Does it make sense to import wood for energy?

03 Jul 2015 | Noel Forrest

Suffice it to say, initially, that I believe the world’s present-day managed and semi-natural forest areas can sustainably produce a much greater biomass yield than they do, at present, and thus provide reliable energy, with some degree of carbon savings, while incurring no land use change at all. This is what the consultants’ reports tell us.

In practise however, we may find that the lowest cost biomass is available via newly established plantations, which then requires us to consider issues such as habitat loss and hunger. Real expertise, and intelligent policy, are both required so that the lives of people local to forestry projects can improve, while nature successfully co-exists. Fencing off areas for nature is a highly limited approach, and benefits only a small number of people. While hunger is, of course, a genuine phenomenon, the large amounts of meat consumed both today and in all projections of human population and diet indicate the phenomenon is one of affordability, distribution and volatility. In other words it is a problem of economics, and therefore policy, rather than genuine limits. These are fascinating and important areas of policy, and they take expertise, but in my opinion we should certainly attempt to resolve them, in time, rather than limiting ourselves to those areas described in the first paragraph (above).

However, to address the question in the title of this blog, does importing wood to the UK for energy make sense? I think it is a question many in our industry have instinctively asked themselves at one time or another, and I have two main observations on the issue. Firstly, an EU (or within EU) policy which stimulates a biomass import trade flow is at least risky while other EU policymakers are seeking a strong global carbon treaty. The latter policy rapidly ought to stimulate local biomass demand pretty much everywhere, thus hampering the trade flow created by the former. One might imagine a policy of ‘first do no harm’, that should be generally prevailing. My second observation is that because the impact of any green subsidy is always smallest in a world where a full carbon treaty does not exist (such is the price elasticity of demand for fossil fuels – a ‘leakage’ effect), international biomass trade is most likely in a scenario where its impact is most limited.

‎Thankfully for biomass developers everywhere, leakage of carbon savings via this effect is most certainly less than 100% (though rather hard to estimate), and a large, and also unquantifiable, part of the value of any green subsidy is the reduction in cost achieved for future adopters, through innovation, learning etc. There is another point to consider, though. If a global carbon treaty was achieved, but placing costs predominately on developed countries in the near term, and if it did not include a workable ‘offset’ mechanism (of the Clean Development Mechanism type), whereby local LEDC reductions could be funded by costs borne by MEDCs, then there might still be potential for LEDC to MEDC biomass flows for some time to come. These flows, thinking further, might actually replace imminent and presently occurring MEDC to MEDC flows, in the instance of MEDC domestic demand (in that same scenario). So the answer to the question under discussion becomes linked to larger, more difficult questions: What might, and what should, a globally binding carbon reduction treaty look like? Even if we can agree on who should pay for climate change (see an earlier blog of mine), then the answer to these detailed questions are sadly not obvious.

In conclusion, biomass makes all the sense in the world as a dependable, fundamentally carbon neutral fuel source that provides ongoing employment and, potentially, sustainable value in developing countries. However, policy makers should be wary of creating trade flows that carry risks from policies their colleagues are separately pursuing. The rationale for importing wood is closely linked to other policies, as summarised in the chart below.

 

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Noel Forrest

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