Scion Seminar Room, Scion, Te Papa Tipu Innovation Park, 49 Sala Street, Rotorua., 24th November 2006
It’s a real pleasure to be here this afternoon and to have the opportunity to participate in your conference. I’m a great fan of wood, having planted, tended and pruned a few thousand trees, living in a house built of macrocarpa, cooking mainly with waste wood on a big Stanley wood stove that also backs up our solar hot water and gives us what little space heating we need. And so, inevitably, chain sawing and chopping a lot of fuel as a by-product of managing the farm and the woodlots, and bringing it back to base, drying and storing it as efficiently as possible. So it’s like a microcosm of the issues you face in the industry, trying to make more use of the enormous resource that is currently wasted.
NZ has a long history of using woody biomass for production of energy. It was, of course, the main fuel for the Maori and early European settlers. However since then it has been overtaken by first coal, and then hydro and gas, to the point where in 2005, wood provided only 6% of New Zealand’s total energy needs. Woody biomass is now confined to comparatively niche-uses such as home fires, pulp mill energy, heat for kiln drying and a small amount of co-generation.
The potential is much greater – though how great is the subject of debate. It has been suggested that woody biomass could supply about 8% of our energy needs by around 2010, as plantation forests now reaching maturity are harvested and processed, making more wood residue available – that is provided we use it.
Woody biomass in the form of forest harvesting residue is one of NZ’s largest untapped energy resources.
It is estimated that an astounding 12 to 18% of total biomass obtained from harvested forest is available as residue and can be used for energy production but is typically discarded as waste. We have to change this so that forest owners gain value from this resource.
On the basis of what's happening elsewhere in the world in countries with large forest resources like NZ, I believe we don't make as much use of biomass energy as we could. For example, woody biomass contributes 30 to 40% of primary energy in countries such as Sweden, Austria and Finland. Is there anything we can learn from that?
It is easier of course, in climates with a need for district heating, which is easily supplied by biomass. Our heat demands here are different, and probably industrial heat demand is a better prospect.
Technological innovation will be a key to greater use of biomass wastes – technologies for harvesting widely dispersed residues, for drying it, and for burning it cleanly.
The leading bioenergy-using countries have developed processes for cost -effectively harvesting forest residues as feedstock for heat plant and some electricity generation. Work is underway on that issue here and I hope it will produce results.
There is also a very effective trade in biomass in these countries which has contributed to the growth of the wood pellets market.
As well as targeting the direct heat market we need to work towards using woody biomass for the production of transport fuels. In particular, the use of pyrolysis and cellulase enzyme systems for production of transport fuels needs to be a research priority.
It is therefore pleasing to see that FIDA-funded research is focusing on our forest residues resource.
Government is pleased to see the development of a NZ wood pellets industry, and would like to see it develop faster.
A major problem with wood residues is that they are often in a form that is not easy to transport, store or use. The conversion of residues into a pellet format overcomes many of these problems.
Wood pellets have taken the work out of chopping wood for the domestic consumer, and greatly improved the efficiency of home heating by ensuring the fuel is properly dry.
Air quality concerns are driving the phasing out of many types of wood burner, especially in areas like Christchurch with a temperature inversion problem in winter. The result could be a major increase in electricity use, particularly at peak hour on cold winter late afternoons. Yet research is now available to tell us that the coldest homes in the country are those heated only by plug in electric heaters, and the warmest are those with wood stoves. Electric heat pumps are a more efficient answer for using electricity but personally I would like to see an increase in wood burning for domestic heat, provided it comes only from the most efficient and clean burning devices. The Ministry for the Environment’s website on wood burners which comply with the new air quality standards shows that there are a few log burners which are very clean, provided the wood is dry, and there are pellet fires – excellent for people who can afford to buy fuel and don’t want the mess and trouble of logs.
For larger scale uses, wood pellets are a viable alternative to coal. With pellets we have what is essentially white coal. They have similar handling characteristics to coal (except calorific value) and can be used as a substitute for coal in many existing applications.
With wood pellets being another form of solid fuel it is reasonably straightforward to convert at a minimal cost existing coal boilers to burn pellets. Those of you who have visited the Rotorua Girls High School will have seen how easy it is to convert an existing coal burner to be fired on wood pellets.
In fact, schools represent an excellent market for wood pellets. Many schools use coal boilers to supply heating. Coal is often favoured for its lower running costs. However, schools and communities are now seeing there is an important role to play in providing leadership in environmental issues, and before long we anticipate a world price on carbon will start affecting prices in New Zealand. I thus anticipate that more and more schools will turn to using wood pellet heating systems.
Some of you may remember an issue raised in the house recently when a school in Clutha Valley was said to have been prevented from installing a wood pellet burner by the Ministry of Education. I checked that out with the Ministry, and the story is a little more complex.
The Ministry says it wanted them to install a coal fired boiler and convert it to pellets because they could not be assured of a continuous supply of pellet fuel. Solid Energy say they will always give long term supply contracts to their customers, but the school is a long way from their Rotorua or their Canterbury plants and transport adds greatly to the cost. Local supplies of pellets may not be continuous in Southland, even though in Rotorua they are looking for more customers.
It's a typical situation with a new industry, trying to grow supply and demand at the same rate in the same locations and clearly a challenge the industry needs to work on.
We also need to explore other opportunities to substitute pellets for coal and gas, such as for hospitals and rest homes.
There are a number of barriers to investment in bioenergy projects which need to be addressed - these boil down to information, demonstration, and costs.
A major barrier is the low price of the fuels that are to be substituted. Last week I talked with a German businessman visiting as part of the German trade delegation on renewable energy. He was interested in providing just the sort of technology development and demonstration and consulting services we need here. But he said our electricity prices were just too low compared with Europe. That’s not true of domestic prices, which are about half-way up the scale of prices in other countries, and this offers an economic opportunity for domestic wood burning. But industrial electricity prices are very low by world standards. This gives our industry a competitive advantage but reduces the opportunities for energy efficiency and renewable energy.
In my view, that will have to be addressed either by including full environmental costs in the price of all fossil fuels, or providing financial incentives for renewables.
Aside from costs, potential industry participants need more information on how to develop biomass projects. This can be addressed by creating demonstration facilities to illustrate how the technology actually performs and importantly, define the economics of the project.
Providing decision makers with this information will give them confidence that fuel conversion is a sound long-term investment. And that’s where FIDA comes in.
In May 2004 Government made available funds of $2.5 million over 5 years for bioenergy initiatives.
As a result the Forest Industry Development Agenda (FIDA) and the closely related Wood Process Strategy were announced in April 2005.
The Forest Industry Development Agenda (FIDA) is an agreement between Government and the forest industry to address the information and technology barriers that were seen to discourage investment in bioenergy.
EECA is coordinating this initiative to support forestry bioenergy projects during the next three years, working with an Advisory Group of forest industry representatives.
The FIDA Bioenergy Programme aims to increase the use of renewable energy and, as a consequence, forest owners’ income, through utilising wood waste left in the forest after tree harvesting, and waste produced from wood processing sites.
The FIDA Bioenergy Programme has three key elements:
1. Research into engineering solutions for forest waste harvesting.
This research aims to assess the barriers that stand in the way of recovering forest waste. This involves customizing the bioenergy harvesting and other handling equipment to NZ conditions.
A research project has been developed to evaluate technology solutions for harvesting forest residues from landing sites. This will involve an international literature review of residue processing technologies, and an on-site study of forestry practices in the Central North Island.
When results have been compiled and finalised this information will be made available to industry, early next year.
I would encourage industry to identify more projects of this kind for forest waste harvesting.
2. Funding for feasibility studies into use of woody biomass as a fuel.
The grants can provide funding up to 75% to a maximum of $50,000 of the cost of a feasibility study, to provide the necessary incentive for businesses to use renewable energy and reduce risk for potential investment.
In return the information is to be made available to the public to inform decisions on the use of woody biomass.
The projects can include cogeneration, using wood waste as a substitute for coal and gas, and using wood waste as a feedstock for ethanol production for biofuels.
A number of feasibility projects have already been funded and have started.
Two projects currently underway include:
The co-firing of wood in a dairy factory. This study is to better understand the optimum scale of a wood waste boiler to replace the existing gas fired boiler. The company has a waste stream of lactose so an option is to co-fire wood waste with lactose and this will be included in the study. Co-firing of woody biomass will replace a portion of the gas now used reducing the amount of greenhouse gas emissions produced.
Gasification of wood waste in a sawmill. This study will investigate the implementation of woody biomass fuelled combined heat and power (CHP) at a sawmill assessing two internationally proven technologies which are new to New Zealand. The technologies are a wood gasification/gas engine system and an organic rankine cycle steam turbine.
Four other studies are being finalised and include:
- A fuel switch from diesel to wood waste for kilns
- Converting a boiler from fuel-oil to wood waste on a food processing plant
- Optimisation of an existing wood fired co-generation plant, and
- A study into a new cogeneration
plant in a large sawmill.
We would encourage industry to identify projects that would assist forest owners get maximum value from forest residues.
3. To provide information through a web-based knowledge centre, which is what I will now introduce.
As part of the FIDA Bioenergy Programme, the Bioenergy Knowledge Centre is being developed to provide a central knowledge resource for forestry, wood processing and other industries to assist with investing in bioenergy facilities.
An information flyer on the Knowledge Centre has been made available to you at this conference, describing the services it will offer and how it can work for you.
It will focus on providing up-to-date information to a broad range of stakeholders through the implementation of its interactive user-focused web portal.
The target groups are forest owners, sawmillers and forest managers.
This resource will also help develop a bigger market for wood waste in NZ.
The Bioenergy Knowledge Centre will consist of three major components:
- A web-based portal that allows you to search and access a diverse compilation of information on bioenergy opportunities
- A pool of experts accessible via a call centre to assist evaluation and analysis of bioenergy opportunities
- Information such as case studies, conference proceedings and reports that will be proactively disseminated to a broad range of stakeholders.
The objective of the Bioenergy Knowledge Centre is to reduce technical, financial and operational risks related to investment in bioenergy projects.
The Bioenergy Knowledge Centre will perform four useful functions:
- Build the overall profile of bioenergy
- Increase knowledge of technologies both in NZ and internationally
- Ensure a broad range of information is available to potential users
- Build a community of like-minded companies where practical experience in implementing bioenergy alternatives can be shared.
The web-based service of the Bioenergy Knowledge Centre will link to other websites. It won’t replace what exists elsewhere but will improve access to that information. This not only reduces costs but ensures that the work of others is strengthened by the knowledge centre. Currently it is often difficult to find information. The portal will make access to that information easier.
The portal will provide:
- A diverse compilation of information
- A range of analysis tools to support decision-making processes for bioenergy projects
- Mechanisms to record relevant information related to FIDA funded feasibility and demonstration projects
- Linkages to other energy management and energy efficiency tools
- Links to case studies
- Access to critical statistical information on bioenergy use.
I encourage you to take a look at the knowledge centre once it is up and running - this is scheduled for 15 December.
This resource is being developed for you and the rest of the industry so your support is necessary to make this initiative successful.