DECC Doubles Down on Woody Biomass
On August 22, 2013 the United Kingdom’s Department of Energy & Climate Change released its much anticipated report, “Government Response to the consultation on proposals to enhance the sustainability criteria for the use of biomass feedstocks under the Renewables Obligation (RO)”. The title is certainly a mouthful, but after a few readings of the 52 page document it is clear the DECC intended the report to be its final word on the role that woody biomass would be allowed to play in meeting the nation’s ambitious Renewables Obligation.
In a letter included in the annex of the report was a letter signed by a host of biomass industry professionals that asks DECC to not only firmly establish its support for biomass, but to buttress this support with some measure of long term certainty. The ministers at DECC clearly headed this advice and included in their report a commitment to “long term certainty” that deal makers and the investment community were advocating for. Specifically, on page 8 the report states, “We have also decided to adopt a policy that the UK will no make further unilateral changes in the methodology underpinning the GHG targets or to other aspects of the RO sustainability criteria before 1 April 2027”.
And so the DECC has spoken. The report establishes that woody biomass will play a significant role in the UK’s Bioenergy Strategy moving forward, but not without robust assurances of adherence to sustainability guidelines. While North American pellet producers, foresters and landowners were certainly aware of, and comfortable that they could achieve sustainability requirements the UK would set forth, the unresolved question hinged on the degree to which this adherence would be verified and reported.
While the report establishes that final sustainability criteria will not be announced until the end of the year, so that they may be harmonized with the criteria being established by the European Commission, the report also establishes that once finalized, power producers would be “required to demonstrate that solid biomass and biogas feedstocks meet the sustainability criteria in order to be eligible for support under the RO”. Essentially, if power producers going to participate in the Renewables Obligation and generate Renewable Energy Credits, audits, verification and reporting must become a part of their supply chain program, beginning April 15 2015.
By answering this one question, the DECC report introduces many others. Clearly, the finalized criterion that the report suggests will be issued at the end of the year is the biggest question for producers and their supply chains, but that isn’t the only one. As North American pellet producers continue to grow their exports and satisfy UK based demand, creating a chain of custody reporting program that their customers will need will have to become an extension of their production operation.
Forest certification, while not widespread in the United States, does have a precedent. Both the Forest Stewardship Council (FSC)and the Sustainable Forestry Initiative (SFI) have established certification programs and are certifying forest acres that later become paper and lumber products, all bearing proof of their certified status. This latest report from DECC confirms that the growth in the export market for North American producers will continue and along with it an industry wide reporting and verification program.