Norbord calls on the government to amend biomass subsidies
09/11/2016

Earlier this year, a major energy supplier lobbied the government to make biomass power stations eligible for future subsidies. The company wants to be allowed to bid for ‘green’ subsidies which the government is planning to auction off later this year. 

Biomass power plants already receive government support, but the industry wants more. However, the type of technology used to convert coal-fired power stations to biomass is not currently eligible to bid for the new subsidies.

There are several reasons why this technology should not receive subsidies but the most basic is that wood is, fundamentally, very different from other renewable energy sources such as wind and solar power. Nobody has to buy their wind or sunshine and there is no market for these energy sources.

Wood markets, however, are well-established. It is a raw material for numerous industries and is traded internationally. Subsidies fundamentally distort the market for timber and applying the same incentives to wood as to wind or solar power generation is nonsensical.

Norbord is one of many manufacturers for whom wood is the principal raw material and depends upon the ability to buy materials competitively in a free and open market. As a manufacturer, Norbord burns process residues to generate 75% of its heat energy from on-site biomass plants for which it receives payment under the government’s Renewable Heat Incentive. 

However, this payment does not even get close to offsetting the impact of wood price increases resulting from subsidies paid to biomass power stations.

To incentivise the burning of wood as biomass simply distorts the market and damages established industries – industries that provide jobs and produce useful products for society. 

The government needs to amend the existing subsidy process to remove this unfair incentive and must not cave in to biomass energy companies who want even more public money to subsidise their businesses.