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Should the UK end tax breaks on burning wood for power?

by | Jun 15, 2020

A new report from climate change think tank Ember reveals the cost of burning wood for power, with energy billpayers committed to subsidies of more than £13 billion, including £10bn at Drax power station alone. In addition to the direct subsidy, we estimate biomass generators are receiving carbon tax breaks of £333 million a year.

The UK has now left the EU, and there’s an opportunity to reassess carbon pricing – including in the design of the UK emissions trading system. In this research, we demonstrate why the UK should abandon the carbon tax break afforded to large power stations burning biomass (mostly wood in the form of pellets or chips).

Unlike other large thermal generators, biomass power plants do not pay for their carbon emissions. This is because biomass is assumed to be inherently carbon neutral under the EU Emissions Trading System and the UK Carbon Price Support. That assumption, however, is not supported by the weight of recent science, or by data provided by power plant operators themselves.

As other countries consider biomass as a bridge out of coal, the UK can send an international signal that biomass must no longer be assumed to be carbon neutral.

Phil MacDonald, Analyst at Ember, said: 

Biomass power stations are in receipt of a huge tax break, based on an outdated assumption that burning wood is carbon neutral.
 
Meanwhile renewables like offshore wind guarantee emissions cuts – for less than half the price of burning wood for electricity.
 
Subsidies and tax breaks for biomass push up energy bills and taxes, without a clear benefit for the climate.
 
As they continue to receive billions of taxpayer subsidy, the onus is now on the biomass industry to be transparent about the true emissions impact of their technology.

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