Inquiry Response: Air Quality
1. The Anaerobic Digestion and Biogas Association (ADBA) is grateful for the chance to respond to the Environmental Audit
Committee’s inquiry into air quality. Our response focuses on the vital role that gas and biomethane vehicles can play in tackling poor
air quality, which Public Health England demonstrated was responsible for 28,000 premature deaths in the UK in 2010.
2. We also explore actions that government should take to promote uptake of biomethane and gas vehicles for both local authorities
and businesses – which include changes to fuel duty, the Renewable Transport Fuels Obligation and food waste policy.
3. ADBA has 350 members from across the biogas industry, including biomethane producers, fleet operators, vehicle manufacturers,
equipment suppliers, financiers, conversion specialists and supporting service companies.
4. Biomethane as a vehicle fuel can either be provided directly from an upgrading facility to a refuelling station or vehicle in the form of
liquid or compressed biomethane, or it can be injected into the gas grid and later extracted for use in the form of compressed or
liquefied biomethane.
What impact can biomethane vehicles make?
5. The use of gas and biomethane in vehicles such as buses and HGVs can make a huge contribution to tackling poor air quality,
particularly in urban areas. This is obviously becoming increasingly important as the government faces legal action from the European
Commission over its failure to meet air quality targets.
6. Trial data has made clear the significant air quality benefits that are realised from moving from diesel to gas or biomethane. For
example, Coca-Cola’s trial of an HGV fuelled by biomethane from landfill gas saw a reduction of NOx emissions by 85.6% and PM
emissions by 97.1% compared to an equivalent diesel vehicle. Leeds City Council also recently trialled two biomethane powered
refuse collection vehicles, achieving a 49% saving in well-to-wheel GHG emissions during the trial compared to an equivalent diesel
vehicle
7. Sheffield City Council’s 2015 Air Quality Action Plan illustrates the damaging impact diesel HGVs play in urban areas across the UK,
stating that ‘Heavy diesel vehicles make up only about 7% of total traffic, but create 35% of the cities total nitrogen dioxide (NO2) and
19% of fine particles (PM10)’.
8. It is not just urban areas however where air pollution from vehicles is causing problems. For example, government has proposed to
introduce a 60mph speed limit between junctions 28 to 35a on the M1 to boost local air quality.
9. Given the fact that road transport also accounts for around 20% of the UK’s greenhouse gas (GHG) emissions, it should be clear
that gas and biomethane vehicles are pivotal in ensuring the UK reduces its emissions and improves air quality.
10. There are also clear financial benefits from employing biomethane and gas vehicles, particularly for haulage and logistics
companies who use HGVs. With fuel prices likely to rise ever faster as the UK becomes more reliant on imported supplies, the use of
biomethane as a domestic source of fuel can lead to real cost savings for businesses – it is already around 20% cheaper than diesel
and will become even more attractive in the coming years.
11. Following the 10 year duty differential that is now in place between gas and diesel, in recognition of the environmental benefits of
gas, major fleet operators are also increasingly confident that they will be able to achieve significant cost savings by converting a large
portion of their HGV fleet to run on gas and biomethane.
How can government better support the use of biomethane/gas vehicles?
12. While this sector has grown impressively in recent years, with around 800 gas and biomethane vehicles now running in the UK,
there are still a number of regulatory obstacles which are hindering the use of biomethane and gas in vehicles.
13. As well as those actions outlined below, ADBA believes that the recommendations agreed by the Department for Transport’s (DfT)
Low Emission HGV Task Force group (which were based on an independent study by Ricardo-AEA which stated that gas and
biomethane were the only ways to decarbonise the HGV fleet) should be implemented as a priority. We believe that government must
address the following policy areas, in order to ensure that the biomethane and gas vehicle market reaches its potential, delivering
significant air quality improvements:
1. Fuel Duty
14. There are a number of policy barriers hindering the use of biomethane and gas in the transport sector. While the gas vehicle
industry welcomed the announcement from Treasury in December that fuel duty differential between diesel and natural gas would be
maintained for ten years, a further differential between natural gas and biomethane would better incentivise the use of biomethane.
2. RTFO equivalence
15. To ensure that the direct use of biomethane in transport is effectively incentivised, ADBA believes government should increase the
support available for biomethane producers through the Renewable Transport Fuels Obligation (RTFO) in order to be equivalent to
support available under the RHI for biomethane grid injection.
16. Currently, the use of biomethane in transport is supported by 2 Renewable Transport Fuels Certificates (RTFCs). This is at present
only worth around 34p/kg of biomethane and is subject to market fluctuation so is not bankable.
17. Given negotiations over the Renewable Energy Directive are likely to be a slow process in Europe, it is imperative that the UK
government shows greater urgency in increasing the support to biomethane under the RTFO to a level equivalent with the RHI.
18. Following the DfT’s Advanced Fuels call for evidence, ADBA is also aware that government is considering introducing a price floor
for RTFCs. Coupled with amending support to offer equivalence for biomethane producers with the RHI, this would help to drive the
biomethane and gas vehicle market. It is worth noting that the RHI biomethane tariff is currently being reviewed by the Department for
Energy and Climate Change, so may be at a lower rate for some larger biomethane projects by the end of 2014.
3. Carbon reporting – biomethane certificates
19. Fleet operators are keen to be able to decarbonise their existing fleet by purchasing certificates, via the Biomethane Certification
Scheme or the Green Gas Certification Scheme (the latter applicable only to biomethane which has been injected into the gas grid),
without affecting any existing contractual arrangements in place.
20. The trading platform connected to the Biomethane Certification Scheme will enable fleet operators to purchase biomethane
certificates directly from producers via the trading platform at an open market determined price. Biomethane users that require
certification of their green gas purchases for statutory compliance will be able to provide this evidence using these certificates.
21. At present , however, fleet operators who have purchased biomethane from suppliers and/or have purchased Green Gas or
Biomethane Certificates are unable to apply Defra’s biomethane conversion factor (0) in GHG emission reports. They must instead use
the compressed natural gas (CNG) conversion factor (2.724/kg).
22. In order to help make biomethane a more attractive option for fleet operators, government should amend the guidelines to
Defra/DECC’s GHG conversion factors for company reporting, allowing fleet operators to apply a real biomethane conversion factor in
this scenario, reflecting the actual carbon value rather than an assumed value. Biomethane certificates should be recognised as the
mechanism to demonstrate the actual carbon value, and government should confirm that, if these are purchased by fleet operators, the
operator can apply a real biomethane conversion factor rather than Defra’s assumed one or the CNG conversion factor.
23. Whilst certificates encourage the production of biomethane and injection into the gas grid, if companies want to physically use
biomethane directly (other than via the gas grid) it is also vital for government to ensure that this is effectively incentivised, which is
why the RTFO needs to be at a comparable level to the RHI.
24. Government should also explore the viability of a “Renewable Methane Incentive”, which could be awarded to the processer of
biomethane irrespective of the final end user, thereby creating a level playing field.
4. Biomethane production
Certainty over financial incentives:
25. To ensure that the biomethane vehicle sector reaches its full potential, it is imperative that strong support remains in place for the
production of biomethane through the RHI and RTFO.
26. RHI support is critical to supporting the injection of biomethane into the gas grid for later extraction and compression/liquefaction as
a transport fuel. The RTFO is essential for supporting the production of biomethane for direct use in transport (ie not via the gas grid),
such as for use in tractors on farms.
27. Fleet operators have expressed their concern to us around the low availability of biomethane, and it is therefore vital that support
under both of these incentives remains stable at an appropriate level, given the relatively low level of current biomethane generation,
particularly compared to our European neighbours.
Food waste collections:
28. Over 40TWh (over 10% of the UK’s domestic gas demand) of biogas could be delivered through anaerobic digestion, but only if the
sector is able to get hold of all the available feedstock. Almost 60% of this potential is based on food waste. Defra confirmed in its
Waste Review that AD offers “the greatest environmental benefit” of any food waste treatment.
29. In England most food waste is not source segregated at present, and as a result only 7% of food waste is treated through AD.
(WRAP data shows that only 27% of English local authorities have separate food waste collections, compared to 95% in Wales, and
Scotland where all urban councils and businesses will have separate food waste collections by 2015 where practical).
30. ADBA believes that government must explore how local authorities can be encouraged to introduce separate food waste
collections. The devolved governments are clearly leading the way in innovative approaches here – the Welsh Government for
example funds up to 25% of a council’s food waste treatment costs, under 15 year guaranteed contracts where source segregated
food waste is treated through AD.
31. Indeed The Department for Transport’s Low Emission HGV Task Force group outlined that getting food waste policy right was
crucial to increasing the supply of biomethane for transport, recommending ‘discussion with DECC, Defra and CLG on waste policy to
assist with removing potential barriers to biomethane supply capacity’.