Biomass Sweet Spot
Biomass generates 20 percent of all energy consumption in Sweden and wood-fired district heating systems satisfy more than half of the residential heat demand. The industry became robust because of a combination of factors and has evolved since its beginning 40 years ago.
Sweden has no domestic fossil fuels so when the first oil crisis hit in the 1970s, the country began to move toward a more environmentally friendly and cheaper energy alternative. Given the fact that about 60 percent of Sweden is covered in forests, woody biomass seemed the obvious choice. “We have a lot of forest,” says Gustav Melin, CEO of the Swedish Bioenergy Association (SVEBIO). “We have a strong forestry industry. We have no domestic fossil fuels and we have had politicians with good knowledge and a clear view for the future and for market conditions for biomass.”
In the dismantling of fossil fuel use, the Swedish government enforced carbon taxation for oil and coal consumers at a much higher rate than other countries, currently equaling $150 per ton of carbon dioxide. “That high taxation led to oil prices going higher than biomass,” says Thomas Levander, head of the policy analysis unit for the Swedish Energy Agency, the central administrative authority for matters concerning supply and use of energy. So a combination of the punishment for using fossil fuels and state subsidies incentivizing the research into use of forest fuels gave the biomass industry a jump start. Since then, the country has taken away the subsidies, instead relying on general economic instruments such as the carbon tax, as well as the polluter pays principle, which mandates that the polluter or industry pays for any damages it causes to air, water or soil. “We don’t subsidize the system anymore,” Levander says. “We have before, but it wasn’t a good idea.”
In addition, the country’s pulp and paper industry is well-developed, as is the sawmill industry, providing a framework for a thriving biomass industry. About half of the forest fuel is actually used within the forest industry, Melin says. In fact, the country-wide switch began with substituting forest wood as an energy source within forest industries, according to Rolf Björheden, program leader of the National Forest Energy Technology program at Skogforsk, Sweden’s forestry research institute. “We’ve been doing this about 30 years longer than most of the world and about 15 years longer than the Finns, who are the second nation in the world to use forest biomass for energy,” he says. “We’ve built up the infrastructure needed for a functional market.” Levander adds that the country has also been ahead of the curve in the development of residue harvesting machinery.
While its extensive district heating networks are well-known, most of Sweden’s biomass plants primarily generate electricity, Björheden points out. Only the small district heating plants are exclusively heat producers, he adds. The biomass industry gets a portion of its timber residual feedstock from pulp and paper producers, as that industry can’t use certain types and grades of wood. “So they expanded their interest in that direction rather than creating new industries,” Levander explains.
Competition and Prices
But with an increase in demand for woody biomass, concerns have been swirling about competition between the biomass and pulp and paper industries, as well as price hikes for wood fiber. “For more than 20 years, there was continuous arguing between the bioenergy people and the pulp industry foresters,” Melin says.
Pellet manufacturers in Sweden, as in many other countries, started with the cleanest wood, which is sawdust, according to Hakan Ekstrom, president of Wood Resources International LLC. Then when pellet capacity was expanded, not enough sawdust was generated to satisfy demand and other types of raw material were necessary. “That’s when you start to see competition between pulp mills and pellet manufacturers,” he says. Previously, competition was fierce between board and pellet manufacturers, but eventually the biomass industry won the battle with its willingness to pay more for the raw material and the board industry was forced to step aside. “That industry has mostly disappeared from Sweden,” Levander says.
Similar to the change in pellet feedstock sources, raw biomass supplied directly to energy plants traditionally comes from sawmills, but increasingly from forests as demand climbs. “It’s the same thing there,” Ekstrom says. “That’s starting to be more expensive. You start to see pulp mills and energy plants competing for the same product.” In some instances, it pushes up prices, but in others it means prices won’t go down. “I think you see this more in Sweden because they’re ahead of most other parts of the world,” Ekstrom says. The cost of forest fuel materials has risen since 2005 because of increased demand, Björheden says, having been nominally static for the previous 25 years. “In real terms, that means a very, very strong decrease in price actually,” he adds.
But the competition between the pulp and paper and biomass industries is not an issue all over the country. In fact, some, such as Levander, argue it’s not an issue anywhere in the country, but recognize that changes in certain factors could make it one. Björheden says it hasn’t been an issue because the energy sector has not bought significant amounts of pulpwood. Ekstrom, however, says it is becoming a concern in the central portion of the country, where landowners are demanding more money from pulp and paper producers. “You see landowners starting to tell pulp mills, ‘If you don’t pay more for the pulp wood, we’re going to sell it to the energy plants instead,’ which forces prices up in some regions,” he says.
Even with possible competition, significant price increases will be slow to mature. “That won’t happen overnight,” Ekstrom clarifies. “Initially, the energy companies will go out and look for, at least right now, less expensive biomass than round wood.” But the demand and competition hasn’t hurt the energy industry, Ekstrom says, and prices for biomass material are not at risk of approaching that of oil and coal, due primarily to the carbon tax. In addition, Sweden’s experience and longevity in the biomass energy industry means demand will not likely increase exponentially. “They’re starting to get to a level where the problem might not expand on the demand side dramatically over the next 10 years,” Ekstrom says.
Although Melin acknowledges there’s been a long-standing argument about supply and pricing between the two industries, he says now the energy wood demand is a good thing. “Today, the pulp industry is happy about the bioenergy development since they actually gain money on the power production that is done at every site,” he says. “I believe they also have started to understand the possibilities of better management of forests.”
From a forest owner’s perspective, demand and price increases for wood fiber isn’t bad. “If we have an industry that develops and starts to pay more for the products of forestry, according to market principles, that must mean that this new industry can do better things and provide better services,” Björheden says.
Melin agrees. “The use of bioenergy is actually a way for the foresters to get paid for better management of their forests, so to me there are only benefits to the industry,” he says.
Besides, biomass harvesting is not the most significant thing that happens in land management sectors in Sweden, Björheden emphasizes. “The big change is that we clearfell areas normally after 70 to 100 years of management,” he says. “That’s the really big event in the life of that forest.” The country has maintained its forestlands this way for the past 800 years.
It goes without saying that good silvicultural practices don’t include the removal of biomass from delicate areas, and the country also does not remove biomass material from national forests. Sweden’s forest practices are constantly monitored and have not remained the same throughout the biomass industry’s 40-year history. The country spends more resources on monitoring and sustainability than on technology research and development, Björheden says. Sweden implements a host of measures to ensure sustainability and forest health in the wake of its intensified forestry. “Our governmental board of forestry has a balanced view and the mission to take both environmental and production goals into account,” Melin says.
“We can see that when you pick up residues, it might even be good for the environment,” Levander explains. For the most part, he adds, citizens and environmentalists trust in the policies implemented by the government and view them as responsible. For instance, laws mandate that ash from burning forest residues must be applied back to the forest. “That’s the secret behind counteracting the negatives,” Björheden says. “Any lasting success in this is that you have to counteract as many of the negatives as possible.”
Much like in the U.S., some Swedish citizens oppose residue removal, even with policies in place to prevent over-utilization, Björheden says, recognizing that many citizens are not particularly well informed. Even though the municipal veto does permit a community to halt development, no plant in Sweden has been shut down or development stopped in response to citizen opposition, he says. On the contrary, citizens in municipalities with extensive woody biomass use are proud of their vision and approach to a fossil fuel-free existence. Residue removal has not been a large issue in the general public, Björheden says, but it is between forest industries and the Forest Stewardship Council. “They’re constantly talking about this and I think in general, cooperation has been good and both parties have benefitted.”
And like the Manomet Center for Conservation Sciences study that evaluated forest biomass carbon neutrality and sustainability in Massachusetts, Sweden’s government-funded research into woody biomass use for electricity and heat has found that it is only carbon neutral after a period of time, not instantly, Levander says.
Further research in the country is geared toward development of gasification systems for biomass and a pilot combined-heat-and-power plant operated briefly in Värnamo. Chemrec has also established a black liquor gasification plant for liquid biofuels production in Piteå.
With such up-and-coming research, and the fact that Swedish forests capture more carbon dioxide than goals dictate, Björheden says the country is proud of its progress. “Presently, our conscience is fairly good,” he adds. “But we can do better. We can do more. We can’t stop global warming in Sweden, but we can do our part.”
Author: Lisa Gibson
Associate Editor, Biomass Power & Thermal