This document summarizes a panel discussion on the outlook for anaerobic digestion (AD) in the UK given the new Conservative majority government. It was noted that AD has advantages over other renewables as it is dispatchable and low cost. However, support mechanisms like the Renewable Heat Incentive (RHI) may be threatened by budget cuts. The panel discussed strategies for making the case for AD and working with allies to counter potential political risks and support a shift to bill-funded support instead of cuts to the RHI. Key messages were that AD is low cost when accounting for dispatchability, cuts carbon cost-effectively, and supports rural jobs.

1. THE OUTLOOK FOR AD AND THE
FUTURE OF THE INDUSTRY
#UKADBiogas @adbioresources
CHAIR:
CHARLOTTE MORTON, ADBA
PANEL:
CHRIS HUHNE, ADBA
TONY GLOVER, ENERGY NETWORKS ASSOCIATION
ADRIAN GAULT, THE COMMITTEE ON CLIMATE CHANGE
DUSTIN BENTON, GREEN ALLIANCE

2. A CONSERVATIVE
MAJORITY: WHAT IT
MEANS FOR AD
#UKADBiogas @adbioresources
OPPORTUNITIES AND CHALLENGES
CHRIS HUHNE
STRATEGIC ADVISER, ADBA

3. Key messages
• The recession has been awful for energy bill-
funded renewables (FIT, ROCs, CFD)
• Income growth will now relieve pressure on LCF
but not on RHI funded from tax
• Tories will seek low cost options (in theory)
• AD must be clear about its key advantages over
other renewables: despatchability, low cost carbon
cuts, digestate benefits and a role in biomethane
for transport

4. Real income growth vanishes
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
19641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008201020122014
Real household income growth (5 year moving average)

5. A different type of recession
Output
Jobless
rise
Jobless
rise
% change % points per % fall in output
1979-81 -5.6 6.7 1.2
1990-1 -2.2 3.8 1.7
2008-9 -6 3.4 0.6

6. Conservative promises
• Cameron sees green as a key part of his personal
brand and Tory modernisation
• The PM surprised the NGOs by backing the all-party
commitments on climate change
• Owen Paterson and the right wanted repeal of the
Climate Change Act, but manifesto says: “We will
continue to support the UK Climate Change Act”.
• And backs Paris: “We will push for a strong global
climate deal later this year...that keeps 2c firmly in
reach”.

7. Low carbon on the cheap?
• In theory, Conservatives say we will “cut emissions as
cost-effectively as possible”.
• Conservatives will “secure clean but affordable energy
supplies...This means a significant expansion in new
nuclear and gas; backing good-value green energy...”
• “We will only give significant support to (renewable
technologies) that clearly represent value for money”.
• BUT moratorium on one of two cheapest: on-shore
wind

8. Low carbon cost comparison
DECC est/auction Pounds per mwh
AD (Memo from 2013) £140
Geothermal £140
Biomass with CHP £125
Offshore wind £114.39
Nuclear £92.50
Onshore wind £79.99
Solar £79.23

9. AD advantages:
• Remember AD is dispatchable – it can be turned
on and off at will once biogas is stored - whereas
cheaper renewables are intermittent and nuclear is
constant
• Key advantage in a world where electricity demand
varies so much intra-day and intra-seasonally
• So how much is the variation?

10. Electricity demand, GB

11. Results of France’s study

12. Frontier Economics study
• DECC has commissioned Frontier – Sam Street – to
do the same
• Frontier did comparison of biomass and offshore wind
• Aware of issues, and now aware of French ADEME
study
• My guess is Frontier will come in higher than DECC’s
old £10 per mwh: £25-35 per mwh?

13. Adjusted renewable costs
Cost per
megawatt
hour
Strike
price
Storage Total cost
AD £140 £0 £140
Biomass with CHP £125 £0 £125
Geothermal £140 £0 £140
Offshore wind £114.39 £63 £177
Nuclear £92.50 £0 £92.50
Onshore wind £79.99 £63 £142.99
Solar £79.23 £63 £142.23

14. ADBA data: CO2 case (FIT)
£-
£50
£100
£150
£200
£250
£300
£350
Sub-100 kWe AD tariff Wind 15-100 kWe from 1 April
2015
Solar 50-100 kWe Middle Rate
from 1 April 2015
Hydro 15-100 kWe from 1 April
2015
Draft cost of CO2 mitigation
£/ MWh £/ tonne co2

15. Other AD benefits
• Digestate good for soil replenishment – but this is
a DEFRA benefit for a DECC subsidy
• Biomethane is a potential answer to transport
problems –vans, lorries and even planes.
• Conservatives said: “Our aim is for almost every
car and van to be a zero emission vehicle by
2050”.

16. The politics of AD
• Rural diversification is a key benefit for any party
that represents farming communities
• AD has relatively few planning or NIMBY problems
compared with on-shore wind
• Most renewables – AD included – reduce import
dependency and help insulate the economy
against energy price shocks

17. Political risks
• Conservative majority is 12: it is tight. Sir John
Major had 21 in 1992 and was held hostage by the
“bastards”.
• Two years of rows on Europe could undermine
investment and recovery
• Referendums are unpredictable: we could be out of
the EU by end-2017
• If we are out, no legal backing for our renewables
target of 15% in 2020

18. And the RHI is under threat
• Budget squeeze is going to be horrible: £30 billion off by
2017-8 means 15 per cent from non-protected budgets
• £12 billion off welfare
• Osborne did not expect to win, and thought Lib Dems
would veto squeeze
• Even OECD is warning Treasury
• Careful what you wish for...

19. Strategy for support
• Make the case for AD advantages
• Prepare possibility of shift of RHI to bill-funded
LCF envelope (best case?)
• Press ban on food waste to DCLG
• But don’t bank on it...counter-cultural
• Work on backbench support
• Work on allies for common front: NFU, CLA

20. Key points of the AD case
• AD is a low-cost renewable once despatchability is taken into account
• AD is value for money in cutting carbon
• AD has a key biofuel role (lorries, planes)
• AD replenishes soil without river run-off
• AD diversifies the rural economy and jobs
• AD helps make us Putin-proof
• AD is a Conservative-friendly renewable – but we are not complacent

21. THE OUTLOOK FOR AD AND THE
FUTURE OF THE INDUSTRY
#UKADBiogas @adbioresources
CHAIR:
CHARLOTTE MORTON, ADBA
PANEL:
CHRIS HUHNE, ADBA
TONY GLOVER, ENERGY NETWORKS ASSOCIATION
ADRIAN GAULT, THE COMMITTEE ON CLIMATE CHANGE
DUSTIN BENTON, GREEN ALLIANCE