09:30 Nigel Adams (Selby and Ainsty) (Con)

That this House has considered biomass as a source of renewable energy.

It has been less than a year since the Conservative party secured a clear mandate from the British people to govern. One of the core commitments that we made in the run-up to the general election, which we repeat regularly, is that it is important to keep energy bills as low as possible for consumers and to promote competition in the energy market. Indeed, those same themes featured in the speech given by my right hon. Friend the Secretary of State for Energy and Climate Change to the Institute of Civil Engineers in November. It was referred to as the “reset” speech because it set out the Government’s direction of travel on energy policy over the coming years.

The two themes of affordability and competition are at the core of today’s debate. Like many of us, I am fully committed to ensuring that my constituents have an energy grid that is secure, reliable and affordable. The question, of course, is how we go about achieving that. Last week NERA, an independent economic research consultancy, and Imperial College London published a significant and insightful piece of research that considered the very issues we are discussing. The research was commissioned by Drax, which, as many Members will realise by now—if they do not, they have not been listening very hard for the past six years—operates a power station in my constituency. I grew up looking at the cooling towers. Drax power station generates between 8% and 14% of the UK’s electricity and, perhaps surprisingly, it is the UK’s single largest source of renewable energy thanks to its gradual conversion away from coal to sustainable biomass generation.

The report revealed that around £2 billion-worth of savings could be passed on to the consumer if the Government allowed biomass to compete in future renewable auctions. That £2 billion would equate to an average saving on each and every household bill throughout the land of between £73 and £84. That saving, which I believe any reasonable person—energy expert or otherwise —would argue is significant, stems from the fact that on a whole-system cost basis, biomass is without doubt the cheapest form of renewable energy available to us today. The concept of whole-system cost is important. It has attracted a lot of interest and discussion in recent months and, on that basis, merits further consideration today.

The Committee on Climate Change, an independent and well-respected voice on energy issues, stated in its recent report on the future of the UK power sector:

If the Government are committed to taking coal off the grid by 2025, as they have indicated, the quickest and most affordable way to do so is to enable more coal power stations to convert to biomass. That is not only the quickest and cheapest way to decarbonise our power sector, but a means of keeping existing stations on the grid, thereby ensuring that the communities that have enjoyed the social and economic benefits from those power stations for many years can continue to do so. There is a clear and compelling case, based on the analysis by NERA and Imperial College, for the Government to look hard at whole-system costs when considering which technologies to back or to allow to bid. I understand that the Department commissioned Frontier Economics to do work on that topic, which is very welcome, and that the Minister committed to publishing the results of that report in the first half of this year. That is unquestionably a step in the right direction and I thank her for it, but will she assure hon. Members that her Department will utilise the body of research on whole-system costs to inform Government policy?

Converting stations to biomass is the quickest, most affordable way to get coal off the system and achieve what the Department says it wants to achieve. In less than three years, Drax has become the largest decarbonisation project in Europe; previously, it was called the dirtiest power station in Europe. It generates 12% of our renewable energy. I am delighted that the company has managed to protect the 850 or so jobs that are currently based in the power station, although colleagues may have read a Telegraph article this week that appears to imply that half of the station is under threat. I hope the Minister and her Department noticed that, because such threats are not normally hollow.

[Source]

09:50 Ronnie Cowan (Inverclyde) (SNP)

It is a pleasure to serve under your chairmanship, Mr Crausby. I thank the hon. Member for Selby and Ainsty (Nigel Adams) for bringing forward this debate and for his continued work on biomass and renewable energy. I hope we can put cross-party pressure on the Government to do the right thing by the electorate of the United Kingdom.

It will be apparent to everyone present today that unabated climate change presents a major challenge to legislators in the UK and across the world. We must address the environmental health of our planet and the decarbonisation of our energy supply as priorities. Tackling the problem will require an unprecedented level of international co-operation. In some instances, our best course of action is to provide a positive example for other nations to follow, and I am proud of what Scotland has been able to achieve so far.

The Scottish Government are on track to meet their 42% emissions reduction target by 2020, and around half of Scotland’s current energy consumption is supplied by renewable wind power. We have also outperformed the UK on total emission reductions from a 1990 baseline in every year since 2010, and Sweden is the only European Union state to have outperformed Scotland. Professor Jim Skea, a member of the UK Government’s Committee on Climate Change, said:

The hon. Gentleman has either read my mind or read my speech over my shoulder, because I was about to move on to the renewable heat incentive. I was particularly disappointed by the Chancellor’s announcement that spending on the RHI would be some £690 million less than previously forecast by the Office for Budget Responsibility. The UK Government’s own reports have shown that the RHI has been an important tool in pushing forward the decarbonisation agenda. Data issued by the Department of Energy and Climate Change found that two thirds of users would not have installed renewable heat technology without the RHI. It is therefore difficult to understand why the UK Government feel it necessary to make these changes, which are being imposed against expert industry advice and to the detriment of jobs, investment and the environment.

Most importantly, I want the UK Government to abandon their policy of managed decline in support for renewables. Scotland is ambitious and we take the responsibility to tackle climate change seriously. It is time for the UK Government to do likewise.

[Source]

10:00 Amanda Milling (Cannock Chase) (Con)

I appreciate the desire to move towards renewable energy such as wind and solar, but it does not necessarily offer the same reliability or flexibility as other forms of energy. As my hon. Friend the Member for Selby and Ainsty said earlier, we are reliant on the wind blowing or the sun shining for those forms of renewable energy, but biomass, as a low-carbon renewable energy source, provides both reliability and flexibility. To date, however, the benefits of biomass unfortunately do not appear to have been fully recognised, although, as my hon. Friend outlined, biomass has huge benefits. Biomass, though, is not necessarily playing on a level playing field versus wind and solar, because the whole-system costs are not being considered.

[Source]

10:06 Albert Owen (Ynys Môn) (Lab)

I am disappointed that carbon capture and storage is off the agenda, because clean coal and gas could also play their part in the transition to a fully low-carbon economy. However, CCS is not on the agenda. What is on the agenda is the opportunity to have co-firing biomass plants for the future and I very much support that.

My constituency has been dubbed the energy island, a concept that I support, because we had early prototypes of onshore wind—they were much smaller than is proposed now. We have also had safe nuclear generation for 40 years, and we have projects in the pipeline for tidal power as well as the biomass project that I will talk about in my remaining time. It is a £1 billion project for not just a biomass station but an eco-park. Under the proposal we will have 299 MW produced from biomass and linked to that will be aquaculture, with a large fish farm and the opportunity to produce fertiliser at the farm for use in food production. It is a very forward-thinking project, so when we talk about building power stations in our areas, we should build eco-parks and link them into district heating systems in the future, so that there is no waste. Such areas really would be low carbon, with heat retained in them, which limits the effects of climate change.

I realise that there is a time constraint, and that another hon. Member wants to speak, but there is the jobs aspect, which was touched on. New green energy jobs can be created if we go forward with biomass technology, many of which can be for retrained people as well as for apprentices. As I said, they can be in research and development. In the construction phase of the Orthios project in my constituency there will be 1,200 construction jobs and then 550 permanent jobs.

I was at the launch a couple of weeks ago with apprentices who have already been taken on, and with young people from the schools. We must say to the young people that climate change is real—they get it even if many other generations do not—and there is a future for them in producing green, low-carbon energy. The United Kingdom can be world leaders, and Wales and my island of Anglesey in particular can pioneer many of the technologies.

We need to have low-carbon energy going forward and biomass is a huge part of that. I say to the Minister that the auctions are a complicated process. I sat on an Energy Bill Committee in the previous Parliament in which many of us—including the Ministers, who are no longer Ministers in that Department—found them confusing and complicated. We need to simplify them, because if we do not we could lose out on innovative schemes and that worries me. As the hon. Member for Selby and Ainsty said, we need a level playing field for biomass, or indeed a special category for it so that we can develop the technology to play a part in the mix going forward. We need a truly consensual approach to our energy policies, with them not determined by five-year electoral cycles. They need to be in the long-term interest and work towards climate change.

I was at the COP 21, where there was a mixed reaction to Britain. Yes, the Secretary of State was trumpeting the fact that we are closing down our coal stations, but there was also real concern about the cuts to our renewables. What I want to see is real investment in low-carbon energy going forward. I repeat that that should be in new nuclear, in renewables and in energy efficiency measures so that, on climate change, the United Kingdom can hold its head up proudly and say, “We are world leaders.” I want to see biomass as part of that and I hope that when the Minister responds she will give special consideration to biomass, because the project I have outlined in my constituency and what we have heard from other hon. Members is good for Britain and good for climate change.

[Source]

10:16 Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)

The Scottish National party is highly supportive of the increasing role that biomass heat and combined heat and power schemes are playing in reducing CO 2 emissions. Biomass has played a vital part in putting Scotland on track to meet its 42% emissions reduction target by 2020 ahead of schedule, which was touched on eloquently by my hon. Friend the Member for Inverclyde (Ronnie Cowan). Of course, biomass is the oldest source of renewable energy.

The Scottish Government have shown a strong political commitment to biomass as a renewable energy resource. The UK’s largest biomass combined heat and power plant in Markinch, in the kingdom of Fife, received significant funding from the Scottish Government. The plant not only is an asset to Scotland but will help deliver the target of 11% of non-electrical heat demand by renewable sources by 2020, yet the UK Government’s decisions continue to undermine the UK’s and Scotland’s renewables commitments—more on that later.

Under the contract for difference, new build biomass projects must be CHP, as the hon. Member for Selby and Ainsty mentioned. However, the industry currently views biomass CHP as largely uninvestable—if that is a word—under the contract for difference, because the CfD scheme’s design is not fit for purpose. The CfD biomass CHP tariff will need to be changed before we can expect the biomass CHP opportunity to be captured. To make the CfD investable for biomass CHP, the Government must allow biomass CHP to receive CfD for its electricity over the full 15 years of the contract, even if its heat customer closes. The Department for Energy and Climate Change has been considering that necessary change for close to two years, and there is now a risk that the regulations that are needed will not be in place before the next CfD allocation round, which is expected late in 2016. We might contrast that with the Hinkley C nuclear strike price of double the current rate, guaranteed for 35 years.

The hon. Member for Selby and Ainsty and my hon. Friend the Member for Inverclyde touched on the reuse of existing energy infrastructure. The SNP believes that the UK Government should be more flexible about legislation, to make a smoother transition to renewable energy from fossil fuel use possible. I maintain that biomass has a key role to play, and I urge increased use of it, especially given DECC’s own figures for electricity generated by renewables and as a percentage of gross consumption, which show a meagre increase of biofuel as a percentage of overall renewable energy, from around 4.1% in 2009 to 4.7% in 2013. However, in line with the Government’s advice, I would introduce a word of caution, because that industry often competes with other types of land use such as food and raw materials production, and of course with the vagaries of crop prices we should also be careful about the availability and price of sufficient sustainably resourced biomass.

“It is widely recognised that bioenergy has an important role to play if the UK is to meet its low carbon objectives by 2050. Excluding biomass from the energy mix would significantly increase the cost of decarbonising our energy system—an increase estimated by recent analysis at £44 billion. As set out in the 2011 UK Renewable Energy Road map, bioenergy is also an important part of the Government’s plans to meet the Renewable Energy Directive objectives in 2020.”

Nevertheless, biomass, like all other proven renewable energy sources, is being neglected for the UK Government’s preferred options of nuclear and unconventional gas, which of course means we will not meet our climate change targets as set out in the Climate Change Act 2008.

The hon. Gentleman and his colleague, the hon. Member for Inverclyde, both made the point that Scotland has outperformed many parts of Europe—everyone except Sweden, I think we heard—with its decarbonisation initiatives, yet we also hear that that is a reserved matter, so such policy is for the UK Government. I am interested to understand how in that case the credit for doing so well is due to the Scottish Government, not the UK Government. I would point out, as the hon. Member for Ynys Môn (Albert Owen) did, that, of all the devolved Administrations and England, Scotland has the highest percentage of electricity generated from nuclear. It is a long road to replace that.

As I mentioned, we will not meet our targets under the Climate Change Act 2008, so I urge the Minister to revise legislation to enable biomass to play its part in achieving our renewable energy targets on time.

[Source]

10:29 Callum McCaig (Aberdeen South) (SNP)

I met with Drax quite early on in my role as the SNP’s energy and climate change spokesperson and very much commend what it has done on shifting away from coal to biomass. There are issues around such large-scale production, which have been touched on, but if it is done right and done well—as I think it broadly is by Drax—it has a large role to play.

One theme in the debate has been the need for both a level playing field and a long-term plan for biomass technology. I know the Government are very fond of their long-term economic plan. It is perhaps time they got a long-term energy plan—I note that that has the same acronym, so it could be used interchangeably. The two plans are tied together rather neatly: to have a long-term economic plan, we need a long-term energy plan. As we have heard, we very much require that plan to include biomass if we are to meet our decarbonisation targets.

The hon. Gentleman talked about the hidden costs of intermittent technologies; that is fair. His comment was that that is the “definition of a perverse outcome”. My definition of a perverse outcome would be applying the climate change levy to green energy production. I was surprised that that did not feature in his speech, given that when the levy was introduced in the Budget, Drax’s share price fell by 25% overnight.

Combined heat and power is used well elsewhere in the world, in particular on the continent. It has always struck me as perplexing that we have never utilised it on the same scale, because it is a pretty simple technology. It stops the wastage of electricity because it is converted into heat. If we can get that level of savings—by and large in deprived communities in Aberdeen—that is a win-win situation. I am pleased to see the Scottish Government looking at how combined heat and power can be ramped up as we look to meet our climate change commitments. We have discussed the different ways that the devolved Administrations and the UK Government can work. A lot can be learned from that example, and we would welcome that.

The time is now. As with so many of the issues around energy and climate change, if we are to decarbonise, we need a sensible framework. A number of Members have pointed out where there are gaps in terms of biomass. They need to be closed, but the gaps in our energy policy more widely also need to be closed.

[Source]

10:40 Dr Alan Whitehead (Southampton, Test) (Lab)

Having said that, biomass certainly can play a clear and substantial role and can perhaps produce 10% to 12% of the UK’s energy requirements in future. That also emphasises the point that biomass should not be set against other forms of renewable energy. In that context, I was a little concerned about the suggestion from the hon. Member for Selby and Ainsty (Nigel Adams) that biomass should, as it were, be advantaged against other forms of renewable energy, because of its relationship to system integration costs, as far as the network is concerned.

I thank the hon. Gentleman for that clarification, but perhaps I can also make a little clarification for him. He mentioned the NERA and Imperial College London report about system integration costs. That is an important report, but he should also know that a similar report from NERA and Imperial College London was produced about three months before the report that he mentioned. It so happened that the client for the other report was the Committee on Climate Change, as opposed to Drax. The questions that were asked in the two reports, which had identical authors at almost identical times, were slightly different and therefore produced fairly different results for overall system integration costs. Essentially, one looked at how biomass would relate to the system as it stands; the other looked at how it might relate to system changes.

The hon. Gentleman is absolutely correct. There are system integration cost differentials between different forms of renewable energy. My point is that, depending on which report people read, those are not the same as they might appear to be between renewables. Indeed, what is undertaken in how the system works as a whole can substantially mitigate the different costs, so that, as we evolve the system, we can be in a much better position to ensure that the suite of different renewables—which, as my hon. Friend the Member for Ynys Môn mentioned, is so important for future low-carbon deployment—can properly be deployed happily alongside one another, as a suite of measures to ensure that we move towards a decarbonised economy.

I recognise that we have limited time this morning, so I want to turn briefly to the point the hon. Member for Selby and Ainsty made about the level playing field that is necessary for biomass. It is undoubtedly the case, given the measures that are in place at the moment for the enhancement of renewable energy, that there is not a level playing field. There is an overall problem with that suite of measures because of the levy control framework and the extent to which hardly anybody is likely to get a contract for difference for their project over the next period. Indeed, the hon. Gentleman will be aware that some biomass plants got contracts under the early investment decisions, prior to the new form of CfDs coming into being. However, when it comes to the efficiency of biomass, allying that with CHP schemes to ensure that biomass can get 15-year contracts under the CfD arrangements, even if the heat source is not there for 15 years, is an important change that would need to be made to CfD arrangements for the future.

[Source]

10:52 The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)

Every hon. Member here will know that our priorities are to move to decarbonisation at the lowest cost while ensuring that lights stay on. This debate has shown that there are many ways of achieving that. I am grateful to the hon. Member for Ynys Môn (Albert Owen) for pointing out that a balanced energy policy is needed—the shadow Minister also made that point. It cannot be all or nothing.

It has been pointed out that we cannot go ahead without careful consideration of the effects, both positive and negative, that biomass can have on the wider environment. Unlike other renewable technologies, biomass cannot rely on an inexhaustible fuel like the wind, tides or sunshine. The fuels on which biomass is dependent need to be sourced responsibly and sustainably, and in a manner that realises the carbon and greenhouse gas savings that biomass is capable of delivering. Our renewable energy policy seeks to balance those considerations.

My hon. Friend asked whether I agree with the proposals in the NERA report regarding whole-system costs. I am often asked, and I understand why, whether Department of Energy and Climate Change is familiar with the full-life costs of biomass compared with other technologies. I assure him that we are very aware of the costs of balancing the grid from intermittent technologies that are not incurred from electricity generated from biomass. It is dispatchable, can be base load, is controllable and is very valuable. I confirm that my Department is looking carefully at whole-system costs, but the reports that he and the hon. Member for Southampton, Test (Dr Whitehead) mentioned consist of a subset of technologies and we must look carefully at whole-system costs.

The hon. Member for Inverclyde (Ronnie Cowan) raised his proud point that Scotland is doing so well on renewables, but I remind him that, as my hon. Friend the Member for Selby and Ainsty pointed out, over 20% of the support under the renewables obligation as a whole goes to Scotland with far less of Great Britain’s population. Scotland received 24% of RO payments in 2014-15 and will receive significantly more than its per capita share, so it would be fair if the hon. Gentleman credited the UK Government and Great Britain’s bill payers with the Scottish Government’s achievements in renewable energy.

The hon. Member for Inverclyde asked why the Government are cutting RHI support. The RHI budget to cover renewable heat schemes has been confirmed to March 2021, rising each year to a total of £1.15 billion. The hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) referred to biomass CHP. We are considering our proposals for that for the forthcoming RHI consultation. We will refine our current policy so that it delivers improved value for money to taxpayers and targets biomass in line with the Government’s long-term approach to heat decarbonisation, focusing on large biomass and biomass for process and district heating, and to encourage deployment that is sustainable without subsidy in future.

The hon. Member for Southampton, Test asked about the bioenergy strategy published by the previous Government in 2012. It set out a direction for biomass and recommended supporting sustainably produced biomass to deliver real greenhouse gas savings cost-effectively and taking account the wider impact across the economy. A great deal has happened in the industry since it was written, but those recommendations remain compatible with our current intentions.

Finally, as many hon. Members have pointed out, bioenergy contributes to the UK economy, creates jobs in the fuel supply chain in harvesting, processing and transport, and creates opportunities for foresters, farmers and UK ports and railways. It remains and will continue to remain important, bringing many benefits to the UK in decarbonisation, security of supply and economic benefit. I remain of the view that, when sourced responsibly, biomass can provide a cost-effective, low-carbon and controllable source of renewable energy.

That this House has considered biomass as a source of renewable energy.

[Source]