Feedstock Sustainability Regulations in the EU

Sustainability of biomass supply is already a well-monitored, efficiently managed issue in some European countries, regarding supply chains for industrial-scale power and heat generation.
By Hannes Lechner and John Dawson-Nowak | May 30, 2017

The sustainability of biomass fuels has been, and continues to be, a topic of discussion within the European Union. The United Kingdom, Netherlands, Belgium and Denmark have all introduced clear and proven sustainability criteria to cover this issue, but its repeated coverage in mainstream media highlights that the industry still has progress to make when it comes to convincing the public of biomass’ credibility as a sustainable energy source in large-scale power and heat generation. Going forward, the European Commission has proposed binding sustainability criteria that would apply across the EU, but it is not yet clear how such criteria will be implemented, which adds further uncertainty to the market.

Existing Regulations
Existing sustainability regulations largely focus on two key areas—monitoring of greenhouse gas (GHG) emissions, and ensuring biomass comes from well-managed and sustainable sources, with adherence to these regulations linked directly to eligibility for incentives. While the differences between regulations in the U.K., Netherlands, Belgium and Denmark may appear limited, they create some difficulties for the trading of pellet volumes, as individual shipments may meet the criteria in one country, but not in another.

 Emissions from biomass combustion are considered to be carbon neutral, as they are reabsorbed by forest stands that are grown and managed on a sustainable basis to supply raw material for energy generation and other industries. The U.K., the Netherlands, and Denmark have supply chain GHG emission limits in place ranging from 200 kilograms (kg) of CO2e per megawatt hour (MWh) to 285 kg CO2e/MWh of electricity generated. In Belgium, the number of Green Certificates awarded is directly linked to the energy balance of the biomass, or to CO2 savings achieved compared to a gas alternative with an emissions factor of 456 kg CO2e/MWh.

In respect to the source of biomass fuels, Belgium has tight restrictions on the type of biomass that can be used, largely preventing the use of any feedstock that is being used by traditional wood-consuming forest industries in Belgium. In the U.K., Netherlands and Denmark, proof that the biomass comes from a well-managed and sustainable source can be verified through the provision of Forest Stewardship Council or Pan European Forest Council certificates. In cases where such certificates are not available, third-party audits or adherence to alternative criteria, such as those outlined by the Sustainable Biomass Program, can be used as evidence.

Suggested Changes to EU RED
A number of changes to the EU Renewable Energy Directive, including the introduction of EU-wide sustainability criteria for using solid biomass in power and heat generation, were proposed at the end of 2016. Similar to existing regulations in the U.K., the Netherlands, Belgium and Denmark, they would be comprised of two main elements covering GHG emissions and the source of the fuel used.
For GHG emissions, it proposes that biomass-consuming projects beginning operations from Jan. 1, 2021, will have to demonstrate supply chain emissions of below 132 kg CO2e/MWh, and projects starting operations from Jan. 1, 2026, will have to demonstrate supply chain emissions of below 99 kg CO2e/MWh. It is important to note that these changes will not apply to existing supply chains for plants that are already operating. They are also considerably tighter than any existing GHG limits, and may prove difficult for some international fuel suppliers to meet when supplying new European bioenergy plants from 2021 onward.

Regarding the biomass source, it has been suggested that it must come from a country that has laws, and monitoring and enforcement systems in place to ensure biomass production does not cause deforestation, degradation of habitats, loss of biodiversity or overharvest. However, it is not yet clear how this will be monitored, creating some uncertainty.

Additionally, the biomass must come from a country that has ratified the Paris agreement with land use, land use change and forestry emissions monitored, improved and accounted for in the country’s emissions targets. The U.S. is currently one of the main suppliers of industrial pellets into Europe, and while the Paris agreement was ratified by the U.S. under the Obama administration, the Trump administration has indicated that it may rescind this. If this happens, and the proposed changes to the EU RED come into effect, then U.S. supply chains developed after Jan. 1, 2021, would not be able to supply into the European market.

Criticism of Biomass as Renewable
There is a large catalog of scientific reports and studies verifying the validity of biomass as a renewable fuel. Nevertheless, the approach currently being taken toward accounting for GHG emissions, including the assumption that emissions from combustion of sustainable biomass are effectively carbon neutral, have been a continual topic of both discussion and criticism.

Most recently, such criticism has come from a report published by the well-respected U.K. think tank Chatham House. The report claims that subsidies awarded for large-scale biopower generation in the U.K. represent a misuse of tax payer money, as combustion of biomass can result in higher CO2 emissions than the combustion of coal.

Although this report has been rejected by the scientific community, which has pointed to more detailed scientific analysis with better understanding of forest management practices and the validity of such an approach, the fact that such analysis and reports are still appearing in mainstream media shows that the sustainability issue is still of importance to the wider public.

Sustainability of biomass supply is already a well-monitored, efficiently managed issue in some European countries, regarding supply chains for industrial-scale power and heat generation. The challenges ahead will require individual EU member states and all stakeholders involved to ensure they have a clear understanding of the subject matter, so that when binding, EU-wide criteria come into effect, they are fully prepared. Additionally, the continued discussion of biomass sustainability in large-scale industrial applications within mainstream media is evidence that the industry needs to do even more to effectively communicate the green credentials of biomass power, and the effectiveness and validity of current approaches toward regulation and criteria.

Authors: Hannes Lechner
Senior Principal, Pöyry Management Consulting
+44 7876 348 262

John Dawson-Nowak
Consultant, Pöyry