By Wolfgang Kuhn, Director Of Financial Sector Strategies, ShareAction
When you have too much carbon in the atmosphere, stop burning carbon. - an old English proverb
In recent years we have seen a rise in biomass being burnt to generate electricity, mostly in former coal power plants.
Great right? Replacing dirty coal with newly-grown wood?
Unfortunately, it is not that simple.
In fact, the scientific consensus is that burning biomass (mostly wood in the form of pellets or chips) instead of coal could is counterproductive, and actually be accelerating climate change, not reducing it.
Currently, across Europe, 76 plants burn a total of 32.6 million tonnes of biomass every year. That’s the equivalent of cutting down and burning almost 2500km squared of forest – or removing the UK’s New Forest nearly five times over.
The resultant emissions are 60.7 million tonnes of CO2 at the point of combustion – roughly the annual emissions of Portugal.
The rise of European biomass
Because of the fact that biomass has long been considered a ‘renewable’ energy source (a tree can be regrown, right?), governments were keen to subsidised it (they no longer are).
This has meant that biomass has risen – and continues to rise across Europe.
An analysis from climate think-tank Ember showed that proposed EU coal-to-biomass projects could see the use of biomass more than double.
This would require 36 million tonnes more wood pellets and approximately 2,700km squared more forest being cut down, equivalent to 100 per cent of Dutch woodland.
And with this comes a rise in associated emissions.
The myth of ‘renewable’ biomass
So why are we still considering biomass as renewable?
If we waited 20 years until a new tree was fully grown – for the sole purpose of biomass – before cutting it and burning it, you might just call that “renewable”.
But that’s not what happens. Instead, wood is burned NOW, and regrown thereafter.
Euphemistically, it is called “payback period” or “carbon debt”. As you might imagine, being indebted to the climate isn’t a very good idea.
A false assumption
The preference for biomass has long been based on a false assumption.
It assumes that the emissions from combustion of biomass are to be recaptured as new trees grow. Also, at the point of combustion, wood emits more CO2 than coal.
But companies are not having to account for emissions at the point of combustion. No emissions has so far meant no questions. Investors are smitten.
Given that we urgently need to reduce greenhouse gas (GHG) emissions to reach a net zero energy system by 2050, biomass is not a viable fuel option: it emits CO2.
Biomass: A risky bet for investors
As such it poses a significant risk for investors backing the fuel.
Firstly, investment in biomass undermines investors’ public commitments to tackle climate change, and supporting the goals of the Paris Agreement. Sooner or later, exposure to biomass investments will negatively impact reputations.
Secondly, investors are likely to find themselves holding assets that are worth a lot less than they thought as the scientific consensus around the climate impact of biomass continues to strengthen.
At the moment, the business model is supported by government subsidies. But governments are reconsidering, given scientific evidence. That means no subsidies in the future.
Drax is the largest consumer of biomass in the world. It consumes around 22 per cent of all biomass burned in European power stations – 7.2 megatons per year.
Today, we’re writing to the five biggest investors in Drax, together holding 40 per cent of the company, to encourage Drax to reconsider their business model and prepare for the end of biomass as a renewable fuel.
Carbon is carbon, and does not belong in the atmosphere. Whether it was formed while dinosaurs roamed, or in a wood around the corner.