Overcome the obstacles

Dr. Matthew Goodwin, Waste Knot Energy and European Pellet Council, UK, analyses the future of renewable fuel sources and looks at the barriers the sector must overcome to allow for innovation.

The demand for alternative and renewable fuel sources continues to grow as governments put in place measures to combat climate change – and choosing which fuel to burn will soon become an even bigger consideration. Regulation, political pressure, changing social values, and carbon tax implications are some of the biggest drivers as high energy users look to alternative fuels to reduce their carbon footprint.

Ever since 1990, the EU and UK have introduced a series of measures to help combat climate change and incentivise power stations to ditch coal, coke, and petcoke in favour of alternative fuels.

The UK Government sets carbon emissions reduction targets every five years under the Climate Change Act 2008 and they grow ever more ambitious. In fact, in April 2021, it announced radical new commitments to cut emissions by 78% by 2035, bringing the UK more than three quarters of the way to net zero by 2050. The big question, however, is which alternative fuels to choose? Wind power has made a lot of headlines but one of the most embraced options so far is biomass.

Biomass options include: > Wood pellets. > Waste wood. > Virgin wood chip. > Agrifuels – such as miscanthus and straw.

The most recent addition to the renewable energy source list, however, is pellets made from non-recyclable waste, brought to the market by British company Waste Knot Energy.

Solid, improved, recovered fuel (SIRF) pellets will be manufactured in Middlesbrough, UK, with other plants due to open over the next few years. The Middlesbrough plant will produce approximately 250 000 tpy of SIRF pellets, with plans for the development of eight plants producing 2 million t over the next five years.

These pellets, an innovative fuel for high-energy users, are made from a mix of dry waste materials such as wood, paper, card, and non-chlorinated plastics that are carefully processed to create a clean, highly specified, and consistent alternative fuel. Easily transportable, they are suitable for power generation, steel production, brickmaking, and cement production, and have a biomass content of >55%.

Another benefit is that they can be used alongside other fuels, allowing businesses to mix with coal, petcoke, or wood as they travel through their carbon reduction journey.

Figure 1. SIRF pellets are made from non-recyclable waste and are the most recent addition to the renewable energy source list.

Figure 2. Waste Knot Energy’s pellet plant in Middlesbrough, UK.

Why Renewable Obligation Certificates can be a barrier to fuel innovation

There are, however, barriers to this kind of fuel innovation – some of them inadvertent, some political.

Environmental permits, for instance, often forbid the burning of waste, which means power plants which currently burn virgin wood or agrifuels feel nervous to upgrade, despite the fact that the emissions from burning SIRF pellets are generally well within permitted emission limits. It is time that governments took a closer look at how these permits work.

Environmental permits are less of an issue for those burning waste wood, which already have a permit that allows burning waste, but the other big consideration in the UK is the impact of Renewable Obligation Certificates (ROCs).

The scheme, launched in 2002, supports approximately 30% of the electricity supplied in the UK and is designed to incentivise uptake of renewable fuels.

The certificates are issued to energy generators for each unit of renewable energy they produce and can then be traded at the market rate, generating millions of pounds. The buy-out price for the 2021 - 2022 obligation period is £50.80 per ROC – the amount suppliers will need to pay for each ROC they do not present towards compliance with their 2021 - 2022 obligation. This money is paid into a cash fund which is then recycled back to suppliers who did meet their targets.

There is no doubt the scheme has been successful, pushing the UK towards its zero carbon goals, but it has also created behaviour which is unsustainable in the long-term.

At present, waste wood and wood pellets are the alternative fuel of choice for many power stations. But the price of wood pellets, which are often imported from North America, is astronomical compared to other fuels and only viable because of ROC payments. So, what happens when the payments disappear?

Waste wood, too, is a volatile market, fluctuating violently depending on the state of the construction industry. During the COVID-19 pandemic, for instance, the price of waste wood in many countries ballooned when construction companies downed tools – but dropped again when the industry recovered.

The reality is that the business models of many power stations which burn waste wood or wood pellets depend on ROCs to survive, even though they know the scheme will not last forever.

New applications for the scheme were closed in 2017 and with ROCs normally lasting 20 years, that means 2037 is the ultimate end date – and it will be far sooner for some. At that point ROCs, worth millions of pounds a year, will simply fizzle out.

As this crossroads draws ever closer, decision makers in the power industry ought to be asking whether they should be burning what they are burning for the long-term. But in many cases they are not – and remain unprepared for what lies ahead.

Smaller power plants which have missed out on ROCs are looking at alternative solutions but many others are holding back, afraid to put their incentive payments at risk by looking at other fuels in the meantime.

That is not good news for the industry because fuel innovation needs to be encouraged to meet future targets rather than present barriers, however unintentional they may be.

Forest biomass under siege

Forest biomass is under fire right now, with environmental groups concerned about whether burning wood is sustainable when so much of the world has suffered from deforestation. This makes it an emotional issue despite arguments that the wood is harvested responsibly with trees replanted.

The Netherlands, for instance, has recently pulled back on plans for forest biomass plants and its take on the issue should be a warning to other countries.

In a report published by the Socio-Economic Council of the Netherlands in 2020, the advisory board to the Dutch government described forest biomass as an “indispensable resource” for the circular economy and argued that burning it is wasteful. It suggested that sustainably produced biomass is too scarce to keep using it for the production of heat or electricity and also called for the subsidies intended for forest biomass combustion plants to be phased out.

Warning signs from the Netherlands

That is an early warning sign for power stations in other areas of the world, including the UK, because if this is the direction of travel, then the lifetime of ROCs in the UK and Renewable Energy Directives (RED) in the EU is limited.

In fact, the Dutch government has followed through on these plans. In February 2021 it voted to disallow the issuing of subsidies for 50 planned forest biomass-for-heat plants.

Changes to the EU’s Renewable Energy Directive

The EU is already reviewing its Renewable Energy Directive and has told energy providers that there will be no support for the production of energy from saw logs, veneer logs, stumps, and roots in the future. The use of quality groundwood for energy is also discouraged.

It does, however, support renewable energy with an ambitious target – announced in July 2021 – that at least 32% of energy in the EU should come from renewable sources by 2030. This represents doubling the current renewables share of 19.7% in just a decade. A cross-border pilot project is also being set up to foster regional co-operation on renewables.

The future direction is clear. High-energy users should be thinking ahead now to meet those ambitious EU targets, and so the sooner they experiment with alternative fuels and alternative options the better.

The global picture outside of Europe

If you look outside of Europe, of course, the picture is different. In many areas of the world, and especially in Asia, the discussion is almost entirely about cost and not about climate change when it comes to energy production – and paradoxically that makes innovative fuels easier to sell in.

In countries such as Thailand, embracing alternatives such as burning SIRF pellets instead of coal is a no-brainer. The pellets are far cheaper and have a far lower carbon footprint, especially as they also save waste from going to landfill.

Compared with fossil fuels such as coal, which has a carbon footprint of 2223 kg CO2e/t, the huge environmental advantages of this alternative fuel are clear.

Table 1. Carbon footprint of SIRF pellets vs fossil fuels

Emissions avoided by not sending to landfill 658.38 kg CO2e/t

SIRF pellet production

SIRF pellets including avoided landfill emissions

Coal (electricity)

Coking coal

Petcoke 128.87 kg CO2e/t

-530 kg CO2e/t

2223 kg CO2e/t

3222 kg CO2e/t

3398 kg CO2e/t

Table 2. Carbon footprint of SIRF pellets vs wood pellets

SIRF pellet production

SIRF pellet production, including avoided landfill emissions 128.87 kg CO2/t

-530 kg CO2/t

Wood pellet production 72 kg CO2/t

Wood pellet including transport from US 123 kg/t

There is also a growing realisation from the West that countries in Asia, South America, and Africa need help and encouragement if they are to reduce carbon emissions. The British insurer Prudential is currently working with the Asian Development Bank on a scheme to buy out coal-fired power plants in Asia in order to shut them down within 15 years. The programme is known as the Energy Transition Mechanism and is likely to draw in other banks to support it. It remains to be seen whether this approach will work, but the need for countries in Asia to invest in renewable fuel sources will be even stronger if it does.

The benefits of renewable energy pellets

As the debate rages over forest biomass, pellets made from non-recyclable waste should be on the agenda. The bottom line is that burning waste means less extraction of damaging fossil fuels, less need to send damaging waste to landfill, and significant reductions in CO2 emissions as a result.

It is an innovation which needs nurturing as the future looks to alternative fuels that are affordable, reliable, and costeffective, regardless of government incentives.

Carbon tax benefits

Based on a carbon price via the Emissions Trading System of £40/t CO2, SIRF pellets will save the user approximately £41/t in carbon tax compared to burning coal (in addition to energy cost reduction).

Conclusion

Ultimately, there is no easy route to overcoming climate change or to solving the world’s energy challenges. However, in order to make a difference, alternative and renewable fuel sources should be embraced – and any barriers which stifle innovation in this field, however unintentional, must be removed.