1. FUELBELT European experiences in production of wood biomass Enhanced use and consumption of wood June 18 – 19, 2007 Opatija, Croatia Veli Pohjonen University of Helsinki, Finland

2. European forest belt – FuelBelt - is a vast resource source: European Forest Institute

3. Enhanced use of wood energy in Europe Combatting climate change needs renewable energy, instead of fossil fuels Growth in renewable energy in Europe is largely based on woody biomas For enhanced wood use all over Europe we need an intelligent energy carrier that is durable, storable and transportable

4. EU aims at 20 % in renewables Renewables now at 6.5 per cent in EU in combatting the climate change the aim has been set 20 per cent by 2020. Plenty of biomass, hydro, wind power and liquid biofuels are needed Intelligent Energy Europe (IEE) demonstrates good working models FUELBELT under building for such project

5. Renewables per cent: case Finland In 2006 renewables totalled 23 per cent Forest energy 20 %, hydro 3 %, wind 0.2 % New forest energy developed since 1976 The case path points to 36 per cent in 2020

6. Wood energy origins are in wood industries About half of round wood is sawn to lumber The other half is in various residues, like saw dust (middle), bark (right) and others Optimum use of wood energy supports saw milling. Same applies for pulp and paper industries Saw Mill and Power Plant: Polkky Ltd, Kuusamo, Finland

7. In modern saw mills bark and saw dust are used for energy electricity and heat are produced chips are sold to pulp mills shavings are pressed into pellets optionally: saw dust is also used for pellets

8. For enhanced use we have a problem: supply and demand do not meet Forest energy supplies are in less populated, remote areas (in FuelBelt) Demand for renewable energy is highest in populated areas of Central and Southern Europe Raw forest energy bulky, not transportable Energy carrier is needed Already developed carrier: wood pellet

9. Shaving of Scots pine under microspcope mostly air (brown), less cell walls (yellow)

10. Wood density rule Pelletizing today densifies 4 x which is sufficient to transport from FuelBelt to consumer belt

11. Rule of thumb for maximum transport Chips, saw dust or shavings: 100-200 km (by truck) Round wood 1000 km (by train) Wood pellets 5000 km (by ship), 500 km by truck

12. In combatting the climate change: pellets substitute coal and natural gas Example of large scale: wood pellets processed in North-eastern Finland, Kuusamo are sold to Southern Sweden, Stockholm to subsitute coal in Hasselby power plant Example of small scale: wood pellets processed in Austria are sold to Italy to subsitute natural gas in small houses

13. Kuusamo (Finland) pellet factory: Shavings in, pellets out, export to Stockholm Hasselby (Sweden)

14. Example of large scale customer: Stockholm Hasselby (Sweden) Coal fired power plant for pellets in 1992 Target: cut carbon dioxide emissions Pellet use 250 000 tn / a (25 times Kuusamo production) Power plant in suburb of Stockholm, on a lake side, transport only by ships Domestic pellets 70 % (from Sweden) Import 30 % (from Estonia, Latvia, Norway, Poland, Finland)

15. Austrian model pellet production of 90,000 tn/a from shavings and saw dust for local market and export (e.g.Italy)

16. Example of small scale customers: natural gas heated houses Unstability of natural gas in 2000s has created market for pellets and pellet burners in Central and Southern Europe Pellet retail price peaked last winter over 400 Euro/tn (15 kg bags, in Italy) Price has come down, but apparently follows the development of natural gas Pellets create energy security in small housing

17. Pellets have been developed for 30 years Over 200 factories in Europe Small scale (house) use is well advanced Large scale use started in Hässelby, Sweden in 1992; Denmark also active Raw materials: shavings from carpenter industries, saw dust from saw mills source: The Bioenergy International

18. Effect of carbon dioxide trading Tested in EU 2005-2007, second phase 2008-2012 System works for the environment, CO 2 emissions are better under control Experience from Finland: prices of electricity, wood fuel and pulp wood rise CO 2 trading sets the basic price for wood pellets, against coal

19. Carbon dioxide price blue 2007 emissions, green 2008 futures

20. Wood pellet reference pricing against coal, based on summed coal FOB price and CO 2 price (from 1.1.07 futures CO 2 price for Dec 08 used)

21. Does pulpwood go into energy? in mid 2007: no (blue line is under green line) FOB-prices for pulpwood (Finland) and coal, CO 2 price from 1.1.2007 for futures Dec 08

22. Target of pellet development: to get it recognized in Commodity price lists see e.g. ”pink sheet” in http://www.worldbank.org/http://www.worldbank.org/ Jan-Dec Jan-Feb DecJanFeb CommodityUnit20042005200620052006 Energy Coal, Australia$/mt52.9547.6245.4438.2343.1947.70 Crude oil, avg, spot$/bbl37.7353.3961.0856.4362.4659.70 Crude oil, Brent$/bbl38.3054.4361.7556.7563.5759.92 Crude oil, Dubai$/bbl33.4649.2957.9453.1358.3157.58 Natural gas, Europe$/mmbtu4.286.337.967.497.967.95 Natural gas, US$/mmbtu5.898.928.0712.838.667.49 Wood pellet, Europe€/tn ??? ???

23. FUELBELT There are good prospects for pellet development in Europe Combatting climate change, raising renewable energy, subsituting coal and natural gas give the frame There are high expectations on forested countries That is why we are developing FUELBELT project for Intelligent Energy Europe Participants: Finland, Sweden, Austria, Spain, Latvia and Croatia.

24. Thank you, The presentation will be posted in http://veli.pohjonen.org http://veli.pohjonen.org Veli Pohjonen Opatija, Croatia 19 June, 2007