Hakuna Matata – to worry or not to worry about the policies of biomass

2010-07-09 11:34:00

Paul Hodson, Deputy Head of Unit, DG ENER, European Commission, opined recently that there are no reasons to worry about the future of biomass within the overall transition to a low-carbon society.  “Without biomass,” he said, “you can’t write a de-carbonized story. It’s just not possible.”   Ah, no reasons to worry. As in, Hakuna matata. She’ll be apples, matey.   But we get a slightly less rosy picture from those in the business of financing biomass. Paul Battelle, Deutsche Bank director of renewable energy financing: “Historically, power and energy projects that have undertaken unhedged commodity risk such as electricity price risk and biofuel related price risks have performed poorly for banks. We like green certificates, but especially feed-in tariffs, as they have historically offered good certainty.”   So, perhaps there’s a little too much hakuna in our previous matata. Both Batelle and Hodson share an interest in the “sure thing” – one in the post-carbon society, the other in the making of money. Nothing wrong in that – just doing their respective jobs – one looking after the future of the planet, one looking after the money to pay for it. It’s self-interest at work.   But there are more actors than policy makers and bankers in the world of biomass and power. For example, there are the farmers. Where are they?   Bette Jean Crews, Ontario Federation of Agriculture president, articulates: “Until Ontario Power Generation says they are actually going to buy it, and what they are going to pay for it, farmers need that information before they can do the math and see whether they can afford to grow it.”   Ah, chicken and the egg. “We’ll plan to grow it if you buy it, and you’ll plan to buy it if we agree to grow it.” It’s more than self-interest at work, of course – its the survival instinct. Absent a market maker, buyers and sellers struggle to make transactions, become nervous, and stall.   Even amongst those who have vision to pioneer, there are challenges and reasons for hesitation.   In the UK, the country’s largest power station Drax ahas announced plans that it will convert one of its boilers to biomass. Though the coal-based plant has been co-fired with biomass for the past seven years, converting a single boiler to completely biomass could reduce the carbon dioxide from the plant by 4.4 million metric tons a year, the equivalent to taking 1.2 million cars off the road.   If the experiment goes well, Drax may look at converting its other five boilers to biomass as well. The company says the government’s lack of subsidies for biomass power is hindering the industry’s transition to greener fuels.     The lesson? Biomass is a value-chain of many actors, and renewable energy as a whole involves far more than a mandate. What is required is the catalyst that certainty brings, and certainty flows from solid partnerships and certainty begins with policy stability. That stimulates the utility, who in terms gives the certainty to the feedstock provider and the technology vendor.   Those who have the broadest capital or social base have the obligation to create the rules of engagement by which any new technology is adopted. Let us not forget that the government did more than subsidize the internet, it picked up every dime of the tab for development and deployment for a quarter century. Having been initially funded in 1966, it was commercialized in 1991, and gained traction within just a few years after that.   Where would we be without the internet? Better to ask where would we be without the policy stability that created it? Nowhere, that’s where, despite any well expressed thoughts on the internet’s inevitability from any quarter, EU or otherwise, or any other technology platform, like renewables, that has the power to transform society.   It takes a village to raise a child, and policy writ in 20-year increments to raise a platform. One that is in place, well may we say Hakuna Matata, and not before.

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