Proposal to include native wood waste could hit wind, solar

Along with other proposed changes to the RET, the issue of RECs for native forest waste incinerators is expected to return to parliament, with crucial cross bench senators Ricky Muir and Jackie Lambie vocal in support.

Changed conditions in forest markets could mean this has a bigger impact on Australian renewables that it has in the past.

Native wood waste was disqualified for RECs in 2011 when the Clean Energy Futures Package was announced. Plantation waste was retained in the scheme, and furnaces registered before 2011 were allowed to continue to operate and claim credits.

Historically, only a moderate number of RECs have been created by wood waste generators. The total is currently about 150,000 per year – about equivalent to the output of 100MW of PV.

Most of these RECs are made by power stations still covered by transitional rules. The remainder – about 36,000 per year – are registered by a single new applicant; the VISY pulp and paper mill at Tumut, which uses urban wood waste.

Reports that extol the potential for bioenergy to expand in Australia generally focus on the size of the resource – and there is certainly a large volume of waste.

A CSIRO study (which assumes some pulpgrade will be used as well as waste) estimates that 10,000 GWh could be produced annually from current logging rates. This would definitely contribute towards a 41,000GWh RET.

However the economics are currently marginal. A Deloitte study prepared for the industry cites costs of $30-60 per tonne of green waste delivered (from a distance of 50km), with the price paid falling across the same range. Many would be further from a market.

RECs could add about $30 a tonne (green) at today’s price, for generators not already eligible under transitional rules.

The value of wood chips, which constitute the bulk of native forestry output, has been falling since 2011 – partly because consumers around the world are moving to plantation-sourced products.

Kuark East Gippsland March 2015

Processed woodchips are currently $160 per tonne. At the pulpmill door, where they would compete with feedstock for power generation, this translates to a price of about $55 per tonne. In 2011, the last time generators could register to create RECs, competing prices were $25 higher. (Whether these markets compete directly would depend on the grades of wood made eligible for RECs generation.)

Those opposed to granting RECs cite the tendency for supplementary, and often subsidised, activities taking over to drive native harvesting, with woodchipping itself the prime historical example.

The numbers seem to justify this concern – and any slowdown in the transition away from carbon-intensive native harvesting will come at the expense of the transition to wind and solar.

Emma Chessell has worked in the renewables industry in the Northern Territory in technical roles and as a trainer

Originally Published at http://reneweconomy.com.au/2015/proposal-to-include-native-wood-waste-could-hit-wind-solar-88498

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