Biomass Energy drives global land rush
in Fortune, September 4, Addis Ababa, Ethiopia
Biomass energy makes up 77% of world renewable energy, and trees and woody plants account for 87% of the biomass. This includes planted or managed trees such as conifers or broadleefed trees, some bamboo and woody grasses such as miscanthus grass or switch grass, and forest and wood industry residues.
Such woody biomass is often burnt directly for domestic heat and cooking, especially in the global south, but new technologies now allow it to be converted competitively into liquid fuels and electricity. In the search for renewable energy sources, to diversify economies away from fossil fuel and mitigate climate change, governments in Europe, North America and East Asia are turning their eyes to woody biomass ; in some cases setting concrete targets for increasing the share of biomass energy.
These plans by countries in the Organization for Economic Cooperation and Developpment (OECD) to rapidly expand power plants fuelled by woody biomass are fast increasing the demand for materials such as wood chips and pellets, the latter being compacted and dried to reduce transport costs. Meeting national 2020 targets in Europe will require an additionnal 40 million oven dry metric tonnes (ODMT) of solid biomass to generate electricity and another 50 million ODMT of biomass for heating and cooking.
In the UK, for example, plans to expand biomass energy will push demand for biomass up to as much as 60 million tonnes annually, compared with one million tonnes burnt or co-fired in the country's biomass power stations today. In Asia, the South Korea Forest Service (SKFS) forecasts that pellet demand could rise from 20 000 tonnes in 2010 to 5 million tonnes in 2020.
In the face of such rapidly escalating demand, securing reliable sources of woody biomass will be key. Local sourcing is often viewed as important from an energy security perspective and also reducing the greenhouse gas emissions linked to transport. Countries such as France, Germany and the US are pursuing a model that mainly relies on domestic supplies. But for many OECD countries, demand for biomass will outstrip national supply capacity and local sourcing will not be an option.
Where will the global north get his woody biomass, then ?
In part, it will rely on the world's existing leading exporters of wood chips and pellets. The anticipation of growing demand from Europe is already driving major investment in new biomass pellet production units. At least five major pellet facilities in Canada, Norway, Russia and the US went into production, in 2011 alone, with a total combined capacity of around 3 million tonnes.
Sourcing from other exporters, including Australia, Chile, South Africa and Vietna, is hindered by high transport costs. The extent to which supplies from these sources can keep expanding is uncertain. For example, plans to reduce the use of fossil fuels in North America are expected to divert supplies of wood pellets away from export markets.
It is likely that countries in the global north will have to look to non-traditionnal suppliers in the global south to plug their biomass gap. Operators in Brazil, for example, are increasingly interested in exporting to Europe and some analysts see the country as one of Europe's most promising future sources of wood pellets because of its good infrastructure and relative proximity.
Africa is also likely to play a big role in feeding the demand for biomass. Already, some companies are moving to service or replant existing tree plantations for this purpose. For example, deals have been signed to produce woodchips for export markets by replanting old rubber plantations in Ghana and Liberia. But the sheer scale of projected global demand means that new plantations will also have to be developped to fuel biomass power stations.
Africa is attractive in this regard because it is perceived to be abundant in land. And there is another reason for biomass suppliers to acquire land and develop plantations in the global south : tree growth rates and consequent financial returns are much higher. In natural temperate forests, growth rates range from one to four cubic metres per hectare, each year. In temperate and subtropical plantations of conifers such as pines, this range rises from 10 to 30 cubic metres per hectare, each year. Tropical pine plantations are faster still at 15 to 45 cubic metres per hectare, each year. Faster of all are tropical eucalypt plantations that can reach growth rates of up to 60 cubic metres per hectare, each year.
Energy companies are already developping plantations on available land in Canada, Europe, Russia and the US using fast growing material supported by stable policy environments and sustainability standads. While such sources can meet demand, land acquisition for biomass plantations in the global south are likely to remain limited. But evidence suggests that private operators increasingly consider this a viable business option.
Several feasibility studies are underway in Southeast Asia, Africa and South America. And some land deals for biomass plantations have recently been announced. For example, in 2010, a US company announced the acquisition of a 49 year lease on 5 000 hectares of land in Ghana for a plantation to produce feedstock for biomass power plants. The company also operates in Guyana, where it leases some 2 000 hectares, with the option to lease an additional 58 000 hectares, hoping to export wood chips to the US and the UK. The same company intends to establish energy crop plantations in Madagascar, Mozambique and Tanzania to export wood chips for biomass power to Southern Africa and India.
It has also concluded a deal with an Indian company to conduct trials of bamboo and other species in India, Ghana, Guyana, the Philippines and Tanzania. Other companies operating in Africa include the subsidiary of a Canadian business, wich runs eucalyptus plantation in Congo that, in 2009, supplied around 350 000 tonnes of wood chips to Europe.
It is not just the private sector taking the lead in land deals for biomass plantations, the South Korean and Indonesian forest ministries signed memoranda of understanding that reportedly allocated 200 000 hectares of forest land to the production of wood pellets and included a 99 year lease on separate land, with private companies expected to construct and operate a pellet making plant, in 2009.
The extent to which these types of activities become and remain profitable depends on soil fertility and local microclimate as well as the species, rotation length, trees per hectare and havesting system used. Perhaps most importantly, the economic attractiveness of biomass plantations significantly depends on the stability and nature of policy incentives and on the comparative prices of fossil fuels ; if fossil fuel prices are relatively low, it becomes more difficult for biomass energy to compete.
But several factors are expected to increase the attractiveness of investing in biomass plantations in the coming years. Fossil fuel prices are expecting to rise. The cost of biomass production is likely to fall as strategic breeding and production methods develop.
Biomass plantations may also be able to generate additional revenue streams, for example through selling carbon credits. They can also sell into markets such as timber or pulp, if energy prices fall. Some tree plantations are already doing this.
What are the implications of expanding biomass plantations for recipient countries in the global south ?
Some benefits may materialise apart from creating hoped-for jobs ; biomass plantations could open the door to improve energy access. But there are also real concerns. In particular, the search for cheap land, suitable climates and competitive transport costs will increasingly lead investors to focus on Africa and Southeast Asia, where many countries are characterised by food insecurity and vulnerable land rights.
Where land is formally owned by the state, as it is in much of Africa, decisions about biomass plantation will be taken by central government agencies. People who may have used land for generations and see it as their own tend to have weak and undocumented land rights, little capacity to exercise these rights, and are marginalised in decision making. Some national laws required local consultation but in practise implementation often falls short of expectations.
In some countries land is controlled by customary chiefs and they may become the one who sell or lease land to, and negotiate deals with, biomass operators. But there are still questions about the extent to which these chiefs are accountable to their constituants and maximise local public interest. In all these cases, there is a real risk that people will lose the land they depend on for survival.
Compensation may be inadequate to restore local livelihoods. Although new jobs may partly offset adverse impacts, plantations and processing plants may not generate jobs for all affected people.
Biomass plantations may also compete for the best lands with food crops and biofuel feedstocks, adversely affected local food security and further marginalising smallholder farming. Where biomass production is for export, these tensions are not compensated for by improvments in local energy security.
There has been some debate about sustainability standards for production but little attention has been paid to the wider implications of biomass plantations.
If left unchecked, the growing pressure on land access could undermine livelihoods and food security in some of the world's poorest countries.
It may be early days, but the sheer pace and scale of growth in biomass energy makes this no ground for complacency. Certainly, the world needs greater public scrutiny and debate about what the plans for niomass energy in the global north will mean for developing countries in the global south.
Biomass Energy drives global land rush