The increase in biomass facilities to generate renewable electricity has become an issue that is gradually dividing the wood recycling sector. All agree that the board industry has suffered as biomass plants have come online, increasing the demand for wood waste feedstock. But biomass facilities are an important tool in the battle to secure the UK’s electricity supply, making the change in the market essential.
The argument hinges on the Government’s incentive under the Renewables Obligation scheme to build more renewable electricity facilities across the UK in a bid to meet EU targets of producing 15% electricity from renewable sources. Facility operators receive a certain number of Renewables Obligation Certificates (ROCs) for each mega-watt hour produced, and these are worth a particular amount of money depending on supply and demand in the ROC market.
Wood Panel Industry Federation director general Alastair Kerr says: “These indirect subsidies give the generators the ability to pay more for wood than the wood panel industry, which does not get subsidies and cannot compete. They [biomass operators] receive a significant amount of money from the ROCs scheme and would have the ability to double what is currently being paid [if they needed to].”
“Only timber at the end of its natural life should be treated as a biomass fuel to recover its energy”
According to Kerr, the price of recovered wood for board has risen by 30% during the past four years. A wood waste specialist, who does not wish to be named, agrees: “We have seen substantial increases in the price that the panel board industry is having to pay, while biomass prices are also rocketing. The price for biomass (Grade C) has doubled in the past five years. But it is no surprise the Government is incentivising the industry because it needs the energy. It doesn’t need to incentivise the panel industry because it’s not a growing industry, but it’s not dying either.”
Although a large number of plants have not yet been built, he adds that wood prices are being pushed up as operators seeking investment to build biomass plants have to secure feedstock to ensure the viability of projects. He also points out that there is more wood available than is currently being recycled or burned: “Much of the Grade C wood in the UK is being exported to Europe and places like Scandinavia in high volumes because there is not much demand for burning biomass in the UK at the moment. But as soon as more facilities start to open up here, the material will stop being exported and used in the UK.”
The opening up and growth in the biomass sector has given wood recyclers an extra market in which to sell its wood waste, specifically the lower grade wood that the board industry is not interested in.
A report by the Waste & Resources Action Programme, Wood Waste Market in the UK, says it is not clear what effect biomass plants will have on the wood waste sector because some facilities are able to use a variety of feedstocks. But “it is assumed the demand for wood waste for electricity generation will increase in line with changes in the generating capacity of dedicated biomass plants which can use wood waste”.
And according to a report Wood Fibre Availability and Demand in Britain 2007 to 2025, published by the Confederation of Forest Industries, the potential demand for recovered wood is set to increase from the current rate of just under three million tonnes up to seven million tonnes by 2017. Consumption would outstrip supply, as WRAP estimates that UK wood waste arisings are to remain stable at 4.5 million tonnes throughout this time. This will mean that the UK may have to import wood from overseas to satisfy demand, which will keep pushing prices up.
“If you think about the carbon emissions, it is better to make a product from the wood than burn it,” adds Kerr. “We can see there are legitimate energy concerns being addressed, but there is too much focus on larger scale commercial plants of 50-300MW. There should be more focus on smaller biomass boilers.”
But Hadfield Wood Recyclers group operations director David Lee believes it is the small commercial and domestic boilers that will be driving the prices higher, particularly when the Renewable Heat Incentive comes online in April 2011. These take the cleaner wood waste which is favoured by panel board producers, unlike large biomass facilities which traditionally take lower grade wood. “I don’t think large plants have changed the market at all so far,” Lee says. “Any changes are because of the small commercial plants. For example, in the past 18 months, nearly every school that has been built under a PFI contract has had a biomass boiler installed (see below).”
There are complications about wood grade availability and which grade each end market is using. Lee explains: “It is believed by some in the industry that while the industry is relatively highly regulated, enforcement activity has been a ‘light touch’ historically. While guidance on permissible uses of wood waste exists, this is not enforced with any significant vigour, and a quantity of material is likely to be used in applications prohibited by Environment Agency (EA) guidance.”
Kerr adds: “Most recyclers have an element of segregation of their waste wood to send it to the right markets. However, when the biomass plants buy wood they sometimes tell them not to bother segregating the material - they will pay a high price for it as a mixed load because they can burn it as it is.”
But there is more wood available to recover at the moment than is being used. The wood specialist, who does not want to be named, adds: “[The wood panel industry] has not had wood supply security problems, whereas energy is a major issue, so this disadvantages
them. Have they suffered a shortage in wood? No. In fact, wood recyclers try to ensure that the wood panel industry is supplied with wood otherwise they would end up only supplying to one end-market again.”
Work with the Wood Recyclers’ Association and the EA on a quality protocol for wood is currently being undertaken to provide a solution to this issue.
Kronospan UK timber buyer Richard Coulson says: “The waste hierarchy needs to be observed. Virgin or high-quality recycled wood fibre should be reused to manufacture products and lock that carbon up for another life cycle. Only timber at the end of its natural life should be treated as a biomass fuel to recover its energy.” Many in the wood waste industry agree.
WRAP’s work on landfill bans also provides hope to the industry. If such bans come into force, there will be more wood available to the biomass industry because most wood now going to landfill is low grade. This would better satisfy biomass feedstock demand and could leave more material for the board manufacturers. A possible refinement of ROCs and further emphasis on creating new biomass feedstock are also being called for by the board sector.
Kerr’s concern about the future of the wood panel industry is raw. When MRW asked if there was a chance that it could be wiped out by biomass, he says: “That’s the ultimate risk - it’s difficult to say. There will come a time when it becomes uneconomic [to buy the wood at high prices]. We started talking about the [effect biomass would have] five years ago - now we’re seeing it on the ground and it’s exactly what we warned everyone about.”
The Government’s Renewable Heat Incentive scheme, to come into effect on 1 April 2011, has driven more local authorities to consider small-scale biomass boilers.
Hull City Council, for example, plans to install wood-burning boilers in 26 secondary schools during the next seven years as part of its Building Schools for the Future Programme. However, it was important to research what quality and quantity of waste wood was being generated in the area.
CO2 Sense Yorkshire commissioned Urban Mines to do this research. CO2 Sense project manager Ingunn Vallumroed says: “The report found that there was enough wood being produced to heat the 26 schools in the area, but some of this wood was already in demand for other uses. So we are looking at where businesses send their wood to find out if it could be used more effectively.”
Currently, the waste wood that is recycled contributes to the council’s 45% recycling target. But if it is used for biomass it would not. “The Government is encouraging us to use more biomass but local authorities have recycling targets to reach,” says Vallumroed.