Energy is the hot topic17 October 2009 by Peter Whitfield
Peter Whitfield, UPM Tilhill’s timber operations director, believes the rapidly growing wood energy market will change the face of traditional forest products operations
Traditionally the forest industry has been relatively slow moving and 10 years would be a typical planning horizon. But, due to the rapidly growing biomass sector, that is now changing. Here the time frames are being compressed to a couple of years. This will be entering into the conventional market’s thinking when planning future investment and products.
The UK already has five large biomass plants – including UPM’s Caledonian and Shotton mills – each consuming more than 300,000 tonnes of woody biomass a year. There are plans for larger plants to be based on using imported wood fibre but, potentially, these will also access marginal domestic fibre that may have gone to conventional markets. The panel board industry is lobbying the government to remove incentives for the use of roundwood for energy, both from a displacement viewpoint and for reasons of sustainability – timber products tie up carbon for longer.
The government, particularly in Scotland, has recognised that forestry plays a significant role in climate change mitigation and has set very demanding targets for new afforestation. In Scotland the target is 10,000 additional hectares a year. Interest in forests as a green investment with a positive return is high.
As domestic producers only provide about 20% of our timber needs, the UK's dependence on imports remains high. This will continue as the use of timber as a ‘green’ building product is seen to be increasingly important. The government's target that all new build homes should be carbon neutral by 2016 is an important positive factor for the future of the timber industry.
Looking ahead we know there will be growth in the availability of UK timber supplies for sawmills, particularly in Scotland. As a result of investment in private forestry in the 60s and 70s, current UK production of 9 million tonnes per year will increase to 11 million tonnes over the next 10 years. Sawmillers are looking forward to this and planning considerable investments in upgrading, expanding and improving their productivity as well as creating a more tailored product to meet user demand.
Even though in real terms timber values today are lower than they were 20 or so years ago, the future for the forest and timber processing industries still has to be good. Processors, who have invested millions of pounds in their facilities, are concerned how demand for energy wood might undermine their ability to obtain their basic raw material. However, for the most part, energy users are still in the development rather than the building stage, so I think it will only be in the next five years that it will become more apparent what impact this new sector will have on the traditional domestic processing industry.
It is certain that there will be change! There will inevitably be consolidation in this changing market and we are moving from a traditional forest industry that’s been with us for 40-50 years to one that will have a very different complexion.
UPM Tilhill is a key supplier of biomass to our own combined heat and power plants and third-party operations across the UK and is working on further developing biomass for energy. We have resources in place finding ways to bring this material out – for example, we harvest brash for fuel, which three years ago would have been left in the forest. We also use stumps for energy, along with arboricultural arisings from tree surgery contracts. And we have developed operational controls for forest biomass harvesting to ensure all operations meet ISO 14001 certification and UKWAS 2 guidelines.
In future we could well be burning biomass waste derived from refuse. Such changes could help to allay the fears of the board producers concerned about the use of roundwood.