The impact on wood prices and supply to a new wood pellet plant has set the wood products industry in north-east Scotland ablaze with controversy.
The new Brites plant at Invergordon, owned by Balcas, a company based in Northern Ireland, is the biggest pellet enterprise in the UK. It came on stream in July 2010, producing up to 100,000 tonnes of pellets per year, but it will consume much more wood than that.
According to the company, 60% of the raw materials are used for the production of Brites, while 40% is used for the generation of electricity.
Clearly, the arrival of such a large new player in the market has had a significant impact locally, and concerns are being voiced about whether its demands can be sustainably met.
Donald Maclean of the UK Forestry Contractors Association, based at Invershin, said: “The convoys of timber lorries coming through here headed for Balcas are unbelievable; I’ve never seen anything like it. Some of our members have not done badly out of it, but for how long?”
Over the past year the price of a tonne of wood at the factory gate has risen from around £18 to £30, and supplies of wood for small-scale buyers are becoming more difficult to secure.
A small-scale wood merchant on the west coast, who did not wish to be named, said: “I’ve definitely noticed a difference. In the past, forestry operations would usually have a few tonnes of unsuitable wood left behind, and a small firewood business like mine could pick them up, but now every scrap is mopped up for Balcas.
Maclean: “If you’re a private woodland owner, you soon get wind of these prices. It definitely does make it difficult for small firewood merchants. They will have to be quite clever, keep their ears to the ground and snap up whatever wood they can.”
Amanda Calvert, an expert on wood fuel who works for Highland Birchwoods, said that Balcas coming on stream had certainly helped to put up the price of wood, because they’re prepared to pay more.
“While this is creating opportunities for some wood fuel merchants, it is limiting for those buying small quantities,” said Calvert. “As landowners become used to higher prices, there are far fewer chances to buy a cheap half load of wood at the end of a felling operation.
She believes that the Balcas effect on prices is part of a wider picture where the huge increase in demand for wood fuel is the main driver of rising prices.
She points to a combination of escalating household and commercial fuel bills, particularly for those heating with oil, growing awareness of the impact on climate change of burning fossil fuels and the availability of incentives, which are encouraging people to switch from oil and coal to wood fuel. Wood stove sales are booming and many community and commercial organisations are installing wood chip or pellet boilers.
Ironically, 10 years ago, forecasts of wood supply showed a bulge between 2010 and 2020, known as “the wall of wood”, caused by plantations from the 1960s and 1970s coming to maturity. It was predicted to cause flooding of the wood market and plunging prices. In fact, there are so many demands on current wood supplies that prices are rising at unprecedented rates.
Growth in demand for wood is creating a much more complex market.
Calvert said: “Some forestry contractors are branching out into selling fuel and some firewood and woodchip merchants are setting up their own felling operations.
“Very small firewood merchants are being squeezed, as there is so much more demand on the resource. The smallest companies may often be much the greenest, as by delivering renewable energy to local customers they keep transport to a minimum, yet they are hit the hardest.”
Maclean believes that the government needs to do more to help the smaller players in the wood fuel market.
“The big companies don’t employ so many people. They’re not as good for the rural economy. Small locally-run businesses are the way forward, and the Forestry Commission should do a lot more to help them.” he said.
It is not only small firewood enterprises that are complaining about being squeezed by the Balcas fuelled wood-price boom. Norbord is one of the country’s biggest wood users, consuming the equivalent of about 20% of the wood cut in the UK.
Steve Roebuck, director of health, safety and environmental affairs at Norbord, said: “The biofuel industry is now starting to have a very significant impact on wood supplies.
“Part of Balcas’ ability to pay higher prices is due to them generating electricity from the wood, and thus being eligible for renewables obligation certificates (ROCs). The subsidy allows them to pay top dollar.
“Without ROCs none of it would be happening. The point is that it’s supposed to be so-called green energy, but I can’t think of any less efficient use of wood than transporting it across the country to burn it to make electricity.”
Roebuck is also critical of the “wood-to-wire” subsidies for wood fuelled electricity generation. “The government is not considering the impacts of its incentives on other users of wood,” he said.
The Scottish Government’s own Wood Fuel Task Force agrees. Its recent report is highly critical of the UK Government’s subsidy regime for electricity generation from biomass, saying that it “believes that there is insufficient domestic supply to provide even a fraction of the fuel supply needs of the UK Government’s very ambitious plans for large scale biomass in the rest of the UK”. And adding that “such ambitious plans will displace domestic wood fibre from meeting renewable heat targets and the existing wood-using industries”.
However, the Scottish Government supports Balcas because it is a combined heat and power (CHP) plant.
Rebecca Carr, of Forestry Commission Scotland, said: “Current policy is to prefer to see wood fuel used in heat-only or CHP schemes, off gas-grid, at a scale which can make best use of both the available heat and of local supply. Using biomass for heat in heat-only and CHP schemes achieves 80-90% energy efficiency for the former and 50-70% for the latter, as opposed to 30% in electricity-only schemes.”
The wood supply pressure from Balcas is not likely to ease. Although the Wood Fuel Task Report states that there is currently the equivalent of around 432,000 dry tonnes of untapped wood resource, and improving timber production rates suggest this could at least double within the next 10 years, this will still not keep pace with demand.
The government’s own predictions are that planned CHP plants will increase wood fuel use in Scotland from the current 670,000 dry tonnes to more than 3million dry tonnes.
But here’s a sobering thought. A study by John Clegg Consulting showed that UK biomass demand could exceed 27million tonnes by 2017, which is more than the current global trade in woodchips and pellets.
Where supplies will come from to meet such demand is anyone’s guess.
Mandy Haggith is a freelance writer who specialises in rural affairs