Last week I spent 2 days at a European biomass trading conference in London. Sustainability was covered quite thoroughly in the opening session and cropped up frequently over the two days. The discussion complemented the work in my recent report ‘Sustainability of biomass for cofiring’ (available from the IEA CCC bookshop).
The Sustainable Biomass Partnership (SBP) is an industry initiative from Dong Energy, Drax, Vattenfall, E.On, GDF Suez and RWE. The aim is for the SBP to be agreed and widely taken up to remove the problem of pellet makers having to comply with multiple certification organisations to prove the sustainability of their product. In the short term the SBP is developing a biomass assurance framework. Development and acceptance of the SBP is important to make wood pellets a tradeable commodity.
There is considerable interest in UK developments and policy regarding biomass as the conversion of 3 units at Drax will take their demand up to 7.2 mt/y of biomass. Total UK demand could exceed 10 mt/y by 2015, a massive increase from current levels. Infrastructure developments in the UK are taking place to receive the imported pellets at the Ports of Immingham, Hull and Tyne. New train wagons have been designed and built to transport the pellets to Drax, and new freight railway lines are being constructed.
Elizabeth McDonnell (DECC) gave an update on the UK Electricity Market Reform (EMR), which has secure, sustainable energy supply as its objective. This requires £110 bn of capital investment to 2020, of which £40 bn will be designated for renewables. The Renewable Obligation (RO) expires in 2017, but cofiring biomass has been grandfathered. If a plant is cofiring under the RO and then converts to 100% biomass, it can then apply for the Contracts for Difference (CfD).The strike price for biomass conversion is set at £105/MW. The first CfD are expected in the second half of 2014, and the sustainability standards that exist in the RO will be mirrored in the CfD.
Other European countries are developing sustainability standards for biomass, as no finalised standards have been made available from the EC. The regulatory framework is important for the development of the biomass market in the EU. The residential demand for pellets is increasing strongly. The Asian pellet market is also expanding, and is expected to reach 3 mt in 2015. Cofiring is being tested at a couple of power plants in South Korea.
There were interesting presentations from pellet producers in the southern USA. For example, Alicia Cramer of the Westervelt Company described how the company, established in the 19th century as a producer of paper bags converted in 2005-07 to pellet production. They manage over 600,000 acres of forestry, on a 25 y rotation, for saw logs. The thinnnings and residues are converted to pellets. 95% of the pellets produced at their riverside plant in Alabama come from a 36 mile radius. The pellets are then transported downriver. Foresters and loggers make little money, so the new pellet industry contributes significantly to the economic sustainability of the forests, as well as creating local employment.
The conference closed with an interesting discussion about how to explain the sustainability of biomass, and highlighted campaigns such as ‘Back Biomass’ and ‘Bridging with Biomass’.
From this conference, I found that the pellet industry is still quite new and is developing fast. There is a huge amount of forestry in North America (which was the focus of this event) and pellet making plants are being developed. Ships are being built to transport the pellets, ports are being expanded to receive them and the infrastructure to get the pellets to the power plants is being developed. Power plants, such as Drax in the UK and Avedore in Denmark are converting to biomass. There is not a great amount of trading going on, and the industry depends on government support. It does not have the problems of intermittency associated with renewables such as solar and wind, it uses the power plant infrastructure that already exists and it contributes to the economic viability of North American forests. The sustainability of biomass for power plants can be assessed and can be acceptable, and work is underway to agree sustainability standards.