REA response to DECC Consultation on the Woodfuel guidance for providing bespoke evidence

Transcription

1 REA response to DECC Consultation on the Woodfuel guidance for providing bespoke evidence The Renewable Energy Association (REA) is pleased to submit this response to DECC s consultation. The REA represents a wide variety of organisations, including generators, project developers, fuel and power suppliers, investors, equipment producers and service providers. Members range in size from major multinationals to sole traders. There are over 1000 corporate members of the REA, making it the largest renewable energy trade association in the UK. Responses to consultation In the following sections, we will address the concerns we have with the three documents released by DECC on woodfuel guidance for providing bespoke evidence. We will, however, start with again stating our support for the sustainability regulation, including the land criteria, as it is vital to both consumers and biomass suppliers to ensure that biomass fuel does not originate from illegal deforestation or have high carbon footprints. The industry has a clear interest in demonstrating the green attributes of biomass fuel to ensure continued support and long-term growth. Consumers will likewise need to be reassured that the purchased fuel does generate significant greenhouse gas savings and originated from properly managed forests. The industry is not interested in watering down the sustainability regulations, when only tough and robust criteria will thoroughly demonstrate the green credentials of biomass fuel. We accept and support the increased difficulty of demonstrating compliance with the timber standards (TS) for biomass fuel from countries with substandard legal protections. In its nature, the land criteria regulations should make it more difficult to import from countries where there is little legal protection against deforestation. We are, however, concerned with the practical implications of having to demonstrate compliance within the limited timeframe under the RHI and RO, which may prove too difficult. Timeframe of implementation The industry has for the last two years called for the land criteria to be published to put the necessary measures and contracts in place for implementation. DECC has argued that the Timber Procurement Policy (TPP) guidance documents have been available on the Central Point of Expertise on Timber s (CPET) website, but all documents have been under construction and CPET have told both our members and the REA that the guidance documents could not be used for timber fuel, as they would differ too much from the final Timber Standard for Heat & Electricity. The industry has long been calling for at least a period of a year between finalising the details of the guidance documents, and making the requirements mandatory. This would be a similar approach to what has been 1

2 required under the RO, where generators have been obliged to report on the sustainability characteristics of their fuel for two years, before the requirements becoming mandatory. RHI fuel suppliers will not have this learning period, which may cause significant problems before the implementation date. Larger generators will also have little time to comply with the regulations. Fuel suppliers can have 1-2 year old fuel in stock (partly due to the mild winter), for which they will have to retrospectively obtain evidence to demonstrate compliance. This will prove difficult for some, as their supply chains may have changed or the required two year old evidence no longer exists. The fuel will in that case be unsellable. Most consumers under the RHI will choose to purchase fuel from the Biomass Supplier List (BSL) to minimise the regulatory burden of proving conformity with the sustainability regulations. Most fuel suppliers will therefore seek to get their fuel listed on the BSL. The BSL administrator will later release their own guidance in addition to the guidance documents of this consultation. Although this will probably prove useful, it will again delay the process for the industry and shorten the interval to ascertain what the final requirements will be and instate the necessary measures and contracts in time for next April. We would argue that a one year grace period will be necessary under RHI, in which fuel suppliers will be required to supply available evidence needed under the Timber Standard without consequences for non-compliance. This will allow the industry to install the required controls and obtain the necessary evidence to fully show compliance with the land criteria. The industry will also need clarity of how the implementation will take place, and how DECC, the BSL administrator and ISAE 3000 assessors will deal with companies who had insufficient time to procure the necessary evidence before April Category A/B evidence The voluntary schemes accepted under Category A evidence are at the moment only FSC and PEFC. FSC and PEFC are not practical options in areas where forest ownership is highly fragmented, which includes significant parts of Europe, which makes FSC and PEFC unavailable for many fuel suppliers. Using category B evidence would be an initial challenge for a fuel producer to supply as it is the saw mills that will have to collect the information i.e. felling licences from their many different sources of material. The additional bureaucratic tasks could affect the tonnage price. We are aware that other voluntary schemes are being considered, and these should be listed as soon as possible, as it is important to contract in the near future for at least baseload supply for next year's anticipated demand. Suppliers who find themselves contracting nearer the time may find that a good part of producers' output is already contracted, periods of availability are limited (e.g. most of what is left is only available in summer) and prices are higher. The fuel suppliers will need to know within the next coming weeks which producers can safely be contracted. Our members have suggested the Green Gold Label and SFI to be included. 2

3 Most pellet mills will have some raw materials with no FSC claim i.e. FSC Controlled Wood, but they still originate from FSC forest plantations. Some have argues that the Woodfuel Advice Note indicates that FSC controlled wood would be non-sustainable. Should this be correct, pellet producers will struggle to attain 70% sustainable materials. FSC Controlled Wood for pellet production is taken from the edges of the round wood in saw mills. The mills see more value attributing their FSC claim to their sawn wood than they do from their by-products (the wood chip) as they can demand a higher price for it. If pellet producers were only receiving raw material with a usable FSC claim, it would increase the tonnage price considerably and make the end product more expensive. If it reduced demand for that material, it could also increase their carbon emissions due to the materials being sourced from further afield. Having certification for materials sourced within the UK should be seen as acceptable evidence for meeting the regulations. Both FSC and PEFC products are verified from the forest of origin through the supply chain, and the products are responsibly harvested from well managed and verified sources, even though the by-products do not carry the FSC certification. There is no provision for switching between certification schemes, which will significantly reduce fuel suppliers' flexibility or increase their overheads. If a fuel supplier wants to buy from a FSC certified fuel producer, he will need to ensure that the supply chain is FSC certified from the producer to the user, including himself (i.e. they will need to be FSC certified). If he then wants to buy from a PEFC certified producer, everyone in that chain (including the supplier) will have to be PEFC certified. An FSC certified supplier won't be able to source from a PEFC certified producer, and won't be able to use anyone in the chain (e.g. a trader or shipper), who is not certified in the right scheme. Some flexibility between certification schemes should be accepted to avoid fragmentation, confusion and bureaucracy. However, for companies only using UK sourced wood, all forests that are certified under UKWAS can be dual certify. FC, Scottish Woodlands and UPM Tilhill managed forests are all dual certified and all have dual chain of custody certification. The type of evidence recommended under category B is quite extensive, and we would argue too onerous in many instances. Onsite and field inspections should not be necessary for countries with strong governance on the relevant areas and where there is a relatively low level of corruption. In line with FSC, PEFC and EUTR, if the corruption Index is below 50%, evidence of internal field inspections might be necessary as documentary evidence may not be possible or credible. However, if the corruption index is above 50%, documentary evidence alone should be sufficient to demonstrate how the criteria are met. It would not be reasonable if the BSL administrators or ISAE 3000 assessors would require field inspections in countries with very low level of corruption and strong regulation of forests and the timber industry. 3

4 The possible evidence' listed in the checklist should not be absolute or confined to the listed suggestions of credible evidence. BSL administrators and ISAE 3000 assessors should accept all reliable evidence, which may vary greatly from country to country and region to region. As the evidence will be quite bespoke, the BSL administrators and ISAE 3000 assessors will need great experience. The potential lack of experience of the auditors must not be a disadvantage to the fuel suppliers and generators, and there should be shown some flexibility in the type of evidence accepted. Consignment under RO and CfDs The 70:30 rule for legal and sustainable under Category A & Category B will need to be reconsidered when reporting on a consignment basis. The proposal from DECC on woodfuel is to report annually, but at the DECC workshop on Monday 22 nd September, there was discussion on how the monthly payments (RO and/or CfD) would be administered by Ofgem given the 70:30 rule. Ofgem highlighted there could be issues for monthly payment claims if the 70:30 rule was applied annually, as this could lead to ROC revocation or CfD repayments from the generator to LCCC, which is something DECC wants to avoid. In effect, the timber standard for practical purposes would need to be applied to consignments in order to ensure compliance and issuance of payment by Ofgem. Ofgem emphasized that each consignment would (under the current regulations) have to comply with the sustainability regulation. This would make the annual averaging impossible. It will not be possible to use legal only timber under the 70:30 rule, as consignments refer to Biomass which shares identical sustainability characteristics which includes country of origin, same feedstock type and same fuel classification. The 30% legal only would be a separate consignment, and as each consignment would have to be 70% sustainable and legal, the 30% legal only consignment would not comply. The definition of consignment effectively prohibits any legal only wood fuel. We would ask DECC and Ofgem to confirm their position on this. Will Ofgem be able to make payments if the monthly ratio is less than 70% for the legal and sustainable component? How does it interact with RO/CfD rules on contamination? Will the legal only component be treated as contamination if above 30% and therefore invalidate just the consignment it is in or the whole month s burn? Domestic UK timber fuel The worked example of UK category B evidence in the checklist document will not be hard to replicate, as it effectively treats the UK as one region. It proves sustainability for non-certified timber as long as a felling licence and chain of custody is in place. As the criteria are completely new to many small foresters and smaller companies, an inflexible implementation will effectively push them out of the market. We would urge DECC to allow some flexibility in the implementation 4

5 phase of the regulations, and BSL managers and ISAE 3000 assessors to show some leeway. EU import We have concerns with how burdensome it will be to show compliance with category B evidence for import from non-english speaking countries within the timeframe given under the RHI. It can be very difficult for small and medium companies to acquire all relevant evidence (documents, legislation, forest legislation/regulations registry, guidance, Best Management Practices, available data from a credible third party, producer s field inspections etc.) in time for April 2015, as it would not be in English. Assuming all evidence will need to be provided in English for the BSL managers and ISAE 3000 assessors, the small and medium companies will also have to translate all evidence into English, which will require considerable time and effort, in addition to being costly. The category B route seems to be very similar to the evidence that large generators have required producers to provide for the generators' own sustainability auditing, and will prove very difficult to fulfil for small and medium companies who import their fuel. Wood Fuel Advice Note On page 9 the Wood Fuel Advice Note states: Woodfuel received with a mixed claim from one of the Timber Standard Category A is not considered to be wholly compliant with the Timber Standard legal and sustainable criteria, see page 12 for further information. This seems unclear. If 1) material is received as FSC Mix Credit or FSC Mix x% by a valid certificate holder and 2) is part of a product group and correctly listed on their certificate, then the remaining percentage has been assessed under their FSC Controlled Wood Programme or their suppliers by the certification body. It is not unknown sources. EUTR Only the competent authority in the UK (the National Measurements Office) has the authority to evaluate in reference to EUTR 995/2010. The BSL administrator should not tell the customer that fuel on the BSL is categorically legal, as the BSL is not an authority or a certification body. The BSL should be assessing the risk of legality where illegality looks to be of low risk, instead of confirming legality in accordance with the EUTR 995/2010 where the risk of illegal harvesting must be negligible. Only the National Measurements Office can confirm legality in accordance with the EUTR 995/2010. Timeframe of consultation This consultation was open from the 8 th September to the 26 th September, just above two and a half weeks. When considering that this is the first opportunity for the industry to understand how the land criteria would be implemented and what evidence would be needed, it has not been sufficient time to adequately assess the guidance documents. Taking into account the huge administrative burden this will prove for many fuel suppliers, this is not sufficient to properly engage with the supply 5

6 chains, judge the feasibility of the regulations or understand the proposed ramifications for the industry. We appreciate that DECC wishes to implement legislation as soon as possible, but that does not justify giving the industry inadequate time to evaluate major proposed regulation, which will have a huge impact on their business. 26 September