Summary
• A government review will set green energy subsidies until 2017.
• Burning wood for power is only 30% efficient.
• Panel producers’ raw materials costs have risen 60% in five years.
• The biomass energy sector is now the UK’s third biggest wood fibre user.
• Make Wood Work is stepping up its campaign to change green energy subsidies.
The heat in the debate on the use of wood fuel to generate electricity has been stoked up a few more degrees.
Strong criticism of government strategy has come from Norbord managing director Karl Morris, who says green energy subsidies not only threaten to push up timber demand and prices, but undermine the UK’s CO2 reduction targets. And the Wood Panel Industries Federation (WPIF) says the government decision to bring forward its review of Renewable Obligation Certificate (ROC) banding, which will set green energy subsidies for the next five years, adds new urgency to its lobbying for a change of policy.
Addressing a group of construction trade journalists recently, Mr Morris described the government’s policy on ROCs as “deeply flawed, with huge unintended consequences”.
“The critical flaw in the thinking is that not all renewables are the same,” he said. “Wind, solar and wave power are limitless; forests are not. The wood from the UK’s forests can only be used once and it is used today by the panel industry and other wood processors to produce products that store carbon for decades. ROCs reward large energy companies for buying the same wood to burn and every tonne burnt rather than processed for everyday products increases CO2 emissions.”
Make Wood Work Campaign
The WPIF, of which Norbord is a member, is campaigning for the government to revise its policy under the banner “Make Wood Work”. One of the objectives is for it to base its strategy on wood energy on “hierarchy” of use.
“This means that first we use timber for products which store CO2 long term, then we reuse and recycle, and we burn it for warmth and energy when there is no other possible use,” said Mr Morris.
Burning timber to produce energy is also very inefficient, he said. “Burning for warmth is 80% energy efficient, but for power generation it’s just 30%,” he said. “It’s actually less efficient than burning coal and an incredible waste.”
The biomass sector is already the third biggest timber user in the UK and is putting pressure on the wood fibre market.
“We’re already paying 60% higher costs than five years ago,” said Mr Morris. “What will be the raw material price tipping point where it is no longer viable to produce wood panels in this country?”
The government assumption is that wood fuel will be imported, but Mr Morris pointed out that energy companies are buying forests in the UK for future fuel.
“There is also growing pressure on the wood resource abroad, with the biomass energy developing there too,” he said. “A recent survey found that if all 27 EU countries increased their wood consumption as planned, they’d need 1 billion tonnes a year in five years. That would require a 30% increase in global wood harvest.”
Cost to taxpayers
Potentially, he added, if ROCs increase in line with the growth in the number of biomass power plants, the cost to taxpayers could rise to £1bn annually.
“It would be interesting to find out what people’s reaction would be to paying £1bn a year to effectively increase UK carbon emissions,” he said.
One reason the panel sector was struggling to get its message over to government, he added, was due to a lack of “joined-up thinking between departments”.
“We get a sympathetic hearing from the Department of Business Innovation and Skills, but Defra and the Department of Energy and Climate Change seem just focused on increasing energy from renewables, regardless.”
Mr Morris said UK panel producers were “happy to compete with the energy sector for raw material, but on a level playing field without current subsidies”.
He added, however, that new subsidies for generating heat from biomass under the Renewable Heat Initiative threatened to “distort the market for wood further”.
WPIF director-general Alastair Kerr said that under the government’s plans for rebanding ROCs, the scheme would be closed to new entrants after 2017, putting pressure on biomass plants to be built in the next five years.
“This has given a new urgency for the whole industry to lobby government and participate in the consultation on ROC policy in the coming months,” he said.
Subsidy impact
He said that ROCs were effectively intended to subsidise the import of biomass by the energy sector. But because the subsidies were open-ended, they could also enable them to outprice existing users for domestic wood supply.
“This would only satisfy an estimated 0.5% of the energy sector’s requirement, but jeopardise the whole UK forestry and panel industry, which generates jobs and makes products that lock up carbon,” he said. “If they revised this aspect of the policy so subsidies could not be used to purchase UK material, then we could compete for wood fibre.”
Mr Kerr said the politicians were not yet persuaded of Make Wood Work’s arguments and were still “convinced there was enough fibre out there for everyone”. To change their minds the campaign is stepping up its lobbying, with a “marketing/PR event” planned in the Houses of Parliament for late October/early November.
He said that the timber industry was “increasingly talking with one voice” on the issue, with strong input from ConFor, the UK Forest Products Association and other organisations.
“On the wider European front, the European Panels Federation and timber industry organisation Cei-Bois are also raising awareness of the issues with a range of seminars and other activities planned,” said Mr Kerr.
