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Wood panels industry calls for clearer thinking on Renewable Heat Incentive

An “astonishing £3.34 billion” of taxpayers’ money has been paid by the UK Government in Renewable Heat Incentive (RHI) payments over the past decade, a scheme which subsidises wood-burning while a potential shortage of wood is threatening the UK’s construction sector.

These are key points raised in a report commissioned by the All-Party Parliamentary Group on the wood panel industry which represents the UK’s six industrial plants producing wood-based materials for the construction industry. The report calls for an end to the RHI and warns that any future subsidy regime for biomass “must be predicated on completion of a comprehensive and robust assessment of subsidy impact upon wood supply.”

The cost of RHI last year alone stood at more than £800 million. While the scheme closes to new non-domestic entrants in 2021 and domestic the following year, the UK Government is currently considering future subsidy arrangements following consultation. The report points out that it takes 30 years to replace every tree that is chopped up into biomass pellets for burning and warns: “The UK wood supply is finite – and if wood is being burned for subsidy, it cannot be used in the construction industry as was the intention when these trees were planted.”

The six UK wood processing plants are located close to the forestry plantations from which their raw material comes. The report warns: “If the industry becomes dependent on imported timber (as is already happening), that rationale disappears.” Collectively, the six plants directly provide more than 2000 well-paid jobs as well as many more indirectly and “are directly dependent on this issue being addressed by the Government.” It also asserts that “open-ended subsidy to burn a scarce natural resource is inconsistent with the Net Zero commitments made by administrations across the UK.”

The report states: “In the longer term, the answer might lie in planting more trees. However, (this) offers no prospect of early relief — the benefits of planting over the next few years will not be realised until 2040-60. Forestry planting has been in decline in the UK since the 1970s and that is the legacy the industry is now living with. Inevitably, therefore, the biomass sector is currently — and for the next 20 years — relying on planting which took place with other purposes in mind, long before the RHI existed.”

Selaine Saxby MP, who chairs the All-Party Parliamentary Group and whose North Devon constituency includes a large wood panel manufacturing plant at South Molton, said: “Wood is too important a resource to burn. That is the basic contention of those of us who are calling on the UK Government to reconsider support for the Renewable Heat Incentive before a crisis is created for other users of our finite forestry supply.”

Alastair Kerr, Director General of the Wood Panel Industries Federation and Secretary of the Expert Working Group for the Wood Panel Industry, commented: “We have a successful industry providing high quality employment and with ambitions to invest and expand, particularly in response to increased demand for housing. Increased use of wood in construction is also consistent with the Government’s environmental agenda. All we are asking is for recognition from Government that wood is a finite resource and there is a conflict between burning it as fuel with taxpayer subsidy and using it for the purposes intended when trees were planted. Security of wood supply is now a major concern in determining our members’ investment plans.”

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