Dave McElroy: government must re-think its biomass policy.

Norbord calls for action on market distortions created by energy subsidies

Published:  21 March, 2011

UK: Norbord is calling on the Government to modify renewable energy subsidies which encourage the construction of biomass plants to burn wood.

The wood panel sector is now under threat because these subsidised electricity generators can afford to pay more than double the price currently paid by the UK wood panel industry for its primary raw material.

Through its Renewables Obligation, the Government has effectively distorted the market with the result that wood panel products manufacturers have seen the price of their feedstock rise by more than 30% over the past four years, and this trend is now accelerating.

This surge in wood prices has been exacerbated by increases in other input costs, such as the resins used in board manufacture, and transport, both of which are influenced by rising oil and gas prices.

Last year, Norbord helped the Wood Panel Products Association launch a campaign, called 'Making Wood Work', to highlight the impact of the Renewables Obligation on the wood-based panel products industry.

“If all the planned UK plants were built by 2020, this would result in at least a doubling of total UK wood consumption by that time,” said Dave McElroy, deputy managing director (commercial) at Norbord. “This amount of wood/biomass supply is simply not available from home-grown sources.”

Norbord currently consumes about 20% of all the softwood harvested annually in the UK and turns it into useful products such as MDF, chipboard and OSB. Ironically, these products act as a carbon sink, whereas wood burned in commercial power plants releases carbon back into the atmosphere.

“We urge the Government to rethink its policy on biomass and focus its subsidy on non-wood fuels and fast-rotation crops. Only wood that has reached the end of its useful life should be used by the energy sector,” said Mr McElroy.

“We need to highlight the effects of unfair subsidies that are aimed at burning wood instead of using it, re-using and recycling it as the wood products industry does.”

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