Letter to Stakeholders - Distillery Co-products
Updated: Jun 22, 2020
The bioenergy, agriculture and Scotch Whisky sectors are being consulted on how to ensure a fairer market for distillery co-products used in livestock feed in Scotland.
Distillery co-products are an important source of protein and fibre, but the amount used in Scotland as livestock feed has decreased in recent years as prices have increased. This price increase has been partly driven by competing demands for distillery co-products from the bioenergy sector, which uses them for generating low carbon gas.
Rural Economy Secretary Fergus Ewing and Energy Minister Paul Wheelhouse have written to a broad range of stakeholders requesting information from them to understand the impact of UK Government bioenergy incentive schemes on competition for bio-resources and to consider what can be done to promote a fair market for distillery co-products.
The information which stakeholders provide will feed into the Scottish Government’s response to a UK-wide consultation on a successor for the Renewable Heat Incentive for biomethane producers, which offered financial incentives for businesses to start using renewable fuels to generate heat.
The full text of the letter reads:
To Whom It May Concern,
We are writing to you jointly on an important policy matter that has been raised with us by industry stakeholders and we want to enlist your help in shaping our response.
Distillery co-products are an important source of protein and fibre when used for livestock feed in certain areas of Scotland. In recent years, the cost of distillery co-products as a livestock feed has increased and this may be due, in part at least, to competing demands through increased use in bio-energy. This has in turn been driven by UK Government incentive schemes such as the Renewable Heat Incentive (RHI) which we have promoted as an important means of helping businesses and households to decarbonise their heat supplies.
As you may be aware, the RHI is due to close to new applicants on the 31 of March 2021 and the UK Government’s department for Business, Energy and Industrial Strategy (BEIS) is consulting on a successor “Green Gas Support Scheme” for biomethane producers . As such, we believe that now is a good time to consider what we might ask BEIS to do to ensure that the administration of this new scheme strikes the correct approach. This is important given the need to understand any impacts that competition for bio-resources has on those reliant upon them for bioenergy projects, or for alternative uses such as livestock feed, and, in addition, to best understand how to promote a fair market for bio-resources.
In July 2019 we published a study by Scotland’s Rural College which found that the total amount of distillery co-products used as animal feed in Scotland was arround 60kt lower in 2019 compared to 2012. It was identified that this may have been attributable to the relative increase in the use of products for bioenergy, including bionergy projects within distilleries.
The Scotch Whisky industry has taken a lead role in the adoption of bioenergy. The industry’s investments has allowed its 2020 non-fossil fuel energy target to be surpassed four years early in 2016. This leadership must be recognised and we are grateful to the Scotch Whisky industry for the impressive progress it has made towards our ambitious national greenhouse gas emissions reduction targets. However, we must also take care to evaluate how market incentive schemes which promote the use of bioenergy affect traditional users of these resources.
One area which has caused particular concern for some within the Scottish farming community is the classification of distillery co-products as a “waste” or “residue”. The current RHI regulations require that over fifty percent of the feedstock used in accredited schemes must come from “waste” or “residue” sources. This is done to promote the use of feedstocks which maximise upstream saving of methane emissions, such as material which would otherwise go to landfill. In the administration of the RHI, the definition of materials such as draff and pot-ale as a “waste” is considered on a case by case basis and scheme applicants must provide evidence to demonstrate that the materials do not have an alternative use in order to meet sustainability criteria. BEIS have proposed using similar criteria in the new "Green Gas Support Scheme".
We want to ensure that the UK Government promotes a fair market for bio-resources in the design of the new “Green Gas Support Scheme”. Therefore, to help inform our own response to BEIS in relation to the issues outlined above, we would be grateful to receive your response to the following questions:
Do you expect the “Green Gas Support Scheme” to result in continued, reduced, or increased demand for distillery co-products in bioenergy? Please explain and provide any evidence to support your view.
What impact do you think the “Green Gas Support Scheme” will have on the availability and price of distillery co-products for livestock feed?
Should the use of distillery co-products count towards the “waste residue” feedstock requirement for accredited biomethane producers on the “Green Gas Support Scheme”? Please explain and provide any evidence to support your view.
What can practically be done through the administration of the “Green Gas Support Scheme” to ensure a fairer market for distillery co-products?
We also encourage you to respond directly to BEIS on the “Green Gas Support Scheme” consultation and, because we are not routunely able to access the views of respondents from Scotland, we would be grateful if you could also share any response you submit directly with the Scottish Government Energy team. To help us ensure our own submission is fully reflective of your views, please send this, and your responses to the questions above, to GreenGas@gov.scot no later than Noon on Tuesday 23rd June.
Scotland has a long and proud tradition of co-operation and collaboration across its rural economy. The historic relationship between the Scotch Whisky sector and farmers is an asset which adds value and supports jobs across the country.
As we work to address the joint challenge of the global climate emergency and rebuilding our economy, it is important now more than ever to ensure that our policies are fair, equitable and just. In this spirit we look forward to your response and would also be happy to host a roundtable discussion to give feedback on consultation responses, should that be helpful.