DECC responds to criticism of Drax conversion, CfD contracts

By Erin Voegele | October 08, 2014

The U.K. Department of Energy and Climate Change has spoken out to criticize an article published by the U.K.-based Daily Mail that questions the environmental benefits of the Drax Group biomass conversion and the sustainability of U.S. wood pellets.

Within its rebuttal, the DECC disputes claims made in the article that the Drax conversion would increase annual household energy bills by £23 ($37) per year for the next 13 years. The DECC also stresses the article’s characterization of biomass as a “grotesque environmental charade” is wrong, citing a scientific model that shows North American biomass used in the U.K. can be low-carbon, particularly biomass sourced from diseased trees, broken branches or unused sawdust that would otherwise be burned as waste.

The DECC also points out that the U.K. is introducing tough sustainability standards that not only require greenhouse gas (GHG) reductions, but also provides information on the type and source of biomass. Beginning next year, biomass that does not meet sustainability standards will not be eligible for government support.

“We are investing in sustainable biomass to help us transition to a low carbon future, which will strengthen our energy security and provide a better deal for consumers by reducing our reliance on polluting fossil fuels and volatile foreign markets,” said the DECC in its statement.

The Daily Mail is not the only group to criticize the Drax conversion project in recent days. A report issued by the Commons Committee of Public Accounts of the U.K. Parliament in early October criticizes the early contracts for difference (CfDs) awarded by the DECC. Drax was expected to receive CfDs to support the conversion of two additional power generation units, but has been awarded only one CfD contract.

Within the report, the committee said the DECC’s decision to award early contracts worth up to £16.6 billion to eight renewable projects without price competition failed to adequately consider how to secure the best value for consumers. According to the report, the DECC committed 58 percent of total funds available for renewable contracts under the transitional agreements, which has severely constrained the amount of funding available to be awarded under new arrangements through price competition. The committee said this has reduced the opportunity to test the market and secure the best value for consumers.

The DECC has announced that new renewable electricity projects will compete for £300 million in support under the CfD program this fall via an auction. The budget is split between several technology pots. The first pot includes £50 million for established technologies commissioning in 2015/’16 and £15 million for established technologies commissioning in 2016/’17. Established technologies include onshore wind, solar photovoltaic, energy from waste with combined-heat-and-power (CHP), hydro, landfill gas and sewage gas. The second pot includes £155 million for less established technologies commissioning in 2016/’17, and £80 million for less established technologies projects commissioning in 2017/’18. Less established technologies include offshore wind, wave, tidal stream, advanced conversion technologies, anaerobic digestion, dedicated biomass with CHP, geothermal and Scottish Islands onshore wind. No 2014 budget has been released for the third pot, which includes biomass conversions.

In July, the DECC indicated that the decision not to budget for the technology group for biomass conversions in the 2014 allocation round does not imply the DECC would not release a budget in future rounds for biomass conversions. “Our current decision is made purely for overarching budgetary reasons,” the DECC said. For the 2015 allocation round, the DECC said it has not yet decided on an indicative budget for the technology group.