• The payments for renewable heat, such as the home burning of wood to replace gas or rooftop solar hot water, are much higher than predicted.
• The figures for wind have risen since the autumn consultation document. This means that well-located wind turbines of the 6-15 kW size are likely to produce returns above 13% per year.
• The payments for solar PV have been increased slightly, but do not offer returns as good as wind. Importantly, the government has also signalled that it will allow PV installed at any time over the next 28 months to capture the full feed-in tariff. Previously, the tariff declined for installations made after March 2011.

An earlier article on this topic which looks in more detail on the incentives to take up the new ‘feed-in tariffs’ is here.

Renewable heat incentive
Full details are not yet on the DECC website, but the payments for heat look surprisingly large. A wood-burning boiler will attract payments of 9p per kilowatt hour generated, or almost three times the current price of mains gas. Let’s put this another way. A tonne of very dry wood generates about 5,000 kWh of heat. So the payment for burning this tonne in an efficient stove would, we assume, be £450. Since the price of wood on the ground in southern England is no more than £60 a tonne, this incentive will transform the economics of forestry. Virtually no wood is harvested across much of Britain but landlords will now find it far more attractive to manage their holdings. My recommendation – buy woodland now. Timber is going to be worth a lot more in ten years’ time.

Payments for solar hot water installations are also much higher than expected and will undoubtedly spark a rush to put up rooftop panels. Combined with the boiler scrappage scheme, the solar hot water incentive will encourage many hundreds of thousands of homes to upgrade their heating systems.

Domestic combined heat and power systems are also heavily incentivized, as are heat pumps.

Wind
A 15 kW wind turbine – the sort of size that might sit on a small hill at the back of a village – costs about £50,000 to buy and install. (Installation costs will vary substantially, depending on the proximity of the electricity network.) The draft figures suggested a payment of about 23p per kWh but the final announcement today has increased this to over 26p. My previous calculation suggested a return of about 12% per year, but these new figures take this figure to above 13%. Confusingly, the government’s announcement suggests a figure of ’5-8%’ for the financial returns under its proposals but I believe the figures for community wind are actually much higher and will kick mutual ownership of turbines into life. A turbine of 15 kW should be an easily financeable proposition across much of the UK.

Solar
The payments for PV have been increased from the earlier proposals. The solar installation industry had been sweating nervously about the possibility of a large reduction. Today’s figures suggest that a good south-facing roof location in the English south-west will achieve financial returns of above 8%. The government may correctly have felt that the likely continued decline in the cost of solar panels will gradually improve this figure over the next few years. Surprisingly, the announcement says that the solar PV feed-in rates will last for more than two years. Previously they were slated to fall gently from April 2011. This may produce a perverse incentive. The fall in the price of solar panels – as a result of improved manufacturing techniques and the entry of huge amounts of Chinese capacity – may mean that parsimonious householders wait until 2012 to put up the panels. The government wants us to invest today.

The UK’s woodland was depleted by the needs of industry, urbanization and agriculture and fell to little more than 6% of national land area in the early 1920s. Wood was virtually absent from many lowland areas in England. A recovery in the area given over to woodland means that about 12% of the UK is now forested but this number is only rising very slowly. Net new forestation is now well below 10,000 hectares (100 sq km) a year, much of which is in Scotland.

The UK is significantly behind other countries in Europe.

Percentage of land area under forest and woodland

Source: Combating Climate Change: A Role for UK Forests (Edinburgh: The Stationery Office, 2009), p. 1.

As trees grow, they extract CO2 from the atmosphere by photosynthesis. Young trees don’t capture much as their absolute growth is slow. Old trees have largely ceased to grow and also don’t extract much carbon dioxide. The UK’s newer woods, mostly planted thirty to fifty years ago, are now just past their peak at sequestering carbon. The 2005 figure was about 16m tonnes CO2. In 2010, the figure will fall to about 10m tonnes, and by 2020 the figure could be as low as 5m tonnes (less than 1% of national emissions).

Combating Climate Change, a report commissioned by the Forestry Commission makes a powerful case for a sharp increase in the rate of new planting.[1] It suggests that 1m new hectares, about 4% of total UK land area, should be given over to forest cover by 2050, increasing the planting to almost 25,000 hectares a year, triple today’s rate. This would, says the report, reduce UK emissions by about 15m tonnes of CO2 a year by mid-century. Parliament has legislated to cut UK emissions to about 150m tonnes of CO2 by this date. New forestry could therefore reduce the national CO2 total by about 10% below its expected level.

Is a million new woodland hectares possible? Easily. About 4m hectares are given over to rough pastureland in England alone. I haven’t got the exact figures for Wales, Scotland, and Northern Ireland, but these countries probably have another 4m hectares. So transferring a million hectares into woodland is perfectly feasible.

What about the cost? The report suggests that it strongly depends on what sort of forestry we use. ‘Energy forestry’ using, for example, coppiced hazel and willow for fuels may well have a net cost below zero per tonne of CO2 saved. (That is, the wood fuel costs less than the fossil energy it replaces.) At the other extreme, the creation of new broadleaf woodlands, managed for biodiversity, is estimated to cost about £41 per tonne of carbon dioxide. The Climate Change Committee says that any proposal costing less than £100 per tonne is potentially cost-effective. So although £41 per tonne is almost certainly greater than the cost of, for example, carbon capture at coal power stations by 2050, it is in line with other projects for reducing CO2.

The cheapest form of reforestation – giving over large plantations to single species for frequent harvesting of wood for heating and electricity generation – is broadly unpopular in the UK. Even still, it probably needs to be considered carefully. Using biomass to generate electricity is a very good way of providing ‘dispatchable’ electric power, electricity that can provided exactly when needed. The last few weeks of cold, still weather in the UK should remind us that we need huge amounts of biomass as a reliable source of renewable power as a backup for wind.


Footnote
[1] D. J. Read and others, Combating Climate Change: A Role for UK Forests: An assessment of the potential of the UK’s trees and woodland to mitigate and adapt to climate change: The Synthesis Report (Edinburgh: The Stationery Office, 2009). Available here as a free PDF from the Forestry Commission website.

10:10 footprinter
10:10 footprinter is a free tool from Best Foot Forward, the UK’s leading analysts of corporate footprints. Register here. It offers a calculator with attractive graphics and easy data entry. One of the targets is the list of 2,000 or so businesses that have signed up for the 10:10 campaign. Membership of 10:10 commits a company to reduce its emissions by 10% during 2010 and the footprinter allows its managers to check progress against the target.

10:10 footprinter allows companies to input data from invididual offices, subsidiary companies, and divisions. Inputs can include electricity use, gas, cars, and aviation. Data can be amalgamated and results can be compared between separate parts of the company and for different periods of a calendar year. Best Foot Forward will provide and update all the input data, such as the right figure to use for the carbon emissions from a kilowatt hour of electricity.

The thing I most liked about the calculator was its very effective and colourful graphics. It’s easy to use, even for a small company. For businesses that need to show their emissions performance for supplier audits and other purposes, this is an extremely useful tool. One small criticism: I would have liked to have been able to enter different CO2 figures for different types of cars.

iMeasure
Oxford’s Environmental Change Unit has put together a website allowing individual householders to enter their gas, electricity and water consumption each week. Register here.

The calculator estimates the resulting CO2 emissions for each member of the household and compares it to similar properties for the week in question. At the time I entered my data early in January the website had 500 or so members so the comparative information is already quite good. Over time, this website will develop extremely useful data about patterns of energy use for different types of household. I suggest that the ECI should ask us for a lot more demographic information so that they can get a better feel for what drives household energy consumption.

Very easy to use. Interesting results, and the information from other households will prove an interesting competitive spur. Last week our house was a bit better than average but having five people holed up in the snow all week may have increased our figures this week to above the mean. A must for carbon cutting clubs – individuals can chart their performance against other members.