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National Audit Office questions biomass industry sustainability standards

31/1/2024

Close up of engineer's gloved hands holding biomass pellets Photo: Drax Power
Biomass made up 11% of the UK’s electricity generation in 2022

Photo: Drax Power

Over the past two decades, the UK government has provided more than £20bn of support to businesses using biomass in the power and heat sectors – a key part of its net zero ambitions. However, the government ‘cannot demonstrate’ that biomass fuel is sustainably sourced, and its assurance schemes are not good enough, according to a new report from the National Audit Office (NAO) that raises questions about future subsidies and climate goals.

Biomass materials, such as plants or food waste, can be used in generating power or heat, or for fuelling vehicles. In 2022, biomass made up 11% of the UK’s electricity generation, according to the NAO report.

 

The government and independent Climate Change Committee (CCC) considers biomass to be ‘low-carbon’ if generators adhere to sustainability criteria set by government and monitored by Ofgem. To enable government to monitor compliance with these criteria, participants submit regular information to Ofgem and can draw on third-party certification – an approach which is set out in legislation. However, ‘the government has not evaluated whether its current arrangements are effective at ensuring compliance’, states the NAO.  

 

The Department for Energy Security and Net Zero (DESNZ) argues its approach is proportionate. But the NAO’s report sets out its view that the lack of an evaluation means the government cannot demonstrate that its current arrangements are adequate to give it confidence that industry is meeting sustainability standards.

 

Looking to the future, DESNZ has committed to strengthening its sustainability criteria.

 

For biomass to play a significant role in meeting long-term climate targets depends on the success of the government’s carbon capture utilisation and storage (CCUS) programme, notes the report, adding that if biomass is enabled with carbon capture and storage (known as BECCS), it could generate negative emissions.  

 

There are no BECCS plants currently operating in the UK, although earlier this month the Secretary of State for Energy Security and Net Zero granted development consent for Drax’s BECCS project, in a move decried by environmental groups.  

 

DESNZ has a programme to promote CCUS technology and is negotiating commercial terms with a first wave of eight carbon capture projects, though none of these are BECCS plants.

 

Of the £22bn of UK government subsidies provided to the biomass industry to date, around £16bn has come from consumer-funded support – with £14bn coming from the Renewables Obligation scheme, and £2bn coming from contracts for difference (CfD), which guarantee generators a set price for the electricity they produce. As the largest biomass electricity generator by some distance, 36% of the Renewables Obligation funding has gone to Drax, reports the NAO.

 

DESNZ is considering whether to provide transitional support to large-scale biomass generation, such as Drax and Lynemouth beyond 2027, when both their CfDs and Drax’s support through the Renewables Obligation is due to finish, to enable them to convert to BECCS in the future.

 

If biomass is unable to make the contribution to achieving net zero that government currently expects, then DESNZ may need to increase activity in other areas to reach its 2050 target. This could include increasing the capacity of other types of greenhouse gas removal technology, encouraging greater behaviour change, or further innovation, suggests the report.

 

The NAO is recommending the government ‘adequately assures’ itself that generators comply with sustainability requirements; and that the government publishes the environmental impact of continuing subsidies for unabated biomass after 2027.

 

‘If biomass is going to play a key role in the transition to net zero, the government needs to be confident that the industry is meeting high sustainability standards,’ says Gareth Davies, Head of the NAO. ‘However, government has been unable to demonstrate its current assurances are adequate to provide confidence in this regard. Government must review the assurance arrangements for these schemes, including ensuring that it has provided adequate resources to give it assurance over the billions of pounds involved.’

 

Welcoming the NAO report, a Drax spokesperson said: ‘The NAO acknowledges the important role that sustainably sourced biomass has to play in addressing the climate crisis and displacing fossil fuels in the production of dispatchable electricity. It’s essential that sustainability reporting and criteria are robust and fit for purpose. This was also recognised in the government’s Biomass Strategy published last year, which outlined a review which has already begun. We fully support that a review process should be carried out and look forward to playing our part and working with government in this. We are committed to ensuring the biomass we source delivers positive outcomes for the climate, for nature and for the communities in which we operate.’