Once again we find ourselves in the midst of a long recycled fibre market awaiting October demand. Gate fees for lower grades of recycled wood are still holding firm and now range from £55 in the home counties to £35 in the south-west, £25 in the Midlands and £5 in Scotland.
Cleaner wood fractions are selling well into their existing markets. There is about 750,000 tonnes a year of surplus waste wood across Great Britain - this number is based on the volume that is recover-able from an estimated total surplus of 1.2 million tonnes a year, from the most recent research carried out by market analyst firm Tolvik.
The closer the supply demand balance is reached, the lower the gate fee, as indicated by the spread of gate fees across Britain.
Good quality recycled waste wood (grade A) has many uses, from animal bedding to material for both OSB and MDF board production. More contaminated wood (grades B and C) provides feedstock into the biomass markets.
Come March, the UK’s largest biomass combined heat and power plant should be commissioned, having an annual feedstock demand of around 400,000 tonnes and 90% of this will be processed recycled wood.
This plant is based in Fife, Scotland, and inevitably there will be a pull from England to feed it.
The market has the ability to supply the plant. But there will be a settling-in period as product is recovered from the north of England, with existing markets having to adjust their procurement activities to take account.
For example, Sonae is consulting employees and the future of its Merseyside plant is uncertain. The proposal not to reopen following a fire and planning dispute was a severe blow to the sector.
The north may well see a decline in demand from this mill and then a ramping-up caused by the new Scottish plant. These two events are unconnected but, from a supply demand point of view, could well offset each other.
Biomass plants are eligible to claim Renewable Obligation Certificates (ROCs) to support the investment into this technology. In July, the Department for Energy and Climate Change (DECC)published its revised ROC banding for the 2013-17 period. The picture is quite complicated, but the table provides a summary of the key numbers for biomass.
DECC also wishes to consult further on the possibility of implementing a cap after April 2013 on the total UK installed capacity for dedicated biomass, in addition to asking what the long-term greenhouse gas levels should be for this technology.
These consultations mean there is there is uncertainly in the wood market, which will remain so until the outcome is published in mid-2013. Further information on the consultation process will be made known this month, and we should then be in a position to understand the ramifications of revisions to the support mechanism.
Neil Bailey, Technical adviser, Wood Recyclers’ Association