Burning ambition: Why the forestry industry needs the RET

On Wednesday, shadow Environment Minister Mark Butler moved an amendment to the RET legislation on behalf of the Labor opposition, that would disqualify native forest biomass as an eligible fuel source for renewable energy credits in the legislation itself. The fate of the amendment will be decided on the cross bench in the Senate on or after June 15, when parliament resumes sitting.

Tasmanian Forest

When Environment Minister Greg Hunt introduced the Renewable Energy (Electricity) Amendment Bill on May 26, he reinstated native forest wood waste as a renewable energy source in the RET scheme. In doing this he made good on a pre-election promise and overturned the 2011 amendment made by the former Labor government, excluding native forest wood waste from the RET.

Native forest wood waste was used in the lead-up negotiations to the RET as a bargaining chip by the government. Minister MacFarlane wanted a trade off of the two yearly reviews in exchange for Labor’s support on the biomass amendment. In the end, Labor did not agree to a trade-off, despite agreeing to the target of 33,000GWh, which passed through the House of Representatives on Tuesday night.

Marginal and localised

The logging industry has been keen not to raise alarm bells about the change. Ross Hampton, CEO of the Australian Forest Products Association (AFPA) said on May 15 that biomass used for electricity would be a “very small amount.” He downplayed his own initial estimate to the Warburton Review of the 3,000 – 5,000 GWh of power a year that could be generated, admitting that AFPA had put that figure to the review panel but saying it “was a very theoretical number.

Nathan Trushell, VicForests General Manager for Planning, said last week that “the economics are marginal. It would only ever be a localised industry”, adding that trees are heavy and hard to transport.

For an industry that could only ever be ‘marginal’ and ‘localised’, the forestry industry lobby has fought hard for this change. It has a dedicated ally in the Coalition government, which has now made good on its pre-election promise to make native forest biomass an eligible fuel source under the RET.

No negative impact

Greg Hunt was quick to downplay the impact of the previous decade when native forests were eligible for Renewable Energy Certificates. When introducing the bill this week, he stated that there is no evidence “that its eligibility leads to unsustainable practices or has a negative impact on Australia’s biodiversity.”

In the pre-2011 regulations there were certainly very few biomass projects to receive Renewable Energy Certificates. That post Regional Forest Agreements decade was a period of almost boom conditions for the woodchipping industry. Both prices and export volumes increased to record levels and profits were high. It would have been impossible for the energy industry, with or without Renewable Energy Certificates to compete with the prices the industry was getting for woodchips for fibre.

Even without the biomass projects though, there was demonstrable damage to the forests during the decade in question. Since the beginning of the Regional Forest Agreements and the 2001 Renewable Energy legislation, the areas logged increased considerably to provide the same volumes of logs, with all of the associated problems of weed growth, damaged ecosystems and biodiversity, and dieback. Logging infringements have been rife. In some areas there are almost no sawlogs left. In NSW the government has been paying Boral compensation for inability to supply contracted volumes and in SE NSW Forestry Corporation has admitted it has almost run out of sawlogs.

Native forests at the centre of a perfect storm

Native forest woodchip exports have collapsed in the past decade. Increasing competition from cheaper Asian exports, and more buyers demanding higher forms of certification than the industry’s own Australian Forestry Standard (AFS) are partly responsible. Eighty percent of Australia’s wood production now come from plantations, which are profitable, and much preferred by buyers. In many areas public forests have been over-logged to the extent that there is very little resource left.

The falls in Victoria and NSW have been large, but the export collapse has been huge in Tasmania. A decade ago at its height Tasmania was processing more than 5 million cubic metres of native timber. In 2012-13, a little under 800,000 cubic metres was processed.

Minister Hunt’s statements about sustainability or otherwise of native forest logging and the emissions produced by burning or not burning wood ‘waste’ has little to do with this push by the industry. It’s about access to subsidies and propping up a logging industry that is in terminal decline

In that context, this week’s revelations that Vic Forests logging operations in East Gippsland are uncommercial, and that it plans to use timber it cannot sell as feedstock for biomass plants comes as no surprise.

All State forestry agencies have made significant losses on their native forest operations. While the specifics have varied from State to State the full extent of the losses has been disguised by cost shifting (from native to plantation sector costs), questionable paper revaluations of forest resources, and having some Community Service Obligations funded by the Treasury rather than the agency.

So at a time when demand has slowed to a crawl for traditional forest products, and forests are in desperate need of restoration and time to regenerate, the agencies and the industry lobby are instead gearing up for a new industry that will burn not only ‘waste’ but also whole logs disguised as ‘waste’.

When ‘waste’ is not ‘waste’

Australian Solar Timbers chairman and former President of the industry body Douglas Head said this week that timber for a proposed biomass plant in New South Wales’ Macleay Valley would come from existing sawmill waste that had little current value. “There is not one new tree that would be cut. Frankly you would not cut a tree to produce electricity alone. It’s got to be cut for some other high-value use,” he said. “Any fears of massive forest furnaces that we’d want to build, or seek people to construct, I think is simply a nonsense in the foreseeable future.”

The logging industry definition of ‘waste’ is not ‘waste’ in the sense of the residue left after logging on the forest floor. The industry is not suitably geared up to pick up this residue waste in most cases, and the cost of manually removing it would be prohibitive. The definition of ‘waste’ or ‘residues’ that is built into the regulation allows for whole logs to be burnt for power production. ‘Waste’ can be defined as any log that does not have a higher commercial purpose. In this way a pulplog (for paper production) is of lower value than a sawlog (for sawn timber), so the pulplog is considered ‘waste’, even when pulplogs comprise 90% of the timber extracted from a forest.

This is the same definition of ‘waste’ that has been used by wood-chippers for decades. The Eden chipmill on the NSW South coast was set up 50 years ago to use the ‘waste’ from sawmilling but has only ever used whole logs not suitable for saw logging. It has no structural or mechanical facility to use tree leaves and branches.

The Vic Forests Business Plan leaked last week admits that even sawlogging in East Gippsland will cease without large scale biomass burning, which makes a nonsense of the “waste” argument. In NSW the LNP changed the definition of wood ‘waste’ for electricity production last year to include whole pulplogs as well as other ‘residue’. Forestry Corporation of NSW has added biomass for electricity generation to the categories of logs for which it will account in the future.

How much wood is too much?

Medium to large wood-fired generators are very inefficient. They need vast amounts of raw material to produce a small amount of energy. The two Drax wood fired generators in the UK burn over 5,000,000 tonnes of pellets a year. The 70MW Laidlaw plant in NH USA burns 113 tons of wood an hour.

These high demands for feed-stocks cannot be met by simply using ‘waste’ materials and residues from the surrounding area. They need whole logs and the cost of transportation, which is often the largest part of any operation, will always be a large, if not their major expense. Drax in the UK has claimed it used only wood ‘waste’ but has now been forced to admit that 60% of its feedstock is from whole trees. It imports most of its wood from the forests of the USA and Canada in the form of pellets, and forest loss is now highly controversial in the USA.

There are some medium to large scale forest biomass projects on the table in Tasmania, Queensland and WA. The proponents of the 40MW plant at Manjimup WA claim they will use plantation wood, but the generator will be built in the middle of Karri forest, and nowhere near the proposed plantations. The cost of transporting feedstock from plantations would make the exercise uneconomic.

In Europe, energy suppliers are co-generating with wood and coal or converting coal fired generators entirely to wood. In Australia where dedicated plants are expensive to build, conversion of burners or co-generation of coal and wood could make biomass burning more economically attractive. Two of the six massive DRAX coal burners in the UK have been converted to wood burners with plans for two more conversions.

The conversion of burners overseas from coal to wood is legitimising and supporting coal fired power plants through subsidies, and in this way the future of big coal and big timber are entwined.

Small-scale projects do not require RECs

There are a number of small scale commercial ventures of wood biomass burners for heat and electricity in Australia that are profitable already when co-located where wood is already handled and ‘waste’ is already produced. Reid’s Timber Mill in Victoria has a profitable commercial arrangement with a company that will use the steam from the new wood boiler at the site. They can run it 24/7 producing heat when they need it and electricity when they don’t.‚Ä®‚Ä®This and other businesses like greenhouses in Victoria and WA can run on ‘wood waste’ that costs around a fifth the price of natural gas, let alone bottled gas, to produce heat with a payback time of a few years in most cases. Boilers for heat can also be set up and once the infrastructure is in place to chip, store and transport the wood, they can co-locate some electricity production.

As gas prices continue to escalate businesses are looking at alternatives. Maryvale Pulp Mill in Victoria has the biggest gas bill in the state and they are looking at biomass as an alternative source of energy.

Large-scale projects will never be financially viable with or without RECs

Large scale projects on the other hand will need significant on-going government assistance beyond the granting of RECs. No large scale operations in the US or the UK are viable without government financial support, and there are a vast array of subsidies, support programs and incentives available.
These include Renewable Certificates, feed in tariffs and other types of direct payments in the form of grants, tax credits, or tax exemptions in the EU.  In the US, there are also direct payments and tax incentives for growing biomass crops and producing power, as well as investment tax credits and a residential energy renewable tax credit, and various state subsidies and incentives.

The environmental cost

The environmental cost of native forest biomass power will be high, both in the loss of natural values and ecosystems, and the production of greenhouse gases. Forests can be replanted, but it takes the life of the tree logged to regrow and reabsorb the amount of carbon lost when it is logged, chipped and burnt. Australian forests are logged on much shorter rotation times than the initial carbon took to store, creating a burgeoning carbon debt.

Add to this the carbon the tree would have continued to sequester if it had not been logged, (non-fuel) vegetation destruction, soil disturbance, transport and processing of logs, and burning native forest biomass for electricity generation involves major depletion of forest carbon stocks. On many accounts it is 1.5-3 times as carbon emissive as burning coal.

The tide on this industry is slowly turning. There is a large and growing backlash against this form of power in both the US and Europe, and not just from conservationists. The US EPA final report in 2014 rejected the assumption of carbon neutrality for forest biomass. Last year, Vermont rejected approval of a 35 MW wood biomass plant, due to GHG emissions. Scientists have consistently called for forest biomass to be distinguished from less emissive and destructive forms of biomass, such as agricultural waste.

Minister Hunt in his speech this week was painting the environmental benefits in glowing terms. “Using wood waste for generation is more beneficial to the environment than burning waste alone on the forest floor or simply allowing it to decompose and to produce methane a very high global warming potential gas.”

Even this argument doesn’t stack up. Much of the non-growing biomass in native forests provides vital habitat for a diverse suite of native fauna , retains sediment, protects water quality, stabilises soils and builds soil profile and hence fertility. There are serious doubts about the ongoing capacity of the logged forest to regenerate fully if logging debris is removed from the forest for biomass burning.

The future for native forest biomass energy in Australia

It is likely that there is enough forest biomass, in the short term, to produce the 3000-5000 KWh of electricity per year, but the fuel would not be the residue from logging on the forest floor. It would be mostly whole logged native forest trees. It would prop up the failing native forest logging industry for a while, but large scale projects would require on-going public subsidies, with or without RECs.

Small-scale projects would eventually lead to large-scale biomass projects, whether through co-generation, conversion or building new plants. Unsustainable logging would continue and increase, and along with it the loss of biodiversity, including threatened or critically endangered species like the Leadbeater’s Possum, the Swift Parrot, and the koala in SE NSW.

If we don’t call a halt to current bad management regimes, and especially if we allow a native forest biomass industry to take off, eventually our forests will be converted to plantations of fast growing commercially viable species which lack any meaningful natural values. The industry push into national parks, and on steeper slopes and water catchments will continue, and carbon pollution will increase, whether or not the government chooses to account for it.

This is at a time when all of Australia’s timber needs can be met by plantation wood, and our native forests can be restored and retained as carbon stores, water purifiers, habitat for wildlife and destinations for tourists.

Meanwhile the world is quickly moving away from polluting industries. If Australia establishes another polluting, carbon intensive industry, it risks having large empty generators which can only burn coal or wood, when both will eventually be consigned to the dustbin of history.

Can we dare to hope that the cross benchers will do what the government seems incapable of doing itself and vote to reject the change to part 4 of the RET legislation that includes native forest biomass as a source of renewable energy, eligible to attract Renewable Energy Certificates?

Lorraine Bower is the convenor of the Australian Forests and Climate Alliance. The Australian Forests and Climate Alliance is calling for a national inquiry into the native forest logging industry


Originally Published at http://reneweconomy.com.au/2015/burning-ambition-why-the-forestry-industry-needs-the-ret-75436

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