Britain should only support energy production from burning wood and other biomass where proven carbon cuts result, said a report by the Environment Agency, a public body which advises government. Investors and energy companies plan to invest billions in developing British power plants running on wood chips, straw and other biomass, in response to UK climate change policies which add a premium for generation of low-carbon electricity.
British finance minister Alistair Darling presents his budget on Wednesday and is expected to announce new support for renewable energy and to back tough, legally binding 2020 greenhouse gas emissions targets.
But recommendations in a report commissioned by the Environment Agency, if adopted by government may dent biomass initiatives especially by excluding support for electricity-only projects rather than those which use combined heat and power.
A policy approach which discouraged electricity-only biomass generation could prove problematic, said a Citi report published on Tuesday, highlighting plans by coal-fired power producer Drax to burn biomass to produce electricity.
Drax plans to invest up to 1.2 billion pounds ($1.74 billion) building three 300 megawatt (MW) dedicated biomass plants in the UK as part of a joint venture with Siemens.
Relevant policies should ensure that combined heat and power and heat only plants are built rather than electricity only, as is currently the case, said the Environment Agency report, Biomass: carbon sink or carbon sinner.
Mandatory minimum standards for the greenhouse gas savings achieved by fuels used to generate heat and power should be developed, the report added.
In its latest financial results, Drax details no plans to use the heat generated by its biomass projects. The company wasn't immediately available for comment.
Biomass is in theory a low-carbon energy source compared to fossil fuels because burning wood or crop waste only emits carbon dioxide which plants and trees suck out of the air.
But the size of carbon cut depends on how plants are grown, for example energy-intensive farming practices, fertilizers and long-distance transport of the feedstock pump more greenhouse gases into the atmosphere.
Burning biomass to produce both heat and power is more efficient than wasting the heat and only using the electricity.
Burning straw can even produce more carbon emissions than natural gas, a fossil fuel, according to the Environment Agency report, after taking into account the transport of the feedstock and efficiency of the power plant.
It's a lot of nonsense, said David Williams, managing director of energy company Eco2, which aims to raise 300 million pounds ($435 million) to build three straw-fired power stations only one of which would use the generated heat.
Williams said the report failed to take account of the fact that straw is a by-product of food production, such as wheat, and the figures also assumed a very inefficient power station.
(Editing by Peter Blackburn)