Consultation on reform of the Renewables Obligation Response from…

Consultation on reform of
the Renewables Obligation

Response from
Friends of the Earth



                       September 2007
Friends of the Earth                                   Renewables Obligation consultation response




Friends of the Earth inspires solutions to environmental problems, which make life
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Friends of the Earth is:
· the UK's most influential national environmental campaigning organisation
· the most extensive environmental network in the world, with around one million supporters
   across five continents, and more than 70 national organisations worldwide
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Friends of the Earth
26-28 Underwood Street, London N1 7JQ
Tel: 020 7490 1555 Fax: 020 7490 0881
Website: www.foe.co.uk




Written by:
Dave Timms, Economics Campaigner and Dr Michael Warhurst, Senior Waste and
Resources Campaigner


September 2007




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Friends of the Earth                                 Renewables Obligation consultation response



Introduction


Friends of the Earth welcomes this opportunity to input its views on the future
development of the Renewables Obligation. We believe the current policy framework
for supporting the development of renewable energy in the UK is insufficient to meet
the new EU wide goal of 20% renewable energy by 2020. The Renewables
Obligation (RO) is the main policy instrument responsible for the development of
renewable electricity generating capacity in the UK.
While the Government's current RO banding proposals are a welcome attempt to
address this issue, they do not address wider problems associated with the RO, in
particular its lack of transparency and the unpredictability of future Renewables
Obligation Certificate (ROC) prices.
In many European countries legislation to introduce a renewable energy Feed-in
Tariff (REFIT) has proven a highly effective policy instrument for delivering a rapid
increase in the uptake of a wide range of renewable technologies at a considerably
lower cost to the consumer than the RO.
Feed-in tariffs are the primary support instrument for renewable energy throughout
Europe, paying a guaranteed and fixed price for renewable energy, with different
price levels set for different technologies.
For micro-generators (typically householders), community groups and businesses
outside the large scale dedicated energy industry, a REFIT would provide a simple,
transparent and cost-effective mechanism that would deliver real, predictable and
reliable incentives and rates of return for individuals and organisations to confidently
invest in renewable technologies.
A UK REFIT would provide long term security to investors with guaranteed rates of
return. It would remove the current uncertainties about future ROC value which is a
major barrier to investment in renewables.
The recent paper by Dr David Toke of Birmingham University, commissioned by the
World Future Council and submitted to this consultation offers an extensive analysis
of the limitation and failings of the RO. It sets out the advantages of REFITs in
general and sets out much of the detail of how a UK REFIT could work in practice
and how it could function alongside a reformed RO.
We urge the Government to reconsider its rejection of a Feed-in Tariff as an
additional mechanism for delivering an increase in renewable generating capacity in
the UK. Friends of the Earth would further urge the Government to consult on the
development of a UK REFIT to support the widespread deployment of small scale,
on-site, community owned and domestic renewable generation capacity.
In addition Friends of the Earth supports the continuation of the RO as the primary
policy mechanism to deliver large scale renewable energy capacity banded to deliver
different support to technologies depending on their cost and stage of development.
We have set out our views on a number of issues raised in the consultation in
response to the specific consultation questions.



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Friends of the Earth                                 Renewables Obligation consultation response




There are many other policy instruments which could support the development of a
thriving renewables industry and increase the deployment of renewable generating
capacity in the UK. While we recognise they are outside the scope of this
consultation we believe grants, direct government spending, fiscal incentives and
regulation all have a strong role to play.


Response to specific questions


Q1,2,3
No response.


Q3: Do you agree with the rationale for grouping technologies in this way?
See our answer to question 4.


Q4: Do you agree with the proposed banding levels? If not, please provide
evidence as to why these should be changed. Views are also invited on the
reports by Ernst and Young and Oxera published alongside this consultation
document
1) We do not support award of ROCs to any form of energy from waste incineration,
whether with CHP or without CHP.
A detailed analysis of the climate impacts of incineration1 by Eunomia Consultants
has demonstrated that a CHP waste to energy incinerator emits around the same
amount of fossil fuel derived CO2 per unit energy as a gas fired power station.
However, in addition to this fossil fuel derived CO2, incinerators will also emit around
twice as much biogenic CO2. Therefore gas fired power stations have a better climate
performance than incinerators, so if ROCs are awarded to incinerators they should
also be awarded to gas power stations, which would make a mockery of the whole
system.
The Eunomia study also undertook a more sophisticated comparison of the impact of
all CO2 emissions from incineration when compared with other residual waste
treatment methods. This analysis concluded that pre-treatment of residual waste to
remove recyclables and degrade biodegradable materials, followed by landfill of the
end material, was better for the climate than incineration, with or without recovery of
heat. It is therefore clear that incineration is not the best way to divert biodegradable
waste from landfill, and should certainly not be viewed as a "renewable energy"
source.
It's worth noting that DEFRA's own analysis of the climate impacts of incineration
acknowledges their inefficiency & fossil-fuel derived CO2 impacts, in Annex E of the
England Waste Strategy 2007:


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Friends of the Earth                                  Renewables Obligation consultation response



"Where fossil fuel based products are incinerated (e.g. plastics) they tend to generate
energy less efficiently than using fossil fuel directly, hence are associated with an
overall carbon cost"


2) We are opposed to granting of ROCs to gasification and pyrolysis of wastes
containing fossil-fuel derived materials (e.g. plastics).
We consider that there is insufficient evidence of the carbon balance of these plants
to be able to judge whether they have an overall climate benefit. We would suggest
any assistance to such technologies should be held back until the results of DEFRA's
new technologies programme are available.


3) We support the granting of two ROCs to Anaerobic Digestion, as a 100%
renewable energy source.


4) The need for a renewable energy Feed-In Tariff.
The proposal to abandon the unbanded one-size-fits-all approach of the existing RO
and group technologies, reflects the need for a policy to deliver different levels of
support to different renewable technologies.
However a REFIT would allow greater flexibility to set different tariff levels for
different technologies depending on their stage of development and cost.
We agree with the consultation (section 3.15) that "in the long-term microgeneration
can make a significant contribution in terms of carbon savings."
The consultation (section3.15) states that "the Obligation was designed to support
large scale deployment of renewables and we do not feel that it is the best way to
deliver the incentives that the microgeneration industry require."
We agree that the RO cannot deliver the necessary support for microgeneration, or
indeed decentralised renewable energy generation more generally. The insufficient
level of funding available through the Low Carbon Buildings Programme is also
failing to deliver support for microgeneration. Friends of the Earth believes that a
REFIT for small renewables is the best policy mechanism to develop UK renewable
microgeneration capacity and the Government should consult on its development
including tariff for each technology and the generating thresholds (or other criteria) at
which an installation would qualify for support under the RO or REFIT.


5) Geopressure.
We are perplexed by the proposal that electricity generated from the geopressure of
natural gas should be excluded from the renewables obligation. We accept that at
first glance this electricity is not strictly renewable, but believe the technology can
achieve significant carbon savings, for little environmental impact, not least because
the UK will continue to use natural gas for many decades to come. We believe the



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Friends of the Earth                                Renewables Obligation consultation response



Government should say clearly how it intends to support geopressure, should it
proceed with its proposal to exclude the technology from the Obligation.


Q5-10
No response.


Q11: Do you agree with the proposed treatment of projects under 50 kW as set
out in para 4.21?
Friends of the Earth believes that small-scale and on-site renewables are best
supported by a REFIT and not the RO. The Government should consult on the
generating capacity threshold at which each technology would move from receiving
support from the RO to a new REFIT. Many installations with a generating capacity of
under 50kW would be much better supported by a REFIT.


Q12-17
No response.


Q18: Do you agree with the need for a special co-firing criterion for an
emergency review of banding? Is 10% of ROCs an appropriate trigger point?
No response.


Q19: Do you agree with the Government's proposal that reducing support and
reviewing the co-firing band for regular biomass if it contributes 10% of ROCs
makes a cap on co-firing unnecessary? If not, please provide evidence as to
what the likely impact of uncapping co-firing at the proposed level of support
would be and the level of cap appropriate.
We support a 10% cap on co-fired ROCS. Friends of the Earth recognises that co-
firing biomass leads to significantly greater emissions savings than processing it for
transport fuel. The Government ought therefore to give greater support for this type
of energy generation. However there are still many serious sustainability issues
connected to the fuel sources linked to co-firing. Taking into account these risks and
with a view to minimising destabilisation of the ROC market, a cap is the most
sensible approach to pursue.


Q20: Do you agree with the proposed treatment of energy crops set out in
paragraphs 6.9­6.14?




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Friends of the Earth                                Renewables Obligation consultation response



Some tropical oils such as soy and palm oil are linked to very high levels of carbon
emissions due to deforestation and forest fires. The high level of risks associated
with those crops imported into the EU for energy use are such that they should be
excluded from use. This includes both palm oil and soy oil. It is not enough just to
monitor the materials that are being used. Crops should only be used that meet strict
sustainbility critiera. ROCs should not be issued (and should never have been
issued) for energy produced from energy crops or biomass unless strict sustainability
and carbon saving criteria are met. A mandatory minimum 50% carbon saving should
be set.


Q21: Do you agree that sustainability requirements should cover all biomass
users?
Yes. Sustainability and carbon saving standards should certainly cover all biomas
users. Reporting requirements alone are inadequate. A mandatory legal standard is
required to guarantee carbon savings and sustainability.


Q22: Should those generating less than 50 kW be exempted from sustainability
reporting? Should any other threshold be used.
No response.


Q23: Do you agree with the criteria to address sustainability for biomass?
The Criteria are reporting criteria only. A minimum carbon and sustainability standard
is needed which includes independent auditing of the application of this standard and
strong penalties for the contravention of this standard, Imports from outside Europe
should not be permitted. A cap should be set according to what can be produced
sustainability for the UK market within Europe, a 50% minimum carbon saving should
be adopted and a much more credible sustainability standard for European biomass
set that includes impacts on wildlife, water quality, chemical use, fertilizer use. The
full carbon cycle of biomass production needs to be taken into account.


Q24: Do you agree that Ofgem should freeze the ROCs of operators who do not
provide the necessary information on sustainability?
ROCs should be frozen for operators who do not meet the strict, mandatory carbon
and sustainability standard. The provision of information alone is a very weak
regulatory tool that is massively open to abuse and lacks credibility in ensuring
carbon and sustainability standards are met.


Q25: Do you agree that deeming the fossil fuel content of waste is appropriate?
Should operators be given the opportunity to present Ofgem with evidence that
the fossil fuel content is lower?



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Friends of the Earth                                 Renewables Obligation consultation response



We don't support classification of burning of mixed waste as `renewable' (and we
don't support the burning of mixed waste). Given this, deeming fossil fuel content will
at least help to make it clear that this material is not `renewable'.


Q26: Is 65% fossil fuel the right level to deem? Does the remaining 35%
receiving ROCs provide a suitable incentive through the RO without
compromising the Government's aspirations for increased recycling?
We do not believe that the government should give any incentive to burn mixed
wastes. The aim should be to maximise recycling, digestion & composting. As
mentioned in our answer to question 4, we consider that pre-treatment to remove
recyclables & to stabilise the waste before landfill is the best interim residual waste
treatment for the climate.


Q27: Do you agree that the RO should be made `neutral to waste (SRF)' in this
way? Would there be any negative consequences? Do you agree that a CEN
based definition is appropriate?
We do not support the burning of refuse derived fuels, so we are opposed to this
proposal. We would also point out that solid recovered fuels are still mixed wastes,
so your statement that you are "extending neutrality only to solid recovered fuels (i.e.
not to unsorted, mixed waste)" is misleading.




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Friends of the Earth                                       Renewables Obligation consultation response



References
1 "A changing climate for energy from waste?", Eunomia Consultants for Friends of the Earth, May
2006: http://www.foe.co.uk/resource/reports/changing_climate.pdf




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