Renewable Heat Incentive: Temporary changes to wood pellets quality requirement

The UK government, in cooperation with industry, recognises that the supply of wood pellets in the UK has been affected as a result of the suspension of wood pellets sourced or imported from Russia and Belarus, due to the Russian invasion of Ukraine.

We would like your views on the proposed measure to temporarily suspend the fuel quality requirement for Renewable Heat Incentive (RHI) participants using wood pellets. The proposed measure applies to both the Domestic and Non-domestic RHI schemes.

Policy background

In January 2021, new legislation (SI 2021/76) introduced an ongoing obligation on NDRHI and DRHI participants using woodfuel, that is that all woodfuel must meet the standards mentioned in Schedule 4A of the RHI regulations. This new obligation started from 1 April 2022 and aims to improve fuel efficiency and reduce emissions of harmful air pollutants (nitrogen oxides and particulate matter). Specifically for the purposes of this notice we are referring to paragraph 2 of Schedule 4A which requires all wood pellets used by scheme participants to meet the ENplus A1 standard, or an equivalent.

The Russian invasion of Ukraine led to the suspension of the importation of Russian and Belarusian pellets by both the EU and UK in April 2022, and the importation of wood products from either country is banned in the UK sanctions legislation that came into force on 23 June 2022.

It is estimated that up to 40% of the ENplus pellets used in the UK are imported from Russia and Belarus. We recognise that the suspension of wood pellets coming from these countries is likely to have an impact on the availability, and consequentially on the prices of wood pellets in the coming months and through the next winter.

The government has been working with the UK Pellet Council, trade bodies and with industry to assess options to minimise any potential disruption to the supply of wood pellets.

Proposal for a temporary suspension of the fuel quality requirement for participants using wood pellets

We propose to temporarily suspend the fuel quality requirement for RHI participants using wood pellets specified in Schedule 4A(2). This suspension, which would be enacted through secondary legislation would apply to both the non-domestic and domestic RHI schemes.

We judge that a 12-month suspension of this requirement will permit additional supplies of wood pellets to be utilised this winter. In turn it should also serve to mitigate against potential price rises due to a lack of supply. While we recognise that this could have some short-term negative impact on fuel efficiency and air quality in some cases, on balance it is judged as acceptable so that homes heated by biomass do not experience significant price rises or a lack of fuel supply altogether during this period. We will continue to closely monitor the supply chain for wood pellets and intend to reinstate the current requirements after 12 months.

Question 1: Do you agree with our proposal to temporarily suspend the fuel quality requirement for wood pellets under the domestic and non-domestic RHI schemes? Please explain your reasoning and include any evidence you think is relevant.

Question 2: Do you agree that a 12-month suspension would be adequate and provide enough time for the market to adjust to the gap left by Russian and Belarusian pellets?

We also propose to amend the current RHI regulations to give the Secretary of State the power to temporarily suspend the requirement for domestic and non-domestic RHI participants to use ENplus certified pellets.

This power could be used in future situations where the Secretary of State determines that a shortage of pellets risks limiting pellet availability for scheme participants. Providing the Secretary of State with this power would avoid the need for the government to amend the RHI regulations if a future suspension is required. Ahead of using such a power, full consideration would be given to the potential impact on air quality and fuel efficiency, and it would only be used in the absence of other viable options.

Question 3: Do you agree that the Secretary of State should be given the power to temporarily suspend the fuel quality requirements in the future if there is a risk of another pellet shortage?

Please respond by 11.45pm on 11 September 2022.

We will provide further details on taking forward these measures in the government response to this notice.