REA: ENERGY MINISTER SIGNALS SUPPORT FOR THE UK BIOMASS INDUSTRY

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1 Renewable Energy Association Press Release 16/12/2011 Immediate Release REA: ENERGY MINISTER SIGNALS SUPPORT FOR THE UK BIOMASS INDUSTRY Energy Minister, Charles Hendry MP, this week reinforced Government support for the UK biomass industry and highlighted its importance as a proven, practical and secure part of a sustainable energy mix. Speaking at a packed Westminster reception organised by the Back Biomass campaign, the Minister reaffirmed that the Government is committed to a significant ramping up of biomass electricity, heat and CHP and is well on the way to tackling financial and non-financial barriers to achieving their ambitious targets. The event, held at Westminster City Hall and hosted by the Lord Mayor of Westminster, Cllr Susie Burbidge, was attended by MPs and industry representatives, together with leading figures from the forestry and agriculture sectors. The Back Biomass campaign is an industry-led initiative designed to promote awareness and understanding of the merits of biomass as proven, practical, secure source of low-carbon energy. The campaign has gained widespread support since its launch in July, and will be continuing to work with Government and other stakeholders in 2012 to ensure that the full benefits of biomass are delivered for UK PLC. Energy Minister Charles Hendry MP said: I want to state that biomass is a huge opportunity for the UK. It can bring us clean electricity and heat, greater energy security, economic development in both rural and urban areas, and new green jobs. It is one of the major new growth opportunities that can help the UK economy out of recession. The Government s bio-energy strategy will be published in the New Year. This work confirms the key importance of sustainably-sourced energy from biomass in meeting the UK s legally binding carbon reduction targets for In fact it confirms that without bio-energy it will not be possible to meet those targets. Welcoming the Minister s comments, REA Chief Executive Gaynor Hartnell said: We started the Back Biomass campaign in early summer, with the objective of delivering the message to government that if it puts the right policy framework in place, the biomass industry is ready and willing to assist in meeting the Government s renewables target. With the introduction of new sustainability criteria from 2013, Government has also made it clear that only sustainably-sourced biomass, which complies with strict environmental regulations, will be supported. This position is welcomed by an industry keen to play not just an interim but a long term role in the low carbon

2 economy of the future. ENDS For further information or to request an interview, please contact: REA switchboard: , or Paul Thompson (REA): +44 (0) ; +44 (0) Jessica Lennard (Edelman): +44 (0) ; +44(0) Peter Bellini (Edelman): +44 (0) ; +44 (0) Notes to Editors Back Biomass Campaign The REA represents over 900 companies in the UK renewable energy sector. The organisation has recently launched the Back Biomass campaign to deliver a clear message to Government on the many benefits of biomass power and CHP. Key Facts The 2009 Renewable Energy Directive sets a target for the UK to achieve 15% of its energy consumption from renewable sources by This compares to 3% in The Renewables Roadmap sets out an action plan to accelerate the UK s deployment and use of renewable energy, in order to achieve the nation s 2020 target, while driving down the cost of renewable energy over time. o The central range for deployment indicates that biomass electricity could contribute up to 6 GW by Achieving this level of capacity equates to an annual growth rate of 9%. Research by the Department for Energy and Climate Change suggests that bioenergy could account for up to half of the renewable energy required to meet the 2020 renewables target. Analysis undertaken as part of DECC s 2050 calculator also points to the potential importance of bioenergy in meeting our longer term carbon reduction goals. o In 2020, we estimate that the total potential supply to be around 450PJ at the 4/GJ price point if easy constraints alone are overcome and around 750PJ at the 10/GJ price point with all constraints overcome for the 1G maximum scenario. By 2030 this rises to around 500 PJ and 780PJ for the same scenario. The review of bioenergy undertaken by the Climate Change Committee (CCC) has examined the potential for biomass resources up to Published last week, the review concludes that a 10% share of bioenergy in total energy could be required to meet the UK s 2050 emissions target, compared to the current share of 2%.

3 The Department for Energy and Climate Change is currently developing a bio-energy strategy which will be published in the New Year and will build on the research undertaken by the Climate Change Committee. Once completed, the strategy will set out a strategic framework for use of bioenergy across heat, electricity and transport in order to achieve the cost effective delivery of the 2020 goals in a way that is consistent with other objectives across the economy and longer term carbon reduction ambitions to Biomass Biomass is uniquely well placed to help fill the UK s looming energy gap as fossil fuel power plants are gradually phased out over the coming years. As the only renewable, low carbon energy source currently capable of both baseload and peaking generation, it is able to support more low carbon generation coming onto the grid, as well as delivering controllable, predictable low carbon energy. A balanced energy mix, drawing on all low carbon forms of generation is essential in order to meet the UK s long term energy needs. No one technology can provide a silver bullet solution on its own. However, the Government s Electricity Market Reform White Paper and Renewables Roadmap, as well as reports by the IEA, AEA and IPCC all advocate a significant role for biomass in the UK s future energy mix. Biomass heat and power offers a superb cost and resource efficient solution for energy users. Due to comparatively low capital and operating costs, this flexible, proven, low carbon energy source can help deliver carbon savings cost effectively for the UK taxpayer. Sponsors of the back biomass campaign Sponsors of the Back Biomass Campaign are: Drax E-on RES Future Biogas British Sugar Full text of Charles Hendrys Speech I would like to thank the REA for inviting me to this event and giving me the opportunity to speak with the bioenergy industry. I am very pleased to be here. One of the key challenges for all of us - as highlighted by the Back Biomass initiative - is to get more of these very positive messages for renewables out there. We need to get better at communicating about our successes and promoting the many benefits of renewable energy, as well as raising the profile of our work to robustly address concerns such as sustainability. I want to state that biomass is a huge opportunity for the UK. It can bring us clean electricity and heat, greater energy security, economic development in both rural and urban areas, and new green jobs. It is one of the major new growth opportunities that can help the UK economy out of recession. The opportunity for biomass electricity is developing fast. This year at Tilbury - we are seeing the first big scale conversion from coal to biomass in the UK. This is an exciting development which opens the way for other coal plant to convert to renewable fuels, in whole or in part. Co-firing and conversion are major opportunities for the UK safeguarding existing jobs, growing new jobs throughout the supply chain, and cleaning up our emissions.

4 Just last week, we had the announcement of a 40MW dedicated biomass power plant to be built at Sleaford. 120m investment, 200 construction jobs, 30 operation jobs and 50 more jobs in the supply chain. We expect to have 3GW of biomass power installed by Christmas, and our analysis shows the potential for 32-50TWh per year of biomass electricity by This, by itself, would provide between 15-21% of the 234 TWh we estimate is needed to meet our renewable energy target. Both Government and the Climate Change Committee (CCC) are looking at where we want to use biomass resources over the decades to The CCC review was published last week. The Government s bio-energy strategy is the response to it, which will be published in the New Year. This work confirms the key importance of sustainably-sourced energy from biomass in meeting the UK s legally binding carbon reduction targets for In fact it confirms that without bio-energy it will not be possible to meet those targets. It also sets out how we want to use biomass across the economy particularly for construction and for energy. It reaffirms the importance of biomass heat to fuel our industry, of advanced biofuels for aviation and shipping in particular, and the exciting potential for biomass with carbon capture and storage. This offers the Holy Grail of negative energy emissions for the longer term future. Moreover, biomass is one of the few renewable sources that can provide robust base-load power, and provide power on demand in order to meet peaks in requirements. This means it is a natural partner to intermittent renewables such as wind, tidal and wave, where the UK has such rich natural resources. Biomass, whether used for electricity, heat or CHP will also deliver GHG savings and help protect us from fossil fuel price spikes. Achievement of the 2020 Renewables target will reduce our overall fossil fuel demand by around 10% and gas imports by 20-30% against what they would have been in It will also reduce our carbon dioxide emissions by over 750 million tonnes between now and Therefore, we need to continue and increase this surge of investment in biomass and other low carbon energy sources, to help get us off the fossil fuel price hook, meet our carbon commitments, keep the lights on, keep energy bills down and generate new business and employment. We want the UK to be a leading destination for global investment in renewables and low carbon energy. The market remains at the heart of our approach. Review of the Renewables Obligation banding, together with reform of the electricity market will create the incentives needed to support investment in renewable and low carbon energy, while improving competition to ensure that the costs to consumers are minimised. In addition, the launch last month of the world s first renewable heat incentive, and further enhancements to Feed in Tariffs will provide the long-term, stable and predictable incentive framework necessary to encourage and enable investment in renewable energy We are also tackling non-financial barriers through the reform of the planning system in England and Wales. We want to ensure that our planning system supports economic growth, gives communities a greater say and stake in development, and help local authorities and communities to identify opportunities for the deployment of renewables using analysis from regional studies. We are also ratifying new energy National Policy Statements (NPSs), and returning decision on major energy infrastructure to democratically elected ministers. However we recognise that there are difficulties with biomass power. That there are concerns on sustainability and also on the impacts on other biomass-using industries. Ipsos MORI polled a thousand UK adults on which energy sources they preferred. By a clear margin, people favoured renewables. But 57% viewed biomass favourably, compared to 82% for wind and 88% for solar. We clearly have work to do.

5 Government is putting place actions to help address these issues, which I will briefly cover, but we need to work together and build further on this. Firstly, reflecting our commitment to sustainability we introduced sustainability standards under the RO in April, These include a lifecycle greenhouse gas emissions savings target compared to fossil fuel. And we are developing a robust approach to sustainable forest management to further ensure that the increased use of woodfuel does not lead to global deforestation. Bringing forward more biomass supplies will help manage the potential impacts on other biomass users. Therefore I was very pleased by the June launch of the Forestry Commission s Woodfuel Implementation Plan which aims to bring forward 2 million tonnes of additional wood to market by And next year, Defra will consult on restrictions for waste wood going to landfill. Plus in the RO consultation we propose to continue to providing higher support generation from energy crops such as miscanthus grass, and to grandfather this support. Finally a further risk relates to the perception that all renewables, including biomass, are too expensive; particularly in our current economic climate. Therefore, the proposals in the RO consultation, now underway, concentrates on the cheaper and transitional biomass technologies, by introducing new 1 ROC bands for conversion and enhanced cofiring. Both co-firing and conversion are relatively cheap sources of renewable energy because they use existing assets. In this way their subsidy cost and so their impact on consumer electricity bills is lower than many other renewables. They have another particular advantage as well, which is that they are transitional technologies which avoid the risk of locking in finite resources of biomass. Support for the more expensive emerging biomass technologies (AD, advanced gasification and pyrolysis) is proposed to stay at 2 ROCs until 2015, then degresses over the period in line with the marginal technology offshore wind, to ensure value for money. Moreover, we need to ground the discussions on value for money in actual figures. Our support for renewable electricity currently adds around 21 to the average annual domestic electricity bill; so just over 5 per quarter. Though this cost will rise over the lifetime of the RO to around per quarter [ 50 per year] for the consumer as the level of renewable electricity in our grid mix rises, the changes to the RO set out in the consultation are expected to bring forward more renewable energy and reduce bills compared to leaving the RO as is. Overall this could mean a reduction in consumer bills of between bn over the lifetime of RO support. And the cost of the RO needs to be seen in the context of both highly volatile oil and gas costs and that significant supplies are concentrated in less stable regions. It is essential that we act to manage the potential impacts on bills and protect our energy security. A flexible, diverse energy portfolio is a prudent investment for the UK, and bioenergy has a very important role to play in this portfolio. So it is very important that we have got the framework right on finances, planning, supply-chains and on sustainability. We look forward to your response to the RO and other consultations. But Government can only provide the policy framework. Success will be delivered by the people in this room, and others like you. Ultimately it is for you - investors, power generators, manufacturers, farmers and foresters - to seize the opportunities, and deliver the growth in sustainable biomass we all want to see.