The Wood Fibre Futures report, compiled by a consortium of forest technology companies, has identified wood processing technologies that could meet goals of a higher value, lower carbon economy.
It has identified 15 key technologies with a particular focus on turning residual forestry biomass into “biocrude” and liquid biofuels.
But Wood Processors and Manufacturers Association chief executive Dr Jon Tanner says until New Zealand was functioning on a level playing field globally, or significant government commitment rebalanced that field, this technology would never have a realistic chance of launching here.
The report’s opening pages highlight Tanner’s own concerns about the sector’s potential.
It states the residual wood biomass that would be used for the processing is expensive in NZ, at about 20% more than key competing countries.
“For anyone in the business of processing residue for biofuel, it needs to be cheap residue and ideally in an environment with high crude oil prices. Right now, we have neither of those,” Tanner said.
The report highlights how NZ’s difficult terrain, smaller felling areas, low carbon price signal and small local investor market are all also working against investing in higher value forestry processing here.
Tanner says there were companies including Oji Fibre Solutions that would be only too willing to pick up the technology for creating such fuels today, but the cost of raw material was simply too high.
“Basically, we have China buying all grades of timber, including residue to use in their boilers or for cheap industrial use,” he said.
“They are paying inflated prices for all material because of the subsidies they receive to add value back in China.”
For the past decade, NZ has submitted strongly to the World Trade Organisation (WTO) to try and have subsidies on wood processing removed, to no avail.
Over that time, WTO power has diminished, and even more so with the United States stymieing its appeals body.
“The Ministry of Foreign Affairs and Trade have done a good job of documenting all this protection, but WTO rules have gone out the window and are not likely to come back any time soon,” he said.
“All other countries are rushing to protect their value added sectors. So we need to change direction too, if we want to get this sort of development off the ground.”
The report highlights how countries, including Canada and Finland, are proving such forest to fuel technology can be developed.
Canada has developed a clean fuel standard that comes into play in 2023 and will utilise forestry waste for fuel input.
Finland is aiming to have 30% of its transport fuel bio-based by 2030, and wood sourced energy is the second major generation source there after hydro.
However, both countries have significant funds to tap into.
Finland can tap a Eu11 billion European Union innovation fund. Investment grants for up to 40% of a renewable fuel project’s cost are also available. Finland’s US$70 a tonne carbon price also induces moves to low carbon fuel, compared to NZ’s NZ$34 a tonne price.
“So, we are about to start talking with the Government to see what exactly will be done to get NZ into these sectors. Things like tax breaks, accelerated depreciation on plants are some of those,” he said.
“The Government has to get in and play the same game as the rest of the world on this.”
Tanner says the report did reinforce the level of technology and capacity NZ has for such innovative use of forestry.
He also welcomed discussion by minister for economic development Phil Twyford about putting a carbon cap on buildings.
“Once you have done that, wood comes to the fore. However, then the risk is we see cheaper wood from Canada or Austria used, unless the business environment for forestry changes here,” he said.
