Renewable Energy: Changes to the Renewables Obligation (Scotland) Order 2010: Statutory Consultation

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Section 4: Sustainability Criteria for Bioliquids

Summary

  • We are proposing to introduce sustainability criteria for bioliquids. Generators claiming ROCs for electricity generated from bioliquids will need to demonstrate that the sustainability criteria have been met.
  • Generators will be required to have an independent audit to verify that their data and their systems for demonstrating compliance with the sustainability criteria are accurate, reliable and protected against fraud.
  • We are proposing to open up the ROS to all bioliquids produced from biomass, including biodiesel such as FAME.

Issue

4.1 Concerns have long existed that some bioliquids are not sustainable. This concern has been reflected at European level, resulting in the introduction through articles 17 to 19 of the RED of sustainability criteria for bioliquids. A bioliquid means a liquid fuel for energy purposes and which has been produced from biomass.

4.2 The RED2 requires that electricity generated from bioliquids must use bioliquids that fulfil the sustainability criteria set out in Article 17 if the Member State intends to:

  • Count it towards meeting the 15% target for 2020 set by the Directive; or
  • Allow it to count towards compliance with a renewable energy obligation; or
  • Reward it with financial support.

4.3 The UK Obligations do not at present differentiate between biomass (including energy crops) in solid, liquid or gaseous form. The RED therefore imposes a new requirement that electricity generated from bioliquids will need to demonstrate compliance with sustainability criteria in order to receive ROCs.

4.4 The Commission communications and guidance published 19 th June explains that bioliquids include viscous liquids such as waste cooking oil, animal fats, palm oil, crude tall oil and tall oil pitch.

4.5 The sustainability criteria set by the RED are broadly that:

The bioliquids used must demonstrate a greenhouse gas emission saving of at least

  • 35% from the introduction of these criteria, unless produced in an installation in operation on 23 January 2008 (for bioliquids produced in installations in operation on that date, the minimum 35% GHG saving requirement will apply from 1 April 2013);
  • 50% from 1 January 2017; and
  • 60% from 1 January 2018 for bioliquids produced in installations 3 in which production started on or after 1 January 2017.

4.6 The methodology for calculating the greenhouse gas emission saving is set out in Article 19 of the RED.

  • Raw material shall not be obtained from land with high biodiversity value, This applies to land having that status on or after 1 January 2008, whether or not the land continues to have that status. Article 17(3) of the RED lists the categories of land that have high biodiversity value, such as primary forest, areas designated for nature protection purposes and highly biodiverse grassland. There are some limited exceptions where taking of the raw material can be shown to be necessary to preserve grassland status or can be shown not to interfere with the nature protection purposes.
  • Raw material shall not be obtained from land with high carbon stock. This applies to land that in January 2008 would have fallen into one of the categories of land listed in article 17(4) of the RED, such as wetlands, and certain forested areas, but no longer has that status. The restriction does not apply if, at the time the raw material was obtained, the land has the same status as it had in January 2008.
  • Raw material shall not be obtained from land that was peatland in January 2008, unless evidence is provided that cultivation and harvesting of the raw material does not involve draining of previously undrained soil (article 17(5) of the RED).
  • Agricultural raw materials cultivated in the EU will need to comply with the requirements and standards under the provisions referred to under the heading 'Environment' in part A and in point 9 of Annex II to Council Regulation [ EC] No 73/2009 of 19 January 2009 and in accordance with the minimum requirements for good agricultural and environmental conditions defined pursuant to Article 6(1) of that Regulation (article 17(6) of the RED).

4.7 Bioliquids produced from waste or residues (but not from agriculture, aquaculture, fisheries and forestry residues) are only required to meet the greenhouse gas emission saving criteria ( i.e. the first criteria listed above).

4.8 The RED includes a description of a mass balance system which must be used by generators when demonstrating compliance all bar the last of the sustainability criteria listed above.

4.9 The RED also requires generators to have an independent audit of the sustainability information they submit, to verify that their data is accurate and their systems for demonstrating compliance with the sustainability criteria are accurate, reliable and protected against fraud. It must also evaluate the frequency and methodology of sampling and the robustness of the data used by the generator.

4.10 Generators using bioliquids will also be required to submit information on measures taken for soil, water and air protection, the restoration of degraded land, the avoidance of excessive water consumption in areas where water is scarce and on a range of other social issues (article 18(3)). However, the Commission is yet to establish the list of information to be provided on these matters. In the absence of a Commission decision on this matter, we will not be able to draft the amendments to implement this requirement of the RED.

4.11 Article 17(8) the RED prevents us from refusing, on other sustainability grounds, to take into account bioliquids which comply with the sustainability criteria set out in the RED. This means that we cannot impose any additional sustainability criteria of our own on bioliquids.

Proposals

4.12 We propose that ROCs should only be issued where generators are able to demonstrate that the sustainability criteria imposed by the RED have been met. Generators - where bioliquids have been used - will need to provide evidence as part of their monthly ROC claims to confirm that the sustainability criteria have been met.

4.13 We intend that this will continue to be administered by Ofgem, and that Ofgem's administrative costs be funded from the buyout fund.

4.14 For the purpose of demonstrating compliance with the minimum greenhouse gas emission savings criteria, generators will be required to follow the greenhouse gas emissions methodology set out in the RED. One method for doing this would be to use the Renewable Fuels Agency's ( RFA) life cycle analysis methodology as set out in the technical guidance. For fuels where default values are appropriate, these can be found in the RFA's technical guidance.

4.15 For fuels that are the same as those used in road transport ( e.g. palm derived FAME), the RFA's current data may be applicable. However, as parts of the fuel chain may be different ( e.g. end stage transport) this will need to be investigated.

4.16 Where the bioliquid is a precursor to a road transport fuel ( e.g. palm oil), the data up to that point where the chains diverge could be used. Where it is not the same at all - e.g. fish waste - these will have to worked out

4.17 Use of the RFA methodology (where applicable) would ensure consistency between returns from different generators and between the use of similar fuels in power generation or transport

4.18 For the purpose of identifying land with high biodiversity value, a list of the relevant areas designated in the UK for nature protection purposes will be identified in guidance. The Commission has not yet set the criteria and geographical ranges to determine which grassland is to be treated as highly biodiverse grassland (for the purposes of Article 17(3)(c)). In the absence of a Commission decision on this matter, we will not be able to draft the amendments to implement the sustainability criteria relating to highly biodiverse grassland. Should this be the case, we will need to amend the ROS when the Commission publishes its decision.

Demonstrating Compliance

4.19 In order to demonstrate compliance with the relevant sustainability criteria listed above, generators will be required to operate a mass balance system if bioliquids or raw materials with different sustainability criteria are mixed.

4.20 We don't propose routinely to require generators to demonstrate compliance with the sustainability criteria on compliance with standards under common agricultural policy regulations, as the RED doesn't require generators to demonstrate compliance with this criteria. Instead, we propose that Ofgem should refuse to issue ROCs where, on receipt of evidence, it is satisfied that there has been a breach of this sustainability criteria.

4.21 To comply with the RED we will require generators to have an independent audit - at least annually - of the bioliquid sustainability information they provide to Ofgem over the year. The audit should verify that the systems used by the generators to demonstrate compliance with the sustainability criteria are accurate, reliable and protected against fraud. The RED requires the audit to be carried out by an independent person. We propose that this should be someone who is not the owner or operator of the generating station or a person connected to the owner or operator.

4.22 The RED requires the audit to be carried out to an adequate standard. In line with proposals put forward for the RTFO, we propose that the ISAE 3000 standard 4 should be regarded as an adequate standard for this purpose. If generators wish to have their audit done to a different standard, they will need to demonstrate to Ofgem's satisfaction that the alternative standard which they wish to use is adequate.

4.23 We propose that generators should have until 31 st December following each Obligation period to provide an audit report to Ofgem showing that the audit has been carried out. In the event that the audit report is late, qualified or not provided, we propose that Ofgem should have the power to either revoke ROCs or withhold a commensurate number of ROCs in the next Obligation period.

4.24 As required by article 18(3) of the RED, we propose to require generators to make available to Ofgem on request the data that they used to develop the sustainability information they provided to Ofgem. We propose that Ofgem should be able to request data going back five years, in line with the Commission communication on requirements for voluntary schemes.

Article 54 sustainability reporting

4.25 Section 3 sets out our proposals to introduce sustainability criteria for solid biomass and biogas. Currently, article 54 of the ROS applies and this requires a wider range of information than is set out in the RED. We believe that this information should continue to be gathered. We will therefore continue to require generators not exempted by article 54 to mandatorily report information on biomass type, format, mass or volume, country of origin, whether waste, energy crop or by-product, if it meets an environmental standard and the name of that standard, plus details of any land use change since January 2008 not covered by the RED.

Biodiesel

4.26 We consider that the current exclusion from the ROS of bioliquids produced directly or indirectly from fossil fuel, including biodiesel such as FAME, amounts to the imposition of additional sustainability criteria not permitted by the RED. As a result, we are obliged in our view to allow all bioliquids to be eligible for ROCs if they meet the sustainability criteria - unless there are other reasons for their exclusion which do not amount to additional sustainability criteria.

4.27 We propose to enable electricity from bioliquids, including biodiesel such as FAME, to be eligible for ROCs (whether or not it is produced directly or indirectly from fossil fuel). However, we would welcome views on whether there are other reasons, unrelated to sustainability grounds, why any exclusions on bioliquids ought to remain in place.

4.28 We can't change support levels under the ROS without a banding review. Therefore, we propose that support for those bioliquids that become eligible for ROCs as a result of these proposed changes should receive whichever band into which they happen to fall, pending the outcome of the forthcoming review of bands. We intend to allow biodiesel to receive support in proportion to its renewable fraction.

Questions

  • Do you agree with, where applicable, using the RFA technical guidance to calculate greenhouse gas emissions savings?
  • Do you agree that the ISAE 3000 standard should be regarded as an adequate standard for the independent audit report?
  • Do you agree that Ofgem should have the power to revoke ROCs/withhold a commensurate number of ROCs in the next Obligation Period where the audit is late, qualified or not carried out?
  • Are there other reasons, unrelated to sustainability grounds, why biodiesel ought to remain excluded from the ROS?
  • Do you agree that we should maintain reporting criteria in line with those being proposed for solid biomass in section 3?