Renewable heat sector needs ‘significant increase’ in State support

State payments to producers of renewable heat will have to “significantly increase” in the coming years if a new scheme is to make a meaningful impact on Irish emissions, it has been claimed.

The biomass industry expects that when fully operational, the cost to the exchequer will be between €30 and €50 million per year, compared to the current funding of €7 million per year.

Minister for Climate Action Richard Bruton on Tuesday opened the second phase of the state's support scheme for renewable heat, which is designed to encourage medium sized businesses to move towards using renewable heat technology based on boilers that burn wood chips, or similar technologies.

Sean Finan, chief executive of the Irish Bioenergy Association, said that the current budget of €7 million would need to grow to between €40 million and €60 million to support an industry of meaningful size. "There's only a couple of million allocated for this year, we want that significantly increased. It will only be realised through proper budget. The industry is in complete stagnation, there's been no activity in the sector because no scheme has been announced".

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‘Way too late’

He welcomed the introduction of the scheme, but said that it was too late to make a meaningful contribution to hitting renewable energy targets. “Today is a good day, but it’s way too late. We could have achieved our targets if the government had done this scheme [earlier], which is very disappointing if we have to pay fines. That money could have assisted with the decarbonisation of our heat supply.”

The scheme works by the state making payments to businesses, such as hotels or farms, who have verified that they are meeting their heating needs through the use of renewable heat. With the payment from government, the businesses can invest in the expensive technologies needed to produce the lower carbon power, and pay for the fuel which goes into the systems.

The Irish scheme is designed to avoid the type of abuse that was seen in the Northern Irish renewable heat incentive, in which producers allegedly produced - and were paid for - amounts of heat significantly above what was needed for their uses in what has been dubbed the “cash for ash” scandal. The Irish scheme has several design features to disincentive such activity, including payments that taper off as heat increases, meaning that it would become uneconomical to produce more heat than was being consumed by a business.

Exclusion

Representatives of the renewable gas industry warned that under the newly-announced government scheme, large payments would end up being made to overseas producers of fuel for the power plants. PJ McCarthy, who is chairman of the Renewable Gas Forum Ireland, said that there had been an effective exclusion of renewable gas as an eligible fuel source for the scheme. He said Ireland did not have a significantly developed industry to produce enough wood pellets, for example, to meet the anticipated needs of the sector.

“85 per cent [of the cost of the scheme] will be supplied from jurisdictions outside of Ireland. That money is being spent to support industries in other countries, it’s not being spent in Ireland.”