Wood Pellets get budget boost

Biomass and wood pellet sector gets UK budget boost

Now that we know the Renewable Heating Initiave (RHI) is being continued, and with a budget that will allow the entry of many thousands of new projects, there is some certainty in the U.K. biomass heat sector for the foreseeable future.

Back in September, there was an uncertain tone, thanks to the lack of policy certainty around renewables in the United Kingdom, and the swinging cuts that had been made to various support schemes in the preceding months.  At the time, the biomass heat sector was lobbying hard to avoid falling foul of the knife being wielded by U.K. Treasury in the run-up to the Comprehensive Spending Review, the process government uses to set its budgets for the remainder of the parliament.

The biomass heat industry let out a collective gasp on the day of the CSR. The Renewable Heat Incentive had been retained, but with what appeared to be just £10m ($15.1 million) of funding for new projects in the 2016-‘17 financial year. That’s enough for just a few hundred new installations to join the RHI. This caused 24 hours of concern and consternation—funding just a few hundred more schemes spread across an industry that has been averaging 250 systems a month since the RHI was launched in November 2011—sounded very much like a death knell for biomass heat. Thankfully, the figures in the original announcement were wrong, and the RHI budget has actually been increased by £210m ($318.3 million), to £640m ($940 million), which includes existing commitments in the 2016-‘17 financial year, triggering sighs of relief all round.

Now that we know the RHI is being continued, and with a budget that will allow the entry of many thousands of new projects, there is some certainty in the U.K. biomass heat sector for the foreseeable future. That said, there were accompanying announcements about reform to the RHI, which has seen its fair share of gaming over the past four years. Thanks to loopholes in the RHI scheme design, some unscrupulous suppliers and heat customers have taken advantage of opportunities to create projects with disproportionately high rates of return. The language of DECC—the scheme funder—indicates what many of us have been hoping for: that the days of RHI gaming are numbered.  We’ve been told that radical reform and bold changes are in the cards, all to ensure that the RHI delivers the best value for money possible for the U.K. taxpayer.

We still have a long way to go to reach our legally binding carbon reduction targets in the U.K., and as heat is the largest contributor to our national CO2 emissions, decarbonizing the sector clearly remains a priority for our government. The DECC is now very much in information gathering mode, with civil servants actively polling the views of industry to help shape the changes to come. Ultimately, all responsible participants in the biomass heat sector want to see us deliver value for money, as only by doing this can we ensure that government has the confidence to continue supporting the industry for as long as it needs to become sustainable. Improving quality and efficiency through the development and enforcement of standards is seen as critical, as are moves to provide the industry with more than just a cash injection. The various forms soft support needed to help the industry professionalize and grow are high on our list of priorities for the coming years.

As Adam Sherman, Vermont-based Biomass Energy Resource Center’s executive director recently commented in his talk to the 2015 Wood Heat Association conference in Bristol, the way to ensure a biomass heat sector grows as we all would like it to, is to use “silver buckshot” rather than a silver bullet. We’ve tried the silver bullet over the past four years and made good progress, but the time has certainly come to break out the big guns now that we’ve dodged treasury’s knife.

Author: Neil Harrison
Board Member, Wood Heat Association