By Virginia Cram-Martos Director · 2008. 10. 14. · UNECEUNECEUnited Nations Economic Commission...

UNECE United Nations Economic Commission for EuropeUNECEUNECEUnited Nations Economic Commission for EuropeUnited Nations Economic Commission for Europe

The Market Dynamics of Wood Energy in Europe

Wood as an alternative energy source

By Virginia Cram-Martos

Director

UNECE Trade and Timber Division

Reading University

February 2007


Structure of the Presentation:

UNECE - a short introduction

• Wood energy – why are we talking about?

• Wood and the energy market

• Where does wood come from – where does it go to?

• State of the forests within the UNECE region

• Why is wood good ? (socio-economic and political reasons)

• Assessing the wood energy market and its development

• What drives the market?

• Recent trends and future developments in wood energy


The United Nations Economic Commission for Europe (UNECE):

•Is one of the five United Nations regional commissions

•Has 56 member States

•Provides a forum for developing tools for economic cooperation

•Offers a regional framework for the elaboration and harmonization of conventions, norms and standards


The UNECE’s Programmes:

• Economic Cooperation and Integration• Environmental Policy • Housing and Land Management• Statistics• Sustainable Energy• Timber and Forestry• Trade• Transport


The Trade Programme:

Develops and maintains

international norms, standards and recommendations

that help countries and enterprises

increase their competitiveness

by reducing technical barriers to trade.


The Work Focuses on:

• Trade Facilitation

• Electronic Business

• Regulatory Cooperation

• Standardization Policy

• Agricultural Quality Standards

• Technical Barriers to Trade


The UNECE’s Programmes:

• Economic Cooperation and Integration• Environmental Policy • Housing and Land Management• Statistics• Sustainable Energy• Timber and Forestry• Trade• Transport


UNECE/FAO Timber Section – a joint office

Develops information and recommendations on:

• Markets and Statistics

• Forest resource assessment and indicators of sustainable forest management in the region

• Sector outlook studies: analysis and follow-up

• Social and cultural aspects of forestry

• Policy and cross-sectoral issues


The United Nations Economic Commission for Europe (UNECE):

Provides technical assistance to the countries in the region with transition and-or less developed economies.

This assistance takes the form of advisory services, training seminars and workshops where participants can share their experiences and receive support from other countries in the region.


Wood Energy, why are we talking about it?

Because forests are…


…“nice” Energy stocks…


…good for the climate…

1 average European tree consumes 6 kg CO2/day one person produces 1 kg CO2/day

C6H12O6 + 6 O2 + 6 H2O 6 CO2 + 12 H2O

1 ton wood + 1,392 tons O2 + 0, 541 tons H2O

1,851 tons CO2 + 1.082 tons H2O

Combustion

Photosynthesis



…and if something goes wrong, the negative effect is very limited in time and space.


Wood energy - the global political framework

•Energy supply security (diversification / price)

• Climate protection (Kyoto protocol commitments, Johannesburg Implementation plan, International conference on renewable energies (Bonn) etc.)

• Sustainable energy supply (strengthen local structures)


• EC Forestry action plan (2006)

• EC Strategy and action plan on renewable energy sources(2005)

• EU Directive 2001/77/EC(electricity from renewable sources)

• Ministerial Conference on Environment in Europe

• EC Directive 1999/31/EC(2010: -65% landfill of biodegradable waste)

Wood energy – the European legal framework (waste, energy, environment):


Different stakeholder - one topic:

• Same interest?

• Different objective ?

• Detailed specific information available for each field

Lack of an overall picture

Different units (m3, tons, Btu, Toe, GWh, PJ etc. )

Waste management

Environmental protection

Energy Production

Wood based Industries

Wood for energy

Society

Wood energy - a cross-sectoral topic:


Wood and the energy market

Overview of Total Primary Energy Supply (World/Europe/ECE)

The share of renewable energy

Share of wood within renewable energies

Energy wood and other wood products

Types of wood energy

Development of wood energy

Trade in wood energy


World - Total Primary Energy Supply (2003)

23,9%

35,8%

20,8%10,6%

2,1% 6,4%

0,5%

Coal

Crude Oil

Gas

Nuclear

Hydro

Geothermal, Solar, etc.

CombustiblesRenewables and Waste

Source: IEA


TPES - Total Primary Energy Supply: Indigenous production + imports - exports - international marine bunkers ± stock changes

World energy supply / consumption per capita

Tons of oil equivalent per capita



World energy supply – importing and exporting countries



World energy supply – CO² emmisions



Europe energy supply/consumption per capita



Europe energy supply:

importing and exporting countries



Europe energy supply –

CO² emmission per capita


Europe 25 - Total Primary Energy Supply (2003)

18%

39%

4%1%

14%1%23%

Coal

Crude Oil

Gas

Nuclear

Hydro

Geothermal, Solar, etc.

CombustiblesRenewables and Waste

How much of it is wood ?


“Combustible Renewables and Waste”As defined by the IEA:

• Gas Liquids from Biomass

• Industrial Waste

• Municipal Waste

• Solid Biomass and Animal Products


Gas Liquids from Biomass

Biomass gases are derived principally from the fermentation of biomass (which may include some wood or wood by-products) and solid wastes. These gases are combusted to produce heat and/or power.

Included in this category are landfill gas and sludge gas (sewage gas and gas from animal slurries). Bio-additives such as ethanol are also included in this category.


Industrial Waste

Industrial waste consists of solid and liquid products combusted directly (usually in specialised plants, e.g. tyres) to produce heat and/or power.

It may contain wood.


Municipal Waste

Municipal waste consists of products that are combusted directly to produce heat and/or power.

It includes residential, commercial and public waste that is collected by local authorities for disposal in a central location. Hospital waste is included in this category.

It may contain wood or wood by-products (such as paper)


Solid Biomass and Animal Products

Biomass is any plant matter used directly as fuel or converted into other forms before combustion.

Included are • wood, • vegetal waste (including wood waste and

crops used for energy production), • animal materials/wastes • sulphite lyes, also known as "black liquor"

(a by-product from the manufacture of paper where the energy content derives from the lignin removed from wood pulp)


“Combustible Renewables and Waste”As defined by the IEA:

• Gas Liquids from Biomass

• Industrial Waste

• Municipal Waste

• Solid Biomass and Animal Products

Wood energy has no specific category !


Wood ~ 3 % of the Total Primary Energy Supply in the EU 25 (source: EurObserver 2005

Composition of Cumbustibles, Renewables and Waste 2004

Total Primary Energy Supply (EU 25)

Other (straw, peat, corn,animal manure etc.)

Wood

75 % = 43,5 Mtoe

Wood energy supply in the EU 25?

55,4 Mtoe

Combustibles, Renewables and Waste

4 % of EU

25 TPES


Importance of wood, wood wastes, other solid wastes as % of TPES



Biomass composition for energy use of biomass in 20 European Countries (1999)

Source: AFB-Net 2001


Most biomass is used for heat production

83%

17%

Increasingly used in combined heat and power plants (CHP).

Households and local heating networks

83%

17%

heat production electricity production

83 %

17 %


Remaining high price for crude oil makes alternative fuels more

attractive.

Technical progress in burning facilities

Emerging new types of wood fuel

More competition - higher market prices

Wood processing industries (pulp and paper, panel and sawmill

industries) are facing competition for raw material with energy

producer.

Assessment of future developments requires better data on wood

energy from the energy and the forestry side.

Wood processing vs. Wood energy?


Forestry and Timber sector versus Energy sector– two sectors – two worlds ?

Mtoe, MWh, GJ, Mcal, TPES, ….

Roundwood equivalent,m3, tons,…

Definitions and language


How important is bioenergy? Which role do wood and biomass play for energy? Where does

wood energy go to?

Where does wood for energy come

from? – How does this affect forestry?

Forestry and Timber sector versus Energy sector– two sectors – two worlds ?

Objectives


UNECE/FAO Timber Section:

Where does wood energy come from?

Joint effort by the IEA, UNECE, FAO and EU

Joint Wood Energy Enquiry


Wood removals EU 25 (2004)

0102030405060708090

Sw

eden

Fin

land

Ger

man

yF

ranc

eP

olan

dA

ustri

aS

pain

Cze

ch_R

epLa

tvia

Por

tuga

lE

ston

iaIta

lyN

orw

ay UK

Lith

uani

aS

lova

kia

Hun

gary

Bel

gium

Slo

veni

aIre

land

Gre

ece

Den

mar

kN

ethe

rland

sLu

xem

bour

Mal

ta

1.00

0.00

0 m

3

Industrial roundwood Wood fuel

Traditional fuel wood and its importance for the national forestry

Source: FRA 2005n

Russian Federation

129

50


EU 25 (2004) National removals for fuelwood (%)

0%10%20%30%40%50%60%70%80%90%

Gre

ece

Italy

Den

mar

k

Hun

gary

Fran

ce

Net

herla

nds

Lith

uani

aE

ston

iaA

ustri

a

Nor

way

Slo

veni

aE

U 2

5

Bel

gium

Spa

in

Sw

eden

Ger

man

y

Finl

and

Latv

iaP

ortu

gal

Cze

ch_R

ep.

Slo

vaki

a

Pol

and

UK

Luxe

mbo

urg

Irela

ndM

alta

Source: UNECE/FAO Timber Section

Traditional fuel wood and its importance for the national forestry


Other paper and paperboard

Woodfuel

Wood chips and particles

Wood residues

Plywood and veneer

Sawnwood

Fibreboard Particleboard Wood pulp

Recovered wood products Other fibre

pulpRecovered

paper

Recovered fibre pulp

Mechanical wood pulp

Semi-chem. wood pulp

Chemical wood pulp

Dissolving pulp

Newsprint Printing and writing paper

Roundwood

Other industrial roundwood

Pulpwood, round & split

Sawlogs and veneer logs

Source: EFSOS UNECE/FAO

15 % (EU 25)

COMPLEX RAW MATERIAL FLOWS


Source: EFSOS UNECE/FAO

Direct:Logging residues, thinnings, clearings,

short rotation coppice etc.

Indirect:Residues, enhanced/densified wood fuel

(pellets, charcoal, biofuels), etc.

Recovered:Post consumer recycled wood products (often

contaminated), construction, demolition, waste etc.

Wood for energy use can have many forms…

The Joint Wood Energy Enquiry – Structure


Wood energy

– Various forms, different assets…

Dry, indirect, co-product

High energy density. Compatible with existing engines, distribution schemes already in place.

Direct or indirect co-product

Black Liquor

Liquid, easy storage, local use

light, dry, easy storage and transport

Cha

rcoa

l

High energy density, standardized humidity, easy

storage and transport

Pellets

SawdustChips

Abundant, local Fuel

woo

d


Final energy usersWood fuel supply sources

Forests

Industries

Society Private Households

Industrial sector

Power and Heat generation

Direct wood fuels: Wood used as solid and liquid fuel, produced for energy purposes

Recovered wood fuels: wood used as fuel, derived from socioeconomic activities outside the forest sector

Indirect wood fuels: solid and liquid bio fuels produced from wood processing activities

Sources and user for energy production


'Europe' Sources for wood fuel

S1 Direct

S2 Indirect

S3 Recovered

'Europe' User wood energy

U1 power and heat

U2 Industry

U3 Private

Source: UNECE Joint Wood Energy Enquiry

'Northern America' Sources for wood fuel

S1 Direct

S2 Indirect

S3 Recovered

'Northern America' User wood energy

U1 power and heat

U2 Industry

U3 Private

`North America´`North America´


'Northern America' Sources for wood fuel

S1 Direct

S2 Indirect

S3 Recovered

'Northern America' User wood energy

U1 power and heat

U2 Industry

U3 Private

`North America´`North America´

'Europe' Sources for wood fuel

S1 Direct

S2 Indirect

S3 Recovered

'Europe' User wood energy

U1 power and heat

U2 Industry

U3 Private

Source: UNECE Joint Wood Energy Enquiry

SOURCES:

- Indirect wood is the most important source for wood energy generation.

- Direct wood supply plays less of a role in North America than in Europe.

- Restrictive waste management policies (reduced landfill) and higher raw material prices increase the use of post consumer recovered wood.

USER:

- Wood processing industries are important consumer of wood energy. In particular in North America

- Commercial power and heat generation plays a major role in North America

- In Europe fuelwood and wood fuel consumption by private households is quite significant


Different sources of wood energyEurope

0

10,000

20,000

30,000

40,000

50,000

60,000

Fran

ce

Sw

eden

Finl

and

Ger

man

y

Aus

tria

Cze

ch R

epub

lic

Nor

way

Sw

itzer

land

Uni

ted

King

dom

Lith

uani

a

Slo

veni

a

Net

herla

nds

1000

m3

S1 D irect S2 Indirect S3 Recovered

N orthe rn A m e rica

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

USA

Can

ada

Sources North AmericaEurope


Different user of wood energyEurope

0

10 ,000

20 ,000

30 ,000

40 ,000

50 ,000

60 ,000

Fran

ce

Sw

eden

Finl

and

Ger

man

y

Aus

tria

Cze

ch R

epub

lic

Nor

way

Sw

itzer

land

Uni

ted

King

dom

Lith

uani

a

Slo

veni

a

Net

herla

nds

1000

m3

U 1 P ow er and hea t U 2 Industria l U3 P riva te househo lds

N o rth e rn A m e rica

0

20 ,000

40 ,000

60 ,000

80 ,000

1 00 ,000

1 20 ,000

1 40 ,000

1 60 ,000

1 80 ,000

2 00 ,000

US

A

Can

ada

Users North AmericaEurope


Energy from sawdust – high quality fuel production

Source: Hillring

Trend:

Standardized, dry product with high energy content, easy to transport


What is the advantage of upgraded fuels?

- Moisture content is an important factor for the energy content per unit.

- Emission standards require a low humidity

- Modern burning facilities are highly efficient (>90%) and require high quality, dry fuel.


Energy content and density of different wood fuels (dry)

Source: Eurobserver / World Energy Council

0.270.39Wood Pellets

0.50.63Ethanol

0.81Oil Petroleum

0.080.23Peat 0.150.33Fuelwood

…0.26 – 0.35Black liquor0.150.19 – 0.33Wood Chips

Toe/m3Toe/ton material


International trade in biomass trade for energy production

Source: www.bioenergy.org IEA Bioenergy Task 40


International biomass trade for energy production in Europe

Wood has been a locally used energy carrier in the past.

Recent technical development provides the market with compacted energy carrier with a standardized humidity and Energy content.

The international transport of wood for energy purpose has the potential to maintain its momentum and to accelerated its growth. The European trade of biomass. Source: AFB-net.


International wood energy trade

• Traditionally considered negligible

• Statistical problems (classification measurement)

• Non-traditional forms (pellets etc.)

• In fact significant and (probably) growing

In the common field of energy, trade, waste management and forestry

UNECE Timber Section Joint Wood Energy Enquiry provides better information about the production and flow of energy wood in the different member states.


If wood energy develops throughout the UNECE region, …

…Will there be enough Wood ???


State of the forests within the UNECE :

Forest resource assessment (FAO) in 2005:

Annually growing forest area

Increasing growing stock

Perpetual availability of the raw material due to sustainable management of the natural resources.


Source: UNECE/FAO FRA 2005

0,001% annually increase in forest surface within the UNECE (EU 25, Russian Federation and CEE)

~ 650 000 ha/a (Belgium total forest surface 667 000 ha)


Net annual increment, Europe 25(million m3)

190

200

210

220

230

240

250

260

1990 2000 2010 2020 2030 2040

Source FAO Source MCPFE 2003


Recent market development:

0

1

2

3

4

5

6

7

8

9

10Fr

ance

Swed

enFi

nlan

dG

erm

any

Spai

nPo

land

Aust

riaPo

rtuga

lLa

tvia

Unite

dDe

nmar

kIta

lyCz

ech

Rep.

Gre

ece

Hung

ary

Neth

erla

nds

Lith

uani

aSl

oven

iaBe

lgiu

mSl

ovak

iaEs

toni

aIre

land

Luxe

mbo

urg

Cypr

usM

alta

Consumption of primary energy from wood energy EU 25 (in Mtoe)

2003 2004 (estimation)

Total 2004: 55,4 Mtoe

(+ 5,6%)

Source: Eurobserver 2005


0123456789

10Fi

nlan

dSw

eden

Ger

man

ySp

ain

Uni

ted

King

dom

Net

herla

nds

Den

mar

kFr

ance

Aust

riaPo

rtuga

lH

unga

ryPo

land

Cze

chR

ep.

Belg

ium

Italy

Slov

akia

Slov

enia

Esto

nia

Latv

iaLi

thua

nia

Gross electricity generation from wood energy (in TWh)

20032004 (estimation)



The ambitious aim of the White Paper* cannot be reached…


MToe *

* White Paper 1997 by the European Commission EC Strategy and action plan on Renewable energy sources

Mtoe:Million tons oil equivalent


… but energy generation from wood

will steadily increase…


… because it is creating jobs – more than other energy sectors…Predicted impact on local employment from bioenergy and from other renewable energy technologies, European Union (new net full-time jobs relative to 1995 base)


…it is economic viable at current and mid term fuel prices…

0

50

100

Nov

03

Jan

04

Mrz

04

Mai

04

Jul 0

4

Sep

04

Nov

04

Jan

05

Mrz

05

Mai

05

Jul 0

5

Sep

05

Nov

05

Jan

06

Mrz

06

Mai

06

Jul 0

6

Sep

06

USD

/m³

0

20

40

60

80

100

120

(Cru

de O

il) U

SD/b

bl

theore tica l wood fue l p rice $ /m³ (based on energy equ iva lent)

C rude O il (U S$/bb l)

END-USER PETROLEUM PRODUCT PRICESAND

AVERAGE CRUDE OIL IMPORT COSTS

Source: IEA, November 2006


Export prices for coniferous roundwood (Europe)

0

10

20

30

40

50

60

70

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

$/m

3… due to stable market prices for unprocessed wood.

Storms affecting the wood market

average price roundwood (EU 25) ($/m3) Source: UNECE Timber Section


The stable prices are changing at the moment (pellets):

Modern burning facilities request processed, standardized wood products.

New market – small number of producer

More investments in (private/small) burning facilities

Shortage in raw material (market and policy failure)

Demand exceeds offer => higher prices

frustrated consumer

Competition among regions (USA East/West; Italan consumer vs. German, Austrian and French)

Influence on other wood products – generally higher prices


Three market trends point to the opportunity to expand biomass fuel markets.

1) Wood is currently available in many regions for less than half the cost of fossil fuel on a delivered Toe (tons of oil equivalent) basis. In many areas, the supply of low-grade timber and chips is large and demand is small.

2) Rapid fluctuations in energy prices over the last few winters has stimulated many industries to look for a more stable fuel supply. The price of wood fuel has fluctuated little over the last 10 to 15 years.

3) The availability of fuel - at any cost - is less certain than in the past. Purchasing a locally available, renewable fuel from a local business owner is one way industries can increase security in an uncertain and rapidly changing world.


Conclusion I:

• Fuelwood is not a panacea and cannot assure the entire energy supply, but can help to diversify the national energy portfolio.

• At current crude oil prices wood energy is economically competitivewithout subsidies.

• Raw material price for wood will remain relatively stable as the resource is still increasing in volume and surface due to sustainable forest management.

• Energy markets world-wide may become more stable due to a large number of energy suppliers compared to the current situation.


Conclusion II:

• Wood is easy to store and serves perfectly as standby energy source to accommodate less permanent and less constant energy sources (e.g. wind/solar).

• New markets may generate substantial income sources for relatively poor world regions.

• International bio-energy trade will increase

• The development in the wood energy sector has a positive trend. The magnitude of future development will largely depend on external factors like remaining high oil prices, (environmental and economical) political decisions at the local, national regional and international levels.


Contact: [email protected]

By Virginia Cram-Martos Director · 2008. 10. 14. · UNECEUNECEUnited Nations Economic Commission...

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