Richard Burrell, Chief Executive, AMP Clean Energy.
I recently presented the notion of the Biomass (heat) Trilemma to a wide range of cross-industry representatives. In doing so, I aimed to outline the challenges facing the industry, and the opportunity to highlight the future potential of biomass heat.
So, what is the Biomass Trilemma? Put simply there are three key issues at play: the policy landscape, air quality and the importance of heat decarbonisation. Each of these issues present threats and opportunities to the UK biomass heat market.
It is well known that the Government is off-track to meet its renewable heat targets – 12% of heat to be sourced from renewables by 2020 – with around a fifth of our greenhouse gas emissions coming from heating. Under the Government’s Renewable Heat Incentive (RHI), which aims to increase the uptake of renewable heat, biomass has been far and away the most deployed technology. It has been particularly successful in decarbonising a range of community buildings, schools, hotels and agricultural processes.
But with the RHI closing to new applicants in 2021, current policy uncertainty is leading to investor inertia. We now risk undermining the expertise built up in the established UK industry and its supporting supply chains.
Another key component of the trilemma is air quality. The Government rightly want to reduce harmful emissions impacting air quality, but the proposal to remove RHI support for biomass in urban areas, will not help achieve this. The misconstrued perception that all biomass is bad, confuses modern, automated biomass boilers, with domestic wood burning. It does not take into account the controls that are already in place which restrict the particulate emissions from modern boilers. What this proposal would almost certainly achieve would be to limit industry’s ability to switch from fossil to low carbon fuels.
Air quality issues further muddy the waters of a proven, world renowned technology, which is already making a considerable contribution to renewable heat. Indeed, the Committee on Climate Change said last year that up to 15% of the UK’s primary energy demand could, under certain conditions, come from sustainable biomass by 2050.
In a bid to increase the uptake of renewable heat, the Chancellor announced in his Spring Statement that gas boilers will be replaced by low-carbon heating systems in all new homes built after 2025, using alternative systems such as heat pumps. In order to support and make this transition, we will also have to provide flexible electricity in times of peak demand. This is where the role of natural gas peaking plants – such as our Urban Reserve projects – will play an important role in supplying standby energy in our busy urban areas.
This brings me back to the third arm of the trilemma – the importance of renewable heat. To fulfil its potential, biomass now needs the support of a stable and ambitious future policy framework. Research by AMP Clean Energy has shown that the non-domestic RHI has in fact underspent its budget in 2018/19 by around 30% which constitutes more than £200 million. This money should be ringfenced and set aside towards a post 2021 heat subsidy. It should not be absorbed back into the treasury, which is where underspend usually goes.
Of course, this all depends on how the Biomass Trilemma plays out. The mix of factors at play could force the market to stall – or worse go backwards. The third, and more appealing way, is that the combination of a supportive policy landscape and a united industry, will enable biomass heat to play its rightful part in the UK’s heat decarbonisation.