Energy and Climate Change CommitteeAddendum written evidence submitted by Drax Group plc (BIO21a)

Introduction

Drax should like to thank the Committee for this opportunity provide further information and to take the opportunity to answer a number of concerns raised by members of the Committee during the oral evidence session on Tuesday 21 May 2013.

Key Points

Sustainable forest management, underpinned by robust sustainability criteria, is essential in order to ensure the carbon neutrality of biomass at the point of combustion. Those who argue that sustainability criteria are irrelevant to carbon balance have missed the central importance of sustainable forest management practices to the carbon equation.

Claiming that “regrowth” means biomass is carbon neutral is a simplification too far. The crucial point is that the growth in a forest area should be higher than the rate of extraction from that same area.

The output from carbon accounting models should always be referenced to the underlying assumptions and scenarios used in its production to avoid unrealistic general conclusions being drawn from hypothetical or unrealistic scenarios.

Wood prices in the UK have not demonstrably increased as a result of the Renewables Obligation. For most of the time since the scheme has existed public records of UK wood prices have been closer to their lowest point than their highest since records began.

Carbon Reductions

1. At the oral evidence session, the Committee sought an assurance that the Government’s proposed new sustainability criteria will be sufficient to ensure that there will be genuine carbon reductions from the use of bioenergy. A concern was expressed that while the DECC carbon standard requires a 60% reduction in emissions against the average EU fossil fuel grid comparator, the calculation does not assess the impact on the carbon balance of the forest and the ”carbon debt” that, allegedly, can be created by harvesting and depleting that carbon sink.

2. The reality is that these impacts are included within the terms and conditions of the contracts entered into between Drax and its biomass suppliers. Suppliers have to provide detail of their impact on carbon stock and those contractual requirements are independently audited. This point was explained in greater detail in paragraph 18 (Policy Principle 2) of Drax’s original submission. For Drax contracts, forests must be managed in a way which increases or maintains their productivity and therefore their ability to act as a carbon sink. Furthermore it should be emphasised that where there is predictable long-term demand for wood, forests can be managed in order to maximise wood growth and therefore carbon sequestration.

3. In carbon terms, where forests are managed sustainably the results can be astonishingly beneficial. For example, despite fluctuating but ultimately increasing demand for wood from US forests over recent times, forest cover in the US is increasing consistently and therefore its function as a carbon sink is increasing. In fact it has been increasing for over 50 years; with standing volume increasing 49% between 1952 and 2006, net volume per acre has increased 94% since 1953. The US forest estate now stands at 751 million acres which is the same figure as in 1910. Drax has a robust sustainability policy which will maintain not destroy that state. To reiterate the point made at the Committee’s oral evidence session, despite increased demand for wood products over the period, the US Environmental Protection Agency reports that the amount of carbon contained in US forests is 31% higher now than it was in 1991. It is therefore difficult to correlate these data with allegations of a reduction in carbon stock.

4. Certification schemes and other assurance processes (such as Drax’s) which demonstrate that a forest is being managed in a sustainable way are therefore crucial to confirming that carbon savings are genuine and immediate.

Regrowth

5. At the oral evidence session an assertion was made that the reason why emissions from combustion are not currently included in DECC’s model is that there is an assumption that the emissions from combustion of biomass are neutralised by regrowth.

6. Regrowth can be a misleading term. It is not the regrowth of a particular tree which means the carbon equation is neutral. It is the concurrent growth of the wider forest area which is absorbing CO₂ at a faster or equal rate than carbon is being extracted that is the key to carbon neutrality. Failure to account for or recognise this has caused some to conclude that a “carbon debt” is created.

7. When considering the impact of wood extraction it is essential to view it in the context of a forest with trees at different stages in their life cycle sustainably managed over a period of years rather than as a collection of single trees. This underpins the use of the widely recognised growth:removal1 ratio measure (or equivalent). In terms of carbon sequestration a growth:removal ratio of equal to or greater than unity essentially defines a sustainably managed forest and maintenance at this level or greater effectively demonstrates the avoidance of the creation of a ”carbon debt”.

8. Current removals from U.S. forest are about 21.2 billion cubic feet annually—nearly 320 million dry tons. This level of harvest is well below net annual forest growth and only a very small fraction of the total standing timberland inventory. In 2006, for example, the ratio of forest-growing stock growth (wood volume increases) to growing stock removals (harvest, land clearing, etc.) in the US was 1.71 which indicates that net forest growth exceeded removals by 71% (Smith et al., 2009)2

Carbon Debt Modelling

9. Some models which are cited as indicating the possibility for a carbon debt are based on assumptions and counterfactuals which are unrealistic and do not reflect established, sustainable, forest practices. Much of this debate is of a purely academic nature where the disagreements are around the theoretical likelihood of future uses of a forest rather than about the actual current or any likely future management practice. As a result of this, some evidence presented to the Committee as showing a possible carbon debt is misleading because of the lack of context or the omission of the future scenarios to which they refer. Some of the written evidence even omitted key caveats the original authors had included. For example, the following four assertions were made in written evidence:

DECC’s new BEAC calculator shows intensification of forest management mostly result in emissions which are significantly higher than fossil fuels. This is incorrect since the prototype does not currently reflect actual or likely future sources of biomass or current sustainable practices. DECC is aware of this.

In Sept 2011 the European Environment Agency said it was incorrect to assume that the use of biomass would not result in a net carbon accumulation in the atmosphere. Incorrect. The selective quote used to support this claim omits the key qualification “If bioenergy production replaces forests or reduces forest stocks…”

The European Commission’s Joint Research Centre recently concluded that biogenic carbon neutrality is not valid. The JRC actually said neutrality is not valid, but in situations where extracting biomass reduces carbon stocks through the dedicated extraction of stemwood. The exact quote on page 15 of the report is: “In the case of dedicated harvest of stemwood for bioenergy purposes and short term GHG reduction policy objectives (eg 2020) the assumption of “carbon neutrality” is not valid since harvest of wood for bioenergy causes a decrease of the forest carbon stock”—however, as shown above using genuinely sustainable biomass does not reduce carbon stock and the ”dedicated harvest of stemwood” for biomass is not a realistic scenario.

DECC’s Bioenergy Strategy states that using whole trees is higher carbon than leaving the trees in the forest and burning fossil fuels. The actual work performed for DECC makes it clear this is only the case in hypothetical, unlikely situations. The very next line in the Bioenergy Strategy paper states such scenarios are “very unlikely”. It went on to say quite clearly: “In situations where new forests are created, or existing forests have been under long-term management for production of timber and/or biomass, harvesting of wood does not incur a carbon debt.”3 This is a complex piece of work and it is therefore suggested that, if there is a further oral evidence session, it may be sensible for the Committee to hear directly from the report’s authors at the Biomass Energy Centre (BEC)—indeed a number of the articles cited in written evidence actually rest on misinterpretation of BEC’s work.

Whole Trees

10. ”Whole tree” is not a phrase used by the forest sector. A substantial amount of wood, which a layperson may describe as ”whole trees” is extracted from sustainably managed forests and which can be used for energy and if so deliver substantial carbon savings. This includes examples where the ”whole tree” is removed in thinning in order to boost the growth within the stand (and this is a common approach in the US South), or where a tree is removed due to disease or fire risk and no other use can be found for it.

11. The debate about the use of “whole trees” should not distract from the fact that any forest where more carbon is being absorbed than extracted is an effective carbon sink. The “whole tree” debate is not actually about carbon debt per se, but rather about the magnitude of the carbon savings which would hypothetically be made if the “whole tree” were used for (for example) construction rather than for fuel. It is therefore an academic debate which only has merit if forest owners, for some unaccountable reason, chose to sell their output to the lowest priced market (bioenergy) rather than the highest (construction). To be clear, the majority wood fibre in the US will continue to supply the higher value industries (which often happen to sequester carbon for longer) even if demand for biomass were to increase.

12. The types of wood used for bioenergy include tree thinnings, residues and wood which is not destined for an alternative commercial market. It would not include trees destined for any other higher specification product use because the very low price the bioenergy sector can afford to pay means that if there is any other use a tree could be diverted to, it will go there. Drax, and biomass purchasers in general, are the buyers of last resort.

Wood Panels

13. At the oral evidence session, a concern was expressed that wood used for biomass may increase prices paid for the raw materials used to produce wood panels in the UK. This concern is not directed at Drax, or other major generators which will not be using UK wood in quantities which could possibly affect UK wood prices. Further, the analysis which suggests wood prices have increased because electricity generators are buying biomass is flawed.

14. It is often quoted that the “price of wood has risen 60% between 2005 and 2010”. This is an odd timeframe, considering data are available from 1985 right up to 2013, however, a quick look at the full data set shows why this particular time frame has been chosen. Figure1 below is taken from a recent Furniture Industry Research Association report. By plotting just three points on the graph FIRA has indeed shown what appears to be a 60% rise. However, when the full data set is obtained from the Forestry Commission, as shown in Figure 2 below, a different and more complex picture is revealed. In fact, wood prices are not particularly high and appear to track wider economic trends.

15. Since the oral evidence session the Timber Price Indices 2013 have been published. This independent data from the Forestry Commission shows that standing coniferous timber prices in the UK for the year ending March 2013 are 7.7% down on the previous year and 41.8% lower than 20 years ago. Softwood sawlogs showed a similar trend with prices 29.3% lower than 20 years ago and down 7.2% over the last five years. Claims that the support to biomass generators from the Renewables Obligation is driving up UK wood prices are manifestly not supportable..

Potential Closure

16. Drax is the most efficient coal-fired power station in the UK and is fitted with Flue Gas Desulphurisation equipment on all six of its generating units. We are currently determining the optimal solution for compliance with the Industrial Emissions Directive. It is opted-in to the Large Combustion Plant Directive and will run under the Industrial Emissions Directive (IED). It would not, therefore, have had to close under “European rules”. Although, without abatement through the use of biomass, the UK’s Carbon Price Support would put economic pressure on coal-fired generation.

Certification

17. It is important to stress that all of the biomass procured by Drax must meet its independently verified sustainability criteria which was detailed in Drax’s initial submission. This means that both certified and non-certified sources of forestry are subject to robust scrutiny.

Clean White Wood

18. At the oral evidence session, there was an extended exchange on the subject of whether Drax burns solely “clean white wood”. This may have been meant to imply we burn solely or predominantly trunk wood. This is not the case. The pellets we burn can include some bark, but as was made clear at the oral evidence session our wood pellets primarily come from forest residues and thinnings which can be de-barked.. Furthermore up to 50% of a tree destined for use as a saw log typically ends up as residue which need not necessarily contain much bark.

Thinnings and Residues

19. The Committee asked for evidence about the amount of thinnings and residues available in the US and the use to which they are put and why it is that large proportions cannot be used by industries other than the bioenergy industry.

20. The US Department for Energy’s Billion Ton Update: Biomass supply for a Bioenergy and Bioproducts industry provides detail. Overall, it finds that US agriculture and forest resources have the capability to potentially produce at least one billion dry tons of biomass annually, in a sustainable manner. The report also goes on to answer the specific question posed by Mr Gardiner in relation to forest thinning and residues.

21. Taking into account that a proportion of the residue is left in situ in a sustainable forest, total logging residue and other residues in the US currently amount to nearly 93 million dry tons annually—68 million dry tons of logging residue and 25 million dry tons of other removal residue (Smith et al., 2009). The US Department for Energy’s report concludes: “The logging residue material largely consists of tops, branches and limbs, salvageable dead trees, rough and rotten trees, non-commercial species, and small trees. Most of this residue is left onsite because its small piece size makes it unsuitable and uneconomic for the manufacturing of forest products. However, as markets for bioenergy feedstocks develop, a significant fraction of this residue could become economically feasible to remove.” Note that this applies specifically to the question about thinnings and residues not, other types of woody which may be suitable for biomass (for example, secondary residues). It is analysis of what would be available now if a market existed, it does not take account of the increasing volumes of residue available should the wider forest industry in the US start to recover. The report also provides detail of the varying volumes available depending on the amount a user may be willing to pay for the thinning.

22. An explanation of the two types of thinning may help to explain why these residues are currently left unused site.

The first is pre commercial thinning—this is a thinning on a forest before the canopy has closed and is a way of reducing the density of stems per land area. The trees that are removed are generally under 5 inches in diameter at breast height (<5” dbh). Traditionally these are left in the forest to rot as they are not suitable as pulpwood and there is not a market for bioenergy in most places that would cover the cost of chipping and then trucking for any significant distance. The pre-commercial thinnings could also be dragged out and burned but only in the case where there is possible revenue from pine straw collection or hunting; both of which would benefit from having a clean forest floor. 

Commercial thinning—the first of these commercial thinnings occurs at age 121–5 years where the canopy has usually closed and there is a selective thinning to reduce the stocking density. The trees taken out are usually between 6 and 8 inches dbh and at this diameter they could be taken to a pulp mill if a market exists. There can also be one additional commercial thin before final harvest depending on the management plan. 

23. Pre commercial thinning is achieved in several ways, the prevalence of which demonstrate that hitherto the primary purpose of thinning has not been to supply wood markets. We believe creating a market for biomass is actually preferable to these methods in carbon terms:

Herbicides—herbicide is sprayed in bands, killing the trees where they stand. They will rot there and release CO₂ and methane.

Roller Drum Chopper—this is a heavy roller with blades running parallel to the axis of rotation that cuts and rolls all of the biomass material into the ground as it is dragged behind a bulldozer. 

Manual Row Cutting—Usually employing chain saws and is mainly done in the case that the trees have grown too large for the above two treatments.

Prescribed Burning—prescribed burning is a common forestry practice in the US Southeast and is used to control the underbrush that would compete with the trees for nutrients and to make the forest stand more desirable for certain species. Fuel that is left in the forest, either as dead material from pre commercial thinning or as small trees, will result in emissions to the atmosphere and not replace coal or be used as energy. This is something that is not included in the relevant counterfactual. 

24. Thinning reduces the likelihood and severity of both pests and fire. There are a lot of possible and hypothesized complementary causes for these catastrophes but areas which are most at risk are those stands which are overstocked. This is the main cause behind the severity of Mountain Pine Beetle (MPB) outbreak in West Canada. This outbreak can be ascribed as an attempt to preserve, rather than conserve the forest.

25. The US South has another species called the Southern Pine Beetle (SPB) which causes similar damage through like vectors. Between 1999 and 2003 the SPB affected nearly 1 million acres and cost a total of over $1.5 billion in lost timber value. The species is cyclical and resurges every 7 years or so and there is no way to prevent but only to control the severity of the outbreak. The forest service funds SPB programs in all 13 southern states. 

26. While the control programs in each state vary somewhat, the general format is that the State Government pays the landowner to thin and there is no requirement that the material from the thinning be taken to a mill. Taking this to its logical conclusion, the counterfactual asserting that the forest will stay in forest without being thinned cannot be applied as a general rule.