NAO report: The government’s support for biomass

Over the past two decades, government has provided more than £20bn of support to businesses using biomass in the power and heat sectors - a key part of its net zero ambitions. Yet government cannot currently demonstrate that its approach to making sure generators comply with its sustainability requirements is adequate, according to a new National Audit Office (NAO) report.

Biomass materials, such as plants or food waste, can be used in generating power or heat, or for fuelling vehicles. In 2022, biomass made up 11% of the UK’s electricity generation.

The government and independent Climate Change Committee (CCC) considers biomass to be low-carbon if generators adhere to sustainability criteria set by government¹ and monitored by Ofgem.

To enable government to monitor compliance with these criteria, participants submit regular information to Ofgem and can draw on third-party certification – an approach which is set out in legislation. But the government has not evaluated whether its current arrangements are effective at ensuring compliance.

The Department for Energy Security and Net Zero (DESNZ) argues its approach is proportionate. However, the NAO’s report sets out its view that the lack of an evaluation means the government cannot demonstrate that its current arrangements are adequate to give it confidence that industry is meeting sustainability standards.

Looking to the future, DESNZ has also committed to strengthening its sustainability criteria.

For biomass to play a significant role in meeting long-term climate targets depends on the success of government’s carbon capture utilisation and storage (CCUS) programme. If biomass is enabled with carbon capture and storage (known as BECCS), it could generate negative emissions. There are no BECCS plants currently operating in the UK. DESNZ has a programme to promote CCUS technology and is negotiating commercial terms with a first wave of eight carbon capture projects, though none of these are BECCS plants.

On 16 January 2024, the Secretary of State for Energy Security and Net Zero granted development consent for Drax’s BECCS project.

Of the £22 billion of government subsidies provided to the biomass industry to date, around £16 billion has come from consumer-funded support – with £14 billion coming from the Renewables Obligation scheme, and £2 billion coming from Contracts for Difference, which guarantee generators a set price for the electricity they produce. As the largest biomass electricity generator by some distance, 36% of the Renewables Obligation funding has gone to Drax².

DESNZ is considering whether to provide transitional support to large scale biomass generation, such as Drax and Lynemouth beyond 2027, when both their CfDs and Drax’s support through the Renewables Obligation is due to finish, to enable them to convert to BECCS in the future.

If biomass is unable to make the contribution to achieving net zero that government currently expects, then DESNZ may need to increase activity in other areas to reach its 2050 target. This could include increasing the capacity of other types of greenhouse gas removal technology, encouraging greater behaviour change, or further innovation.

The NAO is recommending the government adequately assures itself that generators comply with sustainability requirements; and that government publishes the environmental impact of continuing subsidies for unabated biomass after 2027. 

Gareth Davies, Head of the NAO said:

“If biomass is going to play a key role in the transition to net zero, the government needs to be confident that the industry is meeting high sustainability standards. 

“However, government has been unable to demonstrate its current assurances are adequate to provide confidence in this regard.

“Government must review the assurance arrangements for these schemes, including ensuring that it has provided adequate resources to give it assurance over the billions of pounds involved.”

Notes to editors

1. The criteria includes: land criteria, which consider the sustainability of the land from which biomass is sourced, and greenhouse gas (GHG) criteria, which account for the greenhouse gas emissions emitted over the life cycle of biomass materials. 
2. All figures are rounded. The Renewable Heat Incentive, a taxpayer funded scheme to encourage homes and businesses to install low-carbon heating systems, which can include biomass and is worth around £5 billion, makes up the remaining quantum of subsidies (see paragraph 8).
3. The purpose of this report is to add transparency around the conditions in which the government considers biomass as a sustainable, low-carbon alternative to fossil fuels, such as its requirements over where biomass material is sourced from. It also explains the compliance regime that government has implemented for ensuring these conditions exist in its current schemes to identify lessons that it should incorporate into the design of its future support. We highlight the main risks DESNZ will need to manage as it takes forward its Biomass Strategy and the impact these risks could have on its overall ambition to achieve net zero.
4. In 2021 the UK imported 9.1 million tonnes of wood pellets for use in energy production. Around 60% came from the US, 18% from the EU and 16% from Canada.
5. In the same year, 66% of biomass burned in the UK was from domestic feedstock.