The BIG picture Matthew Rivers

1. The BIG pictureMatthew Rivers

2. EU Regulation on climate change Demand for biomass Supply in UK What can this mean ?

3. R.E.D. is not a colour, or an instruction to stop – but it is a challenge !

4. The Renewable Energy Directive (2009)defines the ambition of the EU to tackle climate change. • Global political lead in tackling climate change • Secure 20% of final energy consumption across EU 27 from renewables by 2020 • Plus 20% reduction in energy use – efficiency hence 20-20-20 • Use all forms of renewables - solar, wind, hydro and biomass. • Delivery of national targets is matter for Member States

5. 1,642 To meet EU targets: biomass sources dominate~1,600 TWhheat and power estimated to come from biomass plus ~ 328 TWh of biomass based biofuels demand TWh 2020 Final Energy Consumption (FEC) from different renewables Total FEC from RED Biofuels mandates Heat and power Power from hydro Power from wind 70 555 Solar power 40 Solar heat 40 Geothermal powerand heat 13 Heat and powerfrom biomass SOURCE: European Commission; Europowerand heat

6. 2010 all Member States published National Renewable Energy Action Plans.UK starts from low base 3% and targets 15% by 2020 – x3 electricity generation.

7. Responding to this expectation are a number of large, planned biomass boilers for electricity.There are many more smaller scale boilers being installed and operating Can be 2 Million tonnes per annum demand

8. UK technology intentions – for heating and cooling(Ktoe) • Scale of increase for solid biomass is even more dramatic • A proportion of biomass is described as ‘’in households’’ which is shown to increase from 10% in 2010 to 25% of total biomass used in 2020. • District heating is expected to increase from 42 to 230 Ktoe = substantial growing demand for wood for heating • Likely to be fragmented, local and small scale units Source: Table 11of UK NREAP

9. Then there is the biofuels mandate ….. The Economist, 30th October 2010. Where to now?

10. The biofuels agendarequires 10% of liquid fuels to be from renewables by 2020There are several different concepts – just moving to pre-commercial phase with 2G which can also use wood as feedstock Feed Stock Processes Products 1G: Sugar & Starch 1G 1G • Fuel ethanol • 10% gasoline blend • E85 for FFV cars • 30% less energy • 0 .. 90% less CO2 Methyl ester diesel • 7% diesel blend • 10% less energy • 30 .. 60% less CO2 Fermentation Sugar cane Sugar beet Corn Wheat Transesterification 1G: Oleic Acid 1.5/2G Hydro treatment Palm Soya Rapeseed 2G 2G 2G: Cellulose • Synthetic gasoline • 90% less CO2 Synthetic biodiesel • high performance • 50 .. 90% less CO2 Enzymatic/acid hydrolysis Grass Bagasse Sludge Wood Gasification Fischer-Tropsch

11. What about supply ? EU 20-20-20 impact on Europe wide woody biomass demand-supply balance in ‘conventional’ forest industry - Supply Demand Estimated gap 200 – 260 720 – 800 340 – 420 ? 160 – 170 515 – 540 ~380 355 – 370 • Current forest Mobilization Estimated Estimated Non - traditional Traditional • biomass Net imports supply demand demand demand • • supply Recovered (energy) Paper • wood Wood products Demand exceeds supply – there is only one way for price An opportunity for new businesses

12. In UK all biomass domestic production is remarkably stable. As our living standards increase we import more – mainly food - most/all can be re-used for energy at some point. UK domestic biomass production and imports 1970 - 2008 Data from Office for National Statistics

13. UK wood flow (M m³) in 2009-10 – rough numbers can sustain 12 M tonnes of forest harvest and 5 M recycled wood : when demand can be easily double that amount Exported SRW Sawn timber 2.87 MT Drop to 416 km3 2009 Sawn timber Industrial roundwood 10.03 Logs for wood products • Forest biomass • Total removal • 10.81 • Annual felling • potential till 2011 • 11.53 6.27 MT Recycled wood 5.4 to 5.52 6.27 10.03 By products 2.7 Pulpwood Wood based panels Fencing Pellets Pulpwood Wood based panels Fencing 7.75 3.76 3.76 RCP 3.99 million –UK 4.85 million Export 1.81million potential 0.46 0.188 Firewood/Wood Fuel 780k By products 780 k 0.144 Forest residues Small wood Stumps Branches ArbArisings SRC 456k Forest energy potential ~2.75 * Energy wood biomass Heat Electricity 2.444 456k 1.072 1.072 *Forestry Commission

14. Of courseoutcomesareuncertain - but a clearopportunity is to use national resources to bettereffect: whichalsocontributes to energysecurity. Increase in wood supply in EU Globalization of energy wood bio- mass market POLITICS Increasing competition for wood and higher prices Subsidies to change the opera- tional environ- ment Competition with the traditional forest industry will intensify Estimation of EU-27 woody biomass gap 2020 200 Mm³ EU 20 20 20 Political target adjustment (= failure ?) Role of waste and other burn- able material as energy source will increase Role of waste and agriculture as energy source will increase

15. The element that I am spendingmy time on Keyflows in shippedwood chips and biomass – recent history Total Pacific basin chip 18 M bdmt p.a. 0.9 [0.5] Vietnam,Thailand + Indonesia 3.9 [ 2.0] 0.7 [0.5] Total Europe chip 2 M bdmt p.a. Wood pellets (M tonne, 2010 [2009] ) Pulp chips to Japan (BDMT) Pulp chips to China (BDMT, 2010 [2009] ) Chips to Europe (BDMT)

16. What does this mean to us all ? Higher personal energy bills ! – because generators are steered to deliver Government obligations + recover all costs from the consumer

17. Summary