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UK bioenergy bodies welcome Chancellor’s first budget speech

In the UK, bioenergy industry leaders have welcomed the news that the UK Chancellor, the Rt Hon Rishi Sunak MP, has announced GBP100 million (≈ EUR 113.8 million) in funding and a twelve months’ extension to the Renewable Heat Incentive (RHI) giving the sector a level of certainty in terms of protecting jobs and delivering short-term renewable heat projects.

In his first Budget speech on March 11, 2020, the UK Chancellor, the Rt Hon Rishi Sunak MP, announced GBP100 million (≈ EUR 113.8 million) in funding and a twelve months’ extension to the Renewable Heat Incentive (RHI), news that was welcomed by bioenergy industry leaders giving the sector a level of certainty (photo courtesy HM Treasury).

In his first Budget speech on March 11, 2020, the Chancellor set out the Government’s funding commitments for low carbon heat including:

  • GBP 100 million (≈ EUR 113.8 million) of exchequer funding in total for 2022/23 and 2023/24 for grant-funding for households and small non-domestic buildings, to install heat pumps, or biomass in limited circumstances, to replace fossil fuel heating. This will form part of government action to help build supply chains ahead of future measures to phase out high-carbon heating; and
  • GBP270 million (≈ EUR 307.3 million) for a Green Heat Network Fund to run from 2022 to 2025, to follow on from the Heat Network Investment Project. This new targeted fund will ensure that heat networks adopt the most cost-effective low carbon heat sources and will avoid locking in gas generation in the sector.

Ahead of such schemes being established, the Chancellor also confirmed that the Government will also:

  • extend the Domestic Renewable Heat Incentive (DRHI) for a year in 2021/22, maintaining support for heat pumps, biomass, and solar thermal;
  • introduce a third allocation of Tariff Guarantees under the Non-domestic RHI (NDRHI). These will be available for all technologies that have been eligible for the previous two allocations.

A consultation will be launched shortly by the Government setting out details on the proposals for new exchequer grant-funding to support biomass deployment and publish further information on the proposed changes to the RHI schemes and the future of the Non-Domestic RHI scheme.

This is positive news from the Chancellor and a step in the right direction for both the biomass heat industry and the UK Government regarding delivering heat decarbonisation, net-zero policy. The announcement now provides a degree of clarity and certainty to protect and sustain 46 000 jobs and 700+ supply chain companies, as well as push on with new investment and renewable heat installation projects in the short-term. The GBP100 million in funding to replace fossil fuel heating in homes and small, non-domestic buildings and an extension to the RHI post-2021, albeit for twelve months, is essential to address climate change issues whilst encouraging a continued switch to renewable energy. It will also play a key part in the supply chain process when creating new woodland areas so we’re supportive of the Budget announcement made today and very much welcome the opportunity to work closely with Department of Business, Energy, and Industrial Strategy (BEIS) ministers to develop and deliver future policy, said Mark Lebus of Biomass Heat Works! and Chair of the UK Pellet Council.

The Government will also be consulting on details of the Green Heat Network Fund later in the year.

This budget provides some welcome fiscal support for the renewable energy and clean technology; there are clear steps in the right direction especially around the Green Gas Obligation consultation, the extension of the domestic RHI, Carbon Capture and Storage, decarbonising transport and R&D funding. This budget, however, does not make the strides needed to fully unleash the potential of the sector and pave the way to net-zero. With the declared climate emergency, the Government needs to take decisive action to produce a whole-government Net Zero Strategy that includes a detailed, funded and measurable roadmap that delivers the wholesale systems-change required to decarbonise the economy, and then ensure that we have an effective taxation system that protects natural capital, and incentivises renewable energy and clean technology beyond fossil fuels, said Dr Nina Skorupska CBE, Chief Executive of the Renewable Energy Association (REA).

The Budget also introduces a Green Gas Levy on gas suppliers to support green gas injection to the grid with the aim of accelerating the decarbonisation of the gas supply. This is expected to be implemented in autumn 2021.

There is no net-zero without biogas. Whilst it is good news that there is a commitment to support biomethane injection into the gas grid post-March 2021, the government’s ambition to see a tripling of the current level of production by 2030 is only around 38 percent of the AD industry’s potential. In the year the UK hosts COP26, we encourage the government to treble its ambition so that our industry is able to fully support the decarbonisation of agriculture, heat, transport and waste management to reduce total UK emissions by 6 percent whilst also creating 30 000 new green jobs throughout the UK by 2030, and we look forward to continuing to work with Government to this end, remarked Charlotte Morton, Chief Executive of the Anaerobic Digestion & Bioresources Association (ADBA).

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