UK Demand for Wood Fiber

From the April 2010 Forest2Fuel newsletter.

While domestic demand from bioenergy facilities remains weak, European demand continues to expand. A recent report estimates that Britain will need to import 30 million tons of wood chips and pellets annually by 2017.

Several announcements for 400 MW biopower plants, each planning to consume approximately 4 million tons of wood fiber annually apparently raised red flags for some. As a result, twenty leading companies in wood utilization and woodland management in Britain funded the study in order to understand the demands being placed on the supply chain from a forest products industry that continues to develop and an increasing number of announcements for wood-fueled energy plants.

According to the report, total harvest volume in Britain in 2007 was roughly 20 million tons. This number is forecast to increase to 22 million tons by 2019, at which point it will start declining. The tipping point is forecast to occur in 2012, when proposed biopower announcements will begin adding demand beyond the bounds of domestic supply.

In 2013, the need for imported wood chips and pellets is estimated at 11 million tons. By 2015, this number increases to roughly 25 million tons. In 2017, Britain will need to import nearly 30 million tons of wood fiber in order to meet the demands of the both the forest products and bioenergy industries. The study points out that this level of demand—from just Britain—could double the size of the global trade in wood fiber.

These numbers, however, assume that 100 percent of all announced bioenergy facilities will be operational at the dates reported. In the U.S., only 10 percent of all announcements remain on track and actually open. The success rate may be higher in Britain due to the impetus provided both by the country’s adoption of the Kyoto Protocols and the Government’s Renewables Obligation program.

  The Renewables Obligation program is designed to incentivize renewable electricity generation. One Renewables Obligation Certificate (ROC) is issued to an accredited generator for each megawatt hour (MWh) of eligible renewable output generated.

The target started at 3 percent of total output, climbed to 10 percent this year, and will be 15 percent by 2015.

Generators meet their obligations by presenting sufficient Renewables Obligation Certificates (ROCs) to meet a renewable electricity standard (RES or RPS). If they do not have enough certificates to meet their goals, generators must pay US$57 per MWh into a fund (the rate for 2010). Because this approach incentivizes generators to meet the renewable electricity standard (RES or RPS), a higher percentage of announced facilities are likely to become realities in Britain.

If the trend in Britain is going to become a trend in the United States, the single most important legislation before Congress in 2010 will be an energy bill that establishes a national RPS. This is essential if the biopower industry is going to become a domestic source of demand for forest biomass. While many states already have an RPS, the enactment of a federal standard is certain to make wood-fueled biopower projects more bankable.

The report, “Wood fiber availability and demand in Britain 2007 to 2025,” was conducted by independent consulting firm, John Clegg Consulting Ltd. The study estimates demand based on survey results and news reports and represents all of the existing and proposed demand except for 5 large-scale plants that refused to provide any information. For the purpose of this article, tonnes have been converted to short tons.

Read the full report.

BCAP Q & A:
Q: Which states received the highest total matching payments? Answer
Q: Which regions received the most funding? Answer
Q: Why were payments so heavily weighted toward forest materials? Answer
Q: When will the USDA release the final rules and restart the BCAP program? Answer
Q: The $170 million question: What did the American taxpayer get for the $170,112,607 in BCAP matching payments? Answer
Q: How can the goals of the BCAP Matching Payment Program be met? Answer

To register and read more about the Forest2Fuel e-Newsletter, click here.