Have you wondered why your site hoarding, wall sheathing and floor decking materials have rocketed in price over the past few years? Why, it’s global warming, of course. Measures introduced to combat the effects of climate change inevitably add to the cost of a building project. Part L of the Building Regulations, governing the conservation of fuel and power, has been through numerous revisions over the past decade, each one tightening up the requirements and piling on the cost every time. The Part L revisions are tied into government policy with its strict carbon reduction targets enshrined in law and enforced by regulation. And so conditioned are we by the climate change orthodoxy that we accept these added costs as the price we must pay to save the planet for future generations.
But not all sustainability targets are realistic. The UK has already missed its 2010 target to reduce emissions by 20% from 1990 levels and in October 2013 the government’s advisor, Cambridge Econometrics, warned the government that it will narrowly miss carbon targets up to 2017, and by bigger margins after that. These targets were set by the government’s scientific advisors but not all of the scientific advice was realistic – nor even grounded in common sense – as manufacturers of wood-based panel products will be happy to tell you.
Products such as oriented strand board (OSB), medium-density fibreboard (MDF) and particleboard – commonly known as chipboard – are staple materials in the construction industry. OSB in particular is one of the most ubiquitous materials; you’d be hard-pressed to find a site where it’s not used as hoarding, flooring, roof decking or in walls. Timber frame construction is almost unthinkable without it. These products are all made out of wood fibre, a renewable resource. And because it’s renewable, wood fibre is currently in high demand as a ‘green’ alternative to fossil fuels in energy generation. Over the past decade or more, government policy has encouraged a shift to renewable electricity generation with grants and incentives designed to make sure it’s worth the energy companies’ trouble. The main tool has been the Renewables Obligation (RO), which places an obligation on energy suppliers to source an increasing proportion of electricity from renewable sources. This has effectively created an artificial market for renewable energy, making it worth while for electricity generators to invest in ‘green’ electricity schemes, including biomass. Other schemes include feed-in tariffs which pay power generators a bonus for feeding renewable energy into the grid. The wood panel products industry is not happy about this for the simple reason that it is their raw material that the new biomass plants are being encouraged to burn. Concern reached a climax a couple of years ago when the government changed its policy on subsidies for biomass energy production to favour plant conversions over new-build plant. Converting an old coal- fired power station to biomass is much cheaper than building a new biomass plant from scratch.
RWE Npower had already converted its Tilbury power station to biomass, with a planned output of 750MW. It closed after a devastating fire in February 2012. Nevertheless other energy companies have followed suit, notably Drax in Yorkshire - notorious as the UK’s biggest single producer of CO2 emissions - which started biomass generation last year and aims to convert the whole site to biomass. “Renewable energy policy has been driven by new demand and the main driver is subsidies,” declares Alastair Kerr, director general of trade body the Wood Panel Industries Federation (WPIF). “We’ve never argued against generators burning wood for energy. Our problem is with the subsidies.” As Kerr points out, increased demand forces prices up. But the power generators can afford to pay because they are in receipt of government subsidies whereas the wood panel products industry receives no financial help and has to pay the going rate.
The result is that the price of OSB, MDF and particleboard has rocketed, says Karl Morris, managing director of the UK’s largest panel products manufacturers, Norbord Europe: “Our costs have risen by 50% in the past five years,” says Morris. “We are a big manufacturer – we have driven a lot of cost out of our business and so the consumer hasn’t felt the full effect in the form of price rises. But we would have made these cost reductions anyway, so this has affected our bottom line.” The cost pressure on the industry is significant, and potentially very damaging. “The danger is that we are priced out by one of two things: product substitution, where our customers switch to cheaper alternatives, or geographical substitution, where foreign manufacturers can afford to ship panels half way around the world and sell them cheaply in the UK,” says Morris. Norbord, like most of its rivals, uses only home-grown timber in its manufacturing processes. OSB is made from forest thinnings, the spindly, immature trees thinned out of the forest to give better specimens space to mature. MDF is made largely from sawmill residues – sawdust in other words – while particleboard is at least 75% recycled softwood, such as old pallets. In each case, the wood fibre is coated with a resin binder and pressed into thin sheets under high pressure and temperature to produce the panels. The largest biomass plants in the UK cannot rely upon home-grown fuel because their demand far exceeds the supply. “The demand of these companies is massive,” says Morris. “Drax alone would burn 6m tonnes of wood a year at full capacity – that’s 60% of the UK forestry harvest,” he says. So these plants have to import wood from as far afield as Canada or even Australia to feed their generators. The wood panel industry is not alone in speaking out against such large-scale biomass developments. Just over a year ago Greenpeace, Friends of the Earth and the RSPB got together and published a report entitled: “Dirtier than Coal? Why Government plans to subsidise burning trees are bad news for the planet”.
The report claimed, amongst other things, that the government’s “flawed” emissions calculations meant that plans to invest in biomass conversion would actually increase carbon emissions by at least 49% over the next 40 years.
Trees absorb carbon dioxide from the atmosphere as they grow. A typical conifer from a sustainably-managed European forest takes at least 30 years to mature. Cut it down and make panels for building or furniture and that carbon stays locked away in the fibre until maybe years later when it reaches the end of its life. Then it can be burned to generate energy; but by then another tree will have had time to mature.
But cut it down and burn it in a biomass plant and you release that carbon back into the atmosphere in hours or even minutes. Burning wood for electricity generation is immensely inefficient too, says Morris. “Only 20% of the embedded energy is converted into electricity; 75% of it goes straight up the chimney as heat.” The government, partly in response to the outcry by WPIF and others, has now stopped its subsidies to electricity-only plants and to all biomass plants above 400MW. Because biomass is more efficient at producing heat energy, the focus now is on combined heat and power plants (CHP) below 50MW. And while that’s better for the environment, it’s not good news for the panel products industry. “There’s been a big take-up in this sector and there are quite a few projects in the pipeline. They are more likely to take domestic wood than the big plants like Drax,” says Kerr.
The ultimate irony is that the wood panel products industry has itself been an enthusiastic user of biomass for many years. The manufacturing process uses huge amounts of heat energy for which biomass is ideal and each one of Norbord’s four European plants (two in Scotland, one in Devon and one in Belgium) has its own biomass plant. In fact until recently, Norbord could claim to be the UK’s largest producer and consumer of renewable heat energy. “Because we process a vast amount of wood, we have large amounts of residue such as bark. Many years ago we decided to use this as fuel, less for environmental reasons than for economic ones,” says Morris. “We are accidentally environmentally green.” Of course Norbord and its fellow panel producers (Egger, Medite, Kronospan and Smartply) get nothing from the government for generating renewable heat, despite the roll-out of the Renewable Heat Incentive (RHI) two years ago. Industrial biomass plants commissioned before July 2009 are not eligible for subsidy. The wood panel products industry is not large and Alastair Kerr ruefully admits that, in the face of a massive climate change lobby, backed by legally-binding government carbon reduction targets, WPIF struggles to be heard. But the folly of paying people to burn trees in the name of sustainable, renewable energy and in the process penalising a small industry that really does make good, sustainable use of the material cannot go unchallenged, says Kerr. “While we can’t stop a policy like this, we would like to think we could modify it and avoid a catastrophe,” he says. Kerr believes that WPIF lobbying has got through to ministers and he is hopeful for the future. But there is much at stake: “All wood panel product manufacturers in this country are foreign-owned. They will always look at the bottom line and if it’s not economical to operate in the UK, they’ll go somewhere else,” he says. That would damage the UK economy, it would cost hundreds of British jobs and it would open the door to substandard and unsustainable foreign imports – a constant threat that the industry has so far fought successfully to prevent. But it would also be bad for the environment – and an embarrassing own-goal for government environmental policies.
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