on energy crops. Dedicated plant could follow, taking up the biomass supplies once co-firing ceased to be eligible for support under the renewables obligation.
The obligation stipulates that co-firing will receive support only until 2011, and that from 2006 75% of co-fired biomass must come from energy crops. It also limits suppliers to using co-firing to meet no more than 25% of their obligation targets.
However, the electricity generators warned that it will not be feasible to grow large quantities of energy crops so quickly, and that they might have to stop co-firing from 2006 if the rules are not changed (ENDS Report 335, pp 16-17 ). This prompted the Government to promise in its energy White Paper that there will be a consultation on the 2006 deadline "to develop a stronger stimulus to provide a biomass supply chain" (ENDS Report 325, pp 19-23 ).
Interest from generators
In the run-up to the consultation, 11 coal-fired power stations with a combined capacity of over 21GW are registered to benefit from the renewables obligation. Joining them are four sewage sludge incinerators and two plants operated by Slough Utility Services.
If all the registered coal stations were to co-fire at an average of 5%, they alone could account for around a quarter of the total renewables obligation target for 2004/05. This would secure the generators annual subsidies totalling over £100 million, and push co-firing up to the ceiling allowed under the obligation.
Many factors could, of course, lead to the figure being much lower than this. For instance, two Powergen stations registered for co-firing have recently been closed - Drakelow and High Marnham. And generators may decide not to co-fire in every boiler on their stations, or burn biomass at a low level in all boilers on their plant.
Scottish Power - which became the first generator to co-fire on a commercial scale in May 2002 - is only getting 2% of the output of its Longannet station from co-firing with sewage sludge.
However, American Electric Power has been producing some 10% of the output from its Ferrybridge and Fiddlers Ferry stations from biomass, and renewables director Chris Moore is confident that this level will be maintained.
Meanwhile, other generators have been conducting co-firing trials. All the companies contacted by ENDS are planning to move to commercial operation - subject to positive tests - by early 2004.
Innogy expects only 3-4% of the output from its Tilbury and Didcot plants to come from biomass by the end of the year, while Powergen and International Power expect the figure to be closer to 5% for their plants.
Availability of biomass is likely to be the main constraint on co-firing as there is often an order of magnitude difference between the supplies available and generators' requirements. A 1,000MW coal station co-firing with 5% biomass would require 200,000 tonnes of wood per annum.
Renewable Energy Growers has over 70% of the energy crops grown in the UK to date, and they need to be harvested soon. But the farmers believe that their short rotation coppice - originally intended for the ill-fated Arbre project - is only a fraction of the amount needed to tempt generators to co-fire beyond 2006 (ENDS Report 341, p 9 ). This is forcing generators to look elsewhere for fuel.
Scramble for forestry residues.
A row is brewing over the other main potential source of UK biomass - forestry residues. The wood panel industry is claiming that biomass generators are muscling in on their markets and undermining an environmentally sound industry.
In a series of parliamentary questions in June, MPs and peers voiced concerns about how generators could obtain the huge quantities of wood they need without disrupting existing markets.
"These so called green power stations will be able to outbid woodchip mills for...woodchip, much of which comes from freshly felled trees," said Conservative MP for Hexham Peter Atkinson.
"Fifty per cent of the available timber in Scotland has been bought by a single power station on the back of substantial subsidies for renewable generation," claimed Martin O'Neill, Labour MP for Ochil.
Powergen's head of biomass development, Tony Nott, described the comments as "completely inaccurate" and "very ill informed". "I don't see why we would be putting up prices when there is an over supply of wood. There's more than enough for everyone," he insists.
Forestry residues are due to increase by 70% across the UK by 2020, including a doubling in Scotland, according to Cedrick Wilkins, director of forestry industries at Scottish Enterprise. This is because large areas of forest which were planted in the 1950s, 60s and 70s are becoming ready for felling, he said.
He dismissed Mr O'Neill's comments as "complete misinformation", stressing that there is no large-scale customer from the energy sector at the moment.
Alastair Kerr of the Wood Panel Industries Federation does not dispute Scottish Enterprise's figures, and believes that there will be enough timber to go round eventually.
But the timber industry will take some time to establish the infrastructure to extract the new wood, and the wood panel industry could face a short-term threat over the next 3-5 years as co-firing increases, he fears.
Innogy is already using wood from southern England in its Didcot station, and is planning to burn Welsh forestry residues at its Aberthaw plant, starting in the second quarter of 2004 after trials later this summer.
Mr Kerr believes that generators will search out timber from existing supply lines at low cost, and argues that competition for this material would not be fair because they receive a subsidy through the renewables obligation.
The UK's largest woodchip supplier has already notified the industry that the 500,000 tonnes of material per annum he supplies will be going to a dedicated biomass station which Powergen is proposing near Lockerbie, Mr Kerr told ENDS. Another supplier has indicated that its material will be going to Slough Heat and Power, he said.
Powergen has written to new Energy Minister Stephen Timms and the MPs who asked questions in the Commons, challenging their claims.
The letter acknowledges that the planned Lockerbie plant would require about 500,000 tonnes of biomass per year, but no contracts have yet been put in place. "For the panel board industry to claim therefore that the plant has already taken up half of Scotland's available resource, or would ever do so, is simply incorrect," it says.
Although Powergen hopes to start construction of the 40MW plant in the first half of 2004, it does not expect it to be operational for another two and a half years, according to a Powergen spokesman.
In the letter, Powergen cites figures from the UN Food and Agriculture Organisation, saying that availability of UK wood is forecast to outstrip demand by around 2 million m3 by 2005/06, rising to 4 million m3 by 2020.
The company denies that wood prices will rise substantially, and insists that the viability of projects like Lockerbie is "heavily dependent on the cost of wood remaining at a similar level to where it is today."
The debate shows that utilising the UK's forestry residues potential will be anything but straightforward - at least in the short term.
Mr Timms told Parliament that the Department of Trade and Industry is facilitating work to explore the potential for using by-products from "existing wood industries". He said that this should reduce imports, and make more UK biomass available, thereby stabilising prices.
Biomass imports flood in
While the wood panel industry has been voicing concerns about the wisdom of using UK forestry residues for energy production, a potentially bigger row could be on the way. Biomass from around the world is being used in co-firing, including by-products of an industry linked to rainforest destruction.
In late June, AES began trials with palm kernels on one 660MW boiler of its 4,000MW Drax plant, the UK's largest power station. Environmental group WWF has recently raised concerns that palm oil production is contributing to rainforest destruction and other environmental problems (ENDS Report 341, p 32 ).
The material was chosen because it was available in sufficient quantity at the right time, said AES' head of environment Nigel Burdett. "My understanding is that the milled palm nut which we use originates from Malaysia/Indonesia and that it is currently already imported for animal feed."
John Peak, the Environment Agency officer who authorised a variation in Drax's integrated pollution control permit for the trial, said that IPC applies solely to on-site issues, and no questions had been asked of AES about ecological and transport impacts.
But he acknowledged that these impacts are important and said he would be more likely to ask questions for an application to step up to commercial-scale operation. A colleague had "considerable discussions" with rival generator American Electric Power about commercial operations at its Ferrybridge station, he added.
AEP has been using "very large volumes" of palm nut kernels "from all over the world" in both its Ferrybridge and Fiddlers Ferry stations, according to its director of renewables, Chris Moore. The company has also tried a range of other fuels, including citrus pulp pellets, olive residues, wood products and shea nuts - a tropical crop native to Africa.
AEP buys direct from biomass producers, and company staff visit each producer and satisfy themselves that the operation is sound, said Mr Moore. The CO2 impact of transporting biomass around the world is "insignificant", he added, as it only cancels out a quarter of 1% of the CO2 saving from displacing coal.
Disturbing traditional markets
AEP secures its olive residues from countries around the Mediterranean, including Spain, Italy, Greece and Tunisia. Mr Moore said that the material was no longer being used as animal fodder as it had been replaced by more nutritious material, and would otherwise have been landfilled.
However, Duncan Thew of International Power said that the involvement of large utilities could raise the price of olive products and displace traditional uses such as cattle feed and fertiliser.
Depending on the harvest, there is often an excess of material which cannot be taken up by these users. Nevertheless, said Mr Thew, "we're looking to limit our involvement in the markets so we don't cause major price hikes or displace existing users. It would be irresponsible for us to leave decimation in our wake."
Mr Thew believes that one way of doing this could be to use aggregators. Suppliers who already operate across several countries including Spain, Syria and Greece would be well placed to perform that role, he said.
International Power has also been conducting combustion trials with sawdust at its Rugeley station, is currently testing olive residue, and will shortly be testing cereals and wood/cereal pellets. It is hoping to establish a merit order in terms of price, energy content and ease of milling.
However, the company's priority is to find UK biomass sources. "Our preference is to start with UK suppliers and then look to imports as we increase co-firing," said Mr Thew
Imported wood has also been used for co-firing. Trials at Innogy's Tilbury plant have been using "sawmill co-products" imported from Latvia - where much of the plant's coal also comes from, according to Andy Marshall, who is in charge of the trials.
The biomass is blended with coal at the point of loading in Latvia to minimise transport costs. Coal shipments were restricted by weight, not volume, so carrying wood blended with coal enables more fuel to be transported in each ship, he said.
EDF has been using "forestry residues and sawmill waste" in co-firing tests at its Cottam station. But the company was "unable to comment" about which country the wood came from, or how it was previously used.
Clearly concerns about the environmental credentials of any imported material need to be seen in the context of displacing coal - which is often shipped to the UK from as far afield as Australia and which is the most carbon-intensive fossil fuel.
Nevertheless, it was never foreseen that the renewables obligation would subsidise shipping of biomass half-way round the world, potentially encourage unsustainable agriculture and forestry, or displace traditional uses such as animal feeds or fertilisers.
"We have plentiful sources of biomass in this country, but we are sucking in imports because co-firing plant can pay a higher price than local users," commented Gaynor Hartnell of the Renewable Power Association.
"We have the renewables obligation in order to deliver our share of a European-wide target. It would surely make more sense to utilise the biomass in the country of origin, that way avoiding the emissions associated with shipping it around the Union," she added.
A key question for the Government's consultation is whether biomass imports should be regulated or restricted, and if so how. The renewables obligation currently excludes imports of foreign renewable electricity via the English Channel interconnector until a bilateral agreement is drawn up with a country with a similar obligation (ENDS Report 319, pp 35-37 ). It is unclear whether the Government could similarly exclude from the obligation electricity generated in the UK using imported biomass.
Controversy over rule changes
Both generators and pressure groups appear to be divided on whether or not to amend the obligation's co-firing rules.
Innogy's Andy Marshall said that the prospects for growing enough energy crops in time to allow a significant co-firing programme before 2006 are "virtually non-existent". He wants the deadline postponed until at least 2010 to give farmers more time to plant energy crops, and the minimum energy crop percentage "substantially lowered" from 75%.
Innogy's position appears to be broadly in line with the stance of the Biofuels Alliance - which includes British Biogen, Friends of the Earth, the Country Land and Business Association, and the Forest and Timber Association. The Alliance's consensus view is that co-firing should be supported under the obligation until 2016, with energy crops accounting for 25% of the biomass used by 2010, rising to 50% by 2013 (ENDS Report 335, pp 16-17 ).
However, the leading co-firer wants the obligation left unchanged. In March, AEP wrote to the DTI saying that it is "strongly against" changes to the obligation on the grounds that it has "committed substantial time and resources to a strategy that would allow us to switch to using 75% energy crops after the 2006 deadline."
"Although certain types of coppice require up to four years to establish, we are confident that significant volumes of other energy crops could be established within two years", it said.
Chris Moore stressed that AEP could not have got co-firing off the ground with UK biomass as not enough of it was available at the time. Now that the company has a track record of successful commercial operation it is attracting substantial interest from UK suppliers and has been "in talks with the domestic growing industry for some time," he said.
However, AEP has put its energy crop strategy on hold until the results of the consultation are announced, the letter said. It concluded: "If it is felt that further assistance is needed to precipitate large-scale development of energy crops, this should be done by mechanisms outside of the renewables obligation."
Meanwhile, the RPA is against substantial changes to the obligation unless the suppliers' overall targets are raised to compensate.
"We do not expect that the forthcoming review of technical changes to the renewables obligation should significantly affect future ROC prices, unless it makes the cardinal mistake of changing the eligibility of supply sources, without changing the percentage quotas," said Philip Wolfe, the RPA's chief executive.
"Co-firing is already happening successfully and increasing under the present rules. They might be able to come up with changes to enhance the prospects within the co-fired sector for local energy crops, but must not affect the overall level of co-firing against other technologies. If they were to do so, the loss of confidence would undermine ROC values - devastating future investment in new renewables capacity", he added.
Jury still out
On the surface, co-firing looks like being a success story - directly displacing coal and giving the statistics for renewables generation a much needed boost.
However, it is far from clear to what extent co-firing will secure a long-term biomass fuel supply industry once coal stations close. It is also unclear whether shipping biomass residues half way around the world results in the best outcome from a global perspective - especially from industries implicated in rainforest destruction - or whether legitimate industries like wood panel manufacturing will suffer from unfair competition.
The challenge for the Government is to ensure that it fully addresses these issues in the consultation, and produces a regulatory framework that bears in mind its original vision of creating dedicated plants burning indigenous biomass, mainly from energy crops.