New forest biomass sustainability criteria were proposed in the revised EU Renewable Energy Directive, presented by the European Commission in November 2016. These criteria are highly relevant for the Nordic countries as producers and users of forest biomass for heating, cooling and electricity generation. Biomass accounts for 5 – 31 % of the fuel used in heat and electricity production in the Nordic countries (2013 numbers). Denmark imports nearly half of its forest biomass, while Sweden, Finland and Norway are almost fully self-supplied.

What are the implications of the proposed revised directive?

A new report – commissioned by AGFE, the working group for renewable energy within the Nordic Council of Ministers and administrated by the Nordic Energy Research – analyses the administrative burdens and the market implications of the EU directive. It concludes that “Implementation of the sustainability criteria is not expected to significantly impact the overall forest biomass consumption in the Nordics.”

This conclusion is based upon three assumptions: 1, That the new risk-based sustainability criterion for forest biomass is introduced as suggested in the report. 2,  that the LULUCF requirement for ensuring proper carbon accounting of carbon impacts of forest biomass used in energy generation is met. And 3, the 20 MW capacity threshold for energy plants.

The second conclusion of the report is that “[the EU directive] does, however, increase the forest biomass fuel costs for the energy plants.”. The cost increase of biomass fuel is estimated at 0.1-0.7 EUR/MWh (1-4 %). This applies to forest biomass from countries meeting the country level criteria for sustainable biomass (“low risk countries”). 85 % of this cost consists of additional burden for energy plants. The extra costs will either be transferred to the price of heat and electricity for the consumers, or lower the prices for biomass suppliers, depending on the market situation.

The country level criteria are the most important aspect affecting the administrative burden and related costs for using forest-based biomass for electricity and heating in the Nordics. Sourcing of biomass from a country not meeting the country level criteria is estimated to increase the administrative cost by some >65%, i.e. 0.2 EUR/MWh of fuel, compared to sourcing from a country meeting the country level criteria. This increase in cost will likely affect the future import of wood pellets from countries outside the Nordics.

Biomass  energy plants in the Nordics will need to demonstrate compliance with the EU criteria to the state administration, and the responsibility to meet the sustainability requirements will be transferred to biomass suppliers, including sawmills and forest owners. The administrative burden will be significant for the smallest energy plants and  small scale forest owners, but will be more cost-effective if sustainability is demonstrated by the biomass suppliers.

Despite the challenges, the Nordic countries are in a good position for meeting the EU sustainability requirements for biomass.

The final report will be published on the NER publications page in mid-January, 2018.