Britain is on the cusp of a biogas
revolution, and the asset finance industry is in the perfect
position to underwrite it.

This was the message given to Leasing
Life
by long-standing Lib Dem peer and former energy spokesman
Lord Redesdale last month, in the run-up to the UK’s first trade
show dedicated to the anaerobic digestion industry.

He believes that the UK is ready to
follow in the footsteps of Germany, currently the world leader in
biogas production, by building 1,000 new anaerobic digestion (AD)
plants worth up to €5bn within the next 10 years.

Crucially, so does the coalition
government, which announced in its 20 May Programme for Government
that it would “introduce measures to promote a huge increase in
energy from waste through anaerobic digestion.”

Measures are one thing, however, and
means are another – while Redesdale is optimistic that the
government’s position on subsidies for renewable energy will
stabilise and improve going forward, it is clear that investment
must come from the private sector.

Hence ADBA (the Anaerobic Digestion and
Biogas Association), the brand new association chaired by
Redesdale, which will hold its inaugural conference on 7 and 8
July, at the NEC in Birmingham.

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ADBA aims to remove “a number of barriers
from the (AD) industry’s growth”, with one of the most significant
obstacles identified being the difficulty in securing finance for
AD facilities.

The problem, Redesdale said, is one of
understanding – AD equipment is simply not a familiar asset class
in the UK.

On the other hand, should asset finance
providers get involved in underwriting the oncoming wave of biogas
plants, they stand to benefit greatly should the CRC carbon trading
scheme be expanded to include green gas production as a means of
procuring carbon credits.

Risk will also be mitigated by a plant
accreditation scheme currently being developed by ADBA, which will
make due diligence costs far less of an issue for potential AD
lessors.

 

A fuller analysis of the investment
opportunities for lessors interested in the AD industry will be
published following ADBA’s conference in July.