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Corrections to Government's wood price calculations could benefit wood panel industry

The Wood Panel Industry Federation (WPIF) hopes corrections made to the Government’s calculations on wood prices will encourage it to reconsider the inclusion of woody biomass under the renewables obligation (RO).

In a Westminster Hall debate in the House of Commons about the impact of the RO on the wood panel industry, energy minister Greg Barker revealed that the Government had been using calculations for wood pricing based on saw logs. However, neither the wood panel industry nor the electricity generators use this type of wood, therefore referencing this data for pricing does not reflect the true picture.

Barker said: “In real terms - perhaps this is the most telling point - the price of softwood saw-logs increased by 14% over the five-year period ending in September 2010. I have not done the arithmetic, but I would have thought that the rise was below inflation over that period… If there were a problem of the magnitude hon. Members have described, it would be reflected in the price, but, clearly, we have not seen that to date. However, I accept that that is clearly something that we will have to watch.”

According to the WPIF, the Government should have been looking at the price of standing timber, which is a better reflection of the raw material the two industries use. Standing timber has seen a 53% increase in price over the past few years – 42% of which has been since 2009. The price of waste wood has also increased over the years due to demand from [wood burning?] generators and the wood panel industry, and this is expected to rise further.

WPIF director general Alastair Kerr said: “It’s important that the Government looks at the right data. In the past, the Government has not necessarily believed that there was a problem with the wood price. But we have now demonstrated why we are concerned about competing against the generators for this wood.

“Our aim is to get the Government to reconsider RO support for wood-burning electricity generators. We don’t think there is a need to subsidise it because it creates distortion in the wood market because the money from the RO is being used to support the purchase of fuel rather than help build infrastructure, as it is meant to.”

A statement from the Department of Energy and Climate Change said: “DECC relies on both market intelligence and research reports to inform it of how much biomass, including waste wood is available. We welcome expert opinion such as that of the wood panel industry to help ensure that we use the most accurate information that is available. WRAP is conducting a study into the wood waste market which we understand will be published this summer.”

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