An automated auger for loading processed wood chip heating fuel into a biomass boiler.
An automated auger for loading processed wood chip heating fuel into a biomass boiler.

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Executive Summary

The use of wood for electricity generation and heat in modern (non-traditional) technologies has grown rapidly in recent years. For its supporters, the use of wood for energy offers a flexible way of supplying renewable energy, with additional benefits to the global climate and to forests. To its critics, it can release more greenhouse gas emissions into the atmosphere than the fossil fuels it replaces, and it also threatens the maintenance of natural forests and the biodiversity that depends on them. Just like the debate around transport biofuels in recent years, this has become a highly contested subject with very few areas of consensus.

This paper is one of a series on biomass produced by Chatham House. Between them these papers aim to provide an analysis of the growth in the use of wood for power and heat and a discussion of its impact on the global climate and on forests. In addition, the series intends to reach conclusions on the appropriate treatment of woody biomass for energy in policy frameworks. This paper provides background information on the use of woody biomass for power and heat within the EU – the main global source of demand for non-traditional uses of biomass – and examines patterns of demand and supply in nine EU member states, together with the policy frameworks that support the use of biomass for energy. In 2016 (the latest year for which figures are available), the countries analysed in this paper, which have been selected to include a range of different patterns of use and sourcing of woody biomass, were nine of the 11 largest consumers of energy from solid biomass for power and heat in the EU.

The EU

The EU remains the main global source of demand for wood for modern uses of biomass for power and heat. In 2016, energy from solid biomass (mainly wood) accounted for about 7.5 per cent of EU gross final energy consumption and about 44 per cent of total renewable energy consumption. Most of the biomass consumed was for heat, accounting for 78 per cent of total consumption of renewable heating and cooling; biomass supplied about 10 per cent of total generation of renewable electricity. The residential sector accounted for about 40 per cent of biomass energy consumption, industry (particularly pulp and paper) for about 31 per cent and large-scale power and heat facilities for about 29 per cent. Demand is projected to continue to grow at least until 2020, but the implementation of energy efficiency policies and growing competition from other renewable technologies, particularly in power generation, may lead to growth tailing off thereafter.

As well as being a major consumer of wood for energy, the EU is also a major producer. In 2014, it was estimated that overall, 42 per cent of harvested EU wood was used for energy, as wood fuel (often acquired informally by households for their own use), black liquor for the pulp and paper industry and industrial roundwood (usually as chips or pellets) for power and heat generation. Production is not sufficient to meet demand, however, so about a third of total consumption of wood for energy was imported, mainly from the US, Canada and Russia. The EU is the world’s largest producer of wood pellets, but demand is higher, so in 2016 about 40 per cent of total consumption of pellets was from imports.

In view of the continued growth in demand for wood for energy, projections of future EU supply potential are uncertain, depending on, among other factors, the future development of industries that compete for the raw material and the potential for increased use of wood, agricultural residues and waste wood as well as the growth of energy crops. Most projections assume growth both in domestic supply and in imports.

The main driver for the increase in the consumption of biomass for power and heat has been the renewable energy targets adopted by each EU member state under the 2009 Renewable Energy Directive, which set an overall target of 20 per cent of the EU’s energy mix coming from renewable sources by 2020; almost every member state would now find it impossible to meet their national targets without using biomass. The policy framework after 2020 is still under discussion within EU institutions, but higher EU-level targets for renewables and a possible relaxation of the rules regarding emissions from land use, land-use change and forestry (LULUCF) seem likely to create more incentives for growth in biomass use, particularly for heat, where competing renewable technologies are not as well developed.

The main driver for the increase in the consumption of biomass for power and heat has been the renewable energy targets adopted by each EU member state under the 2009 Renewable Energy Directive.

The new framework also includes, for the first time, sustainability criteria for solid biomass, designed to ensure that their use delivers significant greenhouse gas savings compared to the fossil fuels they replace – though because the criteria do not take emissions from the combustion of biomass into account, their ability to restrict the impact on the climate of the use of biomass for energy will be limited. Some member states have developed more strict criteria, including restrictions on the types of feedstock eligible for support (for example, Italy restricts feedstock to wastes and residues; roundwood is not allowed); it remains to be seen whether they will retain these criteria once the EU-wide criteria are finally agreed.

Selected member states

In 2016, Denmark produced 10 per cent of its electricity and 31 per cent of its heat from solid biomass, which is increasingly replacing coal and gas in the country’s extensive network of combined heat and power (CHP) stations and district heating systems. Wood pellets and chips are the main feedstock for large-scale plants; straw, wood fuel and wood chips are used in private boilers, district heating, CHP and power-only plants, but in recent years, several of these plants have switched to pellets. Most wood fuel, wood chips, wood residues and straw are sourced domestically, but pellets are mainly imported; in 2016 Denmark was the EU’s second largest importer, after the UK. Sources include other EU member states, Russia and, increasingly, the US. Government support for renewables, including biomass, is mainly in the form of feed-in tariffs and reliefs from energy and emissions taxes, which are very high compared to other countries. Voluntary sustainability criteria were introduced by the biomass industry in 2015. They include a requirement for legal and sustainable forest products, but do not account for changes in forest carbon stock; however, the standards aim to avoid the use of feedstock that ‘negatively affects the quantity and quality of forest resources in the medium and long terms’.

Biomass is Finland’s largest single energy source, generating 12 per cent of its electricity and 49 per cent of its heat in 2016. Woody biomass comprises about 80 per cent of the bioenergy consumed, and is often co-fired with coal or peat. Industry, particularly producers of pulp and paper, is the largest consuming sector. The country’s sizeable timber industry generates large volumes of wastes and residues (and black liquor from the pulp and paper industry) that can be used for energy, but there are also some imports of wood chips, mainly from Russia, partly for energy use. Renewables have been supported through feed-in tariffs and exemptions from energy and carbon taxes; private forest owners can access grants for forestry and wood fuel production. The 2016 Energy and Climate Strategy foresees a continued expansion of biomass energy, with potentially a major impact on Finnish forests.

France is the EU’s second largest consumer of biomass for heat; in 2016 biomass accounted for 16 per cent of heat consumption, though use in power generation is much smaller. Most of the wood is used for heat in residential boilers and stoves, while black liquor is used in the pulp and paper industry. Small amounts of wood pellets are used in small-scale private and industrial boilers. The country is a large producer of roundwood, about half of which is used as wood fuel (a much higher proportion than in most EU member states). Government plans to expand the use of domestic forests for energy have met with some resistance, however, from local populations and other forest industries. Biomass in power generation is supported through premiums on the market price and energy saving certificates, while biomass for heat consumption receives financial support through the Heat Fund and tax credits; the steadily rising carbon tax also creates a general incentive to favour renewables.

In absolute terms, Germany consumes the largest amount of heat from biomass in the EU, and generates the second largest amount of electricity. In proportional terms, however, biomass is less significant than in many other countries, partly because of the strength of other renewables, particularly wind and solar PV. The country is a substantial producer of roundwood and wood fuel. Most of the wood used for energy is consumed in CHP plants, which generally source wood waste and forest residues. Biomass is also used in heating systems in households and commercial buildings, where the feedstock is mainly wood fuel, with much smaller amounts of wood pellets, chips and briquettes. Germany is also the EU’s largest producer of wood pellets, mostly for domestic use. The ‘Energiewende’ framework has provided extensive support for the development of renewable energy for many years; for woody biomass this includes feed-in tariffs and power auctions, support for CHP plants, and grants for biomass heating systems.

Like France, Italy has chosen to encourage the use of biomass more for heat than for electricity; in 2016 biomass supplied 13 per cent of total heat consumption but only 1 per cent of power generation. Most wood used is domestically produced, as wood fuel for the residential sector, wood chips for CHP plants and district heating, and wood pellets for commercial and residential heating, but Italy is also a major importer of wood, including pellets, mostly from within the EU, and wood fuel, mainly from Bosnia and Herzegovina and Croatia. The government aims to develop domestic sources of biomass energy feedstock from agricultural residues and related by-products rather than from wood. Policy support has included a tradable renewable energy certificate scheme, feed-in tariffs, financial support for the construction of renewable heating systems, tax deductions and loans. These systems have proved effective but expensive, and have been scaled back in recent years. Sustainability criteria introduced in 2016 limited eligibility for the feed-in tariff to agricultural and livestock wastes and residues, and by-products from forest management and wood processing; roundwood is not included.

Poland is a major user of biomass for energy; in 2016, it accounted for 4 per cent of electricity generation (mostly through co-firing in coal stations) and 14 per cent of heat consumption. Wood from domestic forests and other wooded land provides the majority of domestic biomass energy supply, mainly as wood fuel and wood chips, though pellet production has climbed sharply in recent years, using agricultural as well as wood residues. Poland is now a net exporter of pellets, wood fuel and wood residues, mainly to Denmark and Germany, and a substantial net importer of wood chips, mainly from Belarus. Policy support has been provided through auctions, a feed-in-tariff scheme, tax relief, loans and subsidies, with greater support for biomass power than for biomass heat.

Romania, one of the EU’s poorest member states, relies heavily on biomass for heating (which accounted for 26 per cent of total heat consumption in 2016), a reflection more of the historically limited use of fossil fuels, particularly in rural areas, than of any policy support. Electricity generation from biomass is small but growing rapidly. Wood from local forests supplies most of Romania’s biomass energy needs, as wood fuel and wood chips, though demand exceeds supply, so substantial quantities of wood fuel are imported, almost entirely from Ukraine. Pellet production has grown quickly but domestic consumption of pellets is low, so most is exported, mainly to Austria and Italy. The government plans afforestation efforts, the promotion of energy crops, more intense wood harvesting from forests, and greater use of wood residues, but use of the wood may be subject to competition from the wood processing and furniture industries. Policy support is limited but includes a quota system for biomass power and subsidies for both biomass power and heat.

As a proportion of total national energy use, Sweden is the largest user of biomass for energy in the EU, mostly for heat.

As a proportion of total national energy use, Sweden is the largest user of biomass for energy in the EU, mostly for heat (heat from biomass accounted for 55 per cent of total consumption in 2016); the largest end-use sectors are industry (mainly pulp and paper mills) and the extensive district heating network. There is lower use for electricity generation: biomass accounted for 7 per cent in 2016. Sweden is the EU’s largest producer of roundwood, and wood chips, residues and wastes provide the country’s main feedstock, followed by black liquor. Sweden is the EU’s second largest pellet producer, mainly for domestic use in small and medium-sized heating facilities; its pellet exports, mainly to Denmark, roughly balance imports, the majority of which come from Russia and Estonia. Extraction of forest residues for energy has increased and seems likely to grow further, particularly as the country is planning additional tree planting as part of its aim to reach net zero greenhouse gas emissions by 2045. The use of woody biomass for energy has been encouraged in particular through a tradable electricity certificate system and exemption from taxes on energy, and carbon and sulphur emissions.

Of all EU member states, the UK has seen the most rapid growth in the use of biomass for electricity, both relatively and absolutely; in 2016 the country accounted for 21 per cent of all the electricity generated from biomass in the EU. Electricity from biomass has grown rapidly since 2009 (reaching 6 per cent of total UK electricity in 2016), mostly from the conversion of coal-powered stations, and in particular Drax, the largest biomass-burning power station in the world. Biomass also accounted for 5 per cent of total heat consumption, mostly in the residential sector. Wood pellets dominate supply; in 2016 the UK consumed an estimated 26 per cent of all the wood pellets produced worldwide. The vast majority are imported, amounting to 7 million tonnes in 2016, including 5.7 million tonnes from outside the EU (mainly from the US and Canada). Drax alone burnt 6.6 million tonnes of biomass, almost entirely pellets, in 2016 – almost 23 per cent of total global wood pellet production. Projections suggest limited scope for further expansion, however, particularly given increased competition for feedstock. Policy support has been given through an obligation by electricity suppliers to procure renewable energy, a system now being replaced by long-term fixed-price contracts awarded through auctions. Support for biomass heat is provided through the Renewable Heat Incentive (RHI), the world’s first long-term financial support programme for renewable heat. Sustainability criteria require legal and sustainable forest products, but changes in forest carbon stock are not taken into consideration.

Accounting for biomass carbon emissions

As discussed in more detail in the Chatham House paper Woody Biomass for Power and Heat: Impacts on the Global Climate, published in 2017, carbon emissions from the use of forest biomass are accounted for in national greenhouse gas emission accounts in the land-use sector (at the point of production) rather than in the energy sector (at the point of combustion). However, this can result in incomplete accounting of emissions from the use of biomass for energy. The problem of ‘missing’, or unaccounted-for, emissions arises when a country using biomass for energy:

  • Imports biomass from a country outside the accounting framework – such as the US, Canada or Russia, all significant exporters of woody biomass that do not account for greenhouse gas emissions under the second commitment period of the Kyoto Protocol;
  • Accounts for its biomass emissions using a historical forest management reference level that includes higher levels of biomass emissions than in the present; or 
  • Accounts for its biomass emissions using a business-as-usual forest management reference level that (explicitly or implicitly) includes anticipated emissions from biomass energy; these emissions will not count against its national target.

This failure to account fully for biomass energy emissions risks creating perverse policy outcomes: where a tonne of emissions from burning biomass for energy does not count against a country’s emissions target but a tonne of emissions from fossil fuel energy sources does, this creates an incentive to use biomass energy rather than fossil fuels in order to reduce the country’s greenhouse gas emissions – even where this reduction is not ‘real’, in the sense that it is not accounted for in any country’s land-use sector accounts.

The quantity of emissions missing from the international greenhouse gas accounting framework is impossible to calculate directly, but is likely to be significant. In 2015, emissions from solid biomass from the nine countries analysed here reached 313 million tonnes of carbon dioxide, equivalent to 14 per cent of their energy-related emissions. A proportion of these emissions in almost all of these countries will go unaccounted for, either because they or their main sources of imports use forest management reference levels that build in a level of biomass-related emissions or because they import from countries outside the second commitment period of the Kyoto Protocol. The UK in particular imports substantial quantities of biomass from countries outside the Kyoto Protocol framework (and, in the case of the US, potentially outside the Paris Agreement). Other member states, such as Finland, include projected significant emissions from biomass in their forest reference level, meaning these will not count against their targets – and these figures may increase if the relaxation of the LULUCF rules, voted for in the European Parliament in September 2017, goes ahead.

One solution to this problem would be to account for carbon emissions from biomass burnt for energy within the energy sector category of national greenhouse gas emission accounts rather than the land-use sector category. While additional rules would be required to ensure emissions were not double-counted in the energy and land-use sectors, this could be a viable solution given sufficient data and guidance to promote transparency. In effect, it would shift the incentives to manage emissions from biomass energy use from the countries in which the biomass is grown to the countries in which it is burnt.

If this major revision of greenhouse gas accounting rules does not prove acceptable, four steps could nevertheless be taken within the existing framework (with biomass emissions recorded in the land-use sector accounts) to reduce the potential for missing emissions:

  • All parties to the Paris Agreement should include the land-use sector, including forest management, in their national greenhouse gas emissions accounting.
  • Forest management reference levels should contain detailed information on projected emissions from using biomass for energy, the origins of that biomass (additional domestic forest harvests or increased use of domestic forestry residues) and the resulting emissions.
  • Countries that import biomass for energy should be required to report on whether and how the country of origin accounts for biomass-based emissions. Emissions associated with biomass imported from a country that does not account for such emissions, or from one that has built biomass energy demand into its accounting baseline, should be fully accounted for by the importing country.
  • Countries using domestic biomass for energy should reconcile their energy and land-use sector accounting approaches in order to put emissions from each sector on a par with each other, if possible through using the same benchmarks – either a historical reference year/period or a business-as-usual scenario – to avoid emissions leakage between the sectors. This should be uniform across all countries.

Prospects for biomass in the EU

In most EU member states, electricity from biomass has grown along with renewable electricity as a whole; growth has been most marked in the UK. In five of the nine countries analysed here, however, and in the EU28 as a whole, biomass provided a smaller proportion of renewable electricity in 2016 than it did in 2009. Finland, France and Romania have seen small increases in the proportion of renewable electricity generated from biomass, while the UK has seen a very substantial increase.

An important reason for this slower growth of biomass power than of renewable electricity overall is the significant falls in the costs of competing renewable technologies, particularly solar PV and wind. While, on a global scale, in 2014 the levelized costs of electricity from biomass were slightly lower than those of solar PV and roughly the same as onshore wind, biomass combustion technologies are relatively mature, and therefore have a lower cost reduction potential. By the end of 2016, costs had fallen so fast that solar and onshore wind energy were less expensive than biomass and offshore wind was only slightly more costly. The role of biomass as a dispatchable power source providing a system balancing element may secure it a position in the future, but there are alternatives, including grid interconnection and battery and other storage technologies.

Heat consumption from biomass has also grown throughout the EU, along with renewable heat as a whole, but in every one of the nine countries analysed here it has fallen as a proportion of renewable heat, as alternative technologies, mainly heat pumps, solar thermal and biogas, are now beginning to find wider markets. These alternative forms of renewable heat are less well commercialized, however. In addition, in many countries biomass has always been an important source of heating, particularly in rural households, and in several of these countries, particularly Finland and Sweden, an important part of biomass heat consumption is accounted for by the production and consumption of black liquor in the pulp and paper industry. For these reasons, biomass is likely to remain the dominant source of renewable heat throughout the EU, though growing concerns over its impact on local air quality and human health, and increasing investment in energy efficiency measures, may affect this.

Across the EU, biomass energy use is projected to continue to grow at least to 2020, but further significant growth beyond that seems less likely. Supply from the EU’s own forests seems almost certain to increase, though projections are uncertain, depending on, among other factors, the future development of industries that compete for the raw material and the potential for increased use of wood, agricultural residues and waste wood as well as the growth of energy crops. Growth in imports also seems extremely likely, particularly from North America and Russia, but also potentially from non-EU Europe (e.g. Belarus, Bosnia and Herzegovina, and Ukraine) and Latin America.

Recommendations for policy

Along with the total level of consumption of biomass for energy, the type of feedstock used plays a critical role in the impact of biomass use on the global climate. As discussed in the Chatham House paper, Woody Biomass for Power and Heat: Impacts on the Global Climate, any increase in forest harvesting rates caused by demand for energy will in almost all circumstances increase net carbon emissions very substantially compared to using fossil fuels, because of the combustion of stored carbon in the wood, the loss of future carbon sequestration from growing trees and the release of soil carbon consequent upon the disturbance.

It is therefore important for policymakers in the EU to control the types of biomass feedstock used – and supported by EU and member states’ policy frameworks – to limit the negative impacts on the climate. In principle, sustainability criteria can be used to distinguish between feedstocks with different impacts on the climate. None of the national sets of criteria currently in use yet achieves this, most notably in their failure to take account of changes in the forest carbon stock – though in limiting eligible feedstocks for support to wastes and residues, the Italian criteria do go some way to addressing this. The criteria proposed in the draft of the new Renewable Energy Directive are similarly inadequate, partly because of the weaknesses in the system of accounting for biomass emissions from the land-use sector to which they refer. Therefore, as argued in the 2017 Chatham House paper:

  • In assessing the climate impact of the use of woody biomass for energy, changes in the forest carbon stock must be fully accounted for. It is not valid to claim that because trees absorb carbon as they grow, the emissions from burning them can be ignored.
  • Along with changes in forest carbon stock, a full analysis of the impact on the climate of using woody biomass for energy should take into account the emissions from combustion and the supply-chain emissions from harvesting, collection, processing and transport.
  • The provision of financial or regulatory support to biomass energy on the grounds of its contribution to mitigating climate change should be limited to those feedstocks that reduce carbon emissions over the short term.
  • In practice, this means that support should be restricted to sawmill residues, together with post-consumer waste.

This is not to argue that fossil fuels should not be replaced by renewable energy for power and heat: this is essential if the world is to escape the most catastrophic impacts of climate change. It is to argue, rather, that public support and subsidy should be used for renewable technologies that reduce carbon levels in the atmosphere in the near term as well as the long term: some forms of biomass, as argued above, but primarily genuinely zero-carbon renewables such as solar or wind.