The study examines the opportunities that exist for those forest products companies that are correctly positioned to exploit them. It also highlights the many challenges that lie ahead for all forest products companies, particularly with respect to biomass feedstock availability and cost. 

The study equips decision-makers with an understanding of the energy policies, trends, technologies and markets that are shaping the future prospects of their businesses. As such, it provides a roadmap that will assist forest products companies – as well as organisations outside the forest products industry: energy companies, policymakers and financiers – to develop a strategic response to the many opportunities and challenges that they face. 

Fundamental shifts in government energy policies have major implications for companies in forest-based industries. Increasingly, government policies in Europe, North America and elsewhere are encouraging the development of renewable sources of energy, many of them setting ambitious targets for the use of renewable heat, electricity and/or transport fuels. Although wood is obviously just one source of renewable energy it is apparent that the only way that governments can hope to meet their targets is by realising the untapped energy potential of forests. 

Some forest product companies may be inclined to view bioenergy as a threat; it does, after all, introduce a completely new set of end-uses which will in the future compete for more-or-less the same forest resource. On the other hand, it is also a tremendous opportunity for forest-based companies which are, in most cases, several steps ahead in terms of their access to biomass resources, whether these be in the forest, in pulp mills or in sawmills. 

The challenge for forest-based companies will be to choose the most appropriate bioenergy strategy. There are a great many bioenergy pathways to choose from; some which may be integrated with a company’s existing operations and others which will necessarily involve a joint venture with a specialist energy company or distributor. 

Some pathways are relatively low-tech, such as the production and marketing of wood pellets and chips. For forest companies with access to appropriate fibre they offer exciting possibilities in a rapidly growing market. The European market for wood pellets, for example, is predicted to grow by between five and tenfold by 2020, depending on regulatory developments in the EU and the feedstock choices of electricity generating companies. The North American market for wood pellets is currently much smaller, but this could also take off if the next US Administration introduces federal targets for renewable electricity and heat. 

Other bioenergy pathways involve higher-tech processes, many not yet commercially proven. These carry a higher risk but, by promising to add much more value to the wood resource, potentially offer commensurately higher rewards. The so-called thermochemical pathways are the most advanced. These include advanced gasification technologies to produce heat and power, pyrolysis oil and liquid biofuels produced by variations on the Fischer-Tropsch process or mixed alcohol synthesis. 

The biochemical pathways – including cellulosic or second-generation bioethanol or biobutanol – offer perhaps the greatest potential rewards in the long term, but the technology is still in its infancy, although larger-scale demonstration plants are due to start up by 2009-2010. 

Possibly the most interesting opportunities for pulp producers involve developing the energy potential of black liquor. Kraft pulp mills are already major producers of bioenergy, but new black liquor gasification technologies promise to capture the energy values of black liquor far more efficiently, turning a pulp mill into a true biorefinery that produces transport fuels and biochemicals alongside electricity, heat and woodpulp. 

European and North American targets to supply bioenergy in the form of heat, power and second generation biofuels imply a threefold growth in woody biomass feedstock demand by 2020. Consequently there are questions about the availability of wood to meet the growing demand for bioenergy as well as the existing demand from the pulp, paper, lumber and wood panel industries. 

Our research demonstrates that a surplus of woody biomass in North America contrasts with a potential shortfall in Europe, a fact that will increasingly drive the development of the trans-Atlantic seaborne trade of wood chips and densified biomass; e.g., wood pellets (including torrefied pellets) and bio-oil. 

Biomass sourced directly from forests comprises by far the largest share of potential woody biomass supply in both Europe and North America. (Other sources include different forms of processing residues and recovered wood.) However, this is also the source whose availability is most sensitive to the costs of supply. As it becomes necessary to extract energy wood directly from the forest in dedicated harvesting operations – rather than using industrial processing residues – so the marginal costs of supply will rise. 

The conclusion is that if forest biomass supplies are to be mobilised to meet governments’ ambitious bioenergy targets, the price of energy wood will necessarily increase. One of the results will be that pulpwood and energy wood buyers must expect to compete more fiercely for favourably located wood. 

Amongst the questions addressed in this 215 page multi-client study are: 

The study was completed in September 2008 and is available immediately. The price of the study is £4,800 (or the equivalent in US dollars or euro). The price includes a PDF copy and two printed copies of the study as well as a presentation meeting with the authors in London. Additional copies of the report will be available for a nominal fee. 

The scope and content of the report, and an order form, can be downloaded here

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