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Where next for bioenergy crops?

While growing crops for energy has become popular in recent years, economics and changes to Government incentives appear to be putting the brakes on this market.

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Defra recently released statistics concerning crops used for bioenergy, showing that in 2017, 129,000 hectares, just more than 2% of UK arable land, was used for this purpose. This is the second highest level so far recorded, a shade below the 131,000ha grown in 2016.

 

However, with last year‘s closure of the UK’s Ensus and Vivergo bioethanol plants, the former has since reopened, said to result from the Government’s failure to roll out E10 fuel, which has a higher bioethanol blending ratio than petrol currently on sale, and limits on crop use for anaerobic digestion (AD) has growing crops for energy reached its peak?

 

In 2017, 48% of land used for bioenergy was for biodiesel and bioethanol for the UK road transport market, with 217 million litres of biofuel for the UK road transport market produced from UK grown crops.

 

In 2017/18, more than 60,000ha of UK crops were used for biofuels supplied to the UK road transport market, which equates to 1% of the total arable area of the UK.

The area of crops for biofuels saw a decrease of 11% between 2016/17 and 2017/18, although this translated to virtually no change in the volume of biofuel produced. This disparity reflects a change in the balance of sugar beet and wheat used and higher crop yields in 2017, with a particularly large increase in sugar beet yields in comparison to 2016/2017 – 71 tonnes/ha in 2016/2017 to 83t/ha in 2017/2018), according to the Government statistics.

 

About 5,500ha of sugar beet were used in the production of bioethanol for the road transport market in 2017/18, an increase in area of more than 70% compared with 2016/17. This is in line with a general increase in the area of sugar beet grown across the UK in that time, following an end to the EU sugar beet quotas in 2017, with British Sugar said to produce 80 million litres of bioethanol a year.

 

An estimated 56,000ha of wheat was used for bioethanol in 2017/18. This was a decrease in area of 20% compared to 2016/17, with intermittent closures of both UK cereal bioethanol plants during this time likely to have had an impact on the amount used.


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Plant closures

 

Last year, the Ensus bioethanol plant on Teeside ‘paused’ production while Vivergo ceased production at its bioethanol plant in Hull. The Ensus plant has since reopened, but only at 25-50% capacity and mainly using maize. Failure of the Government to roll out E10 and low ethanol prices were cited as reasons for the decisions to halt production.

 

Chairman of the NFU North East Regional Crops Board, Brett Askew, says while closure of the plants is likely to have had a £5-£8/t negative impact on national old crop wheat prices and £10-£12/t negative impact on the Yorkshire/Northumberland wheat market, it has also been having an impact on feed wheat prices for 2019.

“In July [2018], you could sell feed wheat forward for November 2019 at £175/t. Now it is £130/t for harvest.”

 

About £10/t of this drop is estimated to be directly due to lack of demand for wheat from these plants. Lack of demand for biofuels creates a tipping point where UK feed wheat is more likely to end up in export markets which are becoming increasingly competitive with cheap wheat from the US and Asia available, says Mr Askew.

With a potentially larger UK wheat crop in the offing for 2019, with winter wheat plantings up 4-5%, Mr Askew says: “There will be a lot of pressure on price without a world weather issue going forward.”

 

In early May, the NFU gave evidence at a meeting of the All Party Parliamentary Group for British Bioethanol titled ‘An Inquiry into Introducing E10 in the UK’. While Government seems to support the introduction of E10, without a mandate, fuel companies have a get out clause, says Mr Askew.

 

“With Brexit [dominating], the Government does not want to have a conversation with the public about a new fuel.”

 

He fears that without progress on E10, Vivergo may never reopen and the UK will become dependent on bioethanol imports in the future.

 

E10 lobbying

 

As well as the NFU, the Renewable Energy Association has also been lobbying for a rollout of E10. Gaynor Hartnell, head of transport fuels and LFG at REA says: “Progress has been painfully slow. There is now an acceptance that a mandate is needed; the only question is when it can happen. It seems unlikely before 2021.”

 

Provisional Renewable Transport Fuel Obligation (RTFO) data indicates no oilseed rape grown in the UK was used to produce biodiesel for the UK road transport market in 2017/18. Ms Hartnell explains: “Because of double counting, the UK policy incentivises the use of wastes in fuel production and consequently more UK and European wastes – such as used cooking oil and fats, oils and greases – are pulled in to production, along with imports from further afield.

 

“If these wastes become more than twice as expensive to source than crop-based material, then we can expect to start crops coming back in again.” Countries such as Spain moving to the double counting system could bring more competition in the market for waste-based material, she adds.

 

In 2017, total energy produced from AD was 1.1mt of oil equivalent, a 16% increase on 2016 (953,000t). Energy production from AD followed a rapidly growing upward trend from 2009-2016, a result of rapidly expanding capacity for AD in the UK in this time period.

 

This was supported in part by schemes, such as the Renewables Obligation (RO), which was a major support mechanism for large-scale renewables projects. Following RO closure to new generating capacity in March 2017, growth slowed for the first time between 2016 and 2017, and it is likely it will slow further in future years, according to the Defra report.

 

Electricity produced by AD made the most significant contribution to total energy production in 2017 at 810,000t of oil equivalent, a 19% increase on 2016 (683,000t). This corresponds to 2.5TWh of electricity produced. At 299,000t of oil equivalent, heat produced by AD made up about 25% of the total energy contribution in 2017, an 11% increase on 2016.

 

Biomethane installations

 

According to the Anaerobic Digestion and Bioresources Association (ADBA), Renewable Heat Incentive tariffs in 2018 were raised to their highest levels since 2016, accompanied by the introduction of tariff guarantees. The tariff uplift is likely to lead to the building of about 30 new biomethane installations, some of which may use crops as part of their feedstock mix, it adds.

 

A spokesperson for ADBA says: “Reforms to both the Feed-in Tariff and Renewable Heat Incentive schemes include a requirement that, in order to receive the full payment, AD operators must produce at least 50% of their biogas from waste or residues for the whole period they receive the tariff.

 

“This is likely to reduce the share of crop feedstocks used for AD. We are expecting an increase in available food waste as a feedstock over the coming years as local authorities are likely to be obliged to separately collect food waste from 2023.

 

“We estimate the growth in the amount of land used to grow AD crops will therefore slow in the next few years, reaching a projected 80,000ha by 2020.”

 

Types of crops suitable for use as feedstocks include maize, grass and oilseeds. Official statistics on the amount and type of crops grown for AD are currently limited to maize. Defra says it will be exploring possible ways to gather crop feedstock data in the future.

 

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