Waste wood shortage predicted by 2015

The 2011 Briefing Report: The UK Waste Wood Market study, was carried out to assess the potential for recovering additional tonnages of waste wood in the UK amid increasing competition between the emerging renewable energy market and more established markets for waste wood such as the panel board industry.

The hope of some, it explains, had been that competition for feedstock would stimulate the recovery of additional tonnages of waste wood in future to service both markets. This was alluded to in Defras Review of Waste Policy for England, in which the department claimed that substantial tonnages of waste wood were still being sent to landfill (see letsrecycle.com story).

However, through looking at a number of existing reports on the waste wood market, and by carrying out its own analysis, Tolvik estimates that the amount of additional waste wood which will be available to the UK market in future will be lower than some had hoped driven by factors such as the economic climate, increased resource efficiency and rising landfill tax.

It estimates that there were 4.3 million tonnes of waste wood arisings in 2010, of which it says that 3.2 million tonnes were recovered (a recovery rate of 74%) leaving 1.1 million tonnes of extra material which could potentially be recovered. Tolvik estimates that this figure will rise to 1.6 million tonnes by 2015, provided waste wood recovery rates rise to 84%. But, taking into consideration new biomass plants and those already in construction, it suggests that 1.1 million tonnes of this will already be accounted for leaving only 0.5 million tonnes of waste wood available as feedstock for new biomass facilities – a great number of which are being planned.

The report says: Clearly it would take only a small proportion of [proposed] biomass facilities to be developed for the market to move and value of waste wood to rise further. Whether a waste wood feedstock is then commercially viable will in part be dependent on future wholesale electricity prices and the ability to secure ROCs in the long term.

Biomass

Looking at the biomass market in more detail, the Tolvik study highlights how the development of biomass capacity in the UK has been stalled by concerns over the availability of feedstock and debt and also uncertainty surrounding the level of support plants receive under the Renewables Obligation. In particular, concerns over the grandfathering of ROCs for biomass plants (see letsrecycle.com story) and uncertainty over ROCs subsidy levels from 2013-17 (see letsrecycle.com story) have prevented many projects from getting off the ground, it says.

The company claims that while only two new wood waste-burning large-scale biomass plants are currently under construction in the UK by Dalkia at Chilton and RWE at Markinch – significant biomass capacity is already operational in northern Europe creating real competition for material.

It says: There is therefore the very real chance that exports, rather than being a relatively short term solution, could become a long term market for waste wood and that market participants will need to carefully consider the implications of this trend on this own business model.

Competition

Tolvik director Adrian Judge, who discussed the report at a meeting of the Wood Recyclers Association in Birmingham last week (September 14), told letsrecycle.com that the 31-page study showed how competition for waste wood would rise. And, he raised questions over whether a landfill ban for waste wood, which Defra is to consult on in 2012, was therefore really needed.

He said: Whilst the market may have seen a hardening in gate fees over the last few months in large part due to the Sonae fire, the medium to long term view remains one of pressure from biomass and export markets.

The report raises questions as to whether England needs a landfill ban for wood and the implications on quality were such a ban imposed.

There is a very real chance that exports will be a long term outlet for the UK in which case it is not clear how recovered wood can materially contribute to renewable energy markets

Welcome

The findings of the report have been welcomed by many wood recyclers, who have seen the prices for recycled woodchip fall over recent months due to a seasonal drop-off in demand for material from biomass plants in Europe and also the temporary closure of the Sonae chipboard factory in Knowsley. This has led to an oversupply of waste wood in the market, with many companies stockpiling material (see letsrecycle.com story).

The waste wood market report can be purchased from the Tolvik Consulting website. The document was prepared in conjunction with sonsultancy GE Environmental, which warned earlier this year that North East England faced a ‘massive shortage’ of waste wood by 2012 (see letsrecycle.com story).