GOVERNMENT INCENTIVES FOR VALUE-ADDED TIMBER?

THE INCREASE IN LOG EXPORTS SINCE the millennium and general closure of local timber mills and wood processors has prompted action by both Government and the forestry industry to initiate more onshore processing of this country’s forestry resources.

In an email addressed to NZ Logger, the Hon Stuart Nash, Minister of Forestry, listed several steps under the Forestry and Wood Processing Industries Transformation Plan (ITP) on actions to transform the industry. These include:

“Boosting productivity and supporting New Zealand’s drive to a low emissions future. This includes the allocated $57m through the current 2022 Budget to stimulate investment in the domestic production of value-added wood products. But the Government would want input from all forestry stakeholders. It awaits suggestions of investment proposals, but it would be subject to Cabinet approval” – hopefully before the end of the year.

The plan is to transform the entire supply chain in over a generation, the Minister writes.

• Increase woody biomass supply: The Government will plant 10,000 ha of forest, including alternative species to meet growing demand for biomass.

• Government investment to grow wood processing capacity: Ensuring the sector has the right assets to produce high value and low carbon products.

• Improve financial incentives: Exploring the appropriate mix of financial incentives to stimulate investment in advanced wood processing and wood based bio-product technologies. This includes accelerated depreciation and investment grants.

• Supporting the development of regional manufacturing clusters: The government will partner with the sector to explore, assess, and deliver processing manufacturing clusters.

So far some positive and some mixed responses to the original worded proposals has been received from stakeholders.

Forest Owners Association President, Grant Dodson, writes: “Despite the traditional sawmilling sector there is much opportunity in remanufacturing and engineered wood products. This is part of the focus of the new ‘Forests, Our Low Carbon Future’ campaign, and the recently released Industry Transformation Plan (ITP).

“We can expect considerable demand for timber internationally, particularly engineered wood products for medium rise construction in a modern climate friendly world, he says: “Significant investment in scale and technology is typically required to be competitive in these specialised areas. Other key areas of opportunity are in bio materials, biochemical and bioenergy”.

Referring to the closure of medium-sized, overseas-owned Blue Mountain Lumber in 2008, Ernslaw One Regional Manager, Phil De la Mare, explains it had been loss-making for a number of years “where a New Zealand owner would have closed it earlier”.

Asked if the company would have continued with the mill had the current initiatives been available at the time, he replies: “We unsuccessfully tried to build a new mill in the Coromandel in the 2000s. We lost in the Environment Court, so if the MPI initiative kicks the Resource Management Act to touch for greenfield sawmills, then the answer could be Yes, but the playing field has moved on in everything else.”

Commenting on the future of engineered timber Phil says, “Engineered timber for high rise buildings will only happen at scale when owners, government ministries, councils, universities, engineers, architects, specifiers, quantity surveyors and the village priest are all aligned. Steel and concrete manufacturers have always been very strong at lobbying... at the expense of timber. We have a lot of lobbying and educating to do.”

David Cormack, CEO of Wenita Forest Products says Wenita is broadly supportive of the plan saying the sector can do this by:

• providing low emissions construction materials and fuels,

• increasing domestic processing of lower grade logs,

• increasing export earnings from highvalue products made from wood,

• replacing emissions-intensive building products with engineered wood products,

• increasing the resilience and productivity of our plantation forests.

David urges ongoing government support and partnership as essential for this plan to be successful.

He says some of the ways government can support the plan are to coordinate and bring together the different parts of the sector forest owners, processors, forest advisors etc. “to work together on the plan”.

Also, “lead by example and show the way with the wood-first policy for government construction projects, and demonstrate new building products and construction techniques.”

David suggests supporting increased domestic processing with tax relief, simpler consenting processes and recognition plus rewards for the carbon locked-up in processed wood products. That is, carbon credits for wood products.

On the question of wood-based biomass for heat energy and electric power generation, Otago-based Pioneer Energy is expanding its operation to Milton and the Central North Island. It already has chipping operations in Naseby, Dunedin, Timaru and Pukaki, where it is trialling wilding conifers as a resource.

Pioneer’s Richard Ireland, at this stage, believes it is not efficient and too costly. “It only makes sense where fuel is available and cheap, and/or existing electrical infrastructure is not capable,” he says.

However Scion Research notes it’s a matter of economy of scale where excess steam is used to run generators. It cites Red Stag sawmill near Rotorua which has three boilers with a capacity of around 55MW thermal and two steam turbine generators ranging from 1 to 3.4 MW electric and 1 to 2.9MW electric maximum.

It reports a large cogeneration plant at Kinleith Mill, Tokorua producing steam and power for the pulp mill where the boiler can run on wood or gas, or both. The boiler is around 130MW thermal and steam turbine generator is around 39MW.

The Pan Pac pulp and sawmill site at Whirinaki runs a cogen (co-generation) plant producing 14MW electricity from a thermal 45MW boiler.

Experiments with wood-based liquid fuels and chemical extraction are ongoing with research bodies. Port Blakely, for example, is in the process of researching extraction of essential oils by utilising the thinnings of one of its plantations.