Battle stations

Summary
• It is estimated that biomass power stations will require 80-100 million tonnes of woodfuel by 2030.
• The current UK annual harvest is 10 million tonnes, 1.4 million tonnes of which is woodfuel.
• Consultation on the UK Renewables Obligation Banding Review proposals is closed.
• The biomass threat has united different factions of the timber sector.

For the past three years One Joinery, which has a 2,000ft² workshop on the Kent/Sussex border, has been selling briquettes, first in local shops and now to a wholesale distributor. The offcuts are sold outside the workshop as firewood or taken home as perks by employees.

“I started because the horse fraternity didn’t want the shavings because oak and sapele are too dusty,” said owner Nigel Foster. “I would have a chipper as well, but they are too noisy for our workshop. I’ve spent about £14,000 on equipment and I suppose we get back about £2,500 a year from the briquettes. It’s brilliant, it’s not carbon neutral, but it’s very green.”

What’s not to like about biomass? On a small scale, nothing. However, government strategy to build or convert coal-fired power stations to burn biomass on a huge scale has led to a head-to-head conflict with the timber industry. It doubts the ability to supply power stations with an estimated 80-100 million tonnes of biomass by 2030, and is locked in a battle over subsidies to energy companies which mean panel, pallet and other wood product manufacturers have to compete for raw materials with rivals that can afford to pay much more.

Review process

The issue is in the balance. The UK Renewables Obligation Banding Review proposals, under which investors will know the future subsidy for investment in biomass, have closed for consultation and legislation is to be published in the summer to take effect on April 1, 2013 and run until 2017.

“On this whole question of biomass subsidies we believe we have an extreme case because these are projects which are out of all proportion to the supply of biomass,” said Gil Covey, president of the European Federation of Wooden Pallet and Packaging Manufacturers (FEFPEB). “They would require eight times the harvest of the UK and I cannot see where all this will come from. Other countries have the same problem or are waking up to that fact, so simply importing wood chips from elsewhere is not the answer.

“We’re working in concert with the panels industry and sawmilling,” he added. “In fact all the associations are working with one another, and I think the one positive thing biomass has achieved is to get all the factions of the timber industry working in harmony.”

Parliamentary focus

The Timber Trade Federation (TTF), the Wood Panel Industries Federation (WPIF) and Confor attended the inaugural meeting of the All-Party Parliamentary Group on biomass in March. In a joint statement they called on the government to review the subsidies and take into account the raw material needs of the wider UK wood industry. It said it would be shameful if good manufacturing jobs were thrown on to a “publicly subsidised bonfire”.

TTF head of external affairs David Hopkins said the focus was almost exclusively on biomass for energy. “When timber representatives raised concerns over whether there was sufficient volume of fuel, they were dismissed,” he said.

David Sulman, executive director of the UK Forest Products Association, added: “At a recent meeting with the energy minister, Charles Hendry, he listened to what was said and at the end said ‘we don’t want any unintended consequences and we don’t want to damage your industry, but we have to keep the lights on’ – and that’s what it boils down to. I think Westminster has painted itself into a corner with its energy policies and is looking for a quick fix.”

The current annual UK timber harvest is 10 million tonnes, with the Forestry Commission estimating 1.4 million tonnes for woodfuel. About 4.5 million tonnes of waste wood is generated in the UK each year, of which about half (2.2 million tonnes) is recycled or used in energy generation. The total virgin and recycled material available would power about four average-sized stations, however, around 70 are in the pipeline (see below).

UK growth

Industry sources said UK and European plans to bring untended woodland into active management would make little difference to the shortfall and consultants for the Department of Energy and Climate Change agreed 90% of biomass fuel will need to be imported. The latest North American Wood Fibre Review report said exports of pellets to Europe reached a record high of 2 million tonnes last year, up 300% in three years. Utilities in the UK, the Netherlands and Belgium “continue to be the largest consuming destinations, with the UK showing the steadiest and vigorous growth”.

Panel manufacturers say their raw material prices have increased by 50% in five years while the knock-on effect to the furniture sector has been a 55% increase. Egger has warned that the 500 jobs at its site in Hexham, and another 1,000 in the forestry and haulage industries, are at risk and Karl Morris, managing director Norbord Europe, has said the issue was a straightforward question of supply and demand that could not be balanced.

That might ultimately decide the size of biomass-fired electricity generation, according to Mr Sulman. “Some of the people who want to build these plants will have to go to the City to raise finance. They might be persuaded by the technology and the subsidies available, but they will want guarantees. People are beginning to realise that it’s actually very difficult to secure 10, 20 or 25-year contracts. They have found it almost impossible to secure them for domestic timber in the UK and, furthermore, although wood fibre is available from North and South America, surely they will want to keep material for their own biomass purposes.”

Blunt instrument

The consensus is that the subsidy is a very blunt instrument. “It is the same whether it is for wind, tidal or solar and biomass, which of course is a quite different case,” said Mr Morris. “The subsidy is also the same whether the wood comes from five miles away or 5,000 miles away. Why would you import wood from around the world when you are getting the same subsidy for burning UK wood? The devolved governments in Wales and Scotland are very close to our position on subsidy, but not the UK.”

He added that the panel industry had a good heritage in the green agenda using waste wood and sawmill chips at the premier end; recycled wood and then the under-used top of the tree for OSB. “What we have under threat is an industry that has green credentials for storing up carbon, for absorbing waste wood and is a user of renewable heat.”

Mr Covey said there are three billion pallets in circulation in Europe and more than one billion pool pallets worldwide. “We use every bit of timber and keep the carbon in the product for as long as possible. The pallet is made, it is repaired and when it has reached the end of its useful life it is chipped for panels or biomass. You don’t burn the timber in the first place.”

Increased carbon emissions

WPIF director-general Alistair Kerr agreed. “Displacing the wood panel industry in favour of biomass energy will increase carbon emissions by six million tonnes a year,” he said. “The government is using taxpayers’ money to support a technology which is only about 30% efficient and will lead to an increase in carbon emissions. It is not a logical solution.”

One insider familiar with the negotiations added: “It’s difficult to tell whether the lead government agencies don’t understand the arguments or aren’t listening. My guess is the outcome will be that some projects will proceed and some won’t – but in the end it will be because of money.”