Farming News - Government cuts subsidies for crop-fed AD

Government cuts subsidies for crop-fed AD

The government has announced planned changes to the renewable heat incentive (RHI) aimed at pushing for decarbonisation and offering better value for public money.

Maize fieldThese changes include reduced subsidies for heating plants that use more agricultural crops to generate heat. Under the reformed scheme, new anaerobic digestion (AD) plants will only receive full subsidy support if they use more than 50% waste or crop residues as feedstocks, rather than virgin agricultural crops. Officials will determine the proportions of biogas from wastes and residues in sustainability audits for larger plants.

In a consultation response published late last week, the energy ministry said the use of agricultural crops in heating plants is creating “competition with food production and reduced soil and water quality, and typically does not deliver carbon abatement as cost-effectively.”

Commenting on the decision, Peter Melchett, policy director at the Soil Association said, “We welcome the Government decision on AD and crops, which we see as a major step forward in restricting the uncontrolled, doubly subsidised rush to grow maize and other crops for AD. We do think the Government should have gone further but this is an important first step, and we will be watching to see if the reduced subsidies lead to cuts in the use of crops as AD feedstock.”

The Soil Association policy director said the government’s criticism of using agricultural crops as feedstocks, rather than crop residues, waste or other by-products, echoes “Exactly what we said in our report ‘Runaway Maize’ published in 2015.”

Maize is probably the most rapidly growing crop in the UK, having enjoyed a 23-fold increase in area planted over the last 40 years (with 183,000 ha planted in 2014), and farm unions have got firmly behind the idea of growing energy crops for use as feedstocks.

However, the Soil Association’s 2015 report found that maize and other energy crops are associated with environmental damage and raised concerns that the crop is covered by a ‘double-subsidy’ because of Common Agriculture Policy (CAP) payments gained for growing the crops and feed-in tariffs for renewable energy plants using them, even though the green credentials of the energy produced are debatable. The organisation called for an end to subsidies for AD plants using maize as a feedstock and the removal of CAP subsidies for fields growing maize for AD.

Further reforms to the non-domestic RHI scheme announced last week mean new participants in the scheme will no longer be able to claim support for heat used to dry digestate from the plants, which can be used as fertiliser, and biomethane tariffs will be rolled back to April 2016 levels.

RHI scheme reforms

Last year, the government committed to continuing the RHI scheme to 2020. The scheme is intended to support the development of domestic and larger-scale renewable and low carbon heating technologies and to reduce the climate impact of heating, which currently accounts for almost half of UK energy use. The changes announced last week aim to improve the government’s progress towards its 2020 renewables targets.

The RHI reforms were part of a response was issued as part of a slew of papers released over two days by the government’s business and energy department.

Changes to the domestic RHI include higher tariffs for air and ground source heat pumps and domestic biomass installations. In the future, the government plans to make further changes to the scheme, so that households can pass on their rights to RHI payments to a third party (in theory this will allow third parties to install free or reduced-cost heating systems to gain RHI payments in return, but officials said they still need to look into consumer protection issues this raises).

Full details of the changes to the domestic and non-domestic RHI schemes are available here.

In its statement on reforms, the energy department said, “The Government remains supportive of further deployment of biogas and biomethane production plant but is keen to make changes to improve the cost effectiveness of support.”

The Renewable Energy Association, which represents the renewables industry, cautiously welcomed the reforms, acknowledging that they represent “A step in the right direction” and noting that the Association’s analysis “Indicates that the reformed Renewable Heat Incentive moves us closer to the UK meeting it’s legally binding 2020 renewable heat target.”