Fuel from the forests?

Scion is set to launch a report into the viability of generating biofuels from trees at the end of February – a move that could throw a muchneeded financial lifeline to the struggling forestry and wood-products sector.

Turning tree waste into biofuels and bioplastics has long been a Holy Grail for the forestry and wood processing industry. It would turn marginal pulp-wood earnings and sawmill waste into real revenue streams.

But while the technology has been proven in the laboratory, questions remain over the long-term commercial viability, despite extensive research by forestry-dependent countries such as Canada and Sweden.

That’s something Crown-owned tree researcher Scion hopes to overcome with its Woodscape report, which follows what Scion’s head of sustainable design, Trevor Stuthridge, calls a techno-economic approach – or putting the numbers together with the science.

Funded by Woodco, the Ministry for Primary Industries, New Zealand Trade and Enterprise and Scion, the report will look at ways of generating the greatest return for the forestry and timber sector, with a heavy focus on biofuels.

Biofuels are a potential panacea of the renewable energy sector, providing a means to produce fuel on a carbon-neutral basis, but the production process is fraught with problems.

‘‘Above the ground, we have some of the biggest sustainable forest plantations, and, below, the largest energy resources in the form of geothermal,’’ Stuthridge said.

‘‘We have a tremendous opportunity to turn heat and steam into bioproducts.’’

Biofuels have huge economic potential for the country.

Stuthridge said that if forest plantings doubled, about $5.5 billion worth of biofuels could be produced annually, effectively replacing imported oil.

This would be on top of the $4.2b currently earned by exports of forestry and timber goods.

It could also potentially set New Zealand up to be an exporter of carbon-neutral energy.

Should the investment case prove viable, it would also be a lifeline for forest owners.

Investment in forest planting has tailed off since the 1990s due to rising land costs, falling log prices, and the sharp rise of dairy farming.

It was hoped that the investment case would improve with the introduction of the Emissions Trading Scheme (ETS). However, the introduction of cheap international credits into the ETS has seen the price of New Zealand carbon units drop.

As it stands, only a portion of a harvested log is usable as structural timber. The remainder, as well as damaged wood, is sold as pulp to be turned into paper.

Returns on pulp material are very marginal because of transport and harvesting costs, and falling demand for printed materials has been adding further price pressures. Late last year Norske Skog announced it was halving production at its newspaper plant in Kawerau.

‘‘It’s early days, and I would expect that it’s probably not going to be a silver bullet . . . but it is a path,’’ said Sally Sisson, forestry manager at Forest Management New Zealand.

Andres Katz, a forestry economist at Resource Management Services, said previous attempts to quantify the forestry biofuel market by Canadian officials had shown that the opportunities were not huge.

‘‘That doesn’t mean we can’t do it, especially once scale kicks in, but it’s an untested and unproven market.’’

It is understood that the Government has chosen to remain on the sidelines, endorsing moves to increase the use of renewable energy but waiting for a market to put a strategy on the table.

For now, the sector is waiting for the report and the ‘‘hard metrics’’ promised by Scion before it even starts thinking about the capital commitment needed to get biofuel revenues flowing.

But at the very least, the mood is optimistic, and that’s something that hasn’t been widely seen in the industry for a while.