The Big Interview: Lord Redesdale

Lord Redesdale talks to Nick Warburton on how the Anaerobic Digestion & Biogas Association is pushing to remove the regulatory hurdles facing AD

Lord Redesdale has good reason to be upbeat despite the fallout from the recent elections. In a month when his party, the Liberal Democrats, felt the wrath of the British electorate and AV was voted down, his positive outlook might seem at odds with the headlines.

But as the organisation he chairs prepares to descend on Birmingham’s NEC this month, it has been a truly remarkable journey for the UK’s leading trade association in the AD and biogas industry.

Considering that ADBA was formed less than two years ago, in September 2009, the trade body has been punching far above its weight.

The Liberal Democrat peer, who first became involved in AD in 2008 when he was working on the Energy Bill, has been a pivotal figure in ADBA’s efforts to win Government support for this growing industry.

He argues passionately that AD has the capacity to produce 20% of the UK’s domestic gas – the equivalent of 10% of its generating mix – and is vital for the nation’s long-term prosperity. “We were a net exporter of gas, but in the next five years we are going to be importing 80% of it,” he warns.

That is why ADBA broadly welcomes the Coalition Government’s recent announcement on the long-awaited Renewable Heat Incentive (RHI).

What this means is that biomethane injection projects will receive 6.5p/kWth; a considerable increase on the 4p tariff proposed in the Government’s RHI consultation.

“RHI is the lifeline and the death knell of AD, so if the Government had come out at the wrong rate, we would have been stuffed,” he says. “When the FiT announcement came out too low, there was a reduction by 80% in the number of plants being built. You wouldn’t have built any plants if the RHI had come in at a low rate.”

The 6.5p/kWth level represents a huge vote of confidence in AD. Not only that but it means that upgrading biogas to biomethane for injection into the grid becomes a more financially viable alternative to the UK’s current gas supply while also potentially reducing carbon targets.

But it hasn’t all been good news. ADBA is disappointed that issues around the treatment of Combined Heat and Power (CHP) have not been resolved.

It fears that the 200kWth limit creates uncertainty for some AD projects and will call on the Department of Energy and Climate Change to reconsider its position before 2012 by making the case for supporting heat use from CHP.

On a positive note, Defra’s AD strategy report was published in June with the waste review. The document, which came about as a result of the coalition agreement, summarises AD’s role in helping the UK to meet its climate change targets and also outlines the work that needs to be undertaken to foster the industry.

“I think what you’ll see in AD, which you don’t see in certain other industries is a much more comprehensive plan and a much more coherent strategy,” says Lord Redesdale. “It helps that it is a small industry to start off with.”

Faced with the stark economic picture that is the UK economy, this might not seem the most opportune time to risk investing in a small yet growing industry. But then there is something ironic in the fact that the tight budgetary constraints that could have killed the industry might just direct local authorities and central government into developing AD.

“I’m not saying the cuts are a good thing, but when you start understanding that you have no money whatsoever to play around with and you have waste targets to meet, people are going to start taking a long hard look,” argues the peer. “When you have a lot of money, you don’t start reviewing whether you can afford this five years down the line.”

Lord Redesdale has no illusions about the challenge ahead and the effort that will be needed within the industry and from partners in growing AD into a thriving and commercially successful asset.

“We’re talking a build cost of between £2B and £5B, depending on the technology use. But that’s a fraction of one nuclear plant and you suddenly have a waste solution, a renewable fertiliser solution and a renewable energy solution.”

That means getting the infrastructure right from the outset. At the moment, most of the interest is from large businesses. Lord Redesdale says that local authorities and the waste companies are holding back and part of the problem is a lack of knowledge about AD. That is why ADBA will specifically target local authorities at its forthcoming conference at the NEC to underline the benefits of investing in the AD industry.

“The big problem local authorities have at the moment is that waste collection is one of the major costs that they face, but in the future it could be a massive asset,” he says.

“What they’ve always done is say, ‘Right, we’re going to outsource waste to waste companies’. But waste companies have to pay for the infrastructure so that you can recycle. You are going to have to separate food from other recyclables because there will be cost implications if you don’t.”

Lord Redesdale warns that councils will be fined if they do not meet the targets laid out in the Waste Framework Directive. With landfill tax set to rise year-on-year, the AD industry offers a cost-effective solution to local authorities’ problems.

To assist councils, ADBA has produced a best practice guide, which covers the entire process from planning, designing and financing plants through to procurement and the successful and efficient operation of plants.

ADBA’s plan is to build 1,000 plants, but being a gas-based industry, it is vital that health and safety is not compromised.

“What we want to do is build a very, very safe industry and that’s got to be based around training,” he says. “What worries me is that we could have a foot-and-mouth-type event if we don’t have high enough standards. Conversely, if the standards are too high, you can’t do anything.”

So what next for ADBA? Aside from educating local authorities about procurement and collection methods, there is the ongoing challenge of setting in place the right financial conditions to support the AD industry’s growth.

Equally important, a more supportive regulatory environment needs to be created.

“Every renewable energy sector has its moment in the sun,” he says on reflection. “ADBA’s role is to get AD to the top of the tree for the next couple of years and give it the political clout to change the regulations, which means we can survive as an industry. We’re working very closely with all the government departments and agencies to remove the road blocks.”

Nick Warburton is editor of LAWR

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