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2012: the key policy developments

2012 has certainly been a busy year for ADBA’s policy team. See below for just six of the key policy issues and themes that have been occupying us in the last twelve months – on top of these came the drafting of a Biomethane Quality Protocol, the development and announcement of the Weekly Collection Support Scheme, the draft Energy Bill and many more issues.

Keep an eye out in the New Year for a blog outlining some of the most important industry developments in 2012.

“Dash for Gas” v “Dash for green gas”

A key issue over the latter part of 2012 has been the government’s increasingly committed support for shale gas from fracking, as was set out in their Gas Generation Strategy and removal of the fracking ban in December.

We have argued that government should instead be prioritising biogas, which can offer similar economic benefits in terms of energy generation and job creation, but offers positive environmental impacts in terms of reducing carbon emissions and recycling nutrients to land.

ADBA will continue to work with government in 2013 to increase recognition of the unique strategic benefits of biogas to the UK economy, as well as the opportunity to raise the profile of green gas in contrast to shale.

RO or no RO?

Despite the negative impact of uncertainty in the period following the government’s announcement in July that AD projects under 5 MW would be unable to receive the Renewables Obligation (RO) from April 2013, their eventual u-turn in October following pressure from ADBA and others was a major relief for the industry.

The RO continues to be a vital mechanism for supporting the continued growth of the AD industry, and such a sudden removal would have proven a huge dent for the financial viability of many projects.

While we are pleased that there does now seem to be long term clarity over the RO, with the scheme closing to new generation in 2017 to be replaced by the Contracts for Difference (CfD) model, detail of the operation of CfD will likely be a hot topic over the next twelve months. The government will also need to consider the capacity of the Feed in Tariff to absorb more new installations once the RO closes in 2017.

Expansion of the RHI

One of our key concerns as we head into the New Year is whether plans to expand the Renewable Heat Incentive (RHI) beyond its current 200kW thermal limit for biogas combustion will apply to existing biogas CHP projects or not.

While we have largely welcomed the long-awaited plans to expand the RHI, following conversations with DECC officials it became clear that, under the current regulations, existing biogas CHP projects would not be eligible to receive the tariffs above 200kWth when they were introduced in summer 2013.

Discussed in some detail at our October Members’ Meeting, we submitted a paper to DECC outlining our view that this interpretation of the regulations would mean that existing CHP projects would not be able to make good use of heat which is currently being wasted, and that DECC should look to find a sensible mechanism for accrediting existing installations under the RHI.

We will continue to liaise with DECC as they consider this issue in early 2013 before making final proposals in the Spring.

Purpose grown crops

Securing full recognition of the benefits that purpose grown crops can bring for farmers and land management has been a key priority for ADBA in 2012. Following a Defra stakeholder workshop in November 2011 which concluded that “AD is unlikely to have an adverse impact on food security and land use change in the UK at current levels of incentives” and “rapid, unsustainable expansion of purpose grown crops in the UK is unlikely to occur”, negative statements within the FIT consultation document and from Defra Ministers has been especially frustrating.

While there is no current suggestion that support for plants using crop feedstocks will be removed, negative statements are nerveless frustrating as they will hamper investor confidence and market development.

We are working hard to combat any concerns through the publication of best practice guidance for growing crops for AD, a project with extensive input from a range of partners, along with regular dialogue with Defra and DECC officials to advocate an evidence-based position on the important role of purpose grown crops in AD.

End of waste

European-wide end of waste criteria have developed through 2012, albeit at a very slow pace. The new criteria would replace PAS 110 and the AD Quality Protocol, and provide common criteria for proving end of waste for biodegradable waste treatment across Europe.

Most of the focus since the third draft was published in August has been on the ‘positive list’ of allowable inputs, which was expanded to include sewage sludge and residue from Mechanical Biological Treatment (MBT). Defra’s response opposed both, while our separate response opposed MBT but recognised sewage sludge could be included if clearly labelled.

The latest consultation closes in mid-January, with the proposals anticipated to be finalised in the spring of 2013, meaning that after Member State negotiation, the new criteria would not be implemented in the UK until well into 2014 at the earliest.


FIT Degression

The Comprehensive Review of the Feed-in-Tariff (FIT) concluded in July, setting out important changes to the tariff rates as well as introduced a preliminary accreditation model. Implemented from December 2012, the >500kW rate was cut to 8.96p/kWh while a preliminary accreditation model was introduced, guaranteeing tariffs for up to 12 months.

Perhaps more importantly, the review set out the government’s degression plans for the FIT – this would see the tariff rate reduced each year for new applicants from 2014, based on installed capacity under the scheme in the previous calendar year. Our main concern remains the proposed 4.5 MW annual deployment trigger for the sub 500kW tariffs – we believe that this is a very low figure to trigger an above-baseline degression (i.e. 10%) and we will be working with DECC in the New Year to further explore this issue.

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