COLUMN-Biomass Burners Beware New EU Oversight: Wynn

By Gerard Wynn Aug 21 (Reuters) – Utilities planning to invest in wood-fired power plants beware: the European Commission’s draft green standards for burning biomass would regulate carbon emissions from burning wood for the first time. At present, EU laws favouring green energy have led countries to pay generous subsidies for burning biomass, but in the future developers would have to meet the new standards to get those incentives. (For draft copy, see Chart 1) Greater scrutiny is appropriate, given the present assumption that burning wood produces no carbon emissions at all, under renewable energy and carbon trading laws. Biomass including wood, energy crops, food crops and waste is the main source for renewable energy in Europe, and accounts for 7 percent of all EU energy consumption. Until now, only biomass used to make liquid biofuels for road transport has been subjected to “sustainability criteria” – a check list to make sure they are environmentally friendly. The Commission will now propose to widen similar, binding criteria to biomass used to generate heat and power, which accounts for more than four times the energy of biofuels. It is only a first step, and will probably take several years to legislate. But the direction is important: the Commission’s track record is to toughen environmental regulation over time, and the case of biofuels is illustrative. As a directive, the proposals need backing from the European Parliament and member states, where the haggling will start. Academic literature suggests that there is room for argument that many existing sources of biomass would fail to meet the new criteria, with implications for biomass demand, project returns and rival low-carbon electricity technologies. *************************************** Chart 1: link.reuters.com/jep52v Chart 2: (page 238) link.reuters.com/nep52v Chart 3: (page 6) link.reuters.com/pep52v *************************************** DRIVE EU countries face a collective target to get a fifth of all energy, including power, heat and transport, from renewable sources by 2020. Member states have published details of how they will meet their 2020 goals, which the European Environment Agency (EEA) aggregated into EU-wide data. Burning biomass to produce heat and electricity would together account for 44 percent of all EU renewable energy consumption in 2020, according to the EEA report, “Renewable Energy Projections as Published in the National Renewable Energy Action Plans of the European Member States”. (Chart 2) That is far ahead of higher profile sources, such as wind power (18 percent of all renewable energy in 2020); biofuels (13 percent); and solar power (4 percent). The new regulations will therefore no doubt be bedded in softly, initially, not to upset the bloc’s entire green energy strategy. Britain, for example, has been especially active lately in supporting biomass power – faced with concern about a blackout risk due to coal plant closures. It has recently granted planning approval for 6,940 megawatts of dedicated biomass power plants, refusing just 209 MW, with a further 456 MW in the application pipeline, planning data show. Electric utilities involved in various stages of planning approval include E.ON, GDF Suez, RWE , Scottish Power. EU DRAFT The EU’s 2009 renewable energy law required the Commission to investigate possible oversight of biomass, beyond biofuels. The Commission said in 2010 that it did not then see the need for binding rules, making recommendations instead. The Commission has now had a change of heart, arguing that it is better to have a single set of binding obligations for all biomass across all 28 member states, to avoid confusion. The new rules for biomass heat and power broadly follow the existing guidelines for biofuels. They would require a minimum greenhouse gas saving of 60 percent compared with fossil fuels (including the carbon emissions from burning the fuel to generate electricity or heat); particular emissions values for biomass feedstocks and processes; and protection of forests with high conservation value. It may safeguard existing investments by applying the new criteria only to new installations, but the draft does not spell that out. DEBATE The new proposals do not list greenhouse gas savings for various types of biomass compared with fossil fuels – perhaps because that will be the most contested item. But in its note three years ago, the Commission cited its own in-house research (the Joint Research Centre) calculating savings for 20 different sources of biomass for heat and power. Regarding electricity generation from biomass, the research showed that 11 sources would fail the proposed 60 percent threshold; for heat generation, five would fail. (Chart 3) The JRC numbers show two critical factors determining greenhouse gas savings: first, the fuel used for processing the biomass, whether natural gas or less carbon-emitting wood and other forest residues. And second, the source of the biomass, whether from the EU or from tropical sources, where the latter may be primary rather than managed forest, and with higher transport emissions. No doubt, environmental and industry lobbies will haggle over the numbers. More important is the direction. The European Commission has in the past shown a bias towards making environmental legislation tougher, once it is introduced. The biofuel rules are illustrative. The EU approved biofuel consumption targets and sustainability criteria in the 2009 renewable energy law. Next month, the European parliament will vote on halving the previously agreed target for food-based biofuels, shifting support towards fuels with much lower emissions. “The Commission is of the view that in the period after 2020 biofuels which do not lead to substantial greenhouse gas savings and are produced from crops used for food and feed should not be subsidised,” the Commission says, in a policy shift on biofuels which the biomass industry should now be wary of. (Reporting by Gerard Wynn; Editing by Jeff Coelho) Taylor Scott International