The wood panel industry provides vital employment in rural communities and is the biggest recycler of wood in the country. The Norbord plant in Anne’s Stirling constituency alone provides 250 jobs, without counting those employed at other points along the supply chain.

However, these jobs face an uncertain future, as subsidies for generating electricity using biomass are distorting the domestic wood market. Energy companies, supported by the Renewables Obligation (RO), are using their enhanced purchasing power to bid for the same wood used by the wood panel industry. If the situation does not change, explains Anne, the future of the wood panel industry and wood-based manufacturing in Britain will be threatened.

In response, Anne has supported the ‘Make Wood Work’ campaign in Westminster, tabled an Early Day Motion in support of the wood panel industry and a Westminster Hall debate. Some progress has been made but the Wood Panel Industry APPG will continue to make the industry’s concerns known to DECC.

You can read Anne McGuire’s interview in full here

The Rt Hon Anne McGuire MP (Chair) will oversee proceedings and the election of Officers will be confirmed.

The Group will discuss their progress in obtaining recognition of the industry’s renewable heat contribution towards Britain’s renewable energy targets. Anne McGuire will report on the meeting with Greg Barker MP, Minister for Climate Change, and his indication that the department would consider including direct heating in the regulations for the Renewable Heat Incentive (RHI).

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

Reporter Sharmini Selvarajah speaks to furniture manfacturers, wood panel manufacturers, the Rt Hon Anne McGuire and Greg Barker (Minister of State for Energy and Climate Change) about the Renewables Obligation and its impact on the price of wood.

You can listen to the programme by clicking on the link below. Select chapter 2 for the relevant broadcast:

http://www.bbc.co.uk/programmes/b010y30t

The FOE contribution marks a significant addition to the debate about biomass demand and its impact on the natural environment and existing forest markets. In addition to highlighting the impact on ecosystems, biodiversity and sustainability, Ms McMahon stresses the impact of increasing demand on existing forest product industries. Quoting a peer-reviewed study, the letter asserts that as ‘prices increase marginal wood consumers in existing markets will be displaced’. As things stand in the UK, current subsidies for biomass mean this remains a very real threat for wood processors such as the wood panel industry.

Furthermore, Ms McMahon criticises Forth Energy’s application for failing to consider growing biomass demand both in the US and in the UK. The demand precipitated by the Port of Tilbury plant alone equals 7.5 million tonnes of wood per year, the majority of which will be sourced from North America. The FOE US letter makes it very clear that current supplies of North American wood will not be able to meet the combined biomass demand in the UK and US. Forth Energy’s proposal to build multiple biomass plants, therefore, is distinctly unsustainable and their assertions that they will source wood from producers certified by the “Sustainable Forestry Initiative” (SFI) or by the “Forest Stewardship Council” (FSC) are a long way from addressing the sustainability problem.

FOE US have made a welcome contribution to the debate. It would appear that members’ concerns regarding the importation of biomass are legitimate and that they are not alone in believing that current approaches to biomass need a serious rethink.

The letter can be viewed here:
http://www.guardian.co.uk/edinburgh/2011/mar/31/leith-biomass-friends-of-the-earth-open-letter/print

The Minister of State for Energy and Climate Change, Greg Barker MP, welcomed the opportunity to meet with Anne McGuire and industry representatives to listen to their concerns. Furthermore, the Minister apologised for not including the industry’s representation in the recent Renewable Heat Incentive (RHI) Impact Assessment.

t

The Wood Panel Industries Federation (WPIF) commends the fact that the piece criticises the Government for not taking biomass sustainability seriously.

While the wood panel industry certainly does not oppose support for small-scale heat generation from wood, the industry remains concerned that DECC has yet to produce a coherent bio-energy strategy that recognises the enormous demand for wood created by subsidy for wood-fired electricity. The WPIF urges the Government to reform the Renewables Obligation to reflect pressures on wood supply, which are undermining the competitiveness of wood processing businesses and the broader wood industries.

Anne McGuire MP’s article can be viewed online here and is copied below:

http://www.epolitix.com/latestnews/article-detail/newsarticle/the-wood-panel-industry/

MP raises concerns about wood sustainability

By Anne McGuire MP – 16th March 2011

Last week’s announcement on the Renewable Heat Incentive was an attempt to turn attention to decarbonising the heat sector. However, it has serious ramifications for the forest industries, introducing another incentive for biomass energy generation – largely produced from wood in the UK.

As chair of the all-party group for the Wood Panel Industry, I am well aware of the distortion that biomass subsidies are causing to the UK’s wood market, where supply is already struggling to meet demand. The wood panel industry produces two-thirds of the UK’s consumption of wood-based panels – chipboard, MDF and oriented strand board – wholly using UK-sourced, sustainable wood, both virgin and recycled.

The decision to exclude the wood panel sector’s existing renewable heat capacity – responsible for a third of all UK industrial renewable heat – is a mistake because it will further undermine that industry’s ability to buy wood. It will also threaten its existing renewable heat generation, based on its own process residues. DECC clearly has not taken concerns about wood sustainability seriously, as the RHI’s Impact Assessment did not even mention potential impacts on the forest industries.

Biomass is unlike most renewable energy technologies because it has ongoing fuel costs and competes with an established market for its feedstock. Whereas an incentive for wind power principally discriminates against an equivalent fossil fuel energy generator, an incentive for biomass discriminates against industries that make excellent use of the same raw material (wood), turning it into low-carbon construction products and locking carbon up, often for decades. Therefore, the case for supporting biomass energy must be based on the highest possible environmental gains.

However, the government continues to provide substantial subsidies, through the Renewables Obligation (RO), for the large-scale generation of electricity from wood. This is a notoriously inefficient process, where over two-thirds of the energy is wasted, much through heat loss. Large biomass plants also consume vast quantities of wood. The Prenergy Plant being built at Port Talbot will consume around 3 million tonnes of wood a year – over a quarter of the UK’s entire annual wood harvest.

The government’s response has been that other wood streams are available to support biomass energy growth, such as waste wood, brash and other peripheral material. If this material is feasible for bioenergy, why are the financial support mechanisms not geared specifically to incentivise their use? The introduction of the RHI without a serious impact assessment on wood processing suggests that DECC is in denial about the sustainability of the domestic and global biomass resource.

The best way to end market distortion and to achieve the best environmental outcomes is to end support for electricity only generation from wood and exclusively support good quality combined heat and power, heat generation and energy from low-grade wood waste. This would ensure high energy efficiencies, it would protect wood recycling, and it would reduce landfill. It would also greatly reduce the impact on wood processors, who play a vital role in carbon abatement through the manufacture and recycling of low-carbon, sustainable construction and furniture materials.

Anne McGuire has been Labour MP for Stirling since 2005. Parliamentary private secretary to Labour Party leader Ed Miliband, in 2010 she was elected unopposed to the public accounts committee.

The debate has been secured by the Chairman of the Wood Panel Industry APPG Anne McGuire MP, and it is hoped many WPIF supporters will attend in an attempt to impress upon the Government the detrimental effects of biomass subsidies. The title submitted for the debate is “Government policy on the wood panel industry and the UN International Year of Forests” and Greg Barker, Minister of State for Climate will be responding on behalf of DECC.

The UN declared 2011 as the International Year of Forests to raise awareness of sustainable management, conservation and sustainable development of all types of forests. There is significant concern about the sustainability of wood demand from the biomass energy sector and its impact on traditional forest industries. The Renewables Obligation and the forthcoming Renewable Heat Incentive are key drivers of this demand and must be shaped by environmental, economic and social imperatives. This debate will focus on the effect of Government policy on the UK’s wood panel industry and its contribution to carbon abatement.

Listen here: http://news.bbc.co.uk/today/hi/today/newsid_9420000/9420694.stm

The RHI is the Government’s attempt to reduce the carbon emissions attributable to heat production, which analysts say are greater than those attributable to electricity generation. Providing long-term financial support to renewable heat installations, it is hoped the scheme will encourage the uptake of renewable heat. However, although the aims of the policy seem environmentally credible, the Today Programme’s coverage of the RHI announcement highlighted crucial sustainability concerns.

Government says it has sustainability rules that will apply to this scheme, so as not to take out virgin land, but Roger Harrabin raised an additional problem. Double-counting of land when assessing potential biomass availability is currently confusing understanding of just how much land there is available. In turn, the multiple counting of the amount of land that we have to grow forests for heating or other energy needs is starting to mirror anxieties over ‘peak oil’. Mr Harrabin questions whether the matter is becoming a question of reaching ‘peak land’. Of equal concern is the prospect of reaching ‘peak wood’, the mainstay of biomass demand.

Biomass plants are proliferating across Europe, subsidised by governments reaching for ambitious energy targets. The combined biomass demand for EU member states – declared in their national renewable energy plans – is just short of a 1 billion tonnes of wood every year. This level of demand would require the total global harvest of wood to increase by a third. The Wood Panel Industries Federation (WPIF) questions whether such an increase in the global harvest is possible. If not, the UK Government and its counterparts should take a long hard look at whether their investment in big biomass is sustainable.

It is worth considering the lessons learned from first generation biofuels. Environmentalists now question whether biomass demand will turn out to be as unsustainable and environmentally damaging as the Government’s foray into biofuels, where the clearing of rain forests to fuel cars with palm oil proved highly controversial.

The largest consumer of biomass fuel in the UK is now the Drax power plant in Selby, North Yorkshire. It is also the largest source of carbon dioxide emissions in the UK as a result of burning coal.

This raises questions about incentive schemes for biomass power in the UK, which were established to try and encourage farmers to grow alternative sources of biomass fuel or to see wood recycled before being burned.

Senator, Britain’s largest office furniture manufacturer, says the price it pays for chipboard, one of its main materials, has gone up 30 per cent, with a 10 per cent increase in the last quarter alone.

“Biomass burning wood is hitting our industry and any industry that uses wood based products,” says Paul Clarke, commercial director.

While around 30 new biomass power plants have been approved or are awaiting planning permission, Drax is now in the unique position of being Britain’s largest single source of renewable energy as well as our largest source of carbon dioxide emissions.

‘Biomass is a really good opportunity’
This year Drax completed a new biomass facility to increase the amount of wood and other agricultural by-products like husks and straw it can burn alongside coal in its furnaces.

Last year Drax burned around 900,000 tonnes of biomass – mostly wood. Its owners say that the subsidy on biomass – around £25 for every megawatt-hour in the case of Drax – should be increased to allow them to burn more. Its ultimate ambition is for at least half of its fuel to be biomass – around 7 million tonnes a year.

“Biomass is a really good opportunity for the UK and the world to reduce carbon emissions,” said Peter Emery, production manager for Drax Power Limited.

Given the scale of Drax’s carbon emissions, burning biomass is one of the only ways the plant can meet legally binding targets to reduce carbon emissions in the medium term.

The current subsidy system allows them to burn a maximum of 12.5 per cent. They are now lobbying government to have that cap raised.

“If we don’t get that support then I think we are squandering a real opportunity to save carbon emissions today. Not just at Drax but in the UK generally.”

Making something positive
But any increase in subsidy that encourages power plants to burn virgin timber – often imported from overseas – would unnecessarily harm their industry, said Paul Clarke.

“We want the wood to come to us so we can make something positive out of it – use it for a life of 20 years or so before Drax and the people burn it to get power back,” said Clarke. “The power is always there – we want to use the wood first.”

Their factory in Accrington, Lancashire, has been part-powered by off-cuts from wood used in the plant for 12 years.

As Senator see it, subsidy for biomass fuel should reward people for either making use of waste timber or alternative sources of fuel that don’t impact other sectors.

Domestic supply chain for wood
The subsidy system was set up to encourage farmers and foresters to grow biomass crops. These include grasses like miscanthus, as well as fast-growing trees like willow and poplar.

Subsidy is also designed to reward new, small-scale, purpose-built biomass plants – not existing fossil-fuel plants.

“The idea behind subsidising burning of biomass in coal-fired power stations was to try and establish domestic growers, and a domestic supply chain for wood,” said Dr Rob Gross, Director of the Centre for Energy Policy and Technology at Imperial College, London.

“If that could be made to happen, then that would be a very good thing for biomass fuel and it should also relieve the pressure on furniture makers and other users of wood,” he added.

“Unfortunately despite trying for about the last 10 years, as yet that hasn’t happened.”

Rising wood consumption
Industry body, the Wood Panel Industries Federation, estimates that there is the capacity in the UK to produce 16.6 million tonnes of wood each year.

They say if the government were to achieve its 2020 greenhouse gas emissions targets for biomass generation, wood consumption would have to rise to about 50 million tonnes per annum.

Studies funded by the UK Energy Research Centre, however, suggest that if currently unused agricultural land in England, were planted with coppiced wood, an extra 7 million tonnes could be produced each year – the same mount Drax plans to burn.

In a statement, the Department for Energy and Climate Change told Channel 4 News: “It is not our intention for our renewable support mechanisms to adversely affect other industries.

“We believe this can be minimised by increasing the supply of wood and forestry residues available, better management of our waste wood, and the increased use of other biomass resources such as food waste and perennial energy crops.”

On Friday 29th October, the UK’s wood panel manufacturers marked a Day of Action, uniting with panel manufacturing companies across Europe.  Organised by the European Panel Federation, the industry protested against subsidy regimes for biomass energy that are distorting wood markets, the preferred fuel of biomass generators.

The wood panel industries argue that the burning of wood should only occur at the end of its useful life, in order to maximise the carbon storage and economic potential of this valuable resource.

Egger held a day of debate at Hexham, bringing together local politicians and government officials, industry representatives and Forestry Commission officials. Sonae, Kronospan and Norbord all held shut-downs to demonstrate the potentially devastating impact of industry failure, as a result of market distortion by government subsidies. Several members of the APPG took part or lent their support.

All four companies, represented by the Wood Panel Industries Federation, are calling on the Government to support the development of high-efficiency processes, such as good quality combined heat and power from biomass. The industry would like to see an end to support for large-scale generation of electricity only from biomass, which is arguably unsustainable, wasteful and damaging to British manufacturing.