STIMULATING AUSTRALIAN BIOENERGY – insights from Sweden
With the Bioenergy Australia conference coming up next week, one of the speakers talks about how international experience can be applied to the Australia context
By Philip Peck
Associate Professor at the International Institute for Industrial Environmental Economics
Any examination of industrial production systems in Australia immediately supports a view that an abundance of unutilized biomass residues is generated, particularly in the forestry and agricultural sectors. In a number of other countries, and particularly in Sweden, bioenergy industries have been built upon such waste flows. Across the economy, forestry harvest waste and agricultural wastes are valorised for industry heat, combined heat and power (CHP), residential sector heating, and for biogas production. As the spatial distribution and scale of the Swedish and Australian forest industries are sufficiently similar for parallels to be drawn, a number of the drivers that stimulated forestry harvest residue utilisation in the Nordic zone can be taken forth as valid examples for Australia.
While this is argument is put forward, it is done so with clear recognition that there are fundamental differences in the energy mix context between the two countries and that this places limitations on how much one can generalise. To start with, Sweden is a cool temperate country with a long heating season and well-established district heating networks; further, the country has no economically viable fossil fuel resources. With this in mind, this article shall focus more on general socio-economic issues underlying a major uptake of bioenergy rather than focusing on specific technology systems.
Australian Bioenergy: is ‘waste going to waste’ ?
Prior to seeking insights from abroad it seems sensible to briefly establish that Australia really does have ‘potential’, and that such potential is not being leveraged. Addressing forestry, a simplified compilation of publicly available statistics and ‘potential-biofuel’ estimates provides clear evidence that Australia has substantial volumes of forest harvest waste that should be economically viable (Table 1). At present, much of such residues are either burnt in the open, or left onsite.[i]
As figures for bioenergy potential are based on plantations, and are less affected by a range of issues that affect harvest waste potential from native forests, it is logical that waste from a large proportion of these resources should be available for recovery. Moreover, it is important to note that these figures do not include other waste streams such as sawmill residues. Nor have volumes of stemwood currently chipped for export been considered here. A resource foundation for a large bioenergy clearly exists in this sector that is at least as large as the figures indicated in Table 1; indeed it is likely that it is actually much larger.
Table 1. Plantation forest harvest waste bioenergy potential in Australia
|Plantation type||Logs 2013-14
|Forest area 2013-14 (‘000 ha)||Indicative biofuel from waste potential[ii]
|Indicative biofuel from waste potential
|Softwood||14 358||1 024||2 154||10 770|
|Total||21 269||1 987||3 191||15 955|
Figures derived from ABARE (2015) with assumptions as listed.
Shifting focus to bioenergy delivered, it is clear that there is indeed meaningful activity in Australia – the Clean Energy Council[v] provides details of both established and upcoming projects for bioenergy power that will total more than a Gigawatt of installed capacity nationally; but with only a modest proportion of this derived from forest bioenergy (presently some 15%). However, they also report a generally low penetration of bioenergy and energy from waste technologies in Australia, and many opportunities where further gains can be made. It certainly does appear that forest residues with real technical and market potential for bioenergy valorisation are ‘going to waste’ in Australia.
Achievements in Northern Europe
If one examines shifts to bioenergy in the Nordic zone, (with a particular eye on Sweden) it is first important to note that a pragmatic framing in three issue-areas preceded the challenges of climate change that now take up so much space in public debate. While climate gas mitigation is an increasingly important issue, in the past this was seldom the first issue to drive bioenergy developments. As such systems are generally deeply embedded and intertwined with local or regional socio-industrial systems, there will be many instances where socio-economic issues should be given much more attention.
As a first issue of importance for the emergence of modern Nordic bioenergy systems, the oil crises of the 1970s forged explicit recognition that ‘convenient’ fossil fuels often add volatility to operating cost profiles. Further it was recognized, that if imported, they seldom add much value to economies beyond fiscal multiplier effects they provide through their consumption. Indeed strong views have emerged that (expensive) imported fuels can be directly damaging to economies. As a country with a high level of oil dependence (circa 75% in the late 1970s), and with no domestic oil or gas production, Sweden was particularly sensitive in this area.
Secondly, and growing from experimentation with bioenergy following the oils shocks, there was an emerging belief that efforts to source energy carriers from within the sphere of existing domestic ‘production’ activities (such as forestry, agriculture, and food processing) yielded broader socio-economic benefits. Simply put, the replacement of fossil fuels with locally derived fuels was expected to be good for local, regional, and national economies. As experience with bioenergy grew, opinions became stronger that bioenergy could improve industrial and rural community resilience, generate both direct and indirect employment opportunities, stimulate technological innovation, and contribute to environmental improvement both locally and regionally.
Thirdly, as time passed, a broader consensus grew among social, industrial and political spheres that failure to use the energy content of many waste streams was a major lost opportunity. It was now seen as negative for the economy, for society and for the environment. One key pathway to valorise waste in Sweden was to use forestry harvest residues for bioenergy.
Swedish experiences with forest derived fuels
As noted, Sweden was hard hit by the oil crises and reduction of oil dependency, and the threat it poses to economic growth, has been central to the country’s energy strategy since that time. Figure 1 provides insights into how the country has now markedly reduced its vulnerability to the global oil market and largely assured national energy security. Heavy fuel oil and light heating oil consumption has fallen some 80% – from 51 to around 10 TWh. yr-1. Much of this being the result of fuel switching to biomass derived fuels.
Over the same period energy supply from biomass grew from 61 to 129 TWh. yr-1 – and now represents almost a quarter of the total energy carriers supplied to the country’s economy. Over the same period, while fluctuating up or down some 10% yearly, the total energy use of the country remained essentially stable, averaging 579TWh. yr-1 over the period. Fossil fuel displacement with bioenergy has also contributed significantly to a third item of note – a 23% reduction in total greenhouse gas emissions from Sweden since 1990.
However, that which may be most interesting for many external audiences is that the Swedish transition to biomass-derived energy has taken place during an era when the Swedish economy has grown steadily – more than 40% in real terms. In the period 1990-2013, GDP increased from 32 300 $US (2005 constant $)/capita to 45 600 $US. The only disruptions to steady economic growth in the country were the global economic downturns of 1991 and 2008. As essentially the most successful European economy over recent decades, Sweden has clearly not been disadvantaged by its shift to bioenergy.
Figure 1. Index for selected developments in the Swedish Economy 1996–2014 (index value 1990=100) Sources: Statistics Sweden, Swedish Energy Agency, The Swedish Bioenergy Association (Svebio) and World Bank, International Comparison Program database.
While bioenergy applications are now pervasive across the Swedish economy, the industrial and energy sector bioenergy shifts have been central to the Swedish experience. Important factors for such users have been the relative stability of biofuels in comparison to other fuels, as well as their price advantage. To help demonstrate this, Figure 2 shows an indexed comparison of prices for key fuels for industrial customers over the period 1996–2014. Prices for forest chips have been both less volatile in price, and have displayed a slower price development. For comparison the 1996 price level (2013 Swedish kronor [SEK]) for forest chips was 0.14 SEK.kWh-1 (0.023 $A) and the 2014 price 0.20 SEK.kWh-1 (0.032 $A). In contrast, while the average 1996 gas price was quite similar to forest fuels at 0.17 SEK.kWh-1 (0.028 $A), gas prices have both fluctuated significantly and increased much more; the 2014 price was more than double at 0.42 SEK.kWh-1 (0.068 $A).
Figure 2. Energy price index for industrial customers 1996–2014 (index value 1996=100) Data sourced from the Swedish Energy Agency, 2015.
The policy push away from fossil fuels
Sweden’s major energy system shifts did not however, simply evolve in the absence of a concerted policy push. For Sweden, the most significant stimulus for the bioenergy sector was provided by the imposition of a carbon tax in 1991. Applied across utilities, industry, residential, and service sectors, the carbon tax was part of a larger economy-wide tax reform that shifted parts of the taxation base from labour (a ‘good’) to polluting or socio-environmentally undesirable activities such as fossil fuel use (the ‘bads’). The carbon tax was deliberately made high enough to raise the cost of fossil fuels to levels where renewable energy sources were clearly competitive. As has been discussed, over time this has effectively driven fossil fuels (particularly oil) from power generation, district heat, industrial-heat and residential heating markets.
While care was taken to set industry carbon taxation levels low enough to maintain competitiveness, if viewed from an international perspective, they were never the less considerable. While there has been some differentiation between utilities and industry, in essence it has been applied at around 150 SEK2015 (25 $A/ tC) from the early 1990s. Much higher taxation levels however were imposed in the residential and service sectors – when first adopted, the carbon tax for as applied at some 350 SEK2015/tC (58 A$/tC). In the mid 2000s when the shift from fossil fuels in this part of the economy was well underway, the tax was raised again to around 1000 SEK2015/tC (167 $A/ tC).
To support fuel-switching responses to the carbon tax at large scale facilities, the government first (1990s) provided investment grants to combined heat and power (CHP) plants to support biomass use in electricity production. This was followed with a ‘green certificate’ system introduced to support investment in new renewable power plants in 2003, which resulted in a rapid expansion of bioelectricity production. At other scales, support mechanisms such as investment grants for fuel switching, provision of information to help users, and significant national investment in research and technology development activities were applied across the broader economy so as to support the shift.
Insights for Australia
As noted earlier, Swedish and Australian contexts are not the same. In Sweden, the forest industries are a pillar of the economy and have a broad social legitimacy; in contrast Australia relationships between many social actors and the forest industries are ‘strained’ to say the least, and levels of trust are low. In Australia, there are huge vested interests in fossil fuels, and lobbies for these industries are entrenched in both social and political structures; in contrast Sweden has no large coal, natural gas or oil extraction industries and their voice is largely absent. A number of these issues without doubt add to the challenges for bioenergy in Australia.
There is however also a large area of common ground; proponents in Australia should recognise many of the comments that have appeared from critics, and from frustrated early movers, throughout the years in Sweden: “productivity is too low”; “supply chain technologies and logistics are not available”; “specialized equipment for local forestry conditions does not exist”; “biofuels cannot compete with fossil alternatives convenient”; “the politicians are not interested”, and so forth. The Swedes did indeed have to work with such problems.
When seeking insights in how to deal with such issues, it is useful to return to the underlying issues presented as important for Sweden at the outset of its bioenergy shift, and some lessons that Sweden took on-board during its multi-decade learning process. Due to scale effects, learning, and innovation, the majority of these comments no longer apply in Sweden, however they had to be dealt with just the same. Clear communication to stakeholders in Australia that the bioenergy world is not static, and that such constraints can be ‘worked with’, is an important part of gaining the engagement and support that the sector needs.
Key observations that can be taken from Nordic experiences include that:
- bioenergy systems can provide an endogenous energy supply to a range of industries, that is both price competitive and significantly less volatile than fossil alternatives; they have thus contributed to increased resilience of industrial operations across a range of sectors;
- the emergence of a domestic bioenergy sector delivering locally sourced fuels will result in a significant quantity of direct and indirect employment opportunities, and associated socio-economic gains within host communities;
- cost-effective harvesting, processing and delivery of biofuels suited to specific regional conditions generally requires the development of new technology systems with markedly higher productivity and efficiency; these processes in turn stimulate activity in manufacturing and logistics sectors.
However, it must also be recognized that support will be needed for many years to ‘level the playing field’ in most jurisdictions seeking to establish such activities. Gaining such support in Sweden has required clear communication from bioenergy proponents. A range of messages repeated in Sweden through the years that appear relevant to Australia include:
- that bioenergy is much more than low carbon – while ‘carbon’ intensity may be a useful differentiating factor for support initiative, the suite of benefits that can accrue go far beyond this – as such policymakers must be helped to recognise broader issues;
- which socio-economic benefits accrue and how big they may be – while communicating the concept of ancillary benefits is important, providing real evidence and some numbers is vital to achieve broader support, trust and legitimacy;
- where technology systems need improvement and what benchmarks have been achieved elsewhere – while the technological/logistical systems may not yet deliver to required levels, stakeholders need to know where significant learning curves have delivered these systems in other places, and what mechanics are required to bring the technologies and logistical systems required ‘up to speed’.
The messages listed above underline a final key learning point for this discussion – this related to Swedish research efforts over the past decades. A key factor behind the progress of bioenergy in that country has been Government support for research that delivers knowledge in all of these areas. The biomass was there all the time, but the country still needed to support learning by doing with a great deal of desk and field-based study.
Author’s note: The author, Philip Peck is an Australian, raised in Tasmania, who has lived in Sweden since 1996. Working at Scandinavia’s largest university in Lund in the south of the country, he has researched and analysed environmental, economic and policy issues related to emerging energy and technology systems for the past 20 years or so.
[i] Andreas Rothe, Forest biomass for energy: Current and potential use in Tasmania and a comparison with European experience. July 2013; Weihenstephan-Triesdorf, University of Applied Sciences.
[ii] Based on 30% of roundwood volumes removed as harvest waste for bioenergy. This figure also allows for circa 30% of forest residues to be left lying and does not include stump removal, which could potentially increase biomass available for energy by circa 50%. A specific density of 0.5t-dry weight m-3 has been used to convert m3 roundwood equivalent to metric tonnes (for both hardwoods and softwoods).
[iii] 18 GJ/t-dry biomass specific energy content
[iv] Forest productivity: hardwood plantations 15m3ha-1yr-1; conifer softwood plantations 17.5m3ha-1yr-1. As most hardwood plantations were established in the latter part of the 1990s, many have not yet reached harvest age; this indicates that the productive capacity once established will increase these volumes.
[v] Clean Energy Council (2014) CLEAN ENERGY AUSTRALIA REPORT 2014