again earn credits for generating clean energy, but there's dispute about whether burning native forest waste for energy is 'carbon neutral'. Background Briefing reports.

Originally published on the ABC website 

The owners of one of Australia's oldest and dirtiest coal-fired power stations—Hazelwood in Victoria's Latrobe Valley—have been secretly considering plans to reinvent the plant as a 'clean energy generator' by burning forest waste.

GDF Suez, the majority owners of Hazelwood, and Victoria's state forest corporation, VicForests, have confirmed to ABC RN there have been discussions over the supply of native forest wastes from East Gippsland logging operations.

GDF Suez also confirmed 'a number of trials'—mainly using plantation material—have been conducted at Hazelwood over the past decade 'with varying degrees of success'.

GDF spokesman Trevor Rowe says: 'The most recent trial was in 2009. Due to a number of factors, including cost, availability of suitable material and the need for additional processing to meet boiler requirements, Hazelwood has not proceeded beyond these initial trials.'

Mr Rowe also confirmed more recent 'initial discussions' with VicForests three years ago, 'but these have not been ongoing'.

In an indication of ongoing interest in biomass for its Hazelwood plant, GDF Suez in October last year advertised for a 'coal and ash operator' who would also 'participate in biomass trials'.

According to a confidential corporate and business plan prepared by VicForests leaked to the ABC, the proposal to establish a local market for native forest biomass would take a lead time of around two years.

Nathan Trushell, general manager of stakeholders and planning for VicForests, says: 'We've not had any [recent] conversations with any brown coal generators. [But] certainly in the past, we've had discussions to look at the potential economics and benefits. Still, the economics are very challenging.'

Hazelwood is close to the forests of East Gippsland, where VicForests is losing millions of dollars every year on logging operations since the decline of woodchip markets. The corporation is looking for new markets for sub-prime and 'residual' logs to make logging operations more economic.

Asked how much waste resource was potentially available from native forests in the region, Mr Trushell estimates 50,000 to 150,000 cubic metres. 'In the grand scheme of things they're not significant volumes,' he says.

Hazelwood's majority-owner, GDF Suez, is controlled by French company Engie. The company is well versed in biomass technology overseas. The company spent 125 million euros ($184 million) converting a Belgian power station in Rodenhuize in 2011, amongst others. Engie declined several requests by the ABC for an interview to discuss its international biomass experience and plans.

Asked what VicForests would do with residual logs and waste from east Gippsland with the decline of the woodchip market, Mr Trushell says: 'If we've got surplus material, we'll advertise that, run through a sales process, a tender process, an open and competitive process. If proponents were interested in approaching us, we will always talk to them.'

Senator Richard Colbeck, parliamentary secretary to the minister for agriculture, is supportive of any plan for Hazelwood to co-fire forest biomass with brown coal.

'If we're genuinely looking at replacing coal with other, less emitting forms of energy generation, those are things that can and should be considered. If you look at [Gippsland], there is a significant forest industry. They would be generating certain volumes of waste out of that industry. If that can be properly put to good use as part of a reconfiguration of that [Hazelwood] power plant, why not?'

Greens forests spokesperson, Senator Janet Rice, says that setting up Hazelwood to co-fire native forest biomass as well as brown coal would be straightforward.

'The interesting thing with Hazelwood as an old coal-fired power station, apparently there's very little change that needs to be made in order for it to burn wood. There's evidence, in fact, that trials have been done and Hazelwood has already been accredited to be using wood from native forests for the generation of renewable energy certificates.'

Indicative of the growing interest in native forest biomass since the government's recent changes to the renewable energy target (RET), a wood pellet making factory is being built adjacent to the Hazelwood power station. The pellet plant is scheduled to open its doors later this year with plans to take wood waste from nearby sawmills. It will be producing pellets to fuel small-scale heating boilers.

Built between 1964 and 1971, Hazelwood supplies Victoria with one quarter of its electricity needs each year. It's been tagged Australia's 'dirtiest' power station, with intense speculation over the past decade that it would close with a rising price on carbon pollution—but that hasn't happened.

Three key pages of the confidential 2014-2016 VicForests corporate and business plans were leaked to ABC RN Breakfast in May. Background Briefing has a copy of the entire 73-page document. It points to biomass as one of a range of 'new initiatives' that VicForests is considering.

'The use of wood as a brown coal substitute is another possible opportunity, but its use will be dependent on what renewable energy targets are set by the government. For co-generation, logs are converted into woodchips or pellets before being used by the power station.'

Mr Trushell says the leaked corporate plan is now two years out of date, and has been updated twice since.

'I want to reinforce that we don't see [Hazelwood co-firing] as being the main opportunities for bio-energy in the space that we operate in, at least in the short to medium term. I think, really the opportunities again, are in small scale localized energy production. I think the technology is getting close. It may or may not be commercially feasible right now, but certainly I think that's where the opportunities exist.'

He says biomass energy could work best on the margins of the existing power grid, where transport costs would be lower 'but importantly, not just producing electricity, producing gas and heat which is traditionally very expensive for users of energy'.

Mr Rowe says recent changes to include the burning of native forest biomass in the 2020 RET had not improved the economics.

In addition to Hazelwood, at least seven other coal-fired power stations across Australia are registered with the Clean Energy Regulator to earn renewable energy credits from biomass burning. (To see the list of generators, search for 'wood waste' as a 'fuel source' on the Renewable Energy Certificate registry.) All but one are situated within a short distance of state forests' logging operations.

Four years ago, the Rural Industries Research and Development Corporation funded a major study into biomass co-firing for electricity generation.

RIDC says the potential to generate electricity from biomass resources is 'well known'. 'Co-firing of biomass for power generation is considered to be one of the least cost options in this regard, requiring minimal new technology or investment. Nevertheless, adoption has been very poor to date, falling far short of levels possible using current potentially available biomass.'

Stuart Dix from e3international, one of the authors of the report, estimated that around 1.8 million renewable energy credits had been generated from woody biomass in Australia under the RET since 2001. However, only one of those REC certificates was generated using native forest biomass.

In an indication of the scale of the sector in Australia, Mr Dix said about 23 million RECs had been generated from all biomass projects, including landfill operations using methane gas.

Mr Dix said that even co-firing existing plants with as little as three per cent woody biomass could generate significant numbers of Renewable Energy Credits.

He said co-firing was cheap, and while there was a technological risk, it required little adaption of current black and brown coal generators.

He thinks it's unlikely that recent changes to the RET to once again allow the burning of native forest waste will make much difference to the adoption of biomass at a large scale.

'If you wanted to do a wholesale large scale co-firing projects—say 10 per cent or something like that—of a power station, you really need to have a long term feed stock supply, and you cannot get security of supply without growing your own ...  if power companies wanted to do this, they would need to take that next step to grow their own.'

Hazelwood is a 1600 megawatt power station. Mr Dix estimated that to co-fire a 1000MW power station with 3 per cent biomass, around 200,000 tonnes of 'waste' would be required.

This is near the upper end of the native forest ‘waste’ resource that Nathan Trushell from VicForests says is available if loss making timber harvesting operations continue in East Gippsland.

“It would depend on the specifications ... depending on the intensity of those operations, you could vary your production or manipulate your production of residual log perhaps from 50,000 to 150,000 cubic meters. In the grand scheme of things they were not significant volumes, but... our view on that now is that transporting that material from East Gippsland to existing brown coal power stations would just simply not be economic”.

The Australian Forest Products Association, in its submission to the Warburton RET review last year, estimated that about 3,000 megawatt hours of renewable electricity—more than 7 per cent of the RET—could be generated from wood related waste in Australia.  AFPA points out this estimate is based on all forest waste, including plantations, not just the waste from native forest harvesting.

Senator Colbeck is confident biomass will find its niche in Australia.

'There is significant potential,' he says. 'But I don't see that sector providing large-scale power stations. I see it operating at a local level.

'Based on the sustainable returns that might come out of a particular area of the forest, the numbers show that you can—at a scale of 15 to 30 megawatt power stations, at a regional level—generate that energy requirement back into those local areas. It's more than sustainable.

'If you look at what's happening in Europe, in some countries up to 50 per cent of their renewable energy comes from biomass. That comes from both plantation and native forest. Australia is quite an outlier in that space.'

Global growth in demand for biomass

Biomass demand has grown rapidly in the past decade, driven by renewable energy credits in Belgium, the Netherlands, Denmark and the UK. It's mainly involved the burning of biomass wood pellets in power plants.

There's now keen interest in Asia—particularly Japan and Korea—and also America.

Bioenergy Australia manager Stephen Schuck says that globally, renewables make up about 13 per cent of all heat, power and transport fuels. Bioenergy supplies the bulk of this—about 10 per cent—with most of it coming from woody biomass.

The recent boom in burning biomass to generate electricity or heat is due to current greenhouse accounting rules which rate biomass as clean and green, or 'carbon neutral'. The carbon emissions that are created at a power plant or boiler are assumed to be 'captured' in the forestry and land use sector, as forests regrow.

But there's growing argument about the United Nations carbon rules, with claims that carbon accounting loopholes are creating 'missing emissions'.

Much of the 'woody biomass' from forests is turned into wood pellets which are consistent in size, shape and moisture content. Coal-fired power stations can readily be retrofitted to run partially or entirely on wood pellets.

An estimated 27 million tonnes of wood pellets were produced in globally in 2014, making it one of the fastest growing energy commodities.

Europe, with its commitment to reducing its greenhouse gas output by 40 per cent from 1990 levels by 2030, has embraced wood pellets. The biggest consumer of wood pellets in the world is UK power station Drax.

Duncan Brack, an associate fellow of UK think tank Chatham House, the Royal Institute of International Affairs, has been working on a study of the global biomass trade for the past two years. The report will be released later this year, ahead of the UN climate treaty negotiations in Paris.

'The general level of investment in the biomass industry in the UK has probably caught people slightly by surprise,' he says.

'It's under the incentive of the EU renewable energy targets ... and biomass was seen as one of the easier and cheaper ways to make that. So there's been more ... proposals for conversion of old coal stations or building new dedicated biomass plants than the government expected.'

Mr Brack says the Drax power station is the single, biggest source of biomass use in the UK. Two of the power station's six boiler units have been converted to burn wood pellets, with plans to convert another next year.

Drax currently consumes more than 3 million tonnes of wood pellets each year. Mr Brack says 5 million tonnes of carbon emissions are generated by burning those pellets, and they're currently 'missing' on global accounts.

He says it's partly because biomass emissions are treated differently to other carbon emissions. He says the problem is not currently being dealt with because it's so complex, and also because so many other issues on the table as the world negotiates a new post-2020 global climate treaty.

In America, 46 US senators recently wrote to the US Environmental Protection Agency supporting biomass energy. The senators say that the 'carbon neutrality of energy from forest biomass ... has been repeatedly recognised around the world'.

But that's under challenge.

William Schlesinger, president of the Cary Institute of Ecosystem Studies in Millbrook, New York, says: 'In the US right now there are about four or five analyses that all conclude that if you look at the 20 to 50 year time horizon ... that burning woody biomass is actually not helpful to mitigating climate change. It actually releases more carbon dioxide into the atmosphere than if you continue with coal.'

He says burning old or slow growing forests creates a 'carbon debt' that takes too long to pay back.

'When you cut down a forest and burn it, you release all the historical carbon that forest has accumulated for many years,' he says.

'You release that all that once into the atmosphere. At the end of that day the forest no longer exists. It contains no carbon. All the carbon is in the atmosphere. It takes multiple decades for the regrowth of that forest to re-accumulate the carbon dioxide from the atmosphere. If you're concerned about carbon dioxide emissions over the next 10, 30 or 50 years as a determinant of climate change, that's a really unacceptable form of energy.'

Last year, Dr Schlesinger organised nearly 100 scientists to sign a very different letter to the US EPA.  The letter called for stricter guidelines on the use of biomass for power generation.

Dr Schlesinger says there are lessons for Australia.

'I think Australia ought to look very carefully at how long it takes for the forest that are being harvested to supply biomass energy for power plants, how long it takes those forests to re-accumulate the carbon that's being released with a single harvested burning,' he says.

'If it's more than 20 to 30 years, one should seriously question whether that's helpful to climate change treaty negotiations and protocols.' 

So far, the US biomass industry has largely been export focused, driven by demand from power stations in Europe and the UK for wood pellets.

But like in Australia, the clean energy rules are changing and Dr Schlesinger says US power utilities are ready to move on biomass.

'Right now the US doesn't have any government mandated rewards for switching to biomass. But I think a number of the electric utilities see that on the horizon. They're trying to get out in front of the game, essentially,' he says.

'Certainly in the south-eastern United States, there's a number of the electric utilities there that have retrofitted some of their power plants so that they can burn both wood or coal. I think as President Obama's Clean Power Act becomes enforced—which will give mandates to the individual states to cut their carbon dioxide emissions—that the interest in biomass will explode.'

In addition to the argument over the climate credentials of forest biomass, green groups in the US accused one of the major US wood pellet exporters, Enviva, of environmental vandalism.

Enviva says that the company uses timber which doesn't otherwise have a value or a market, such as old plantations established for the pulpwood market. Enviva did not respond to several requests from the ABC for an interview.

Dr Mary Booth, director of the Partnership for Policy Integrity says: 'The Dogwood Alliance is a group in the United States that has been doing some fantastic work, actually tracking these logging trucks back and forth between the areas that are being cut and to the plant. They've documented with photographic evidence that (Enviva is) harvesting huge, huge trees from lowland swamp forests, really beautiful old trees that are being cut down and pelletised.'

'These trees are ... performing a vital function. When you cut them and you burn them, no matter whether they're merchantable or unmerchantable, you're taking forest carbon where it's locked up safely and you're turning it into atmospheric carbon.'

There are parallels of the international debate about the carbon neutrality of biomass burning in Australia.

Professor David Lindenmayer, from the Australian National University's Fenner School of Environment and Society, is well known for his opposition to native forest logging. He says that the 100-year carbon time frame that United Nations organisations and national governments are working on is flawed.

'When we look at what happens to carbon when it's burnt—whether it's coal or a tree or what have you—our analysis shows that about 60 per cent of the carbon emissions fraction is reabsorbed back into the earth system after 100 years. But the remaining 40 per cent stays in the atmosphere for another 2,000 years. So there is no way that emitting carbon through emissions this way can be regarded as renewable energy. It just simply can't. 

'It's a long-term carbon emission that has long-term impacts on Australia's climate and on the world's climate,' says Professor Lindenmayer.

In Australia, the CSIRO and researcher Fabiano Ximenes from the NSW Department of Primary Industries have been trying to calculate the carbon life cycle of a logged forest.

'What we've found is that a lot of the times the published research tends to overlook a lot of the essential components of the carbon cycling forest products. So they do a very good job of looking at the forest carbon side of things but I think they are quite a few omissions when it comes to tracking the fate of carbon in wood products, and that's where I think there's a big point of contention.

'The latest work that we've been doing suggests that if you do take those things into account, if you look at the carbon storage in wood, if you look at product substitution impacts, and if you look at the fossil fuel displacement impacts of using biomass or bio-energy, when you combine those things with the carbon that's actually stored in the forest in a production scenario, then you see that after multiple rotations you get a better ... a more beneficial greenhouse outcome than if you are measuring a forest for conservation purposes only.'

In Australia, biomass from sewage digesters and landfill gas already generate around 200 MW of electricity—about one-fifth of a medium sized coal fired power station. Sugar cane mills also generate smaller amounts of power by burning bagasse, the waste from sugar cane.

Tasmanian resources minister Paul Harriss said recently he wanted to see a wood pellet plant and biomass plants established in the state.

'Across Europe and the world, biomass is widely accepted as carbon-neutral and considered environmentally green energy. In Bavaria, there are over 700 small biomass plants dotted around the country,' he says.

'Now that's with a forest industry about the size of Tasmania's, yet here in Tasmania we have very few biomass plants.'

Stephen Schuck, from Bioenergy Australia, says Tasmania generated the only renewable energy credit from native forest biomass before the practice was banned in 2011—a decision recently reversed by the Abbott Government.

'It was generated in the Huon Valley at an isolated power supply ... My understanding is that renewable energy certificate costs an awful lot of money—over half a million dollars—to set up a dual-fired gasifier into a diesel generator. It was more to prove the concept that native forest biomass could be used. That half a million dollars cost was for a $50 or $60 certificate ... developing the technology and installing the technology around it, and getting their bearings with how gasifiers worked.'

Dr Schuck says biomass for co-firing trials with coal has also been done by major electricity generators, for example Delta Energy in NSW.

'A few years ago, Delta announced that that were heading towards a larger project which would involve a getting farmer groups to grow oil mallee eucalypts in central New South Wales, to coppice the biomass and produce wood pellets,' he says.

'They wanted to introduce these pellets in higher percentages with coal for co-firing. Their eventual target was somewhere around about 20 per cent ,which would convert a 500 megawatt unit at a power station to a 100 megawatt renewable energy plant.'

With no price on carbon and Renewable Energy Certificate prices falling, Dr Schuck says the project was put on hold.

'The actual technology is probably the easy bit,' Dr Schuck says. 'The fuel procurement side—basically procuring long-term supplies of biomass at the right quality and quantities—is probably the more problematic area.'

Australia's biggest biomass project, at Albany in Western Australia, has solved this problem by sourcing its feedstock from eucalypt hardwood plantations that were originally established under the troubled Managed Investment Schemes.

Plantation Energy, which badges itself as Australia's largest manufacturer of clean and renewable energy, uses only plantation stock, thus avoiding the debate about the best use of native forests.

Founding director Gavin Harper says markets are opening up in Japan and Korea for sustainably produced wood pellets for biomass power plants.

He says the company is named Plantation Energy for a reason. 'It's really important for internationally traded carbon credit certificates, whatever they're called in different parts of the world, (they) really have to be supported by a certified sustainable management process which is very strictly controlled.  That comes down to not just the way the trees are planted, but what kind of land they're planted on, so you're not displacing food production.'

Mr Harper says Plantation Energy has also been speaking with Australian electricity generators about using the plantation pellets locally. 'We've had dialogue with generators here in the west for a number of years, there is a lot of interest, it hasn't happened yet, the numbers aren't quite there, there is certainly some co-firing happening in the eastern states. I think that will be a trend that grows.'

Additional research by Sam Provost