1. 27th Joint FAO/UNECE Working Party on Forest Economics & Statistics, 24th March 2005 Item 6: special topic – wood energy Some implications for the wood- processing sector of increased demand for wood as fuel Jeremy Wall DG Enterprise & Industry Directorate I, Unit 3 Forest-based Industries Enterprise and Industry Directorate-General European Commission

2. Challenge to JWPFES: changes in policies are driven by need to combat global warming (reduce greenhouse gases) and have more sustainable consumption of resources. For energy policy, this means increased demand for RES (renewable energy sources); for biomass, this means wood, but: How to measure (changes in) wood energy flows? Enterprise and Industry Directorate-General European Commission

3. EU WHITE PAPER SCENARIO FOR BIOMASS (1997): FROM UNEXPLOITED SOURCES/RESIDUES: BIOGASCOULD DELIVER15 Mtoe FROM 80 Mtoe FARM & WOOD “ “ 30 “ FROM 150 “ ENERGY CROPS “ “ 45 “ NEW TOTAL90 = X 3 (EXTRA ) NB: NO “TARGET” FOR WOOD, BUT WOOD SEEN AS MAIN FARM & WOOD BIOMASS SOURCE SINCE: - TRADITIONALLY USED; KNOWN TECHNOLOGY - CHEAP & AVAILABLE (ANNUAL FOREST CUT 65 % OF NAI) - OTHER BIOMASS NOT WELL IDENTIFIED OR DEVELOPED > ESTIMATED 163 M m3 (47%) WOOD FROM EU-15 F-BI BY 2010! European Commission Enterprise and Industry Directorate-General

4. EU DEVELOPMENTS IN RENEWABLE ENERGY SOURCES (RES) SINCE 2000: EU LEGISLATION: - “Green Electricity” Directive (22% RES by 2010) - Bio-fuels Directive (5.7 % transport bio-fuels by 2010) - Combined Heat & Power (CHP) Directive - Directive on Energy Efficiency in Buildings - Heat Directive? BUT:RES « TARGETS » NOT MET, AND: - FOREST-BASED INDUSTRIES’ INCREASED WOOD CONSUMPTION, so far met by IMPORTS mostly from NMS (EU-10), other CEECs &, RUSSIA - FORECASTS OF FURTHER SUCH INCREASES IN DEMAND FOR WOOD (e.g. Alterra) European Commission Enterprise and Industry Directorate-General

5. RES Working Group (led by DG Enterprise, Working Group of F-BI Advisory Committee): Objective: “To examine the relationships between the EU policies affecting RES and the European wood suppliers and wood-processing industries.” (so as to identify issues and solutions). European Commission Enterprise and Industry Directorate-General

6. RES Working Group - composition: Wood suppliers: incl. forest owners, sawmillers; Wood processors, incl. sawmillers, woodworking and paper and board manufacturing industries; Commission services - DGs AGRI, ENTR, ENV, RTD, TREN; Sectorial experts. European Commission Enterprise and Industry Directorate-General

7. RECOMMENDATIONS – five types: Information Policy Legislation & standards RTD, innovation & knowledge transfer Institutional adaptation European Commission Enterprise and Industry Directorate-General

8. NEXT STEPS: 1. completion of RES WG report; 2.input to Community Biomass Plan (CBP: new EU initiative to reach RES « targets »); 2.need for follow-up actions: - better information, incl. sources: e.g. MS surveys? Other studies? - catalogue & disseminate best practices European Commission Enterprise and Industry Directorate-General

9. Main issues arising from forest/wood sector for Community Biomass Plan (CBP): 1.How can the overall 2010 biomass « targets » best be met? 2.How much wood should be used as RES and how can that best be managed? (i.e. at national, regional & local levels) (NB challenges & opportunities); 3.Which other kinds of biomass should be developed to fulfil the remaining biomass needs and how can that be done rapidly on a commercial scale? Which measures are needed? European Commission Enterprise and Industry Directorate-General

10. 2. How much wood for RES and how can that best be managed? Challenges: - Is use of wood as RES causing problems for the wood-using industries? - How much more wood should come from forests? How can it be mobilised? - How can more wood residues be collected? - How can wood be used most efficiently? Opportunities: - More diverse markets for sawmillers & forest owners, but how to motivate? - Wood-processing industries can make, use and sell heat and power; - Disseminate best practices; - Wood’s « green credentials » can be harnessed (energy-efficient buildings) European Commission Enterprise and Industry Directorate-General

11. Does use of wood as RES cause problems for wood-using industries? CBP: adequate supplies of biomass; no undue distortion of competition RES WG report indicates at least regional distortions and « biomass, mostly wood, is main type of RES for which there is significant competition » RES WG recommendations: 15: better qualitative & quantitative (incl. price) information on wood (incl. residues) availability to mkt.s, incl. consumption & trade. 9: examine elasticities of price on demand for wood and its residues; 5: studies, incl. sensitivity analysis, on use of economic instruments; 2: examine causal factors of difficulties in wood supply to industry; How can more wood residues be collected? RES WG recommendations: 12: promote increased collection of residues, e.g. through contracts; 18: re-examine defintion(s) of biomass in relation to waste; 29: voluntary agreements, inter alia for residue collection. European Commission Enterprise and Industry Directorate-General

12. How much (more) wood from forests for RES? Recommendations: 1: re-assess projections of overall wood availability & accessibility; 3: estimate realistic contributions to RES from forests and residues; 26: examine scope for expansion of forest resources. How can it be mobilised?Recommendations: 19: incentives incl. carefully quantified and targeted economic instruments to mobilise more wood; 4: more intense, technically advanced, forest harvesting; 6: institutional adaptation, e.g. forest owners co-operatives; 7: shared ownership of forest harvesters and/or power plants. How can wood be used most efficiently? Recommendation: 21: wood energy should be optimised through producing CHP. European Commission Enterprise and Industry Directorate-General

13. Opportunities: More diverse markets for sawmillers & forest owners (boost to SFM), but how can they be motivated? Recommendations: 9: examine elasticities of price on demand for wood and its residues; 19: incentives incl. carefully quantified and targeted economic instruments to mobilise more wood; 16: stable policy measures, esp. financial instruments; 23: examine policy package necessary to achieve RES goals. European Commission Enterprise and Industry Directorate-General

14. Wood energy information issues for JWPFES: 1: re-assess projections of overall wood availability and accessibility; 2: examine elasticities of price on demand for wood and its residues; 3: estimate realistic contributions to RES from forests and residues; 4: better qualitative & quantitative (incl. price) information on wood (incl. residues) availability to mkt.s, incl. consumption & trade. 5: studies, incl. sensitivity analysis, on use of economic instruments; 6: design incentives incl. carefully quantified and targeted economic instruments to mobilise more wood; DEMAND/SUPPLY APPROACH TO WOOD ENERGY INFORMATION? European Commission Enterprise and Industry Directorate-General

15. How should JWPFES approach wood energy information issues?: Using a demand/supply approach: 1.How do we define our information demand? 2.We know information supply is inadequate, but how much can it be improved? European Commission Enterprise and Industry Directorate-General

16. WOOD & WOOD ENERGY FLOW DIAGRAM FOREST (NAI) FOREST RESIDUES REMOVALS Mm 3 o.b. EXTRA CUT UNCUT BARK Mm³ ROUND WOOD Mm 3 u.b. F-BI PROCESS ENERGY WOODWORKING SLABSSLABS SAWING CHIPSCHIPS F-BI PROCESS ENERGY PULP+PAPER PELLETS PANEL - MAKING PANELS PULPING PULPPULP BLACK LIQUORS SAWN WOOD PACKAGING INCL. PALLETS CONSTRUCTION + JOINERY FURNITURE + FITTINGS ETC. PAPER RECOVERED WOOD RECOVERED PAPER DOMESTIC FIREWOOD + OTHER USES INDUSTRIAL (NON F-BI) HEAT + POWER (CHP) DISTRICT HEAT + POWER (CHP) ELECTRICITY TO GRID TRADETRADE 3 4 5 6 1 2 7 89 10 11 12 13 14 15

17. JWPFES wood energy information survey: 1.13 countries responded: F, D, CH, CZ, LAT, FIN, S, AT, UK, EST,N, It, Rus – 6 up-dated THANK YOU! (up-dated draft report available) 2. Most expressed problems of infrequent specific wood energy surveys, and 3. Partial information on wood energy flows European Commission Enterprise and Industry Directorate-General

18. JWPFES wood energy information : 1.Decide on « lowest common denominator » of desirable information; 2. Are specific studies/surveys needed? 3. What kind of group should co-ordinate? 4. Is an expert needed? 5. How should/can these items be funded? European Commission Enterprise and Industry Directorate-General

19. F-BI Unit (DG ENTR/I/3) Contact us: European Commission, DG Enterprise Forest-based Industries’ Unit Office: AN88 04/27 B-1049, Brussels Website: http://europa.eu.int/comm/enterprise/forest_based/index_en.html Phone: +32-2-299 1852 Fax:+32-2-296 7015 E-mail:entr-forest-based-industr@cec.eu.intentr-forest-based-industr@cec.eu.int European Commission Enterprise and Industry Directorate-General