Biomass Asa Renewable Energy Source: R C E P [PDF]

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Biomass as a Renewable Energy Source

ROYAL COMMISSION ON ENVIRONMENTAL POLLUTION

ROYAL COMMISSION ON ENVIRONMENTAL POLLUTION

Biomass as a Renewable Energy Source

About the Royal Commission on Environmental Pollution The Royal Commission on Environmental Pollution is an independent standing body established in 1970 to provide authoritative advice on environmental issues. Its terms of reference are: To advise on matters, both national and international, concerning the pollution of the environment; on the adequacy of research in this field; and the future possibilities of danger to the environment. Within this remit the Commission is free to consider and advise on any matter it chooses; the UK government or the devolved administrations may also ask it to consider particular topics. The primary function of the Commission is to contribute to policy development in the longer term by providing a factual basis for policy-making and debate, and setting new agendas and priorities. It considers the economic, ethical and social aspect of issues alongside the scientific and technological aspects. It sees its role as reviewing and anticipating trends and developments, identifying fields where insufficient attention is being given to environmental problems, and recommending actions that should be taken. The Commission has published 24 reports, and many of their recommendations have been accepted and implemented by successive governments. The members of the Commission have a wide range of expertise and experience in natural and social sciences, medicine, engineering, law, economics, and business. They serve parttime and as individuals, not as representatives of organisations or professions. A full-time Secretariat supports The Chairman and Members by arranging and recording meetings and visits; gathering and analysing information; handling finances and administration; and drafting and publishing the Commission’s reports. In the course of its studies, the Commission canvasses a wide range of views. Information on its work (including minutes of meetings, background papers by consultants and summaries of evidence submitted) is available via www.rcep.org.uk.

BIOMASS AS A RENEWABLE ENERGY SOURCE

A Limited Report by The Royal Commission on Environmental Pollution

Contents

Page

CHAPTER 1 – Introduction

3

CHAPTER 2 – Biomass fuels

9

Energy crops Forestry products Sawmill co-products Municipal arisings Conclusions

9 21 24 26 28

CHAPTER 3 – Generation using biomass fuels

30

General principles Heat generation Combined heat and power Electricity generation Environmental implications

30 31 33 40 43

CHAPTER 4 – Meeting the target

47

Economics of biomass Transport Energy conversion facilities Land-take Planning for biomass Phased delivery A strategic approach

47 52 58 60 63 67 68

CHAPTER 5 – Conclusions and recommendations

69

APPENDIX A – Policies to support biomass – description of current schemes

72

APPENDIX B – Case studies

75

APPENDIX C – Scope and limitations of the special report

83

APPENDIX D – Conduct of the report

85

APPENDIX E – Members of the Commission

88

APPENDIX F – Reports by the Royal Commission on Environmental Pollution

89

REFERENCES

90

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ROYAL COMMISSION ON ENVIRONMENTAL P OLLUTION – BIOMASS AS A RENEWABLE ENERGY SOURCE

CHAPTER 1 – INTRODUCTION

Context 1.1

Energy consumption throughout the world, but particularly in industrialised societies, has been steadily increasing. Much of the energy consumed, 97% in the case of the UK1, comes from non-renewable sources. The present use of carbon-based non-renewable energy is unsustainable, inter alia because of the effect of the resultant carbon dioxide (CO2) emissions on the global climate. Reduction in demand must be part of the solution2 but alternative energy sources must also be developed. All energy sources come with environmental penalties, whether from the construction of dams and barriers or from the impact of renewable sources such as wind on rural landscapes, but these impacts must be balanced against the necessity of developing low-carbon sources that are both economically viable and also secure.

1.2

The Royal Commission’s Twenty-second Report, Energy - The Changing Climate published in 2000, advocated a number of steps that the government should take, both in terms of domestic policy and through international negotiation. A key recommendation was that a long-term target should be set to reduce CO2 emissions by 60% by 2050. This was based on the contention that the maximum concentration of CO2 in the atmosphere should not exceed twice the pre-industrial level. The government subsequently accepted that the UK should put itself on a path towards this aim3. In order to reach a 60% reduction of CO2 emissions, it is vital for the government to concentrate on encouraging low- or non-carbon electrical and heat generation. As a component of a renewable energy generation mixture, biomass should play an important role.

1.3

There are three types of indigenous biomass fuel: forestry materials, where the fuel is a byproduct of other forestry activities; energy crops, such as short rotation coppice (SRC) willow or miscanthus, where the crop is grown specifically for energy generation purposes; and agricultural residues, such as straw or chicken litter. Biomass can also be imported, mainly in the form of pelleted sawdust (which is already an internationally traded commodity).

Why Biomass? 1.4

Wood is a renewable fuel; its production and use is almost carbon neutral. Trees absorb CO2 to photosynthesise organic compounds using solar energy. The energy is stored chemically and released when the wood is subsequently destroyed - whether by natural decay or combustion. Hence, although CO2 is released into the atmosphere when wood is burnt, an equivalent amount of CO2 has been taken from the atmosphere during growth. Some net release of CO2 would take place if the growing, processing or transporting of the wood involved the use of fossil fuel.

1.5

The carbon in biomass used as fuel does not therefore contribute to greenhouse gas emissions. Technically emissions from biomass use are reported in the UK greenhouse gas ROYAL COMMISSION ON ENVIRONMENTAL P OLLUTION – BIOMASS AS A RENEWABLE ENERGY SOURCE

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inventory as a memo item, but are not included in the national total. This is in accordance with international guidelines from the Intergovernmental Panel on Climate Change (IPCC) and the United Nations Framework Convention on Climate Change (UNFCCC). On the other hand emissions of nitrous oxide and methane from the combustion process are included in the national total (because the carbon is balanced by photosynthetic uptake but the methane and nitrous oxide are not). Emissions of nitrous oxide from any fertiliser used to grow the biomass are also included, as are emissions of CO2 from fossil fuel used in forest or field operations and transportation. 1.6

Unlike most other renewable energy sources biomass can be stored and used on demand to give controllable energy. It is therefore free from the problem of intermittency, which is a problem for wind power in particular. Also, unlike most other renewable sources, biomass offers potential as a source of heat as well as electricity, offering high conversion efficiencies. This potential appears to have been overlooked in government policies to promote biomass, which have concentrated on electricity generation. In this report we therefore concentrate on biomass as a fuel for heat or combined heat and power (CHP) . We will show that biomass energy offers an opportunity to rethink energy generation and to drive a step-change in the efficiency of power and heat production. The implications for the UK’s CO2 reduction targets are highly significant.

1.7

Biomass energy technology is inherently flexible. The variety of technological options available means that it can be applied at a small, localised scale primarily for heat, or it can be used in much larger base-load power generation capacity whilst also producing heat. Biomass generation can thus be tailored to rural or urban environments, and utilised in domestic, commercial or industrial applications.

Box 1A Units of energy production Rates of production of energy are measured in watts (or kilowatts (kW), megawatts (MW) or gigawatts (GW)). If a production rate of one watt is maintained for one hour, the amount of energy produced is one watt-hour. This report uses watts and the units derived from watts to indicate energy generally. Where it is important to distinguish heat (thermal energy) from power (electrical energy) a suffix (th or e, respectively) is used. For example a CHP facility with a total output of 40 MW might typically produce 30 MWth and 10 MWe.

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1.8

The technology is most efficient where a source of fuel and a demand for heat are within an economically viable distance of each other. In this report we examine the costs of transporting biomass fuels, both financially and in terms of CO2 emissions. We show that we might expect a significant proportion of the UK to be able to meet the maximum distance criterion for efficient use of biomass. In some areas of the UK fuels could be grown as energy crops and in others it would arise as a by-product of agriculture, forestry and other activities.

1.9

Biomass offers important opportunities for UK agriculture and the countryside. As the North Sea resources become exhausted, the shift from coal to oil and gas-fuelled generation

ROYAL COMMISSION ON ENVIRONMENTAL P OLLUTION – BIOMASS AS A RENEWABLE ENERGY SOURCE

means that most of our fuels will come from outside the UK. This dependence on international sources for our fuel reduces security of supply and marginalises the domestic agricultural sector. Biomass energy provides an opportunity to develop a fuel source from the UK’s own resources, increasing the security of its energy supply; it also offers new opportunities for UK agriculture.

Why not biomass? 1.10 Biomass has been successfully used as a source of energy across Europe but it has not become established in the UK; there are several reasons for this. The main problem is that the government’s capital grants schemes for biomass initiatives have focussed on hightechnology approaches to electricity-only generation with a view to potential export development. Demonstration schemes have not been based on established biomass technology and they have consequently failed, with resulting loss of confidence. The failure to recognise heat utilisation as an important way of delivering high-efficiency energy means that opportunities have been lost. Climate change policy, not speculative export possibilities, should be the primary driver for developing the biomass sector in the UK. 1.11 Additionally, the complexity of grant schemes has made it difficult to make headway into developing this sector. In this study we identified 14 different grant schemes, but found no national co-ordination. Similarly there is no national facility for the sharing of information and experiences on biomass. At present it is too difficult for the biomass sector to grow and government policies that are meant to make this process easier fail to do so. 1.12 These problems however are institutional rather than technical. There is no fundamental reason why the UK biomass industry should not follow the route that has proved to be successful in countries such as Sweden, Denmark, Austria and New Zealand. However, growth of energy crops requires water and land and can have implications for biodiversity and landscapes. 1.13 In this report we address these issues and discuss how they are likely to affect the take-up of energy crop production in the UK. Any extensive use of biomass could also have significant transport implications, and planning must allow for and minimise the associated costs and impacts. 1.14 Combustion of biomass generates gaseous emissions and considerable quantities of ash, some components of which (such as dioxins and heavy metals) are potentially harmful. This report discusses these emissions and makes recommendations for the reduction of emissions and the handling of solid wastes.

Strategy Targets 1.15 This study was carried out following the publication of the Energy White Paper, which accepted a number of the recommendations in our Twenty-second Report. Here we expand

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upon those recommendations and offer policy-based guidance on how to achieve them. In particular we recommended that by 2050 up to 16 Gigawatts (about 12%) of the nation’s energy should come from biomass (Table 1.1). This would be a clear but not dominant role for biomass within a larger, diversified energy portfolio. Our Twenty-second Report illustrated four possible scenarios for the future of UK energy generation, all of which required some degree of biomass generation to meet the 60% CO2 reduction target. Table 1.1 summarises the contributions required from biomass as set out in the four scenarios in the Twenty-second Report.

Table 1.1 - Biomass targets from the Twenty-second report Scenario

Biomass GW

Total UK GW

Biomass as % of total GW

1

16

205

8

2

16

132

12

3

7.5

132

6

4

3

109

3

Environmental, social and economic implications 1.16 This report describes the agronomic, technological and infrastructure developments that would be needed to deliver sufficient energy from biomass. In doing so, it discusses the environmental, social and economic implications of each component. Environmental 1.17 Setting aside the savings in CO2 emissions, which are common to all renewable energy sources, the production and use of woody biomass as an energy source will have both positive and negative effects on the environment. While these may be difficult to quantify, we have seen evidence that the net impact will be positive. Experiences in countries such as Austria and Sweden where use of biomass is well established are particularly encouraging. Given the limited experience in the UK, it is important that care is taken to learn from experience elsewhere to minimise adverse effects. Environmental impact assessments should be carried out and the evidence reviewed at each stage of the development of a biomass energy sector. Social 1.18 Experience in Austria and Sweden has shown that if biomass energy is introduced sensitively and transparently, society welcomes it. Local concern may well arise if people see evidence of large-scale landscape changes as energy crops are introduced, or are not

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satisfied that the local impacts of energy generating plants have been properly addressed. However, guidance and standards are available to address these concerns, and it is important that these are carefully applied. Economic 1.19 We have also considered the cost of biomass energy. The cost of the fuel is comparable to that of fossil fuels (particularly when the external costs of CO2 emissions are taken into account), but the capital investment required is generally higher. In addition the grant structure to support biomass utilisation is both complex and incomplete when compared to the support available to other forms of renewable energy. It is not well suited to supporting an energy source that delivers heat as well as electrical power. There is a need to stimulate markets for heat, and there are opportunities now to do this. We have made recommendations to address this.

A staged approach 1.20 A successful biomass energy strategy requires that by 2050 much of the fuel needed will be grown as energy crops, and this means that potentially significant amounts of agricultural land will need to be diverted to this use. However, in the shorter term there are existing sources of biomass to fuel the development of the sector. We have identified four stages in this process: • Immediate future - energy crops utilise a relatively small proportion of set-aside land. • Short-term - area required for energy crops increases to an area equivalent to the amount of set-aside land. • Medium-term - area required for energy crops increases beyond the amount of land that is currently set-aside. • Long-term - area of land increases to be a significant proportion of total available agricultural land. The timing of these stages and the amount of land that will ultimately be needed by 2050 for growing energy crops will depend on the availability of other biomass fuels, especially straw and forestry arisings. We consider fuel availability in chapter 2. 1.21 In chapter 3 we discuss the different approaches to converting biomass to heat and power. We question the appropriateness of the government’s current emphasis on high-tech power generation and we concentrate on the use of relatively simple heat or CHP plants, and on co-firing in existing stations – these are technologies that are already available or are close to being proven. 1.22 Chapter 4 brings our conclusions on fuel resources and conversion facilities together into a new strategy for developing a biomass utilisation programme over the next few decades, based around the four stages described above. We calculate the number of energy plants that would have to be built and the amount of land that would need to be ROYAL COMMISSION ON ENVIRONMENTAL P OLLUTION – BIOMASS AS A RENEWABLE ENERGY SOURCE

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brought under energy crop production, and map these onto the four-stage model. Chapter 5 is a summary of our conclusions and recommendations. 1.23 Our proposed strategy does not cover biofuels for transport or energy carriers such as hydrogen produced from hydrocarbons. As described in the Twenty-second Report and our analysis of the environmental impacts of air travel, transport is a prime user of hydrocarbons. Fuels such as bioethanol from cereals and biodiesel from oil seeds may have a role as fuels for surface transport4. Applications of woody biomass to produce transport fuels are more speculative, they are not covered in this report as we view them as longerterm possibilities that might be appropriate if surplus biomass or land is available once the more immediate applications have been exploited. 1.24 We also make the point that woody biomass gives a higher energy yield per hectare than transport fuels from cereals or oil seed crops. However, in a climate of changing policies and incentives, farmers will naturally prefer to plant annual crops rather than woody materials which require a commitment to one crop for many years. This leads to a further theme in our recommendations: that development of a biomass sector is dependent on stable longterm policy.

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CHAPTER 2 - BIOMASS FUELS 2.1

Biomass for fuel can be gathered or grown. Energy crops are grown using agricultural methods; in this chapter we shall examine the main species suitable for use in the UK and the methods of cultivation, economic value and impacts through land-take, water use and soil contamination. Forestry and municipal tree management both lead to substantial arisings of woody plant material that could be gathered for fuel and we shall consider the likely arisings in the UK. The potential resources of straw from cereal and oil seed crops are also considered.

Energy Crops Species 2.2

Willow (Salix spp.) has already been used in commercial or near commercial operations in the UK. Investment in developing new varieties with increased yield stability and improved crop management has made willow increasingly competitive as an energy source (paragraph 4.2). Willow chips are a reliable source of fuel of a consistent quality, suitable for firing in CHP and district heating plants. Willow has been grown extensively in Scandinavia for fuel, and in Sweden some 15,000 hectares of land are dedicated to its production for renewable energy. Consequently, much more information about cultivation, harvesting and yields is available for willow than for the other potential energy crops. The grass miscanthus (Miscanthus spp.) is attracting an increasing amount of interest but it is still largely at trial stage in the UK.

2.3

Among other potential candidate species, poplar (Populus spp.) is closest to providing an alternative source of fuel. Poplar is being trialled in short rotation coppice (SRC) plantations, as well as being tried in silvoarable agro-forestry where it is intercropped with arable species. Straw has also been used as fuel and has the advantage of being a by-product with which farmers are familiar.

Cultivation, harvesting and yield Willow 2.4

Short rotation coppicing (SRC) is the most promising way of growing willow quickly and easily. Breeding programmes are continuously developing new varieties that have higher yields, better growth characteristics (straighter stems for easier harvesting for example), and more resistance to pests and pathogens. Willow is easy and relatively inexpensive to plant using cuttings. The stems are cut into 2 metre lengths before transportation (they can be frozen if travelling long distances). A Swedish company5 has developed a step-planter that cuts the stems into 15cm sections and deposits them in the soil. They are then pushed further into the soil with a roller and left to take root.

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2.5

The first year of growth is cut back to encourage rapid, thick growth in the second to fourth years. The willow is ready for harvesting and chipping after three years of regrowth. The stems are cut above ground level and the stumps are left to reshoot. An average willow coppice can be harvested over 15-20 years and the land can readily be returned to conventional crop use in 1-2 years by ploughing in the roots and treating the soil and weeds with herbicide.

2.6

Willow is capable of benefiting areas with loose topsoil because its roots grow into a matlike mass immediately below the surface of the soil, which helps to retain the topsoil. The leafy canopy prevents saturation of the land during periods of heavy rainfall, reduces soil erosion from run-off and prevents nutrients from entering streams.

2.7

Levels of pest or pathogen damage that are considered unacceptable in food crops can be tolerated in plants that are destined to be burned. Consequently, established SRC can be managed with few pesticide applications without incurring significant economic penalties. Integrated Pest Management (IPM) has been addressed mainly for willow, but a number of the recommendations could be extended to poplar. The resistance of willow genotypes to infestation by various pests and pathogens is well understood, as are site-dependent factors such as plants present in adjacent areas that might act as hosts to divert fungal diseases. IPM for willow SRC recommends the planting of up to five varieties of different ages in a plantation to enhance biodiversity. It also recommends strategic planting to concentrate pests and pathogens in smaller areas of coppice, reducing the scale of chemical application needed to control the pests6. Rabbits are a pest that cannot be controlled through the use of IPM, they can pose a significant threat to willow shoots and rabbit-proof fencing is costly, especially on irregularly shaped plots of set-aside land with high boundary to area ratios.

2.8

The emphasis, when planning SRC plantations, should be on utilising local knowledge and planting varieties that have been tested previously on a similar site. Tailoring the plantation to the local environment is essential. Attention to detail at the planning phase can result in well-designed, healthy coppices with high yields, low disease and pest susceptibility and improved biodiversity.

2.9

Conventional willow harvesting machinery cuts and chips the stems simultaneously. By planting the willow in rows, high chipping rates can be achieved. It is important to harvest willow in winter as it results in better wood with lower water content and allows nutrient cycling from fallen leaves. The harvesting equipment that has been used so far is based on that used in Sweden. There, willow is harvested in winter and the frozen ground makes it possible for heavy machinery to move over the land without causing excessive soil damage. In the UK the land does not freeze to the same degree as in Sweden and so this type of heavy equipment is not suitable. A UK willow growers’ group has gone some way towards solving this problem by using an imported sugar cane harvester7. There is no need for frozen soil during harvesting as the mat-like roots of the willow plants adequately support the lighter machinery.

2.10 The UK transportation infrastructure cannot yet match the rate of willow chip production, so chips would have to be stored at the side of fields and reloaded onto trucks. The cost of unloading and reloading chips for later transportation can be restrictively high both

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economically and energetically, and storage times and methods need to be controlled to avoid the development of fungi leading to biodegradation, and the build up of excessive moisture. 2.11 The cane harvester used in the plantations established around the Arable Biomass Renewable Energy (ARBRE) plant (paragraph 3.35) harvests the wood in rod form, which is easier to transport and store and has a higher bulk density with lower moisture content. Storing the materials in rod form also reduces the loss of material and calorific value due to

Coppiced poplar wood chips in farmer’s hands

decomposition during long-term storage8. The rods are then chipped before use, or, if destined for use in a co-firing plant (paragraph 3.42), can be milled directly into wood dust. 2.12 UK farmers and test centres have reported varying yields for willow SRC. This variation is likely to be the result of the variable quality of the plants, suitability of the land and more or less effective management. Yield has also been found to depend on planting density and frequency of harvesting9. Farmers currently see willow as a marginal crop and will make use of subsidies by planting on set-aside land. The land chosen for set-aside is often the lowest quality land and this could also result in reduced yields. Weeding and fertilising are important in the first year of growth; if it is not carried out effectively then yield may drop. Fertilising can be important throughout the growth cycle, though the amount required for willow SRC is significantly less than for arable crops. 2.13 Climatic factors also have an impact on yield. Willow requires substantial quantities of water and suffers reduced growth in dry conditions or dry years. Wetter regions of the UK might be expected to be better suited to growing willow than others, though farmers have had successful willow crops in drier areas of the UK so it seems that other factors may also be important10. The requirements for water should be considered as part of the overall water demand when crops are to be grown to provide energy for new building developments.

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2.14 Over the three years between harvests, the yield for willow should be ~ 20-25odt (oven dried tonnes) per hectare (but it can be higher if grown under optimum conditions with additional fertiliser and water). This can deliver an income of > £100 per hectare per year (ha/y) in addition to grants and subsidies. Under the current arrangements for grants and subsidies, the growing of energy crops is only considered to be viable at yields of 10 odt/ha/y or more11. Yields of willow at this level are achievable through careful agronomy and by building on experience. Willow is less economically viable as a fuel for electrical generation only, and in chapter 3 (paragraphs 3.4 to 3.33) we have explored ways of adding value to the crop by exploiting the potential for using it in CHP and heat-only generation plants. Poplar and other tree species 2.15 Poplar has been trialled on a much more limited basis in the UK and results have varied dramatically from site to site. Planting of poplar is more difficult than with other energy crops because it is not easily propagated from cuttings. Good apical buds are needed for effective planting and growth. Planting machinery has not yet been developed and current practice is to use a cabbage planter; success with this machinery is limited and there is real scope for technological developments to make the process much easier and more effective. Land used for poplar is more difficult to return to normal agricultural use than that used for willow, as the deep woody roots are difficult to remove. 2.16 Willow harvesting methods are also likely to be relevant to poplar although harvesting may be needed more frequently due to the fast growing stems that thicken quickly. 2.17 Poplar trials in the UK have revealed that the yields are very site specific. In some cases poplar yield has outperformed willow by up to 66% but in others poplar yield has been as low as 30% of willow production12. The wide variation in yield, dependent on a number of site-specific factors, could prove an obstacle to wide scale adoption of poplar as an energy crop in the UK but does not rule out its use in those areas that are suited to its production. 2.18 Increasing the variety of energy crop options available to farmers enables planting to be determined by local environmental factors, which increases farmer confidence. This also enhances security of supply for generators, as farmers will be able to plant crops that are more likely to thrive in their locality thus making harvests more reliable than if only a single energy crop option were available. It is our opinion that the influence of site suitability on yield means that farmers should be allowed as much flexibility as possible when moving into biomass fuel production. Planting should be guided as much as possible by local knowledge and farmers’ experience of the type of crops that they can grow on their land, not by planting grants for specific crops. We recommend that producer group grants be extended to include producers of energy crops other than willow. We also recommend that the Scottish Forestry Grant Scheme be similarly extended to cover all possible sources of biomass. 2.19 Short rotation forestry (SRF) is another option for the cultivation of a number of tree species for energy. In SRF, trees are grown closely (as single stems) and harvested after 5-15 years. Of the many coniferous and broad-leafed species that have been trialled, ash (Fraxinus spp.) may be the most suitable, but it requires good soil that is not acidic. On

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poorer, wetter soils, alder (Alnus spp.) has potential. In the short term SRF is not seen as a major source of biomass for fuel, but this could change in the future. Miscanthus 2.20 Like wheat, miscanthus (also known as elephant grass), is a member of the grass family (Gramineae) and is grown using conventional agricultural methods and harvested annually. It is gaining favour with farmers as it is planted, harvested and stored using existing farm equipment and methods. It is cut and baled with a straw baler and stored in barns. It thus requires less capital investment than willow. Farmers also have more confidence in using current farming practices. The main disadvantage of miscanthus is that it can be difficult to rehabilitate the land for other uses due to its deep root structure. 2.21 Miscanthus is a genus of about 20 species native to tropical Asia and Africa and like most tropical grasses (such as maize, but with the notable exception of rice), it carries out a modified form of photosynthesis, known as C4 (Box 2A). Most C4 grasses are cold sensitive and do not grow well in cool regions. Miscanthus x giganteus, the cross most commonly used for biomass production, is fairly cold tolerant and can grow (rather than just survive) at temperatures that would not suit some arable C4 crops such as maize. Unlike maize,

Box 2A C4 photosynthesis The key reactions of photosynthesis are the same in all plants. Light energy is converted into chemical energy, with the production of oxygen as a waste product. The energy is used when carbon dioxide (1 carbon atom per molecule) is added to the 5-carbon atom sugar ribulose bisphosphate producing, after several stages, two molecules of the 3-carbon atom sugar, triose phosphate. This is the C3 pathway, and is the starting point for synthesis of almost everything else in the plant: sucrose, cellulose, amino acids etc. The enzyme that carries out the reaction to produce triose phosphate also catalyses a reverse reaction, a process known as photorespiration, in which oxygen is used and carbon dioxide generated. This is a waste of much of the light energy that could have been used to produce sugars etc. However, photorespiration can be suppressed by increasing the concentration of carbon dioxide at the site where it occurs. C4 plants can change their internal concentrations of carbon dioxide by temporary storage of carbon dioxide in C4 acids, such as oxaloacetic acid, formed from C3 acids in leaf mesophyll cells. From there acids are transported to bundle sheath cells (located around the leaf veins) where carbon dioxide is released and the donor acid returned to the mesophyll cells. In the bundle sheath cells carbon dioxide is at a higher concentration than in the mesophyll cells and thus photosynthesis can occur without photorespiration. C4 plants are more efficient than C3, particularly at high temperatures, and many are also thought to control their water use more effectively. C3 plants typically have transpiration ratios (g water lost per g carbon dioxide fixed) in the range 490-950 compared to 250-350 1 -2 -1 for C4 . Maximum growth rates (g m day ) are correspondingly higher: 34-39 for C3 compared with 50-54 for C4. 1

(Hamlyn G Jones (1993). Plants and microclimate CUP).

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miscanthus maintains high levels of key C4 enzymes that function at low temperatures to maintain high rates of photosynthesis13, although leaves may expand more slowly at low temperatures14. Successful growth of miscanthus has been reported at an altitude of 300m above sea level on the Yorkshire Wolds. As with several C4 grasses such as genotypes of sugar cane, there is evidence that endophytic nitrogen fixing bacteria can occur in miscanthus15. This could reduce the need for nitrate fertiliser, but is likely to be very genotype-specific. There is also evidence that miscanthus may have a positive effect on nutrient cycling and soil organic matter content (carbon and nitrogen)16. Miscanthus is economical in its use of nutrients and has a good internal recycling system, where much of the N, P and K (nitrogen, phosphorus and potassium) is translocated from leaves and stems and stored in the unharvested rhizome fraction. Defra cites an ash content of 2.7% (of dry mass), which is below average for this type of plant (paragraph 2.24). 2.22 Miscanthus is widely grown as an ornamental plant, because of its attractive inflorescences. Genotypes developed for biomass are selected for delayed flowering and for infertile hybrids to avoid it becoming a weed17, (miscanthus is propagated by rhizomes or by micropropagation, so seeds are not needed to produce material for commercial use). Although relatively efficient in its use of water, miscanthus yields may still be reduced by drought: genotypes with tight control of transpiration have been identified for use in breeding programmes18. 2.23 There are fewer sites planted with miscanthus for energy production in the UK than with SRC so information is more limited. Of the seven sites for which results are available19, two failed to achieve regular yields of 15 odt/ha/y, and one of these failed to achieve the accepted profitability threshold of 12 odt/ha/y. Four of the remaining five sites achieved yields in excess of 20 odt/ha/y in one or two years. However, reliable planting and development of miscanthus rhizomes remains an issue given the limited experience to date. Other grasses 2.24 Most work on evaluating grasses other than miscanthus has been carried out on canary reed grass (Phalaris arundinacea), a C3 species native to Europe. Canary reed grass is a rhizomatous perennial that is grown from seed, reducing establishment costs, and can be harvested 2-4 times a year. It produces harvestable material earlier than miscanthus and can be processed with the same machinery as wheat straw. It can be grown in cold areas such as Finland20. The first harvest in the spring is of the previous year’s growth, before new tillers are produced; this has a low water content (10-15% dry weight). It does not need high levels of nitrogen, indeed it can be used to take up nitrogen from polluted waters and it may have an additional use in cleaning up heavy metals from municipal sewage21. On the other hand it can become very invasive of wetlands and is in fact banned from some areas in North America. Canary reed grass was one of four perennial rhizomatous grasses selected for evaluation for energy crops in Europe and USA. The others were miscanthus, giant reed C3 (Arundo donax) and switch grass C4 (Panicum virgatum). Both giant reed and canary reed grass inhabit wetlands, and so would not be a suitable alternative to arable crops on high grades of agricultural land. The ash content of C4 grasses is typically around 8%, about double that of C3 grasses. This ash is primarily fine silica, which adds to the fly ash produced when the grass is burned22.

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Straw 2.25 Cereal crops consist of roughly equal parts grain and straw, oil seed crops such as rape produce roughly 1.5 tonnes of straw per tonne of seed23. These ratios imply that the total amount of straw produced in the UK was almost 24 million tonnes in 2002. This straw may be used for animal feed or bedding, and there are limited export markets, for example to Holland for use in tulip cultivation. 2.26 Many farmers prefer to plough straw back into the field to improve the organic content and texture of the soil. This use for straw has only come about in response to a ban on burning straw, which had been the practice for many years, and there are divergent views on its benefits, especially in terms of nutrient content (paragraph 2.27). The volume of straw available in the UK is considerable and it is likely that a significant surplus would be available for use as fuel from those farmers that choose to market it for energy generation.

Environmental implications Energy use during production

Table 2.1 Energy use and greenhouse emissions from fuel production24 Resource

Energy use (Mj/odt)

CO2 equivalent emissions (kg/odt)

Forestry residues

572

33

Straw

1253 (a)

171 (a)

(baled)

-31 (b)

-4 (b)

Short rotation coppice

756

35

338

40

(chips)

(chips) Miscanthus (baled) 2.27 Table 2.1 shows the energy use and CO2 equivalent emissions from fuel production, including direct inputs, indirect inputs and resource-related inputs. These have been converted from values per wet tonne to values per oven-dried tonne (odt). Two values for energy use and emissions for straw have been given as a result of the possibility of varying fertiliser input assumptions (paragraph 2.26), which have a large influence on the estimates. In case (a), fertiliser inputs are used to replace nutrients lost when straw is removed from the field instead of being ploughed in. As a result, indirect and resource energy use and emissions are large, and are significantly greater than for the other fuels. However, if it is assumed that replacement fertiliser is not needed (case (b)), the energy and emissions are

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15

negative compared with ploughing in. But even in the worst case, the CO2 savings from using biomass rather than fossil fuel (about 1,000kg CO2/odt equivalent for gas) massively outweigh these emissions. Water requirements 2.28 The high water requirement of willow can constrain its use to areas where sufficient irrigation water is available at reasonable cost and without unacceptable environmental damage (paragraph 2.13). However, municipal sewage or sewage sludge can be used to irrigate willow, and will provide both additional nutrients and water25. Water companies have already shown an interest in this disposal routei, which could provide an additional revenue stream for farmers as well as reducing their fertiliser input costs. Willow and heavy metals 2.29 The high heavy metal content of sewage used as fertiliser can raise concerns over soil content. Willow, however, will take up heavy metals, particularly cadmium, and concentrate them in the wood. Willow plantations can therefore actively reduce levels of metals in contaminated soils26 (Figure 3-V) and can be used for the bioremediation of contaminated land. Subsequent care in managing the ash from energy production is important to prevent unacceptable build up of heavy metals in the soil. We address this in chapter 3 (paragraphs 3.53 - 3.56). Landscape 2.30 The English landscape is not constant; it has been in a state of change for centuries as humans have changed the use to which they put the land27. Change need not be undesirable, but substituting one landscape for another will be of significance to those who value the landscape and decisions on land use should be made cautiously. A change of land use from arable cropping to willow coppicing or miscanthus cultivation over a large area would have a significant impact on the landscape - a mature willow crop can grow to four metres in height before harvest and miscanthus can reach similar heights. 2.31 Willow plantations need not be visually intrusive if planting is planned sensitively. The Forestry Commission has produced a guideline note28 on planning plantations of SRC (willow in particular) and minimising the impact on the landscape. The guidelines indicate that irregular-shaped plantations on low-lying land that are sympathetically shaped and managed are the best option for such a visually intrusive crop. The Forestry Commission emphasises that planting coppices of various ages near to existing tall plants (woodlands for example) reduces dramatic landscape changes after harvest; it also suggests incorporating public rights of way and planting areas of shrubs around these to improve diversity and visual interest. It is important to avoid planting large, geometric shaped coppices on high ground that can block local scenic views, especially in recreational areas.

i

16

Yorkshire Water’s initial interest in the ARBRE project was in using the SRC as a sewage disposal route.

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2.32 Straw is a by-product of an existing crop so few, if any, landscape changes would be likely to result from its adoption as an energy fuel. Likewise forests are an existing landscape feature and their use as a source of fuel will have little or no landscape impact but improvements in forest management could increase their accessibility for public recreation. Biodiversity 2.33 Short Rotation Coppice provides cover that is not supplied by arable crops or grassland and weeds are better tolerated. This can provide an environment attractive to small mammals, invertebrates and insects29, which in turn attract many species of bird. Ground nesting birds are attracted to SRC especially after harvest or first year cutback. Sensitive planting of SRC can improve game bird prospects, and pheasants in particular value the shelter that a well-established crop can offer. An average SRC plantation can exist for 15 or 20 years, providing a more stable and mature environment for wildlife than annual crops. This is particularly true for winter-sown cereals which, as currently managed, do not support a high level of biodiversity. 2.34 The fauna attracted to coppices are similar to those found in woodland. Planting SRC adjacent to woodland not only reduces the visual impact of the plantations but also provides ecological corridors for the movement of wildlife. The cover provided by a coppice offers opportunities for bird watchers and animal enthusiasts as it also attracts larger mammals such as deer. Unfenced willow and miscanthus plantations may, however, shelter rabbits that may graze neighbouring crops. 2.35 Sensitive planning is central to the issue of improved biodiversity. Replacing wetlands or other natural habitats is likely to result in a net reduction in biodiversity. The water demand of willow means that the crop can have an impact on an area beyond the plantation boundaries especially if it is sited close to wetlands or small local streams. Fish and other waterborne creatures can be negatively affected by a reduction in the water table due to the high water demand of coppicing in nearby areas. This is addressed in the EC Environmental Impact Assessment Directive that requires an assessment to be carried out before uncultivated or semi-natural areas are converted into intense agriculture if this is likely to cause significant environmental effects30. 2.36 Poplar appears less able to enhance biodiversity than willow, particularly in respect to insects31. However, poplar coppices can tolerate higher weed populations and weed seeds are an important bird food. There may also be benefits for biodiversity of invertebrates such as spiders, beetles and slugs32. Poplar plantations also tend to sustain more stable and diverse plant communities, with fewer annuals and invasive perennials33. 2.37 As yet there are few data available on the biodiversity impacts of other energy crops such as miscanthus, though similarly a miscanthus plantation might provide better cover, higher weed-growth and lower pesticide usage than arable crops. 2.38 We recommend that the biodiversity benefits of energy crops be reflected in the Energy Crops Scheme, with payments matching those available with respect to biodiversity enhancement through the Countryside Stewardship Scheme. The Energy

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17

Crops Scheme goes some way towards this by allowing open spaces within plantations to be included in the area that is counted in the awarding of grants, but payments based on set criteria for sensitive planting of a variety of species and ages and incorporating public rights of way and wildlife corridors would provide better incentives for farmers embarking on energy crop production. The possibilities for integrating energy, farming diversity,

Box 2B Land classification in England and Wales Agricultural land is divided into classifications by the physical limitations of the land for agricultural use, the determining factors being climate, site and soil and how these affect the versatility of the land and the reliability of crop yields1. England and Wales have five classifications (or grades) and grade 3 is divided into subgroups a and b2, the Scottish executive uses seven grades of land classification with up to three sub-categories in each3, The first five follow roughly the descriptions and proportions set out below for England and Wales4. Grade 1 - excellent quality agricultural land 3% of agricultural land Land that produces consistently high yields from a wide range of crops such as fruit, salad crops and winter vegetables. Grade 2 - very good quality agricultural land 16% of agricultural land Yields may have some variability but are generally high, some factors may affect yield, cultivation or harvesting. Grade 3 - good to moderate quality land 55% of agricultural land Limitations of the land will restrict the choice of crops, timing and type of cultivation, harvesting. Yields are generally lower and fairly variable. Grade 4 - poor quality agricultural land 16% of agricultural land Severe growing limitations restrict the use of this land to grass and occasional arable crops.

Grade 5 - very poor quality land 10% of agricultural land Land that is generally suitable only for rough grazing or permanent pasture. Defra (2003). Agricultural Land Classification. Protecting ‘the best and most versatile agricultural land’ MAFF(1988). Agricultural land classification of England and Wales 3 Personal Communiction, J Hooker, April 2003. 4 Defra. England ALC stats 1 2

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biodiversity and recreation targets should be recognised and encouraged through additional payments to farmers that meet these standards.

Potential production 2.39 England has about 2.5 million hectares (Mha) of grades 1 and 2 agricultural land, 6 Mha of grade 3 land and 3 Mha of grades 4 and 5 land. Food production is likely to continue on the best grade 1, 2 and 3 land but a significant amount of land in grades 3, 4, and 5 will be available and suitable for energy crops. Environmental impact assessments may rule out some areas of set-aside and grade 5 land for energy crop production on environmental grounds, or it may just be unsuitable (steep slopes or very poor quality soil for example). Therefore it is more likely that grades 3 and 4 land will be used for willow production. Energy crop production could be started as a use for set-aside land but it is likely that eventually other arable land would need to be switched to energy crop production. 2.40 There are currently 1,795 hectares of land under cultivation of commercial willow SRC and miscanthus in the UK34; at least 1,500 hectares of this is willow35. The land dedicated to energy crops totals less than 0.01% of the total arable land in the UK36. The Defra NonFood Crops Strategy states that domestically grown crops should meet a significant part of the demand for energy and raw materials in the UK37. The National Farmers’ Union suggests that up to 20% of crops grown in the UK could be made available for non-food uses (i.e. for fuels or industrial materials), by 202038; hence, there is scope for a significant expansion of energy crop production in the UK. Planning crops in order to achieve the maximum environmental benefits and yields in areas close to demand is the challenge to be met by the farmers and energy generating companies 2.41 The implications for UK land availability can be considered in four stages: • Immediate future - energy crops utilise a relatively small proportion of set-aside land. 2.42 For the immediate future, the indications from power plants in the planning stages are that farmers can be attracted to allocate sufficient land to growing energy crops by the existing set-aside and planting grants39,40 with a proportion of growers not using set-aside land. • Short-term - area required for energy crops increases up to the amount of set-aside land. 2.43 The average set-aside land over the four years from 1999-2002 was 640,000 ha. It is unlikely that all of this will be suitable or available for energy crops, for a variety of reasons including farmers’ preferences for other industrial crops, water availability, commercial return and land productivity. Therefore, it is likely that a change in grant regime will be required to ensure that land equal in area to the total area of land that would otherwise be set-aside is used for non-food crops, with an appropriate proportion being energy crops. This is likely to result in much set-aside land being returned to its former uses, with some land remaining fallow, whilst other land is converted from other crop production to energy and industrial

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19

crops. The new CAP single payment scheme is understood to make energy crops more commercially viable41 for farmers but additional drivers will be needed from government to encourage wider-scale take-up of energy crop production. • Medium-term - area required for energy crops increases beyond the amount of land that is currently set-aside. 2.44 As a viable fraction of set-aside is used for energy crops, growth in energy crops will move onto other grades of land. The issues then become effective agricultural and forestry policy and the relative profitability of different land uses. Agricultural policy issues that arise include import and export balances of food crops and the effect of a possible move to less intensive and lower output farming methods. Within the UK there will be many geographical variations, for example the availability of water for SRC, so the cover of these new crops will not be evenly spread throughout the country. Further evidence42 suggests that, in the short to medium term, Scotland will have sufficient biomass from forestry arisings and co-products to meet its needs and will not need to grow dedicated energy crops. • Long-term - area of land increases to be a significant proportion of total available agricultural land. 2.45 In the long-term, in addition to the economic and policy issues above, the environmental impacts would become more significant. Siting of energy crop production would be constrained by both proximity to installations using the biomass and the suitability of the land. To achieve the levels of biomass energy production suggested by some sources43 would require at least 20% of the total available arable land area, and would be likely to result in many large areas having much more than 20% of land area dedicated to energy crops.

Conclusions on energy crops 2.46 This land will not come into energy-crop cultivation unless it provides an adequate return for farmers. The Energy Crops Scheme (Appendix A, paragraph A.6) intends to encourage farmers and end-users to work together and to ensure that supply and demand are both satisfied. It takes account of factors such as environmental and landscape issues as well as energy requirements. The scheme already recognises the biodiversity value of SRC to some extent. We recommend that the Energy Crops Scheme be enhanced to make energy crops more viable for farmers, and be tied to specific planting standards to protect landscape and other environmental features. This would help to reassure environmental groups and the public that SRC plantations cannot be established indiscriminately at the expense of the local environment. It would also provide a higher income stream for farmers. 2.47 Successful cultivation of energy crops would have two positive outcomes. A fuel would be produced for use in biomass energy generators in a way that is not a by-product of, and therefore limited by, a different type of operation such as forestry or municipal tree surgery; and a valuable cash crop with additional financial support would become available for farmers. Set against this are limitations imposed by processing and transporting the fuel. However, without guaranteed markets farmers are unable to receive Defra establishment grants for energy crops and they are understandably hesitant to dedicate large areas of their land to a crop that is relatively new to the UK.

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2.48 While in general willow and poplar perform better in wetter areas and miscanthus yields are likely to be higher in warmer areas less prone to frost, energy crops can be grown in much of the UK. A detailed investigation needs to be carried out into the suitability of areas of the UK for biomass energy. We recommend that extensive detailed analysis of the suitability of land for energy crop production and a comparison of this to possible markets for the energy be undertaken on a regional basis. This should be carried out with central government support and guidance and should aim to incorporate environmental, agricultural and fuel poverty issues as well as economic considerations.

Forestry Products Trends in availability 2.49 Historically, woodcutting has fuelled domestic or industrial stoves and has provided the raw material for products such as charcoal and other processed or semi-processed wood fuels. In the developed world the use of wood in this way has been largely abandoned in favour of other forms of energy, and forestry is now primarily directed towards the production of timber and paper pulp. The demand for paper pulp in the UK is decreasing as recycling increases, and the demand for construction timber from UK forests has also decreased; consequently the availability of wood for fuel has increased. Added to this, large amounts of Britain’s forests were planted in the 1960s and 1970s and will soon be reaching maturity without a clear market for the wood. 2.50 Figure 2-I illustrates the anticipated wood production from forests in Britain from 1994 to 202144. Supply is predicted to increase over the next couple of decades, peaking at about 10 million tonnes per year above current demand by 2020. Not all of these forests will necessarily be replanted so wood production could decline after 2020. This, however, will be offset to some extent by bringing more forests under active management. Demand for UK-grown timber might increase over the same period because of the large-scale house building currently foreseen in government strategies for housing and planning45. Competition from imported timber however will mean that UK materials will not be used to meet all of the domestic demand and some surplus wood will still be available as fuel. 2.51 We expect that much of the extra 10 million tonnes per year of production by 2020 will be available as biomass fuel for energy, and that the supply will then fall to a level dependent on the competitivity of the UK industry. Long-term supply cannot be predicted but it is likely to be significantly higher than the current availability of 1.3 million tonnes per year. 2.52 A market for bioenergy in Britain would provide an opportunity for Britain’s forest industry to receive income from its residues; giving the forest industry a market for its byproducts and increasing its competitivity and helping it to resist decline. Under such conditions the economic strength of the industry may be sufficient to utilise the increased

ROYAL COMMISSION ON ENVIRONMENTAL P OLLUTION – BIOMASS AS A RENEWABLE ENERGY SOURCE

21

potential harvests projected in Figure 2-I. As the primary products comprise only half of the trees cut, a growing forestry industry would provide a growing supply of biomass residues for energy purposes at a low cost. Whether demand for UK timber increases or decreases over the coming decades, biomass energy provides an additional market that could complement other wood-based industries to develop the forestry sector.

Figure 2-I Supply and demand of GB wood 20000 18000

Thousand m 3

16000 14000 12000 10000 8000 6000 4000 2000

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

0

Year Total GB wood availability Demand for GB wood

2.53 Forestry materials available for biomass fuel arise as a consequence of other forestry activities, so that the marginal energy costs of and emissions from its production are minimal. Should the production of fuel become again a major objective of forestry, it would be necessary to investigate the costs and environmental impacts of keeping land in forestry as opposed to releasing it to other uses, as well as the energy requirement of harvesting and transporting the materials. The opportunity to sell forest arisings as an energy fuel could make forest management more economically viable. This is an opportunity to use an existing resource and improve the management of the UK’s forests and woodland as a result. We recognise that it is important, however, to monitor the impact of removing arisings from the forest. In some areas the physical removal of arisings could cause unacceptable effects on soil structure (leading to erosion) and nutrient retention (leading to possible acidification and eutrophication of waters). Sufficient materials must be left on the forest floor to prevent this from occurring. 2.54 Management of planted forests to produce fuel for energy could offer a valuable opportunity to rethink the UK’s forests and to replant with a diversity of indigenous species to replace the single species planting prevalent in many of the UK’s forests. This recommendation was made in the Commission’s Twenty-third Report46. We recommend that the Woodland Grant Scheme for England and Wales take a similar approach to the Scottish Forestry Grant Scheme, which recognises this potential and structures the grant payments to reward planting of selected broadleaved trees in new and improved woodland areas47.

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Accessibility 2.55 If forests are located in remote areas, there may not be access for harvesting machinery or transportation and it may be uneconomic or unattractive to invest in building roads. Building access roads in unspoilt areas is usually undesirable but this would only apply to a small proportion of the UK’s forests and should not be considered a general obstacle to the use of forestry materials for fuel. The long lead-time, uncertainty of supply (a glut followed by scarcity of supply in some areas following the 1987 storms for example), and a lack of expertise in harvesting methods all detract from the value of forest materials as a long-term source of fuel compared to energy crops, for example, that are more controllable. However, in those areas close to forests, the benefits of using an existing local resource for energy production are clear. 2.56 Forestry products are not suitable for all modes of biomass conversion. The dispersed nature of the supplies makes it unlikely that they will be used for large-scale energy production. The fuel is often insufficiently homogenous for small-scale plants without considerable preprocessing to increase the density and uniformity and reduce moisture content. A typical product is compressed sawdust in the form of pellets but the energy and economic requirements of such a process impacts on the suitability of the fuel and must be handled accordingly – this is discussed below (Box 2C). The Finnish Alholmens Kraft is a very large cogeneration plant that is located at the site of a pulp plant so that both industrial residues and forestry co-products from the primary product collection can be used as fuel48. This could serve as a model for UK applications of biomass energy.

Impact on other industries 2.57 There are several industries that rely on forestry materials, particularly wood and sawdust, as an input material. In the absence of other factors a sharp rise in demand for biomass could potentially increase prices and so decrease the competitiveness of such industries; if so, this would need to be reflected in any economic analysis of biomass fuel. However, supply of forestry materials is increasing much faster than demand (paragraph 2.50) and a significant increase in prices is unlikely to materialise49. In addition, these wood-based industries produce by-products that themselves have potential as fuel, and some farms and manufacturers already use their own by-products to fuel small-scale CHP units (Box 2C).

Forests as Carbon Sinks 2.58 The Kyoto Protocol acknowledges the value of forests as carbon sinks and promotes afforestation as a way of achieving national targets for CO2 reduction set under Kyoto. Only forests that are planted post-1990 are eligible for accounting under this system. Carbon sequestration through afforestation accounted for around 0.4 million tonnes of carbon (MtC) in the UK in 200150. Use of surplus forest materials to displace fossil fuels as an energy source would have a much more significant impact than afforestation on reducing CO2 emissions towards the Kyoto targets.

Availability and costs 2.59 The dispersed nature of forest materials means that they are better suited to small scale CHP or district heating applications. The rural location of most forests makes them ideally

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23

placed primarily (but not exclusively) to serve rural communities. There is an opportunity to link biomass energy policy with rural regeneration and fuel poverty strategies. The economic returns on rural schemes may be lower than in urban areas due to the lower heat demand density in rural areas51. 2.60 Encouraging co-operatives between foresters would increase their influence in the energy sector and spread the capital costs and risks between a number of stakeholders. Energy generators are likely to support such moves; dealing with a single co-operative rather than a number of individual farmers or foresters reduces administration costs. We recommend that the government investigates the possibility of extending the grants for establishing producer groups to farmers and foresters who wish to use their woodlands or other arisings (hedgings for example), as a source of fuel but do not wish to plant energy crops. 2.61 The benefits associated with forests are not exclusive to rural areas. The Office of the Deputy Prime Minister’s (ODPM) Sustainable Communities programme (paragraph 4.18) incorporates the planting of a number of community forests for recreation. We recommend that the infrastructure for management and distribution of forest resources should be an integral part of the planning process; these materials should then be used in local community heating or CHP schemes to improve the sustainability of these communities. 2.62 One of the key advantages of forestry material is that there is already a surplus of wood that could be made readily available for use as a fuel. With a supply peak around 2020 (Figure 2-I), forestry materials can be used to initiate the biomass energy sector and support its development over the next couple of decades. This would allow energy crops to be planted at a gradual rate enabling the environmental impacts of the change in land-use to be periodically monitored and reviewed. By the time forestry materials begin to decline (post 2020), sufficient energy crops should have been planted, and yields increased, to allow them to take over the lead in energy production.

Sawmill co-products 2.63 The main demand for forestry materials currently comes from sawmills but these mills produce by-products that could in turn be used as biomass fuel in either their raw state or following processing. Chipboard manufacturers would be in competition with energy companies for sawmill by-products but they also produce by-products that could be employed for energy production. Sawdust can be compressed into wood pellets that can be used in domestic or industrial applications. Pellets have the advantage of being dense, clean and dust-free so they are easy to transport, store and combust in smaller-scale operations that require a more consistent fuel. 2.64 Using biomass resources produced on-site to provide heat and power for the pelleting procedure, as Balcas does (Box 2C), reduces the environmental impact of the process significantly. Sawmills, chipboard manufacturers and other processors of virgin wood are ideally placed to develop on-site biomass CHP and pelleting schemes along the Balcas model (albeit on a smaller scale).

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Box 2C Pelleting sawdust The pelleting process can be scaled according to the resource available. Balcas Ltd is a company based in Northern Ireland that owns 4 sawmills, 2 pallet factories and an MDF mouldings plant. They have recently been awarded a capital grant from the DTI to build a CHP and pellet mill extension onto their sawmill in Enniskillen. Balcas will use surplus sawdust and woodchip from the mill to fire a 15MW boiler to produce 2.7MW of electricity and heat to dry further wood, to produce wood pellets and power and heat the entire facility. The pelleting operation will produce 50,000 tonnes of pellets per year and these will be sold to external customers. This scheme will cut energy bills and fossil fuel consumption, and will dispose of the mill’s co-products in a safe and convenient way, which will bring additional income to the company (provided they have a market for the pellets). Construction of the pelleting and CHP plants is due to begin in early 2004. It is worth noting that the grant has been awarded only for the CHP facility and that there is no specific government support for the pelleting operation under this particular initiative.

2.65 In some European countries the take-up of small-scale domestic wood-fuelled heaters increased dramatically with the increased availability of wood pellets. Wood pellets have been particularly successful in promoting the use of biomass for heat in Austria (Figure 2-II). A large pellet market and distribution system has developed that enables homeowners to install domestic pellet heaters confident in the knowledge that they will be able to obtain a regular, reliable supply of fuel. In Salzburg, 50% of all new-build projects now incorporate biomass heating, 70% of which use pellets as fuel52.

53

Figure 2-II Biomass heating in Austria since 1986 60,000

40,000

30,000

20,000

10,000

2002

2000

1998

1996

1994

1992

1990

1988

0 1986

Number of installations

50,000

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25

2.66 The Forestry Commission estimates that the sawmill co-product available in Britain totals around 859k odt/y, 20% of which is sawdust54. There are existing markets for 98% of this resource but the Forestry Commission estimates that around half the sawdust could be made available for fuel without serious disruption to existing industries. Any increase in availability of sawdust for pelleting in the future would come from either an increase in sawmill activity or a decrease in other markets for sawmill co-products. 2.67 Any significant increase in pelleting in the short term would have to come from processing other sources of wood (willow, forestry materials etc). Wood Energy Ltd in Devon is developing miscanthus pelleting to improve the manageability and density of the fuel and they are currently trying to secure funding for firing trials55.

Municipal arisings 2.68 The maintenance of parks, gardens, road and rail corridors and other green spaces in towns and cities gives rise to plant cuttings that are typically woody and suitable for use as biomass fuel. The civic community already incurs the costs of producing and collecting the material as part of its normal operations, and any marginal costs of delivering to an energy plant instead of to a landfill site will be slight if not negative, particularly if gate fees are consequently avoided. The increases in the landfill tax and the introduction of the Landfill Directive56 are requiring councils to look for alternative disposal routes for their biodegradable wastes. Using woody arisings to produce energy is an alternative route for these materials. Some of the material might be suitable for composting, digestion or further processing into solid fuel (sawdust pellets) and the cost of this would depend on the local availability of outlets for its use in this way. 2.69 The Forestry Commission estimates that the quantity of park and garden waste arising in towns and cities could total 492k odt/y if this resource were exploited fully. The dispersed nature of the resource makes this fuel especially suited to small-scale, district heat or CHP production, to reduce transport distances and

26

Forestry workers feed cut branches into shredder

ROYAL COMMISSION ON ENVIRONMENTAL P OLLUTION – BIOMASS AS A RENEWABLE ENERGY SOURCE

costs. There are however few opportunities to store or process municipal materials at source, which affects the possibility of allowing the fuel to dry to the low moisture content required for some small-scale operations. 2.70 A project in South London, BedZED (Beddington Zero Energy Development), will use wood from municipal tree management in a small CHP plant using gasification in a housing development that aims to be energy-neutral (Box 2D). It was funded by capital grants from the Combined Heat and Power Association (CHPA) and the Energy Saving Trust (EST). The EST was established by the DTI to encourage the sustainable use of energy and to help the government to achieve its carbon reduction targets. There has been no direct government involvement in the scheme but Patricia Hewitt (Secretary of State for Trade and Industry) chose BedZED as the site of the launch of the Community Energy programme, thereby lending weight to the scheme.

Box 2D BedZED BedZED, the Beddington Zero Energy Development, is a development of 100 properties including housing, work units, shops and green spaces. It has been designed to have as little environmental impact as possible. Through the combination of energy efficiency and sensitive design it is estimated that residents will see a 60% reduction in heat demand compared to a typical suburban home. BedZed aims to be carbon neutral through the use of renewable energy converted onsite. A combined heat and power unit no larger than a small home will meet all the energy demand, fuelled by arboricultural arisings from Croydon Council’s park management (which would otherwise go to landfill). The CHP unit has been sized to supply the entire heat demand of BedZED and the average electricity demand. At times electricity will be exported to the grid, to be retrieved during periods of peak demand when the CHP electrical output is insufficient. The CHP plant uses a gasification process with a reciprocating gas engine (paragraph 3.15). It is currently the subject of a start-up programme to achieve reliable operation.

2.71 Some councils are piloting biomass CHP and district heating schemes in their public buildings. Nottinghamshire County Council, for example, has installed biomass heating in three of its schools, to be fuelled by forest materials from the local area. However, they currently have to use more expensive wood pellets as it is proving problematic to establish a reliable supply chain from local foresters in the absence of government support57. This provides the public with examples of the application of reliable, efficient CHP and encourages acceptance of the new technologies but the supply chain problems must be resolved to attract further interest in biomass schemes.

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27

Classification as waste 2.72 Forestry materials, municipal arisings and straw are all secondary products; consequently some of these materials might fall under the legal definition of waste. The classification of a material as a waste depends on whether it has been discarded or is intended or required to be discarded regardless of whether there is a market for it as a product58. 2.73 In broad terms, the ramifications of materials being designated as wastes impact largely on their transportation. Waste transfer notes must accompany waste materials during transit. As the disposal of these materials is current practice, existing transport arrangements should already be in compliance with waste regulations where necessary. 2.74 The classification of these materials as waste need not affect their use as a fuel. Plants that are fuelled by virgin, untreated wood are excluded from the Waste Incineration Directive59. This means that biomass plants burning municipal arisings or forestry wastes either alone or with energy crops or co-fired with coal should not need to be classified as waste incinerators. However, we recommend that all potential biomass schemes confirm the legal status of their operations on a case-by-case basis. 2.75 Separate from the legal question is the issue of public antipathy to the processing of waste in their neighbourhood. It has been reported60 that certain biomass stations have met with opposition when local residents have become concerned that the plant may be used as a waste processing plant in the future, even when this was not in the project plan. It may be easier to promote wood gasification technologies that require a homogenous fuel that is clearly distinguishable from waste; but with the development of advanced technologies such as pyrolysis that can accommodate very heterogeneous fuel sources, this is likely to become an increasingly prominent issue. It is important for acceptability that biomass plants are kept distinct and separate from waste disposal operations; this will only be achieved if operators are scrupulous and transparent about the source of their fuel.

Conclusions 2.76 The Forestry Commission has calculated that about 3.1 million odt/y of wood-derived fuel could currently be made available in the UK61. This includes forestry materials, sawmill coproduct, municipal arisings and energy crops (but not straw). This is equivalent to 440MW of electricity (at a conversion rate of 20% in an electrical output only plant), which is about half of the UK’s commitment to electricity production from biomass, even without additional planting of energy crops. The same amount of fuel could also produce some 1400MW of heat (assuming 85% total efficiency). This assumes full and easy access to all of the UK’s current biomass resource without competition for these materials from other industries. If competition for this wood from other industries is taken into account, an estimated 1.3 million odt/y could be made be available; this is a sufficient resource to initiate a sizeable biomass for energy sector, and it is available now. 2.77 The biomass for energy chain is currently disjointed and there is insufficient communication between the stakeholders involved. We recommend that a new

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government/industry forum should be established, consisting of representatives from all parts of the biomass for energy supply chain, including farmers, transporters, generators, construction companies, local councils and central government policy makers. The forum would allow its members to identify problems, share solutions and experiences and make recommendations on improving the effectiveness of biomass energy policy. Currently the process of establishing schemes is fragmented and relies to a great extent on local knowledge and enthusiasm and the drive of a few local entrepreneurs. Setting up a discussion forum would allow knowledge and experience to be shared to the benefit of all, and produce policy recommendations to enable biomass energy to be promoted more effectively.

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CHAPTER 3 - GENERATION USING BIOMASS FUELS

General Principles 3.1

Biomass can be converted into energy by simple combustion, by co-firing with other fuels or through some intermediate process such as gasificationii. The energy produced can be electrical power, heat or both (combined heat and power, or CHP). The advantage of utilising heat as well as or instead of electrical power is the marked improvement of conversion efficiency - electrical generation has a typical efficiency of around 30%, but if heat is used efficiencies can rise to more than 85%. This chapter describes these technologies, and considers the amount and types of generation that would be needed to meet the renewable targets discussed in chapter 1 (paragraph 1.2).

3.2

In each type of plant, the overall reaction for a fuel of mean composition Cx Hy Oz is Cx Hy Oz + (x+y/4-z/2)O2

x CO2 + (y/2) H2O

The total energy released by this reaction is independent of whether the fuel is burned in a combustion plant, pyrolysed (i.e. heated to decompose the fuel) or gasified (i.e. heated in a flow of a gas, usually air or steam). If the gas and char from pyrolysis or gasification are then burned, the overall reaction is the same as the above; the differences in performances between combustion and pyrolysis or gasification lie in the way in which the heat is released and utilised. 3.3

Biomass differs from other fuels in several respects, of which two are particularly significant for heat, CHP or power plants using biomass. The calorific value - i.e. the heat released by burning a specified mass of fuel- is relatively low. Furthermore, the water content of the combustion gases is relatively high, both because of the hydrogen present in the fuel (see above) and because most biomass fuels contain some degree of moisture which evaporates when the fuel is burnediii. To recover the energy retained in the water vapour, it is necessary to use a condensing heat exchanger which converts the water vapour to liquid and recovers the latent heat of evaporation; this is currently considered an undesirable degree of complication for simple heat and simple CHP plants. However, the overall efficiency is generally improved if the biomass is dried before firing, to reduce the water content of the combustion gases.

ii Some types of biomass can be converted to energy through other means, such as anaerobic digestion to produce methane or fermentation to produce ethanol. These methods are not well suited to the lignocellulosic materials being considered here and are therefore not included in this report. iii Two measures of calorific value are used: the Gross Calorific Value (GCV, or higher heating value), which measures the heat released when the fuel is burnt and the water is condensed out of the combustion gases as a liquid and the Net Calorific Value (NCV, or lower heating value), which measures heat release on the basis that the water remains in the vapour phase. The difference between GCV and NCV is higher for biomass than most other fuels, and is widened by increasing moisture content.

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Heat generation Description 3.4

The simplest kind of process, Figure 3-1 ‘Heat only’ combustion plant a plant that provides heat output only, is shown schematically in Figure 3-I. To stack The fuel is burned with air in a combustion chamberiv. The Gas cleaning Fly ash hot gases produced by combustion pass into a heat Cool water exchanger, where they cool and transfer heat to another Heat exchanger fluid. In the case of a heating Hot water plant, such as for district heating, this fluid is water that is pumped through the heat Fuel Combustion exchanger and circulated to chamber distribute the heat. The Air Bottom cooled gases are then cleaned ash to remove particulates and other pollutants before being emitted to the atmosphere through a chimney or stack. Typically up to 90% of the Net Calorific Value of the fuel can be recovered as heat; the proportion is higher (and can exceed 100%!) if a condensing heat exchanger is used.

3.5

Most of the non-combustible part of the fuel - primarily minerals - leaves the combustion chamber as bottom ash. Finer particles are conveyed out of the combustor and removed in the gas cleaning stage, along with any material injected to clean the gases, as fly ash. Bottom ash and fly ash are commonly handled and disposed of separately.

Practical application 3.6

Heat-only applications for biomass are constrained to locations where biomass fuel is available and a market for the heat exists. At present this makes them particularly suited, but not limited, to rural areas without access to the gas grid. These areas otherwise have to resort to costly and polluting oil-fired heaters, electric heating or older wood stoves which are usually inconvenient and inefficient. The use of locally produced materials could also help with rural regeneration through investment and employment opportunities and provide an alternative market for sectors such as forestry (paragraph 2.59).

iv A range of possible combustion chamber configurations is available but, for the sake of simplicity, this kind of detail will not be considered here; nor will the various detailed refinements which can be employed to improve the efficiency of any of the general processes be discussed.

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3.7

Wood from forest management seems therefore to be a particularly suitable fuel for heat producing plants. The college of West Dean in Sussex has operated a successful example of this type of development since 1980. Thinnings and other surplus wood arising from the management of woodland on the college estate fuel the heating system for the college. This provides both an economic incentive to maintain the woodland and a substantial cost saving on the college’s fuel bills. Further details of this scheme are in Appendix B.

Chipper and storage shed

32

3.8

Another example of a small-scale wood-fuelled heat facility is a community housing association in Lochgilphead in Scotland. A 460kW boiler, powered by locally produced wood chips and by-product from a nearby sawmill, heats 50 one and two storey houses and a respite home.

3.9

There does appear to be emerging government recognition of the need to provide support to renewable sources of heat. Defra has recently awarded £16m in grants to a number of energy saving and heating schemes. The largest recipient was Leicester City Council, which was awarded £5.1m for a citywide community heating system. The first phase will link Leicester University, four housing estates and sixteen council-owned buildings. The scheme is not entirely biomass-fuelled but it contains some biomass elements (case study 1, Appendix B). Urban schemes such as this can be less suited to entirely biomass-fuelled schemes as the immediate availability of the materials is limited to management of urban green spaces and biomass from the surrounding countryside. Other fuels may therefore be necessary to supplement biomass; at least until the supply infrastructure develops.62

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Combined heat and power Description 3.10 For generation of electricity as well as heat, the plant requires a generator driven either by the combustion gases or by some other working fluid. Figure 3-II shows a steam cycle (reduced to its bare essentials). The hot combustion gases pass into a boiler where water is evaporated to produce high-pressure steam. The steam passes through a steam turbine that drives the electrical generator. On leaving the turbine at lower pressure, the steam is condensed by heat exchange with cold water, and then pumped back up to the higher working pressure. Thus the steam cycle is closed; water is only added to compensate for deliberate venting of the steam or leaks from the steam cycle. On leaving the boiler, the combustion gases are still at a temperature above that at which they are vented. They can therefore be cooled further by transferring heat to circulating water, before cleaning and emitting to the atmosphere. Bottom ash and fly ash are produced as in a heat-only plant (paragraph 3.5). 3.11 The kind of plant shown in Figure 3-II is capable of flexible operation to vary the ratio of heat to electrical output. To maximise heat output, the turbine can be bypassed so that the steam goes straight to the condenser and the plant operates in “heat only” mode. However it is then possible to bring the turbine into operation if electrical output is needed to follow demand or support intermittent supply from other renewables. If particularly rapid response is needed, the turbine can be partially bypassed but allowed to rotate without driving the electrical generator. Using CHP plant Figure 3-II Combined heat and Power in this way leads to very (CHP) plant, using steam cycle for much lower energy penalty co-generation than using electricity-only plant as “spinning reserve” to supply short-term increases To stack in electrical demand. Fly ash 3.12 This kind of process is used for relatively large scale CHP plant: it provides both heat (to water which can be circulated for heating purposes) and electrical output. Steam cycles are most efficient at relatively large scales, and the process in Figure 3-II is used in largescale CHP plants of the type used in urban installations in Northern Europe. This kind of process is also used in

Gas cleaning

Cool water

Heat exchanger

Hot water

Heated water water Condenser Cold water

Boiler Steam Fuel

Electrical Combustion chamber

Turbine generator

Air Bottom ash

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33

large-scale coal-fired electricity generating stations in the UK, where the heat transferred to cooling water from the steam circuit is dissipated by evaporating some of the cooling water in cooling towers that are a familiar sight at UK electricity generating stations. It is also used in some biomass-fired electrical generation plants, such as the Fibrowatt plant at Thetford63 or the straw-fired plant at Ely64. 3.13 With a steam cycle, the proportion of the calorific value of the fuel that can be converted to electrical output is limited by the temperatures in the steam cycle, most critically by the steam temperature at entry to the turbine ( Box 3A). A modern coal-fired combustion plant typically has an efficiency of about 40% in converting the energy content of the fuel to electricity. Biomass-fired plants are typically smaller; they also give combustion gases at lower temperatures (paragraph 3.3) so that very high steam temperatures cannot be achieved. Consequently while their overall efficiency, including the production of heat and electricity, can be high (typically 80% or more) their electrical conversion efficiency is lower, and maybe of around 10% for small units. To achieve higher electrical efficiency - i.e. higher Power Efficiency in the case of CHP plant - it is therefore necessary to dispense with the steam cycle and use instead a gas turbine or gas engine. Rather than simply being burned, the fuel must now be gasified or pyrolysed. 3.14 In a gasification process, air (or sometimes steam) is blown through the fuel to produce a combustible gas (mainly carbon monoxide and hydrogen). A mixture of air and steam may be used to control the temperature in the gasifier. Pyrolysis involves heating the fuel without air or steam, to decompose it and drive off volatile combustible gases. Pyrolysis inevitably leaves a carbon-rich char which may be burned or gasified. Gasification leaves much smaller proportions of residual char. 3.15 Figure 3-III shows schematically a gasification process. The gas produced by gasifying the fuel is burned with air and the hot pressurised combustion gases are passed into a gas turbine. Because the turbine inlet temperature can be higher, the proportion of the heat released that is converted to electricity is higher (Box 3A). Very large gasification plants may operate at high pressure, to further increase the efficiency of electricity generation. However, in order to protect the turbine from corrosion and erosion, the gases must be cleaned before entering the turbine. Gas cleaning may be done on the

34

Figure 3-III Combined heat and Power (CHP) plant, using gas turbine for cogeneration To stack Cool water Heat exchanger Hot water Gas turbine Air

Electrical generator

Combustion chamber

Gas cleaning Fuel

Fly ash Gasifier

Air or steam

ROYAL COMMISSION ON ENVIRONMENTAL P OLLUTION – BIOMASS AS A RENEWABLE ENERGY SOURCE

Bottom ash and char

BOX 3A Efficiency of energy conversion [Summarised from Box 3A of the Twenty-second Report of the Royal Commission on Environmental Pollution: "Energy – The Changing Climate" (2000)] Although the first law of thermodynamics states that energy can be neither created nor destroyed, different forms of energy are not simply interchangeable. Converting heat to work involves using some form of heat engine (such as the steam cycle in Figure 3-II) in which heat is supplied at a high temperature (T1) and leaves at a low temperature (T2). In the case of the steam cycle in Figure 3-II, T1 corresponds to the steam temperature entering the turbine and T2 to that of the water formed from steam in the condenser. The maximum fraction of the heat entering the heat engine that can be converted to work (i.e. electrical energy in this case) is ηmax = 1 – (T2/T1) = (T1 -T2)/T1 Thus ηmax increases if T1 is increased. Real generating plants have conversion efficiency substantially below this thermodynamic limit. The fraction of the heat not converted to work (or electricity) leaves the engine as low-gradeheat.

fuel gas before final combustion, as in Figure 3-III, or may sometimes be applied after combustion. The gas turbine drives the electrical generator directly. Heat is recovered from the hot gases after the gas turbine, to provide the heat output from the CHP plant. The combustion gases can commonly be vented without further cleaning. Both fly ash, and particularly bottom ash, usually contain unburned char and must be handled accordingly. For example, they may be co-fired with coal in a conventional generating station. This type of plant is inevitably more technologically risky than a combustion plant like that in Figure 3-II. It is also capital-intensive and complex, and therefore only viable at relatively large scale. 3.16 Small-scale CHP plants require a different approach from either the steam cycle in Figure 3-II or the gasification process in Figure 3-III. The electrical generator is driven not by a turbine but by a reciprocating gas engine, most commonly a modified diesel engine. In effect, the combustion chamber and gas turbine in Figure 3-III are combined in the gas engine. It is still necessary to clean the gases before they enter the engine, although the requirements are less stringent than for a plant using a gas turbine. This must be done at the elevated temperature of the fuel gas but not at high pressure, the technology is therefore simpler. As in Figure 3-III, the heat output is obtained by cooling the exit gases thereby exchanging heat into water that is circulated as the heat supply.

Combined Heat and Power Quality Assurance Scheme 3.17 New CHP facilities may attract government support under the CHP Quality Assurance (CHP QA) scheme. CHP facilities representing significant environmental improvements may be exempt from the Climate Change Levy (CCL) provided they meet certain

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35

performance standards. This is not relevant to biomass-fired plants, which automatically qualify by using a renewable fuel. However, Enhanced Capital Allowances (ECAs) may also be claimed based on the plant’s Quality Index (QI), a measure of overall efficiency (paragraph 3.19), and Power Efficiency which is defined as the proportion of the (gross) calorific value of the fuel converted to electrical output. 3.18 Both the Power Efficiency and QI thresholds to qualify for ECAs have been set at levels intended to encourage biomass-fired CHP, implicitly recognising the particular characteristics of biomass specifically that the proportion of the calorific value that can be converted into electrical output is lower than for other fuels (paragraphs 3.3, 3.13 and Box 3A). Plants fuelled solely by biomass must achieve a Power Efficiency of 10% or more and also reach a required QI threshold, both based on total fuel burned and electricity despatched over a 12-month period. By comparison CHP units using more conventional fuels must achieve a power efficiency of 20% plus a more stringent QI threshold. 3.19 The QI is “an indicator of...energy efficiency and environmental performance...relative to the generation of the same amounts of heat and power by separate alternative means”65. The definition of QI in the CHP QA standard recognises differences between fuels and scales of operation, including the particular characteristics of biomass: biomass-fired plant is set a threshold which is very much lower than that for large gas-fired plants, significantly lower than for small gas-fired plant and marginally lower even than that for plant fired by alternative fuel gases or biogas. 3.20 Thus the existing CHP QA standard appears to provide incentives for new biomass-fired CHP installations, although they need to be complemented by incentives for renewable heat production (see below). The requirement to meet even the 10% threshold for Power Efficiency calculated for average performance over a year however, could act as a barrier to using CHP plant as “spinning reserve”. We recommend that the government undertake or commission a study to investigate whether the existing Power Efficiency standards are appropriate and, if necessary, modify the CHP QA standard to promote the use of CHP as “spinning reserve” to back-up intermittent renewables. The study should also review whether the thresholds should be based on the gross or net calorific value of the fuel (page 30, footnote iii).

Practical application 3.21 CHP plants burning biomass as a fuel are not common in the UK. The BedZED development in South London (Box 2D) has a small biomass gasification plant at its centre. Some technical problems have been experienced, primarily with gas cleaning (Figure 3-III), but the indications are that these problems are short-term. Also, the scheme being developed by Leicester City Council (paragraph 3.9) is likely to include 6MWe of biodieselpowered CHP in its later stages. There are other examples of CHP plants using biomass or biofuels, but use of the technology in the UK is far behind deployment in other Northern European Countries. 3.22 This is partly because output-based government support for renewable energy is only available for electricity generation (Appendix A) but also because biomass-fired plants are

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less easy to operate than, for example, gas-fired. Relatively small heat-only plants can be tolerant to fuel inconsistency and moisture but larger plants, and particularly gasification processes operating at high pressure (Figure 3-III), require dry fuel with consistent properties, including particle size. Fuel preparation and drying then presents an additional expense if forest co-products or SRC biomass is to be used. Sawdust or wood-dust pellets break down to give a particularly free-flowing material. Domestic scale plants require consistent free-flowing fuel for automatic operation, and therefore many operators and most domestic users would prefer to use the more costly sawdust pellets than cheaper but less consistent willow chips or forestry residue. 3.23 Although sawdust pellets are becoming an internationally traded commodity, supply chains are not yet sufficiently established in the UK to guarantee a reliable source of fuel. Potential developers may therefore be discouraged from investing in CHP because of the lack of available and consistent fuel. Some developers have resorted to using local forestry resources until supplies of pellets are available but this can cause problems with technology that is designed for a drier, more homogeneous fuel.

Heat demand and CHP 3.24 The viability of heat and CHP schemes at larger than domestic scale relies on a market for the heat output, which in effect means that they are tied to a building, a factory or a heatdistribution network. In Scandinavia such networks have been established, and experience there shows that a heat distribution network can extend economically for tens of kilometres and reach tens of thousands of homes and other premises. There are over 600 community heating schemes in the UK, some of which already utilise CHP66. We recommend that the councils or organisations that own these networks should be encouraged to incorporate biomass elements using local resources wherever possible when upgrading the systems. 3.25 There are also possibilities to develop new applications for CHP plants within an emerging biomass sector. The heat output can be used for drying biomass, for production of pellets to be utilised in other plants. Production of some biofuels for transport also represents a heat demand, for example the distillation of bioethanol. This demand can be met by straw-fired CHP. 3.26 For larger biomass power installations of the order of 10MWe and above, finding a 1030MWth heat demand to enable the plant to run in CHP-mode is less easy today than it was 10 years ago. The UK has continued to de-industrialise, and there are now fewer singlesite heat demands available. In addition, many suitable sites such as petro-chemical plants, airports and car factories already have gas-fired CHP systems in operation. Some sites do remain however, and new opportunities are emerging with significant housing, retail and industrial park developments. Retail sites find connection to a district heating system especially attractive because it removes the need to allocate potentially profitable retail space to a heat plant. 3.27 Community heating, utilising both existing small and larger systems, as well as developing new schemes, provides a significant opportunity for biomass heating. For existing schemes,

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37

replacing fossil fuel boilers with biomass heating boilers is a relatively simple and economically viable option, subject to an adequate and reliable heat demand and sufficient capital grants. Bristol City Council is considering this option for a council-owned housing block currently fuelled by natural gas (case study 4, Appendix B). 3.28 While there is no central database of heat demands in the UK, research for the Community Energy Programme run by EST and the Carbon Trust has begun to map heat demand across the UK67. These include domestic buildings, hospitals, higher educational establishments, factories, warehouses, offices and retail premises, central government buildings (including prisons, Ministry of Defence buildings, and offices), hotels, leisure centres, and schools.

Table 3.1 Fossil fuel use for electricity and heating Fossil Fuel Use for Space Heating and Domestic Hot Water

Electricity Use

Hospitals (kWh/bed)

25,740

7,000

Universities (kWh/full time student)

4,200

1,710

Factories (kWh/m2)

245

471

Local Government Offices (kWh/ m2)

95

39

Commercial Offices (kWh/ m2)

147

95

Retail (kWh/ m2)

185

275

Warehouses (kWh/ m2)

64

81

Hotels (kWh/bedroom)

13,620

6,387

Schools / Further Education (kWh/pupil)

2,583

372

Leisure Centres (MWh)

2,350

650

1

This figure does not include process electricity

3.29 The findings of this research have been separated into heat and electricity requirements by sector; this is illustrated in Table 3.1. It demonstrates that hospitals and hotels are important opportunities for biomass district heating and CHP, providing stable heat demand and utilisation levels. Universities, schools and leisure centres provide other good heat demand levels, while those for offices and warehouses are less attractive. It also

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illustrates that far more energy is consumed for heating these buildings than for direct electrical requirements. It is therefore logical for heat to be the driver of a CHP facility where there is sufficient demand. Replacing fossil fuel-powered heat therefore offers opportunities for much higher CO2 savings than replacing the electricity. The current government incentive schemes fail to recognise this despite the fact that this would be an extremely effective way of achieving the CO2 reduction targets that it has set. 3.30 All new housing, office and other building developments provide opportunities for biomass heating and CHP. All boiler replacements offer similar opportunities, particularly in areas away from the natural gas grid (paragraph 3.6). At present however, the level of awareness amongst developers, designers, financiers and users on the potential for biomass energy is low. Significant informational campaigns are necessary, as well as targeted marketing programmes for local authority staff and elected members, developers and the private sector. With significant new housing developments planned across the UK (paragraph 4.18), as well as new and refurbished hospitals, schools and other public buildings, every development where district heating and CHP for both biomass and fossil fuels is not assessed is an opportunity lost for saving CO2 emissions. We recommend that all new housing schemes and mixed industrial/retail/housing developments should assess district heating and CHP opportunities, including the opportunity to use local biomass fuels. Positive planning policies should require these developments to include biomass district heating and CHP wherever it is feasible (paragraph 4.19). 3.31 To make both current and additional sites attractive for CHP in future, greater incentives will be needed for ‘green heat’, comparable to those for renewable electricity (Appendix A). Whereas green power can attract a price of 6.5-7p/kWh in total, green heat can attract an income of only 1-1.5p/kWh68. This encourages the development of the less efficient green electricity market at the expense of the more efficient green heat market, so that electricity is currently the usual driver for CHP and heat output is often wasted. Heat output needs to become a significant driver to promote more widespread use of CHP, especially in plants that can be used as “spinning reserve”. Green heat credit 3.32 It has become clear to us that the most obvious gap in current support schemes is the lack of any mechanism for supporting the generation of renewable heat energy, comparable for example to the RO scheme for renewable electricity. We recommend that the government introduce such a support mechanism. It could act as a major stimulus to both biomass heat and biomass CHP, and it is unlikely that these renewable energy forms will increase significantly without it. The mechanism could be set up along the lines of the Renewables Obligation, and oblige current heat suppliers (gas, oil and electricity) to supply a given proportion of their heat from renewable sources by a set date (for example, 2% by 2010 and 5% by 2020). The Renewable Heat Obligation could either relate only to biomass, or include other technologies such as solar hot water panels; the percentage obligation would depend on which technologies were included. Certificates of verification of supply could be administered in a system analogous to the Renewables Obligation Certificate system as Heat Obligation certificates - HOCs.

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39

3.33 We have recommended the introduction of a ‘green heat’ credit as a policy measure that would fit naturally with the government’s current policy and actions to promote renewable energy. However, we note that an approach based on taxation of CO2 emissions would promote all renewable energy sources, would require fewer specific measures and would automatically promote heat as well as electrical output. The introduction of the EU-wide emission trading system will favour biomass along with other renewable energy sources, but whether the price will be high enough to provide a serious incentive remains uncertain at this stage.

Electricity generation 3.34 Unlike heat-only and CHP facilities, operations that generate only electricity avoid the need to locate generation facilities adjacent to demand. Electrical power lines are cheaper to install than heating networks and are more versatile, and where the plant is situated near the national grid the generator can sell any surplus power on the open market. The cost is the loss of efficiency by not utilising the heat output from the plant. For example, the Forestry Commission has estimated that some 440MW of power would be available from existing biomass resources (paragraph 2.76) - this would however forfeit 1400MW if the heat was not also used. At present only electricity output qualifies for credits under the government’s Renewables Obligation scheme, which is why this has attracted more investment than district heating or CHP (Appendix A). There are two approaches to electricity-only generation from biomass: gasification and co-firing.

Gasification of energy crops - ARBRE 3.35 The Arable Biomass Renewable Energy (ARBRE) plant at Eggborough in South Yorkshire was an example of the kind of process shown in Figure 3-III: gasification of the fuel followed by combustion into a gas turbine, with high turbine inlet temperature to maximise the efficiency of conversion to electrical energy. The fuel comprised agricultural residues and SRC willow chips. The plant was designed for electrical output only, with the heat dissipated by water evaporation in cooling towers. Some aspects of the project were outlined in the Twenty-second Report. 3.36 Although the ARBRE initiative eventually collapsed, it nevertheless illustrated many of the infrastructure features essential for a successful biomass energy scheme. The ARBRE project involved a group of farmers growing willow and selling it to a dedicated biomass energy plant with long-term contracts. Kelda (originally Yorkshire Water) was investigating the potential for using sewage sludge as a fertiliser. 3.37 The ARBRE plant experienced some technical difficulties, specifically due to deposits that fouled and ultimately blocked the heat exchangers. These should not have been sufficient to jeopardise the scheme but the investors were unable to underwrite the costs of completing the start-up programme and bringing the plant into full operation. The failure of ARBRE had implications considerably beyond that single operation: Kelda saw it as a potential pilot for a further 10 such plants whose future is now in serious doubt, while the Swedish company from whom the technology had been licensed saw it as an important demonstration. But the loss of ARBRE has also shaken the confidence of other investors and, equally importantly, of the farmers concerned. 40

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3.38 One of the original difficulties at ARBRE lay in securing a stable funding base for this experimental project. It was planned and built under the Non-Fossil Fuel Obligation (NFFO), which guaranteed demand and price for the electrical output but ignored the potential heat output and gave no assistance with the capital expenditure. The Renewables Obligation has now replaced NFFO but nevertheless many of the features of NFFO remain, specifically in focusing on electrical output but giving no credit to heat. The lack of success so far in introducing this technology seems to be a UK-specific problem, given the success with which biomass energy plants are operating in other Northern European states, and this suggests under-resourcing of this critical pilot stage. ARBRE cost £28m69 to build, but a properly operating plant would generate revenue and would be attractive to investors if underwritten; it would also lead the way for further investment. 3.39 The government’s emphasis on high-technology, capital intensive plant, concentrating on electrical output and aiming to maximise the potential export value of the technology (paragraph 1.10), inevitably means that biomass energy will experience a few false starts (such as ARBRE). Furthermore, given that the UK process plant sector shrank to a small size some decades ago, most of the equipment is fabricated outside the UK so the potential export earnings are limited. The focus should therefore be on establishing the sector through the use of existing, proven technology whilst simultaneously developing new technologies and demonstration plants. We recognise the value of innovation but stress that it must be developed against the backdrop of a secure, stable sector that can operate independently of these new developments until they are proven; the very successful development of the wind sector in Denmark illustrates this approach. Waiting for high-tech approaches to be developed merely delays the development of the entire sector. 3.40 The Bio-Energy Capital Grants Scheme (Appendix A, paragraph A.8) has so far been too focused on new technologies. We recommend that the scheme is expanded and its guidelines revised to make clear that its main purpose is to support the installation of biomass-based combustion equipment to bring about a large-scale expansion of heatonly and CHP generation from biomass (power-only generation should be excluded on efficiency grounds). 3.41 We recommend that the government underwrite the cost of at least one, but preferably several schemes to demonstrate the commercial viability of medium-scale biomass energy projects. Future schemes should however be designed to utilise their heat output as well as electrical power.

Co-firing 3.42 With slight modification, coal-fired power stations can accept a proportion of processed biomass (usually as sawdust) blended into the fuel. A number of plants in the UK currently co-fire a variety of biomass materials, including that from energy crops, to produce electricity and consequently qualify for Renewables Obligation Certificates (ROCs). 3.43 Co-firing, unlike the use of biomass on its own, produces net CO2 emissions from the combustion process, because of the coal in the fuel mix. These emissions are less than if the coal had been burned alone, but the overall contribution of carbon to the atmosphere is still

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41

positive. Partly because of this the ROC system places limitations on output from co-firing to prevent companies focusing on this one, easier form of renewable energy at the expense of investment in renewable technologies that avoid fossil carbon emissions altogether. Grades of biomass 3.44 Biomass for co-firing is classified as low-grade or high-grade according to calorific value. Sawdust is low-grade as it has a high moisture level and hence a low net calorific value. It can be co-fired without drying because it will be mixed with coal, but the heat released per tonne will be less than for drier material. This is not just because part of the mass (the moisture) has no calorific value but also because of the heat consumed in evaporating the water. High-grade biomass is produced by drying and processing (into pellets, for example), but is more expensive and better suited to domestic heaters and 100% biomass-fuelled operations (paragraph 3.22). Blending 3.45 The fuel for co-firing is prepared by blending coal and sawdust. Sawdust already has a high moisture content (paragraph 3.44) but has a capacity to absorb further water if not kept under cover. Consequently the capital costs of providing storage for sawdust is high. This could be minimised by providing central facilities for the blending and storing of fuel, servicing several generating facilities. However, Ofgem claims that under current rules fuel that is blended off-site is not eligible for ROCs. So for now, co-firing plants must blend their own fuels on site, or inject coal and biomass to the combustion chamber separately. Therefore, power generators wishing to co-fire must invest in costly storage and blending facilities. If they are unable to recoup this capital expenditure by 2016 (when co-firing ceases to be eligible for ROCs) they may choose not to co-fire at all. This is a significant obstacle to the development of co-firing. 3.46 We have heard a number of arguments from Ofgem to justify this situation. We have heard concerns about the difficulty of maintaining audit trails across long distances (some sawdust is imported), about the difficulty of sampling blended fuels to check their composition, and even the concern that sawdust will blow away during transport. We are not convinced by the arguments and consider that the current arrangements for blending are unnecessarily restrictive. We therefore recommend that possibilities for secure arrangements be investigated whereby Ofgem can certify blended fuels for co-firing as eligible for ROCs at sites other than the power station that is going to use them. Role of co-firing 3.47 Current government policies encourage and reward co-firing of biomass and fossil fuels in existing power plants, but, correctly in our view, co-firing is treated as a transitional stage in the process of replacing fossil fuels that allows a biomass industry and infrastructure to develop. We will return to this point in chapter 4. However, we note that some of the more prominent schemes we have examined that use biomass alone are failing or delayed, albeit for wellunderstood and rectifiable reasons. The technology might take longer to develop than so far anticipated and the need for co-firing is, therefore, likely to need to remain a part of UK energy production for longer than is currently foreseen by government. In particular, the capacity to

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replace co-firing with completely biomass-fuelled power production is likely to remain limited beyond the 2016 deadline for the end of co-firing. We recommend that the 2006 review of the Renewables Obligation takes this into account when assessing its deadlines.

Environmental implications 3.48 Combustion plants of any description have environmental effects, resulting from their gaseous emissions, solid wastes, physical intrusion, noise and transport. Any strategy that envisages the construction of several hundred new wood-burning plants requires a careful assessment of the consequences of their effects on the physical environment and of the reaction they will engender in people living near them, or who might otherwise be affected. The strategy will need to include arrangements for minimising pollution and intrusion, and gauging and addressing public concerns.

Emissions 3.49 A heat producing plant needs a local heat distribution network servicing its customers. This will usually mean constructing the plant reasonably close to housing or commercial or industrial premises that can make use of the heat. This implies that particular attention needs to be paid to emission control, for reasons both of public and environmental health and of public acceptability. Gas cleaning and particulate removal technologies are readily available, and would be incorporated into the initial design for new-build facilities. Condensers and re-heaters can be fitted to remove steam, plumes of which are unsightly but do not otherwise affect the environmental impact.

Figure 3-IV Regulated pollutant emissions from Swedish CHP plant 70 fuelled with biomass or coal 1.2

VOC CO NOx PM SO2

g/kWh

1.0 0.8

Volatile Organic Compound Carbon monoxide Nitrogen oxides Particulate matter Sulphur dioxide

0.6 0.4 0.2 0.0

VOC CO NOx PM SO2 Biomass Technology

VOC CO NOx PM SO2 Reference Technology

Fuel production

Conversion

Clean-up

Conversion/indirect

3.50 The emissions of most concern (Figure 3-IV) are Volatile Organic Compounds (VOCs). Carbon monoxide (CO), nitrogen oxides (NOx), particulate matter (PM), sulphur dioxides (SO2) and chlorinated organics (principally dioxins). In gasification plants, the gas can be treated before combustion to remove VOCs. Carbon monoxide emissions are low if the combustion conditions are adequately controlled. Lower combustion temperature

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compared to other fuels (paragraph 3.3) means that the production of nitrogen oxides is lower. Well designed and operational gas cleaning equipment filters particulate matter and thereby concentrates heavy metals into the fly ash (paragraph 3.54). The sulphur content of wood is much lower than coal, leading to much lower sulphur oxide emissions. Thus, compared on the basis of electrical output, biomass leads to generally lower emissions than coal; example data from Sweden are shown in Figure 3-IV. 3.51 Chlorinated organic emissions can arise if the fuel contains chlorine. Many forms of biomass have very low chlorine content, and therefore give rise to very low quantities of dioxins. However, the presence of chlorine in the biomass can lead to dioxin production. Therefore timber treated with organochlorine wood preservatives, or wood mixed with PVC, should not be used as a source of biomass fuel in the sorts of generators being described here. Such materials would be classified as waste (paragraph 2.73) and should be burned only in a properly authorised waste incinerator. The combustion of virgin wood will result in the formation of much lower levels of dioxins, but even these small quantities have the potential to be significant on the scale of wood burning that would be necessary to meet the targets for biomass energy that we have proposed. It is important, therefore, to ensure that wood-burning heat and power plants are designed to reduce dioxin levels to the lowest practicable level. Guidance on best available technology for firing installations for wood and biomass is being prepared by the Expert Group on Best Available Techniques of the Intergovernmental Negotiating Committee of the Stockholm Convention on Persistent Organic Pollutants71. 3.52 A modern wood burning plant should, therefore, with careful design, be able to meet all air pollution control standards at reasonable costs. Even so, siting of the plant must be carried out with care, and in particular it is important that biomass plants should not be located in areas where they would exacerbate existing poor air quality. Plant burning any fuel in a boiler or furnace with a net rated thermal input of 50 megawatts or more is authorised by the Environment Agency (SEPA in Scotland and the Environment and Heritage Service in Northern Ireland) under the Integrated Pollution Prevention and Control (IPPC) regulations Part A. All plant involving pyrolysis, gasification or other heat treatment of carbonaceous material would also fall under Part A. Plant with a thermal input of between 20 and 50 MW would be authorised by local authorities under IPPC Part B73. Emissions of nitrogen oxides may represent a significant contribution to poorer local air quality. On the other hand, in some areas, heat made available from a biomass plant could displace more polluting heat sources (paragraph 3.6).

Solid Wastes 3.53 The amount of ash produced when plant material is combusted generally lies between 616% of dry weight, although it may be as low as 1%74. Although much of the variation can be attributed to plant species, growth conditions also play a major role. Apart from heavy metals, considered below and in chapter 2 (paragraph 2.29), the major components of the ash are usually potassium and phosphorus. For this reason, wood ash is often used as a fertiliser. However, the proportions of these and other substances vary widely, resulting in the pH of the ash ranging from almost pH neutral to distinctly alkaline. This variation is often affected by the major nitrogen source used by the plants75.

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3.54 Because of their behaviour in combustion plant, some metals exit primarily in the fly ash; this includes metals with high toxicity, including cadmium, mercury and lead. Figure 3-V illustrates this (see also case study 2, Appendix B). The volume of fly ash from the facility is much smaller than that of the bottom ash. Therefore the proportion of these metals is very much higher in the fly ash than in the biomass. In effect, the process concentrates the metals into the fly ash, which can then be consigned to a sealed landfill. The bottom ash from which these metals have been depleted can be returned to the land where the crop is grown, or put to some other use such as inclusion in cement or other construction materials. This process is illustrated for willow in Figure 3-V using cadmium as an example but it could be applied equally to other heavy metals and other energy crops. Long-term build-up of metal levels in the soil would depend on continuous addition of a fertiliser with a high heavy metal content - usually sewage sludge. The use of bottom ash or sewage for land conditioning would need to comply with regulatory or advisory limits on metal inputs to soil. 3.55 Co-firing of biomass with coal leads to mixed ash in which the coal minerals dominate. This contains constitiuents that prevent it from being returned to the soil. As a result, the soil used for biomass production may suffer long-term depletion of key elements, notably nitrogen, so that increased inputs of agrochemicals may be needed.

Figure 3-V Ash recycling

Cadmium in fuel

Uptake by willow

Bottom ash (small amount of cadmium) used as fertiliser

Cadmium from sewage or fertiliser

Fly ash (most of cadmium) to secure landfill

Cadmium already in soil

3.56 Bottom ash from certain combustion processes can be used as a construction aggregate - for making cement or breezeblocks, for example, or returned to the soil as fertiliser. Ash from power stations and from municipal waste incinerators is used in this way, and this is clearly a more satisfactory way of dealing with ash than landfilling. It is important, though, to ensure that fly ash, with its higher metal content, does not find its way into use either as a fertiliser or an aggregate.

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Intrusion 3.57 A programme of construction of new small to medium heat or CHP plants, incorporated into new housing or light industry developments, offers an opportunity for sensitive and innovative design. Modern biomass stations need not be ugly, and it is desirable, if they are to gain public acceptance, that they are well designed. The building needed to house a small to medium sized installation need not be large or intrusive. The generator at BedZED (Box 2D) is housed in a building the size of a small house, and is incorporated sensitively into the development. The wood-chip store and heat generating plant at West Dean (paragraph 3.7) is the size of a substantial agricultural shed, but sensitive planning has ensured minimal aesthetic impact of the plant; the chimney is camouflaged and walls sympathetic to neighbouring buildings improve the appearance of the plant. At both West Dean and BedZED, potential planning problems were avoided through discussion with those who would be affected by the building of the plant. The 36MW straw burning plant at Ely, Cambridgeshire incorporated a number of measures to reduce the visual impact of the plant76, including sinking the plant to 8m below ground level. The surplus clay removed during construction was used to build soundproofing landscape features that were planted with 12,000 mixed trees and shrubs and this is now used as a public recreational area. 3.58 Generators, particularly those powered by reciprocating engines, are inherently noisy, but to be acceptable to the community the local power plant must be close to silent. It is essential to design a high level of noise control into a scheme from the outset. At West Dean, noise problems were avoided by restricting the chipping to times when it would cause minimum disturbance. At BedZED, the plant is located close to the main buildings but has been adequately soundproofed so that no noise complaints have been made.

Conclusions 3.59 The properties of biomass make it a particularly appropriate fuel for heat and CHP plants. Technologies for biomass-fired heating plants are well established; applications depend on matching biomass supply to heat demand. CHP technologies are controllable but further development is needed, particularly for small-scale plant and plant with high efficiency of conversion to electrical output. Co-firing of biomass with coal in existing generating stations has an important short- to medium-term role in developing the biomass sector. Biomass plant that are well designed and properly operated are associated with lower emissions than other fuels, notably coal. Handling of the ash, including recycling of nutrients to the soil, requires attention for any substantial application along with minimising the impacts of traffic movements and the visual impact of the plant itself. 3.60 Government policy should concentrate on the development of the biomass sector in the UK rather than speculative export opportunities. The plethora of existing schemes should be replaced or supplemented by coherent policies to promote efficient heat production and use, particularly ‘green heat’ from biomass. Unintended barriers to the use of biomass, for example in co-firing, need to be removed.

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CHAPTER 4 - MEETING THE TARGET

4.1

To meet the targets recommended in our Twenty-second Report we proposed that between 3 and 16 GW should be derived from biomass (paragraph 1.15). In this chapter we calculate the number of biomass conversion facilities that would be needed to meet this target and consider sources of wood to fuel them and the land area needed for growing energy crops during each of the four stages of development that we recommended in Chapter 2 (paragraph 2.41). We also consider transport implications and, perhaps most critically, we investigate ways of gauging likely public attitudes to this form of energy and incorporating values into decision-making.

Economics of Biomass Fuels Willow 4.2

In appropriate circumstances, an established willow coppice could bring returns equivalent to those from some arable crops while utilising relatively low-grade land. However, the initial investment required to establish a crop, purchase planting and harvesting machinery and secure a market, can currently be prohibitive. Farmers are unable to grow energy crops without both financial assistance and guaranteed demand for the crop. A number of government schemes offer financial assistance for planting energy crops (Appendix A) but these are very limited in the extent to which they can provide the necessary security. There is potential for these costs to fall, since with larger areas of energy crops, the relative machinery costs for each farmer will fall, and efficiencies in harvesting and collection will also improve. Yields are also likely to improve through better management and higher yielding willow stocks, perhaps by 30%. However, cultivating willow and other SRC crops will continue to be risky for farmers unless the government can bring forward better arrangements for financial assistance and promoting long-term contracts.

4.3

Assessing the overall economics of energy crops is problematic at this stage of development, due to the limited experience in both growing the crops and utilising them in power or heating systems, (less than 2,000 hectares (ha) of energy crops are currently being grown in the UK, producing around 17,000 odt of fuel a year). A number of factors are critical in assessing the overall economic viability for farmers of growing the crops. These include: • Crop yields • the level of grants available for establishing the crop • set aside payments for land used • the costs of maintaining and harvesting the crop • the market for the fuel and payments made for it • costs of removing the crop at the end of the growing cycle.

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48

4.4

The establishment grants for energy crops from Defra are between £920 and £1600/ha, depending on the crop and former land-use. In addition, set-aside payments can continue to be claimed. Alternatively 145/ha for energy crops is available from Common Agricultural Policy (CAP) funds (but the total fund available is restricted and in practice payments may be significantly lower than this). Scottish farmers qualify for additional setaside allowances if they use all of this land for energy crop production. Despite the combination of these funds, there has been slow uptake of energy crops in the UK, mainly due to the lack of a market for the fuel and long-term farmer security.

4.5

A recent analysis of the potential income over a 16-year period for both willow SRC and miscanthus suggested that for medium yield land the average annual income would be £187 to £360/ha77. This compares poorly to a wide range of food crops and livestock. Most of the current energy crops are grown on set-aside land, this payment is important in making the economics of energy crops viable. A report for the DTI that reviewed the economic case for energy crops in the UK confirms this conclusion, it concluded that: based on current yields, our estimates of the gross margin for the farmer suggest that energy crop production is only attractive using set-aside land78. At current yield levels SRC willow is less attractive than barley, oats or winter wheat. The DTI commissioned a further assessment that showed that with a 30% increase in yield, energy crops would be an attractive alternative to barley. Without subsidies an economic case cannot currently be made for energy crops but carefully designed additional subsidies could encourage further uptake of energy crops by UK farmers. The critical issue for farmers is the security of a market for at least two to three crops. Without that the risks of establishing a crop with a lifetime of 15-20 years is too great.

4.6

Planting grants are currently paid in one lump sum after planting. The first harvest takes place after four years of growth and for these four years farmers will not be receiving any income from those areas of land under SRC production except for set-aside payments. If guidelines on the planting of different ages and species are followed, farmers should then be able to attain an annual income from the crops. We recommend that Defra consider introducing growing grants for the first three years of an SRC plantation to improve the financial viability of the crop for farmers. We also recommend that the government offer long-term security to farmers by ensuring that should their local market for SRC collapse, they will be able to receive payments for keeping the crop until the end of the 15-20 year SRC lifespan (paragraph 2.38).

4.7

The Commission has received evidence that higher payment levels to farmers would make energy crops more attractive. However, the over-riding conclusion was that the critical element in improving both the economics and the commitment of farmers to energy crops was security of demand. We believe that if farmers had confidence that at least two, and ideally three, crops were guaranteed a market at a reasonable price, many would make a commitment to the crop. Unlike annual crops, where low prices one year would be likely to lead a farmer to planting an alternative crop the next, SRC willow and miscanthus require commitment to a long-term crop on at least a 16-year cycle. Although miscanthus is on a shorter growing cycle with annual cropping, it is quite difficult to remove the rhizome roots once established so that miscanthus too must be viewed as a long-term option.

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4.8

This assertion is confirmed by recent initiatives from the UK company Biojoule, part of the AEA Technology Group. Biojoule is seeking to provide fuel for the co-firing market. Biojoule have offered a simple contract to a number of farmers to test this market. The key ingredients of the contract are: • an agreement to purchase at least two crops with an option on further crops, • an agreed minimum price, with further financial incentives to increase the yield from a minimum level of 4 odt/ha/year, • commitment to take on the harvesting and sale of the crop. This contract was offered to farmers surrounding a large coal-fired power station and over 300 ha were offered for energy crop planting in Spring 200579.

Comparative prices of biomass fuels 4.9

Energy crops are relatively expensive compared to other biomass fuels. There are three distinctive groups and price bands of fuels: • Waste arisings attract a ‘gate fee’ if sent to landfill instead of being used as a fuel. Costs to the generator are up to £15/odt. These are by far the cheapest fuels and may in fact come at negative cost, depending on transport costs and gate fees. • Forest residues, timber industry off-cuts and arisings and agricultural residues such as straw are typically in the range of £15-35/odt. These are ‘medium cost’ fuels, and transport costs here are quite critical to overall costs. Sawmill and related timber processing industry products used on-site would likely be at the lower end of this price range. • Energy Crops, wood pellets and wood chips produced from roundwood and having to be transported more than 8km are the more expensive fuels. Fuel prices here are in the range of £40-80/odt but as yields increase and production and distribution infrastructure develops this would be likely to decrease.

4.10 Energy crops thus cannot currently compete on price against the other two groups of biomass fuels. Energy crops do however have the potential to provide very significant volumes of fuel. In the event of significant growth in the use of biomass for heat and power, resource limitations may be faced for the other fuels. In order to use the dual heat and power benefits of biomass energy to help reach CO2 reduction ambitions, energy crops will be needed in significant quantity. As supply increases, prices are likely to drop to a more competitive level. 4.11 However, overall, with the exception of mains natural gas, biomass is currently cheaper than all other competing fuels. Even when set against natural gas, some of the cheaper biomass fuels can compete successfully (as is shown in the worked example in case studies 5 and 6 in Appendix B). Gas prices are also increasing at present, a trend likely to continue over the next few years; hence the balance could shift towards wood heating. Biomass also offers the additional benefit of a secure, controllable supply of domestic fuel that is not the case with other intermittent renewables or imported fossil fuels.

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Capital and generation costs 4.12 Compared to fossil fuel heating technologies, biomass plant is more capital intensive by a factor of 2 to 3; savings for a project come through cheaper fuel. While there is a significant potential for capital cost reductions, this will require large volumes of sales and a reliable supply chain in the UK. Even with reduced costs due to volume sales, there would still be a capital cost gap between wood heating technologies and current fossil fuel technology. Capital grants are available through several sources (Appendix A) to reduce the impact of this higher initial cost but as yet they have been unable to stimulate large-scale take-up of the technology. 4.13 Table 4.1 shows the comparative capital costs of biomass and fossil fuel technology for electricity and heat production. It is evident that biomass heating is cheaper per kW installed than any of the power options, but the return from heat sales is correspondingly low. Biomass power costs are higher for the reasons discussed above.

Table 4.1 Installation costs of generation technology Technology

Size

£/kW installed

Biomass Heating

>1MWth

£70

Biomass Heating

>300kWth

£100

Biomass Heating