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Defra PES Pilot: Round 3 Energy for Nature

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Defra PES Pilot: Round 3 Energy for Nature Defra PES Pilot: Round 3 Energy for Nature Final Report September 2015 Sally Mills Lynne Osgathorpe Adam Dutton Contents 1 Executive summary ............................................................................................................................ 1 2 Introduction ......................................................................................................................................... 5 2.1 The conservation problem ......................................................................................................... 5 2.2 Ecosystem services and Payments for Ecosystem Services (PES) ..................................... 7 2.2.1 What are ecosystem services? ............................................................................................. 7 2.2.2 What are Payment for Ecosystem Services (PES)? ............................................................ 8 2.2.3 Policy relevance.................................................................................................................... 9 2.3 Biomass to bioenergy – a potential solution for conservation? ......................................... 10 2.3.1 Policy relevance.................................................................................................................. 10 2.3.2 Bioenergy and the RSPB .................................................................................................... 11 3 Energy for Nature ............................................................................................................................. 15 3.1 Energy for Nature and the PES framework ............................................................................ 15 3.2 Energy for Nature and PES development .............................................................................. 23 3.3 Energy for Nature – the model ................................................................................................ 29 3.3.1 The Energy for Nature intermediary ................................................................................... 30 3.3.2 Energy for Nature – Land Manager Model ......................................................................... 33 3.3.3 Energy for Nature – Community Model .............................................................................. 37 4 Business case and structure........................................................................................................... 40 4.1 Business case ........................................................................................................................... 40 4.1.1 Supply ................................................................................................................................. 41 4.1.2 Demand .............................................................................................................................. 51 4.1.3 Business Case .................................................................................................................... 55 4.2 Business structures ................................................................................................................. 60 4.2.1 Potential business structure ............................................................................................... 60 4.2.2 Suggested business structure ............................................................................................ 64 5 Evaluation .......................................................................................................................................... 68 Tables Table 2.1 Average costs incurred by the RSPB for reedbed management based on BAU techniques. .... 6 Table 2.2 Classification of ecosystem services according to the Millennium Ecosystem Assessment (MA) and the UK’s National Ecosystem Assessment (UK NEA). ......................................................................... 8 Table 3.1 Summary of the possible actors who could participate in an Energy for Nature PES scheme and their motivations for becoming involved in the scheme. Based on data gathered through the DECC Wetland Biomass to Bioenergy project and local stakeholder meetings held through the Energy for Nature project. ........................................................................................................................................................ 16 Table 3.2. Underpinning principles that would form the basis of an Energy for Nature PES scheme....... 26 Table 4.1 Habitat areas available for cutting in the Somerset Levels and Moors case study area. In this section we are presenting very rough estimates to work through the issues. ‘Cut Now’ refers to areas which are currently managed by Natural England, Somerset Wildlife Trust or the RSPB. ‘Potential’ is based on previous mapping work describing other landholdings in the area which might be considered lower value and so likely to wish to have vegetation removed. .................................................................. 41 Table 4.2 Relating habitats to vegetation types in the Somerset Levels and Moors case study area. ..... 43 Table 4.3 Dry vegetation yields from areas managed by current and potential partners in the case study area. ............................................................................................................................................................ 43 Table 4.4 The cost of harvesting one hectare of wetland, by wetland habitat type base on the Conservation Biomass Calculator. ............................................................................................................. 45 Table 4.5 The cost of harvesting one dry tonne of wetland, by wetland vegetation type base on the Conservation Biomass Calculator. ............................................................................................................. 45 Table 4.6 Harvesting costs of wetlands specifically relevant to the Somerset Levels and Moors case study area. .................................................................................................................................................. 45 Table 4.7 Estimated total costs of harvesting wetland biomass in the Somerset case study area, now and in the future. ................................................................................................................................................ 46 Table 4.8 The cost of processing one tonne of dry biomass for conversion into heat, gas or electricity. 47 Table 4.9 Cumulative costs of harvesting and processing one tonne of dry biomass for each wetland vegetation type. .......................................................................................................................................... 47 Table 4.10 Average cost of producing different bioenergy products. ........................................................ 48 Table 4.11 The range of products and process for solid wood fuel products in Somerset. ....................... 54 Table 4.12 The annual business case for biomass to bioenergy in the Somerset Levels, starting with the biomass boiler. ........................................................................................................................................... 55 Table 4.13 Approximate yearly budgets for AD systems before and after repaying the capital loan ........ 57 Table 4.14. The business case for biomass to bioenergy in the Somerset Levels: the biomass boiler and an AD unit. .................................................................................................................................................. 57 Table 4.15. Approximate average costs and income per dry tonne of storable energy products ............ 59 Table 4.16. The annual business case for biomass to bioenergy in the Somerset Levels: the biomass boiler, an AD unit and storable bioenergy products. .................................................................................. 59 Figures Figure 3.1 The four possible configurations of buyers and sellers within PES schemes, taken from Defra (2013). ........................................................................................................................................................ 18 Figure 3.2 Payment pathways associated with scenarios 1a and 1b. Sellers retain the ownership of the biomass and a direct payment is made from the buyer to seller. Bioenergy products could be briquettes, biochar or raw (chopped) biomass. ............................................................................................................ 19 Figure 3.3 Payment pathways associated with Scenario 2. This is a two staged pathway with payments moving from buyer to processor, then processor to seller. ........................................................................ 19 Figure 3.4 a-d. Payment pathways associated with Scenario 3. These are two staged pathways that require the payment to move from buyer to processor, then processor to seller. The bioenergy products in Fig. 3.4a,c could be either briquettes or biochar. ................................................................................... 20 Figure 3.5 The two phased configuration of buyers and sellers required in an Energy for Nature PES scheme. ...................................................................................................................................................... 21 Figure 3.6 Five keys steps required in the Energy for Nature Coordinator (i.e. intermediary) role. .......... 31
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