Written submission from Biomass UK (DPS0057)

 

BEIS Committee Inquiry: Decarbonisation of the power sector

 

Response from Biomass UK, part of the Association for Renewable Energy and Clean Technology (REA).

 

Biomass UK is part of the Association for Renewable Energy and Clean Technology (REA), the largest renewable energy trade association in the UK. Biomass UK is the members’ forum within the REA which advocates for the Biomass Power industry, championing sustainable biomass use for low-carbon energy and its supporting supply chain.

 

 

Is the proposed future electricity mix, as announced in the Energy Security Strategy, the most efficient and cost-effective way to deliver power sector decarbonisation by 2035? Are there any further policy details and/or legislation required by the end of this Parliament to achieve these goals?

 

  1. The scale of ambition within the Government’s Energy Security Strategy was welcome, though it was disappointing to see the lack of mention of biomass, which is expected to play an important role in the future electricity mix. In 2021, bioenergy provided 12.6% of UK electricity generation, making up 33% of renewable electricity generation.[1] This capacity came from a range of feedstocks, including forestry residues, waste wood and energy crops.

 

  1. Bioenergy will play an increasingly important role in the UK’s future electricity mix as the basis for bioenergy with carbon capture and storage (BECCS). BECCS is unique in its ability to generate renewable electricity alongside negative carbon emissions, meaning that it is an invaluable tool in supporting the Government’s ambition to have a zero-carbon power sector by 2035.

 

  1. National Grid’s Future Energy Scenarios 2021 note that BECCS “is the largest provider
  2. of negative emissions in all scenarios that reach net zero.”[2] In the Leading the Way scenario, bioenergy is forecast to provide 121.2 TWh of energy in the power sector (in 2021, bioenergy for power provided 40.0 TWh).[3]

 

  1. In their Sixth Carbon Budget, the Climate Change Committee set out the need for BECCS in power to remove 16-39 million tonnes of CO2 a year by 2050 to meet net zero targets.[4]

 

  1. BECCS is not only valuable for its provision of negative emissions and contributing to our climate targets - it is also cost-effective. BECCS provides power system services such as inertia and voltage control, helping to reduce the system costs of managing the grid. These services will grow ever more important as more and more variable renewables come online. National Grid ESO notes that transmission constraint costs could reach £2.3bn p.a. by 2026 as the share of variable renewables on the system continues to grow.[5]

 

  1. A study by Baringa found that if the option to deploy BECCS at Drax (the UK’s most advanced potential BECCS project) in 2027 is not taken, it would cost the UK £13bn more to achieve the 5th carbon budget, and over £26bn more to achieve Net Zero.[6] This includes £4.5bn of power system costs, as well as the additional costs of greater action being required sooner in other sectors.

 

Policy requirements

  1. Further policy certainty is needed from Government if bioenergy (and BECCS) is to play its expected role in power sector and wider decarbonisation.

 

  1. The Government has committed to establishing the role of BECCS in reducing carbon emissions across the economy and, as part of its upcoming Biomass Strategy, setting out how the technology could be deployed.[7] Given the long lead times for large-scale projects, Government must urgently seek to provide certainty to the sector about the future of existing infrastructure and the need it sees for BECCS in the UK.

 

  1. For any Final Investment Decision to be taken on BECCS projects, clarity is required from Government on business models for greenhouse gas removal (GGR) technologies. A promised consultation on such business models is now delayed and needs to be published and committed to soon, if it is going to allow for the deployment of BECCS at the speed required.

 

 

Beyond current Government ambitions, how else can energy demand be reduced and how much of an impact will this make on reaching power supply targets? What action is required to ensure consumers engage with and are protected during the power sector transformation?

 

N/A

 

What are the key challenges faced by each generation technology (e.g., nuclear (traditional, small and advanced modular, and fusion), offshore and onshore wind, solar, hydrogen, tidal, biomass, and gas combined heat and power) regarding both their deployment and scaling up within the current policy framework? What can be done to overcome these challenges? What generation capacity is required and what role will each technology play?

 

  1. The key challenge for biomass is the current lack of clarity from Government around the future of the existing sector, especially following the end of current support mechanisms. The delivery of BECCS will come from the infrastructure, skills and supply chain developed over the last 10-15 years in the UK bioenergy sector. The vast majority of these projects were built out under the Renewables Obligation, with site contracts starting to come to an end in 2027. In order for such sites to continue to play their role in producing renewable generation, and to be encouraged to invest in the retrofitting of BECCS, Government must make clear that they recognise and actively want such sites to continue to generate low carbon power beyond 2027.  Without clear commitments from Government, there is a risk that the skills base and supply chains will contract, endangering the UK’s ability to meet its climate targets.

 

  1. The UK should also seek to maintain its world-leading sustainability criteria and avoid undermining investor confidence through major changes. The UK has some of the most robust and effective biomass sustainability criteria in the world, which operate at several levels and throughout the supply chain, supported by independent, audited certification.[8] [9] This has added a layer of regulation and scrutiny, supporting high silviculture standards in catchment areas, even where bioenergy is a small part of the forestry sector. The UK’s governance framework for bioenergy has evolved over time as scientific understanding has developed, but has stayed consistent to the well-established scientific fundamentals of biomass sustainability. This consistency has been central to the success of the UK’s supply chain relationships and should be maintained if we are to deliver BECCS (and other emerging technologies that use biomass feedstocks). The UK’s international supply chain is committed to its world-leading sustainability criteria, which are seen as the gold standard for other countries to follow.

 

  1. The development of negative emissions technologies will require support from Government in order to underpin investor confidence and get the market off the ground. One possible option for large-scale BECCS is a power CfD, combined with a payment or incentive mechanism for negative carbon emissions. Government should also seek to provide clear routes to market for smaller plant seeking to operate BECCS, especially retrofits.

 

  1. The CCC’s Sixth Carbon Budget and National Grid’s Future Energy Scenarios both see a clear and significant role for biomass power in the future zero-carbon energy mix. Biomass power will play a key role in displacing fossil fuels, supporting intermittent renewables through flexibility services, and generating negative emissions alongside renewable energy through BECCS.

 

 

What are the challenges for the current grid infrastructure in delivering the proposed energy mix by 2035 and how can these be overcome in a cost-effective manner? What role does digitisation of the grid infrastructure play and developing a smart electricity network? Are current regulators enabling this transition and flexibility within the system? What role will storage play? Please consider this question from generation source to in the home.

 

  1. The Energy Security Strategy rightly sets out a high level of ambition for increased capacity from variable renewables. As these new projects come online, existing grid infrastructure will need to manage the associated balancing and constraint costs. National Grid ESO predicts that constraint costs could reach £2.3bn per annum by 2026.

 

  1. Alongside network and infrastructure upgrades, reliable sources of firm power can reduce system costs by increasing flexibility within the system. Bioenergy (with or without CCS added) is one source of dispatchable, firm power which can complement variable renewables and a more flexible low carbon grid. Future market design should adequately reward the provision of these flexibility services.

 

 

What key milestones and indicators are needed to scrutinise and measure progress in delivering the UK’s power sector targets? Should new reporting requirements be required and what role should Ofgem, or the proposed new energy systems regulator, play?

 

N/A

 

 

Does the UK have the right skills, industrial and labour capacity, and materials required to effectively deliver on the proposed energy security strategy by 2035, and if not, how can the supply chain be scaled up?

 

  1. As it looks to develop BECCS, the UK should seek to build on the well-developed assets, expertise and supply chains already established through the UK’s investments in a world-leading bioenergy sector. Developing on the existing sector will prevent the Government having to build BECCS from a ‘standing start’ in the late 2020s, which will necessarily come with greater costs for bill-payers and tax-payers.

 

  1. UK supply chains for biomass have benefited from consistent regulation, allowing for investments in port, rail and handling infrastructure to transport biomass, as well as investments in increasing sustainable production, both in the UK and overseas.

 

  1. Whilst the international supply chain is well-developed, much more work is needed to increase domestic supply of biomass feedstocks. In the Sixth Carbon Budget, the CCC stated that, ““Planting perennial energy crops (e.g. miscanthus and short rotation coppice) alongside short rotation forestry needs to accelerate quickly to at least 30,000 hectares a year by 2035, so that 700,000 hectares are planted by 2050,” noting this could “sequester 2 MtCO2e by 2035 and over 6 MtCO2e by 2050. When used with Carbon Capture and Storage (CCS) technologies this could displace a further 3 MtCO2e of GHG emissions elsewhere in the economy by 2035, increasing to 10 MtCO2e by 2050.”[10]

 

  1. The new Environmental Land Management Scheme should recognise the value of bioenergy feedstocks to farmers and landowners, their provision of environmental services, and their contribution to greenhouse gas savings. Bioenergy markets also provide supporting revenues for landowners to invest in more active forest management, helping to keep forests healthy (e.g. making them more resilient to threats exacerbated by climate change, including disease and pests) and providing additional incentives to support afforestation and maintenance of forested land.

 

 

How should Government work with industry to ensure proposed projects are ready when needed and on-budget? Are there domestic or international examples of time- and cost-effective delivery of large-scale power generation schemes?

 

  1. Government should liaise closely with industry on projects of strategic national importance - including the development of BECCS. Investment timetables for industry are often far longer than parliamentary horizons. Government must be proactive in developing investment frameworks and business models to allow large-scale projects to be delivered to the required schedule. The current consultation on Greenhouse Gas Removal (GGR) Business Models is already delayed and should not be allowed to slip further.

 

  1. The history of biomass power in the UK provides a strong example of success in delivering large-scale power generation schemes. Government support for coal-to-biomass conversions allowed a number of large coal-fired units to extend their operational life, protecting jobs and investment whilst significantly reducing carbon emissions.

 

 

Does the Government’s strategy incentivise investment that enables decarbonisation of the power sector by 2035? Do current financing mechanisms allow for the required investment? What are the risks for taxpayers and/or consumers? Are there national security and investment considerations we should understand?

 

  1. Clear ambition from Government is crucial to driving strategic investment and crowding in private capital. Whilst the Energy Security Strategy provided notable investment signals for a range of technologies, it was quiet on bioenergy and BECCS.

 

  1. Government needs to provide further clarity on business models for BECCS (and other greenhouse gas removal technologies) in order to unlock the required investment in these projects.

 

  1. A delay to clear policy signals and financing mechanisms for BECCS risks increasing costs for taxpayers and consumers. Delaying investment now risks supply chain contraction within the bioenergy sector, which would make delivery more difficult and more costly. Delayed rollout of BECCS would also increase costs for taxpayers by requiring further and faster decarbonisation action in other sectors.

 

  1. On national security grounds, investment in the bioenergy sector poses little to no risk. Around 95% of bioenergy feedstocks imported to the UK come from our allies in the US, Canada and the EU.[11] These markets have the ability to increase supply if needed, alongside the significant potential for ramping up domestic supply (see CCC figures above).[12]

6

 


[1] BEIS, Digest of UK Energy Statistics (DUKES) 2021, Jul 2022, Link.

[2] National Grid ESO, Future Energy Scenarios 2021, Jul 2021, Link.

[3] BEIS, Energy Trends: March 2022, Mar 2022, Link.

[4] Climate Change Committee, Sixth Carbon Budget, Dec 2020, Link.

[5] National Grid ESO, Net Zero Market Reform Phase 3 Conclusions, Mar 2022, Link.

[6] Baringa, Value of Bioenergy with Carbon Capture and Storage (BECCS) to the UK Decarbonisation Pathway, Apr 2021, Link.

[7] BEIS, Biomass policy statement: a strategic view on the role of sustainable biomass for net zero, Nov 2021, Link.

[8] Ofgem, Renewables Obligation Biomass Sustainability Criteria, Link.

[9] Sustainable Biomass Program, Standards, Link.

[10] Climate Change Committee, Sixth Carbon Budget, Dec 2020, Link.

[11] Forest Research, Forestry Statistics 2021, Sep 2021, Link.

[12] US Department of Energy, 2016 Billion-Ton Report: Advancing Domestic Resources for a Thriving Bioeconomy, Jul 2016, Link.