Ensus response to Ofgem s consultation on the Renewables Obligation: Sustainability Criteria for Solid and Gaseous Biomass for Generators

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1 Ensus response to Ofgem s consultation on the Renewables Obligation: Sustainability Criteria for Solid and Gaseous Biomass for Generators Introduction Ensus is the largest producer of bioethanol in the UK. The double counting incentive provided to materials classed as wastes and residues for use as biofuels gives a very high benefit. Also since current biofuel targets do not stretch biofuel production, biofuel producers compete for the available market. Therefore the classification of materials as wastes and residues will have a substantial negative impact on the market for other biofuel producers. It is therefore important that the classification of materials as wastes or residues is made carefully according to RED guidance. Materials should not be classified according to lobbying by companies who might benefit from the classification or by Member States that see this as a way to more cheaply meet their RED targets. The RED provides guidance for wastes and residues and applies to materials used for both biofuels and power generation. Due to the large impact of classification on biofuel production, it is important that materials are classed as wastes and residues with reference to their use for biofuels. Materials should not be considered only with reference to application for power generation, which might subsequently be argued to set a precedent for their classification for biofuel use. Summary The classification of palm stearin and tallow as residue and waste respectively are not justified under the RED guidance. Palm stearin should not be classed as a residue because: The treatment of palm stearin in the RED GHG calculations makes clear that it is a co-product and therefore not a residue. Palm stearin production is a primary aim of palm oil processing and the process has been deliberately modified to produce palm stearin Palm stearin has a reasonably similar monetary values as palm oil If palm stearin were used for energy, then it would need to be made up in current food applications by using more palm oil or palm olein, which would incur substantial direct and indirect GHG emissions. should not be classed as a waste or residue because: has substantial use in several other industries than biofuel, especially the oleochemicals and feed industries, so is not a waste. The value of tallow is comparable to vegetable oils, such as palm oil. Since biofuel production is only a minor use, this value is due to its other uses and not simply because of its use as biofuel. It is therefore not a waste. The rendering process is set up to deliberately produce tallow and tallow is a primary product that the rendering process seeks to produce. is therefore not a residue.

2 Palm oil is a direct substitution for tallow, so if tallow were used for energy, it would need to be made up in current applications by palm oil which will incur substantial direct and indirect GHG emissions. Palm Stearin Table 3 of appendix 2 on page 83 of the consultation document (Ofgem 2011) states that The treatment of oils derived from palm, soy, rape seed and sunflower and of the meal produced as part of the same process in the RED GHG calculations makes clear that these are to be treated as products. This is correct. Table 5 page 86 (Ofgem 2011) states for palm stearin, empty palm bunches, fibre and shell from palm oil production and POME that: These materials treatment in the RED GHG calculations makes clear that they are to be treated as residues. This is incorrect for the case of palm stearin. Palm stearin is derived from palm oil, so its inclusion in this table is inconsistent with the statement in table 3. The energy allocation in the RED GHG calculation allocates the GHG emissions from cultivation and upstream processing of palm oil across the crude palm oil and palm kernel oil and the palm kernel meal according to their relative energy content. The allocation factor is calculated in sheet POFA cell E53 of the JRC spreadsheet (JRC 2008). This calculation shows that the upstream energy and hence GHG emissions associated with fresh fruit bunches (FFB) are allocated across 0.225t of oils(cell I53) and of palm kernel meal (cell I54) per t of FFB. The t of oils corresponds to the total crude palm oil and palm kernel oil yield from palm FFB i.e. it includes the palm stearin fraction of the palm oil. This treatment of palm stearin in the RED GHG calculations makes clear that it is a co-product and it is not to be treated as a residue. EC guidance (ref 1) states A processing residue is a substance that is not the end product(s) that a production process directly seeks to produce. It is not a primary aim of the production process and the process has not been deliberately modified to produce it. About 60% of crude palm oil is separated into stearin (the high boiling point fraction) and olein (the low boiling point fraction), with a stearin:olein ration of 80% (Defra 2011). The separation process is set up deliberately to produce stearin and olein and these products are the primary aim of the process. Palm stearin and palm olein are therefore not residues. Palm oil, palm stearin and palm olein are used in different ratios in many different products in the food industry (Defra 2011). Palm stearin has a reasonably similar monetary values as the palm oil (Figure 2). If some stearin were used for energy use, then it would be made up in current food applications by using more palm oil or palm olein, which would incur substantial direct and indirect GHG emissions.

3 Price $/te It is stated in table 6 page 87 (Ofgem 2011) that: is regarded as a waste. This is a subjective and unscientific statement and cannot be used as the basis for classification for the RED. If a renewable material has significant value as a result of its use in other industries, (other than for use as biofuel), it is clearly not a waste. While as stated in table 6 that tallow is used as a feedstock for the production of biodiesel or bioliquid as fuels, biofuels are only a minor use for tallow and tallow has substantial use in several other industries than biofuel, especially the oleochemicals and feed industries (figure 1). EU Consumption of in 1000 t Oleochemical Industry 29% Feedindustry 25% Pet Food Industry 7% Milk Replacers 3 % Soap Industry 4% Food Industry 5 % subsidiesed applications2 % Fuel Substitute 25% Figure 1 Source APAG The price of tallow is compared with palm oil in figure Prices of oils and fats NW Europe market Crude Palm Oil RBD Palm Stearin Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Figure 2 Source: Oil World

4 The value of tallow is comparable to vegetable oils, such as palm oil. Since biofuel production is only a minor use, this value is due to its other uses and not because of its use as biofuel. Therefore tallow cannot be regarded as waste, as proposed in the Ofgem guidance. Classification as residue A diagram of the animal rendering process is shown in figure 3. The rendering process is set up to deliberately produce tallow and tallow is a primary product that the rendering process seeks to produce. is therefore not a residue. Simplified Rendering Process Diagram Material collected from abattoirs, slaughterhouses, farms & shops Water Fats Rendering Process Solids Protein Meal Food, Feed, Fuel Industrial Chemicals Feed, Energy Petfood Ingredient (Cat 3) PAP Figure 3 Indirect GHG effects It is generally accepted that there are risks of adverse indirect GHG emissions from using some crop products, such as oil palm for the generation of biofuels. It was concluded from ISPRA ILUC expert workshop in Nov 2010, (ref 2, page 47) that Palm oil is a direct substitution for tallow (a co-product from meat production). Substitution of tallow in the oleochemicals industry will therefore incur similar indirect GHG emissions as for palm oil. Work by AEA / E4tech sponsored by UK RFA (AEAT 2008) showed substantial adverse indirect GHG emissions from using tallow for biofuel. This will also apply to its use for other energy use. The UK has previously led Europe on the issue of avoiding the use of biofuels that cause indirect land use change and biofuel targets were reduced due to concern about indirect GHG emissions. The UK should not encourage the increased use of tallow for energy generation, which would incur substantial indirect GHG emissions, by classing it as a waste or residue,

5 References AEAT 2008: Advice on the economic and environmental Impacts of Government support for biodiesel production from tallow, AEAT, E4tech, April 2008 Defra 2011: Mapping and understanding the UK palm oil supply chain, Proforest for Defra, Apr 2011 EC 2010: Communication from the Commission on the practical implementation of the EU biofuels and bioliquids sustainability scheme and on counting rules for biofuels (2010/C 160/02), June 2010 JRC 2008: Biofuels pathways RED method Nov 2008, JRC 2011: Critical issues in estimating ILUC emissions Outcomes of an expert consultation Nov 2010 Ispra, Italy, Marelli L, Mulligan D, Edwards R, June 2011 Ofgem 2011: Renewable Obligation: Sustainability criteria for solid and gaseous biomass for generators., Ofgem Sep 2011.