In the ‘Future Support for Low Carbon Heat’
consultation, launched in April 2020, the government set out its proposal for a
new Green Gas Support Scheme (GGSS), and Green Gas Levy (GGL). The GGL is a
levy on licensed fossil fuel gas suppliers which will fund the GGSS. BEIS have
now published their response to the recent consultation, and after considering
the results, the government intends to proceed with the launch of the GGSS and
The GGSS is a tariff-based scheme supporting the
injection of biomethane produced via anaerobic digestion into the gas grid. The
GGSS will support biomethane injection from anaerobic digestion only, and only
new AD plants will be eligible. According to the proposed plans, the GGSS is
expected to begin in Autumn 2021 and be open for applications until Autumn
2025. The GGSS comes as the Renewable Heat Incentive (RHI), which has recently
been the main mechanism of government support for biomethane, comes to a close
this March for the non-domestic and April 2022 for the domestic RHI.
Key Aspects to the GGSS
The tariff period will be 15 years, (unlike the RHI
which provided 20 years of support) and based on three tiers of support. The
proposed tariffs are:
- Tier 1 (up to 60,000 MWh): 5.51p/kWh
- Tier 2 (up to 100,000 MWh): 3.53p/kWh
- Tier 3 (over 100,000 MWh): 1.56p/kWh
There will be a tariff guarantee mechanism similar
to the RHI, however it will now be compulsory and there will be modifications
to the commissioning window. There will also be tariff guarantee budget caps,
as was the case in the RHI. These will be set for each financial year.
The GGSS will also have a degression mechanism,
which will occur against a forecast expenditure trigger (not quarter-to-quarter
growth) with quarterly announcements, but there will be no degression for first
6 months. There will also be a 10% degression to all tariffs if the expenditure
threshold is breached. An annual tariff review will occur to amend the tariffs
offered to new applicants if costs change, with the outcome announced every
GGSS and other Schemes
Applicants to the GGSS are not allowed any
interaction with the RHI, to minimise any overcompensation risk. As such, some
detail on the transition period from RHI to GGSS is laid out.
- Where an RHI tariff guarantee application has been withdrawn after the coming into force date of the GGSS regulations, an application may not be submitted to the GGSS.
- Where an RHI tariff guarantee application has failed to meet the 31st March 2022 commissioning deadline they will be able to apply to the GGSS, so long as the AD was not used to produce biogas prior to the coming into force date of GGSS.
As for the Renewable Transport Fuel Obligation
(RTFO), quarterly production can be split between both the GGSS and the RTFO to
enable different consignments of biomethane to receive payments from either the
GGSS or the RTFO within the same quarter. Ofgem and the Department for
Transport (DfT) will work with BEIS to ensure the regulations can be applied to
those claiming GGSS.
Going forward under the GGSS, producers of
biomethane will be required to make a GHG emission saving threshold of 70%. This sees the greenhouse gas threshold lowered
from 34.8 gCO2 eq per MJ (as it was for the RHI scheme) to 24 gCO2 eq per MJ. A new methodology will allow for averaging of emissions across
consignments and accounts for covers on digestate stores. In addition, feedstocks
restrictions that will apply as they do in the RHI – 50% of biomethane must be
derived from wastes or residues.
By the time the scheme is open, all new AD plants
under these regulations in England on the scheme will be required to cover
stores, which will prevent a proportion of ammonia being released. In addition,
there are specific requirements for digestate management, including that digestate
must be spread using low emission spreading techniques. It is expected that
BEIS will look to fund a study into further ammonia reduction technologies,
which may impact digestate management under the scheme in the future.
Heating is responsible for a third of the UK’s
greenhouse gas emissions, and decarbonisation of heat is one of the biggest
challenges we face in meeting our climate targets. Support for the sector and
green gas is key to reducing emissions and the UK government expects the GGSS
to generate 21.6 Mt CO2 eq of carbon savings over its lifetime.