Latest News - Fergus Ewing visits Norbord plant at Inverness

Fergus Ewing visits Norbord plant at Inverness
Thu, Apr 7, 2011
Chancellor George Osborne has been warned that the UK government's flagship policies could push a leading Highland employer out of business.

Fergus Ewing, SNP candidate for the Scottish Parliament constituency of Inverness & Nairn, has written to Mr Osborne and Treasury Secretary Danny Alexander to inform them of concerns about the effects of the renewable heat incentive (RHI) and renewables obligation (RO) on the wood panel industry.
 
The government launched the RHI earlier in the month as part of its strategy to revolutionise the way heat is generated and used in the UK.  Believed to be the first of its kind in the world, the policy aims to support emerging technologies and businesses in the UK as well as strengthening security of supply and reducing dependence on fossil fuel heating and emissions.
 
The development of sustainable low carbon energy alternatives has lead to a proliferation in large-scale biomass generators, where energy providers are being given financial incentives in the shape of Renewable Obligation Certificates (ROCs) to burn large masses of crops and wood.  
 
Wood panels, a vital component in the construction industry and in furniture manufacture, are produced from virgin and reclaimed wood - the same materials which biomass energy plants are being subsidised to burn.  However, the wood panel industry has been excluded from the policies and this could have a dire effect on local manufacturer Norbord, which employs 120 people at its plant at Morayhill, near Inverness. 
 
Mr Ewing said: "I have written to the Chancellor and the Treasury Secretary to inform them that government subsidies for biomass energy generation are having dire consequences for the wood panel industry across the UK and could, ironically, lead to substantial increases in carbon emissions funded by the taxpayer

"Electricity generators, purely as a consequence of the RO subsidy, can afford to pay more than double the price currently paid by the wood panel industry for its primary raw material.  This sustained buying power competition has distorted the market and resulted in wood panel manufacturers seeing an average woodprice increase over the last four years in excess of 60%, a trend which will only continue and accelerate. 
"Further discrimination as a result of exclusion from the RHI would make the closure of wood panel plants in the UK, including Norbord near Inverness, highly likely. This is clearly an unacceptable state of affairs for a sector which produces nearly £100m of tax revenues, £1bn of economic activity and supports 8,700 jobs, and I have asked Mr Osborne to intervene to clear up the anomaly by including the wood panel industry in the RHI."
 
With the demand for wood now outstripping supply, a recent study by the United Nations found that there could be a shortage of up to 400 million metres squared of wood in Europe by 2020 due to demands of biomass. 
 
Despite continued lobbying by the Wood Panel Industries Federation (WPIF) and a recent European-wide protest against the directive, the industry's concerns have yet to be fully considered by the country's energy policy makers.  This growing concern was further confirmed last week when it was announced that the RHI's Impact Assessment did not cover any potential impact on the wood industries.  The exclusion comes after the WPIF submitted extensive supporting evidence to the Department of Energy and Climate Change (DECC).
 
Independently assessed data, which has been provided on numerous occasions to DECC, confirms that should such substitution transpire i.e. should the 4 million tonnes processed by the wood panel industry be burnt for energy, the consequences would be in complete contradiction with the ambitions of the Climate Change agenda.  Under such circumstances CO2 emmissions would actually increase by six million tonnes p.a. - taking into consideration the carbon gain of switching from coal to wood fired generation; UK Renewable Heat generation would fall by a third- taking into account the contribution the wood panel industry makes today to the renewable heat generated in the UK and subsidies of close to £500m will be paid to energy companies; to burn the wood that is today used in the production of wood panels that will store carbon rather than release it into the atmosphere.
 
Other consequences could be that substitution of the wood to burning for energy will reduce employment by 4,400 (again using Government's own assessment and expectations of re-absorption rates). The incentives work directly counter to the EU mandated Hierarchy of Use.  This hierarcy recognises the common sense value of use, re-use, and recycle, before recovery through burning. 
 
As well as its Morayhill plant, Norbord also employs more than 250 people at Cowie, Stirlingshire and a further 400 at its site in South Molton, Devon.  Karl Morris, MD of Norbord said: "We are not anti-biomass and, indeed, as an industry we have pioneered the burning of our process-derived wood residues to generate heat and power, which is then fed back into our own manufacturing process.  This is the most efficient use of this scarce resource.  The introduction of a renewable heat incentive is to be welcomed, but to exclude the pioneer of this technology and the largest generator of renewable heat makes no sense.

"The current subsidy regime means that wood panel manufactuing companies are seeing wood prices being driven up and shortages in supply of its primary raw material.  Although we have received backing by MPs and a wide range of other organisations and individuals, it's vital that political decision makers now being to listen seriously to our calls for more responsible use of wood and to create a level playing between ourselves and our competitors across the energy sector."

Fergus Ewing visits Norbord plant at Inverness - Click to make an enquiry
From left to right: Steve Roebuck (Director of Health, Safety & Environmental Affairs), Fergus Ewing and Karl Morris (Managing Director).
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