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Contracts for Difference: Environmental Performance of Holders

Volume 711: debated on Tuesday 29 March 2022

7. What steps he is taking to monitor the environmental performance of holders of existing Contracts for Difference in the context of new standards agreed at COP 26. (906342)

The contracts for difference scheme is a flagship scheme that has contributed to our fivefold increase in renewables since 2010. High environmental performance is a prerequisite for contracts for difference applications, and the next CFD round will require even more ambition from applicants.

I, like many people, have difficulty understanding how burning trees on an industrial scale and pumping carbon dioxide into the atmosphere can be any part of a low-carbon solution, or indeed why the British taxpayer subsidises private companies to do this. Given the Glasgow declaration and the new COP26 standards, is it not time to review whether the British taxpayer should remain the world’s largest subsidiser of tree burning and, in particular, whether contracts for difference on biomass awarded before 2015 would now be awarded were they to meet the new standards and targets?

As a condition of receiving payment under the contracts for difference scheme, generators must demonstrate that they meet our biomass sustainability criteria, irrespective of where that biomass is sourced. There is no evidence that deforestation has occurred in the areas from where UK electricity generators source their biomass, but we must make sure biomass is sourced from areas that are managed consistently with sustainable forest management practices.