Companies converting waste into bioliquids for use in combined heat and power (CHP) generation are facing an uncertain future as the Department for Energy and Climate Change (DECC) is yet to clarify its position on applying the ’grandfathering’ principle to bioliquids.
On 27 July, DECC issued a statement relating to grandfathering being applied to energy from waste (EfW) facilities, making the commitment to fix support for 20 years for the renewable obligation for electricity from biomass, EfW, anaerobic digestion and advanced conversion technologies.
This put an end to months of uncertainty surrounding the financing of EfW facilities because return on investment was now guaranteed through the grandfathering of Renewable Obligation Certificates (ROCs).
However, the announcement was not good news for everyone.
Further to a statement issued in March, DECC confirmed that it would not support bioliquids for use in CHP through grandfathering in the same way as EfW technologies. This means that those involved in the bioliquids industry now face continuing uncertainty because much of the investment has now stopped.
REG BioPower is involved in the processing of waste oil, turning it into a renewable subsidiary biofuel, LF100. Managing director Ian Collins told MRW: “The issue with this is that all investment has stopped. Anyone involved in bioliquid use for energy and heat has just had to put everything on hold since the end of March. I’ve got clients who have got planning permission to build these schemes but just can’t do it because of the uncertainty. Lots and lots of companies are in the same boat as us.
“We’ve stopped recruiting people but we need more service engineers, and we need drivers and people to work in our processing plant. Our new processing plant will only work at 50% capacity unless we can build more generation facilities – and at the moment we can’t.”
According to Collins, there are two main reasons why DECC made the decision not to apply the grandfathering principle to bioliquids. One is because it is trying to push using bioliquids as a transport fuel rather than for CHP to meet EU targets on transport fuel and, second is because it wants to stop the importation of virgin bioliquids such as palm oil.
However, as Collins is keen to point out, what REG BioPower and other such companies are doing is actually diverting waste from landfill and the bioliquids used are derived from waste oil.
DECC has said it understands the distinction but it is do with interpretation of some of the clauses in the Renewable Energy Directive (RED) and, as such, it cannot find a way to support waste-derived bioliquids and not support virgin ones.
REG BioPower has been involved in lobbying the Government on this issue and Collins has been in discussions with DECC on ways round it.
He said: “We have put forward our legal interpretation and we are suggesting that rather than using the RED legislation, DECC could use waste legislation to differentiate between virgin and waste- derived fuels. We submitted some questions to them on this last week and we will meet again in September to discuss it.”
He said the important thing for the industry is the need to reach a resolution quickly so that investment can be guaranteed and the development of CHP from bioliquids can get up and running again.
Collins said: “DECC is talking in terms of six months to a year before this is resolved. But we are saying, hang on a minute, we need an answer quicker. Legislation doesn’t need to be changed for this decision to be made; it doesn’t have to go through parliament – it can just be put in place.”