Energy and Climate Change CommitteeWritten evidence submitted by the All-Party Parliamentary Group for the Wood Panel Industry (BIO0031)

The All-Party Parliamentary Group for the Wood Panel Industry was set up to raise issues of concern to the industry in Parliament and seeks to provide a forum for discussion on the effect of Government legislation on the industry, its employees, suppliers and customers. The All-Party Group is sponsored and advised by the Wood Panel Industries Federation, the trade body representing the industry across the UK.

The main source of biomass in the UK is wood: the APPG for the Wood Panel Industry has concerns that biomass subsidies distort the price and supply of domestic wood in the UK. We believe that subsidies for woody biomass electricity generation need to be reassessed.

The APPG is fully supportive of a sustainable renewable energy policy. However, we have serious concerns about the subsidisation of energy generators to purchase biomass to burn in inefficient large-scale electricity-only plants, which will distort the wood market and risk UK manufacturing businesses and jobs.

There are six wood panel manufacturing sites in the UK providing 7900 FTE jobs, largely in rural areas with high levels of unemployment. The industry is reliant on UK sourced timber, in the form of small roundwood, sawmill co-products and ‘waste’ wood. These ‘lower grade’ inputs are then processed into products such as MDF, OSB and particleboard which are used in furniture and construction.

The UK Renewable Energy Roadmap 2011 states that biomass electricity could contribute 6GW by 2020. This would require 60 million tonnes of wood a year. This is 6 times the UK annual wood harvest, almost all of which is already being used by wood processors and local wood fuel heat markets. Energy generators are subsidised entrants into a limited wood market, and are therefore able to overpay for wood to secure supply, distorting the prices for existing users. The UK will have to import some wood fuel to meet demand from biomass, but were even 10–20% of the supply to come from domestic sources, this would encompass the entire domestic harvest and take away all wood from existing industrial users.

The Government has cited under-utilised woodlands as a possible source for extra biomass feedstocks. The quantity of wood available from such woodlands would not even scratch the surface of the level of wood required. The Forestry Commission estimates that at most, bringing these forests into better management could bring on stream an extra 2–3 million tonnes—a fraction of the wood required. This wood should also be prioritised for the most efficient energy uses—particularly for local renewable heat schemes which operate at 80–90% efficiency. The wood from undermanaged forests is also spread thinly across privately owned woodlands. It would not be suitable for large-scale electricity plants interested in bulk purchasing. Bringing under-utilised woodland into better management is a positive policy aim, but that wood has a future in supporting local heat and power demands, or the wood processing industries, and not large-scale electricity-only plant.

The Government has proposed a 400MW cap on dedicated biomass development; this does not alleviate the APPG’s concerns. 400MW of biomass capacity would require 4 million tonnes of wood, the equivalent of the annual quantity required by the wood panel industry. The 400MW cap also does not include coal conversions and co-firing; the scale of these plants, and the immediacy of the start of their operations, poses just as great a risk to existing wood users as dedicated new build plants.

Burning timber which has viable alternative uses (such as panel production) undermines the Waste Hierarchy. Processing wood, rather than burning it, also stores carbon in the products for their lifetime. Processing wood produces only 378kg of CO2 per tonne of wood, whereas burning wood for electricity generation produces 1,905kg of CO2.1 In addition, displacement of the wood panel industry (and its contribution to carbon sequestration) by wood fired electricity generation, would see a net increase in CO2 emissions by 6 million tonnes per annum—more than 1% of the UK’s reported emissions in 2008.2 Wood processing is the most environmentally sound use of the valuable wood resource, and the Government should not subsidise the burning of wood for electricity where that wood has an alternative use.

By introducing a large subsidised energy sector into the limited domestic wood market, the Government is threatening the future of valuable UK timber processing industries, which provide important manufacturing jobs and store carbon in their environmentally friendly construction materials. The Government should look again at only subsidising imported wood, and at placing lower limits on the total installed electricity biomass capacity.

June 2013