Department Archives - ENERGY BUSINESS LAW

United Kingdom Government Confirms Change to Sustainability Criteria for Biomass

by Irina Denisova | Aug 30, 2013 | Environmental, EU Developments, Power Markets, Renewables

The Department of Energy and Climate Change (DECC) in the United Kingdom published its response to its “Consultation on proposals to enhance the sustainability criteria for the use of biomass feedstocks under the Renewables Obligation (RO)” on 22 August 2013 (the Response). The original consultation was published on 7 September 2012.

In the Response, the UK Government confirms that it will proceed with its proposals to revise the content and significance of the sustainability criteria applicable to the use of solid biomass and biogas feedstocks for electricity generation under the Renewables Obligation (RO). The RO is currently the principal regime for incentivising the development of large-scale renewable electricity generation in the United Kingdom. Eligible electricity generators receive renewables obligation certificates (ROCs) for each megawatt hour (MWh) of renewable source electricity that they generate. Biomass qualifies as renewable source electricity, subject to some conditions.

Changes to the criteria

The sustainability criteria associated with the RO is broadly divided into greenhouse gas (GHG) lifecycle criteria, land use criteria and profiling criteria. There will be changes to all of the criteria, but the significant changes relate to the first two criteria, and will take effect from 1 April 2014.

In general terms, the GHG lifecycle criteria are designed to ensure that each delivery of biomass results in a minimum GHG emissions saving, when compared to the use of fossil fuel. The savings are measured in kilograms (kg) of carbon dioxide equivalent (CO2eq) per MWh over the lifecycle of the consignment (sometimes referred to as “field or forest to flame”). The UK Government has confirmed that all generating plants using solid biomass and / or biogas (including dedicated, co-firing or converted plants and new and existing plants) will be on the same GHG emissions trajectory from 1 April 2020 (200 kg CO2eq per MWh). In the meantime, new dedicated biomass power will be placed on an accelerated GHG emissions trajectory (240kg CO2eq per MWh). All other biomass power will remain on the standard GHG emissions trajectory (285kg CO2eq per MWh) until 1 April 2020.

Changes to the land use criteria will also be introduced. In particular, generating plants using feedstocks which are virgin wood or made from virgin wood will need to meet new sustainable forest management criteria based on the UK Government’s timber procurement policy principles.

The land use criteria set out in the European Union (EU) Renewable Energy Directive 2009 (RED) will continue to apply to the use of all other solid biomass and biogas, with some specific variations for energy crops. As is the current position, the land use criteria will not apply to the use of biomass waste or feedstocks wholly derived from waste, animal manure or slurry.

The new sustainability criteria will be fixed until 1 April 2027, except if the EU mandates or recommends specific changes to the sustainability criteria for solid biomass, biogas or bioliquids, or if changes are otherwise required by EU or international regulation.

Making compliance mandatory

Currently, whilst generators using [...]

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Possible UK Power Shortages Raise Concerns

by Irina Denisova | Aug 21, 2013 | Environmental, EU Developments, Power Markets

by Thomas Morgan and David McDonnell

A warning from the UK’s energy regulator, Ofgem, on 27 June 2013, that the ‘buffer’ capacity of spare electricity on the UK’s national power grid could drop to as little as 2% of national supplies by 2015, has raised concerns in relation to the possibility of widespread disruptions in service. This spare capacity currently stands at about 4%.

The warning was linked to an extensive Electricity Capacity Assessment Report, also published by Ofgem that same day. Revised studies have indicated that power supplies will shrink considerably by 2015, as electricity demand in the United Kingdom is not decreasing in the manner previously foreseen by successive governments. This is due to a variety of factors, among them, the low uptake by residential households of environmentally friendly incentives and energy-efficient practices.

Ofgem recommends the implementation of far-reaching market changes proposed by the Department of Energy and Climate Change (DECC). Among other things, DECC stated in a report, also published on 27 June 2013, that the UK electricity sector will require approximately £110 billion of capital investment in the next decade to modernise its infrastructure. This would create opportunities for investment which a range of market players are likely to monitor with interest.

DECC has also emphasised the need for a ‘Capacity Market’ – essentially an insurance policy against the possibility of future blackouts – which would work by providing financial incentives to generators to keep a certain percentage of energy capacity in reserve to cope with spikes in demand.

The British government has been quick to retort to concerns of service disruption, downplaying the risk of blackouts to domestic consumers and, while it is unlikely that blackouts reminiscent of those experienced in the United Kingdom in the 1970s will be relived, the very publication of a formal warning from Ofgem highlights the potential significance of the concern.

New York Governor Floats Idea to Ban Hydraulic Fracturing in Majority of New York Counties

by McDermott Will & Emery | Jul 23, 2012 | Environmental, Hydraulic Fracturing

by James A. Pardo and Brandon H. Barnes

New York Governor Andrew Cuomo is reportedly considering a plan that would ban hydraulic fracturing (fracing) in all of New York with the exception of five counties along the Pennsylvania border: Broome, Chemung, Chenango, Steuben and Tioga. Even within those five counties, however, fracing would be strictly limited under the Governor’s scheme. Specifically, fracing permits would only be issued for wells located in communities that had not acted locally to prohibit the process – in other words, towns within the five counties still could exercise "home rule" to ban fracing by zoning amendment, or otherwise. Cuomo also would ban fracing in Catskill Park, near any drinking water aquifer, in any nationally-designated historic districts and initially would limit it to the “deepest” areas of the Marcellus Shale.

Governor Cuomo has been under intense pressure from both sides in the fracing debate, and his idea – which an anonymous New York State Department of Environmental Conservation (NYSDEC) official deliberately leaked to the New York Times – was an attempt to take the temperature of both sides to a possible compromise. It appears that Cuomo’s team sought to please environmentalists by banning fracing in most of the Empire State; assuage industry stakeholders by permitting fracing in certain counties with significant Marcellus plays and where public opinion appears to be leaning in favor of natural gas development; and build support with local officials from around the state by implicitly reaffirming "home rule" rights to ban fracing. Initial reaction to this "trial balloon" idea was largely negative from the anti- fracing side – which has been trying to build momentum for a full statewide ban – but recently has drifted towards tepid support as fracing foes may see it as their best chance to stop fracing in most of New York. Stakeholder response has been fairly neutral, with some companies expressing optimism because the plan allows fracing at all – an indicator of just how tight the debate has become in New York right now.

Cuomo’s plan would give everything to nobody, and something to everybody – providing considerable political cover to both the Governor and NYSDEC. For this reason alone, it is a plan that may have the best chance of passing through the regulatory, legislative, legal and public opinion gauntlet that currently exists for fracing in New York.

United Kingdom Government Confirms Change to Sustainability Criteria for Biomass

Possible UK Power Shortages Raise Concerns

New York Governor Floats Idea to Ban Hydraulic Fracturing in Majority of New York Counties

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