Why is biomass dangerous for the forest product industries?

Alastair Kerr: The wood panel and wider forest-based industries, are not cottage industries. These are modern, dynamic and environmentally conscientious businesses, employing thousands of people across the UK. But their future is being put at risk as a result of the government’s reluctance to address its flawed biomass subsidies.

The Renewables Obligation (RO) provides a large subsidy to electricity generators which they can utilise to buy UK wood in competition with existing businesses – businesses which provide jobs, investment and secure significant carbon benefits.

The government justifies its policy by saying that it will help reduce carbon emissions, will boost green jobs, and that there is a surplus of wood in the UK from forestry and post-consumer wood waste. These justifications simply do not add up.

On green jobs: the forest industries currently employ over 150,000 people. According to Poyry Consultants, burning wood for electricity creates two man-hours of employment per tonne of timber. Making wood panels, joinery products, and paper creates 178 man-hours of employment for the same amount of timber. One full-time job is created for every 9.4 tonnes of timber used, compared to one job for 840 tonnes of wood burnt as biomass.

The forest industries have a central role to play in our transition to a green economy, a role which the UK government should be supporting. Instead it is supporting a policy which will ultimately lead to a net reduction in employment.

No surplus

On availability of supply: it is simply not true that there is a large surplus of domestic timber in the UK. Of the annual 10 million tonne harvest, almost all of this is used by the wood processing industries. Nor is it possible that the increased demand can be satisfied by mobilising under-utilised woodlands. At most, that could bring on stream an extra two to three million tonnes – less than 5% of the wood forecast as required by 2030. We encourage mobilisation for the role that it can play in supporting local heat or heat and power demand, but as much of the potential is spread thinly across numerous privately owned woodlands it is fantasy to think that this resource can contribute in any significant way to the demands of large scale electricity plant, which is the direction government policy is focused on.

The sheer scale of demand forecast by DECC far outstrips a level which the domestic supply could satisfy without displacing existing wood users, and the government has stated that it expects 90% of the supply to come from imports.

Yet, the RO does not differentiate between imported and domestic wood for the level of subsidy paid. It also acts as a disincentive to the segregation of waste and, consequently, undermines wood recycling. This is something which we think needs to be addressed.

Carbon storage benefits

On carbon emissions: Over a tree’s growing cycle of 35 – 40 years (UK softwood), carbon is removed from the atmosphere. When that tree is processed into a wood product there is a net carbon storage benefit in comparison to the same tree being felled and burned, when the carbon is released straight back in to the atmosphere.

Displacing CO2 from fossil fuels with biomass works in the very long term but consideration should be given to the short and medium term damage.

Displacing the wood-panel industry in favour of biomass energy will increase carbon emissions by six million tonnes a year. The government is using taxpayers’ money to support a technology which is only about 30% efficient, and which will lead to an increase in carbon emissions. This is not a logical solution and a policy that focused on energy efficiency would actually result in a greater reduction of CO2 emissions’.

The forestry and wood-using sectors are united in calling for the RO to be modified. It does not make sense to subsidise the burning of a relatively limited national resource in inefficient electricity plant and to use a subsidy regime that gives an unfair advantage to electricity generators and puts wood processors out of business. It does not make sense to displace manufacturing industry at a time when the UK needs such businesses to build growth in the economy. It does not make sense to increase carbon emissions because of an unintended consequence of an environmental policy.

The government must act now to redress the distortion that the RO is causing on the UK wood market. If the RO is left unchanged, the pressures on domestic wood supply will result in the widespread loss of business across the forest industries, as existing wood purchasers become priced out of the market.

The UK forest industries have an increasing role to play in our society. The UK government must recognise this now, and support these industries, by adjusting the RO subsidy to remove the market distortion.

Why is biomass important for energy use?

Charles Hendry: Homes and businesses, including no doubt many in the timber industry, are being buffeted by increases in energy bills this winter. And it is rises in fossil fuel prices that lie at the heart of this.

These rises result from factors including increased demand from developing countries, instability in the Middle East (notably Libya), and the closure of nuclear stations in Japan. The winter gas price for 2011/12 is around 40% higher than last winter.

To reduce our exposure to these uncertainties over fossil fuel prices in future we must increase the amount of energy we get from secure, low carbon sources. Not just renewable energy, but nuclear power and clean coal and gas too.

So we are making radical changes to the electricity market to encourage over £100bn of investment in these areas. Not because we simply want to, but because we must. A quarter of our existing generating capacity will shut down in the next decade, as old coal and nuclear power stations close. Without action, there is a risk of uncomfortably low capacity margins from around the end of the decade and a far higher chance of costly blackouts.

Renewable energy will be crucial to a balanced energy portfolio. We have an abundant wind and wave resource in the British Isles – it would be foolish not to harness it.

Biomass too will be important, it is a reliable and flexible source of energy that can be used to produce heat, electricity or transport fuel. It can produce base load or peak load power, so balancing intermittent renewable supplies such as wind.

Looking to the future, there are processes and technologies such as gasification and pyrolysis, which could open up a world of renewable chemicals and convert wastes, residues and energy crops into useful chemicals, such as second generation transport biofuels or methane and hydrogen. This could be used to produce heat and power, or injected into the gas grid.

We expect that biomass supplies will need to increase significantly and sustainably. However, I am conscious that traditional wood-based manufacturing industries have raised concerns that our energy policy might have an adverse impact on their businesses. This is the last thing we want to see.

Current consultation

In our current consultation on the Renewables Obligation – the current financial mechanism for supporting renewable electricity – we have recognised the need to minimise these impacts. We are retaining support for energy crops, which should mean farmers taking the opportunity to grow miscanthus and willow, providing an indigenous supply. It will also stimulate the reintroduction of woodland management into areas of the country where this has fallen into decline.

The wood industry has been involved in the development of our bioenergy strategy which we intend to publish at the turn of the year. This will set out the long term role that we see for biomass in providing the energy we need to 2020 and beyond, making sure it is truly sustainable.

We want our policy development to be informed by the best possible evidence base that addresses the benefits and impacts across the UK. So we are looking at the availability of sustainable biomass feedstocks and what that means in terms of the impact of using biomass in the energy sector against alternative uses and the cost implications of doing so. Clearly imports will have a role to play too, and some larger conversion stations are expected to source between 90% and 100% of their woodfuel from abroad, reducing the pressure on domestic feedstocks.

Our goal is for a significant increase in renewable energy – to 2020 and beyond. However this must not be at the expense of any one particular industry or group. I look forward to working closely with the wood industry as we develop our policy.