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Under consultation in 2009 92 Evaluation of Opportunities for Converting Indigenous UK Wastes to Wastes and Energy AEA/ED45551/Issue 1 The Renewable Heat Incentive is likely to apply to the generation of renewable heat at all scales, through a range of technologies including biomass, solar hot water, air- and ground-source heat pumps, biomass CHP, biogas produced from anaerobic digestion, and biomethane injected into the gas grid, although it will potentially be banded by size and technology. The scheme would be paid for by the introduction of a levy on suppliers of fossil fuels for heat, administered by Ofgem. Such suppliers largely supply gas currently, but it would also include suppliers of coal, heating oil and LPG. DECC currently expect the RHI to be in place April 2011. Renewables Obligation (RO) Entered into force in April 2002 Consultation on the Renewables Obligation Order 2009, published December 2008 The Renewables Obligation aims to support and encourage the increasing adoption of renewable electricity in the UK. It requires licensed electricity suppliers to source a specific and annually increasing percentage of the electricity they supply from renewable sources. The current level is 9.1% for 2008/09 rising to 15.4% by 2015/16. A Renewables Obligation Certificate (ROC) is a green certificate issued to an accredited generator for eligible renewable electricity generated within the United Kingdom and supplied to customers within the United Kingdom by a licensed electricity supplier. Originally one ROC is issued for each megawatt hour (MWh) of eligible renewable output generated, but the update to this system in April 2009 introduced a banding. 159 The targets for the RO are linked to the targets that the UK is committed to through the European Union’s Renewables Directive. This proposes that Member States adopt national targets for renewables that are consistent with reaching the overall EU target of 22.1% of electricity by 2010. The proposed UK share of this target is for 10% of electricity consumption to come from renewables eligible under the directive by 2010. To demonstrate that they have met their share of the RO, suppliers must obtain certificates for renewable power supplied. These certificates (Renewable Obligation Certificates - ROCs, and SROCs in Scotland) are issued to generators in accordance with the metered output of eligible renewable electricity they have supplied. The certificates may be sold on to any supplier, with or without the electricity, and suppliers must redeem certificates with Ofgem (the Electricity and Gas Industries Regulator) at the end of each 12 month Obligation period to demonstrate their compliance with the obligation. Climate Change Levy (CCL) Entered into force in April 2001 The Climate Change Levy (CCL) 160 is a levy on non-domestic energy supply in the UK, which is offset by a reduction in employer’s national insurance contributions. The CCL is under the management of the HMRC. Accreditation is carried out via Ofgem. Under the CCL non-domestic electricity customers are required to pay the levy as follows: • 0.47p/kWh for electricity, • 0.164p/kWh for gas, • 1.02p/kg (equivalent to 0.15p/kWh) for coal and 159 Bioenergy Review for the Environment Agency, Draft Report, January 2009. 160 For more information see the HMRC web site: http://customs.hmrc.gov.uk/
Evaluation of Opportunities for Converting Indigenous UK Wastes to Wastes and Energy AEA/ED45551/Issue 1 • 0.105p/kg (equivalent to 0.07p/kWh) for liquefied petroleum gas (LPG). The CCL has a number of exemptions, including fuels used by domestic users, fuels used by the transport sector, fuels used for the generation of other forms of energy (e.g. electricity generation) or for non-energy generation (e.g. the use of “fuels” as carbon sources for other purposes, such as a reductant in metal smelting). In addition there are various ways that the cost of the levy can be reduced. For example, there is an 80% discount from the CCL for sectors that agree to targets for improving their energy efficiency or reducing carbon emissions by specified deadlines (“climate change agreements” (CCA)). 161 There are various other exemptions but that most relevant to energy from waste is that electricity from renewable sources is exempted from the CCL. To qualify, suppliers of renewable electricity must obtain Renewables Levy Exemption Certificates (“Renewable LECs”). These are issued in respect of eligible renewable output and are used to prove that the electricity supplied is from renewable sources. 1 MWh of renewable power is equal to 1 LEC. If this supply is then made to a non-domestic customer it will not attract CCL payments. Guidance on the HMRC web site indicates that exempt renewable sources include municipal and industrial wastes and agricultural and forestry residues, as explained in Box 2 Box 2 Rules for Levy Exemption certificates (LECs) for waste and biomass under the CCL LECS for waste fuelled generating stations The regulations allow for LECs to be granted for 50% of the electricity from power stations fuelled by waste. If the operator considers that the proportion of renewable energy content of the waste is higher than 50% and he can provide sufficient evidence to Ofgem then more than 50% may be claimed. LECs for Biomass power generation To claim LECs the biomass power station operators must provide the following information to Ofgem: o The proposed % of biomass o Full details of the biomass content showing proportions of each category by weight o The CV (MJ/kg) of each category of feedstock, giving details of how this was obtained. o A description of facilities for storing biomass o Details of the supplier(s) of biomass, including names and addresses and a copy of extracts of contracts that detail the biomass content and contract duration. European Emissions Trading Scheme (EU ETS) Introduced in 2005 1 st Trading period: January 2005 – December 2007 2 nd Trading period: January 2008 – December 2012 The EU ETS 162 is an EU wide scheme intended to help meet the EU’s GHG reduction targets under the Kyoto Protocol. The scheme creates a price for carbon through the establishment of a market for carbon emission reductions. The EU ETS is currently in its second phase, which runs from 2008-2012. The scheme operates through the allocation and trade of greenhouse gas emissions allowances throughout the EU – one allowance represents one tonne of carbon dioxide equivalent. A cap on the total amount of emissions allowed from all the installations covered is set by each Member State in their ‘national allocation plan’ or NAP. The allowances are then distributed within Member States to the qualifying installations. In the UK, the ETS is implemented via UK Regulations that are regulated by the Environment Agency for England and Wales, the Scottish Environment Protection Agency in Scotland and Department for the Environment and Heritage Services in Northern Ireland. 161 These sectors are: aluminium, cement, ceramics, chemicals, food and drink, foundaries, glass, non-ferrous metals , paper, steel, and 20 or so smaller sectors. 162 For more information on the Eu ETS see the Defra web site: http://www.defra.gov.uk/environment/climatechange/trading/eu/index.htm and the Environment Agency’s NatRegs site: http://www.netregs.gov.uk/netregs/62975.aspx 93
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South East 327 - - 55% of MSW by 20
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Appendix 3 MBT Methods Specific in
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Figure 27 Orchid Environmental proc
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