Once upon a time, when wood recycling was in its infancy and panel board was practically our only customer, the board mills held the whip hand. No surprise there, you might say; that’s business.
Then other markets emerged. First, animal bedding and landscaping (mulches, pathways, composts and so on) provided a higher value outlet for clean wood chip. And then, over the horizon, appeared this elephant called biomass. It was soon clear that things were going to change. The panel board industry smelled danger and began building defences, in the form of their Make Wood Work campaign.
The essence of the board mills’ case is that because government subsidises renewable energy, including biomass, and not panel board production, a distorted market has been created. In other words, Renewable Obligation Certificates (ROCs) will give biomass developers unfair purchasing power, to the detriment of the board mills.
In my view, the interests of the wood recycling industry are best served by maintaining all our markets. Panel board remains overwhelmingly our largest UK customer, accounting for over 50% of all the wood chipped in 2010. So it is a very important market for us. Without question, wood recyclers’ relationships with the board mills are changing, and will change even more when UK biomass really kicks in.
It doesn’t take a brain surgeon to spot the competitive edge that any supplier enjoys when two sets of customers are scrapping for his product. But neither do you need Einstein to remind you of the dangers of putting all your eggs in one basket!
All indications are that the scrap for feedstock will intensify. This subject took centre stage at the recent WRA Conference in November. A number of respected commentators reckon that, as early as 2015, we shall be facing a shortage of wood chip in the UK.
This is certainly not the case today. Quite the reverse, in fact. We are still affected by the ‘Sonae Factor’ following their Merseyside mill’s fire, and consequent closure, last June. Gate fees have been rising, against historic trends, and some panel board mills have reacted by lowering prices and/or tightening feedstock specifications. This situation has exacerbated an already significant “timing” issue, as we wait for UK biomass plants to come on line.
In the short term, the surplus has found a home overseas. In 2010, UK wood recyclers exported over half a million tonnes of wood chip to the continent. This was a startling 6-7 fold increase on the previous year. Of this wood, 70% went to biomass (much of which would otherwise have gone to landfill) with the remainder destined for panel board production.
So what is the elephant in the woodshed going to do next? This year should see the commissioning of RWE’s 50MW biomass facility at Markinch in Scotland. According to reports, this plant will use 400,000 tonnes of virgin and recycled wood every year. This follows on from Dalkia’s rather smaller plant, which opened at Chilton, Co Durham last year and consumes 120,000 tonnes of wood annually. So things are on the move. It is not possible to predict how many other biomass plants will follow. But already one can see why commentators are predicting shortages.
In 2010 our industry recycled about 2.8m tonnes of post-consumer wood.That is over half of the total arisings. If we are to satisfy all our markets in the years ahead, it is already crystal clear that recycling rates are going to have to increase.
This is why the WRA is 100% behind the government’s stated aim to restrict the land-filling of wood. It is also why we need to work closely with the regulators – and they with us – to make certain that wood recyclers can be encouraged and supported in what they do. We accept the need for environmental control, but unscientific and unsympathetic regulation of responsible recyclers will have unintended, and unfortunate, consequences.
So there is an elephant in the wood shed. We all need to make sure it doesn’t go mad and knock it all down!
Peter Butt, executive director, WRA