The Renewables Obligation (RO)
Introduced in April 2002 as part of the Utilities Act (2000) the Renewables Obligation Order places an obligation on all licensed electricity suppliers to produce evidence that they have sourced a specified, and annually increasing percentage, of their electricity supplies from renewable energy sources.
The current target is 6.7% for 2006/07 and will rise to 15.4% by 2015/16.
Following the 2006 Energy Review, the Government announced a number of proposals for changes to the Renewables Obligation, one of which was to review the restrictions on co-firing within the Obligation. The Terms of Reference for the Review on Co-firing can be found here.
On 23rd May 2007, the then Department for Trade and Industry (subsequently the Department for Business, Enterprise & Regulatory Reform) published a consultation document entitled “Renewable Energy: Reform of the Renewables Obligation“. The closing date was 6th September 2007. The text of the response by Martyn Jones MP, acting Chairman of the Wood Panel APPG, can be found here. The text of the response by Alastair Kerr, Director General of the Wood Panel Industries Federation, can be found here.
Renewables Obligation Certificates (ROCs)
Renewables Obligation Certificates are electronic certificates for eligible renewable electricity generated that can be bought and sold by licensed suppliers.
This creates economic incentives for business to reduce pollutants into the atmosphere. For each megawatt hour (MWh) of renewable energy generated, a tradable certificate called a Renewables Obligation Certificate (ROC) is issued. Suppliers can either present enough certificates to cover the required percentage of their output, or they can pay a ‘buyout’ price of price of £30/MWh for any shortfall.
This is similar to the sale of emissions credits within the EU’s Emissions Trading Scheme. As a result, by creating incentives to use renewable sources, the Government provides indirect subsidy through ROCs, placing the wood panel industry at an obvious disadvantage. Thus the energy industry’s greater buying power may price wood panellers out of the market and threaten over 6,000 jobs in the industry.
