An increasing number of wood product manufacturers and trade associations are alarmed by subsidized use of wood for energy.  Some companies use secondary woody biomass (mill residues) and are concerned that these materials are being burned for energy rather than made into wood products, as would be in line with the cascading principle that the EU supposedly endorses. Some are concerned by the direct harvesting of forest wood (primary woody biomass) for energy, which raises prices and puts pressure on resources. Overall, the concerns point to the looming ‘availability gap’ highlighted by the Director at the European Commission’s DG Research & Innovation.

The following is a selection from statements issued by companies and trade associations. The main concerns of these groups are:

  1. Importance of aligning bioenergy policy with the circular economy/cascading principle to prioritize use of wood for long-lived products, not combustion
  2. Desire to get rid of subsidies for biomass energy
  3. Requests to stop counting energy from burning primary woody biomass as renewable energy
  4. Over-use and scarcity of wood, need to prioritize material use, not energy

We don’t think all the claims made in these statements stand up to sceintific scrutiny – for instance, burning biomass is not ‘carbon neutral’ even if the wood is harvested ‘sustainably.’  But the message of overwhelming concern about scarcity of wood resources, and market-distorting subsidies for bioenergy, comes through loud and clear. These representatives of wood-using industries are showing real fear about their ability to survive, and deep frustration that bioenergy is gobbling up resources and getting subsidies to do so.

From a statement of the Association of the German Wood-Based Panel Industry on the press release of the Federal Ministry of Food and Agriculture (BMEL) on the so-called timber construction initiative. (translated)

“In addition to the construction crisis, there is also the climate crisis, the biodiversity crisis and the energy crisis – this is leading to the overexploitation of forest areas and the expansion of wood combustion (for example in the area of heat generation) and this with the simultaneous goal of building more with wood. From our point of view, the answer here is cascade use, i.e. to use the valuable, sustainably produced raw material as long as possible and only burn it at the end – in highly efficient plants. Only in this way can we fully exploit the climate protection potential of wood.”

Read the original BMEL press release here.

EU: The European Panel Federation

From a statement published on the association’s website:

The European Panel Federation (EPF), representing the European manufacturers of particleboard, MDF, OSB, hardboard, softboard and plywood, welcomes the positive vote in the European Parliament Plenary on MEP Pieper’s Committee on Industry, Research and Energy (ITRE) report on the revision of the Renewable Energy Directive (RED III) as part of the ‘Fit for 55’ package.

This vote on the revised RED comes at a critical time for the energy sector especially if we are to achieve EU’s goal of net-zero emissions by 2050. EPF applauds that the Parliament resolution clearly recognizes and underlines the need for alignment of bioenergy policies with the cascading principle of biomass in line with resource efficiency through the prioritization of the highest environmental and material added value for the use of biomass and by requiring respect of the waste hierarchy.

EPF is delighted that this will enshrine the cascading principle into the Directive allowing for the maintenance of sustainable carbon cycles in products such as wood-based panels, while ending market distorting subsidies for the burning of primary woody biomass for energy and limiting the burning of all woody biomass through enhanced sustainability criteria.

Belgium: Fedustria: Belgian federation of the textile, woodworking and furniture industries

A statement from Fedustria says (translated),

Fedustria: correct application of the cascade principle for wood remains paramount.

Wood is a renewable raw material and is the circular material par excellence. In the timber sector, the circular bioeconomy has also been embedded for many years: wood is made as long as possible used as raw material, after which it is reused and recycled. The carbon, captured during the growth process of the tree, remains stored in the wood during the entire lifespan of the wooden product, even after reuse and recycling. In this way, the use of wood, from sustainably managed forests, a simple but effective way to combat climate change.

As soon as no other use of wood as a raw material is possible anymore, it is burned with energy recovery. The amount of carbon released during combustion does not exceed the amount that was stored in the wood during the growth of the tree. Thanks to sustainable forest management meanwhile, new trees have the opportunity to grow, capture CO2 and absorb carbon to hit. This is good for the forest and climate.

However, the subsidized combustion of wood raw materials disrupts this cascade and is at odds with the principles of a circular economy. Fedustria therefore continues to ask policymakers for a correct application of this cascade principle. The current energy crisis must not lead to wood raw materials are subsidized. A sustainable energy policy must go hand in hand going with a sustainable materials policy, if one really wants to make the transition to a climate neutral economy.

Estonia: Standard

In this article (Estonian) a very prominent furniture producer in Estonia, Mr Enn Veskimägi, is giving an interview about various subjects. He recently sold his company Standard to some new investors.

One of the questions put to him: 

“In some ways, another crisis is underway. Last year, the price of timber soared, as did electricity and gas. Margins are being cut and wage expectations and wage growth are moving upwards in the market.
Is it even worth producing furniture in Estonia any more?”

His answer:

“No, I don’t want to say it’s not worth it. All things are worth doing. The good question today is what the market demand is. What I still see today is that the most critical times are over.

Energy prices have come down and the components that we buy in, even those prices have become more reasonable. Not to where they were in 2019, but still a little bit down. Delivery times have also got shorter. During the Covid era, things got very out of hand, you couldn’t communicate and borders were closed – it was a very difficult time.

Covid was followed by the economic crisis, and so we have gone smoothly from one crisis to another, but I think everything will recover at some point. Prices will go up. Today you have to look at how affordably you can produce.

But the most critical time for the timber sector was perhaps when they started to burn wood. The same material or fraction that was left over from the forest was used to make both pellets and electricity, and you also had to make furniture.

Our main supplier was Repo Vabrikud, which had been producing slabs for the Estonian furniture industry for 50 years. It was very difficult for them at first, because the material had to be bought essentially at auction, and because the availability of material was very critical, the Repo slab factory worked essentially one shift, which left a deep mark on them.

It was this whole process, this decision to stop or to close down for a period of time – it didn’t come from the owners – that unfortunately ended in bankruptcy.

Typically, if we can’t get the slab here, we buy it from abroad and the delivery or transport price comes into play. If we bring a slab from Germany, manufacture the product here and ship it back to Germany, we are not competing on transport price alone.”

Estonia: Estonian Private Forest Center

The Estonian Private Forest Center (EMK), the forestry management foundation, reports to Estonian Public Broadcasting that the Russian invasion of Ukraine and the energy crisis in Europe have pushed the costs of hardwood to unprecedented heights: the costs of mixed hardwood went up 52.4% over the first quarter of 2022, and up over 200% by the third quarter. EMK attributes this entirely to the increased demand for firewood.

Finland: Stora Enso

Annica Bresky, CEO of Stora Enso, a Finnish manufacturer of pulp, paper and forest products, was quoted in Euractiv: “We are under huge pressure, and it breaks my heart really to see biomass going to energy usage or subsidies going to that region because that breaks all the cascading principles.”

Germany: Arbeitsgemeinschaft Rohholzverbraucher 

Statement from a voluntary association of companies and associations from the raw wood consumption sector in Germany and neighbouring countries (translated): received by email upon query

We would unreservedly support the position of the ENVI Committee not to promote the use of primary wood for energy purposes, i.e. forest wood. As far as the question of a legal anchoring of the cascade principle as an amendment in the Industry Committee, which is to be seen separately from this, is concerned, we are inclined to agree. It depends, however, on the methodology.

Germany: Verband der deutschen Holzwerkstoffindustrie (VHI)

 Association of the German wood materials industry.  Statement (translated):

The resource wood is not just becoming scarce, it is already scarce: Our trees are currently being planned-in several times over to provide the solution to the climate crisis, the biodiversity crisis, the raw material crisis, enabling the construction transition, establishing the circular economy and achieving the heat transition. This cannot succeed and the market is already showing that today:

 The recycling of wood is running on empty. The cascade is no longer functional. We therefore demand a consistent establishment of the cascading principle and an expansion of forests.”

The VHI has also warned that the “current energy crisis cannot and must not be solved by burning more wood.”

In  comments on German renewable energy legisation in 2014, VHI stated, In principle, the VHI welcomes the fact that the promotion of biomass is mainly limited to waste and residues. As is now generally recognized, the potential of forest biomass has been exhausted. In this respect, we consider it urgently necessary, in addition to the protection of existing stocks, to cancel the increased remuneration for input material remuneration classes I and II according to the Biomass Ordinance. As early as 2009, the amount of waste wood was no longer sufficient, so that more and more natural forest wood had to be used in biomass power plants.

That’s the wrong way. Wood is the material to make an active contribution to reducing greenhouse gases. One ton of wood reduces CO2 emissions by 5.6 tons through direct CO2 storage and above all through the substitution effect. If wood is used instead of materials that are more energy-intensive to produce, this makes an active contribution to climate protection.“

Poland: The Association of Wood-Based Panels Manufacturers in Poland, and the Polish Economic Chamber of Wood Industry:

Two documents and an interesting interview:

First, a letter to the Polish Ministry of Climate and Environment states (translated, bold in original):

In connection with the ongoing tripartite negotiations between the European Parliament, the European Commission and the Council of the European Union concerning the revision of the Directive on the promotion of the use of energy from renewable sources (hereinafter RED Directive), we present the position of the Association of Wood-Based Panels Manufacturers in Poland and the Polish Economic Chamber of Wood Industry.

We believe that as part of the ongoing revision of the RED Directive, it is necessary to:

  1. Discontinue the recognition of energy generated from the combustion of primary wood biomass as renewable energy
  2. Discontinue financial support of energy generation from primary wood biomass
  3. Introduce provisions mandating an obligation to cascade the use of wood raw material.

The provisions of the RED Directive, recognising energy generated from the combustion of primary woody biomass as renewable energy, and allowing public support for entities generating this energy, are detrimental to the Polish wood processing industry. These provisions lead to a disruption of the timber market – promoting the energy industry at the expense of the wood processing industry, while at the same time increasing timber prices. Increasing prices and limited availability of raw material increase production costs, reducing the competitiveness of the Polish wood processing industry. The wood processing sector represented by the signatories of the position is one of the European and world leaders. It is also the basic raw material base for the Polish furniture industry. The wood industry in Poland provides employment for more than 300 000 workers. The current situation on the timber market puts the future of the industry in question and threatens thousands of jobs.

We demand that the revised RED Directive include a clear definition of primary wood biomass, provisions that exclude energy generated by its combustion from the list of RES and withhold financial support for producers of energy from primary wood biomass.

We believe that it is wasteful to burn wood in energy plants. Wood should be used primarily for the production of furniture, wood-based panels and other products thus creating added value for the economy. Subsidizing the burning of wood results in raw material suitable for further processing being converted into energy biomass and burned in energy plants.

Therefore, we demand that the RED Directive should include provisions ordering the development of detailed regulations on the obligation to cascade wood management, which will end the competition for raw material between the energy sector and the wood processing industry.

The current RED regulations are detrimental not only to the wood processing industry, but also to society as a whole. The promotion of energy production from virgin woody biomass is to the detriment of forests and the climate. Burning biomass results in high direct emissions of greenhouse gases into the atmosphere. Primary woody biomass is not a green energy source.

We demand that the Polish representation, taking part in tripartite negotiations concerning the RED Directive revision, takes a firm stand on the side of the Polish economy and Polish forests. We believe that the introduction of our postulates will help to stabilize the situation on the timber market and will lower raw material prices.”

Second, a letter from the President to MEPs:

In connection with the legislative work currently under way in the European Parliament on the revision of the Directive on the promotion of the use of energy from renewable sources, we as producers of wood-based panels would like to emphasise that we believe that subsidies for the burning of primary forest biomass in the energy sector should be stopped and that the energy thus generated should no longer be considered as coming from renewable sources. The burning of secondary forest biomass should only be supported if it cannot be used by industry to produce wood products, i.e. after the cascading principle has been fully applied.

The most important point is that the burning of wood which gains the status of energy wood will be subsidised. This involves subsidies from the state budget, i.e. from citizens, for the operation of energy companies in which the State is not the sole shareholder.

As a result, the power industry gains a competitive advantage over other market participants, i.e. timber entrepreneurs, when purchasing wood from the State Forests.

We believe that it is wasteful to use for energy purposes any kind of wood fibre that can be used as a raw material for further processing in industry. All the more reason why such raw material should not be subsidised.

We would like to strongly emphasise that for the production of chipboard, chipboard, fibreboard and MDF production, wood of lower quality may be used, e.g. recycled wood, drought wood, wood with a limited degree of decay, as well as post-production residues of sawmill processing, i.e. sawdust, chips, edgings. The above-mentioned types of wood constitute full-value raw material for the production of wood-based panels.

The consequences of subsidised wood combustion for energy generation will adversely affect both the condition of businesses using it in the production of wood-based panels and the level of CO2 emissions. As a result of competition between the subsidised energy industry and the wood processing industry, the industry’s production capacity is reduced.

The greenhouse gas binding effect in finished products will also be significantly reduced. Lumber, boards, furniture, floor panels and all wood and paper products bind CO2 for many years. In this carbon reduction process, wood is used efficiently. Burning wood for energy production can only take place at the end of the chain of use and recycling of the raw material. The simple combustion of forest wood for energy, which the proposed amendment will enable, significantly shortens the cycle in which carbon dioxide is retained in finished products.

The domestic panel industry ranks 2nd in Europe and 7th in the world in terms of production and is, among other things, the basis for the development and power of the domestic furniture industry, which contributes almost 3% to GDP.

The war in Ukraine has caused a serious shortage of wood on the Polish market. Therefore, it is particularly important to properly treat wood in any form as a strategic raw material for the Polish wood industry.

And that interview ( NGO Instytut Spraw Obywatelskich interviewed Jędrzej Kasprzak, who is PhD in forest sciences, president of one of the biggest panel producers association in Poland and a person responsible for purchases in Kronoswiss Poland).

Translated excerpts:

“Our industry of wood-based panel manufacturers has a vital interest in using any type of wood, because we are able to use even really poor quality wood.

Recycled wood, among other things, is used for the production of chipboards around the world. Even one hundred percent of the chipboard is made of such raw material, post-consumer wood.”

” For us, the big competition is the burning of wood and the burning of primary forest biomass, because this burning is covered by subsidies. Companies that generate energy receive subsidies from the state treasury for green certificates or carbon dioxide emission rights. These are large amounts and we are not able to compete with them in the purchase of wood.”

This one is important – bBecause of the subsidies, the normally cheaper pulpwood is more expensive at auctions!

“At the auctions of the State Forests, the prices of the so-called pulpwood, i.e. medium-size wood for industrial use – whether for the production of paper or, above all, for the production of boards – are higher than that of sawmill wood, because it is also burned to a large extent.”

“As I mentioned earlier, burning is the last resort and should include wood from which nothing else can be made. For the wood-based panel industry, any type of wood fiber that can be used that is incinerated is a waste.”

Portugal: SONAE ARAUCO – Portuguese furniture and wood-construction company

Excerpts from Sonae Arauco CEO’s statement (translated from Portuguese):

The industrial sector of Madeira (sawmills, panels, furniture and construction) operates in a circular bioeconomy model, around the valorisation of wood, a renewable, reusable and recyclable raw material, capable of being incorporated in the industrial process for several cycles, and with a remarkable capacity to store CO2. This sector has an enormous diversity of markets, products and agents, in an extensive value chain and with high interdependence relationships through commercial transactions of products and by-products, in a clear example of a circular economy between the furniture industry, the panel industry and wood sawmills….”

… In line with the cascading principle, woody biomass should be used according to its highest economic and environmental added value in the following order of priorities: 1) wood-based products, 2) extending their service life, 3) re-use, 4) recycling, 5) bio-energy and 6) disposal.

currently the burning of wood (for electricity production) and the production of pellets ( energy) are a huge hindrance to their growth and survival.

Portugal: Carmo Wood, a Portugese wood products manufacturer

Director’s statement (translated from Portuguese):

Over the last year, the raw material supply market (wood) has been undergoing some worrying changes!

The energy industry, more specifically the pellet industry, has been raising the price of raw materials to meet the massive increase in the need for pellets on the market, which, as we all know, is due to the shortage of gas in Europe.

In the case of Portugal, several industries have been installed to manufacture pellets through the support of the European Union so that it could use forest surplus (rama) and add value to these materials that otherwise would remain in the forest, increasing the risk of pests and forest diseases. However, we are currently seeing that these industries are not using these forest waste materials as raw materials due to the low profitability of production but are using wood, which causes several problems both at the environmental level and the sustainability level.

Firstly, at the environmental level, we are cutting wood to burn in boilers or furnaces, emitting CO2, and increasing the carbon deficit since we are using a resource that sequesters carbon to cast it into the atmosphere. Thus, the reduction of gas emissions into the atmosphere and the targets set for the climate are forgotten in pellet production using wood. 

Secondly, in terms of sustainability, we are unsustainably reducing our forest area and diverting the use of wood to products with higher added value, such as furniture, poles or even particleboard. These value-added products have zero gas emissions and high longevity. In the vast majority of cases, production processes are used to increase the longevity of materials, specifically the autoclave treatment of wood.

The fact that the pellet industry increases the value of wood, which should not be used as raw material, means that it is not used for more noble purposes, as well as causing worrying supply problems for these industries. The wood products industries are therefore forced to keep up with the increase in the price of the raw material and thus also increase the value of their products, running the risk of the market not accepting such additions, or some of them may be forced to stop as they cannot keep up with the inflated price of the pellet industry.“

Portugal: Centro PINUS – Research and advocacy centre

The president of Centro PINUS, a Portuguese research and advocacy centre for wood industries using pine, stated (translated):

“The pine cluster in Portugal has been deeply impacted by the energy sector in the last years.

Maritime pine is a native, pioneer tree, that currently occupies 22% of the Portuguese forest.

Pine stands are mostly semi-natural and with low intensity forest management. This is the species that the energy sector prefers to source because of its wood properties. Pine forest is the only in Portugal suffering severe decline, mainly due to forest fires: 27% of the area was lost between 1995 and 2015.

Despite this forest resource decline, a new energy cluster was created within a few years.

Currently, this sector represents a third to a quarter of the annual pine wood consumption in Portugal. This has severely increased the pine wood deficit that is estimated to represent 57% of the annual consumption. 

Competition for pine wood among industrial players is increasing and the cluster sustainability is severely threatened. The market distortion because of subsidies to the biomass industry are a reality: the only reason why these players can compete for pine wood is because of the public support they get, while the other players act on an ‘unregulated’ pine wood market.

Many enterprises can’t cope with the increasing wood price and shut down. Typically, this happens for smaller enterprises that have the highest social impact.

Subsidies to the biomass industry have increased the pressure in an already declining forest resource and directly contributed to the decreased competitivity of traditional forest industries, namely sawmills, the ‘backbone’ of the pine cluster and the sector with highest contribution to job creation.”

Wood product manufacturers sound the alarm about burning wood for energy
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