Annual General Meeting of the Wood Panel Industry APPG – July 5

Early Day Motion in Parliament

All-Party Parliamentary Group for the Wood Panel Industry

The AGM of the All-Party Parliamentary Group for the Wood Panel Industry will take place on Tuesday 5th July at 3pm.

For more details go to the Make Wood Work news section.

The AGM will be followed by a discussion of the meeting with Greg Barker and meeting with the Renewables Obligation (RO) team at the Department of Energy and Climate Change (DECC). Members of the Wood Panel Industries Federation will also provide an update on the Make Wood Workcampaign.

UK Government can’t see the wood from the trees in climate change plans

‘It’s barking up the wrong tree’, says Wood Panel Industries Federation

Power station

An industry group whose business and commerce relies on UK wood says the Government is barking up the wrong tree with its proposed renewable energy plans, especially those concerned with the use of biomass, as part of the commitment to carbon emission reduction targets.

New legislation will bind the UK into an agreement to meet a carbon emissions cut of 80% of 1990 output by 2050 (60% by 2030).  The agreement relies on increased use of, and investment in, renewable electricity and/or heat from wind, wave and tidal sources as well as biomass.

Alastair Kerr, Director General of the Wood Panel Industries Federation (WPIF) which is spearheading a ‘Make Wood Work’ campaign, warns that the plans could cause the exact opposite of the Government’s vision – a drastic increase in carbon emissions, the diversion of UK wood supply into inefficient electricity generation, larger household bills for consumers, and the potential death in the UK of industries that currently contribute positively to the UK both financially and environmentally.

Chris Huhne, Secretary of State for Energy and Climate Change has already stated that renewables will be absolutely crucial to securing energy supplies and reducing carbon emissions in the decades ahead, and that the Government are reforming the electricity market to help bring forward a surge of investment in renewables1.

Burning woodKerr says, “Until the mass capacity required of wind, wave and tidal energy is reached, and additional biomass capacity from short-rotation and energy crops occurs, one of the most widely available supplies of renewable energy will come from subsidised and notoriously inefficient electricity-only biomass plants burning UK wood.

“This is being actively encouraged through the Renewables Obligation (RO) scheme and the energy suppliers have been quick to respond. Currently, there are an estimated 16 UK biomass fired electricity power stations in operation, under construction or awaiting approval3.  Their demand, coupled with RO subsidies, will distort the UK wood market and it threatens our industries’ future viability.”

The UK has current capacity to produce between 10-11 million tonnes of harvested green wood (wood that has recently been cut from a living tree) per year, and around 4-4.5 million tonnes of waste wood arisings. 

Currently demand for small forest roundwood and recycled wood by existing  users is broadly in balance, but there are supply strains starting to appear and any significant increase in demand by the subsidised electricity sector will seriously distort the market.

A report2 produced by John Clegg Consulting for the Wood Panel Industries Federation and CONFOR estimated that the demand for biomass from wood, wood chips and pellets, and wood waste by 2017 would be 50 million green tonnes.  One proposed plant, RWE npower’s Tilbury B coal-fired power stations is requesting planning permission to adapt to burn wood – this alone would require 6+ million tonnes a year.

Make wood workKerr continues, “The consequence of redirecting, through subsidy, the wood we use today into energy generation would result in a net increase in CO2 emissions totalling six million tonnes per annum – which is bad news for the environment and the taxpayer.  It will drive industries and jobs abroad and once the UK wood and wood waste supply dries up, wood will have to be imported, leading to increased costs passed to consumers, and additional carbon emissions through transportation.”

“The message is simple”, says Kerr.  “There is not enough wood available in the UK to support the number and scale of biomass electricity plants that are being proposed for development.  The RO subsidies promote the burning of wood rather than locking up the carbon through use, re-use, recycling and only then burning it for energy.  This goes against the grain of our own industry practice and the Government’s previously stated support for the waste hierarchy.

“If left unchecked, the subsidy regime could displace existing wood processors and those who rely on UK wood for product manufacture. It is putting at unnecessary risk many thousands of jobs, hitting the pockets of already stretched consumers through increased energy bills and the knock-on effect that increased wood prices will have on the products we produce.

“Most shockingly, the reality behind the climate change deal and the Renewables Obligation policy is that unless rewards to those burning wood for electricity are stopped immediately, in one fell swoop it will actually increase carbon emissions over the next 20 or so years – the exact opposite of the stated goal.” 

  1. Chris Hukne responds to Renewable Energy Review
  2. Department of Energy and Climate Change
  3. Wood fibre availability and demand in Britain 2007-2025

Don’t Waste – Make Wood Work: a guest blog by the Director General of the WPIF

(Today we welcome our guest blogger Alastair Kerr, Director General of the Wood Panel Industries Federation. Alastair has very kindly agreed to keep us updated with news from the WPIF’s Make Wood Work Campaign, so it’s over to you Alastair…)

Alastair Kerr, Director General

Alastair Kerr, Director General of the Wood Panel Industries Federation

The Government’s publication last month of the details of the Renewable Heat Incentive (RHI) held few surprises. As promised, financial support would be introduced – for industry this year and the domestic sector next year – for generating heat from burning wood, among other sources. 

However, the draft regulations did include some alarming omissions, such as restricting eligible heat transfer to water and steam. This meant greatly reducing the potential for renewable heat generation by excluding the most efficient heat transfer mediums: thermal oil and direct air heating. A speedy response from the wood panel industry has led to the inclusion of thermal oil in the RHI, though the Department of Energy and Climate Change (DECC) will not include direct heating, citing flawed concerns over measuring it.

Yet the biggest problem remains a grave lack of understanding of the UK wood market or industries, which did not even merit a mention in the RHI’s Impact Assessment. DECC’s shortcomings on wood knowledge were evident in the Minister’s speech during a recent Westminster Hall debate on the wood panel industry. The Minister cited only modest increases in sawlog prices over five years. If his Department had any understanding of wood use, they would realise that they should be measuring the price of small roundwood, chips and sawdust to get a feel for how biomass energy demand is impacting on the wood panel industry.

Prices for the whole tree, including this material, have risen 55% over the same period. However, with electricity generators receiving over £80 for every MWh of wood-fired electricity generated (approximately a tonne of wood), it is only a matter of time before sawn timber ends up being burnt instead of being turned into useful products.

Make Wood WorkThe Wood Panel Industries Federation (WPIF), through the Make Wood Work campaign, is working closely with other forest industries and environmental organisations to persuade Government to improve its bioenergy policies. We are urging DECC to revise the Renewables Obligation – which supports electricity generation – so that support for wood-fired electricity generation alone (without capturing useful heat) is greatly reduced or eliminated in favour of support for small-scale and efficient wood heating and combined heat and power.

Large-scale electricity generation from wood is not only hugely wasteful but will reduce the UK’s ability to produce carbon-storing, sustainable products from our limited and precious forests.  We want to see existing wood processing continue alongside a biomass sector that makes the best use of peripheral materials.   Visit www.makewoodwork.co.uk for more details.

2.4 million jobs threatened by biomass subsidies

Biomass protests at Kronospan

Kronospan's workforce protest against biomass subsidies

Government subsidies paid to the biomass industry to burn wood threaten the livelihood of millions of people across the UK and Europe.

The subsidies are paid to the renewable energy industry despite the fact that wood working industries in Europe have a turnover in excess of €270 billion providing 2.4 million jobs. The industry creates 25 times more employment and 10 times more wealth creation than biomass energy generation, according to global analysts Pöyry.

The continuation of these subsidies risk UK jobs, including more than 600 workers at Kronospan’s wood production plant in Chirk near Wrexham, North Wales.

Gavin Adkins, director of Kronospan, says: “Paying subsidies to burn virgin timber rather than manufacture with it, damages wealth creation, the economy and the environment. It’s pushing up prices, creating a shortage in raw material and inevitably threatens millions of jobs.”

Kronospan UK is one of the top 10 manufacturing companies in Wales, employing more than 600 people, 90 per cent of whom live within 10 miles of its North Wales site. The loss of the Kronospan manufacturing plant to this North Wales village would be absolutely devastating.

In the UK, the Wood Panel Industries Federation has been lobbying hard with Government through its Make Wood Work campaign to reverse the consequences of the Renewables Obligation Order, which is a result of European Union Climate Change Directives. The Order places an obligation on licensed electricity suppliers in the UK to generate an increasing proportion of electricity from renewable sources.

The subsidies to the biomass industry have to be stopped or jobs will be lost.

Experts raise doubts on biomass sustainability

Power plant

Total biomass emissions should be measured

The Committee on Energy and Climate Change launched an inquiry in July 2010 to look at the Government’s decision to consider introducing an emissions performance standard (EPS).  

The experts who attended the first evidence session in October 2010 expressed concerns about many wider issues affecting the future production of electricity, including the need to consider emissions resulting from biomass plants and land-use because of increasing demands for biocrops.

The most consistent warning put forward by experts included measuring the total emissions of biomass plants. Professor Jon Gibbins (University of Edinburgh) said that large scale biomass plants contribute their fair share of CO2 emissions. He went on to say that large scale biomass plants are “…a very large source of carbon; it’s about the same amount of carbon as an 800 MW gas plant” (Examination of Witnesses, Question 21).

(For the full story go to the news pages of Make Wood Work.)

If this is the case, why is the biomass industry subsidised to burn wood when the benefit to the environment and its effectiveness in reducing carbon emissions is so questionable?

The best way to use forests as carbon sinks is to harvest the timber and convert it into products (which continue to store the carbon) while replanting more trees than before (Source: IIED and ECCM, Using Wood to Mitigate Climate Change, 2004).

Unfair biomass subsidies threaten wood supply

Burning wood

Use, reuse, recycle and only then burn wood

Current subsidies paid to the biomass industry will cause a potential shortfall, in Europe alone, of up to 400 million m3 of timber by the year 2020, according to a United Nations report.

The subsidies that incentivise the use of wood in energy generation are creating a demand conflict between the manufacturing industry and the energy sector, which threatens future supplies and is pushing up the price of timber.

Several studies indicate a shortfall between the available amount of woody biomass in Europe, and the quantity that is needed to fulfil renewable energy targets set by the EU.

For the year 2020, a shortage of 230 million m³ wood (McKinsey, 2007) to 400 million m³ wood (FAO/UNECE/University of Hamburg) is estimated. This deficit accounts for 1/3 of the total demand of wood in 2020.

In the UK, the Wood Panel Industries Federation is lobbying hard with Government through its Make Wood Work campaign to reverse the consequences of the Renewables Obligation Order, which is a result of European Union Climate Change Directives.

The Renewables Obligation Order places an obligation on licensed electricity suppliers in the UK to generate an increasing proportion of electricity from renewable sources – and the biomass industry has turned to wood to achieve targets.

If the subsidies are allowed to continue they will damage the environment, economy and threatening millions of UK and European jobs.

Wood prices will continue to rise

Kronospan warns of price rises

Kronospan warns of prices rises

One of the UK’s largest wood panel plants is warning of sustained price rises due to an unprecedented increase in raw material costs. And government subsidies to the biomass industry for burning wood are making matters worse, it says.

Kronospan’s CEO, Ludwig Scheiblreiter, is cautioning customers not to try to absorb any increase in prices. Instead distributors and retailers must pass the rises down the supply line now or face serious financial implications, because the increases are here to stay and more are expected.

All the raw materials – timber, chemicals and energy – used for wood panel production are under accelerating supply pressures, which is relentlessly pushing up prices across Europe.

Ludwig says: “This year will be critical and decisive, even without the effects of the new age of austerity. This is not a wave any of us will be able to sit out, nor will any of us be able to continue the absorption of cost increases within the supply chain.”

Subsidies – worth up to four times the current price levels of timber residues and post consumer wood waste – are being paid to the biomass industry to burn wood to create electricity. The well meaning but ill conceived legislation on the generation of renewable energy is squeezing the availability of the core raw material and increasing prices.

In addition, the main chemical used in resin for the wood panel industry process is urea. More than 90% of urea is needed as fertiliser to meet expanding worldwide demand for food. This is obviously putting pressure on supply and with crude oil up 40% the chemical industry’s price demands are rising.

Subsidies paid to the biomass industry are being funded via the cost of electricity, again pushing up price. Add to this tightening rules on carbon trading, continuing price rises in oil and gas, and the UK’s structural supply problems, and there is perpetual strain on energy demand.

Ludwig says: “The industry urgently needs to set up the right structures to secure future supply as price alone will not guarantee availability. These changes will be enormous. The UK is still slightly behind many Western European countries but, with its comparatively low share of forestry, it is catching up fast.

“In Germany and surrounding countries these raw material pressures have already led to major reductions in production capacities and price levels for panel products are up to 25% higher than the current UK levels.”

Ludwig insists there are still things the industry can do to keep price increases to a minimum. The key action is for everyone to campaign to abolish subsidies to the biomass industry for burning still useable wood. Anyone can do this by supporting the Wood Panel Industry Federation’s (WPIF) Make Wood Work campaign. For more information go to www.makewoodwork.co.uk.

The subsidies directly threaten not only Europe’s wood panel manufacturing industry but also all its associated customers, from furniture makers to the construction industry. Wood should only be burnt at the very end of its useful life cycle.

Ludwig says: “The best will survive and we’re committed to further improving our technology, products and service for the long term. Our goal is to provide all the tools the supply chain needs to compete in the global market, to replace imports, build markets abroad and keep price increases to a minimum with tight cost management and efficiency gains.”