Biomass is renewable, organic matter such as virgin wood, sawmill residues and agricultural residues, which can be burned in the generation of electricity and heat.
It excludes fossil fuels including coal or petroleum which have been transformed by geological processes. Biomass is currently used as a fuel source either in isolation or with coal.
Biomass should not be confused with biofuels. Biofuels are a target replacement for gasoline and diesel in transportation and as such have different economics and different demand drivers.
Biomass does not compete with natural gas as a fuel for power generation.
Growth in biomass generation is driven primarily by European legislation, in line with the twin objectives of reduced EU carbon emissions by 20% and having 20% of energy consumption produced from renewable sources by 2020. Biomass is unique among renewable forms of energy in providing a base load power generation source. It is expected to contribute 6% of the UK’s base load power capacity by 2020, up from 0.6% today. Total European demand for wood pellets - the preferred form of biomass fuel used in large scale power stations - is estimated to reach 25-30 million tons per annum by 2020.
Legislation, government subsidies and prevailing market economics means that biomass will displace coal-fired generation capacity rather than natural gas. Due to the projected demand for base load power, it is possible that by 2020, the majority of UK base line power generation will be provided by nuclear, gas and biomass, in that order of preference/magnitude.
Biomass is considered a ‘carbon neutral’ fuel because the source forest must be grown in a sustainable manner before it can be converted into biomass material. This is in contrast to coal, oil and gas, where the carbon dioxide released is ‘new’ carbon dioxide that had previously been locked underground. Rigorous sustainability criteria must be met by biomass consumers. These include the requirement that the overall carbon footprint of the biomass electricity produced - taking into account its cultivation, processing, transport and any direct land use change - should be sufficiently lower than that of equivalent fossil fuel generation (in the UK this threshold is 60% below coal).
The combustion (direct or indirect) of biomass as a fuel also returns CO2 to the atmosphere, however this carbon is part of the current carbon cycle: it was absorbed during the growth of the plant over the previous few months or years and, provided the land continues to support growing plant material, a sustainable balance is maintained between carbon emitted and absorbed.
In our view biomass has an important role to play in the EU and UK's energy mix. GM&T is actively working with biomass producers, power assets and financiers to develop this market opportunity, with a focus on sourcing sustainable and secure supplies in the Russian Federation and Europe to meet the projected demand increase.
Contacts for further information
Will Close-Brooks or Andrey Zherebtsov