1. Wood for Energy Experience of Coillte to date Presentation to the Oireachtas Joint Committee on Marine, Communications and Natural Resources George McCarthy 22 June 2005

2. In this presentation…. Existing uses of wood for energy in forest industry Existing uses of wood for energy in forest industry Increasing the scale of wood use Increasing the scale of wood use Issues arising Issues arising

3. Wood Biomass Forest Residues: Forest Residues:  Tops  Branches  Waste Sawmill Residues: Sawmill Residues:  Chips  Sawdust  Bark

4. Directives on Renewable Energy Sources: Targets for 2010 (Terawatt Hours) 020406080100120 France Italy Sweden Spain Germany Austria United Kingdom Finland Portugal Greece Netherlands Denmark Belgium Ireland Luxembourg 2000/hydro 2000/wind 2000/bio 2000/others 2010/RES-E 5,7 % 13,2 % 6,0 % 29,0 % 9,0 % 20,1 % 39,0 % 31,5 % 10,0 % 78,1 % 12,5 % 29,4 % 60,0 % 25,0 % 21,0 % TWh Source: Tipperary Institute

5. Fuels Used for Heat Supply Residential Residential  Coal and peat fallen in last 10 years  Oil and gas – comfort factor Commercial / Public Sector: Commercial / Public Sector:  Oil and gas increased  Very little solid fuel usage  Sawdust/chip used in the wood processing industry

6. Uses for Fuelwood ElectricityCombined Heat & Power Heat WoodfiringCo-FiringConventionalBoilerGasification Open Fire EnclosedSystem Peat, Coal Oil, Gas

7. Potential for Wood for Energy Co-firing in existing fossil fuel power plants, e.g. Edenderry Co-firing in existing fossil fuel power plants, e.g. Edenderry Stand alone power generation plants Stand alone power generation plants Co-firing: Co-firing:  Economies of scale  Low biomass supply risk  Low investment risk  Proven technologies

8. Wood Biomass Supply Sawmill Residues Sawmill Residues Small diameter roundwood Small diameter roundwood Forest residues Forest residues

9. Wood Biomass Resource Potential (Ireland) ‘000 M3 Pulpwood Sawmill Residues Forest Residues Total 2015 527 319 284 1,130 2020 618 465 300 1,384 2030 1,072 1,887 330 3,289 2005 78 61 0 139

10. Wood Biomass Resource Potential 2005 - 2030 20052006200720082009201020112012201320142015201620172018201920202021202220232024202520262027202820292030 0 1 2 3 4 5 6 7 Million m3 Sawmill Balance Pulp Balance Residue Balance

11. Potential Sawmill Residues Available 465 1,019 1,887 301 568 1,002 137 117 200520102015202020252030 0 500 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.

12. Sawmill Residues Breakdown Woodchips 70% Sawdust 19% Bark 11%

13. Factors Influencing Residue Availability Price Price Commitment to supply board mills Commitment to supply board mills Market diversification Market diversification Exploration of wood for energy through co- fueling and developing own CHP/wood pellet projects Exploration of wood for energy through co- fueling and developing own CHP/wood pellet projects

14. Markets and Prices for Sawmill Residues 2003 Product Principal Markets Price per Wet Tonne Ex-Yard Chips Panel board mills €23 Sawdust Panel board mills; use in sawmills for heating; animal bedding €7 Bark Horticulture; panel board mills (incl. Boiler fuel) €14

15. Forest Residues Thinning and clearfell residues potential of 150,000m3? Thinning and clearfell residues potential of 150,000m3? Energy paying capability with subsidy - €25 (i.e. awarded AER contracts) Energy paying capability with subsidy - €25 (i.e. awarded AER contracts) Cost of harvesting and transporting residues - €30 to €35 per m 3 Cost of harvesting and transporting residues - €30 to €35 per m 3 Risk from removal of lop-and-top: Risk from removal of lop-and-top:  Loss of nutrients  Soil degradation  Extraction damage

16. Potential from Private Forests 290,000 ha of young plantations 290,000 ha of young plantations Could potentially be a source of energy Could potentially be a source of energy Cost of harvesting and chipping first thinnings is prohibitive Cost of harvesting and chipping first thinnings is prohibitive Would not be economic without a subsidy Would not be economic without a subsidy Possibly for community based projects on farm forestry useage – local / small scale Possibly for community based projects on farm forestry useage – local / small scale

17. Issues arising… Lack of tradition is using wood for heating means there is no infrastructure even to serve local markets Lack of tradition is using wood for heating means there is no infrastructure even to serve local markets No current markets of scale exist e.g. district heating systems as in other countries No current markets of scale exist e.g. district heating systems as in other countries No market support mechanisms exist to (a) offset capital costs or (b) support the cost of renewable energy from wood as exist for other forms of alternative energy No market support mechanisms exist to (a) offset capital costs or (b) support the cost of renewable energy from wood as exist for other forms of alternative energy The current volume of wood available over and above current demand is very limited and would only make a marginal contribution to national energy demand The current volume of wood available over and above current demand is very limited and would only make a marginal contribution to national energy demand

18. The Future… Wood has the potential to contribute significantly to national energy requirements as forests planted in the 1990s mature and the sustainable volume of wood increases Wood has the potential to contribute significantly to national energy requirements as forests planted in the 1990s mature and the sustainable volume of wood increases However to make real difference and contribution to national energy needs a substantially greater volume of wood would be required – this provides a further incentive to continue with a major national afforestation programme However to make real difference and contribution to national energy needs a substantially greater volume of wood would be required – this provides a further incentive to continue with a major national afforestation programme As this wood will be owned by 12,000 forest owners substantial investments in infrastructure will be required to ensure that (a) the available energy supply can be harvested economically and (b) markets exist to convert wood into energy As this wood will be owned by 12,000 forest owners substantial investments in infrastructure will be required to ensure that (a) the available energy supply can be harvested economically and (b) markets exist to convert wood into energy

19. Currently wood biomass cannot compete economically with fossil fuels at current oil and gas price levles so financial incentives would be required for forest owners to harvest and sell wood for this purpose Currently wood biomass cannot compete economically with fossil fuels at current oil and gas price levles so financial incentives would be required for forest owners to harvest and sell wood for this purpose It is vital that any incentive designed should not divert small diameter wood from existing wood processing industries It is vital that any incentive designed should not divert small diameter wood from existing wood processing industries

20. Summary Commercial development of wood directly from the forest for energy is limited in the immediate term Commercial development of wood directly from the forest for energy is limited in the immediate term Adequate volumes of residues not available Adequate volumes of residues not available Integrated within the sawmilling sector best option Integrated within the sawmilling sector best option Combined heat and power the most efficient Combined heat and power the most efficient Potential to develop pellet manufacturing business Potential to develop pellet manufacturing business

21. Summary (contd.) Domestic and community market for use of wood pellets growing Domestic and community market for use of wood pellets growing Long term potential for biomass positive Long term potential for biomass positive Financial support needed to establish a forest to end customer supply chain Financial support needed to establish a forest to end customer supply chain