The term “biomass” refers to biological matter in the form of plants or animals. The processing of biomass can yield a variety of useful end products such as fuel, electricity, heat, renewable construction materials and plant based pharmaceuticals.
Depending on the type of biomass being used, a variety of processes can be used to yield these end products including:
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Anaerobic digestion: Typically used to treat waste, this process breaks down biomass to create methane within an environment lacking oxygen. Methane can be used as a source of energy via combustion.
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Incineration: This process involves combusting biomass to exploit the heat and energy released as a result.
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Pyrolysis: This method uses heat to chemically decompose biomass. The method is different from incineration as it does not ignite the material - biomass is simply heated up to high temperatures without any oxygen present. The process yields methane as well as a variety of useful end products.
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Gasification: This method heats up the biomass within a limited oxygen environment to turn it into a gas, which can then be used as a source of energy. This process is considered to be more efficient than others and yields hydrogen as a product.
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Fermentation: This process is similar to anaerobic digestion, but different in that it uses the anaerobic digestion of microorganisms as well as enzymes to break-down biomass into sugars, which are then converted into ethanol and methanol by the microorganism.
Biomass can be sourced from:
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Wood from forestry or wood processing
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Food waste from food and drink
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Energy crops-plants such as willow and rape seed
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Agricultural residues from harvesting and processing
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Industrial waste from manufacturing and industrial processes
For heat and electricity production, coal has traditionally been preferred to biomass due to its greater efficiency in providing energy. However, the use of biomass is quickly gaining momentum as it is considered to be a low carbon solution to climate change. Globally, biomass represents the largest source of renewable/low carbon energy. Experts suggest that more than a third of current electricity demand can be supplied by biomass technology currently available.
Investing in Biomass
Biomass is one of the fastest growing sectors within the renewable energy industry. According to a report by the United Nations Environment Program (UNEP) and New Energy Finance, global investment in biomass and waste-to-energy projects grew by 432% in 2007. Experts predict that the biomass industry can be one of the most profitable within the renewable energy sector, mainly due to the relatively high efficiency with which most biomass developments can run. After a slowdown in 2008 ($8.4 billion with $0.7 billion new equity investments) due to the recession, investment in biomass projects reached record levels in Q2 2009, although equity investments in businesses fell.
The UK biomass industry is currently exploding, with significant investments going into a variety of biomass projects. In 2007, the UK government approved what is to be the world’s largest biomass plant in Wales with a capacity of 350MW, on the condition that the biomass was sustainably sourced. Additionally, a number of biomass projects have either been recently established or are in the planning pipeline, such as Drax and Siemens’ plan to invest £2 billion in biomass power plants in the UK and Tesco commissioning a 295MW plant to power their distribution centre, suggesting investor confidence and a long term outlook on the technology despite the current financial crisis.
According to Merrill Lynch, biomass’ global projected 10 year growth rate is 5%, with most market opportunities expected specifically in gasification. Although this predicted growth rate is relatively low in comparison to other renewable and low carbon energy technologies, the UK has the necessary characteristics to take full advantage of the potential that biomass offers. With the viability of biomass being proven in other European countries, the UK’s abundant supply of biomass and encouraging signs of acceptance, biomass is poised to become a major player in providing low carbon solutions to a variety of sectors in the UK. Experts also state that the biogas market in the UK is 10 years behind that of the rest of Europe, where biogas is quickly becoming firmly established.
Industry Drivers
The biomass industry spans a range of sectors due to the variety of possible end uses. As a result, the industry is highly important in the UK.
Policy Drivers
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The UK Biomass Strategy lays out appropriate approaches and commitments for increasing biomass’ prominence within the UK, creating a thriving market for biomass within the UK as well as the promotion of low carbon technologies. The UK government’s commitment in promoting and developing the market for biomass suggests that market opportunities are likely to arise as a result.
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The Waste Strategy for England outlines the central philosophy for effectively managing England’s waste. The strategy encourages following the “waste hierarchy”, which first encourages waste prevention followed by re-use, recycling and composting, energy recovery, and finally disposal as a last resort. With energy recovery from waste being at the centre of England’s waste strategy in addition to the massive amounts of waste generated in the UK, investment opportunities within the biomass sector are likely to be abundant.
UK Regulatory Drivers
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The Climate Change Act, recently enacted, sets targets to reduce greenhouse gas emissions by 80% by 2050 via measures undertaken within the UK and abroad. The Act also set a target to reduce national CO2 emissions by 26% by 2020. As the use of biomass is one of the most established solutions to reducing carbon emissions via a variety of routes, it will be central to achieving these targets.
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The Renewables Obligation requires electricity providers to source a certain percentage of their electricity from renewable sources, rising from 9.1% in 2008/2009 to 15.4% in 2015/2016. Tradable Renewables Obligation Certificates (ROCs) are gained for every MW of electricity produced from renewable sources. Beginning in 2009, the scheme will differentiate between technologies as well as the amount of certificates they are eligible for. Specifically, biomass developments are due to receive up to 2 ROCs for every MWh of energy produced, depending on the process used and for what purpose.
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The Renewable Transport Fuel Obligation, implemented in April 2008, obliges fuel suppliers to provide a certain proportion of their fuel from biofuels. By 2010, fuel suppliers must source at least 5% of fuel from renewable sources. As biomass can be used to generate biofuels, this obligation will be vital in raising awareness of the biomass industry and will provide investment opportunities as demand for biofuels increases as a result. For detailed information on the UK biofuels industry, see the EIN’s sector report on the Biofuels Industry.
Financial Drivers
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Recently introduced, the Environmental Transformation Fund allocates a total of £1.2 billion to environmental initiatives involving a range of issues both nationally and internationally from 2008 to 2011. £400 million of this fund is allocated to “accelerate the commercialisation of low carbon energy and energy efficiency technologies” within the UK. Specifically £47.4 million has been allocated in 2008/2009 to aid in commercialisation of technologies related to biomass.
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The Bio-Energy Capital Grants Scheme aims to encourage development of biomass projects at all levels and in all sectors. The scheme will provide grants of up to 40% of the difference of the cost of developing a biomass plant in comparison to its fossil fuelled counterpart. This scheme is complemented by the Bio-Energy Infrastructure Scheme, which provides grants that will aid to develop the biomass supply chain. Specifically, grants are available to growers to establish producer groups that can supply biomass within the supply chain, and to producer groups for equipment and training.
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The UK Budget 2009 contained £25 million to help fund community heating infrastructure, with biomass based technologies set to play a significant role in this area. 10 demonstration projects are to be set up across the UK to identify areas where community heating can be a cost effective solution.