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Christchurch hospital will soon be using biomass fuel

Brian Cox's Blog
Monday, March 11, 2019

The decision by the Canterbury District Health Board and the Government to install two biomass fuelled boilers at Christchurch hospital to replace the existing coal fuelled boilers demonstrates the increasing growth in the use of biomass to replace coal and natural gas.

The decision provides a show of confidence in the availability of biomass fuel into the future and the capability of the biomass fuel suppliers to reliably deliver specification fuel to meet demand.

The installation of yet more biomass fuelled heat plant in Canterbury is providing the demand pull that is encouraging biomass fuel suppliers to grow their capabilities to source and supply fuel.

The growing pool of heat plant fuelled by biomass in Canterbury is also providing the critical mass necessary for having adequate levels of advisers and service providers in the region.

Government has signalled that it wants a focus on reducing greenhouse gas emissions from process heat so it is encouraging to see that its own investment decisions are making Canterbury a role model on how 20 PJ of coal and gas could be replaced by biomass fuel by 2050. It is great to see Government ‘putting its money where its mouth is’ with regard to reducing emissions.  Such investment leadership will encourage business to also move to use more biomass energy.

Is an IKEA store to our advantage?

Wink Sutton's Blog
Saturday, February 23, 2019

IKEA is possibly to begin trading in New Zealand. Should New Zealand forest owners be pleased? Already New Zealand has large retailers including The Warehouse, Harvey Norman, K Mart, Mitre10 and Bunnings. However, these are Australian or New Zealand based companies. Sweden’s IKEA is probably the first of the northern hemisphere ‘big box’ retailers such as Walmart, Home Depot or Lowes, to come to New Zealand.

 These ‘big box’ companies can be massive. Walmart, for example, had an annual revenue of US$480 billion in 2018 which is more than twice the GDP of this country which was US$206 billion in 2017. IKEA, although not as large as its North American ‘big box’ equivalents, is still large with a 2018 revenue of US$44 billion.

Their profit comes from not just scale but also from the pressure these retailers can put on suppliers. These ‘big box’ companies pay only minimal prices for their wood and only pay the lowest wood processing costs, therefore much processing is being done in China and other counties with low wage economies. But the cost of wood should be greater than the direct cost of felling, extraction and transport – there must be an extra payment for past and future management costs. Failure to do this means that there will be little or no future forest management and almost no plantation plantings. In the long-term, therefore, less wood would be available.

The importance of paying more for wood than the direct costs involved was highlighted in 1987 report of the World Commission on Environment and Development: Our Common Future, often referred to as the Brundtland report. A most relevant quote from chapter two −

The process of economic development must be more soundly based upon the realities of the stock of capital that sustains it. This is rarely done in either developed or developing countries. For example, income from forestry operations is conventionally measured in terms of the value of timber and other products extracted, minus the costs of extraction. The costs of regenerating the forest are not taken into account, unless money is actually spent on such work. Thus figuring profits from logging rarely takes full account of the losses in future revenue incurred through degradation of the forest.

Being a Swedish company IKEA must know, that for future wood supplies to be assured, it is important to reward forest or plantation owners for their management and investment. Because we should expect IKEA to be a responsible wood buyer. Setting up in New Zealand could be to the advantage of New Zealand forest owners.

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Disclaimer: Personal views expressed in this blog are those of the writers and do not necessarily represent those of the NZ Farm Forestry Association.

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