ACCIONES EXTERNAS
B) BUQUE APROADO
5.1 Energy Sector Policy Drivers
The UK government’s energy policy, as set out in the Energy White Paper, “Our energy future – creating a low-carbon economy”, aspires to 20% renewable generation by 2020 and also endorses the recommendations of the Royal Commission on Environmental Pollution’s (RCEP’s) to reduce CO2 emissions by 60% from current levels by 2050.
The release of ‘greenhouse gases’ into the atmosphere is now widely acknowledged to be a significant contributor to climate change. The most significant source of greenhouse gases is the carbon dioxide (CO2) released during the combustion of hydrocarcon fuels when they are
used for generating electricity, producing heat or as a fuel for transportation. The mitigation options available include:
• reducing energy demand (by adopting energy efficiency measures);
• use of carbon sequestration technologies for capturing and storing carbon dioxide in a less harmful form, and;
• using alternative low-carbon or renewable energy supplies6.
With respect to the third option, it is interesting to note that MSW contains a wide range of different materials, including paper, card, plastics, glass, steel, aluminium, food wastes and garden wastes. Many of these materials have the potential to be used as a fuel, and many of them actually derive from material of recent biogenic origin (such as paper, food wastes or garden waste). For some commercial and industrial waste streams, all of the combustible material is of recent biogenic origin. In terms of policy, it is particularly notable that recovering energy from the processing of waste of recent biogenic origin is considered to be renewable
under the European Commission’s Renewable Energy Directive (2001/77/EC). This includes
the fraction of MSW that can be classified as ‘biomass’ (i.e. that which is of animal or vegetable origin).
Whilst the emission of carbon from the use of fossil fuels remains a fundamental part of the Government’s energy policy, there are other important themes which are currently the subject of much media interest. These include issues such as the cost of energy to both the industrial and the domestic consumer, and the security of a primary energy supply given the dwindling UK oil
6 On a life-cycle basis, all renewable energy sources produce a small net amount of carbon dioxide. Some
renewables, such as wind, emit none directly – the tiny contribution from wind comes from, for instance, the manufacture of the turbines, the construction of the windfarms and the maintenance of the plant and equipment in operation. Other, fuels-based renewables, such as biomass, emit carbon dioxide when they are used, but this carbon dioxide is re-absorbed in the growth of new biomass. In these cases, there is still a small overall net production during biomass cultivation and harvesting, in the transport of biomass and in the operation and maintenance of the biomass-fuelled energy plant, such as a power station. Notwithstanding these observations, the net emission of carbon dioxide from all renewable sources is a very small fraction of that currently emitted from even the most efficiently used fossil fuel.
and gas resources. All of these themes are the subject of the current Energy Review, the outcome of which will be published later this year. Key amongst the challenges faced by Government is to balance the sometimes-conflicting themes of carbon reduction, low-cost energy, and national security of supply. The recovery of energy from our waste streams could contribute to all three of these challenges.
5.2 Energy Sector Policy Instruments
5.2.1 The Renewables Obligation Order
The principal tool by which the Government is trying to encourage the uptake of renewable energy sources in the supply of electricity is the Renewables Obligation Order (commonly termed the Renewables Obligation or RO), adopted in 2002, which applies in England and Wales.
The RO requires electricity suppliers to source increasing proportions of their total supply from renewable sources, up to about 15% by 2015. They can do this by building and operating their own renewable electricity production facilities or by purchasing renewable electricity from other producers. Renewable electricity producers are certified by the electricity regulator, OFGEM, who presents them with Renewables Obligation Certificates (ROCs) for each unit (MWh) of renewable electricity produced.
Electricity suppliers can submit annually the requisite number of ROCs in accordance with their obligation. Those holding insufficient ROCs can purchase from other renewable electricity generators or pay a penalty, or ‘buy-out’, price (currently about £33/MWh and increasing each year) for the shortfall.
A ‘recycling’ mechanism results in the penalty payments being recycled back to electricity suppliers in accordance with the number of ROCs they present. If there are insufficient renewable energy production facilities to meet the obligation overall, then this recycling mechanism eventually results in ROCs becoming more valuable than the buy-out price. This acts as an incentive to new developers and investors to build more renewable energy production facilities.
It is clear that even the current Government targets of 5.5% of electricity supplies from renewable energy sources by 2005/06 and 15.4% by 2015/16 are ambitious given the existing levels of renewable energy deployment. In 2003, only some 3.9% of the UK’s total net electricity production was derived from renewable sources. Delivering further renewable generation capacity to fulfil the 15% target is a significant challenge.
Because of the relatively low renewable electricity production capacity in the UK, the prices for ROCs are currently relatively high (at more than £45/MWh), acting as a strong incentive for developers of renewable energy projects.
In the context of waste management, it must be noted that whilst the Renewable Energy Directive does deem energy from municipal waste as being renewable, the premium price for renewable electricity, as provided by the RO, is currently only available if MSW is converted to electricity using certain qualifying technologies. These qualifying technologies include anaerobic digestion and pyrolysis/gasification. Furthermore, only that proportion of electricity deemed to be generated from the ‘non-fossil derived’ content of the waste stream is eligible for the ROC premium; plastics, for example, would not qualify.
A recent review of the RO widened the ROC-eligibility of Energy from Waste to the use of more established and ‘conventional’ combustion technologies, as long as they produce both electricity and heat in ‘combined heat and power’ plants – CHP. As with the use of ‘advanced’ technologies, however, ROC-eligibility will only apply to the non-fossil element of the fuel. Furthermore, the commercial viability of any such scheme is driven primarily by the long-term availability of a suitable heat load close to the proposed EfW plant. Finding such a suitable combination of location, waste contract, waste logistics and heat load will be a substantial challenge for any project developer.
There are similar provisions for Scotland and Northern Ireland that have been introduced under the Renewables Obligation (Scotland) Order 20027 and the Renewables Obligation Order
(Northern Ireland) 20058 with cross border trading in ROCs enabled subject to logistical
constraints.
5.2.2 The Climate Change Levy (CCL)
The CCL is the second of the instruments to have an influence on the uptake of renewables in the UK. Large energy consumers face a levy on top of their normal energy bills. In the case of electricity, this levy is 0.43 p/kWh. However, the consumer is exempt from paying this levy if the electricity they consume comes from a renewable source (including conventional Energy from Waste) – which means that renewable electricity is worth more to the consumer than conventional electricity produced from a fossil fuel.
5.2.3 The EU Emissions Trading Scheme (EU-ETS)
A third possible influence on the uptake of low-carbon energy solutions in the UK is the
European Emissions Trading Scheme (EU-ETS), which has been created by the EU Emissions
Trading Directive (2003/87/EC). This is an EU-wide mechanism in which organisations that
emit significant quantities of carbon dioxide must reduce their emissions below certain target levels (which are reducing), or to buy tradable permits in a new trading system. If a participating energy consumer fails to come within emissions targets or to procure sufficient permits, he will have to pay a penalty of, currently, 40/tonne of carbon dioxide equivalent. This increases to 100/tonne of carbon dioxide equivalent from 1 January 2008. It is hoped that this economic instrument will have the effect of reducing carbon dioxide emissions across the EU at least overall cost. The implementation of this ‘cap and trade’ system increases further the value of renewable electricity or low-carbon fuels, as their use will enable participants in the EU-ETS to achieve their emission reduction goals, although it should be noted that its impact in terms of £/tonne of ‘fuel’ is significantly smaller than that of the RO.
5.2.4 Other Possible Energy Policy Instruments
In addition to these policy instruments, which are aimed in the main at the electricity sector and at large industrial energy consumers, there are growing signs of other policy instruments coming through that may have an impact on the energy consumption patterns for the production of heat, and in the transport sector.
7 Scottish Statutory Instrument 2002 No. 163
For instance, the European Commission’s Biofuels Directive sets targets for the uptake of liquid
biofuels in the transport sector, which may see growing opportunities for the use of low-carbon fuels in that sector in the future. Indeed, at the end of 2005, the UK Government announced its intention to establish the Renewables Transport Fuel Obligation, in which suppliers of gasoline and diesel will be required to supply 5% of their fuel from renewable sources (such as biodiesel or bioethanol) by 2010.
Furthermore, there is a growing call in Europe and within the UK for the adoption of carbon- driven policy instruments to encourage the uptake of renewable fuels for the production of heat. This strengthening policy theme may, again, see opportunities for low-carbon fuels development further in the future.
In both of these sectors (heat and transport), UK government has yet to adopt the same level of intervention regarding energy and carbon policy as that which has taken place in the electricity and large industrial sectors.
5.3 Summary
In the UK to date, the principal energy policy goal of reducing CO2 emissions is being targeted
through regulations and instruments aimed at the electricity sector and at large industrial energy consumers, through the Renewables Obligation, the Climate Change Levy and the EU Emissions Trading Scheme.
The implications of these policy instruments for the recovery of energy from wastes are:
• the Renewables Obligation currently provides support to advanced conversion technologies that process waste, such as anaerobic digestion, pyrolysis, or gasification (despite the fact that under the Renewable Energy Directive, electricity from all types of EfW process is deemed to be renewable); however, • the recent Renewables Obligation review will result in the extension of ROC- eligibility to more conventional forms of thermal treatment, as long as they involve the recovery of heat as well as the production of electricity, in a CHP plant. The commercial viability of any such project depends on the availability of a suitable and long-term heat load;
• Energy produced from biogenic waste is deemed to be carbon neutral, meaning that the use of such material as a fuel can reduce an energy consumer’s liability for the Climate Change Levy, or alternatively can contribute to the achievement of an energy consumer’s targets under the EU ETS.