Biofuels

Trade and Industry written question – answered on 27th March 2007.

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Photo of David Drew David Drew Labour, Stroud

To ask the Secretary of State for Trade and Industry what assessment he made of the impact on the wood panel industry of increasing the level of subsidy for co-firing using a wood-based raw material.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Science and Innovation), Department of Trade and Industry

The Government support co-firing through the renewables obligation (RO). Currently, all technologies under the RO receive the same level of support. The Energy Review Report proposed banding the RO so that it provides different levels of support to different technologies. As co-firing is one of the most economic technologies, we have consulted on proposals to decrease the level of support it receives. These proposals would require amendments to the Electricity Act 1989 and will be the subject of an announcement later this year. At present, the level through which suppliers can meet their obligation through co-firing is capped at 10 per cent. having fallen from 25 per cent. in 2006. This cap not only protects the RO certificate market but also restricts the volumes of biomass, including wood, that can be used.

The Government also commissioned an independent report to look at the current and future impact of co-firing on the wood panel industry (ILEX, September 2005). The report concluded that allowing more waste wood (which is not suitable for use by the wood panel industry) to qualify for support through the RO would ease competition for the industry's preferred feedstock. We accepted these recommendations and have implemented them through changes to the biomass definition in the Renewables Obligation Order 2006 and will make further changes through the Renewables Obligation Order 2006 Amendment Order 2007 from 1 April 2007.

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