Policy Sam Morgan - 22/September/2022

Bioenergy under renewed scrutiny amid energy crisis

Burning wood for energy is a divisive matter. Critics say that it is an unacceptably polluting energy source, while proponents insist it is a vital part of the transition away from fossil fuels. Upcoming policy changes and unpredictable geopolitics make a complex issue thornier still

Overuse and mismanagement of bioenergy resources damage carbon sinks, creating emissions rather than absorbing them


 

RESOURCE MISMANAGEMENT Overlogging and demand for biomass are reducing the carbon sequestration capacity of Europe’s forests

CLIMATE RISK Natural carbon sinks are also being put at risk from a changing climate, further limiting their effectiveness in decarbonisation pathways, yet governments continue to rely on bioenergy as a low-carbon fuel

KEY QUOTE We have witnessed a massive increase in biomass use, which is having a full-scale negative impact on the functioning of forest ecosystems

 


Contrary to public perceptions, the lion’s share of Europe’s renewables is not sourced from hydropower, solar or wind energy. According to official statistics, nearly 60% of the EU’s renewable energy comes from bioenergy.

Two-thirds of this is sourced from “woody biomass”, which includes wood pellets, while the final third comes from agricultural and waste sources. Most of the total output is used in Europe’s heating sector, with a portion going to electricity production and transport fuels.

Wood-burning is classed as a renewable energy source by the EU, based on the logic that the carbon dioxide released was absorbed by the tree in the first place. But its status is now in doubt, after members of the European Parliament voted in September 2022 to put restrictions on what type of wood can be burned for energy and how much of it can be subsidised.

Under the current Renewable Energy Directive, known as REDII, bioenergy is only eligible for subsidies and can count towards renewable energy targets if it satisfies certain sustainability criteria like checks on harvesting practices. New power plants must also reduce greenhouse gas emissions by 70% compared with the fossil fuel alternative—a target that is set to rise to at least 80% by the middle of this decade.

An updated version of that directive (REDIII) is currently making its way through the EU’s legislative process. In addition to an overall 45% renewables target for 2030—a big upgrade on the existing 32% benchmark—there are other provisions that relate specifically to bioenergy.

 

Key fuel In the EU, most wood pellets are burned to generate heat but around 40% is used to generate power


 

PRIMARY CHANGES

MEPs on the European Parliament’s environment committee voted in July 2022 to rewrite the rules so that “primary woody biomass”—typically made up of branches, stemwood and other parts of trees taken directly from forests—would no longer be covered.

This would mean only secondary biomass like sawdust, forestry residues and wood products no longer usable by consumers would remain eligible for subsidies and would count towards clean energy targets under the reformed directive. Given that primary woody biomass comprises about 50% of all the wood burned for energy in the EU, according to the Joint Research Centre, the vote was a significant signal from the Parliament about how energy policy should change.

There were doubts that a full sitting of MEPs would agree with the traditionally more progressive environment committee and change the status quo of bioenergy, given its substantial contribution to renewable energy goals and pressing concerns about keeping the lights on this winter.

However, lawmakers did in fact do just that on September 14th, 2022.

 

NEW RULES

The Parliament’s reforms would implement a cap on the amount of primary woody biomass that can be counted as renewable energy, based on the average amount used between 2017 and 2022. That cap would be gradually phased down based on reports produced periodically by the European Commission.

More significantly, MEPs agreed that primary woody biomass should not be eligible for subsidies under REDIII, meaning that any investment in the sector will have to be made based on a less-attractive business case.

As a result of the vote, the door remains open for bioenergy in Europe.

Markus Pieper, a conservative German MEP that led work on the overall REDIII rewrite, said following the vote that, “We do need wood-based biomass as a source of energy if we genuinely are to undertake this energy transition.”

Nils Torvalds, a Finnish member of the Parliament’s liberal wing, backed removing primary biomass from REDIII but warned of the clean energy shortfall that governments would have to fill if the measure were to be supported by MEPs. “If primary woody biomass would not be counted toward the renewables target, Germany would end up with 74 terawatt-hours (TWh), Sweden 32 TWh and Finland at least 20 TWh less renewable energy,” Torvalds explained before the vote.

Even MEPs that had campaigned in favour of stripping biomass of some of its legislative perks were not totally satisfied.

Michal Wiezik, a Slovakian lawmaker with the liberal group, said before the vote, “We have witnessed a massive increase in biomass use, which is having a full-scale negative impact on the functioning of forest ecosystems.”

Afterwards, when asked about his take on the outcome, he insisted there are too many loopholes, including allowing salvage logging—the removal of trees from forests damaged by natural disasters—to enjoy subsidies. Wiezik also warns that there is not enough data to calculate the 2017-2022 average, opening the door for governments to game the rules

 

 

DIFFERING VIEWS

Civil society and the forestry industry issued predictably diverging reactions to the vote. WWF Europe’s Alex Mason called it a “turning point”, while Fern—a forestries NGO—praised MEPs for removing subsidies for the “most climate-wrecking type of biomass”. However, the group did criticise that woody biomass was capped and not excluded from renewable energy targets altogether.

Industries issued mixed responses. Enviva, the largest wood pellet producer in the world, lauded the vote for continuing to recognise primary woody biomass as a renewable energy source and a tool in the energy transition. “A failure to increase woody biomass use in the EU would mean failure in meeting climate goals, increased cost to EU consumers and further disruption to security of energy supply,” says the company’s Thomas Meth.

The Swedish Forest Industries Federation (SFIF), meanwhile, was more explicit in its criticism of the result. “[It] fails to safeguard the largest renewable energy source in the middle of the energy crisis”, the group insists, adding that it jeopardises Sweden’s “societal use” of wood for heating and “important investments will be lost”.

The federation’s bioenergy chief Mårten Larsson warns that companies planning to spend big on climate mitigation technologies that use forest residues might have to reconsider their climate goals and strategies.

 

FORESTRY CONSIDERATIONS

Now the full REDIII text will have to be hashed out with the Commission and Council of member states—complicating matters further.

One major hurdle will be the timeline of these negotiations. Talks are unlikely to wrap up before the end of 2022, which means that Sweden’s six-month presidency of the EU Council will take over from Czechia in January 2023 at a crunch moment.

Sweden has a massive forestry sector, where exports were worth about €15 billion to the economy in 2021, according to the SFIF. A recent national election is also likely to install a government coalition that is more industry-minded and less willing to compromise when it comes to climate legislation than Magdalena Andersson’s outgoing administration.

However, Germany’s government has confirmed that it will seek to remove primary woody biomass from the new directive. Given Berlin’s track record of influencing other countries during backroom talks, it means that the outcome of the negotiations is difficult to predict.

The issue will be complicated further still by civil society, as several NGOs have teamed up to launch legal action against the European Commission’s decision to include biomass within the EU’s sustainable finance taxonomy.

 

Panama capped Panama is one of the only countries in the world to achieve negative emissions thanks in part to its forestry assets


 

CARBON SINKS

Meanwhile, in a separate vote in June 2022 on upgrading rules for the land use, land-use change and forestry (LULUCF) sector, MEPs agreed to increase the required amount of carbon removals—particularly by natural carbon sinks—from 225 million tonnes to 310 million tonnes by 2030.

This would result in a de facto increase of the EU’s overall climate target from 55% emission cuts to 57%. There appears to be a certain amount of common ground between lawmakers and member states on this issue. However, the Confederation of European Forest Owners warned that the target would put a lot of extra pressure on their industry.

Natural sinks are still by far the main way countries are seeking to neutralise their carbon emissions. Along with grasslands, wetlands and bogs, wooded areas are the most important carbon sinks. Bhutan, Panama and Suriname are so far the only countries in the world to achieve negative emissions by counting on immense forestry assets and only having relatively small carbon emitting footprints.

Finland’s government plans to neutralise its emissions by 2035. As the most forested country in Europe—trees cover about 75% of Finnish land—the Nordic nation is ostensibly well placed to achieve its ambitious plan. But there is a snag. Finland’s land-use sector became a source of emissions in 2021, according to preliminary data released earlier this year, potentially jeopardising the government’s strategies.

Finland’s emissions for 2021—excluding the LULUCF sector—remained relatively stable. More renewables capacity and less polluting energy meant emissions fell by 0.2% despite an increase in power demand. Factoring in the land use and forestry sector, however, Finland’s emissions go up. The absorbing power of Finnish carbon sinks—equal to about 6.7 million tonnes of CO2—was insufficient and actually added emissions worth more than 2 megatonnes.

 

FELLING DEMAND

Unexpectedly slow tree growth and excessive wood-cutting are the main culprits, according to the government’s statistics office. Other factors linked to tree-felling, such as the release of carbon from disturbed organic soils, also reduced the sink’s efficacy.

Increased demand across the board for wood products, from sawn timber and pulpwood to fuel for bioenergy, is driving appetites for more Finnish lumber, as well as other forested nations like Estonia.

Data for 2020 is also being updated so may reveal that Finland’s sinks began emitting carbon even before 2021. “The situation is alarming, especially when we know that the pressure to increase tree felling even more is great,” says Kaisa Kosonen of Greenpeace Finland, an environmental organisation.

However, industry group Metsä insists that the figures refer to Finland’s carbon sinks as a whole, not just forests. “Last year was a year of active harvesting and the forest sink reduced but it still was a clear sink. Also, more carbon was stored in wood products than the previous year,” Juha Laine, a group spokesperson, told FORESIGHT Climate & Energy.


 

Seeing the wood for the trees

Calculating carbon sink capacity and monitoring forestry output is an extremely complex process, made all the more difficult by a lack of data and a patchwork of different methods and practices.

Norway, for example, has been keeping tabs on its forests for over a century. Its agencies constantly update LULUCF emissions because only 20% of forestry plots are measured every year. In other countries, the methodology is not so defined.

“There is no point building advanced policy packages if you can’t measure progress and failures,” warns forest expert Professor Sten Nilsson.

“Currently, EU-based forest databases are weak and sketchy. To deal with climate change and decreasing biodiversity, we need to collect new indicators not collected previously. The quality of the existing data varies largely between countries,” he adds.

The European Commission is heeding calls to improve data collection. In August 2022, it opened a consultation period on a new observation scheme that would provide open access to detailed, accurate, regular information on the condition and management of EU forests.

“It is expected to increase public trust in forest management, reduce illegal logging, incentivise and reward more sustainable forest management and support the adaptation of forests to climate change,” the EU executive says in a statement.

The EU has already reaped some dividends from other initiatives that are built on solid data and monitoring frameworks, notably the Copernicus observation satellites, which have proved invaluable in reacting to wildfires and other natural disasters.

Existing biomass maps that show tree cover and other essential data needed to manage forests effectively could benefit immensely from more integration with Earth observation assets like Copernicus, says the EU’s Joint Research Centre (JRC) in a recent report.

The JRC warns that existing maps “present substantial uncertainty at subnational and, in particular, at a pixel level, where the relative error is larger than 50%”. The report insists that this level of detail is needed for local management and modelling activities.

 


ESTONIA EMITS

Under government climate plans, Finnish land is supposed to remove around 18 megatonnes of carbon dioxide by 2035 but if the figures for 2021 prove to be accurate, then the country has an emissions gap of some 23 megatonnes to close—roughly the annual emissions of Estonia.

As it happens, Estonia’s land-use sector has also become an emitter of greenhouse gases. It was predicted to happen in 2023 but early data also suggests that the sinks became sources of emissions ahead of schedule in 2020. “Over-logging, deforestation, drainage, peat soils, ploughing and lower logging age are the main factors,” says Liina Steinberg, a member of Estonian civil society group Save the Forest.

Professor Sten Nilsson, a forestry expert who has contributed to Intergovernmental Panel on Climate Change reports, adds that it is not just bad resource management to blame but also other factors affected by climate change. “It is plausible that some very warm and dry summers are a driving force. There is recent research showing that the boreal forests are more sensitive to increased temperatures and droughts than thought earlier,” Nilsson explains.

There is massive pressure on Estonia’s government to strike a balance between ecological and industrial interests. Wood pellet production for bioenergy generation is worth about 10% of the country’s total exports and business is booming.

Graanul Invest, a wood pellet producer based in Estonia, is the biggest in Europe and the second biggest globally. Operating in the Baltic and United States, the company’s revenues approached the half-billion dollar mark in 2020.

 

BETTER MANAGEMENT

Estonian opinion polls suggest that 63% of citizens favour reduced logging and more than 90% back plans for a moratorium during the important spring and summer nesting seasons.

Good industry practices do exist when it comes to bioenergy. Metsä only uses “felling residues” like bark for energy production and 25-30% of that has to be left in the forest. The group also does not collect materials for bioenergy from forests that have nutrient-poor soil. Those practices will be put to the test as demand for domestically-produced wood pellets increases across Europe as a result of Russia’s invasion of Ukraine.

In Finland, there are concerns that supplies will run out this winter because an EU ban on Russian and Belarusian imports of wood pellets came into effect in July 2022, knocking two of the bloc’s biggest suppliers out of the equation. In 2021, the two countries supplied nearly 2.5 million tons of pellets to the EU.

Total EU consumption in 2021 was estimated at 23.1 million tonnes and is expected to grow to over 24 million tonnes in 2022. The European Commission says that the use of biomass, in general, will continue to increase gradually this decade. Most wood pellets are burned to generate heat in the EU but around 40% is used to generate power.

 

Estonian conundrum Bioenergy is a key export sector for Estonia, but there is public opposition to logging


 

FURTHER AFIELD

Biomass burning is also under scrutiny beyond the EU’s borders. In Russia, the sector is facing huge uncertainty as 80% of wood pellet production was exported to the EU market before sanctions following the country’s invasion of Ukraine halted the trade.

With no real economically viable alternative, it is hard to predict what Russian companies will do with already logged inventory and forest assets.

In the UK, a group of organisations has successfully lodged an official complaint against energy giant Drax Group, over claims it has made about the climate impact of burning wood in its power plants. A mediation period is ongoing.

Drax has also announced plans to build what, it claims, will be the world’s largest carbon capture facility at one of its biomass power stations. Once operational, the group says up to eight million tonnes of CO2 will be captured every year.

 

UNCOMPETITIVE EDGE

Gniewomir Fils, a clean technology expert, has compiled a comprehensive list of CCS applications and rated them from unavoidable to uncompetitive. Waste-to-energy, cement and biogas rank at the top of the ladder, while small- and large-biomass plants feature near the bottom.

Fils explains that biomass will face demand competition for raw materials from sectors like next-generation aviation and maritime fuels, as well as supply competition from other energy sources. In the UK in particular, Fils says “offshore wind plus storage will blow Drax out of the water.”

Drax is nevertheless ploughing ahead with its £2 billion investment and the UK government is also jumping on the bioenergy with carbon capture and storage (BECCS) bandwagon.

In August 2022, then-UK energy secretary Kwasi Kwarteng launched a consultation period that will look into how best to stimulate and support the BECCS industry.

 

ENERGY SECURITY

Russia’s invasion of Ukraine prompted the EU to come up with strategies to nix Russian fossil fuel imports. One of those, the REPowerEU plan, increases renewables and energy efficiency measures but has been criticised for not being more comprehensive.

“We are disappointed that the role of bioenergy does not feature more prominently in the REPowerEU plan,” says industry association Bioenergy Europe. Indeed, bioenergy is mentioned just once in the document, while gas is mentioned 128 times.

Michal Wiezik MEP warns that the war in Ukraine is hampering attempts to amend the rules, adding that the rush to replace Russian hydrocarbons might favour a “more benevolent attitude” towards burning wood.

“Given the geopolitical and energy situation in Europe, I don’t think the EU has much of a choice. It has to use bioenergy, although the scientific verdict is still out whether this is good for the climate or not,” Professor Nilsson says. “I see this as another argument to get solid EU forest monitoring established in the EU as soon as possible in order to secure the sink capacity and identify possible negative impacts of the use of bioenergy,” he adds. •

 


TEXT Sam Morgan

 

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