Reasons to Fuel Switch to Wood Energy
1 Future-proofing energy system investments
Switching from fossil fuels to wood energy is the forward-thinking choice.
Fossil fuel prices are subject to dramatic market fluctuations. Global fossil fuel price indexes for the last 30 years indicate coal has the greatest volatility, rising to four times the 2000 price in 2008, and more than trebling in 2011. Oil has similarly shown volatility - varying by two to three-fold over this period, with significant spikes and shocks, most often tightly linked to distinct political and socio-economic events. Reports have shown that recent increases in the cost of European carbon trading have driven up fossil fuel prices there, with coal-generated electricity costs leaping 72%.
Woody biomass from plantation-grown trees is New Zealand’s most significant renewable energy resource. The Bioenergy Association estimates that there is enough recoverable woody biomass available throughout New Zealand that could replace 60% of current coal use in heat plant today at modest recoverability levels.
This abundance of supply lends itself to proven price stability. Using locally-produced fuel provides greater security of energy supply and reduces New Zealand’s reliance on coal and oil imports. This collaterally improves our balance of trade figures.
The technology applied to the raw biomass product, which transforms it into a transportable, high-energy fuel source for industry, schools and hospitals is mature, proven intellectual property. The processes are replicable country-wide to provide scalable supply.
2 Smart economics for today and tomorrow
For large process heat energy systems, biomass hog fuel is cost comparative or more economical than coal, today. That is a price-stable, low-emission, renewable fuel that stands on its own prior to other market influences.
Consultation on the review of New Zealand’s Emissions Trading Scheme, (ETS), has recently closed. The Coalition Government aims to set effective emissions pricing to incentivise businesses to reduce emissions, innovate, and invest in low-emissions solutions. This, linked with the introduction of the Zero Carbon Bill which proposes to establish emissions budgets as ‘stepping stones’ towards a new 2050 target, may mean costly change for industry. The central policy lever for the Government is its influence over the emissions price. The proposed Climate Commission will be involved in setting this price and it is likely that the cap on carbon prices will be lifted from its current level of $25 per tonne of emitted carbon dioxide equivalent, (t of CO2e).
The Productivity Commission in its Low Emissions Economy report has modelled that to meet Paris Climate Agreement’s objectives of net-zero emissions by 2050, emissions prices would have to rise to between $150/t of CO2e to $250/t of CO2e.
Opting to fuel industrial processes with low-emission, carbon neutral biomass is already the economical choice as, compared to coal, its price is favourable. Increases to the carbon price under a reformed ETS, however, will greatly enhance the price position of Biomass, Wood Energy Chip and Wood Pellet Fuel and make it even more attractive as a fuel option.
3 Increased importance of sustainability in branding
In business, a positive reputation creates deeper customer loyalty and facilitates word-of-mouth marketing. Looking to their long-term future, companies are now seeking to promote their corporate image, reputation and brand through the use of triple bottom line accounting, which includes social and environmental performance.
The adoption of sustainable environmental practices is an essential element in today’s corporate best practice and increasingly an expectation in consumers’ minds. Other external factors influencing businesses to act on climate change include a growing demand from institutional investors and shareholders.
Robert Perry, Sustainable Leadership Manager of New Zealand’s Sustainable Business Council puts the issue this way: “The business case for sustainability is clear. Companies that build sustainability into their business strategy perform better through reduced costs, lower risk, enhanced trust and lasting business growth. Sustainability can be your competitive advantage, with investors, communities and staff.”
Indicative of this building trend, the New Zealand Climate Leaders Coalition launched in July 2018, establishing a grouping of 70 New Zealand organisations, responsible for nearly 50% of local emissions. They are committed to measuring and reporting their greenhouse gas emissions, setting long term emissions’ reduction targets and working with suppliers to reduce emissions with the ultimate aim to keep global warming within two degrees.
Studies indicate that if we are to have any chance of keeping global average temperature increases below our 2°C target, we have to leave the majority, (up to 80 %), of our fossil fuels in the ground. Typically coal produces the most CO2 per unit of energy and is often termed the most polluting of the fossil fuels. Its true cost is much greater if social costs are factored in. These include health, climate and environmental problems that are linked to emissions. As such, the continued use of coal in industrial processes is emerging as a sustainability risk that can affect company reputation.
The Sustainable Business Council in a recent submission notes that leading New Zealand businesses are moving away from short-term, incremental reduction targets, towards long-term goals. Those publicly announcing carbon reduction targets include Vector, Fujitsu, Fonterra, Toyota, The Warehouse, Air New Zealand, DB, New Zealand Post, Silver Fern Farms and Auckland Council.
The Productivity Commission’s Low Emissions Economy report found that natural gas and coal account for 84% of process heat emissions. The adoption of wood fuel instead would provide multi-faceted business branding and reputational benefits to companies in this era of sustainability awareness.
4 Lifecycle benefits
Wood energy will play a vital role in helping New Zealand transition to a low-emissions future through conversions that replace fossil fuel use for heat and process energy. Coal, gas and diesel are proven high-carbon emitting pollutants but what makes forest biomass used to produce wood energy carbon neutral?
During their growth, trees absorb carbon from the atmosphere as CO2 and convert it into stored carbohydrates. So when burned, a tree releases the carbon it had stored up, carbon that would have been released anyway when the tree died and decomposed.
About 15-20% of a tree is wasted in the forestry wood processing industry. This residue is going to produce CO2 whether it is burned or allowed to rot. Radiata pine, which makes up 90% of the planted production forest area, are fast- growing exotics that rapidly uptake CO2. Residue following harvest is used to produce wood fuel. When sites are replanted, more carbon is absorbed from the atmosphere through tree growth and creates a carbon neutral cycle.
New Zealand forestry practices are particularly efficient at creating this closed carbon loop. Rapid replanting and harvesting of pine is reflected in recent statistics which show an average forest standing age of 17 years.
The Coalition Government’s One Billion Trees initiative will enhance forestry’s role in reducing the effects of climate change by providing increased biomass for utilisation as fuel.
Wood energy is a sustainable, renewable, carbon neutral energy source. Its use is cost-comparable to fossil fuels and conversions of industrial plants to this fuel source will help New Zealand transition to a low-emissions future.
Other lifecycle benefits that result from wood energy include environmental clean-up. Azwood Energy utilises residues from sustainable forestry, removing slash and waste wood from forestry skid sites. This diminishes fuel for forest fires, reduces the incidence and impact of erosion during extreme weather events, protects waterways from residues and erosion and assists with plant regrowth.
Azwood Energy also repurposes waste products from the wood manufacturing process reducing landfill, preventing leachate in waterways and creating unique technical media for growing trees and crops, land enhancement, stormwater management and pollution control in a sustainable, closed loop circular economy.
5 Achieving emissions targets
The latest report by the Intergovernmental Panel on Climate Change, (IPCC), has called for a reduction in global net human-caused emissions of carbon dioxide to ‘net zero’ by 2050.
To reach such a target, industrial processes currently fuelled by fossil fuels will be required to transition to sustainable, renewable, low-emission sources of energy. Biomass wood energy fits this brief, as a zero-emissions fuel, produced from sustainable and plentiful local resources.
In New Zealand emissions from heat and industrial processes account for around 15% of New Zealand’s gross greenhouse gases. The Productivity Commission’s Low Emissions Economy report found “rising emissions prices will be central to driving emissions-reducing investments in industrial heat processes”. It also recommended the promotion of initiatives to encourage, promote, and support the use of low-emissions energy sources.
One such initiative is MBIE and the Energy Efficiency and Conservation Authority’s Process Heat in New Zealand, a plan to improve the energy efficiency of using process heat and increase the amount of renewable energy used to supply it. Its first report, looking at barriers to emissions reductions, is due for release shortly. Any policies subsequently developed to address these barriers would work in tandem with the emissions price in reducing emissions from the generation of process heat.
The Productivity Commission’s report specifically recommended that EECA and MBIE should consider a wider roll-out of policy initiatives to support the supply and use of biomass.
Schemes, such as Wood Energy South, could be rolled out nation-wide. This project aimed to lower energy-related carbon emissions in Southland, improve air quality and demonstrate the cost and lifecycle benefits of wood-fuelled boilers using local wood resources. Running for three years, its achievements included assisting 12 heat plant owners to transition to wood fuel, (reducing greenhouse gas emissions by a projected 80,000 t of CO2e per year), and implementing the expansion of the local wood fuel supply market. Otago is gearing up to implement a similar scheme.
Government support of such initiatives, through funding for local authorities or grants to facilitate conversions of heat plant to wood energy could supercharge emissions reduction. Similarly, procurement policies should prohibit fossil-fuelled plant being installed in government facilities going forward. Only through implementing such proactive measures will the “rapid, far-reaching and unprecedented change” called for by the IPCC occur.