On 7 September 2012, the Department of Energy and Climate Change (DECC) launched a two-part consultation outlining proposals to improve the sustainability criteria (Part A of the consultation) and change the support levels for biomass plants (Part B of the consultation) under the Renewables Obligation (RO).

Biomass suppliers and generators should consider responding to the consultation to ensure their views are taken into account. Part A of the consultation closes on 30 November 2012 and Part B on 19 October 2012.

Summary

Part A: Sustainability proposals (from October 2013 and April 2020)

  • Obliging power and combined heat and power (CHP) generators with a capacity of 1 MWe and above to satisfy new sustainability criteria for solid biomass and biogas, in order to be eligible for support under the RO (to be independently verified).
  • The new sustainability criteria include: (i) more stringent greenhouse gas (GHG) emissions savings requirements; and (ii) new sustainability requirements for wood-fuel and energy crops.

Part B: Affordability proposals (intended to take effect from April 2013)

  • Capping the proportion of a supplier's obligation that can be met with Renewables Obligation Certificates (ROCs) issued for electricity generated by dedicated biomass plants accredited on or after 1 April 2013 – the cap would not apply to ROCs from CHP plants.
  • Reducing support for standard co-firing, co-firing of regular bioliquids, and co-firing with CHP.
  • Scrapping the energy crop uplift for the standard biomass co-firing.

Part A: Sustainability proposals

DECC announced in December 2010 that from April 2013 biomass and biogas plants of 1MW and above will have to meet sustainability criteria, including a 60% GHG emissions saving for electricity generation relative to the EU fossil fuel comparator (i.e. a carbon intensity target of 285.12kgCO2/MWh or lower).

DECC is now consulting on new sustainability criteria for solid biomass and biogas to be introduced from 1 October 2013, and further tightened from April 2020.  Power and CHP generators of 1MWe capacity and above would have to comply with the sustainability criteria (including meeting carbon intensity targets) to receive support under the RO. Reporting requirements against these criteria would apply for generators over 50kW.

  1. Changes to carbon intensity targets

October 2013 to April 2020

During this period, the carbon intensity target applicable from 1 April 2013 (i.e. 285.12kgCO2/MWh or less) would still apply for existing dedicated biomass plant accredited before 1 April 2013, as well as other plant using biomass, including coal to biomass conversion and co-firing plant.

However, new dedicated biomass plant (with and without CHP), which was accredited on or after 1 April 2013, would be subject from October 2013 to an "accelerated trajectory" target of 240 kg CO2eq per MWh or less.

April 2020 to April 2025

During this period, DECC proposes to lower the carbon intensity targets for:

  • both new and existing dedicated biomass plant to 200kg CO2eq per MWh; and
  • all coal to biomass conversion and co-firing plants to 240kg CO2eq per MWh.

DECC believes that this emissions reduction trajectory is "ambitious yet realistic" but recognises that the targets need to be deliverable and therefore seeks views on the targets that should apply between 2020 and 2025.

In recognition of the fact that the proposals could subject a dedicated solid or gaseous biomass plant accredited before 1 April 2013 which adds new capacity after April 2013 to two different emissions reductions requirements (i.e. the 285.12kgCO2/MWh target, which would apply to the original capacity, and the tighter limit of 240 kg CO2eq per MWh, which would apply to the additional capacity), DECC proposes that in this scenario the current limit of 285.12kgCO2/MWh would apply to both the original and additional capacity until April 2020. After this, the proposed limit of 200kg CO2eq per MWh would apply to the entire capacity of the plant.

  1. New land criteria for wood-fuel and energy crops sustainability

The sustainability proposals would also require solid biomass and biogas plants to source solid wood-fuel from sustainably managed forests and to meet the standards required under the Government's public procurement policy for wood.  This means that plants would have to maintain documentary evidence (including a chain of custody from the forest source) demonstrating that the wood-fuel they use is from a legal and sustainable source. 

In addition, energy crops used as solid and gaseous fuel would have to meet the criteria set out the Government Response to the RO Banding Review and satisfy the requirements of the relevant Energy Crops Scheme. 

However, the Government states that this administrative burden will be offset by the removal of the obligation for plants using wood-fuel to demonstrate compliance with the Renewable Energy Directive (RED) Land Criteria.  It also proposes that energy crops should not have to be assessed against the RED Land Criteria.

Nevertheless, the Consultation invites views on the protection offered by the UK Government's procurement policy for wood and the Energy Crops Scheme relative to the approach of the RED Land Criteria.

  1. Changes to reporting and audit requirements

Currently, the RO requires biomass power generators above 50kW to provide Ofgem with an annual sustainability report. However, the Consultation proposes to introduce new data reporting and audit requirements, which would apply according to the capacity of the plant. 

Under the proposals, eligible plants (excluding landfill gas, sewage gas, municipal solid waste and bioliquids) over 50kW but under 1 MW would have to provide general profiling data about the source, type, form and mass of biomass they use. They would also have to report on their performance against the carbon intensity targets and land criteria, and provide lifecycle emissions data.

Plants over 1MW which use solid biomass or biogas (for which compliance with sustainability criteria would be mandatory and linked to ROC support), would additional have to submit an independently verified sustainability audit report to Ofgem.

  1. Mass balance reporting system to enable the mixing of feed stocks

In recognition of the fact that biomass of different types and from diverse sources are often stored together, the Consultation proposes a "mass balance system" could be employed for all feed-stocks except non-certified wood-fuel.  This enables parties to disclose their biomass consumption based on the total mass of different sources of biomass bought/stored and sold/consumed during a period.  Accordingly, plants would not have to ascertain the actual proportion of biomass used from a particular source.

Part B: Affordability proposals

  1. Percentage cap for new dedicated biomass used to satisfy the RO

Because of Government concerns about the over-deployment of new dedicated biomass plants as a result of support under the RO, it proposes to set a cap on the percentage of the RO that suppliers can meet with power generated by new dedicated biomass plants.  However, the cap would not apply to dedicated biomass accredited, or additional capacity added, on or before 31 March 2013.

The Consultation document indicates that the cap will be set at a level "broadly equivalent to the amount of electricity…generated in a year by 1 GW of new dedicated biomass generating capacity."  DECC's proposals for the percentage cap are:

  • 19% for 2013/14;
  • 17% for 2014/15;
  • 14% for 2015/16; and
  • 12% for 2016/17.
  1. Decrease in ROC support for standard co-firing of biomass

Following DECC's RO Banding Review, for plants under the standard co-firing band (as opposed to the new conversion and enhanced co-firing bands to be introduced following the RO Banding Review), DECC proposes that ROC support should be reduced from 0.5 ROCs to 0.3 ROCs from 1 April 2013/2014 and 2014/2015.

Co-firing of regular bioliquids may also see support fall in the same way.  However, DECC indicates that the rate may increase back to 0.5 ROCs from 2015/2016.

It is also suggested that support for co-firing with CHP should be reduced to 0.8 ROCs in 2013/2014 and 2014/2015 - or to 0.3 ROCs plus subsidy under the Renewable Heat Incentive.

  1. Removal of energy crop uplift for standard co-firing

As mentioned in our e-bulletin (available here), DECC decided as a result of its RO Banding Review to consult on the removal of the 0.5 ROC uplift for standard co-firing. This proposal is accordingly raised in the Consultation.  DECC maintains that scrapping the uplift will reduce costs for energy consumers and will ensure that a consistent approach is applied to all co-firing bands. Its preferred option is for the uplift to be maintained until April 2019 for existing energy crop contracts only.

Useful links

A copy of the DECC consultation on sustainability criteria for biomass can be found here.

Click here for our July 2012 e-bulletin on DECC's response to the Renewables Obligation Banding review consultation.