Presentation to the International Biomass Conference on the woodfuel sector in the UK, April 2009

1. Wood Burns : An Urban Myth?
International BIOMASS Conference
Portland 29 April 2009
Neil Harrison
Living Energy, New Zealand

2. Overview
Part 1 : Setting the Scene
• Energy Production & Use in the UK
• The UK Forest Resource
• The UK Forest Industry
Part 2 : Wood Burns You Say?
• The Policy Glacier
• The Wrong Path
• New Generation
• Emerging Wood Energy Models
• Impact on the Industry
Part 3 : Below the Radar
• The UK Woodfuel “Industry” in 2002
• Behind the Curve
• Green Entrepreneurs
• The Effect on the Ground
• The Penny Drops
• A Typical Scheme

3. Part 1 : Setting the Scene

4. Energy Production & Use in the UK - 2007
Total indigenous production of energy 6% lower in 2007 than 2006
Year on year decline each year since 2000
Coal production 7% lower in 2007 than 2006
Nuclear output fell by 17% on 2006 levels
Natural gas production fell by 10% on 2006 levels
Crude oil production 5.6% lower than 2006 levels
Coal imports down on 2006 levels, but show long-term upward trend
UK became a net importer of crude oil in about 2005
UK imports of natural gas accelerating rapidly, with gas use for electricity generation
hitting new record levels each year

5. The UK Forest Resource
Average forest/woodland cover of just 12%
Concentration, composition & ownership vary considerably across UK
Well established commercial forestry plantations & associated enterprises
Large areas of inappropriate planting in the past – now being cleared or restructured
Large numbers of small parcels of mixed & broadleaved parcels “the traditional English
woodland”
Much of the “traditional English woodland” is either unmanaged or undermanaged
due to economic & ownership issues – the “accidental woodland owner”

6. The UK Forest Industry
Generally at macro-scale – saw, panel and pulp mills
Long, drawn-out decline of traditional small scale processors & users
Buyer is king, often with little or no margin for grower or contractor
Large proportion of UK timber is imported, and recycled material has displaced a
proportion of virgin material in many markets (esp. pulp & panel production)
As processing capacity has concentrated into ever-larger operations, prices have been
driven down and harvesting has become increasingly mechanised

7. The UK Forest Industry – The Stats
Annual wood product consumption in UK is around 1.8 billion cu ft and rising
Annual timber cut in UK is around 320 million cu ft, and has been rising year on year
A deficit of 1.48 billion cu ft (mainly coming from Baltic states)
Industry employs 160,000 people (forestry, sawmilling, panels, pulp & allied industries)
Direct forestry employment has fallen by 22% (c. 3,000) since 2002 (14,000 to 11,000)
Overall contraction in number of primary processors in 10 years to 2008, including :
38% reduction in sawmills, 50% reduction in paper mills and 28% reduction in panel mills

8. Part 2 : Wood Burns You Say?

9. The Policy Glacier
June 2000
May 2004
October 2005
April 2006
March 2007
March 2007
May 2007
September 2007
June 2000

10. The Wrong Path?
In 2002, with a target-driven political climate and a historic focus on electricity, heat from
biomass was seen as a sideline when renewables made it onto the agenda…
Policy and grants regime, coupled with availability of cheap capital for large projects
favoured large-scale electricity generation from biomass
Co-firing biomass with coal also became eligible for support via ROCs scheme, leading to
Uptake of biomass at existing stations, e.g. 4,000MW Drax taking in 30 million cu ft +
Created a potential demand in excess of 70 million cu ft almost overnight
Government support to biomass for heat was just a fraction of that for electricity
production & perversely, it was easier to get a £1m grant than £10,000

11. New Generation
Steven’s Croft, Lockerbie
44MWe Commissioned 2007
480,000 tonnes of biomass SembCorp, Teesside
40 direct jobs & support for 300 30MWe & 10MWth Commissioned 2007
300,000 tonnes of biomass
15 direct jobs & 400 during construction
Drax Power, Yorkshire
4,000MWe coal + direct
injection biomass
1m+ tonnes per year
Western Wood, Port Talbot
14MWe Commissioning 2009
160,000 tonnes of biomass
350MWe planned for same site
Fuel to come from North America Plans for at least 10 more
in 10MWe to 200MWe range

12. Remember The Stats?
A deficit of 1.48 billion cu ft and rising
Direct forestry employment falling (22% between 2002 and 2008)
Overall contraction in number of primary processors in 10 years to 2008, including :
38% reduction in sawmills, 50% reduction in paper mills and 28% reduction in panel mills
Where was 70 million extra cu ft a year going to come from?!

13. Dominant Forestry Processing Model in UK
• High processing efficiency & technology
• High transport costs due to distances
• More efficient forest technology & logistics
• Lower wood supply prices

14. Emerging Biomass-to-Energy Model
Power Station
• High electrical efficiency
• Low total efficiency if no district heating – 30-40% absolute max
• Higher transport costs due to distances
• More efficient forest tech & logistics
• Lower wood supply prices

15. Impact on the Industry
UK Forest Products Association - timber processors - lobbied hard against biomass energy
Confor - mainly timber growers - lobbied hard for biomass energy
Why?!
Processors saw that they would be paying more – growers that there would be competition
Proved right by the first meaningful lift in timber prices in over a decade – even before any
of the new generation capacity came online
However, the forest industry was unable to provide the volume of extra material,
leading to further increases in imports

16. Part 3 : Below the Radar

17. The UK Woodfuel “Industry” in 2002
Virtually no automated woodfuel systems installed anywhere - probably less than 20
4 companies working in the sector - Econergy, 3G Energi, Wood Energy & Talbotts
< 4,000 tonnes chip used per year (2,500 at one site), and < 100 tonnes of pellets (imported)
In a target-driven political climate, with a historic focus on electricity, heat from biomass
was seen as a sideline when renewables made it onto the agenda
Ease of monitoring production of electricity when compared to heat was a factor
This is all perhaps surprising given that energy consumed for heating accounts for just under
half of the UK’s total energy consumption!

18. Behind the Curve - Europe in 2002
Austria installed 2,392 automatic chip and 4,492 automatic pellet boilers in 2002 (<100kW)
And at the time was burning around 100 million solid cu ft of chips and bark for heating
Austria also had 22 biomass CHP plants – 78MWe and 520MWth
Total wood demand for energy production in Austria was around 400 million cu ft
The Swedes meanwhile, were burning close to 1m tonnes of wood pellets
And by 2005 were meeting close to 60% of the heating needs of Sweden with bioenergy
“Behind the curve” does not even begin to describe the situation in the UK..

19. Continental Biomass-to-Energy Model
• High total efficiency with district heating
• Higher specific investment costs
• Lower transport costs due to distances
• Less efficient forest technology & logistics
• Higher wood supply prices
• Greater returns to supply chain

20. Green Entrepreneurs
Three companies made an early impact on the UK woodfuel ‘scene’ in the early
nineties, all 3 of them owned and managed by ‘green entrepreneurs’
All 3 sourced Austrian (5) or Finnish (1) wood-fired boilers
They now hold the #1 and #2 positions in UK market by a huge margin, and now have
300+ installations between them
They received early moral and (limited) financial support, principally in the form of
environmental grants linked to woodland management, from government

21. The Effect on the Ground - South West England
2002 2004

22. The Penny Drops…
Woodfuel was finally identified as the ‘holy grail’ of rural development :
Boiler = Fuel Requirement + Servicing = Sustained Rural Jobs
The rural/job creation agenda is now the principal driver behind almost all public-sector
interventions stimulating uptake of woodfuel : c. US$11,000,000 in 2008 (pre-recession)
Finnish research indicates that a quarter of the $ associated with a large project will remain in
local economies, and that this figure rises to around a half with smaller scale schemes
UK government research indicates that around 6 jobs per MW of biomass boiler are created,
and most importantly, sustained
Slightly more ambitious figure than the Austrians, working on around 3.5 jobs per MW

23. Woodfuel in the UK Today
Wood-fired boilers have gone from the preserve of whacko greenies to mainstream
technology
There are now well over 300 commercial and industrial installations across the UK, and
the number is rising week on week
The woodfuel sector is growing at a rapid, but sustainable rate – not “an extra 70m cu ft
on Monday morning please”
New jobs are being created in the forestry sector at an unprecedented rate
Wood-fired boilers are heating a huge range of buildings : hospitals, hotels, a high-
voltage testing laboratory, visitor centres, the Welsh Assembly building and the home of
the UK nuclear submarine fleet
Using wood for electricity generation at a macro scale is no longer incentivised by
government
Small is beautiful - 90% + efficient & significantly more jobs per MW when compared to
biomass electricity generation
There’s been a recognition that, hey, wood burns!

24. Thanks for Listening