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WPAC – The U.K. is committed to pellets

The United Kingdom (UK) has emerged as Canada’s largest market for wood pellets, accounting for one million tonnes in 2013 (63 per cent of Canadian exports) and up from 794 thousand tonnes in 2012. And since the UK market is dominated by large power utilities replacing coal with wood pellets to reduce CO2 emissions, its climate change policy is of vital interest to pellet producers.

The Climate Change Act of 2008 (the Act) provides that the UK must reduce its CO2 emissions by at least 80 per cent from 1990 levels by 2050 in an effort to limit the global temperature increase to 2°C. To ensure that regular progress is made towards this target, the Act established a system of five-year carbon budgets to serve as achievable steps along the way with the first four set in law. The UK met its first target and is now in its second carbon budget period aiming for a 29 per cent reduction by 2017.

A committee of experts in the fields of climate change, science and economics was established (CCC) and is supported by a secretariat. It acts as an independent body to advise parliament on progress and recommend action where targets are not met by focusing on nine sectors: industry, buildings, transport, aviation, shipping, waste, power, land use and agriculture.

According to the CCC’s July report, deep de-carbonization of the power sector by 2030 is central to emissions reduction and the most economical means of meeting its legislated commitments (since power accounts for around one quarter of total UK emissions).

The CCC makes a number of recommendations that are of interest to pellet producers, which include:

• Completing implementation of Electricity Market Reform (EMR) by setting appropriate strike prices and by signing contracts for low-carbon capacity, while ensuring a suitable mix of low-carbon technologies is supported.
• Requiring all biomass to be sustainably sourced.
• Adding a requirement that all biomass is sourced from forests that can demonstrate constant or increasing carbon stocks, and pushing for this to be reflected in standards at the EU level.
• By no later than 2016, committing funding for low-carbon generation in the period beyond 2020.
• Setting ambitious emissions targets for 2020 and 2030 that will put the UK on a cost-effective path to meeting at least an 80 per cent target for 2050.

The committee reported that biomass power generation rose from 8.7 TWh in 2008 (around three per cent of electricity supply) to 16.5 TWh (five per cent of electricity supply) in 2013. The composition of biomass feedstock used in electricity generation has shifted from a reliance on waste-derived fuels in 2008 (around 85 per cent, the remainder a mix of plant and animal biomass) towards a greater proportion of woody biomass (27 per cent of feedstock in 2013). The CCC also recommends that the use of biomass in the power sector should focus on conversion of existing coal plants rather than new, dedicated biomass plants.

Plans are on track for the UK to meet the following scenario:

Around 2 GW of large-scale dedicated biomass or biomass conversion is already on the system, with a further 1.4 GW of co-firing and other biomass capacity under construction.

The Department of Energy and Climate Change has awarded contracts for biomass conversions at Drax (pellets), Lynemouth (pellets), and Teesside (chips) with a total capacity of 1.4 GW.

There are further plans to convert another unit at Drax (0.65 GW) and potentially at Eggborough (1.4 GW).

1.7 GW of existing biomass conversion capacity is set to come offline by 2016.

The UK is legally committed to aggressive carbon reduction targets well into the future; biomass, especially in the form of wood pellets, will continue to play a prominent role. This is good news for Canadian wood pellet producers.

Gordon Murray is executive director of the Wood Pellet Association of Canada. He encourages all those who want to support and benefit from the growth of the Canadian wood pellet industry to join. Gordon welcomes all comments and can be contacted by telephone at 250-837-8821 or by email at gord@pellet.org.