“Heating Empty Buildings”: Billion Pound British Biomass Subsidy Scandal

Inside a Wood Pellet Heater.

Inside a Wood Pellet Heater. By H. Raab (User:Vesta) (Own work) [GFDL, CC-BY-SA-3.0 or CC BY-SA 2.0 at], via Wikimedia Commons

Guest essay by Eric Worrall

h/t Breitbart – The Times reports that a badly designed British biomass subsidy has led to a gold rush of people cashing in, by heating empty buildings.

Taxpayers face £1bn bill over green energy subsidy scandal

A botched green energy scheme that has ignited a political crisis is on course to cost taxpayers more than £1 billion.

The Treasury faces the bill after a massive overspend on subsidies encouraging farmers and businesses in Northern Ireland to run eco-friendly power schemes. The Renewable Heat Incentive (RHI) was supposed to cost £25 million in its first five years but the bill is likely to reach £1.15 billion over 20 years.

The Treasury can claw back £490 million from the block grant to Northern Ireland, leaving £660 million to be financed by taxpayers in England, Scotland and Wales. The scandal threatens the future of Northern Ireland’s first minister Arlene Foster, leader of the Democratic Unionist Party (DUP). She was the minister responsible when the scheme was set up in 2012. It was intended to boost renewable energy, but critics say Mrs Foster and her officials did not cap costs.

Businesses that signed up could receive £160 from the government for every £100 they spent on fuels, such as wood pellets, burnt in biomass boilers. As people spotted the gains to be made, there was a surge in applications and costs spiralled.

Flaws in the scheme were exposed by a whistleblower who said businesses were buying biomass boilers solely to collect the subsidy. The whistleblower alleged that one farmer expected to make £1 million over 20 years for using a biomass boiler to heat an empty shed, while heating a number of empty factories would net their owner £1.5 million.

Read more (Requires Free Registration): http://www.thetimes.co.uk/article/61055f62-d132-11e6-b721-fbd88801f92d

To me this farce illustrates the utter chaos of British green energy politics.

Clean air laws passed in the 1950s discouraged use of biomass and coal for heating. The laws were widely ignored when I lived in Britain, pretty much everyone on my street had a coal burner, to try to escape skyrocketing gas and electricity costs. But the laws are nevertheless still on the statute books, and I have heard they are rigorously enforced in really high density urban areas.

Now thanks to this botched subsidy, businesses in Northern Ireland are being paid so much to burn smoky biomass fuel, mostly imported from the USA (Britain doesn’t have enough forests to keep up supply), that it is worth their while to heat empty buildings, just to collect the subsidy.

You couldn’t make it up.

Advertisements

100 thoughts on ““Heating Empty Buildings”: Billion Pound British Biomass Subsidy Scandal

  1. No wonder that Stephen Streeter and Henry Adams left Britain in 1638 to move to the Massachusets colony.

  2. Clear cutting and shipping pellets long distances to heat empty buildings can be explained with the ultimate Green excuse line coined by Edward Markey as “who could have known.” With that strategy you can destroy worlds and civilizations.

  3. This is what happens when politicians try to be engineers and scientists. Sadly they are also slow learners, which is probably why they entered politics rather than engineering or science.

    • If someone hasn’t beaten me to it…..
      “If you CAN ….. DO!
      If you CAN’T …. become a Teacher
      If you can’t teach …. become a Teacher of Teaching
      If you can’t do that, become a [name your choice!] Realtor/Used-Car Salesman.
      If you can’t do that either, become a Politician

      • Ross, you missed out after “Become a Teacher of Teaching”
        “His was the higher aim, the broader reach,
        To teach men how to teach men how to teach.”
        Can’t remember who said this, though.
        Anyone?

      • My, axiom went a bit differently;

        …If you can’t teach, become an administrator.

        Its the perfect fit for those who do not know how to do anything, don’t know how to show anyone how to do anything, but have no compunctions against trying to tell everyone else what to do.

    • Sorry for the very late response but exactly! The wonderful Prime Minister of Canada dropped out of Engineering in university – just couldn’t cut it!

  4. It says the government would pay them £160 for every £100 they spent on biomass fuel. If there ever was a grant scheme specifically designed to promote waste and cheating, this was it.

    When politicians cook up “green” schemes, common sense is obviously not part of the planning process. I suppose the virtue of “saving the planet” makes these twits blind to human nature.

    • The problem with the (mainly-left) mindset, is that they think humans are inherently good, and will not lie, cheat, or take advantage of such an obviously decent support initiative. Just like the pink-bats scandal in Australia. They forget real human nature entirely, and common sense flies out the window with it.

      • “The problem with the (mainly-left) mindset, is that they think humans are inherently good, and will not lie, cheat, or take advantage of such an obviously decent support initiative”

        I can’t think why, since lefties generally lie, cheat, and take advantage every chance they get.

      • Barbara Skolaut
        January 3, 2017 at 5:49 pm

        “The problem with the (mainly-left) mindset, is that they think humans are inherently good, and will not lie, cheat, or take advantage of such an obviously decent support initiative”

        I can’t think why, since lefties generally lie, cheat, and take advantage every chance they get.

        I think you’re forgetting that morals,ethics and rules are “for the other people”

        SteveT

      • I think it’s interesting that this blog has a “Cancel reply” button, but not an “Edit” button. …. I say this, having deleted what I was going to write here — a poor attempt at a clever pick up where CommonA left off.

    • I would like to think that it was caused by a typo; and should have been £100 subsidy for every £160 spent.
      Then again the reality is probably one of sheer stupidity!

    • I don’t see this as ignorance of human nature as much as it’s ignorance of how markets work. A subsidy is generally intended to modify the profit incentives present in a market system. Had they made the subsidy, say, 40% of the cost of the biofuel burned, that might have been sufficient to cause some people to switch from their present fuel source. If not, the subsidy would have to be raised to effect the change. The higher the required subsidy, the less sense it makes economically, since it’s encouraging the use of a resource that’s an inefficient choice at the outset (before the subsidy.)

      Additionally, basing the subsidy on the cost of the biofuel burned builds in an escalation of the cost of the subsidy, for if the subsidy is high enough to encourage the switch the resulting increase in the demand for biofuels will raise prices. (Apparently the price of wood chips in the UK is now high enough to justify transporting them across the Atlantic, and away from North American areas that suffer much colder winters than the UK.) To prevent the escalation of the cost of the subsidy, it shouldn’t be tied to usage of the subsidized product, but to some other factor of production, like the percent of electricity generated, for example. Thus, if a factory substituted biomass for half of its electricity generation it would receive a subsidy based on that, rather than on the cost of the biomass.

      But setting the subsidy at 160% of the cost of the biomass was idiotic. They created a market with a marginal cost that was always going to be easily covered. So, if the fixed costs (boilers, buildings) could be captured in a reasonable time (hence the use of existing empty buildings, and possibly even existing unused boilers in some cases), maximum usage was assured, with no limit to the upside other than a lack of empty buildings, or boilers becoming too pricey or scarce. Furthermore, the price of the biomass became worse than irrelevant; actually a higher price was preferred since it would generate profits faster and recover any fixed costs faster. All in all, a nutty scheme that could only be created by someone with no understanding of markets whatsoever or, conceivably, by someone profiting from the scheme itself or, more likely a combination of the two.

      • Who needs expensive boilers? Just burn the imports on an open fire and collect 60 quid per 100 quid’s worth burnt. Come to think of it why affect the balance of payments like that and just let the entrepreneurs burn 100 pound notes in exchange for 160 quid, assuming they’re recycled paper notes of course.

    • At least this subsidy is helping the poor – those with only enough money to afford to own empty cold buildings. It is not like it is only helping the rich who own a few heated empty buildings. They don’t need to start heating they already…

      Oh wait…

      /sarc

  5. And here I thought the Spanish geniuses who developed the ‘solar power at night’ diesel generators had a lock on troughing greatness. British inventiveness . . . I was wrong.

  6. Just the tip of the iceberg, buildings with windows constantly open to let the heat out or hot water running to waste, pure greed facilitated.

  7. “Businesses that signed up could receive £160 from the government for every £100 they spent on fuels, such as wood pellets, burnt in biomass boilers.”

    Meanwhile, in Germany, Angela Merkel says that she discovered that the most serious threat facing her country is the threat from internal Islamic terrorists.

    You’re right, Eric, you really couldn’t make it up.

    Of course, the thing we all have to bear in mind is that all of the people who object to the governing elite, all the people who voted for Donald Trump, all the people who voted for Brexit, all of the people who object to the billions of state $|£|€ being used to subsidise ‘Green’ energy schemes – you and me in other words – we are all poorly educated, low earners, low achievers, folk who have never travelled anywhere, run anything, employed anyone or understood the bigger picture.

    Best to leave it to the Establishment. They’ll know exactly what to do.

  8. Dang Democratic Unionist Party, when will they ever stop DUPing the public???
    Wake up and smell the carbon AGW people, Even burning biomass still produces your much vilified CO2

  9. “You couldn’t make it up.” Successive UK Governments in thrall to everything green and sustainable prove you are wrong. The lunatics in charge of the UK energy policy prove that any madcap green idea will have taxpayers’ money thrown at it. See http://www.dailymail.co.uk/news/article-4081766/18million-tidal-energy-scheme-stops-working-just-three-months.html and http://www.dailymail.co.uk/news/article-4078820/The-great-green-guzzler-Monster-digesters-meant-guzzle-waste-churn-eco-friendly-energy-fed-CROPS-produce-pitiful-levels-power-cost-216m-subsidies-HARM-environment.html

  10. Oh my sainted giddy aunt. When we finally get out of European Union UK politicians need to start answering to the people. It’s clear many of them are just not up to it.

    • I I think the word you are looking for son of mulder is ‘most’ not ‘many’. Probably ‘nearly all’ is even more accurate.

      • What form of insanity has struck the British? Is this some virus from the labs of Saddam Hussein? Some mutagenic chemical left over from WWI? Some hazardous insecticide sprayed on the ivy-covered halls of Academia? What?

  11. A few days ago there were news about enforcing some silly measures because of air pollution in Sarajevo, involving using cars every other day. A few subsidies like this in Sarajevo, all in good faith of doing good for the environment, and it will become horrible.
    BTW, I know of a diploma thesis that correlated the advancing spread of natural gas network, and reduction of particle pollution (and fog duration and frequency) in the city of Zagreb. People burned coal and wood before natural gas became dominant. Now the worst air pollution measurements in Zagreb are 10 times better than the values in Sarajevo.

  12. Technically, we are the UK of GB and NI.
    Therefore this muck up is (N) Irish, not British.

    Still stupid though.

    • Not to be pedantic :-) Ireland too is a part of the British Isles, being the geographic name of the British Archipelago, so Irish, Scots, Welsh, Manx, Cornish, English are ALL British.

    • @M Courtney,

      The demonym for the United Kingdom is British. So calling this a Northern Irish scheme is not wrong but (as it happened in the UK) calling it a British one is not wrong either. Especially as the non-NI taxpayers are on the hook for a lot of the cost!

  13. Just like in Spain, running diesel generators to shine light onto solar panels to collect high prices for solar generated power.

    • Why waste free fuel? Instead,

      “Get you a copper kettle, get you a copper coil,
      Cover with new-laid whiskey mash, nevermore will you toil”.

      w.

      • Build you a fire with hickory, hickory, ash and oak
        Don’t use no green or rotten wood, they’ll get you by the smoke
        You’ll just lay there by the juniper while the moon is bright
        Watch them jugs a-filling in the pale moonlight.

        This is my favourite version

    • burn it? why not sell it on and just say you did?
      then you get 260 back for your original 100
      i’m sure i’m not the first to think of it…lol

      • gnomish,
        Because that would be illegal. What they are doing now is perfectly legal and produces a nice profit. No sense getting too greedy and risk a fraud conviction.

      • gnomish
        January 4, 2017 at 2:46 am

        burn it? why not sell it on and just say you did?
        then you get 260 back for your original 100
        i’m sure i’m not the first to think of it…lol

        I’m sure some may have thought it, but doing it the legal way means you know you’ll get the chance to spend your profits. The second route – who knows, especially if they try to find reasons for not paying up.

        SteveT

  14. There is no piece of legislation that some clever people can’t find a way to subvert to their own advantage.

    • Dear commieBob:
      Stand that on its head…..
      Clever people will *create* legislation that can be subverted to their advantage.
      … On reflection, methinks this is not far from the “Post-Truth, Post-Altruism”, “First-to-the-trough-wins! ” attitude that seems to prevail in corridors of power anywhere near THE MONEY.

    • The road to hell is paved with good intentions. Or lawyers are scum, seeing how most legislatures are swirling cesspools of barristers.

      • The road to hell is paved with lawyers.

        [Rather, “The road to hell should be paved with lawyers.” .mod]

    • “…legislation that some clever people can’t find a way to subvert…”

      Australia used to have a 150% tax discount for film production. The results were obvious… a lot of movies were made to cut somebody’s tax liability… none of them watchable.

  15. “could receive £160 from the government for every £100 they spent on fuels,”

    Arrgh tis an Irish way of doing business so it is ;) Guiness anyone?

    Cheers

    Roger

    My name is irish so I can understand;)

  16. Gimme some cash, I heat with wood in a fireplace insert. 78% thermally efficient and with the EPA approval. 75°F inside regardless of outside conditions. But I don’t fuel it unless I am home.

    Which reminds me, time to split more wood. Getting cold tomorrow.

    • Ditto. But it is cold now and the wood is split and in the thermally efficient wood-burning stove.
      They claim it might warm up to about freezing by this coming Sunday.

  17. What would you do?

    [i]Businesses that signed up could receive £160 from the government for every £100 they spent on fuels, such as wood pellets, burnt in biomass boilers.[/i]

    Remain Calm, Your Government Knows Best.

    • RoO,
      Near the top, there is a link to the Test page.
      Have a look there to see why [i] did not get the italicized text you wanted.

  18. I seem to recall a similar consequence for air conditioning gasses where factories in China we’re being paid to destroy certain gasses for more than it cost to produce them

  19. Reminds me of the chap in India who cashed in on the bounty on cobras…by breeding cobras. Probably apocryphal, but here in Toronto, the city government pays landlords to keep vacant buildings vacant, so I sense a pattern. No, I can’t understand the logic.

    Maybe it takes a published climate modeller?

    • Wasn’t there a factory in China where they were paid to get rid of CFCs. The payment was so generous that it paid them to make more CFC and then destroy it in a cash making Circle.

      • Here in Canada during the 1970s, the government had a huge tax credit for investing in Canadian film production. My college instructor was an actor back in those days, and he said that every Monday, a briefcase of cash would be delivered to the set, courtesy of a dentist or lawyer who would get a massive right off.

        And, no, you don’t want to see many 1970s Canadian movies. Trust me, I had to watch one or two every week for two years (many starring my instructor).

  20. I could see heating empty buildings during winter in order to prevent the pipes from freezing and bursting, but this?

  21. Instead of heating empty buildings, they have rather burning their pellets in boilers/steam generators to produce electricity and sell it to the local energy company. So they can double the benefit.

  22. Credit where credit is due it was the BBC Northern Ireland that first highlighted the problem. Stephen Nolan did a piece before Christmas on the whole sorry story of politicians who didn’t understand what they were doing being taken in by green zealots and subsidy junkies. If memory serves correctly at one point in the programme someone says the only people who didn’t see the problem were the politicians and civil servants running the scheme.

    It was only broadcast on BBC Northern Ireland late in the evening and fortuitously I happened to see it whilst scrolling round looking for some news.

    Available on the iPlayer for a few days for those with access

    http://www.bbc.co.uk/iplayer/episode/b088p3l6/a-nolan-show-investigation

  23. Eric Worral says: “The laws were widely ignored when I lived in Britain, pretty much everyone on my street had a coal burner,”
    Is that supposed to be some sort of evidence-based conclusion? Some people in the one street had a coal burner so he can draw the conclusion that the law was ‘widely ignored’? Amazing! As someone who has lived in more than ten different places in the UK over the past 70 years I can say that Mr Worrall’s conclusion is way off mark. And what’s a ‘coal burner’, anyway? People used to have coal fires in their houses. Nowadays houses are built without chimneys and have been for some time. Mr Worrall should have a look at some old photographs of towns (where most people in the UK live) in the days before the Clean Air Act and compare them with photographs taken after the Act was passed.

    • He probably means coal bunker along with an open fire with a back boiler. I know many of the older houses I lived in in the UK had one, heck I even remember having to fill and use a coal scuttle! As you say, new homes do not have open fireplaces and chimneys any more and rely on gas fired central heating or electrically powered heating (Night storage etc).

    • My parents home had a coal bunker.

      It was an outside building about a metre high by about 1.75 metres wide and 1 metre deep. The coal men delivered the coal pouring it in through an opening at the top. There was a door on the facing side which was probably about 30 by 30cm out of which my Dad (or I) would shovel coal into a bucket to bring into the house.

      My grandparents had a cellar. One part of the cellar was devoted to storing coal. The coal man would pour the coal through an opening at the side of a path that led around the house. This opening allowed the coal to be dropped into the cellar, where a small mound of coal would be formed. My Grandparents then had to go down into the cellar each day to fill a bucket (well several since they had coal fires in all rooms apart from the kitchen) to bring it upstairs to feed the fire(s).

    • Eric Worral says: “The laws were widely ignored when I lived in Britain, pretty much everyone on my street had a coal burner,”

      I think that this statement is probably not correct, and is based upon a misunderstanding of the market place.

      Of course many people had coal fires, but the coal that was being sold and used changed when the Clean Air Act came into force (and it is even possible that the Act was phased in, in different areas at different times, such as city metropolitan areas compared to rural counties). Smokeless coal was introduced, and was the only variety that an ordinary purchaser/householder could reasonably obtain. This was cleaner to handle (being more like round brickets), but never worked as well as the ‘real’ thing.

      Of course, if people had stock piles of the old traditional coal, no doubt they used that up before buying the new smokeless variety that was being sold.

      • As I understand it, the “coal” emissions were burnt out of the coal to make “smokeless coal”, like charcoal? Just not done in cities. But yes I agree, the clean air acts of that time did improve air quality.

    • I guess the UK is a big place. At least 3 out of 4 houses on my street burned wood and coal, or more precisely briquettes. Coal was good for overnight, kept burning longer.

      • Agreed, long burning coal over night heated water for the morning and the house. Was borderline in the 70’s in my recollection, it was cold all the time, ice on windows etc.

      • The UK is about as big a Victoria, Australia. New South Wales is just over 3 times that, and bigger than Texas, US. And like with most Australian conurbations, we huddle the coast.

  24. You could not make this up if you tried.

    Biomass creates far more CO2 than burning coal! So not only is this costing a ridiculous amount of money, it is adding far more CO2 than would be the case if energy was being produced by coal (let alone gas which produced even less CO2 than coal).

    Thus the Government has produced a policy that has resulted in increasing CO2 emissions. Well done! Do these guys never think? Wasn’t this result obvious and entirely foreseeable. heads should roll, and every MP who approved the legislation and scheme should be made to repay the tax payer.

    It is about time that there was real accountability in Public Office.

    • Wood pellets are renewable, thereby within the mantra of the Idiocracy. Never mind the CO2 they produce, renewalbility is all that matters.

      • >>Are they shipped to the UK with ships burning wood pellets?

        Aye, Lad. She is called the Titanic II, with 24 double-ended boilers all fed with wood pellets. And we expect she will have a long and illustrious career on the high seas. Oh, wait a minute….

        R

  25. This reminds me of when some Spanish solar panel owners found that they could make money by running diesel generators to run electric lights to shine on their solar panels at night. Spain lost billions and it’s solar power industry has collapsed because it was nothing more than a stupid, misguided prayer from the beginning. Industry and employment have suffered. Massive transfers of money flowed from the lower and middle classes to rich people and system gamers. And idiots like Griff say things like “HELL YES, give us more of THAT!”.

  26. Greenie policy has elements of the Theater of the Absurd. Pretending to “save the planet”, which itself is a ruse, they do way more harm than even the “good” they pretend to do. As usual, the winners are those able and willing to game the system, profiting off the backs of everyone else who wind up paying higher taxes, higher energy bills, and higher costs of everything they buy. It is a perfect storm of idiocy, lust for power, corruption, and greed. In another time, Greenies would be tarred and feathered, and rode out of town on a rail.

  27. I live here in Northern Ireland and the brown stuff has really hit the fan over this disgrace. Nobody wants to take responsibility for it and it’s a real farce. Something our children will have to pay for.

  28. And with calls for Arlene Foster to resign over the ridiculous mess, she cries ‘misogynists!!’.

    Typical.

Comments are closed.