COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

OFFICIAL REPORT

(Hansard)

Inquiry into Renewable Energy and Alternative Land Use

24 April 2008

Members present for all or part of the proceedings:

Dr William McCrea (Chairperson)
Mr P J Bradley
Mr Allan Bresland
Mr Trevor Clarke
Mr Willie Clarke
Mr William Irwin
Mr George Savage

Witnesses:

Mr Ian Duff

The Chairperson:

I welcome Mr Ian Duff, who is here to make a presentation on coppice biomass. After the presentation, members will be free to ask questions.

Mr Ian Duff:

Thank you, Chairperson, for the invitation. I am little bit surprised to be here, but if I can help you in any way I will be pleased to do so.

I will begin by giving the Committee some information on my background and experience. I qualified as an agricultural engineer and began my working life at the former Loughry College, where I became involved in the initial stages of willow harvester development — a very early attempt at what we would now call a “stick” harvester. The concept was to tie bundles of willow, which could be easily picked up by the farmer with an ordinary tractor and buck-rake. That was in the days when willow was seen as a crop for marginal land. As you have probably realised, it is now seen as being more of an arable crop.

After that, I spent 36 years in the Department of Agriculture and Rural Development (DARD) and retired in 2002. Since then, I have re-engaged with willow, and have organised two or three study tours for farmers, under the Concordia scheme, to see willow biomass being produced in England and Sweden. I will come back to that later. I have also helped to provide technical input into Countryside Services Ltd’s energy biomass infrastructure development scheme (EBIDS), which provides grant aid to farmers who wish to purchase harvesting equipment or build stores and driers for willow chips. That sums up my recent contact with the sector. I am very impressed by the courage and commitment of those pioneers who have gone ahead and done what they have done.

I will limit my remarks to the subjects of willow chip, woodchip and biomass, because that is my area of expertise. I have no current commercial interest in the sector, so I hope that I can be objective. The first fundamental principle is that if the production of willow biomass is going to work, it must demonstrate environmental improvement through economics. Unless the production, processing and burning of willow chip is economic, it cannot be sustained. It cannot continue on environmental benefit alone; people have to get an income from it. The second principle is that there must be enough for everyone in the supply chain, right through from the producer to the user. As you know, that has been a problem in the agriculture sector, and I have some views on that.

By way of background, as you have probably heard and know already, energy consumption in Ireland comprises 37% electricity, 34% heat and 29% transport. The heat sector has been subject to relatively little regulation compared with electricity, which seems to be the most regulated sector. About 700 hectares of land in Northern Ireland are currently being used for growing short-rotation coppice willow, and only 200 hectares are available for harvest this year, so production is still at its very early stages. Members are probably aware that this crop takes three years to grow before it is available for harvest. After one year it is cut back and then it is allowed two years’ growth.

The typical yield is 10 tons of dry matter per hectare per year, which equates to 11·5 tons of chip with 15% moisture content in normal storage conditions. Two and a half tons of chip is roughly equivalent to 1,000 litres of kerosene. On that basis, one hectare of willow will produce the equivalent of 4,500 litres or 1,000 gallons of kerosene or paraffin heating oil. Therefore, the crop can produce quite a lot of energy. It is generally harvested with 50% moisture content, which has to be reduced to 15% if it is going to be stored in chip form. Like any other organic material, such as grain, it must be dried before it can be stored. An added complication of willow chip and woodchip is that it heats very quickly when it is chipped. If it reaches 60°, it develops fungal growth, which, as we all know, is the farmer’s lung organism, and is not something that we want to encourage or allow.

It is a bulky product, and therefore not suitable for long-distance transport. No centralised marketing or distribution arrangements currently exist for this material in Northern Ireland. In contrast, in Sweden 1,250 farmers are growing the product on 18,000 hectares, and it is all marketed centrally by a federation of farmers’ co-operatives.

The difference is that in Sweden willow is burned when it is green; it is not dried at all. It is harvested and burned in large direct-heating-system boilers to supply power to towns or communities. A high proportion of willow is treated with sewage effluent to help growth and to help to process that material.

Looking objectively at where we are, we can grow the crop. We have world-leading expertise at Loughgall, with input from DARD. We can burn the crop; there are many boilers out there, mostly from Scandinavia. The problem area lies in the middle, with the harvesting and storage, and that is where the technical issues arise.

There are two types of harvester in Northern Ireland — rod harvesters, which keep the crop intact, and chip harvesters, which chop it into little pieces. We need objective, evaluated figures for the cost of the operation, as that is critical. Figures have been quoted, but we need to know the exact cost, because it is a significant part of the total cost.

A further type of harvester is available in England. We offered funding for it under the EBIDS scheme, but no contractors took it up. It is called a billet harvester, which cuts the rod into short lengths, so it does not heat to the same extent. However, it should still dry in the heap in the same way as a bundle of sticks. That system must be evaluated to find out whether the rod will survive and dry, or whether it will rot, in Northern Ireland conditions. The system works in the north of England, but it must be evaluated here. We should also consider the idea of harvesting on more marginal land in areas where willow is not grown at the moment. We would need equipment to harvest in those conditions. Those are the gaps in the harvesting process.

With regard to the gaps in the drying process, Countryside Services administered the EBIDS scheme, which was funded under Building Sustainable Prosperity through DARD. It funds 15 stores for farmers, and 11 of those will also dry the crop. We need to get a true picture of the drying costs. Figures of between £8 and £15 a ton have been quoted, but, if you do the theoretical calculations, that does not seem to be achievable. Hopefully, it will be achievable, but that must be validated.

Drying is an expensive, capital-intensive operation, with high running costs. Therefore, someone must evaluate and determine whether there are cheaper methods of drying. That must be done scientifically with mathematical modelling, not simply through look-see trials, which get us nowhere.

Getting a new sector up and running is like the classic chicken-and-egg scenario. People will not plant the crop unless they know that someone will burn it, and no one will install boilers unless there is a ready supply. To be fair to DARD, its challenge fund stimulated the 700 hectares that we have. The current grant scheme is not as generous, and you could argue that it should be increased, but the Committee should consider that matter carefully. It would be much better to suck material up the supply chain rather than try to push it up from below. If producers plant more crop, we may end up with an oversupply and a drop in price. The emphasis should be on usage. We should ensure that the material is sucked up the supply chain, establish a decent market for the product and make that system work. The other option is helpful in meeting establishment costs, but I would like the emphasis to be placed on sucking material up the supply chain.

How can we get more income? There has to be enough money for everyone in the supply chain. Bioremediation, of which I am sure the Committee has heard, is one way of dealing with that issue, and is widely practiced in Sweden. A couple of very good examples are under trial in Northern Ireland at the moment. Willow is able to clean and use up nutrient applied to it. Those trials offer considerable possibilities.

For example, waste from a food factory is being applied to one willow plantation, which will therefore help the nutrient and the growth of the willow. The effluent from the food factory will be treated, and the willow will go back to the boilers in the food factory. Thus, a very good, sustainable cycle is established. That sort of project is exciting and will hopefully develop. For that to happen, the regulators must have an open mind. They must evaluate and try out such projects, rather than always playing totally safe and never letting anything go ahead. We must try new things. Projects must be evaluated, and obviously they must be environmentally sustainable.

Let us consider the cost of the material and its value at the minute. To go back to the figures that I quoted earlier, 1,000 litres of kerosene costs £520 today, which is roughly 52p a litre. Some 2·5 tons of willow chip or woodchip could be bought for £85 a ton, which would be £210 in total. That leaves a margin of £310 for that equivalent amount of energy. Therefore, at this point in time, there is an attractive margin.

Why then are more people not installing woodchip boilers and getting involved in that type of project? We must accept that there is an increased risk and a high installation cost — as much as four times higher than the cost of oil installation. That quite considerable cost has to be earned back.

Another reason is that the product is bulky. There are also issues with specification, and convenience is also a factor. If I want a tank of oil, I simply have to lift the telephone. I can get oil anywhere, but it is not quite so easy to get a load of chip. Many of the good systems that exist on the continent are community-heating systems. People in Northern Ireland are suspicious about community-heating systems because they have had bad experiences in the past. That problem must be overcome.

What can be done to encourage such production? The public sector could set targets to generate a certain proportion of its heat from biomass. The private sector could be encouraged to install combined heat and power plants by offering enhanced capital allowances and business-rate exemptions. The planning application process could be made easier for developments that use community-heating systems. There could even be some form of heat certificate, which could be traded, as for electricity.

Another idea would be to create an association that could bring suppliers together. For example, I may have a contract with a supplier for woodchip in my area. If that supplier decides to stop farming or whatever, what do I do? It would be good to have an association that could perhaps address such problems, honour commitments made by its various members, and so on.

The final and key point that I wish members to note is that farmers and the rural community must maximise their share of the income available in the supply chain. For years, farmers have been what are called “price takers”. Members will be aware of the debate about supermarkets taking the bulk of the margin and the farmers being left with a bit at the bottom. I saw that when I worked in the potato sector; it can be seen everywhere. There is an opportunity for farmers to become involved further up the supply chain, thereby maximising their return. That has been done in Scandinavian countries, such as Sweden and Finland, by what are called “farmer energy groups” or “heat entrepreneurs”. The farmers’ group sells heat to a community development, such as a school or hospital. They sell heat, rather than the woodchip or the fuel; they sell an actual service. I have seen that system working in Sweden. It has exciting possibilities, and it must be encouraged in Northern Ireland, because it has many advantages.

We went to a farm energy plant in Lundsbrunn, which is a small community of 15,000 people. It has a nursery, a primary school and sheltered housing together in one location. In 1995, the boilers of those buildings were replaced with a biomass plant and an oil boiler, which are owned and run by five local farmers. The farmers fuel the plant with woodchip, run the boilers, attend any breakdowns and, generally, have an obligation to sell the heat, and the community pays them for it. In the summer they run an oil boiler, rather than the woodchip burner, because woodchip boilers do not work well with low throughput; they need to work hard. The farmers make all the decisions. That plant has a 15-year contract with the community, and it has four years still to run, so it has been running for 11 years. Heat is supplied by burning forest-waste woodchip — not willow chip in this case — which the farmers harvest. Some woodchip is bought from other farmers, and the group pays for it by the load, but most of it is gathered by the group themselves.

The second example is a small rural school, where two farmers provided and installed a boiler to provide heat. In that case, they have what they called a “package”, which is a little shed beside the school that contains the boiler that is connected to the school’s pipework. The farmers supply the package unit, fuel it and run it. If there is any problem, they are contacted by mobile phone; it is not the school’s problem. Surprisingly, that boiler was burning grain when we visited it, but, as members know, grain also has an energy value.

Those are only two examples, but such farm energy programmes have advantages. They generate a local income stream for the farmers. Farmers, as members know, are competent in looking after equipment — they do so daily — and the work meshes with their abilities. They also have the time in winter to keep up with the peak heat demands, and derive extra income from that. There is also the social integration of farmers and community working together. That also provides protection for both parties, as the farmers know that the contract is unlikely to be broken, or reneged on, because they are part of the local community. The schemes have a lot going for them and seem to work well.

In Sweden, such schemes are encouraged by bioenergy partnerships, which provide assistance to farmers to establish an energy group, look at their options, carry out a pilot study, prepare a business plan, develop proposals and negotiate contracts. That is a big issue for farmers. They are being asked to move out of their comfort zones and into unfamiliar territory; they will need support, facilitation and encouragement to adjust. I know from speaking to growers here that there is a nursing home that would be interested in installing a biomass facility, but farmers need to know how to get in touch with the proprietor and how to negotiate a contract.

That is my overview of the uses of wood energy and biomass, and the experiences of that in Sweden.

The Chairperson:

Whose responsibility is it to sell this idea and this product?

Mr Duff:

The issue is about rural development potential, which is of benefit to communities in those areas. That is where the need should be met and driven from. As you are probably aware, this sector is a difficult one, because DARD is involved with rural communities and the Department of Enterprise, Trade and Investment controls the installation of boilers. There needs to be cross-departmental co-operation, but ultimately the driver is rural community opportunity.

The Chairperson:

You are convinced of the energy potential of woodchip. You also highlighted the technical challenges of harvesting and drying. How do you see the Government in general, and the Department specifically, helping to resolve those technical problems?

Mr Duff:

The technical issues clearly relate to, at present, the research and development of harvesting and drying. The Agri-Food and Biosciences Institute (AFBI) and the College of Agriculture, Food and Rural Enterprise (CAFRE) should be working to develop those areas. However, there is much to be said for working with pioneer farmers. This does not have to be ivory-tower research; it is working in the field.

Mr Savage:

If I heard correctly, you said that there are 700 hectares of willow in Northern Ireland, 200 of which are eligible for harvesting this year?

Mr Duff:

When they were planted, that was the approximate figure.

Mr Savage:

One of the things that you said, and which I support 100 per cent, is that farmers should be at the top of the list to be guaranteed returns, with others receiving their share thereafter. In Northern Ireland, at present, woodchip is in big competition with grain. If I owned 500 acres of willow and 500 acres of grain, wheat or barley, people would be watching carefully to see which performed better.

We need food, but on the flip side we need heat. Short-rotation coppice willow is economically volatile, and you recommended the use of remediation payments to encourage more planting. What barriers must be overcome before Northern Ireland can move towards the Swedish system, where willow farms are treated with sewage sludge from local authorities?

Mr Duff:

It can be used during a short period of the year. It is a matter of supply. A typical Swedish community-heating system burns sawdust, bark, forest waste and willow. The willow is fed into the burner as it becomes available. If a plant were to run totally on green willow, delivery would have to be well controlled. The green willow could not be allowed to sit because it would heat. What would happen if there were a wet week and farmers could not work? The system would become difficult to manage.

There is an argument about whether the moisture needs to be reduced to 15%. The exponents of the stick harvester will rightly say that they can reduce it to 25% or 30%. When that wood is chipped, it will last long enough to be burned before it heats. Possibilities that would reduce drying costs need to be tried out. I did not explain the stick harvester, as I assumed that you understood how it works: with the stick harvester the wood is stacked in the open air. The wind blows through it, and it dries naturally down to 25% or 35% moisture. Obviously, that is much more cost-effective.

Mr P J Bradley:

I am conscious of the questions that the Chairperson, Mr Savage and Mr Irwin have already asked. You, correctly, said that down the years farmers have been price takers, rather than, I suppose, price makers, and that the emerging biomass market provides a unique opportunity for farmers to maximise their share of the product’s value to the final user. Is it not the case that any Government involvement would wipe out the affect of market trends and leave farmers at the mercy of external forces? Do you think that farmers will have a free hand in putting a price on willow? You recommended the establishment of farm energy groups — how can the Government and the Department best facilitate such initiatives?

Mr Duff:

Mr Duff:

Thank you.