Wood for EnergyExperience of Coillte to date

Presentation to the Oireachtas Joint Presentation to the Oireachtas Joint Committee on Marine, Committee on Marine,

Communications and Natural Communications and Natural Resources Resources

George McCarthyGeorge McCarthy

22 June 200522 June 2005

In this presentation….

Existing uses of wood for energy in forest Existing uses of wood for energy in forest industryindustry

Increasing the scale of wood useIncreasing the scale of wood use Issues arisingIssues arising

Wood Biomass

Forest Residues:Forest Residues: TopsTops BranchesBranches WasteWaste

Sawmill Residues:Sawmill Residues: ChipsChips SawdustSawdust BarkBark

Directives on Renewable Energy Sources:Targets for 2010 (Terawatt Hours)

00 2020 4040 6060 8080 100100 120120

FranceFrance

ItalyItaly

SwedenSweden

SpainSpain

GermanyGermany

AustriaAustria

United KingdomUnited Kingdom

FinlandFinland

PortugalPortugal

GreeceGreece

NetherlandsNetherlands

DenmarkDenmark

BelgiumBelgium

IrelandIreland

LuxembourgLuxembourg

2000/hydro

2000/wind

2000/bio

2000/others

2010/RES-E

5,7 %5,7 %

13,2 %13,2 %

6,0 %6,0 %

29,0 %29,0 %

9,0 %9,0 %

20,1 %20,1 %

39,0 %39,0 %

31,5 %31,5 %

10,0 %10,0 %

78,1 %78,1 %

12,5 %12,5 %

29,4 %29,4 %

60,0 %60,0 %

25,0 %25,0 %

21,0 %21,0 %

TWhTWh Source: Tipperary Source: Tipperary InstituteInstitute

Fuels Used for Heat Supply

ResidentialResidential Coal and peat fallen in last 10 yearsCoal and peat fallen in last 10 years Oil and gas – comfort factorOil and gas – comfort factor

Commercial / Public Sector:Commercial / Public Sector: Oil and gas increasedOil and gas increased Very little solid fuel usageVery little solid fuel usage Sawdust/chip used in the wood processing Sawdust/chip used in the wood processing

industryindustry

Uses for FuelwoodUses for Fuelwood

ElectricityElectricity CombinedCombinedHeat & PowerHeat & Power HeatHeat

WoodfiringWoodfiring Co-FiringCo-FiringConventionalConventional

BoilerBoilerGasificationGasification Open FireOpen Fire

EnclosedEnclosedSystemSystem

Peat, CoalPeat, CoalOil, GasOil, Gas

Potential for Wood for Energy

Co-firing in existing fossil fuel power plants, e.g. Co-firing in existing fossil fuel power plants, e.g. EdenderryEdenderry

Stand alone power generation plantsStand alone power generation plants Co-firing:Co-firing:

Economies of scaleEconomies of scale Low biomass supply riskLow biomass supply risk Low investment riskLow investment risk Proven technologiesProven technologies

Wood Biomass Supply

Sawmill ResiduesSawmill Residues Small diameter roundwoodSmall diameter roundwood Forest residuesForest residues

Wood Biomass Resource Potential (Ireland)

‘000 M3

PulpwoodPulpwood

Sawmill ResiduesSawmill Residues

Forest ResiduesForest Residues

TotalTotal

20152015

527527

319319

284284

1,1301,130

20202020

618618

465465

300300

1,3841,384

20302030

1,0721,072

1,8871,887

330330

3,2893,289

20052005

7878

6161

00

139139

Wood Biomass Resource Potential 2005 - 2030

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

0

1

2

3

4

5

6

7

-1

Million m3

Sawmill Balance

Pulp Balance

Residue Balance

Potential Sawmill Residues Available

465

1,019

1,887

301

568

1,002

137 117 117

2005 2010 2015 2020 2025 20300

500

1,000

1,500

2,000

2,500‘000M3

0% 50% 100%

Assumptions:

• 15,000ha afforestation programme;

• Sawmill capacity increases in line with:

1) Coillte and NIFS production, PLUS

2) 0% OR 50% OR 100% of production potential realised from privately owned forests.

Sawmill Residues Breakdown

WoodchipsWoodchips70%70%

SawdustSawdust19%19%

BarkBark11%11%

Factors Influencing Residue Availability PricePrice Commitment to supply board millsCommitment to supply board mills Market diversificationMarket diversification Exploration of wood for energy through co-Exploration of wood for energy through co-

fueling and developing own CHP/wood fueling and developing own CHP/wood pellet projectspellet projects

Markets and Prices for Sawmill Residues 2003

ProductProduct Principal MarketsPrincipal MarketsPrice per WetPrice per Wet

Tonne Ex-YardTonne Ex-Yard

ChipsChips Panel board millsPanel board mills €€2323

SawdustSawdustPanel board mills; use inPanel board mills; use insawmills for heating;sawmills for heating;animal beddinganimal bedding

€€77

BarkBarkHorticulture; panel boardHorticulture; panel boardmills (incl. Boiler fuel)mills (incl. Boiler fuel)

€€1414

Forest Residues

Thinning and clearfell residues potential of Thinning and clearfell residues potential of 150,000m3?150,000m3?

Energy paying capability with subsidy - €25 (i.e. Energy paying capability with subsidy - €25 (i.e. awarded AER contracts)awarded AER contracts)

Cost of harvesting and transporting residues - €30 to Cost of harvesting and transporting residues - €30 to €35 per m€35 per m33

Risk from removal of lop-and-top:Risk from removal of lop-and-top: Loss of nutrientsLoss of nutrients Soil degradationSoil degradation Extraction damageExtraction damage

Potential from Private Forests

290,000 ha of young plantations290,000 ha of young plantations Could potentially be a source of energyCould potentially be a source of energy Cost of harvesting and chipping first Cost of harvesting and chipping first

thinnings is prohibitivethinnings is prohibitive Would not be economic without a subsidyWould not be economic without a subsidy Possibly for community based projects on Possibly for community based projects on

farm forestry useage – local / small scalefarm forestry useage – local / small scale

Issues arising… Lack of tradition is using wood for heating means Lack of tradition is using wood for heating means

there is no infrastructure even to serve local markets there is no infrastructure even to serve local markets No current markets of scale exist e.g. district heating No current markets of scale exist e.g. district heating

systems as in other countriessystems as in other countries No market support mechanisms exist to (a) offset No market support mechanisms exist to (a) offset

capital costs or (b) support the cost of renewable capital costs or (b) support the cost of renewable energy from wood as exist for other forms of energy from wood as exist for other forms of alternative energyalternative energy

The current volume of wood available over and above The current volume of wood available over and above current demand is very limited and would only make a current demand is very limited and would only make a marginal contribution to national energy demandmarginal contribution to national energy demand

The Future… Wood has the potential to contribute significantly to national Wood has the potential to contribute significantly to national

energy requirements as forests planted in the 1990s mature energy requirements as forests planted in the 1990s mature and the sustainable volume of wood increases and the sustainable volume of wood increases

However to make real difference and contribution to However to make real difference and contribution to national energy needs a substantially greater volume of national energy needs a substantially greater volume of wood would be required – this provides a further incentive wood would be required – this provides a further incentive to continue with a major national afforestation programmeto continue with a major national afforestation programme

As this wood will be owned by 12,000 forest owners As this wood will be owned by 12,000 forest owners substantial investments in infrastructure will be required to substantial investments in infrastructure will be required to ensure that (a) the available energy supply can be harvested ensure that (a) the available energy supply can be harvested economically and (b) markets exist to convert wood into economically and (b) markets exist to convert wood into energyenergy

Currently wood biomass cannot compete Currently wood biomass cannot compete economically with fossil fuels at current oil economically with fossil fuels at current oil and gas price levles so financial incentives and gas price levles so financial incentives would be required for forest owners to would be required for forest owners to harvest and sell wood for this purposeharvest and sell wood for this purpose

It is vital that any incentive designed should It is vital that any incentive designed should not divert small diameter wood from not divert small diameter wood from existing wood processing industriesexisting wood processing industries

Summary

Commercial development of wood directly from Commercial development of wood directly from the forest for energy is limited in the immediate the forest for energy is limited in the immediate termterm

Adequate volumes of residues not availableAdequate volumes of residues not available Integrated within the sawmilling sector best optionIntegrated within the sawmilling sector best option Combined heat and power the most efficientCombined heat and power the most efficient Potential to develop pellet manufacturing businessPotential to develop pellet manufacturing business

Summary (contd.)

Domestic and community market for use of Domestic and community market for use of wood pellets growingwood pellets growing

Long term potential for biomass positiveLong term potential for biomass positive Financial support needed to establish a Financial support needed to establish a

forest to end customer supply chainforest to end customer supply chain