Environmental Audit CommitteeWritten evidence submitted by BSW Timber

BSW Timber

BSW Timber is the UK’s largest domestic sawmilling group, processing around 15% of the UK’s annual timber harvest. The company has six mills across the UK (and one in Latvia). The group has an annual turnover in excess of £180 million, employing over 900 people; indirect employment accounts for another 2,500 jobs. It is one of the largest timber buyers in the UK, annually consuming around 15% of the UK wood harvest.

Impact of Energy Subsidies

BSW Timber is extremely concerned about the impact that subsidies for biomass will have on the UK wood market, and the possible distortion it will lead to.

The UK has a very limited wood supply; around 10.2 million tonnes annually. This is almost all used by wood processors. There simply is not enough domestic wood to service a new entrant (biomass) without displacing existing users. Better management of forests will not help to meet this demand; the Forestry Commission estimates that potential increase in production will only be two to three million green tonnes.

Whilst sawlogs are the most expensive part of the tree, and energy generators currently say they do not intend to burn them, we believe that companies like ours are still at risk from biomass subsidy policies. The price premium of saw-logs will not dissuade energy generators from using them for biomass, as it will increasingly become easier and cheaper to purchase whole trees instead of splitting them into premium and “lower value” parts. Generators will start to purchase saw-log timber, diverting this wood from the timber industry and undermining the Waste Hierarchy. Whole trees have already been used for pellets in North America.

The entrance of subsidised biomass energy companies into the wood market does not only increase demand for a finite and valuable resource, it will also increase the cost for domestic wood processors. The large subsidises available to energy companies will allow them to purchase wood at a higher rate than those in the wood processing industry, distorting the market. In the 10 years since the introduction of the Renewables Obligation the price of standing timber has increased 72.4% in real terms.

The UK will require many millions of tonnes more wood than it can supply domestically. As a result, this wood will have to be imported. The current subsidies have been set at a level which allows energy companies to pay the higher cost of imported wood, regardless of whether they source that wood from 50 or 5000 miles away. This will give those energy companies a financial incentive to purchase cheaper domestic wood, putting further pressure on domestic wood processors who (for financial and phytosanitary reasons) can only source UK wood.

We believe that subsidising biomass in the same way as other renewable technologies, rather than taking into account its unique characteristics (namely the existing fuel source for which there are competing and existing users) is potentially extremely damaging for UK businesses and jobs, and the environment.

The Committee on Climate Change has recognised that wood has a valuable role to play in green construction, and that this should be prioritised ahead of burning wood for electricity. BSW Timber is a major producer of sustainable and low-carbon building materials. Wood is the least carbon intensive building material; every cubic metre of wood that is used in place of alternative materials saves between 0.7 and 1.1 tonnes of carbon dioxide. By using a timber frame, it is possible to reduce the carbon footprint of a typical three bedroom house by approximately three tonnes. 4.2 tonnes of CO2 can be saved per 50 square metre of wall element, by substituting timber frame and softwood weather boarding for brick and block. 13.85 tonnes of CO2 can be saved when softwood weatherboarding is substituted for PVCU weather boarding.

BSW believes the Government must urgently reassess the unintended consequences of its biomass subsidy regime, particularly taking into account the more environmentally friendly uses of wood which are at risk of being displaced.

14 June 2013

Prepared 29th November 2013