Panel prices soar on demand for wood chip

Published:  21 July, 2011

COWIE: The price of wood panels could double because of a government subsidy programme that is threatening to destroy the industry says Karl Morris, managing director of panel maker Norbord.

"The Government is making a fundamental mistake with this policy," Mr Morris says. "The subsidy will actually increase carbon emissions, send wood panel costs soaring and cost the taxpayer an extra £1bn a year in higher fuel bills.

"The subsidy is a nonsense and needs to end now," he says.

Contractors and house builders are facing soaring bills for panels that will stoke construction cost inflation.

Wood experts believe government officials have got their sums horribly wrong in the drive to cut carbon emissions.

Public money is being used to subsidise energy companies to encourage them to burn wood in biomass plants to generate electricity. But the move is pushing up the cost of timber causing a 60% jump in wood panel prices already with further rises of up to 100% in the pipeline.

Wood panel producers fear production could be driven abroad by a subsidy skewing the whole timber market.

The subsidy is designed to aid the government's push for renewable energy and reduce carbon emissions. But the panel industry said the policy is actually increasing carbon emissions as wood is burnt rather than turned into building materials. Panel makers want to see the subsidy dumped leaving the next generation of biomass plants fuelled by alternative sources to virgin timber.

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