Page 1  
Title: Proposed regulation of the sales, distribution and marketing of : 
• Wet wood (> 20% moisture) sold in units up to 2m3 
• Bituminous house coal  
• Banning manufactured solid fuels with sulphur content over 2%  
RPC Reference n o: RPC-4233(1) -DEFRA  
Lead department or agency:  
Department for Environment, Food  and Rural Affairs  
Other departments or agencies:   Impact Assessment (IA)  
Date: 11 October  2019  
Stage:  Final  
Source of intervention: Domestic  
Type of measure:  Secondary legislation   
 
 
 
 
 
 Summary: Intervention and Options  
  RPC Opinion:  
 Cost of Preferred (or more likely) Option  – Option 2  
Total Net Present 
Value  Business Net 
Present Value  Net cost to business per 
year (EANDCB)  
 In scope of One-In, 
Three -Out?  Measure qualifies as  
     £7,858.3 m  - £109.3 m £11.7m Out of Scope   
What is the problem under consideration? Why is government intervention necessary?  
The UK must,  under the National Emissions Ceilings Directive (NECD) , reduce  overall national  emissions of particulate matter 
with a diameter of 2.5 mic rometr es or less (PM 2.5) alongside oth er key pollutants , to protect its citizens and environment from 
the resultant d amage . Domestic burning of solid fuels is by far the largest source  of PM 2.5 emissions. There is a strong body of 
evidence link ing increased mortality to long -term exposure to PM. The domestic fuels market does not currently take into account 
this negative externality. Sulphur dioxide  (SO 2) is another key pollutant  emitted from the burning of domestic fuels. I n recent 
years there has been an increase in  the availability of  cheap high sulphur smokeless  fuels on the market. The government is 
taking action to protect the public and the environment from the damage caused by exposure to these pollutants  (with co -benefits 
for reducing other toxic emissions  to help meet its  domestic, EU an d International law obligations) . 
  
What are the policy objectives and the intended effects?  
• A cleaner, healthier urban and rural environment, benefiting people and the economy . 
• Reduce the impact on health and the environment from PM and SO 2 pollution (including reducing mortality from cardiovascular and 
respiratory diseases and from lung cancer) . 
• Address the lack of information whereby consumers are un -knowingly purchasing and burning fuels which are bad for their health and 
the environment  and help consumers make the shift to cleaner alternatives .  
• Contribute towards achieving our domestic, EU and International law obligations ( 2020 ), domestic, EU and International Gothenburg  
Protocol  emissions ceilings for PM 2.5 and SO 2  and more stringent domestic and EU ceilings for the same pollutants for 2030.  
• Make  enforcement easier  for Local Authorities by regulating at point of sale , rather than point of use . 
• Reduce energy bill s for consumers who are un -knowingly purchasing and burning low cost -efficient solid fuels, in particular wet wood .  
 
What policy options have been considered, including any alternatives to regulation? Please justify preferred option (further 
details in Evidence Base)  
Option  0: Baseline/Do nothing approach  – continue with current voluntary arrangements and introduce no restrictions . This is the 
baseline against which the other options are assessed . 
Option 1 – Voluntary approach  –a government communications  campaign  alongside continued support for voluntary industry schemes 
promoting the sale of cleaner fuels . 
Option 2 (preferred option) – regulating  the sale , distribution and marketing of bituminous coal  and wet wood (>20% moisture) when 
sold in units up to  two metr es cubed  and restrictions on the sale and distribution of high sulphur manufactured solid fuels i.e. fuels with 
a sulphur content greater than 2% . An information campaign to raise public awareness of highly polluting fuels  would be conducted 
alongside . This option  delivers the best balance between realising the air quality and health benefits as soon as possible and managing 
the impact on households, businesses and local authorities.  
Other options considered : a) Regulating the sale of fuels in u rban areas only : approxi mately 50% of PM pollution comes from 
outside a local area ; restricting legislation  to urban areas would deliver less air qual ity benefit across the country ; b) modifying existing 
legislation  on smoke control areas ; this is being taken forward under separate legislation  c) taxation was felt not to deliver change at 
the pace needed  to meet our legal obligations  and d) stove scrappage scheme which had prohibitively high costs as compared with 
the proposed option .  
Will the policy be reviewed?  Yes  If applicable, set review date:  12/2025 
Does implementation go beyond minimum EU requirements?  No 
Are any of these organisations in scope? If Micros not 
exempted set out reason in Evidence Base.  Micro 
Yes < 20 
 Yes Small 
Yes Medium 
Yes Large 
Yes 
What is the CO 2 equivalent change in greenhouse gas emissions?  
(Million tonnes CO 2 equivalent)    Traded:    Non-traded:              
- 0.43 
I have read the Impact Assessment and I am satisfied that, given the available evidence, it represents a 
reasonable view of the likely costs, benefits and impact of the leading options.  
Signed by the responsible SELECT SIGNATORY :   Date:        
 
2 
 
 Summary: Analysis & Evidence  Policy Option 1   
Description : Communications  campaign targeted at raising public awareness of the negative health and 
environmental impacts of domestic burning alongside voluntary industry schemes.  
 
FULL ECONOMIC ASSESSMENT  
Price Base 
Year   2017  PV Base 
Year  
2020 Time 
Period 
Years  11 Net Benefit (Present Value (PV)) (£m)  
Low:  28.2 High: 367.1  Best Estimate : 128.1  
 
COSTS (£m)  Total Transition   
 (Constant Price)  Years 
 
 Average Annual  
(excl. Transition) (Constant 
Price)  Total Cost   
(Present Value)  
Low  0.0 1 -0.1 -1.3 
High  0.0  -0.1 -1.1 
Best Estimate  
 0.0 -0.1 -1.2 
Description and scale of key monetised costs by ‘main affected groups’  
The monetised business costs under Option 1 pertain to those businesses which voluntarily subscribe to the Ready to 
Burn scheme. The scheme currently covers less than 1 percent of businesses in the market although it should be noted 
this includes the bigge st fuel manufacturers in terms of the tonnage of domestic fuel sold on the market. The costs  to 
business  will vary depending upon the size of business.  There are also costs to government from the public information 
campaign. We have assumed the government will set aside  £220,000 over a three -year period i.e. from 2020 to 2022  for 
the campaign . The funding will be subject to approval.  The analysis show s a negative total cost (i.e. a saving) for 
businesses, households and the Government, estimated at less than £1 .2 million for the 2020 -2030 period in the central 
scenario.  
 
 Other key non -monetised c osts by ‘main affected groups’  
 
No further costs to the business or household sector are anticipated under this scenario.  
BENEFITS (£m)  Total Transition  
 (Constant Price)  Years 
 
 Average Annual  
(excl. Transition) (Constant 
Price)  Total Benefit   
(Present Value)  
Low  0.0 
N/A 2.9 27.1 
High  0.0 39.5 365.8  
Best Estimate  
 0.0 13.7 126.9  
Description and scale of key monetised benefits by ‘main affected groups’  
Under Option 1 the benefits of reduction in air pollu tion arise as a result of a reduction  in the consumption of wet wood and 
bituminous coal following  the communications campaign. We use the  UK damage cost valuation approach to estimate the 
benefits of reducing PM 2.5 and SO 2 emissions as set out in the Green Book supplementary guidance for valuing changes 
in air quality . The change in greenhouse gas (GHG) emissions is  valued using the Green Book guidance and  is monetised 
using BEIS non -traded carbon values.   
We have assumed the communication campaign results in a 1 percent shift from wood  purchased and burned wet into 
wood burned dry and from bituminous coal into manufactured solid  fuel coal . The figure for the assumed effectiveness of 
the communications campaign is drawn from an analysis of a voluntary industry scheme that encoura ges the sale of 
cleaner fuels and a literature review . We estimate the central present value benefit s from the ass ociated reductions in 
PM 2.5 and SO 2 to be  £126.9 million. 
Other key non -monetised benefits by ‘main affected groups’  
The monetised benefits are likely to substantially underestimate the full social benefit. Reducing emissions of air pollutant s 
will benefit natural ecosystems, biodiversity and th e wider environment which ha s not been monetised  here. There are also 
secondary impacts that are likely to arise from the regulation e.g.  supporting innovation in abatement equipment/green 
technologies  and red uctions in emissions of other pollutants and toxins such as arsenic, lead or mercury that have not 
been monetised as part of this analysis . 
Key assumptions/sensitivities/risks                                                                        Discount rate 
(%) 
 3.5%  
Low and high benefits represent the uncertainty in health benefits from improved air quality (damage costs). The high NPV 
combines low business costs with high damage cost valuation (high benefits), and the low NPV combines high business cost with 
low damage cost valuation .  
BUSINESS ASSESSMENT (Option 1) 
Direct impact on business (Equivalent Annual) £m:  Score for Business Impact Target (qualifying 
provisions only) £m:  Non-qualifying  provision  Costs 0.05 Benefits: 0.0 Net: 0.05 
   
3 
 
 Summary: Analysis & Evidence  Policy Option 2 (Preferred option)  
Description :  Regulation of  the sales, distribution and marketing of bituminous coal and wet wood (>20% 
moisture) sold in units up to 2m3 and restricting the sale of manufactured solid fuels with a sulphur content 
greater than 2%.   
 
FULL ECONOMIC ASSESSMENT  
Price Base 
Year   2017  PV Base 
Year 2020  Time 
Period 
Years  11 
sd111  Net Benefit (Present Value (PV)) (£m)  
Low:  1,647.9  High: 22,688.7  Best Estimate: 7,858 .3 
 
COSTS (£m)  Total Transition  
 (Constant Price)  Years 
 
 Average Annual  
(excl. Transition) (Constant price) Total Cost   
(Present Value)  
Low  0.0 
1 -1.3 -6.5 
High  0.0 4.2 46.6 
Best Estimate  
 0.0 1.4 19.5 
Description and scale of key monetised costs by ‘main affected groups’  
The proposed regulation is likely to result in additional costs to businesses  and potentially to households . The costs to business es 
arise in the form of administrative and monitoring costs incurred from enforcing the proposed regulation  as well as from loss in 
profits  and from capital costs . Costs to households may occur due to the shift towards more expensive sources of energy but these 
are more than offset due to the higher energy density of the fuels being used following the ban.  
The analysis shows  a total cost for businesses, household s and the Government, estimated at £ 19.5 million for the 2020 -2030 
period in the central scenario.   
For businesses,  the total net  estimated cost to the solid fuel sector in terms of the pr ofit lost as a result of the ban is £ 14 million over 
the 11 -year period in the central scenario . It mainly results from lower volumes of wood sold due to the higher energy efficiency of 
dry wood compared to wet wood. In addition, a percentage of businesses selling wood will require investments in drying equipment,  
and subsequently incur an operati ng cost at an estimated £ 83 million cost in present value terms over the appraisal period . A 
significant share of profit losses from reduced activities in coal sales is recovered through increased sales of alternatives  to coal.  
The monitoring and administrative costs to be covered by businesses  are anticipated to be £27 million  in present value terms over 
the 11 -year period in the central scenario.  
There will also be some costs and benefits to households from switching fuels. Adj usting for the energy densiti es of the fuels under 
consideration and appliances’ efficiency , we estimate total net benefit for households at £ 105 million over the 11 -year period. T he 
benefits  to households that switch from burnin g wet wood to burning dry wood are expected to reach  £111 million . Households 
substituting from coal to low sulphur manufactured solid fuels  should also experience a saving of approximately £ 19 million over 
the same pe riod. However, households switching from high sulphur solid manufactured fuels to low sulph ur solid manufactured 
fuels are anticipated to  experience an increase in total costs of approximat ely £2 4 million over the period based on current market 
prices.   
There are some costs to government accruing from an information campaign to promote safer and cleaner fuels burning habits  
(£220,000 over 3 years)  and local authorities’ enforcement  costs  estimated at £1.2m over the 11 -year period.   
Other key non -monetised c osts by ‘main affected groups’  
There may be indirect costs to  businesses within the supply chain of fuel manufacturers impacted by the proposed regulation which 
have not been estimate d as part of this analysis.  The most likely impacts which have not been monetised are:  
• Reduction in freight if people reduce the amount they burn (as they use more efficient fuels)  
• Change in port activity resulting from variation in wood imports: likely to  be a reduction in imports as demand is anticipated 
to decline due to the higher energy efficiency of dry wood  
• Change in port activity resulting from variation in imports of coal and its alternatives  
The impact of the proposed legislation on freight and port activity is relatively limited .  Assessing the size of the impact faces 
significant level of uncertainty  and conducting a study would have been disproportionate .   
 
BENEFITS (£m)  Total Transition  
 (Constant Price)  Years 
 
 Average Annual  
(excl. Transition) (Constant 
Price) Total Benefit   
(Present Value)  
Low  0.0 
N/A 186.0  1,694.6  
High  0.0 2,490.0  22,682.2  
Best Estimate  
 0.0 864.8  7,877.8   
4 
 
 Description and scale of key monetised benefits by ‘main affected groups’  
The proposed  regulation will reduce emissions of PM 2.5 and SO 2 resulting in an improvement in air quality for everyone , 
particularly  for people  living in households which burn  wet woo d and traditional bituminous house coal . The analysis uses 
the UK damage cost valuation approach to estimate the benefits of reducing PM 2.5 and SO 2 emissions as set out in the 
Green Book supplementary guidance for valuing changes in air quality.  We use the latest DEFRA air quality damage cost 
values based on advice from COMEAP.  These are likely to underestimate the benefits of the proposed  regulation as they 
do not fully capture impacts on the environment from air pollution or other toxins from these fuels .  
The reduction  of greenhouse gas (GHG) emission is valued using the Green Book guidance and  is monetised using BEIS 
non-traded carbon v alues. As volumes of fuels burned are reduced as a result of average higher energy efficiency , we 
estimate the carbon saving at £26 million.  
We estimate the central present value benefit s from the associated reductions in PM 2.5, SO 2 and GHG to be £7,878 million  
over the appraisal period and to be significantly higher than the costs of the regulation.   
Other key non -monetised benefits by ‘main affected groups’  
The monetised benefits are likely to substantially underestimate the full social benefit. Redu cing emissions of air pollutants 
will benefit natural ecosystems, biodiversity and th e wider environment which have not  been monetised  here. There are 
also secondary impacts that are likely to arise from the regulation e.g.  supporting innovation in abateme nt equipment/green 
technologies  and reductions in emissions of other pollutants and toxins such as arsenic, lead or mercury that have not 
been monetised as part of this analysis.   
Key assumptions/sensitivities/risks                                                                        Discount rate 
(%) 
 3.5%  
There is  uncertainty  around the scale of health benefits from improved air quality (damage costs)  as well some uncertainty around 
the business costs .  The high NPV combines low business costs with high damage cost valuation (high benefits), and the low NPV 
combines high business cost with low damage cost valuation .  
 
 
BUSINESS ASSESSMENT (Option 2) 
Direct impact on business (Equivalent Annual) £m:  Score for Business Impact Target (qualifying 
provisions only) £m:  Non-qualifying  provision  
Costs : 13.3 Benefits: 0.0  Net: 13.3 
 
 
 
   
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 Table of Contents  
 
 
 
 
 
 EXECUTIVE SUMMARY  ................................ ................................ ................................ .............  6 
 PROBLEM UNDER CONSIDERATION  ................................ ................................ ........................  11 
 RATIONALE FOR INTERVENTION  ................................ ................................ .............................  11 
 POLICY OBJECTIVES  ................................ ................................ ................................ ................  12 
 POLICY OPTIONS CONSIDERED  ................................ ................................ ...............................  13 
 METHODOLOGY  AND COST BENEFIT IMPACTS  ................................ ................................ ........  16 
 ................................ ................................ .................  22 
 RESULTS  ................................ ................................ ................................ ................................ . 26 
 RISKS, ASSUMPTIONS AND UNCERTAINTIES  ................................ ................................ ...........  30 
 MEASUREMENT OF THE IMPACT ON MICRO AND SMALL ENTERPRISES  ................................ ... 33 
 COMPETITION ASSESSMENT  ................................ ................................ ................................ ... 34 
 DISTRIBUTIONAL IMPACTS  ................................ ................................ ................................ ..... 35 
 
ANNEXES…………………………………………………………………………………………………………………………………….. 38                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               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 1. Executive Summary  
1. In January 2019 the government published its Clean Air Strategy1 which highlighted air pollution as 
the top environmental risk to human health in the UK. We know that air pollution is a major public 
health risk ranking alongside cancer, heart disease and obesity, and poses t he single greatest 
environmental risk to human health .   
 
2. Long term exposure to poor air quality reduces life -expectancy through increased risk of mortality 
from cardiovascular and respiratory illnesses and from lung cancer. Short -term exposure to poor air  
quality carries a morbidity burden over a wide range of cardiorespiratory health conditions.2 It can 
cause harm to the natural environment resulting in reductions in yields of key food crops caused by 
ozone damage and changes to delicate nutrient balances causing some aspects of the ecosystem 
to thrive to the detriment of others.3 
 
3. In the Clean A ir Strategy Government set out its ambition to progressively cut public exposure to 
particulate matter pollution as suggested by the World Health Organisation.  Government committed 
to set a new, ambitious, long term target to reduce people’s exposure to P M2.5 and intends to publish 
evidence to examine what action would be needed to meet the WHO annual mean guideline limit 
of 10 μg/m3. 
 
4. The purpose of this proposed legislation is in part to deliver the commitments  in the strategy to 
phase out the most pollu ting fuels from domestic burning  and contribute towards the above 
ambition , protecting consumers from more polluting fuels by phasing them out.  Government aims 
to shift people ’s behaviours  who use solid fuel to heat their homes to cleaner alternatives , such as 
those who burn wet wood to dry wood and those who burn coal to low sulphur manufactured solid 
fuels.  
 
5. Feedback from the consultation on the proposed regulation  demonstrated a wide range of divergent 
views, many who suffer as a result of other’s burning favoured an outright ban on all domestic 
burning whilst others felt that legislation was not required , advocating a focus on education and 
advice . Having analysed all 500 responses,  the final proposal represents a compromise between 
these t wo perspectives . The propos ed legislation will regulate the sale of the most polluting solid 
fuels while mitigating the impacts on those that are most likely to be impacted by the proposed 
regulation .  
 
6. This impact assessment considers various options to s hift consumers towards burning cleaner 
fuels. It sets out the Government’s assessment of the impacts associated with:  
 
• Consumers who burn wet wood shifting to dry wood.  
 
• Consumers who burn coal shifting to low sulphur manufactured solid fuels (MSF).  
 
• Consu mers who burn high sulphur MSF shifting to low sulphur MSF.  
 
7. For wood we have considered an appropriate cut off point to allow only the sales of dry wood. Our 
policy intention is to ensure that people who buy wood for immediate burning are only able to buy 
wood that is dry and ready to burn, but  not to prevent peopl e who buy wood in bulk for seasoning 
 
1 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/770715/clean -air-strategy -2019.pdf  
2 COMEAP (2010) The Mortality Effects of Long -Term Exposure to Particulate Air Pollution in the United Kingdom. Committee on the 
Medical Effects of Air Pollutants. Available from : https://www.gov.uk/government/publica tions/comeap -mortality -effects -of-long-term-
exposure -tohttps://www.gov.uk/government /publications/comeap -mortality -effects -of-long-term-exposure -to-particulate -air-pollution -in-the-
ukparticula te-air-pollution -in-the-uk  
3 RoTAP (2012) Review of Transbou ndary Air Pollution: Acidification, Eutrophication, Ground Level Ozone and Heavy Metals in the UK. 
Contract Report to the Department for Environment, Food and Rural Affairs. Centre for Ecology & Hydrology.   
7 
 
 at home from doing so.  Our evidence , together with  feedback from the consultation, suggests that 
wet wood is an inefficient product to burn , resulting in high cost per heat output.  Therefore , we 
expect that people bur ning large volumes of wood will be burning wood that is dry.  As such , we do 
not consider that a policy intervention is required to ban the sale of wood sold in large volumes.  It 
will be a requirement for sellers of wet wood to provide appropriate advice on how to season wood 
to ensure that householders are well informed.  A full ban on the sale of wet wood may  result in  an 
increase in foraging for wood and may disadvantage poor rural households who have always bought 
cheaper wet wood for home seasoning.  
 
8. The Clean Air Strategy set s out the Government’s legal commitments to improve air quality;  the UK 
is required to reduce overall emissions of certain pollutants under the National Emissions Ceilings 
Directive (NECD) which has been  transposed into UK law  (The National Emiss ions Ceilings 
Regulations 2018). T he NECD  transposes the reduction commitments agreed by the EU and its 
Member States under the 2012 revised Gothenbur g Protocol under the Convention on Long -range 
Transboundary Air Pollution. The UK is a signatory to the Con vention and Protocol in its own right.   
The NECD  sets ceilings on total national emissions of five key air pollutants i.e. nitrogen oxides 
(NOx), sulphur dioxide (SO 2), particulate matter (PM 2.5), non -methane volatile organic compounds 
(NMVOC) and ammonia (NH 4) for 2020  (which correspond to the international obligations under 
the Protocol)  and emission reduction commitments (ERCs) for the same pollut ants for 2030. The 
reductions are set relative to emissions in 2005, the baseline year. The UK is meeting its current 
targets under the predecessor directive to the NECD (which lapses in 2019)  and has done since 
the ceilings were first introduced in 2010.  
 
9. Based on the N ational Atmospheric Emissions Inventory (NAEI) , domestic burning of solid fuels is 
by far the largest source  of PM 2.5 emissions , emitting more than manufacturing 
industries/construction and road transport combined5. Emissions from domestic burning can be 
reduced by  improving the installation and maintenance of stoves ; upgrading the appliance e.g. from 
an open fire to a stove ; or burning cleaner fuels. Government has assessed all these options in 
discussion with stakeholders and cons iders that taking action on fuels is one of the most expedient 
and cost-effective  approaches to reducing PM 2.5 emissions. This will be complemented by a 
dedicated communications campaign targeted at domestic burners,  so as  to improve awareness of 
the envir onmental and the public health impacts of burning.  
 
10. According to  2016 projections , the Government is set to miss its legally binding targets for PM 2.5 for 
2030 by 31 kilo tonnes  if no further action is taken . It is therefore imperative that Government take s 
action to reduce emissions. There are many sources of PM 2.5 emissions including transport and 
industry . However , whilst emissions from these sources ha ve reduced, the emissions from domestic 
burning are increasing  and now account for the largest single contributi ng source . The proposed 
regulation  will make a significant contribution towards  the UK meeting its legal obligations .  
 
11. Whilst PM 2.5 is our primary target pollutant , it is essential that any intervention does not shift 
consumers to another equally polluting fuel. Stakeholders have  flagged that in recent year s there 
has been  an increase in cheap high sulphur manufactured solid  fuels on the market. Sulphur dioxide 
(SO2) is harmful to health and a target pollutant under the NECD. It can also corrode  appliances . 
As such , Government proposes to apply  sulphur standards to manufactured solid fuels.  
 
12. During  the consultation stage, some respondents suggested that those coal bur ners in fuel poverty 
may switch to burning wet wood or even waste wood as a result of this legislation . This switch 
across fuels is considered as part of our sensitivities to assess the impact on PM 2.5 emissions , and 
results presented in Annex 2  (part 1) . The final policy proposal recommends a transition period to 
 
 
5 Source: 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/778483/Emissions_of_air_pollu tants_19 9
0_2017.pdf   
8 
 
 mitigate this risk and allow coal merchants and Government to work t ogether and support 
householders  during the transition to ensure they switch to cleaner fuels.  
 
13. This concern was based upon an industry assessment that MSF are considerably more expensi ve 
than bituminous house coal. Our own analysis has found that MSF are in fact cheaper to burn on 
an energy density basis and as such households will save money on fuel costs.  Whilst some fuel 
poor households may burn waste wood we do not expect that this policy intervention will result in 
an increase in waste wood burned. The communications campaign will include advice on the 
dangers of burning waste wood.  
 
14. It was also highlighted that on an energy density basis, burning  dry wood  may result in  more PM 2.5 
emissions relative to burning  coal. This presents a risk that if people w ho previously burned coal 
shift to burning wet or dry wood  it may result  in higher PM 2.5 emissions . This concern  has been 
considered in detail and Government has concluded it should proceed with the proposed phase out 
of coal for several reasons:  
• We expect that people burning coal will shift to manufactured solid  fuels and those burning wet 
wood will shift to dry wo od and as such both shifts will deliver air quality benefits.  This is partly 
because we expect people’s point of supply to remain the same, with authorised coal merchants 
selling low sulphur manufactured solid  fuel instead of coal.  
 
• The World Health Organization’s International Agency for Research on Cancer has stated coal 
is a known carcinogen and, unlike wood, emits toxic metals such as arsenic when combusted.  
 
• The World Health Organization  has also recommend ed that coal is phased out as a fuel for 
domestic heating and cooking; a recommendation they do not make for wood.   
 
• Government carried out further cost analysis and found that wood is significantly more 
expensive to burn than MSF  on an energy density basis  so it is unlikely th at price sensitive 
consumers will switch from coal to dry wood.  
 
15. Restrictions on the sulphur content of manufactured fuels used for heating will be introduced to 
avoid unintended conseq uences of consumers switching from one highly polluting fuel to  another.  
  
16. A range of options  were considered for this analysis as set out in section 5  with two main options  
assessed in detail. These options  are:  
• Option 1:  A communication s campaign targeted at raising the public’s awareness of the 
negative health and  environmental impacts of bur ning wet wood , bituminous coal and high 
sulphur manufactured solid  fuels  alongside continued  support for  voluntary industry schemes 
promoting the sale of cleaner fuels.   
 
• Option 2:  Regulating  the sale of wet wood, bituminous house co al and solid manufactured solid  
fuels with a high sulphur content , coupled with an awareness raising campaign . 
 
17. Our analysis reveals the largest reductions in emissions are achieved under Option 2 . We estimate 
that restrictions  on the  sale of wet wood  (only)  to abate 87.9 kilo tonnes  (kt) of PM 2.5 emissions 
between 2020 and 2030 . Restrictions on the sale of bituminous coal  (only)  are estimated  to abate6 
3.7kt of PM 2.5 under Option 2. Approximately 1.5kt of PM 2.5 emissions are abated from both wood 
and coal under Option 1 .  
 
  
 
6 Emissions abatement are calculated as the reduction of emissions of pollutants proportionally to the reduction of volume of d omestic fuel 
burnt, taking into consideration emissions factors published in the EMEP/EEA air pollutant emission inventory guidebo ok 2016 . The source 
for wet wood emission factor is a preliminary study carried out by the University of Leeds and the University of Manchester.   
9 
 
 Table 1: Cumulative  PM2.5 emission reductions 2020 – 2030 for Option 1 and Option 2  (kT) 
 
 Option 1  
 Option 2  
(preferred option)  
Wood  1.42 87.87  
Coal 0.04   3.66 
Total  1.46 91.53  
Source: Defra estimates   
 
18. The proposed regulation will contribute to government  meeting its 2030 NECD Emission Reduction 
Commitments (ERCs) through the abatement of approximately 9.37kt of PM 2.5 (Option 2) in the  year 
2030  relative to the do-nothing scenario .  
 
19. The regulation will also result in  emissions reductions  for other pollutants such as  SO 2 and N itrogen 
Oxide (NO x). We estimate that Option 2 will abate a total of 24.9kt of SO 2 emissions between 2020 
and 2030 . The estimated reductions for NO X pollutant are not reported  in this analysis due to :  
a. The uncertainty in their emission factors particularly pertaining to wet wood and bituminous 
coal; and  
b. Significantly  lower levels of abatement achieved relative to PM 2.5. 
 
20. Reducing  air pollution yield s benefits in terms of impro vements to  public health and healthier eco-
systems. The  benefits associated with the improvements in air quality from the reduction in PM 2.5 
and SO 2 emissions are estimated using the damage cost approach as recommended under  the 
Green Book supplementary guidance for  valuing changes in air quality .7 This approach  consists of  
multiplying the total reduction  in the emissions of a pollutant by the associated damage cost. We 
use the latest available damage costs figures accountin g for both the morbidity and mortality effects 
of air pollution . The PM 2.5 damage cost value used is specific to the domestic combustion sector 
while the SO 2 damage cost value used is the national average  as no sectoral breakdown of the SO 2 
damage costs was available  at the time of writing .  
 
21. The benefits accruing from a reduction in PM 2.5 and SO 2 under the proposed regulation  on coal , wet 
wood  and high sulphur manufactured solid fuel in the preferred Option 2  are estimate d to reach 
£7,878 million in the central scenario and range  from £ 1,695 million in the low scenario to £22,682  
million in the high scenario over the period 2020 to 2030.  Three sets of damage costs  values a re 
used to develop  high, central and low scenarios. The variation in the damage costs reflects 
uncertainty in the  evidence about mortality and morbidity impacts . We use  higher  damage costs  
where the  associated health impacts are most prominent and consequently benefits assu med to be 
largest. The damage costs do not fully account  for the health impacts  and the environmental 
damage that arises from pollution and  thus likely to underestimate the benefits  to society from 
reducing pollution . However , they are the current best available evidence . 
 
22. We also estimate th at there  will be benefits in the form of saving for households when switching to 
the proposed alternatives.  Based on current market prices,  both d ry wood and low sulphur 
manufactured solid fuel ( LSMSF ) are less expensive  to burn  on an energy adjusted basis relative 
to wet wood and bituminous coal , respectively.  Consumers switching from coal to low sulphur 
manufactured solid fuels and from wet to dry wood will benefit from a saving in fuel costs  of about 
£130 million . For this  analysis  we have assumed all coal burning takes place on an open fire. There 
will be cos ts to households switching from high sulphur solid manufactured fuels to low sulphur 
 
7 The damage costs mainly reflect the mortality effects of air pollution and some of its impacts on morbidity, ecosystems and productivity. 
The damage costs will be updated this year to reflect a greater number of health impacts. Current version to air quality dama ge cost 
guidance found here:  https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/770576/air -quality -
damage -cost-guidance.pdf    
10 
 
 manufactured fuels  of approximately £24  million in present value terms over the period based on 
current market prices.  This implies a net household saving of £ 105 million.  
 
23. There are business costs linked to the proposed regulation.  The cost s to fuel manufacturers  from 
the regulation are primar ily associated with monitoring and enforcement . Some wood burning 
business are likely to require investment in wood drying equipment  and incur opera ting costs  for 
those running drying kilns . We estimate the  likely costs to industry  from the  regulation using data 
from the ‘Ready to Burn’ scheme, a voluntary industry scheme supported by Government which 
promotes the sale of dry wood . There will be a loss in  profit to the coal and high sulphur 
manufactured fuel  industry from restricting the sale of coal to the domestic sector market  and a loss 
associated to the reduction in the volume of fuels sold due to better average energy efficiency of 
the fuels burnt . This loss is i ncluded in our estimated costs8. The tot al business cost is anticipated 
to be £124 million in the central scenario , ranging from £148 to £99 million  in the low and high 
scenarios, respectively . 
 
24. Whilst the purpose of the legislation is for domestic burning only, there may be some impact upon 
business as consumers that may burn solid fuels such as pubs/hotels or heritage industries.  We 
acknowledge that the legislation may impact upon the supply of these fuels to businesses despite 
the fact that the domestic coal market represents less than 5% o f national coal demand.   For 
pubs/hotels we expect that the impact is positive as the alternative fuels burn more efficiently.  For 
heritage industries concerns were raised during consultation on availability of supply.  This is a 
wider concern due to the already occurring decline of domestic coal supplies however the 2 -year 
transition period for coal is expected to allow businesses time to adjust and mitigate this concern.   
 
25. In all three scenarios, we find the benefits arising from the implementation of th e measures  to 
significantly outweigh the costs  for the preferred option . The table below shows the monetary values 
for the main components of costs and benefits9.  
 
Table 2: Present value costs and benefits of Option 2 (£m, discoun ted) 
  
 Low scenario  High scenario  Central scenario  
Costs fuel suppliers , households and regulatory body  
Loss in profit  * 17.1 11.4 14.3 
Monitoring costs *10 19.4 12.9 16.1 
Administration costs * 12.9 8.6 10.7 
Capital costs**  99.3 66.2 82.7 
Household costs  -105.8  -105.8  -105.8  
Government costs  3.8 0.2 1.4 
Total costs  46.6 -6.5 19.5 
Benefits from emission reductions  
Air quality pollutants  1,694.6  22,682.2   7,877.8   
Net Present Value 
(NPV) 1,647.9  22,688.7  7,858.3 
Source: Defra estimates  
* Direct Business costs  
** Direct Business costs - Wood businesses only  
 
 
8 However, a significant share of profit losses from reduced activities in coal sales may be recover ed through increased sales of alternatives 
to coal as demand increases.  
9 The detailed description of these components are provided in the core of the document.  
10 Monito ring costs are the costs incurred by the regulatory body in monitoring fuel manufacturers to ensure that they comply with the  
proposed regulation. These costs will be passed to fuel manufacturers in the form of registration and fuel testing charges.   
11 
 
 2. Problem under c onsideration  
26. Many everyday activities essential for supporting lives and livelihoods can cause air pollution. 
Particulate matter emitted from the burning of domestic fuels such as wood enters the bloodstream 
and has been found in internal organs resulting in long term damage to human health as well as 
having more immediate impacts such as breathing problems or asthma attacks  for some people .  
 
27. Domestic burning is the single largest source of harmful PM 2.5 emissions in the UK . It acco unts for 
approximately 38 %11 of the total  emissions  in 201 6. This compares with industrial processes  and 
road transport  which account for 1 1% and 12% of PM 2.5 emissions respectively . The growth in 
domestic burning has been partly driven by an increase  in restoration of open fires and instal lations 
of wood -burning stove s.12 Stoves  are now an additional form of heating for many households; for a 
minority they may be the sole heat source. This  has inevitably resulted in a si gnificant increase in 
the amount o f wood burned domestically .  
 
28. While domestic burning and other emissions have reduced significantly since the 1950s, the 
evidence on the adverse health impacts from air pollution has also grown during that time, showing 
that even at today’s lower levels si gnificant harm can be caused. We also have a better 
understanding of how pollution travels through the atmosphere  and the negative externalities from 
air pollution .  However , the awareness amongst burners of the impact upon health or indeed actions 
that can be taken to reduce this impact remains very low. It is important from a consumer pro tection 
perspective  for Government to  take action where necessary  as well as  educate the  public on the 
harmful effects of burning solid fuels in the home and how  they can  minimise them . 
3. Rationale for intervention  
29. Air pollution is a classic negative externality. It imposes costs on people who are external to the 
transaction (in this instan ce the sale and purchasing of fuel). Without government intervention the 
market will not correct for the costs incurred by third parties from the purchasing and burning of 
fuels which are highly polluting.  Regulating the sale of these fuels has health ben efits for those 
households burning these fuels as well as for the communities in which they live. The proposed 
regulation would be implemented in conjunction with an information campaign to raise awareness 
of the health impacts associated with burning solid fuels. At present , labelling on solid fuels is 
confusing making it difficult for consumers to assess which fuels are less polluting and more 
efficient.  
 
30. In our recently published Clean Air Strategy, the Government committed to phasing out the most 
pollu ting fuels from domestic combustion in England, the proposed regulation takes forward this 
commitment. The restrictions will deliver on Defra’s wider objective for a cleaner, healthier 
environment, benefiting people and the economy . These will  contribute to government achieving its 
2030 NECD emission reduction commitments to reduce emissions of five key pollutants including 
PM 2.5 and SO 2, with the goal of halving negative health impacts from air pollution . It will also deliver 
the commitment se t out in the Clean Air Strategy to phase out the most polluting fuels from domestic 
combustion.  
 
31. Feedback from fuel retailers as part of the consultation indicated they have limited capacity to 
engage with another voluntary initiative, emphasizing that a r egulatory approach is required to 
deliver a level playing field and the required change at scale. Large wood suppliers have also 
indicated a preference for legislation to deliver the speed and scale of change needed. The 
 
11 38% is based upon the calculations in the National Atmospheric Emissions Inventory for 201 6, which is the data used for the Clean Air 
Strategy . This data is uncertain given the difficulties in accurately estimating the extent and nature of domestic burning, ev idence and is 
informed by a wide range of data sources, including data from BEIS and the stove and wood fuel industries. Of the total PM 2.5 emissions,  
approximately 36% arose from  domestic wood. http://naei.bei s.gov.uk/data/  
12 The Stove Industry Alliance have informed us that stove sales increased from around 130,000 in 2004 to 180,000 in 2014. , whilst this 
doesn’t capture the entire market it does capture a sense of the scale of the increase.  This has plateaue d from 2014 but remains in the 
order of 100,000s .  
12 
 
 proposed measures should aid the mo nitoring and enforcement of smoke control areas (SCAs). 
The Clean Air Act 1993 gave local authorities (LAs) the power to declare SCAs where it is illegal to 
emit smoke emissions from domestic or industrial chimneys unless you are burning authorised fuels 
or using exempt appliances. It also regulates the sulphur content of manufactured solid fuels which 
can be burned in smoke control areas to 2% sulphur. This legislation was designed in the 1950s 
when most fuel was delivered by coal merchants, restricting wh at fuels could be delivered to 
addresses within SCAs. While this worked well at the time, the domestic fuel landscape has 
changed since then and today most fuel is purchased through shops, rather than delivered making 
the law in relation to  SCAs less effec tive than it once was . 
 
32. To address thi s, we are  also considering how the  Clean Air Act could be amended to make it more 
effective and easier to enforce. Together with the proposed fuels legislation, education and training, 
this will provide  a coherent package of actions to reduce the health and air quality impacts from 
domestic burning.  
 
33. In regulating the sale of traditional coal, the Government will need to make sure that consumers do 
not switch to another low-cost polluting fuel , such as high sulphur solid smokeless fuels  or wet or 
waste wood . To mitigate this ris k, Government is proposing to  apply  sulphur standards to 
manufactured solid  fuels. This inter vention will protect consumers from purchasing fuels that are 
harmful to both their health a s well as  their stoves and chimneys. We are also proposing to apply a 
transition period for sales of loose coal  of 2 years from the introduction of the legislation . This will 
give the market and businesses time to adjust , enabl ing coal merchants to work with their long-
established  customers who buy in large volumes and are most likely to be impacted by the 
legislation ; helping to  ensur e they switch to cle aner alternatives.  
4. Policy objectives  
34. The overarching policy objective of the proposed regulation is to deliver health benefits by reducing 
emissions of pollutants  produced  from burning of solid fuels for domestic heating  purposes . The 
Government seeks to regulate the sale of smaller quantities of wood (more likely to be used 
immediately , and consequently burnt wet ) i.e. wood sold in bags of less than 2 metres cubed . This 
seeks  to ensure that people are not inadvertently burning wet wood while also allowing scope for 
consumers who have the capacity to purchase wet wood and dry it to continue to do so. The 
Government will also phase out the sale of bituminous coal  and apply sulphur standards to all 
manufactured solid fuels . Evidence from a similar approach in Ireland on coal (but not wood) found 
that the restrictions on bituminous coal led to a significant reduction in respiratory problems and 
premature deaths from the effects of burning smoky coal in the existing ‘Low Smoke Zones’. The 
restrictions in Dublin are widely cited as a successful policy intervention. It is estimated that around 
8,000 premature mortalities have been averted in Dublin since the introduction of the smoky coal 
ban in 199013. A study14 shows that t here was a decline in winter all age mortality by 1.25%, which 
equates to 1,923 lives saved per winter month in the USA after the reduction of domestic coal use. 
Another one15 found areas that had previous higher domestic consumption of coal now have raised 
mortality  levels including cardiovascular and respiratory diseases and certain cancers. The study 
shows  that the correlations are strong, statistically significant and independent of all other 
dependent  variables.  
35. At present , many consumers are unaware of the impact on both their health  (and of their 
neighbours ’) from burning these fuels. As set out in  the Government’s Clean  Growth  Strategy , our 
long-term aim is  to phase out  high carbon fossil fuels in homes off the gas grid during the 2020s . 
This policy will help transition towards that goal. Table 3 sets out the main solid fuels burned in 
homes and their estimated corresponding PM 2.5 emissions in grams per tonne of fuel consumed.   
 
13 https://www.dccae.gov.ie/en -ie/environment/topics/air -quality/smoky -coal-ban/Pages/default.a spx 
14 Barreca, A., Clay, K. and Tarr, J. (2014). ‘Coal, smoke, and death: bituminous coal and American home heating’, Working Paper  No. 
19881, NBER  
15 Phillips DIW, Osmond C, Southall H, et al Evaluating the long -term consequences of air pollution in early life: geographical correlations 
between coal consumption in 1951/1952 and current mortality in England and Wales. BMJ Open 2018;8:e018231. doi: 10.113 6/bmjopen -
2017 -018231   
13 
 
 Table 3: The main sol id fuels burned in the home  and corresponding emission factors  
 
Fuel Description  PM 2.5 emissions in 
grams per tonne of 
fuel consumed16 
House coal (or bituminous coal)  A naturally occurring mined product. 
PM 2.5 emissions are higher per unit 
energy than from smokeless fuels.  8.69  
Smokeless coal (or anthracite)  A form of naturally occurring, mined, 
high-purity coal, authorised for use in 
smoke control areas  1.76 
Manufactured solid fuels  Fuels manufactured from coal products 
with other ingredients that have low 
smoke emissions, however some do 
have high SO 2 emissions  1.60 
Wet wood  A naturally occurring product.  Newly 
felled wood has a high moisture content 
and creates a lot of smoke when 
burned, it has over double the 
emissions of seasoned or kiln dried 
wood.  For our analysis, we assumed 
30% moisture content wood.  28.87  
Seasoned wood  Wood that has been left for up to 2 
years to naturally air dry  7.21 Kiln dried wood  Wood that has been kiln dried to below 
20% moisture  
Source: NAEI  
Note:  significant uncertainty around these figures although they  represent current best evidence  
 
5. Policy options considered  
36. This section reviews all the policy options that have been considered and explains the rationale for 
selecting the most viable options for a full cost-benefit analysis. The policy development process 
has drawn on advice from industry representatives and wi der stakeholde rs through a Call for 
Evidence  and consultation  undertaken in the second half of 2018.   As air quality is devolved, t he 
proposed measures are for England  only. This is likely to mean that implementation of the regulation  
in the localities  in England  that border Sc otland or Wales may be weaker  if there i s asymmetry in 
regulation between the home  countries .   
 
Option 0 (Baseline): Do nothing more.  
 
37. The baseline  option  maintains the existing Ready  to Burn voluntary approach with industry on wood  
to shift consumers away from burning wet wood to dry wood . There is no regulation on the sale of  
any fuels or government action to promote the sale of cleaner fue ls. 
  
Option 1: A voluntary approach promoting the sale of cleaner fuels  
 
38. This option  maintains  the Ready to Burn scheme . In addition,  government  promotes the burning of 
cleaner fuels through a public ity campaign to deliver maximum behaviour change  and engage s with 
 
16 Source for all emission factors, except wet wood: EMEP/EEA air pollutant emission inventory guidebook 2016 . Source for wet wood: 
preliminary study carried out by the University of Leeds and the University of Manchester.   
14 
 
 retailers and  fuel suppliers to consider a similar voluntary code on coal and high sulphur smokeless 
fuels  to reduce their consumption .  
 
Option 2 : Regulating  the sale of the most polluting fuels for domestic 
heating . 
 
39. Option 2 considers the impact of  restricting the sale, distribution and marketing of  wet wood (sold 
in bags of 2m3 or less) and bituminous  coal (sol d in any volume)  alongside an information campai gn 
to raise public awareness of the health and environmental impacts of burning these fuels.  Under 
this option , the Government also regulates  the sale of high sulphur manufactured solid fuels  to 
ensure consumers do not switch from coal to another equally harmful fuel . The proposed regulation 
will apply  to fuel manufacturers . Regarding  wood , the legislation will introduce a requirement for all 
suppliers of wood fuel sold in volumes under 2m3 to demonstrate that the fuel meets the required 
moisture levels, with a view to suppliers becoming members of the existing Ready to Burn 
certification sc heme.  For manufactured solid fuels, all suppliers will be required to demonstrate that 
the fuel meets the required sulphur and smoke emission limits, with a view to suppliers obtaining 
certification under a system based upon the existing Clean Air Act acc reditation scheme . Under this 
option , retailers are given a transition period of one year to use up existing stocks. In line with 
feedback from the consultation , Government proposes to give an extra year to small foresters 
(producers of less than 600 m3 of wood annually ) and an extra 2 years for deliveries  of loose coal 
through direct sales .  The purpose of these extensions is to support any small foresters in the 
transition to selling dry wood or increasing volume of sales and to enable those people who bu rn 
high volumes of coal (and rely on this as their primary heating source) to work with their coal 
merchants to identify a suitable and cost-effective  alternative.  The proposed regulation is set out 
below in more detail.  
 
Regulation on w ood 
• All wood sold for the purpose of domestic combustion in volumes under 2m3 must  go through a 
certification scheme  or the supplier must demonstrate that the fuel meets the required moisture 
levels .  
• All wet wood sold for the purpose of domestic combustion over 2m3 must be  sold with relevant 
advice on how to season the wood to make it suitable as a fuel.  
• Small foresters producing 600 m3 or less per year will be exempt for the first year ; it will come 
into effect for them in 2021.  
 
Regulation on bituminous house coal  
• All bit uminous house coal will be phased out from sale  for domestic heating purposes . 
• Direct s ales of loose coal will have a longer transition period to 2022  to enable those who 
currently rely on house coal for their primary heat source to identify a cost-effecti ve alternative.  
 
Manufactured solid manufactured fuels  
• All manufactured solid mineral fuels sold will need to be labelled to confirm they contain less 
than 2% sulphur and have less than 5g/h smoke emissions.  
• Suppliers will need to get their products tested to confirm they comply . 
 
Other options considered  but not developed.   
 
Regulating the sale and distribution of wet wood and traditional coal in urban areas only  
 
40. Due to the population density, air quality is a bigger concern in  urban areas in terms of health 
impacts and population exposure. For this reason , the benefits  of reducing air pollution are higher  
for measures focus ed on urban areas  than rural areas . This option was considered, but not 
developed further  for a number of reasons:    
15 
 
  
I. Evidence from Ireland , where a coal ban had  been previously implemented solely in urban 
areas , indicated  there were significant problems with  compliance. Co nsumers  in urban areas  
were travelling to rural areas to purchase coal , weakening th e impact of the legislation . 
  
II. Particulat e matter  is transboundary  and as such rural  emissions can  travel to urban areas – 
approximately 50% of PM 2.5 pollution is transboundary .  
 
III. Restricting  the regulation  to urban areas would deliver less air quality benefits across the country  
and would make it harder to enforce the legislation .  
 
41. In addition, a number of respondents to our  Call for Evidence  and con sultation  highlighted  that 
nuisance burning is not just an  urban issue  and were supportive of nationwide measures . 
 
Utilising e xisting legislation on smoke control areas  
 
42. Government is in the process of  revising and updating the current legislation  on SCAs  under the 
Clean Air Act 1993  to deliver better outcomes and ensure that it is easier to enforce.   
 
43. It was considered whether this would be sufficient alone to address concerns on solid fuel burning 
and whether any action on fuels could  be incorporated into these changes. It was concluded that, 
for the reasons set out above a nationwide approach on fuels was most appropriate to give a level 
playing field and deliver the best air quality outcomes.  It was also concluded that secondary 
legislation would provide the most appropriate vehicle.  
 
Taxation    
 
44. We also considered tax as an alternative option to the proposed restrictions . Given the substantial 
health benefits from the proposed regulation , and the ease of substitution between highly polluting 
and less polluting fuels  of the same type, it was felt that tax  as a mechanism to incentivise the 
consumption of clean er fuels  would not deliver the abatement in pollution from burning domestic 
fuels necessary  for the Government to meet it air quality obligations .  
 
Stove scrappage scheme  
 
45. Government  also considered a stove scra ppage scheme . Whilst such a scheme  could deliver 
reductions  in emissions , and therefore benefits as compared with open fires or old stoves, the cost 
of replacing stoves is in excess of £2,000 per household . This would make the cost of a scrappage 
scheme significantly higher than taking action on fuels. Additionally, the scrappage payment 
scheme implemented in Denmark in 2015 was found to be ineffective and poor val ue for the tax 
payer17. Government will include the benefits of upgrading appliances in its communications 
campaign.  
 
Evaluation  
46. The effectiveness of Option 2  will be evaluated through a series of channels and reviewed after five 
years.  The policy will require  proof of conformity to the legislation, such as certification of both 
firewood and manufactured solid fuel, as well as auditing of retailer compliance.  This will produce 
useful data for evaluation: the number of certifications (for both firewood and manufactured solid 
fuels) applied for and approved, the volume of certified wood entering the market, the number of 
 
17 Danish Eco logical Council (2016) Pollution From Residential Burning. Available from: https://www.clean -heat.eu/en/actions/info -
material/download/danish -case -study -uk-11.html   
16 
 
 audit checks, passes, and failures, as well  as remedial actions taken to show measurement of 
compliance.  The trends of certified wood produced and business size will also be reviewed.  
47. We will also seek voluntary agreements with registered coal merchants  and local authorities to 
gather information on consumers switc hing fuels in different regions and  the number of enforcement 
actions taken on non -compliance.  This information will be reviewed in the context of qualitative 
feedback from industry.  
 
6. Methodology  and cost/benefit impacts  
48. The following section sets out the methodology used to assess the impacts of implementing 
legislation  on the sale of wet wood and bituminous coal. The impacts are split into the categories 
which are set out  in the remainder of this section.  We assess the imp act of the proposed legislation  
over 11 years commencing from 2020 when the regulation is  intended to come into effect and the 
first costs related to it incurred. The benefits are estimated over t he same period altho ugh they 
would last beyond that . The impacts are assessed based on information collected throug h 
discussions with stakeholders and from the Call for Evidence and public consultation held in 2018 . 
The f ollowing impacts are considered.  
 
Household costs  
 
49. Household costs  will be  incurred by house holds  switching  away from high sulphur manufactured 
solid fuels to low sulphur manufactured fuels. However , they will be outweighed  by the savings 
made from households who burn  wet wood  and traditional bituminous coal, switching  to dry wood 
and low sulphur  manufactured solid  fuel respectively . The costs are estimated using the adjustment 
in volumes due to difference in energy density and the  retail prices  of the fuel s. Based on responses 
from the Call for Evidence  and the consultation , Defra  commissioned  research  on the cost of relative 
energy densities for domestic fuels and  we find dry wood to be 17% cheaper  on an energy adjusted  
basis  than wet wood  based on current market prices . By comparison manufactured solid fuels are  
found to be  6% cheaper to burn on an energy adjusted basis relative to traditional coal.  This new 
evidence is reflected in the analysis and will be published soon . Table  4 sets out the retail prices for 
the two sets of fuels.  
 
Table 4: Retail prices for the fuel s under consideration.  
 
 Wet wood  Dry Wood  
Retail price (£/tonne)  £226 £367 
 Coal  Low sulphur manufactured fuel  
Retail price (£/tonne)  £277 £383 
 High sulphur manufactured fuel  Low sulphur manufactured fuel  
Retail price (£/tonne)  £338  £383  
Source: Defra estimates  based on industry data from Call for evidence  
 
50. We believe that the re are two  reasons why people are not  currently  adopting the most efficient fuels. 
First, there is a large difference in the retail face -value price between the cheaper and the more 
efficient fuels. Second, energy usage is often characterised by choice inertia in which  households 
continue to use the sa me fuels they are used to consuming despite more efficient alternatives being 
available. We expect t his policy will drive  households to make more efficient choice s by changing 
behaviours .        
17 
 
   
51. To estimate the impact of the proposed measures on household s we assume:  
 
I. All consumers who  comply with the regulation  substitute to the  direct  cleaner  alternative  
solid fuel and not to other  fuels e.g. electricity  or gas .  Sensitivity analysis (cf. Annex 2 
part 1) has been carried out to test the impact of this assumption as some respondents to 
the consultation did not feel there would be a clear switch.  
 
II. Full compliance with the regulation for coal is assumed given the limited number of fuel 
suppliers. A lower compliance rate of 40% in 2020 rising to 50% in 2021, 60% by 2022 and 
70% by 2026 for wood is used for the analysis . Less than full compliance is assumed to 
reflect:  
 
a. Flexibility in the design of the reg ulation which is intended to allow consumers who wish 
to buy wet wood in large volumes and dry it before it is burned to do so .  
b. A large number of small retailers which makes the regulation harder to fully enforce.  
 
III. All consumers take into consideration the energy density of the fuel purchased and their 
appliance energy efficiency and , as a consequence,  adjust the volume of fuel they purchase 
to maintain the same energy output as before the implementation of the legislation. 
Sensitivities ar ound how well consumers adapt their behaviour , based on energy 
efficiencies and resulting net present values  outcomes, are presented in Annex 2 (part 2) . 
 
IV. All consumers who used to purchase wet wood in small quantities (below 2m3) before the 
legislation is implemented and decide to continue purchasing wet wood in volumes higher 
than 2m3 after the legislation will dry it before burning . This assumption is based on 
consultation responses indicating that nearly 70% of business respon dents would be able 
to adapt to the legislation and dry the wood before selling it, reducing the supply of wet 
wood and opportunity to purchase it. In addition, it is anticipated that consumers who still 
wish to purchase wet wood in large quantities would have to store it before usage and are 
likely to do so in a dry space.  
 
52. The assumed rise in compliance is due to commitments in the Government’s Clean Air Strategy to 
launch a dedicated communications campaign with  the aim of increasing  public awareness on the 
health and environmental costs of burning wet wood.  Varying the assumed compliance rate has 
drastic effects on the output, so we performed a break -even analysis estimating the level of 
compliance that would result in the  net present value  of the costs and benefits associated with the 
wet wood ban to be zero. We found that the yearly non -compl iance rate would need to be 98%, 
which cannot be realistically expected. Further  sensitivities are reported in the risks and 
assumptions section.  
 
53. Based on this we estimate the net savings  to households switching between the assorted  fuels to 
be approximat ely £105 million in present value terms . This total net saving for households consists 
of a saving of : £111 million for households shifting from wet to dry wood ; £19 million for those shifting 
from coal to low sulphur manufactured solid fuel ; and an extra cost of £24 million for households 
shifting from high sulphur to low sulphur manufactured solid fuel.  
 
54. Only households currently using high sulphur manufactured solid fuel are anticipated to incur a  
financial cost due to this legislation. Based on industry estimates of an average consumption of 3.5 
tonnes per household, it is estimated that an approximate 12,500 households on average may be 
affected  over the 2020 -2030 period , each experiencing an ave rage cost of £170 per annum.  
 
55. However , it is likely that not all consumers will fully take into consideration the change of the energy 
efficiency of their consumption and immediately adjust  the volume of fuel they purchase to maintain 
the same energy outpu t as before the implementation of the legislation. It is expected that 
adjustment will take place progressively. In Annex 2  (part 2) , a sensitivity analysis is conducted with  
18 
 
 adjustments rate tested from 0% to 100%.  We found that households benefit financially even if they 
adapt partially, with the breakeven point at 67%18.  
 
Monitoring and compliance costs  
 
56. Monitoring and compliance costs  are incurred by the regulator  in enforcing the regulation . It is the 
cost of regular inspections and testing of fuels to ensure fuels sold on the market are compliant with 
the required standards.  These costs  are passed onto fuel manufacturers through fuel testing 
charges and annual registration fees to ensure that the monitorin g scheme is sustainable.  
 
57. We estimate the monitoring and compliance costs based on the Ready to Burn scheme, a voluntary 
industry scheme  operated by Woodsure and  supported by  the Government that promotes the sale 
of dry wood. The intention under the legislation is that this scheme would become mandatory for all 
suppliers of wood in volumes under 2m3 to demonstrate compliance. Woodsure have provided 
Defra  with data and information on the ir fee str ucture, the scheme’s operational costs and the likely 
size of the market. We assume the  charging  structures remain unchanged with a similar scheme 
expanded as a result of the legislation . However, the monitoring and compliance costs are increased  
and decreased by 20% in the low and high scenarios  respectively  to reflect the possibility that there 
may be a variability in costs .  
 
58. We estimate the associated monitoring and compliance costs  for the proposed restrictions on wood  
to range from £16.9 million in the low scenario to £11.3 million in the high scenario in present value 
terms over the 11 -year assessment period . The monitoring costs associated with regulating the sale 
of traditional bituminous coal are estimated to range from approximately £2.5 million in present 
value terms in the low scenario to £1.6 million  in the high scenario for the preferred option  over the 
period . The low and high scenarios reflect a +/- 20% adjustment  from the central scenario should 
these costs turn out to be higher  than has been reported. Table  6 sets out the estimated central 
monitoring and compliance costs associated with the restrictions on the sale of wet wood and 
traditional house coal under our preferred option in present value terms. The monitoring costs for 
coal industry are lower reflec ting the smaller number of suppliers and distributors that would need 
to be regulated.  
 
 
Table 6: Present value for monitoring costs for regulating the sale of wet wood and traditional 
coal (central scenario); £ millions  
Fuel 2020  2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  
Wood   1.24   1.49   1.44   1.39   1.35   1.30   1.26   1.21   1.17   1.13   1.10  
Coal 
+MSF                      
0.12                      
0.12                      
0.23                      
0.22                      
0.22                      
0.21                      
0.20                      
0.19                      
0.19                      
0.18                      
0.18  
Source: Defra estimates based on the Ready to Burn scheme  
 
Administrative costs  
 
59. Administrative costs  are incurred by the fuel manufacturer s as part of the inspection. They typically 
represent the cost of the time spent by the  manufacturer’s quality control manager with the 
regulatory body assessing the fuel produ ction and quality control records – including analysing the 
fuel mix and its content. These costs will be incurred by all manufacturers that sell wood or 
manufactured solid fuel for domestic heating purposes.  Based on discussions with industry,  it is 
assum ed a fuel manufacturers’ quality control manager would be required to spend a day and half 
each year in preparing for and participating in the inspection. This would be at a cost of £288 
assuming  an annual salary of £50,000 per annum for a quality control manager.  We estimate the 
administrative and familiarisation costs to businesses (£288 * the number of businesses (3, 702))19 
as a result of the proposed re gulation on the sale of wet wood to range from £11.7 million in the low 
 
18 Households that reduce their usage of fuel by 67% of the total volume they should have red uced to maintain constant energy output will 
not see on average any change in their energy spending. However, they will benefit from higher energy output.  
19 Estimate provided  by industry body.    
19 
 
 scenario to £7.8 million  in the high scenario  in present value terms over the period 2020 to 2030 . 
The estimates  for bituminous traditional coal are £1.2 million  in the low scenario and £0.8 million in  
the high scenario. Table 7 reports the yearly  administrative costs in the central scenario arising from 
the proposed regulation.  
 
 
Table 7: Present value for Administration costs related to regulating the sale of wet wood and 
coal (central scenario); £ millions  
Fuel 2020  2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  
Wood                                 
0.85                          
1.03                      
1.00                      
0.96                      
0.93                      
0.90                      
0.87                      
0.84                      
0.81                      
0.78                      
0.76  
Coal + 
MSF   0.06   0.06   0.11   0.11   0.10   0.10   0.10   0.09   0.09   0.09   0.08  
Source: Defra estimates  based on the Ready to Burn scheme  
 
60. Suppliers and retailers selling wood in volumes over 2m3 will be required to provide advice at point 
of sale to ensure that consumers are aware that the wood will require further seasoning before use.  
Information on how and for how long the wood should be stored prior to burning will also be required, 
Governmen t has already issued  guidance on storage and seasoning20 which may be used by 
businesses to meet this requirement.  We will not require business to print and distribute a leaflet,  
but some may choose to do so.  Government has assessed the cost implications t o businesses of 
this advice and concluded that they will incur little or no cost as a result of this advice requirement.  
This opinion has been confirmed by Woodsure based on  their existing experience with the Ready 
to Burn Scheme.  This is based upon the fact that relevant guidance is already available for suppliers 
and retailers to use both from Woodsure and Government.  The requirement of the legislation will 
require an update to a consignment note and the provision of readily available information.  We will 
not require business to print and distribute a leaflet although some may choose to do so.   
 
Capital and operating costs (wood business)  
 
61. Capital costs : Some  wood  suppliers will need to invest in drying kilns or covered space to season 
wood in order to comply with the proposed legislation. Based on discussions with stakeholders a 
kiln and the supporting fuel infrastructure are believed to cost  between £70,000 and £80,000  for a 
drying capacity of ov er 1,800 tonnes of wet wood per year. T he operating costs  (labour, 
maintenance, insurance and others, boiler feedstock)  are estimated at £16 per tonne . Covers to dry 
wood are estimated to co st £150 per meter squared  with a capacity to season three  tonnes per 
year. From  an analysis of  the consultation  responses , we estimate that half of wood businesses that 
will incur some capital costs to dry their wood  will invest in a kiln drier while the other half  will invest 
in construction of covered areas for the processing, storing and seasoning of timber and processed 
firewood .  
 
62. Based on the most robust sources of evidence available , we estimate that 42% of wood is sold wet. 
We are using the average  from two separate  surveys - the BEIS Domestic Wood Use Survey 
published in 201621 showing that 4 2.2% of wood is sold wet and the Kantar survey on “Burning in 
UK homes and gardens” commissioned by Defra, showing that 42.6%22 of wood is sold wet . We are 
confident in the figu res as t he findings from the two survey s are also consistent23 with industry expert 
views.  Following expert advice recommendations, we are treating wood as wet if it has been 
seasoned for less than one year24.    
 
20 https://uk -air.defra.gov.uk/assets/documents/reports/cat09/1903131256_Seasoning_Wood_Web_Feb_2019_V5.pdf  
21 https://www.gov.uk/government/publications/summary -results -of-the-domestic -wood -use-survey  
22 The Kantar study on “Burning in UK homes and gardens”  is due to be published shortly  
23 It should be noted that the results from these two surveys on the proportion of wood burned  wet are also consistent, with a figure of 
22.5% for the BEIS survey and of 24.9 % for the Kantar survey   
24 “Firewood that has been air dried and stored under cover f or at least 12 months (or 2 summers) can be dried down to around 20% 
moisture content (depending upon species, climate and storage) and may be suitable fo r burning on the day purchased” - https://uk -
air.defra.gov.uk/assets/documents/reports/cat09/1903131256_Seasoning_Wood_Web_Feb_2019_V5.pdf  
  
20 
 
  
63. There is some uncertainty regarding the size of additional capital investment required to raise 
existing wood drying capacity to a level that meets the expected demand from consumers following 
the enactment  of the proposed legislation. Based on our consult ation  and discussions with industry 
experts , wood  producers are likely to respond in one of 4 ways to comply with the legislation  for 
quantities of wood sold wet : 
• Season  it using existing spare drying capacity;  
• Scale up and sell only in volumes over 2m3 – potential customers would be both domestic 
and larger  businesses with drying capacity;  
• Build home -made  cover storage or drying kiln; 
• Invest in cover space or drying kiln.  
 
64. It should also be noted that the Government anticipates that, initially, there may not be full 
compliance to the legislation by wood producers due to the flexibility in the design of the regulation 
and the large number of small retailers which makes the regulation harder to fully enforce . This has 
been reflected in the analysis25. 
 
65. While  the consultation , as well as insights from  discussions with industry experts and  the anticipated 
partial compliance , indicate s that a significant share of wood producers will not invest in drying 
facilities , we are using a very conservative approach in assessing the cost to business in terms of 
capital investment and operating costs. The calculation of cost to business assumes that all wood26 
sold wet in quantities of 2m3 or more will require to be seasoned under cover space or dried in kiln  
when the legislation starts  and will require investing in cover space and drying kiln s. 
 
66. We are incorporating in the analysis the most reasonable level of uncertainty: we have conducted 
sensitivity analyses  around the cho sen figure whereby we assess the sensitivity of key variables on 
cost to business , in particular capital and operating costs for wood businesses,  to a range of values : 
 
- Sensitivity to the proportion of wood burned wet (24%) - see Annex 2 part 3: we used da ta 
ranging from 10% to 80%  for the proportion of wood burn ed wet.  
 
- Sensitivity to the proportion of wood businesses that will require to invest in drying facilities  
(42%) – see Annex 2 part 4 . The central estimate for capital costs is £82.7 million. We 
performed  a sensitivity analysis around  the share of businesses that we anticipate will incur 
some capital costs, ranging from 10% to the maximum of 42%.  The sensitivity  results show 
that the capital costs may range from £57.0 to £82.7 million  over the 11 -year period . Through 
our engagement with  the sector, we are informed wood suppliers who sell less  than around  
600m3 of wet wood a year  may find it unprofitable to invest in kilns and some may  scale up 
their bag sizes to avoid being cau ght by the regulation.  Suppliers who sell more than 600 m3 
of wet wood  will find it profitable to invest in kilns or covers.  
 
Loss in profits (coal and wood business)  
 
67. The impact on  profits of businesses in the coal, manufactur ed solid fuel and wood sectors is 
calculated using estimates of profit margins in the relevant industry27, change in volume of the fuel 
sold following the implementation of the legislation and retail price s. The changes  in the volume  of 
fuel sold following t he policy  result from the lower or higher energy efficiency28 of the alternative fuel 
used (e.g. shift from wet to dry  wood ) following the legislation . A sensitivity analysis is conducted to 
evaluate the  impact on business profits of households’  behaviour in relation to the adjust ment of  the 
 
25 See Annex 2 - Part 6  related to the s ensitivity of the results to the level of compliance for w ood with the legislation  
26 Small forest businesses will be given an additional year to meet the legislative requirements  and are therefore assumed investing in 
drying facilities only on the second year of the implementation of the legislation . 
27 For profit margin in coal: IBISWorld Industry Report B05.100 Hard Coal Mining in the UK. August 2018  
For profit margin in wood: Forestry & Wood Products Industry Profitability Ratios, published by CSIMarket: 
https://csimarket.com/Industry/industry_Profitability_Ratios .php?ind=105  – accessed on 28 June 2019  
28 The energy output of the various fuels considered is calculated based on the data on energy density and appliances efficiency  from a 
report  commissioned by Defra to be published at the same time of this impact asse ssment.   
  
21 
 
 volume of fuel they purchase to maintain the same energy output as before the implementation of 
the legislation (cf. Annex 2 part 2).  
 
68. Based on this approach, there w ill be a loss in profits to the coal industry  estimated at £14.7 million 
as a result of the ban on the sale of traditional bituminous coal. The calculation takes into 
consideration the 2 -year transition period whereby deliveries of loose coal direct sales are allowed.  
The loss in profits to businesses selling high sulphur manufactured solid fuel is ant icipated to reach 
£18.2 million due to the ban of sales. There will also be a net loss in profits to the wood industry 
estimated at £ 15.9 million as a result  of the ban on the sale of wet wood.  The calculation accounts 
for the reduction of sales of wood due to the shift by households from wet to dry wood which has a 
higher energy output  and for the 2 -year transition period for small foresters .  This reduction in profit 
due to lower volumes sold is partially offset by the higher price of dry wood (cf. Table  4).  
 
69. While loss in profits are anticipated to occur in the coal, wood and high sulphur manufactured solid 
fuel markets, the increased sale s of low sulphur manufactured fuel  are expected  to generate £ 34.5 
million of additional profits , as coal and high sulphur manufactured solid fuel user s shift to this 
product.  
 
70. The calculation of overall profit loss to all industries involved takes into acc ount the reductions of 
the volume sold experienced by business following the policy due to the higher energy efficiencies 
of dry wood and low sulphur MSF when compared to wet wood and coal. Consequently, while dry 
wood and low sulphur MSF fuels have a high er retail price (table 4), the higher energy content of 
these fuels reduces the overall quantities sold by industry leading to profit losses in in the coal, 
wood and high sulphur manufactured solid fuel markets.  
 
71. Over the period, we estimate the total net  loss in profits to solid fuel businesses  to be approximately 
£14.3 million  in present value terms based on fixed current market prices  in the central scenario .  
The loss in profits is expected to range between £ 17.1 million in the low scenario taking into 
consideration a 20% discount and £ 11.4 million in the high scenario using  a 20% mark -up. Coal and 
high sulphur MSF businesses can recover profit losses through the sale of low sulphur MSF . 
Table 8: Loss in profits by industry sector  (central scenario)  (£m)  
£m Bituminous c oal High sulphur 
manufactured 
solid fuel  (HSMSF)  Low sulphur 
manufactured 
solid fuel  (LSMSF)  Wood  Total , net  
Loss in 
profits  +14.7  +18.2  -34.5 * +15.9  +14.3  
Source: Defra estimates based on industry data  from Call for evidence  
* Increase  in profit  
 
72. In this analysis, changes in business profits due to reduced sales of coal and wood and increased 
sales of low sulphur manufactured fuels are considered as direct costs/benefits to businesses. The 
regulation re stricts economic activity from the coal and high sulphur manufactured solid fuel (total 
ban) and wet wood (limited ban) sectors and provides direct opportunity for the low sulphur 
manufactured fuel producers to increase sales as the product represents the next best alternative 
to coal. We have calculated the net change in profits for facilitating understanding of the impact on 
businesses.  
 
Costs to business as fuel consumers  
 
73. The purpose of the legislation is for domestic burning only  and would not cover other businesses 
that may burn s olid fuels such as pubs/hotels or heritage industry  add but they will still be required 
to abide by any relevant restrictions in their areas such as smoke control area.   We acknowledge 
that the legislation may impact u pon the supply of these fuels to businesses despite the fact that 
the domestic coal market represents less than 5% of national coal demand.   This is however already 
an issue as the national market for coal is  currently  declining particularly due to the red uced use of 
coal for electricity generation (56% of the demand in 2018).   
  
22 
 
 74. For pubs/hotels, as there is a readily available more cost-effective  alternative, we consider that it 
would be cost beneficial to them in any event to switch to the alternative fuel s.  Government intends 
to work with these businesses to advise o n the benefits of cleaner fuels to their customers.  A recent 
survey of local authorities showed that smoke is observed much less often from such chimneys 
than residential ones in smoke contro l areas, so this may imply that these businesses are already 
burning the least smoky  fuels.  
 
75. The heritage industry raised concerns at consultation as to whether a ban on the sale of domestic 
house coal would impact on the cost and availability of supply fo r this sector.  This was set in the 
context of existing concerns given the phasing out of coal for power generation and declining 
domestic supply.  The All Party Parliamentary Group on Heritage Rail undertook an enquiry.  This 
did not quantify the direct c osts to this sector from a ban on the sale of domestic coal but did 
recommend that a longer transition period be included in government plans.  This has been taken 
into account in our proposals with a longer transition period being given to the phasing out  of coal.   
 
Costs to Government and Local Authorities  
 
76. In line with the Government objective to minimise burdens on local authorities, the legislation 
requires business to demonstrate that the ir fuel meets the legislation requirements. W e aim to 
progressively lead business to obtain certification guaranteeing that they comply with the legislation  
which will be enforced in partnership with Local Authority officers at a cost estimated at £1.2 million 
in present value terms over the 11 -yeat period of assessment .   
 
77. For wood the legislation will introduce a requirement for all suppliers of wood fuel sold in volumes 
under 2m3 to demonstrate that the fuel meets the required moisture levels, with a view to suppliers 
becoming members of the existi ng Ready to Burn certification scheme.  For manufactured solid 
fuels, all suppliers will be required to demonstrate that the fuel meets the required sulphur and 
smoke emission limits, with a view to suppliers obtaining certification under a system based up on 
the existing Clean Air Act accreditation scheme . In line with the Government objective to minimise 
burdens on local authorities,  the main compliance  requirement will be through an  industry led 
certification based on discussions with the Local Government  Association.   
 
78. The proposed regulation will also be accompanied by a Government communications campaign to 
raise awareness of the impacts of burning solid fuels . It is estimated that this would run over 3 years 
at an approximate cost of £2 10,000  in presen t value terms .  
 
 
 
7. Health  and the environment al benefits  
 
79. The beneficial impacts of the measures are considered in terms of the ‘damage avoided ’ if 
emissions reductions are achieved. This is calculated in money terms using the damage cost 
approach. The damage cost approach is part of the official Government ‘Green Book : Guidance on 
Valuing Impacts from Air Quality ’. The damage costs predominantly capture the health benefits from 
reduced emissions. The analysis  uses the most recently published damage costs and is  consistent 
with the approach  used in support of the government’s recently published ‘Air quality plan for 
nitrogen dioxide’.29 The damage costs values used are standardized to 2017 prices (using GDP 
deflators) and uplifted by 2% per annum, in line with Green Book guidance. The uplift  captures the 
higher willingness to pay of the population, and therefore value of health benefits as income 
(economic growth) rise s. 
 
80. Three sets of damage costs have been developed for the high, central and low scenarios. The 
variation reflects different m ortality and morbidity impacts being included in the different sce narios . 
The damage costs are higher in the ‘High Range’ where the associated health impacts most 
prominent and consequently benefits assumed to be largest . The  monetised benefits are also 
 
29 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/633270/air -quality -plan-detail.pdf   
23 
 
 impacted by the compliance rates assumed i.e. how many people currently burning highly polluting 
fuels substitute to the cleaner fuels under discussion . 
 
Table 9: Present value benefits from the proposed regulation on the sale of wet wood , coal and 
HSSMF  (central scenario)  (£m)  
  Source: Defra estimates  
 
 
 
81. Carbon benefit s: This policy leads globally to carbon saving resulting from lower quantity of wood 
and MSF needed to achieve the same heat output. The costs/savings are valued using the Green 
Book guidance and are monetised using BEIS non -traded carbon values. As a result o f the 
proposed regulation , we estimate the carbon saving to be £  26.9m for Option 2 and £0. 24m for 
Option 1  in present value terms over the appraisal period .  
 
 
Other non -monetised benefits  
  
82. It is important to note when applying and interpreting damage co st functions, a number of impacts 
are not taken into account in the quantification; these include impacts on ecosystems  e.g. lower 
acidification and eutrophication of soils  (associated with reductions in soil and surface water 
contamination, reducing acidity) and some  morbidity impacts arising from air pollution.  The analysis 
does not monetise  the benefits from lower emissions of black carbon. Burning solid fuel is a 
signifi cant source of black carbon, itself a strong positive climate forcer. Similarly , we have not 
monetised the benefits arising from a reduction in other pollutants such as NO X due to uncertainty 
in their  emission factors  related to the burning of solid fuels .  
Impact  of a communications campaign   
 
83. Under both Option s 1 and 2, we adjust the baseline to reflect a change in burning habits owing to a 
Government information campaign. The campaign is intended to raise the public’s awareness of 
the health and environmental impacts of burning solid fuels . Its impact is dependent on the existing 
level of public awareness of the damage caused by burning pollu ting fuels. If public awareness is 
high and consumers still choose to burn polluting fuels, then a communications campaign is unlikely 
to result in any behavioural change.  
 
84. However, if public awareness is low, there is scope for such a campaign to have an  impact. Initial 
evidence on public awareness as to how harmful burning wet wood/bituminous coal and high 
sulphur fuels is to human health and the environment suggests that awareness is low. In the 
absence of robust information, we  have conducted an extens ive literature review30 on previous 
 
30  Maibach, E.W., Roser -Renouf, C. and Leiserowitz, A., 2008. Communication and marketing as climate change –intervention assets: A 
public health perspective. American journal of preventive medicine , 35(5), pp.488 -500. 
Weiss, J.A. and Tschirhart, M., 1994. Public information campaigns as policy instruments. Journal of policy analysis and management , 
13(1), pp.82 -119. 
Maibach, E.W., Roser -Renouf, C. and Leiserowitz, A., 2008. Communication and marketing as climate change –intervention assets: A public 
health perspective. American journal of preventive medicine , 35(5), pp.488 -500. 
Montague, M., Borland, R. and Sinclair, C., 2001. Slip! Slop! Slap! and SunSmart, 1980 -2000: Skin cancer control and 20 years of 
population -based campaigning. Health Education & Behavior, 28(3), pp.290 -305. 
 Fuel 
2020  2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  
Wood   
317.30    
572.88   
680.54   
673.67   
722.43   
715.11   
760.07   
750.14   
740.35   
730.68   
721.14  
Coal  37.39   32.94   53.84   45.93   38.23   30.74   28.08   25.49   22.97   20.52   18.13  
HSMSF  19.12   16.84   14.63   12.48   10.39   8.35   7.63   6.93   6.24   5.57   4.93   
24 
 
 communication campaigns and assessed a range of impacts, ranging from little to no impact (0.5% 
change) to a 2 % change in the total wood consumed as the upper bound. We use 1% reduction a 
year in the tonnage of wet wood  which is purchased and burned wet  as the central estimate .  We 
assume those consumers/households who change their consumption habits in response to the 
campaign do not switch back to consuming highly polluting fuels after the campaign. A recent survey 
by the Stove Industry Alliance has indicated that 29% of respondents recognised the brand Ready 
to Burn but as yet quantitative data of the percentage of households who have switched is not 
available.   
 
Baseline estimates for coal and wood  burning activity  
Estimated  wood  baseline  and projection  
 
85. The proposed restrictions regulate t he sale of wet wood sold in bags of less than 2m3. Based on 
consultation with industry, we estimate  a total of  1.8 million tonnes of wood sold in England in 2016 , 
the latest year for which data  were available . Based on the BEIS and Kantar survey data31 and 
consultation with the industry, 42% of the volume of wood in England was sold wet , of which 80% 
was sold in bags of two metres cubed or less , corresponding to 610,510 tonnes .  
 
86. Based on the BEIS and Kantar survey s, 24% of the total quantity of wood sold in bags of two metres 
cubed or less is burned wet, corresponding to 430,792  tonnes . This is the quantity which would 
have fallen within scope of the proposed legislation  in 2016 .  
 
87. We projec t the tonnage of wet wood burned  over the 20 20-2030 period by applying growth rates 
from scaling the historic NAEI wood consumption data using a trend drawn from the E nergy and 
Emissions Projections (EEP)  2015 activity data .32 The NAEI reports annual estimates of pollutants 
emitted based on the Digest of UK Energy Statistics 2017 (DUKES), produced by (BEIS) and the 
EEP, which projects future energy use and greenhouse gas emissions in the UK.  Based on the 
NAEI growth rates, we project  the total tonnage of wet wood purchased and burned wet for d omestic 
heating purposes to grow  from 504,962  tonnes in 2020 to 519,719  tonnes by 2030 in the absence 
of any Government intervention.  
Estimated  coal baseline  and projection  
88. Similar to wood, we rely on  consultation  evidence from industry to estimate our coal baseline.  Using 
data from industry, we estimate 155,000 tonnes of coal were burned in England for domestic heating 
purposes in 201 7, falling to  92,071  tonnes  in 2020 . This is a significantly lower estimate than the 
DUKES (BEIS energy statistics) estimate of 434,208 used in the pre -consultation IA.  During 
consultation , the coal industry advised that they viewed  the DUK ES figure as an overestimate. We 
worked with the industry to co llate sales data for 2017 and have used these industry figures , as 
opposed to official BEIS figures . We estimated  that this provides a more accurate figure and reduces 
the risk of overestimating the benefits . The reported tonnage is projected forward to 20 30 using a 
similar  methodology  to that used to project the  wood  baseline . 
Estimated manufactured solid fuels baseline  and projection  
89. The baseline for manufactured solid fuels is estimated using evidence taken from consultation with 
industry. The proposed policy will restrict the sale of high sulphur  (more than 2% sulphur content)  
manufactured solid fuels. We estimate approximately 77,429  tonnes of manufactured solid fuels 
 
Jackson, T. 2005. Motivating sustainable consumption . SDRN.  
Abrahamse, W., Steg, L., Vlek , C. and Rothengatter, T., 2005. A review of intervention studies aimed at household energy conservation. 
Journal of environmental psychology , 25(3), pp.273 -291. 
Steg, L., 2008. Promoting household energy conservation. Energy policy , 36(12), pp.4449 -4453.  
Prochaska, J.O. and DiClemente, C.C., 1983. Stages and processes of self -change of smoking: toward an integrative model of change. 
Journal of consulting and clinical psychology , 51(3), p.390.  
31 Sources: BEIS Domestic Wood Use Survey published  in 2016  and Kantar survey on “Burning in UK homes and gardens” commissioned 
by Defra , to be published shortly.  
32 The EEP does not have a specific field for manufactured solid fuel or wood. We have used ‘Other Solid Fuel’ as a proxy for MS F and 
‘Biofuels’ as a proxy for Wood.   
25 
 
 (corresponding to about  30% of manufactured solid fuels ) sold in 2020  contai ned sulphur content  
above the proposed restriction . The consumption of high sulphur manufactured fuels in the baseline  
is projected forward to 2030 using a similar methodology to that used to project the tonnages for 
wood and coal . 
 
90. Under this Option retai lers are given a transition period of one year to use up existing stocks. In line 
with feedback from the consultation , Government proposes to give an extra year to small foresters 
(producers of less than 600 m3 of wood annually ) and an extra 2 years for deliveries of loose coal 
direct sales.  The purpose of these extensions is to support any small foresters in the transition to 
selling dry wood or increasing volume of sales and to enable those people who burn high volumes 
of coa l (and rely on this as their primary heating source) to work with their coal merchants to identify 
a suitable and cost-effective  alternative. The proposed regulation is set out below in more detail.  
 
91. Table  10 reports the  baseline  projected tonnag es of wet wood,  coal and high sulphur manufactured 
fuels in the baseline, as well as quantities for  Option 1 and Option 2 for the forecast period. The 
tonnage of wet wood burned is projected to rise while the tonnage of coal burned for domestic 
heating pur poses is p rojected to decline  in line with a fall in the use of coal for energy generation.  
 
Table 10: Projected tonnages (000s) of wet wood, coal and high sulphur manufactured solid 
fuels burned by households in England 2020 – 2030.  
  2020  2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  
Tonnage projections baseline  
Wood  
(wet)   
504,692    
506,957   
 509,222   
 511,486   
 513,751   
 516,015   
 516,756   
 517,497   
 518,237    
518,978    
519,719  
Coal                 
92,071                 
82,311                 
72,551                 
62,791                 
53,032                 
43,272                 
40,109                 
36,946                 
33,783                 
30,620                 
27,457  
 
HSMSF     
77,429                 
69,221                 
61,013                 
52,806                 
44,598                 
36,390                 
33,730                 
31,070                 
28,410                 
25,750                 
23,091  
Tonnage project ed: Voluntary approach with communications campaign (Option 1)  
Wood  
(wet)   
499,645   
 501,887   
 504,129    
506,371    
508,613    
510,855    
511,588    
512,322    
513,055    
513,788   
 514,522  
Coal                 
91,151                 
81,488                 
71,826                 
62,164                 
52,501                 
42,839                 
39,708                 
36,576                 
33,445                 
30,314                 
27,183  
HSMSF                 
76,655                 
68,529                 
60,403                 
52,278                 
44,152                 
36,026                 
33,393                 
30,759                 
28,126                 
25,493                 
22,860  
Tonnage project ed: R egulatory approach with communications campaign (Option 2)  
Wood  
(wet)   
363,379    
253,478    
203,688    
204,594    
179,813    
180,605   
 155,027    
155,249   
 155,471   
 155,693   
 155,916  
Coal                 
46,036                 
41,156  - - - - - - - - - 
HSMSF  - - - - -  
- - - - - - 
Source: Defra estimates   
 
 
92. It is worth recalling  that u nder Option 2 a transition period of one year is given to small foresters 
(producers of less than 600m 3 of wood annually ) and an extra 2 years for the delivery of loose coal  
through  direct sales . The purpose of these extensions is to support any small foresters in the 
transition to selling dry wood or increasing volume of sales and to enable those people who burn 
high volumes of coal (and rely on this as their primary heating  source) to work with their coal 
merchants to identify a suitable and cost-effective  alternative.  This transition periods impact the 
projected tonnages of wet wood and coal anticipated to be purchased at the beginning, in particular 
with the volume of coal  used for domestic heating only falling to zero in 2022.  
   
26 
 
 Emission projections  
Table 11: Emission projections in kilo tonnes of PM 2.5 related to a ban on the sale of wet wood 
and traditional coal.  
 
 202
0 2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  
Emission projections baseline  
Wood  14.5
7 14.64  14.70  14.77  14.83  14.90  14.92  14.94  14.96  14.98  15.01  
Coal 0.80  0.72  0.63  0.55  0.46  0.38  0.35  0.32  0.29  0.27  0.24  
Emission projections voluntary approach with communications campaign (Option 1)  
Wood  14.4
5 14.51  14.57  14.64  14.70  14.77  14.79  14.81  14.83  14.85  14.88  
Coal* 0.79  0.71  0.63  0.54  0.46  0.37  0.35  0.32  0.29  0.26  0.24  
Emission projections regulatory approach with communications campaign (Option 2)  
Wood  11.0
9 8.25  7.01  7.04  6.42  6.45  5.81  5.82  5.82  5.83  5.84  
Coal* 0.46  0.41  0.09  0.08  0.06  0.05  0.05  0.04  0.04  0.04  0.03  
Source: Defra estimates  
* Including emissions from low sulphur MSF used as alternative to coal  
 
93. We use emission factors to estimate PM 2.5 emissions emitted from burning wet wood and coal.  An 
emission factor  is a representative value that  relate s the quantity of a pollutant released to the 
atmosphere with an activity associated with the release of that pollutant.  Emission factors are 
applied to fuel burning activit y to estimate the emissions emitted from burning these fuels. We use 
emission factors from the NAEI which are primarily taken from the EMEP/EEA33 guidebook that 
contains internationally -agreed upon emission factors for a wide range of activities and pollut ants. 
The guidebook contains emission factors for wood, coal and manufactured solid fuel but not for wet 
wood. To estimate the emissions from burning wet wood, we use emission factors from a joint study 
by the University of Leeds and the University of Manc hester34. The study team burned wood in a 
representative stove and undertook a wide range of measurements on the emissions. We use their 
emission factor s to estimate emissions from burning wet wood. Table 11 above  sets out estimated 
PM 2.5 emissions arising  from burning purchased wet wood and bituminous coal for domestic heating 
purposes over the projected period under the different scenarios.  
8. Results  
Key costs and benefits of implementing legislation  on the sale of wet wood and 
traditional bituminous  coal 
94. This section details the estimated costs and benefits that are likely to result from restrictions  on the 
sale of wet wood , bituminous coal  and low sulphur manufactured solid fuel . The results present 
analysis for a n 11-year assessment period commencing in 2020, when the  first costs will be 
incurred. From 2030 onwards, the impacts are assumed to be similar in the absence of any changes 
to legislation. A discount rate of 3.5% is used to derive the  present value cost and benefit as per 
Green Book  guidance  with all costs and benefits reported in 2017 prices.  In the remainder of this 
section, the monetised impacts are outlined  in more detail .  
 
 
33 EMEP: European Monitoring and Evaluation Programme, a body of the Convention on Long -Range Transboundary Air Pollution. EEA: 
European Environment Agency, a European Union body.  
34 https://www.sciencedirect.com/science/article/pii/S00 16236118319859   
27 
 
 Monetised costs to households, business and government  
95. As shown in Table 12 below, the proposed regulation is expected to result in savings  to households 
of £84 million over the period . Total costs to business are anticipated to be £ 55 million. They main ly 
arise  from investments in kilns or covered space  for wood producers to dry their wood  (£21m) and 
from monitoring and administrative costs , estimated at £ 27 million . They also include  loss in profit 
to producers and distributors of wood (£7 million ) as consequence to the lower volumes of wood 
needed by households due to the shift to dry wood with higher energy efficiency . 
 
Table 12: Present value costs (£millions) related to a ban on the sale of wet wood, traditional 
coal and high sulphur manufactured solid fuels under our preferred option in the central 
scenario.   
 
 2020  2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  
Costs to households  
Wood * -6.14  -9.32  -
10.85  -
10.53  -
11.07  -
10.74  -
11.19  -
10.83  -
10.48  -
10.14  -9.81  
Coal* -2.03  -1.75  -2.99  -2.50  -2.04  -1.61  -1.44  -1.28  -1.13  -0.99  -0.86  
MSF   4.34   3.75   3.19   2.67   2.18   1.72   1.54   1.37   1.21   1.06   0.92  
Costs to business  
Wood                     
34.02                      
12.70            
9.58            
9.29            
9.00            
8.72            
8.36            
8.08            
7.82            
7.56             
7.31  
Coal                      
0.27                   
0.25            
0.47            
0.44            
0.41            
0.38            
0.36            
0.34            
0.33            
0.31            
0.30  
MSF *35 - 0.44  - 0.38  - 0.32  - 0.27  - 0.22  - 0.17  - 0.16  - 0.14  - 0.12  - 0.11  - 0.09  
Source: Defra estimates  
* Negative figures mean that shift in activities (including fees paid) result in net saving/ profit  
 
 
Monetised benefits to the environment and human health  
96. The main benefits that accrue from the proposed regulation on the sale of wet wood and bituminous 
coal relate to the reduction in air pollutant emissions and in particular PM 2.5 which can result in 
higher mortality rates for people with cardiovascular and respiratory diseases.  We estimate the 
proposed regulation o n the sale of wet wood and bituminous coal to lower  PM 2.5 emissions in 2020 -
2030 by 91.5kt in our preferred Option 2 , as reported  in Table 13 below . This compares to 1.4kt 
abated  in Option  1.  
 
Table 13: Total emission reductions  of PM 2.5 (in kt) of air pollutants from 2020 to 2030  compared 
to baseline  
   
 Option 1  
 Option 2  
(preferred option)  
Wood  1.42 87.87 
Coal 0.04   3.66 
Total  1.47 91.52 
Source: Defra estimates  
 
 
35 The shift from high to low sulphur manufactured solid fuels is anticipated to lead to improved profits for businesses due to the higher price 
and unit profit of low sulphur manufactured solid fuels.   
28 
 
 97. The restrictions on the sale of high sulphur manufactured fuels in Option  2 are estimated to abate 
24.9kt of SOx emissions (in addition to the abatement of 6.6kt originating from the coal ban) but do 
not yield reductions in PM 2.5 emissions.  
 
98. Table  14 sets out the combined indicative annual benefits related to regulation on the sale of wet 
wood and bituminous traditional coal, as well as restrictions on the sale of high sulphur 
manufactured fuel. The benefits are estimated by applying the damage cost functi ons to the 
reduction in emissions. Not surprisingly, the largest benefits arise from the restriction s on the sale 
of wet wood.   
 
Table 14: Year -on-year breakdown of PM 2.5 and SOx emissions benefits (£m, 2017 prices, 
discounted) central damage cost values  
Year  2020  2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  
Option 1  
Wood   12.12   11.46   11.34   11.23   11.11   11.00   10.86   10.72   10.58   10.44   10.30  
Coal                       
0.70                       
0.62                       
0.54                       
0.46                       
0.38                       
0.31                       
0.28                       
0.25                       
0.23                       
0.21                       
0.18  
HSMSF                      
0.19                       
0.22                       
0.19                       
0.16                       
0.13                       
0.11                       
0.10                       
0.09                       
0.08                       
0.07                       
0.06  
Option 2  
Wood   
317.30   
572.88   
680.54   
673.67   
722.43   
715.11   
760.07   
750.14    
740.35   
730.68    
721.14  
Coal                           
37.39                           
32.94                           
53.84                          
45.93                          
38.23                          
30.74                          
28.08                          
25.49                        
22.97                        
20.52                        
18.13  
HSMSF                          
19.12                           
16.84                           
14.63                          
12.48                          
10.39                             
8.35                             
7.63                             
6.93                          
6.24                          
5.57                          
4.93  
Source: Defra estimates  
 
99. Under Option 2 a transition period of one year is given to small foresters (producers of less than 
600m3 of wood annually) and an extra 2 years for the delivery of loose coal  through  direct sales. 
This transition periods lower the projected benefits from the redu ction of emissions from wet wood 
and coal during the transition periods.   
 
100. The damage costs used are a key sensitivity in the analysis . The main  driver behind the 
differences in the figures presented in Table 1 5 is the differences in valuing human health in the 
damage cost calculations, where the high and low damage costs  represent the uncertainty around 
the central range. The sensitivity in damage costs captures the uncertainty surrounding the 
valuation of healt h benefits for a given level of emission reductions. It should be noted that in all 
three scenarios the level of emissions reduction does not change but the damage cost applies 
changes.  
 
Table 15: Present Value of environment and human health benefits (2020 – 2030); legislation 
on the sale of wet wood and bituminous coal (Option 2)  – in £m  
Sensitivity  Best 
estimate  
Pollutant  Low 
damage 
costs  High damage 
costs   Central  
Wood PM 2.5 and SO 2 1,564 21,314   7,384   
Coal and LSMSF  PM 2.5 and SO 2 76 1,021 354 
HSMSF  SO 2 27 322 113 
GHG  27 27 27 
Total  (£m)   1,694.6   22,682.2   7,877.8  
Source: Defra  estimates  using published damage costs  
  
29 
 
 101. Both wood and coal smoke are known to emit other toxins as well as PM 2.5. A range of academic 
studies and monographs have demonstrated a strong correlation between the chemicals released 
through burning coal and increasing mortality from a wide variety of diseases, including cancer.  It 
has not been possible to quantify these cost s within this impact assessment and as such the above 
estimates may be an underestimate.  
Greenhouse gas monetised benefits  
102. Carbon dioxide (CO 2) contribute s to climate change, so any actions  that can be done to help 
reduce the amount of CO 2 in the  atmosphere can help to tackle climate change. Burning fossil fuels 
such as coal, gas and oil releases their stored carbon into the air as CO 2. By contrast harvested 
wood for bioenergy is accounted a s carbon neutral, with the CO 2 absorbed as young trees grow 
compensating for that released by burning. Manufactured solid fuel s emit higher CO 2 emissions 
than bituminous coal . However , when considered on an energy density basis there is a reduction in 
CO 2 emissions . The reduction in coal consumption should also reduce black carbon which has well 
known climate effects  but is not assigned a CO2e value  and as such is not  quan tified in this impact 
assessment . 
 
Table 16: Total CO2e emission de crease by 2030  (kT), non -traded :  
Fuel CO 2e emission decrease (kt) 
Option 1  CO 2e emission decrease (kt)  
Option 2 
Coal 0.90  76.2 
Wood  3.86 353.8   
Total  4.76 
 430.0 
Source: Defra estimates using BEIS guidance  
 
 
Progress towards UK’s legally binding air pollution reduction commitments   
103. The UK is required  to reduce overall emissions of certain pollutants  under the National 
Emissions Ceilings  Directive  which has been transposed into UK law.  For PM 2.5 the UK is required  
to reduce its emissions in 2030 by 46% ( 69kt) from 2005 levels.  Table  17 reports  the contribution  
of the proposed regulation  towards these targets.  Our emission projections show that without further 
intervention, we are expected to miss our 2030 emission reduction commi tment for PM 2.5 by 31kt.36 
Option 1  deliver s reductions of  0.1 kt of PM 2.5 emission s in the year 2030 . Option 2  delivers  7.5kt of 
PM 2.5 reductions in the same year . Other measures beyond this  proposed  policy will therefore be 
required to achieve the 2030 emissions reduction commitments.  
 
Table 17: Projected emissions reductions from the baseline in 2030  
 Option 1  
 
PM 2.5 (kt) 
  Option 2 (preferred)  
PM 2.5 (kt) Projected gap between 
baseline and NECD PM 2.5 
emission reduction 
commitments  for 2030  
Wood  0.13 9.17  
Coal 0.00 0.21 
Total  0.13 9.37 30.7037 
Source: Defra estimates  based on NAEI  
  
 
36 For further information, see the UK In formative Inventory Report (1990 to 2016): https://uk -
air.defra.gov.uk/assets/documents/reports/cat07/1803161032_GB_IIR_2018_v1.2.pdf  
37 This is the amount by which we are projected to miss our 2030 emission reduction commitment without further intervention.   
30 
 
 Summary of the results  
 
104. In all three scenarios the benefits of the preferred option are assessed to outweigh the costs for 
the measure related to restrictions  on the sale of wet wood  and coal .  
Table 18: Present value benefits and costs of restrictions  on the sale of wet wood and coal 
over a n 11-year period (2020 – 2030 in 2017 prices, £ millions) for Option 2  
 Low scenario  High scenario  Central scenario  
Costs fuel suppliers, households and regulatory body  
Loss in profit  * 17.1 11.4 14.3 
Monitoring costs *38 19.4 12.9 16.1 
Administration costs * 12.9 8.6 10.7 
Capital costs**  99.3 66.2 82.7 
Household costs  -105.8  -105.8  -105.8  
Government costs  3.8 0.2 1.4 
Total costs  46.6 -6.5 19.5 
Benefits from emission reductions  
Air quality pollutants  1,694.6  22,682.2   7,877.8   
Net Present Value 
(NPV) 1,647.9  22,688.7   7,858.3  
Source: Defra estimates  
* Direct business costs  
** For wood sellers only  
 
9. Risks, a ssumptions and uncertainties   
105. There is significant uncertainty in the data on which the analysis for this impact assessment 
relies. To minimise this uncertainty as much as possible, we have used a wide variety of data 
sources and issued a Call for Evidence  as well as consulted o n the proposed legislation . Whilst the 
majority of responses to the Call for Evidence were qualitative , we did receive some further 
quantitative evidence to validate our analysis. In addition , we have an extensive survey underway 
to build stronger evidence of the level of domestic burning.  This research is complete and is 
currently being quality assured so has been used to validate or change our assumptions.  The key 
uncertainties are set out below. Where there is variation between d ifferent estimates, in most cases 
we have based our analysis on the more methodologically conservative estimate to ensure that this 
IA does not overestimate the potential benefits.  
• Proportion of wood burned wet : The proposed regulation on the sale of wet w ood restricts its 
sale in bags smaller than 2 m3. The regulation is designed to tackle  the sale of wet wood in small 
bags which is likely to be burned wet while still allowing space for consumers who may wish to 
buy wood wet and dry it  before burning it . To estimate the impacts , we have assumed  that 80% 
of all wood is sold  in bags of two metr es cubed  or less  of which 24% is burned wet .  
Our estimate of 24% of wood burned wet is based on the most robust sources of evidence 
available . We are using the average of the data from the BEIS Domestic Wood Use Survey 
published in 201639 showing that 22.5% of wood is burned wet and from the Kantar survey on 
“Burning in UK homes and gardens” commissioned by Defra and to be published shortly, 
showing that 24.9% of wood is burned wet. The findings from the BEIS survey is consistent with 
those from the Kantar survey40. We are counting as wet wood all wood seasoned for less than 
 
38 Monitoring costs are the costs incurred by the regulatory body in monitoring fuel manufacturers to ensure that they comply wi th the  
proposed regulation. These costs will be passed to fuel manufacturers in the form of registration and fuel testing charges.  
39 https://www.gov.uk/gov ernment/publications/summary -results -of-the-domestic -wood -use-survey  
40 It should be noted that the results from these two surveys on the proportion of wood bought wet are also consistent, with a figure of 
42.2%  for the BEIS survey and of 42.6% for the Kant ar survey  (taking into consideration only responses from individuals who knew if the 
wood they purchased was wet or seasoned)   
31 
 
 one year as expert advice recommends41 to season wood for at least one year. Our approach 
to estimate the proportion of wood burned wet was validated by the Forestry Co mmission.   
We are incorporating  in the analysis  the most reasonable level of uncertainty: we have 
conducted a sensitivity analysis (see Annex 2 part 3) around the chosen figure whereby we 
assess the sensitivity of key variables such as cost to business and total benefit to a range of 
values (10% to 80%) for the proportion of wood burnt wet. The higher level of 80% was included 
as one respondent from the c onsultation was of the opinion that  the proportion of wood burned 
wet to be up to 80%. There is no evidence to support this particular view but we have  however  
included this level in our sensitivity analysis.  
We have also conducted a sensitivity analysis t o assess the impact of the assumed level of 
wood sold in sold in bags of two metres cubed or less. The assumed proportion of 80% was 
derived from consultation with the industry.  The sensitivity analysis provides a reasonable range 
of 60 to 100%. The resul ts can be found in Annex 2 part 5.  
 
• Fuel heat consumption ratio / conversion factor: The analysis takes into account energy 
densities of different fuels when estimating the quantities of wood and low sulphur MSF 
consumed following the ban. The higher energy densities of dry wood and low sulphur MSF 
when compared to wet wood and coal, respe ctively, implies that less of the more efficient fuel 
will need to be consumed by households to achieve the same heat output. This in turn leads to 
households experiencing a net saving following the policy while businesses experiencing a net 
loss. The conv ersion factor assumed when comparing  fuels of different  energy efficiencies  is 
therefore a key input in the analysis. We base our conversion factor on a Defra commissioned 
study assessing the heat output of six different fuels on three different appliances , which will be 
published in conjuncture with this impact assessment. The assumed conversion factors are 
presented in Table 19. It is possible that households will not respond fully to the increase in 
energy content of their chosen fuels following the intr oduction of the policy and continue to use 
the same quantities of fuel as previously, possibly due to choice inertia or lack of knowledge. To 
address this risk, we have performed extensive sensitivity  analysis  around this input in Annex  2 
(part 2). It pres ents the cost and benefit breakdown at various levels of response by households. 
100% uptake is our central scenario and implies that households realise all of the quantity 
reductions available due to higher heat content of low emissions alternatives, if t hey keep the 
overall energy output the same. 0% uptake implies that households continue to use exactly the 
same quantity of fuel as they previously have, producing overall higher energy output, and 
consequently not realising the available savings.  
 
Table 19: Fuel heat consumption ratio  
 Wet 
wood  Dry 
Wood  Coal Low Sulphur 
MSF  High sulphur 
MSF  
Fuel heat 
consumption 
ratio  
 1 1.96 1 1.47 1.47 
Source:  Defra estimates based on a commissioned study42 
 
• Volumes of wood sold : we estimate the volume of wood sold in England by scaling estimates 
of the total amount of wood sold in the UK for which there is data. Estimates of wood sold in the 
UK are highly variable . The official Government estimate relies on the 201 643 BEIS domes tic 
 
41 “Firewood that has been air dried and stored under cover for at least 12 months (or 2 summers) can be dried down to around 20% 
moisture content (depending upon species, climate and storage) and may be suitable fo r burning on the day purchased” - https://uk -
air.defra.gov.uk/assets/documents/reports/cat09/1903131256_Seasoning_Wood_Web_Feb_2019_V5.pdf  
 
42 The moisture content for kiln dry wood and for wet wood used in this analysis are 15% and 30%, respectively.  The moisture co ntent in a 
typical wet wood log is likely to be higher than 30%, in some cases substantially higher, implying that the analysis is likely to systematically 
underestimate and be ‘on the safe side’ of the benefits to households and of the policy overall.  
43 https://www.gov.uk/government/public ations/summary -results -of-the-domestic -wood -use-survey   
32 
 
 wood survey which estimates 6 million tonnes of wood is sold in the UK in 2015. This estimate 
is viewed with scepticism in the wood industry. Commercial stakeholders in the wood industry 
and the Forestry Commission estimate approximately 2.3 million to nnes of wood is sold in the 
UK each year. We use the industry estimate for our analysis. It is possible that  the true volume 
of wood sold lies somewhere between the two estimates. Using Monte Carlo simulations to 
generate random estimates between the lower  bound 2.3 million , average of 4 million and upper 
bound of 6 million with 1000 trials,  we test the PM 2.5 abatement impact under these varying 
estimates.  The chart  below shows the results under different estimates . 
  
    Figure 1: PM 2.5 abatement in England under varying estimates of wood volum es sold  in the UK  
 
 
Sources: Defra  estimates  
 
• Volume of coal sold for domestic heating purposes : The NAEI reports that  approximately 
434,000 tonnes of coal burned for domestic heating purposes in 2016. Responses from industry 
as part of the consultation point to a significantly lower volume of 155,000  tonnes of coal sold 
for domestic heating purposes. We worked with indus try to collate sales figures for 2017 which 
found a total tonnage of domestic house coal sold as 155,000 tonnes.  We use this lower industry 
estimate in this impact assessment. Figure  2 reports estimates of PM 2.5 emissions abated with 
proposed restrictions on the sale of coal under different 2017 quantity estimates of coal sold.  
 
Figure 2: PM 2.5 abatement in England under varying estimates of coal volumes sold  in the UK  
 
                   Source: Defra  estimates  
 
33 
 
  
• Replacement fuel for coal burners : It is expected that households  who currently use coal as 
a primary or secondary source of domestic heat will switch to low sulphur manufactured solid 
fuels , as this is the next best value fuel source available  (although there is regional variation in 
the difference in comparative cost) , other than free fuel such as foraged wood . Switching to  
foraged wood is unlikely due to the quantity of material required.  Furthermore , it is assumed that 
if free wood is available as a do mestic fuel it will already be used and a ban on coal purchases 
will not increase its consumption . Annex 2 (part 1) develops a sensitivity analysis around the 
emissions abated and resulting NPV if assumed that a proportion of fuel poor households switch 
to wood following the coal ban.  
 
• Emissions factors:  Emission factors used in this analysis are aggregated from the 
internationally -accepted emission factors published jointly by the European Environment 
Agency (EEA) and the UNECE European Monitoring and Evaluation Programme (EMEP). The 
EEA/EMEP emission fact ors are quoted for different appliance types and  applied to the UK 
technology mix as assessed by Defra’s NAEI contractor. The EEA/EMEP emission factors are 
based on experimental measurements of the burning of dry wood. There are no published 
emission facto rs for wet wood as assessed by the universities of Leeds and Manchester. There 
is significant uncertainty in this comparison because of the different appliance types used which 
will impact on the estimated abatement and as such the benefits of the proposed  measure.  
 
• Damage cost functions : When measuring the impact of emissions, an impact pathway 
approach is preferred in some circumstances. An impact pathway approach uses atmospheric 
modelling to estimate the spatial distribution of changes in emission from  a specific source. This 
approach is time consuming and costly. In the case of the measures under consideration, such 
an approach is disproportionate.  For this impact assessment, damage costs were used to 
calculate the indicative impact of emission changes . Damage costs are standardised average 
values of the impact to society of a given change in emissions. Damage cost values are 
published in the Green Book guidance and are used as standard practice throughout 
Government.  A limitation is that damage costs a re a UK average and not specific to the 
geographical source of emissions change. For example, they don’t adjust for the site-specific  
population exposure to the pollution, where reductions in pollutants in a more densely populated 
region would generate gre ater benefits. Moreover, damage costs are  an underestimate for two 
reasons. Firstly, they capture partial health impacts, such as those to mortality (cost of life years 
brought forward) but largely not to those on morbidity (short -term impacts). Secondly, they do 
not explicitly capture the full impacts to eco systems and cultural heritage.   
 
• Compliance to the regulation : Full compliance with the regulation for coal is assumed given 
the limited number of fuel suppliers. However, based on Government’s experience, a  lower 
compliance rate for wood was used for the analysis. Compliance level to the proposed legislation 
has a significant impact on its outcome , both in terms of costs to business and of air quality 
improvement.  We performed sensi tivity analysis the level of compliance of both wood business 
and consumers in Annex 2 part 6.  
 
10. Measurement of the impact on micro and small 
enterprises  
106. Small and micro -businesses (SMBs) can be affected disproportionately by the burden of 
regulation. N ew regulatory proposals are designed and implemented in a manner aiming to mitigate 
disproportionate burdens where appropriate. As such, the default assumption set in the Better 
Regulation Framework Manual (June 2013) is that there will be a legislative ex emption for small 
and micro -businesses where a large part of the measure can be achieved without including small 
and micro -businesses within the scope of the policy proposal.  
 
107. The Better Regulation Framework Manual defines micro and small businesses accord ing to a 
staff headcount. Micro -businesses are those employing up to 10 full time employees as staff 
members while small businesses employ between 11 and 49 FTE staff. The manual provides  
34 
 
 guidance on Small and Micro -business Assessment including a range of  potential mitigation 
measures if the proposed policy option does have an impact on small and micro -businesses.   
 
108. The proposed regulation on the sale of wet wood ha s the potential to impact on SMBs  that sell 
wood fuel. Evidence collected from our Call for Evidence suggests that there are about 3,400 
businesses  selling wood in England , with the very large majority being  SMBs . The nine largest  
market participants selling each over 10,000 m3 of wood hold together only about 16% of the 
market. On this basis, it is assumed that a  full exemption of small businesses is not compatible with 
achieving a large part of the intended benefits of the measure. Furthermore , it is estimated viable 
for most SMBs to mitigate costs  through two strategies.  Either  scale -up the bag sizes in which they 
sell wood to avoid falling into scope of the proposed regulation  or by choosing  to switch from selling 
wet wood to dry wood , which many seem to have the capacity and the will to do so . Consultation 
responses indicated that nearly 70% of business respondents would be able to comply with the 
regulation right away, reducing the risk of unintended consequences.  These businesses  may need 
to invest in capacity to dry wood either via covered space  or the purchase of kilns. In return , they 
would benefit from selling t heir product at a higher price.   
 
109. While a full exemption of wood small businesses  cannot be considered in this case, the 
Government acknowledges that it may be harder for s mall forest businesses to come into 
compliance in the short term and as such they will be given an additional year to meet the legislative 
requirements.  
 
110. Similarly, our Call for Evidence suggests that a large majority of coal manufacturers and 
distributors  are SMBs. There are only 3 businesses out of just over 400 country wide selling over 
6,000 tonnes of coal  and not classified as SMBs .  These operations are estimated to have a total 
market share of about 5 %. On this basis, it is assumed that a full exempt ion of small businesses is 
not compatible with achieving a large part of the intended benefits of the measure.  Furthermore, it 
is estimated viable for most SMBs to mitigate costs  as many  of them  already sell low sulphur 
manufactured solid fuels  or would have the opportunity to switch to low sulphur manufactured solid 
fuels  instead of coal.  
 
111. While a full exemption of coal small businesses  cannot be considered in this case, to support 
those relying on coal as their primary heat source, bulk deliveries will have 2 additional years  to 
come into compliance. This should also support small registered coal merchants to make the 
transition who traditionally deliver coal and have a long-established  customer base.  
 
112. The additional 2 years is to support the industry in adapting to the change, this is also intended 
to support other SMBs who rely on coal such as the heritage industry.  Concerns were raised at 
consultation that the phase o ut of domestic coal could impact upon their supply chain, they 
recommended a transition to support these businesses adapt to legislative changes.   
11. Competition assessment  
113. The competition assessment guidelines set out four questions to establish whether  a proposed 
policy is likely to have an effect on competition.44 In particular, the assessment needs to establish 
whether the requirement to comply with the measures would affect the market by:  
 Directly limiting the number or range of suppliers?  
 Indirectly  limiting the number or range of suppliers?  
 Limiting the ability of suppliers to compete?  
 Reducing suppliers’ incentives to compete vigorously?  
114. A brief summary of the four questions and a response considering the requirement is presented 
in the table below.  
 
 
44 OFT http://www.oft.gov.uk/shared_oft/reports/comp_policy/Quick -Guide1 -4.pdf   
35 
 
 Competition assessment filter questions  
Do the 
proposed 
measures  
 Response   Comment  
Q1. 
…directly 
limit the 
number or 
range of 
suppliers?  No  The proposed measures legislation on  the sale of wet wood and bituminous coal do 
not seek to directly limit the number of suppliers.  
Q2. 
…indirectly 
limit the 
range of 
suppliers?  No  The proposed measures may limit the range of suppliers. T he proposed requirement 
does not prevent entry or exit from the market for any firm.   
For coal as there is  a small number of suppliers the burden will fall on a few 
businesses with potentially large impacts. With a decline in coal and an increase in 
deman d for manufactured solid fuels , businesses who are able to adapt may benefit.   
For wood where a supplier does not have the space or kiln drying facilities to dry 
wood or the distribution network to only deliver in large volumes this could impact 
upon their  businesses. In some areas government grants are available to support the 
transition.  The majority of wood businesses responding to our Call for Evidence 
suggested that they could adjust.  
The wood fuel market consists of five medium sized firms and a large number of 
small sized enterprises. While administration and monitoring cost are likely to be a 
larger relative cost for smaller businesses, they are unlikely to be large enough to 
push new firms out of the market, or provide a disincentive for new firms to enter the 
market. We estimate the average annual present value cost to business from the 
proposed legislation  to be about £3000 a year  (in a near worst case scenario) per 
wood business , mainly due to capital investment for drying , and approximately £300 
a year per coal business to phase out  the sale of bituminous coal.  
Q3. …limit 
the ability 
of 
suppliers 
to 
compe te? No  The proposed regulation would mean that  all domestic fuel manufacturers have to 
comply  with the existing voluntary schemes on ‘ready to burn’ and ‘mineral fuels’ .  
The intervention should not limit the ability of suppliers to compete . 
Q4.  
…reduce  
suppliers’ 
incentives 
to compete 
rigorously?  No  The proposed requirement does not seek to limit the incentives for suppliers to 
compete. In particular, application of the rules across the board would impose similar 
constraints on all operators.  
 
115. Overall, the proposed measures for existing fuel suppliers and new market entrants could have 
a small impact on competition in the short term. The administrative and monitoring costs that 
companies across different sectors would be facing are unlikely to r esult in significant burden 
affecting profitability and commercial viability of these enterprises. The associated costs will be 
imposed across the board for those firms tha t are not already part of the R eady to Burn and ‘mineral 
fuels scheme’.   
12. Distributional  impact s 
Impact on fuel poor households   
 
116. Fuel poverty  occurs where a low-income  household is living in a home which cannot be kept 
warm at reasonable cost  (fuel costs are above the national median level) and were these 
households to spend tha t amount, they would be left with a residual income below the official 
national poverty line. These households often live in older homes with poor levels of insulation and 
inefficient heating. Fuel poverty is a devolved issue and each nation has a separate  measure of fuel 
poverty, with an associated strategy to tackle the issue. It is estimated that approximately 2.5 million 
households45 in England  live in fuel poverty.   
 
 
45  BEIS - Annual Fuel Poverty Statistics in England, 2019 (2017 data)   
36 
 
 117. The fuel poverty statistics for England show that homes which are not heated by mains gas, or 
are ‘off -grid’, are more likely to be fuel poor (15.9%) and whe n off-grid households are fuel poor , 
they are more likely to be severely fuel poor .  
 
118. The BEIS fuel poverty households’ dataset reports there were 2 6,000 households in fuel poverty 
burning solid fuels in 201 7. During consultation stage , concerns were raised around the impact of 
the intervent ions on those in fuel poverty , and whilst this is the minority of burners, Government was 
explicit in its intention that the policy should not adversely impact upon those households .  It was 
felt that the policy on coal would have the greatest impact on th ose households who rely on coal as 
their primary heat source.   
 
119. A study was carried out on coal to consider the costs of  shifting  from coal to low sulphur 
manufactured solid fuels (MSF) , taking into consideration  energy density  of each fuel .  The findings  
are presented in Annex  3. The results show a  significant regional variation in the price of fuels.  They  
demonstrate that  on an energy density basis all households would save money on fuel costs if 
switching from coal to the cheaper  of the two options considered low sulphur manufactured solid 
fuels when burning on an open fire46. The results show that most households would save money on 
fuel costs even whe n switching from coal to the more  expensive of the two smokeless fuels 
considered.  
 
120. However, households currently using high sulphur manufactured solid fuel are anticipated to 
occur a financial cost due to this legislation.  Based on industry estimates of an average 
consumption of 3.5 tonnes per household, it is estimated that an approximate 12,500 households 
on average over the 2020 -2030 period may be affected, experiencing each an average cost of £170 
per annum.  
 
121. The shift from wet wood to dried wood brin gs even higher financial benefits to households . On 
average  for open fire, old and modern stoves, kiln dried wood on an energy adjusted basis  is 2.4 
cheaper than wet wood (with 30% moisture)47. 
 
122. Therefore,  given the potential cost savings  for all households (except those using high sulphur 
manufactured solid fuels) and health benefits an exemption was not appropriate. A n extra period of 
time of two years to come into compliance for direct deliveries of loose coal is proposed  to enable 
coal merchants48 to work with their customers to identify an alternative source of fuel that would 
work with  their heating system  and of one year for small foresters to adapt .  The aim of this transition 
period is to support bo th these small businesses and these householders in switching to cleaner 
fuels.   
 
 
Impact on rural areas  
 
123. Rural areas are areas outside  settlements with populations of 10,000 or more people  and 
make up over 80% of England’s land and are home to around 17% of the English population. 
Thriving rural communities are vital to the English economy. A fifth of us live in rural areas and 
they are home to a quarter of England’s businesses, and generate 16. 5% of the English 
economy. Rural areas also face particular challenges around distance, sparsity and 
demography and it is important that the domestic fuel regulation  consider these properly.  In 
particular:  
 
• Demographics: There is a higher proportion of households in rural areas using wood and coal 
burning as their primary  source of energy . 
 
46 It is not recommended that coal is burned on other appliances . 
47The data are based on a report  commissioned by Defra to be published at the same time of this impact assessment.   
48 Gover nment intends to work in partnership with the Approved Coal Merchant scheme to support this transition .  
37 
 
 • Fuel Poverty: Fuel poverty is proportionately more prevalent  in rural areas , with a larger fuel 
poverty gap for households in rural villages, hamlets, and isolated dwellings49. The section 
above on the impact on fuel poor households is particularly relevant in the rural context.  
• Service infrastructure: Households in r ural areas are more likely to have no gas supply  or 
opportuni ty to access the grid because of the distance from the gas network50  
• Access to services: The combination of distance, transport links and low population density in 
rural areas can lead to challenges for access to  solid fuel distributors , as rural households are 
required to travel longer distance to purchase solid fuel . Should some solid fuel p roviders close 
their operations as a consequence of the domestic fuel regulation, this would further intensify 
the stress on rural households.     
124. As part of the regulation  formulation,  we considered the scale of the possible  impacts on 
rural areas and put  in place measures to adapt  the policy to address them:  
 
• Small foresters  (producing 600m3 or less per year ): Many small foresters produce small 
quantities of firewood as a secondary activity that supports their main business. 
Government policies have encouraged this in recent years in order to diversify rural 
businesses. They usually  sell to consumers in their local area. It is estimate d that 20% 
of firewood produced is sourced from  small foresters , often in bulk quantities , Defra 
research  (currently being quality assured)  suggests that 13% is sourced from 
landowners or farmers for English indoor wood burners.  A requirement to season and 
certify their wood may deter them from selling it in this way; instead they may sell their 
wood to wood dealers or just let the wood rot on the land. Consumers who currently rely 
on such products would then  lose their source of fuel. Alternatives (switching to gas or 
electricity, visiting retailers to purchase wood, or arranging for home deliveries of wood) 
can be limited  for typical rural consumers. Furthermore, small foresters will have a 
reduced revenue a nd business diversity. On this basis, the Government adjusts its  policy 
by providing  small foresters an additional year to come into compliance , in particular to 
season their wood.  Additionally, those that sell in bulk will benefit from the exception for 
quantities sold in over 2m3. 
• Direct deliveries of coal/solid fuel: On the basis of the public c onsultation  conducted in 
relation to this proposed regulation , it appears that d irect deliveries of coal play a greater 
role in rural communities, due to the additional difficulties in visiting a fuel retailer in 
person  and the large quantities required where it is the primary source of heating . From 
our consultation with the industry , there are no technical constraints for consumers to 
replace their coal and h igh-sulphur manufactured fuels with low -sulphur m anufactured 
fuels. It is therefore expected that coal merchants will sell the se products instead. 
However, to ensure a smooth transition and allow small businesses to adapt, d irect sales 
of loose coal will h ave a transition period of two years . 
• Air quality: We would expect a particularly strong positive impact on air quality in rural 
areas because domestic burning has a greater contribution to air quality there 
(compared to urban areas, where typically indust rial activity and transport emissions 
play a proportionally greater role).  
  
 
49 Defra – Statistical Digest of Rural England – May 2019 - 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/805011/05_Statistical_Digest_ of_Rural_E
ngland_2019_May_edition.pdf  
50 NEED Analysis - Areas and types of properties off the gas grid - 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/266468/off_gas_grid.pdf   
38 
 
 Annexes  
 
Annex 1: Post -Implementation Review (PIR) Plan:  
 
Basis of the review : As soon as reasonably practicable after the end of the period of three years from 
the date on which these Regulations come into force , Government will carry out a review of the 
effectiveness of the regulatory provisions.  
 
Review objective:  Objective of the review is to assess whether the policy has resulted in the projected 
reductions of PM 2.5 and SO 2 emissions. Given the large contribution domestic combustion has on overall 
PM 2.5 emissions, the review will aim to study the progress made in working towards  the 2030 NECD 
targets.  
 
Review approach and rationale : The review would be based on data m onitoring and further modelling 
on the achievability of 2030 NECD targets, either through the NAPCP process or a domestic alternative 
reporting mechanism. Social research and a scan of stakeholder views around domestic combustion 
patterns may also be used  to compare the changes in choice of domestic combustion fuel at the 
household level.  
 
Baseline:  The current (baseline) position against which the change introduced by the legislation can be 
measured are the projected emissions of PM 2.5 and SO 2. The current  business -as-usual estimates will 
be comparable with the actual emission levels following the introduction of the legislation and at the 
time when PIR is carried out to measure the success of the policy.  
 
Success criteria:  The policy will be successful if a considerable fall in P M2.5 emissions is observed by 
the projected review date. By 2025, the anticipa ted reductions compared to the baseline under the 
prefe rred option is to reach approximately 36kt.  
 
Monitoring information arrangements:  The policy will require proof of conformity to the legislation such 
as certification of both firewood and manufactured solid fuel, as well as auditing of retailer compliance. 
This will produce useful data for evaluation: the number of certifications (for bot h firewood and 
manufactured solid fuels) applied for and approved, the volume of certified wood entering the market, 
the number of audit checks, passes, and failures, as well as remedial actions taken to show 
measurement of compliance.  Additional r equireme nts for data monitoring for the review are already in 
place as there are statutory inventory reporting obligations, in which emissions of major air pollutants 
from domestic combustion need to be reported.   
 
 
 
 
 
 
 
 
 
 
 
 
 
   
39 
 
 Annex 2: Sensitivities  
 
Part 1 : Coal switch to wood following the ban.  
 
One specific issue raised in the consultation questioned whether following the ban on house coal , 
households that are at the risk of fuel poverty will still choose t o switch to smokeless fuels or if they 
might instead opt to switch to wood. According to the 2016 English Housing Survey there are 49,000 
households using coal as their primary heat source , of which approximately 7,700 are fuel poor . This 
represents approximately 18% of all coal cons umption in England, and implies that if a large proportion 
of these households choose to burn wood following the coal ban, the policy could result in unintended 
consequences due to increased PM 2.5 emissions. The rise in emissions would be attributed to two 
factors. First, wood carries a lower energy content than coal and consequently more wood needs to be 
burnt for the displaced quantity of coal, and second, emissions would rise relative to a situation in which 
all coal users switch to soli d smokeless fuels, since wood carries a higher PM 2.5 emission factor than 
smokeless fuels, as shown in table  3. 
 
To address this risk, we performed a sensitivity analysis assuming that 50% of fuel poor households 
that use coal as the primary source of ener gy switch to using wood as their primary source , and 
compared resulting emissions and NPV . Within wood consumption, we assumed the same compliance 
rate as in the main analysis (40% in year 2020 rising to 60% by 2023) . The results from this sensitivity 
analysis are pre sented in table 20 below. The results show that while the relative amounts of PM 2.5 
emissions increase, conseq uently decreasing the benefits , the absolute NPV of the policy remains 
overwhelmingly large and positive.  
 
 Table 20: Comparing emissions and NPV under sensitivity on coal -wood switch  
 
  Full switch  to 
smokeless fuels   Partial  switch  to 
wood  Difference  
Total PM2.5 Coal Emissions 
following policy (kT)  1.34  10.99  +9.65  
Total NPV of Option 2 following 
policy (£m)   7,858   6,902  -957  
Source: Defra estimates  
 
 
 
   
40 
 
 Annex 2 - Part 2: Adaptation rates to change in energy efficiency .  
The analysis assumes that all consumers take into consideration the energy density of the fuel 
purchased and their appliance energy efficiency when choosing the fuel for domestic combustion. If 
this is correct, then following the legislation consumers will adjust the volume of fuel they purchase to 
maintain the same energy output as before the implementation of the legislation. However, this may 
not be the case, especially soon after implementation. To address this risk we performed s ensitivity 
analysis of the results on the share of households adapting their fuel consumption to keep their energy 
output at the same level as befor e the ban, taking into consideration the change in energy density of 
the fuels , at the 0%, 25%, 50%, 75% and 100% level of adaptation. The results for the central scenario 
are presented in the table 2 1 below.  
 
 
Table 2 1: Impact of household fuel volume a daptation to improved  energy efficiency , in £m  
 
 
 
 
Source: Defra estimates  
 
 
 
Summary results 0% 25% 50% 75% 100%
    Loss in profit -67.5 -34.5 -13.8 2.4 14.3
   Monitoring 16.1 16.1 16.1 16.1 16.1
   Administrative costs 10.7 10.7 10.7 10.7 10.7
  Capital costs 162.3 142.4 122.5 102.6 82.7
Total business cost 121.7 134.8 135.6 131.9 123.9
Household costs 469.2 237.0 91.6 -22.3 -105.8
Government costs 1.4 1.4 1.4 1.4 1.4
Total costs 592.2 373.2 228.6 111.0 19.5
Air quality improvement           6,757.5           7,207.0           7,495.1           7,715.1           7,877.8 
TOTAL NPV Option 2 (£m)           6,165.2           6,833.8           7,266.4           7,604.1           7,858.3  
41 
 
 Annex 2 - Part 3: Sensitivity of the results to the proportion of wood burn ed wet before the 
proposed ban, in £m  
The analysis assumes that the proportion of wood burned wet is 23.7% based on the average of the 
BEIS Domestic Wood Use Survey published in 201651 showing that 22.5% of wood is burned wet  and of 
the Kantar survey  on “Burning in UK homes and gardens” commissioned by Defra and to be publ ished 
shortly, showing that 24.9% of wood is burned wet . However, there is a certain level of uncertainty and 
this may have a significant impact on the impacts of the legislation. To address this risk we performed 
sensitivity analysis of the results on the share of wood burned wet  before the ban, assuming that this 
share could range from 10% to 80%. The results for the central scenario are presented in the table 22 
below.  
 
Table 2 2: Sensitivity of the results to  the estimated proportion  of wood burned wet , in £m  
 
Wood sold wet  18%  35%  42%  53%  71%  89%  100%  100%  100%  
Wood burnet wet  10%  20%  24%  30%  40%  50%  60%  70%  80%  
    Loss in profit  5.1 11.8  14.3  18.5  25.2  31.9  36.2  36.2  36.2  
    Monitoring  16.1  16.1  16.1  16.1  16.1  16.1  16.1  16.1  16.1  
    Administrative costs  10.7  10.7  10.7  10.7  10.7  10.7  10.7  10.7  10.7  
   Capital costs  54.4  75.1  82.7  95.7  116.4  137.0  150.4  150.4  150.4  
 Total business cost  86.4  113.7  123.9  141.1  168.4  195.8  213.5  213.5  213.5  
 Household costs  -41.6  -88.4  -105.8  -135.3  -182.1  -229.0  -275.8  -322.7  -369.6  
 Government costs  1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 
 Total costs  46.2  26.7  19.5  7.2 -12.3  -31.8  -61.0  -107.9  -154.7  
 Air quality 
improvement       
3,595.8      
6,719.3       
7,877.8         
9,842.8      
12,966.3      
16,089.8      
19,213.3      
22,336.9      
25,460.4  
 TOTAL NPV Option 2 
(£m)       
3,549.6      
6,692.6       
7,858.3         
9,835.6      
12,978.6      
16,121.6      
19,274.3      
22,444.7      
25,615.1  
 
 
Source: Defra estimates  
  
 
51 https://www.gov.uk/government/publications/summary -results -of-the-domestic -wood -use-survey   
42 
 
 Annex 2 - Part 4: Sensitivity of the results to the proportion of wood businesses that require to 
invest in drying facilities following the legislation   
There is some uncertainty regarding the size of additional capital investment required to raise existing 
wood drying capacity to a level that meets the expected demand from consumers following the 
enactment of the proposed legislation. Based on our Consultation and discussions with industry 
expe rts, wood  producers are likely to respond in one of 4 ways to comply with the legislation  for 
quantities of wood sold wet : 
• Season it using existing spare drying capacity;  
• Scale up and sell only in volumes over 2m3 – potential customers would be both domest ic and 
larger businesses with drying capacity;  
• Build home -made cover storage or drying kiln;  
• Invest in cover space or drying kiln.  
 
While the consultation  and from  discussions with industry experts indicate that a significant share of 
wood producers will not invest in drying facilities, we are using a very conservative approach in 
assessing the cost to business in terms of capital investment and operating costs. The  calculation of 
cost to business assumes that all wood sold wet (42% of the total) in quantities of 2m3 or more will 
require to be seasoned under cover space (21%) or dried in kiln (21%) when the legislation starts  and 
will require investing in cover space  and drying kilns. The central estimate for this cost is £ 82.7 million.  
However, there is a certain level of uncertainty and this may have a significant impact on the impacts 
of the legislation on wood businesses. To address this risk we performed a s ensit ivity analysis of the 
results on the share of wood businesses that would need to invest in drying facilities. The results for 
the central scenario are presented in the table 23 below.  
 
Table 2 3: Sensitivity of the results to  the estimated proportion of wood businesses that need  
invest ing in drying facilities , in £m  
 
Summary results  Kiln = 5%                          
Cover = 5%  Kiln = 7%                          
Cover = 7%  Kiln = 10%                          
Cover = 10%  Kiln = 15%                          
Cover = 15%  Kiln = 21%                          
Cover = 21%  
    Loss in profit  14.3 14.3 14.3 14.3 14.3 
    Monitoring  16.1 16.1 16.1 16.1 16.1 
    Administrative costs  10.7 10.7 10.7 10.7 10.7 
   Capital costs  57.0 60.2 65.0 73.1 82.7 
 Total business cost  98.2 101.4  106.2  114.2  123.9  
 Household costs  -105.8  -105.8  -105.8  -105.8  -105.8  
 Government costs  1.4 1.4 1.4 1.4 1.4 
 Total costs  -6.2 -3.0 1.8 9.8 19.5 
 Air quality improvement            
7,877.8           
7,877.8            
7,877.8            
7,877.8             
7,877.8  
 TOTAL NPV Option 2 (£m)            
7,884.0           
7,880.8            
7,876.0            
7,868.0             
7,858.3  
 
Source: Defra estimates  
 
 
 
  
43 
 
 Annex 2 - Part 5: Sensitivity of the results to the proportion of wood sold in small quantities.  
The analysis assumes that 80% of wood that is sold is sold in bags less than or equal to 2m3. This 
assumption affects all of the costs and benefits under assessment, except for monitoring and 
administration costs. There is a certain level of uncertainty and this may have a significant impact on 
the impacts of the legislation on wood businesses. T o address this risk , we performed a sensitivity 
analysis of the results on the share of wood businesses that would need to invest in drying facilities. 
The results for the central scenario are presented in the table 24 below . 
Table 24: Sensitivity of the r esults to the estimated proportion of wood that is sold in quantities 
of 2m3 of less , in £m  
 
 
 
 
 
 
 
 
 
 
Source: Defra estimates  
 
  Summary results  60%  70%  80%  90%  100%  
    Loss in profit  10.3  12.3  14.3  16.3  18.3  
    Monitoring  16.1  16.1  16.1  16.1  16.1  
    Administrative costs  10.7  10.7  10.7  10.7  10.7  
   Capital costs  62.0  72.4  82.7  93.1  103.4  
 Total business cost  99.2  111.5  123.9  136.2  148.5  
 Household costs  -105.8  -105.8  -105.8  -105.8  -105.8  
 Government costs  1.4 1.4 1.4 1.4 1.4 
 Total costs  -5.2 7.1 19.5  31.8  44.1  
 Air quality improvement       
7,877.8      
7,877.8       
7,877.8         
7,877.8         
7,877.8  
 TOTAL NPV Option 2 (£m)       
7,883.0      
7,870.6       
7,858.3         
7,846.0         
7,833.6   
44 
 
 Annex 2 - Part 6: Sensitivity of the results to the level of compliance for wood with the legislation  
General a ssumption made in terms of compliance with the legislation  
Compliance level to the proposed legislation has a significant impact on its outcome, both in terms of  
costs to business and of air quality improvement. The Better Regulation Framework Manual (2015)52 
states “ When planning to introduce a regulatory measure, costs and benefits should assume 100% 
compliance, unless there is evidence of the contrary. However, differing levels of compliance should 
also be investigated through sensitivity analysis.”   
Full compliance with the regulation for coal  is assumed given the limited number of fuel suppliers. 
However, based on Government’s experience, a  lower compliance rate of 40% in 2020 rising to 50% 
in 2021, 60% by 2022 and 70% by 2026 for wood was used for the analysis. Less than full compliance 
is assumed to reflect:  
 
a. Flexibility in the design of the regulation which is intended to allow consumers who wish 
to buy wet wood in large volumes and dry it before it is burned to do so .  
b. A large number of small retailers which makes the regulation harder to fully enforce.  
 
The assumed rise in compliance is due to commitments in the Government’s Clean Air Strategy to 
launch a dedicated communications campaign with the aim of increasing public awareness on the 
health and environmental costs of burning wet wood.  
Specific assum ption made for cost to business  
Following consultation with the Regulatory Policy Committee (RPC) secretariat, we have assumed that 
wood businesses will bear cost corresponding  to a situation where they fully comply (100%) with the 
legislation. This decis ion was taken to minimise risk that the assessment underestimates cost to wood 
business. The central cost to wood business is estimated at £123.9 million.  
Sensitivity analysis  
As there is  a certain level of uncertainty on the level of compliance by wood business and this has a 
significant impact on the costs of the legislation on wood businesses , we performed a sensitivity 
analysis of the results on the share of level of compliance by wood businesses . The results for the  
central scenario are presented in the table 2 5 below . The results show that costs to business decreases 
to £80.6 million of wood businesses is line with compliance of wood burners ( 40% in 2020 rising to 50% 
in 2021, 60% by 2022 and 70% by 2026 ). The net b enefit on the society increases from £7.858 billion 
to £7.902 billion.  
 
  
 
52 The latest version of the Better Regulation Framework  Guidance (August 2018) does not advise on this matter.   
45 
 
 Table 2 5: Sensitivity of the results to the level of compliance of wood businesses with the 
legislation , in £m  
Summary results  2020 = 40%; 2021=50%; 
2022=60%; 2024=65%; 
2026=70%  75%  100%  
    Loss in profit  8.3 10.3  14.3  
    Monitoring  16.1  16.1  16.1  
    Administrative costs  10.7  10.7  10.7  
   Capital costs  45.4  62.0  82.7  
 Total business cost  80.6  99.2  123.9  
 Household costs  -105.8  -105.8  -105.8  
 Government costs  1.4 1.4 1.4 
 Total costs  -23.8  -5.2 19.5  
 Air quality improvement53                                7,877.8              
7,877.8              
7,877.8  
 TOTAL NPV Option 2 (£m)                                7,901.6              
7,883.0              
7,858.3  
 Source: Defra estimates  
 
A similar  sensitivity analysis is conducted to assess the impact of the level of compliance of wood 
burners with the legislation . The analysis assumes a compliance rate of 40% in 2020 rising to 50% in 
2021, 60% by 2022 and 70% by 2026.  The sensitivity analysis presented in table 26 shows that the net 
benefit on the society increases from £7.858 billion to £12.663 billion if full compliance is assumed.  
 
Table 2 6: Sensitivity of the results to level of compliance of wood burners  with the legislation , 
in £m  
Summary results  2020 = 40%; 2021=50%; 
2022=60%; 2024=65%; 
2026=70%  75%  100%  
    Loss in profit  14.3  14.3  14.3  
    Monitoring  16.1  16.1  16.1  
    Administrative costs  10.7  10.7  10.7  
   Capital costs  82.7  82.7  82.7  
 Total business cost54  123.9  123.9  123.9  
 Household costs  -105.8  -128.3  -172.8  
 Government costs  1.4 1.4 1.4 
 Total costs  19.5  -3.0 -47.5  
 Air quality 
improvement                                7,877.8              
9,507.3           
12,615.5  
 TOTAL NPV Option 2 
(£m)                                7,858.3              
9,510.3           
12,663.0  
Source: Defra estimates  
 
53 The air quality imp rovement remains stable across the sensitivity analysis as it not linked to the level of compliance by wood business but 
to the level of compliance by wood burners  
 
54 Business costs remain stable across the sensitivity analysis as it not linked to the lev el of compliance by wood burners but to the level of 
compliance by wood business   
46 
 
 Annex  3: Shifting from coal to low sulphur manufactured solid fuels – Cost/savings 
analysis for households  
A study was carried out on coal to consider the costs of  shifting  from coal to low sulphur manufactured 
solid fuels (MSF) , taking into consideration  energy density of each fuel. The results show a significant 
regional variation in the price of f uels.  They  demonstrate that on an energy density basis all households 
would save money on fuel costs if switching from coal to the cheaper  of the two options considered low 
sulphur manufactured solid fuels when burning on an open fire55. The results show t hat most 
households would save money on fuel costs if switching from coal to the more  expensive of the two 
options considered.  
 
Table 27: Regional, energy efficiency adjusted cost analysis for coal and smokeless fuels  
 
 
 
 
 
55 It is not recommended that coal is burned on appliances  other than open fire.  
Cost
Negative cost (savings)Colour legend