Alastair Kerr, Director General of the Wood Panel Industries Federation, provided members with an update on ongoing liaisons with DECC regarding the voluntary agreement with energy generators and outlined the industry’s continued concerns.

The group discussed future activities to continue raising awareness of the industry’s concerns and noted the upcoming publication of the Government’s response to the RO Banding Review which is due to be published very shortly.

Each industry provided an update on the work they have been doing on bioenergy and noted their concerns, many of which were shared, about the future impact of biomass policy on their sectors. The meeting was very positive with both groups agreeing on the need for some joint action to demonstrate the wider impact of current policies beyond the individual sectors.

Rt Hon Anne McGuire MP, Guy Opperman MP, Alastair Kerr, Director General of the Wood Panel Industries Federation and Bob Livesey, Director at Egger, met with the Minister to discuss solutions to the difficulties created for the industry as a result of the Renewables Obligation.

The group discussed the solutions available to the UK Government including a reduction in the subsidy for domestically sourced wood compared to the subsidy for imported wood and discussed potential legal barriers to this approach.

The Minister noted that DECC’s preference is to introduce a voluntary agreement with energy generators on reporting of sourcing plans. Alastair confirmed the industry’s willingness to engage on this but also noted concerns about the impact such an agreement would really have.

A round table discussion between the industry and the energy sector will be arranged by DECC on the voluntary agreement. The wood panel industry looks forward to continuing discussion on this and other solutions with DECC in advance of the publication of the Bioenergy Strategy and the Government’s response to the Renewables Obligation Banding Review.

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.

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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.