FORUM FOR RENEWABLE ENERGY DEVELOPMENT IN SCOTLAND - PROMOTING AND ACCELERATING THE MARKET PENETRATION OF BIOMASS TECHNOLOGY IN SCOTLAND
INTRODUCTION
1. The UK Government believes that there is now strong scientific evidence that climate change is happening and that one of the causes is an increase in atmospheric concentrations of greenhouse gases, particularly carbon dioxide released by burning fossil fuels. This needs to be tackled. In its Energy White Paper published in February 2003, the UK Government set the UK on a path to a 60% reduction in its CO 2 emissions by 2050. As part of the effort to achieve that target, the Government believes that we should generate much more of our electricity and heat from low or non-carbon sources. The Scottish Executive has set a target that 18% of the electricity generated in Scotland by 2010 should be from renewable sources, rising to 40% by 2020. The Executive is committed to meeting these targets by promoting a range of technologies, and believes that biomass has the potential to play an important role.
2. The role that biomass might play is likely to be highly significant since it already provides approximately 64% of total EU renewable energy utilisation. Biomass provides approximately 9% of "green electricity" across Europe. In Scotland, however, it has virtually no market penetration whatsoever.
3. Biomass, particularly wood fuel, is accepted as carbon neutral. It can have a positive effect on the environment. It is also a predictable and firm source of energy supply and therefore an important contributor to a diverse energy mix, which is vital to security and continuity of supply.
4. Scottish biomass is uniquely placed within the UK to contribute to both Scottish and UK renewable targets by 2010 rather than 2015 as indicated by the DTI for England and Wales. This is because Scotland has a substantial existing and expanding resource from managed woodlands and secondary sawmill products which can be accessed for wood fuel almost immediately. The biomass industry in Scotland would therefore not require substantial planting of energy crops for initial development of a biomass energy business, although the growing of energy crops would provide a further option to support its expansion. Biomass offers a more efficient utilisation of the existing forestry resources.
5. At its meeting in January 2004, the Forum for Renewable Energy Development in Scotland (FREDS) established a biomass energy group (BEG). The remit of the group is shown at Annex A and our membership is noted at Annex B. Although BEG recognises that there are a number of biomass fuels, for the purposes of this report only forestry, including secondary sawmill products, energy crops and other arable materials are considered.
6. This report summarises our deliberations. It aims to set out the opportunity for Scotland to create a viable biomass industry which will contribute to the attainment of the Executive's renewable electricity targets. BEG is clear that Scotland is not at present realising its considerable potential to develop systems utilising biomass technology. We have considered why this situation has arisen and how it might be changed, and we have made a number of specific recommendations for action.
7. We have concentrated our deliberations on the use of biomass for the generation of electricity and combined heat and power (CHP), for the reason outlined in paragraph 8 below. We recognise, however, the contribution that the production of heat from renewable sources can make to the Government's climate change targets. Indeed, we have noted that in its report of May 2004, the Royal Commission on Environmental Pollution (RCEP) stated that it believed that there is a significant gap in government energy
8. policy regarding heat production. Supplies of heat form a major part of our total energy (as distinct from electricity) requirement. Biomass is a proven and practical source of heat in many European countries. We believe that the development of power and CHP plants could serve to accelerate the development of supply chains which would be useful in the development of heat plants. To become a properly mature market there is a need to focus on all elements- small scale heat, medium sized CHP and heat, and larger scale power plant (including co-firing). The use of biomass for electricity and CHP, including co-firing, is one of the factors that could stimulate a viable heat sector.
9. We have discussed this with the Scottish Executive. We understand that a response to the RCEP will be made by Government. We have also noted that the Scottish Executive and the DTI have announced that they will be considering the issue of support for renewable heat on a similar timescale to the fundamental review of the GBROs. In the light of these developments, we have concluded that we should not develop recommendations specifically relating to support for the development of biomass heat. However, a number of recommendations that we do make, for example, those relating to the supply chain, to planning guidance, and to information provision, apply equally to biomass heat at large scale as they do to biomass electricity and CHP. We also believe that it would be useful to re-convene BEG once the outcome of the UK Government review of the heat sector has been completed, to ascertain whether further action needs to be taken specifically in Scotland.
10. A considerable number of studies have been undertaken into various aspects of developing the use of biomass technologies. BEG has not sought to undertake activity which would replicate this work; rather it has taken account of the findings of these studies in reaching its conclusions. In particular, BEG has considered the conclusions of recent reports by the Royal Commission on Environmental Pollution (1), by WWF and the European Biomass Industry Association (2), and by the Macaulay Land Use Research Institute (3). We have also noted that the European Commission is developing a biomass action plan.
11. In order to assist us to undertake our remit, the Scottish Executive commissioned Future Energy Solutions and Avayl Engineering on behalf of BEG to look at the employment benefits that might be anticipated from the development of biomass plant in Scotland, to identify the financial support schemes currently available and to consider the need for new capital intervention to support further development. And as part of a multi-national, European collaboration called "BIOHEAT II", funded by the European Commission and, in Scotland by Scottish Enterprise, NIFES Consulting Group has commented on the text of this report.
12. In undertaking its remit, BEG has considered three types of biomass fuel - forest materials, energy crops, and arable residues such as straw. It has looked at the issues under a number of broad headings:
- the fuel supply side (the resource and the supply chain),
- infrastructure,
- the demand side (markets and support mechanisms),
- regulatory issues.
13. BEG has also considered the extent to which a biomass industry can be encouraged initially through co-firing with coal. We have also looked at how the sector is structured and supported elsewhere, in particular in North Rhine Westphalia. The following chapters assess the opportunities for Scotland under each of the key headings and make a number of recommendations for action.
14. It is clear from the work that we have undertaken that there is considerable impetus to develop biomass as a renewable fuel. Scotland is well placed to derive benefit by developing a new business arena for the forestry sector and by improving the Scottish economy through reducing dependence on external fossil fuel supplies and related uncontrolled energy prices. It is likely that further recommendations for action will emerge as a result of consideration of the other work that we have mentioned in paragraph 8 above. It will be important that all concerned, Government and industry alike, consider any further recommendations for action that others may suggest; continue to monitor how the sector develops at Scottish, UK and European levels; and recognise the long term nature of the objectives, and take further action where required.