Focus
BIOMASS A
BURNING ISSUE
Policies needed to spark the biomass heating market
Governments that consistently ignore the potential that
renewable energy has for the heating market cant see
the wood for the trees. A reFOCUS focus on biomass for
heat begins with an overview of the biomass market-
place by Heinz Kopetz, chairman of the European Biomass
Association (AEBIOM).
B
iomass is a renewable energy source
with very specific properties. Compared
to other renewable technologies such
as solar thermal, photovoltaic (PV) or wind,
biomass has few problems with energy storage;
in a sense, biomass is stored solar energy, and
is CO2 neutral when it burns. Another prop-
erty of biomass is its versatility. Biomass can
produce biogas, liquid fuels, electricity or heat,
but recent public interest in bioenergy has been
directed more towards liquid fuels and electric-
ity rather than heat.
Biomass heating in
Europe
But heat is still the most important market
for bioenergy. In 2003 biomass contributed
69Mtoe (million tonnes of oil equivalent)
to the energy system in European Union
(EU25). That is 4% of the total primary
energy input. Of this 70% was used to
produce heat, 29% to produce electric-
ity and only 1% to produce liquid fuels*.
Compared to other renewable heat sources
such as solar thermal or geothermal, bio-
mass still dominates: it accounts for 96% of
renewable heat*.
Burning wood for heat is the main appli-
cation of bioenergy in the world. There is
a constant drive to improve efficiency and
reduce emission particles. Several systems
can be considered, depending on the size.
52 reFOCUS March/April 2007
Background image: the dominant fuels for biomass heat are firewood, wood
Small-scale heating systems for households
typically use wood logs or pellets. Medium-
scale users typically burn wood chips or pel-
lets in grate boilers, while large-scale boilers
can burn different fuels including chips,
wood waste and bark.
Heat produced through cogeneration pro-
vides both bioelectricity and bioheat for
industrial processes in the form of vapour. It
can even supply district heating networks.
Pushed by the European Commissions
renewable electricity directive (2001/77/
EC), many new installations use solid bio-
mass to produce electricity using steam
technology, the organic ranking cycle proc-
ess (ORC), wood gasification or, in small
units, the Stirling machine. In some coun-
tries co-firing biomass in coal-based power
plants became a new way to transform bio-
mass into electricity. Unfortunately, many
of these co-firing projects do not use the
produced heat effectively; this drops the
conversion efficiency below 40%.
Ten years ago the use of pellets as biomass
fuel for heating or electricity was more or
less unknown. This has changed totally. The
pellets industry has developed impressively
since then (see case studies on pages 58). In
2006 in Europe 4Mt of pellets were sold to
different markets. Almost half went to big
cogeneration or electricity-only plants, and
about 60% to the heating sector.
1471 0846/07 2007 Elsevier Ltd. All rights reserved.
chips and residuals.
Focus on biomass a burning issue:
Can EU Policy spark biomass heating
market, pages 5257
Biomass case studies, page 58:
ASEAN takes to biomass congenera-
tion
Wood pellet industry in US needs
policy boost
Welsh look to Ireland and Italy for
export
The investors perspective, page 54
The analysts perspective, page 56
In a few countries like Sweden, Germany,
Italy and Austria, the consumption of pel-
lets for heating private houses is expanding
rapidly. Germany had about 70,000 small
pellet burners in operation in 2006, Austria
about 40,000. In spite of this, pellets share
of the overall biomass heating sector was less
than 2% in 2006. The dominant fuels for
biomass heat are firewood, wood chips and
wood residuals.
Biomass heating: slow
growth
Biomass for heat grew 20% between 2000
and 2004; in the same period biomass for
electricity grew 60%*. This comparatively
slow growth of biomass heat is one of the
main reasons why Europe will miss its origi-
nal goal of doubling the share of renewable
energy sources from 6% to 12% by 2010.

So why is biomass for heating grow-
ing slowly compared to other renewable
technologies? Thus far, European renewable
energy policies have overlooked the most
important segment of the energy market.
In terms of final energy, 50% of renewables
is used for heat, 30% in transportation
fuels and 20% for electricity. But where as
biomass for transportation fuels and bio-
mass for electricity are promoted by clear
European targets, there is nothing similar
for the heating sector. As a result, the lack
of a strong European renewable energy
source (RES) policy for heat is a big disad-
vantage for the deployment of renewables
altogether.
There are also various obstacles to market
penetration and strong competition from
fossil fuels and electricity. For example, bio-
fuels like ethanol or biodiesel blend easily
with fossil fuels for use in existing vehicles.
But wood chips or pellets cannot fuel a gas
or oil burner. To switch from an electricity
or fossil fuel-driven heating system to bio-
mass you need a new burner. This requires a
lot of capital and in many countries the eco-
nomic incentives to switch are too weak.
Positive examples in
Europe
Only a few European countries have
national policies that encourage biomass
for heat. These include Denmark, Sweden
and Austria, and more recently, Germany
and France. Their methods are different.
Sweden, the leading country, supports bio-
mass for heat through its tax policy. Since
the 1980s the tax on heating oil has been
more than
200 per 1,000 litres. This tax
policy made many district heating compa-
nies switch from fossil fuels to biomass. This
dramatically increased the share of biomass
in the heating sector within a few years.
Austria chose a different path. The tax on
fossil fuels is low, yet over years a generous
financial support programme to foster bio-
mass and solar for heating has emerged. In
2006 regional governments and the federal
government provided about
80 million for
investments in biomass and district heating
systems. This is equivalent to
10 per head
of population. This support programme
led to a rapid growth of biomass heating in
Austria at all levels: pellets burners and chip
boilers in individual houses and farms, heat
www.re-focus.net
Of particular importance will be the production of solid biomass on agricultural land by planting
Miscanthus (pictured), short rotation forest or other plants for solid biomass production.
contracting for public buildings, district
heating systems starting from micro-grids
with 300kW up to 60MW, and an increas-
ing use of biomass in the service and manu-
facturing sector of the economy.
Future perspectives
The future of biomass heating depends
upon the development of the markets for
fossil fuels and on policy decisions regarding
the heating market. AEBIOM believes the
principle of efficiency should guide future
biomass strategy.
The main goal should be to maximise
the contribution of biomass to total energy
consumption at low costs to the consumer.
Making this happen requires at least three
things:
Minimisation of the conversion losses;
Keeping final energy yields per hectare
as high as possible;
Low costs to improve the competitive-
ness of the European economy.
The efficiency of conversion from biomass
as primary energy to final energy such as
using heat, electricity or fuels varies between
90% (modern wood burners to produce
heat) and 25% (electricity generation in old
plants).
Focus
There are also big differences in the final
energy output per land unit. With tradi-
tional liquid fuels, 1.0toe-1.5toe per hectare
can be produced. Generating heat from
Miscanthus or short rotation coppices gives
you 3.5toe-5.0toe per hectare. Biogas gives
similar high energy yields. Thus the final
energy output per hectare varies between
1.0toe-5.0toe, depending upon the plant
cultivated and the conversion technology
chosen. The costs per unit final energy are
the lowest for heat and highest for electric-
ity.
Based on the criteria of high conversion
efficiency, high final energy output per unit
land and low cost, the priorities for the
future biomass deployment are bioheat fol-
lowed by transportation fuels and electricity
from heat-driven cogeneration units.
The potential for biomass
What does this mean for the European
energy system? AEBIOM estimates that bio-
mass can contribute at least 220Mtoe of
primary energy to Europes energy supply
by 2020 in a sustainable way. This includes
some 10%-20% that might be imported in
the form of pellets, ethanol or vegetable oil.
This estimate is lower than the figures that
the European Environment Agency published
recently*.
March/April 2007 reFOCUS 53
 Focus

Table 1: Biomass development targets towards 2020 in Mtoe (BAP - Biomass agricultural area in EU27, that is, 183Mha.
Action Plan of the European Commission 2006 AEBIOM - Association europenne Agricultural policy therefore needs to create
pour la biomasse European Biomass Association). new incentives for farmers to produce solid
2004 2010 (BAP) 2020 (AEBIOM) biomass for heating and electricity produc-
Biomass for heat 48 75 120 tion.
In future there might be competition for
Biomass for cogeneration / electricity 22 56 60
raw materials between second generation bio-
Biomass for liquid fuels 2 19 40
fuels and biomass for heat; already demand
Total 72 150 220
for corn from the US biofuel industry has
pushed up input costs for food processors
Based on these general figures, AEBIOM from European forests. Perhaps a quarter or and raised food prices there and in Mexico.
developed sectoral targets for biomass in more will come from the forests in a direct We should opt for the technology that offers
2020 (see table 1 above). or indirect way. the highest conversion efficiency.
A clear emphasis on biomass for heat is the Another important source of raw material
best strategy to reduce greenhouse gas emis- for energy will be the organic waste streams. Renewable heat in the
sions and to improve the security of supply Of particular importance will be the produc- European heating market
as much as possible, given the available quan- tion of solid biomass on agricultural land by Not only is the supply of biomass for
tity of biomass. It is clear that the required planting Miscanthus, short rotation forest or the future heating sector a new challenge,
solid biomass of almost 180Mtoe for heat other plants for solid biomass production. but so is the penetration of the market.
and electricity (one part of this quantity To reach the above mentioned targets Obviously all houses are heated; therefore
will be covered by biogas) cannot come only will require more than 10% of the farmed the increase of biomass heat is possible only
if there is a decrease in existing heating
The investors perspective the Dutch waste management company AVR, sources. In 2003 the final demand for heat
the future is waste-to-energy which had three WtE plants, was sold to finan- was 561Mtoe*.
Compared to other renewable sectors, cial investors, Kohlberg Kravis Roberts, CVC The contribution of RES heat in 2020
corporate investment activity in the Capital Partners and Oranje-Nassau Groep, in could be 120Mtoe from primary biomass
biomass, biogas and waste-to-energy March 2006. On the public markets, the Italian for heat only, 20Mtoe primary biomass for
(WtE) sector by venture capital, private Actelios raised US$302 million through its IPO heat from cogeneration units, and about
equity and public markets was relative- in January last year. 19Mtoe heat from solar thermal and geo-
ly low in 2006 at US$587m. However, New Energy Finance tracks publicly quoted thermal sources. Averaging conversion losses
investor interest is growing and asset biomass companies through the NEX. The from biomass to heat at 15%, this deliv-
financing of projects by companies companies values increased by 16% during ers 119Mtoe final heat from biomass and
increased by 50% last year. 2006; less than the wind and solar sector and 19Mtoe from other renewable sources, total-
Probably the best opportunities in the NEX overall (up 33.3% in 2006), but more than ling 138Mtoe. If by 2020 the demand for
industry are in the extraction of energy the energy efficiency sector. The index includes heat has dropped 5% to 533Mtoe due to
from waste. In order to lessen pressure Actelios, which increased it returns by 6% last energy-saving activities, biomass could cover
on available landfill space, the EUs Landfill year, and Energy Developments, an Australian 22% of the heating demand, and all renewa-
Directive (1999/31/EC) stipulates that member company focusing on landfill gas exploitation, bles together 26%.
countries must reduce the amount of biode- with a price increase of 24%. The European market consists of 200
gradable waste put into landfill by 35% from Through its generous feed-in tariffs Germany million dwellings. They use 86% fossil fuels
1995 levels by 2016. As well as recycling, this leads the field in electricity generation from and electricity (electricity 31%) but only 8%
provides a stimulus to the waste-to-energy biogas, with about 3,500 installed plants pro- renewables*. To increase the share of renewa-
industry. WtE technology has improved con- viding a total capacity of 1,220MW. North bles to 26% means that 18%, some 36 mil-
siderably over the last decade: in the UK, America, where local conditions such as farm lion dwellings, would have to switch their
dioxins, lead and sulphur emissions fell by size are favourable and the market is still in its existing heating systems to renewable ones.
more than 99%. early stages, provides export opportunities for Using figures based on finished projects,
In many European countries for example, German biogas companies. the total capital cost of this change of the
local authorities and municipalities fund the New Energy Finance does not expect such a European heating structure would amount
development of waste-to-energy sites. But meteoric growth in biomass as in wind or solar to
580 billion. That is
41 billion per year
this situation has begun to change as more energy, but investment opportunities certainly until 2020.
and more investors realise the opportunity. exist, where favourable legislation is in place This structural change of the heating sec-
New plants are often built in partnership and feedstock supply can be secured. tor can be reached with a sharp rise in the
with waste management companies and plant Contact: taxes on fossil heating fuels and electricity
operators, but when a project is established, Irmgard Herold, New Energy Finance
investors tend to act alone. For example, irmgard.herold@newenergyfinance.com Continued on page 56

54 reFOCUS March/April 2007 www.re-focus.net

 Focus

The analysts perspective

- key opportunities for Biomass combined
heat and power (CHP)
At a global level, Europe and North America
are currently the most important regions
for biomass applications. Europe alone
represents around half of the current global
market while North America represents
approximately 30%.
North America has witnessed slow growth
in the use of biomass for electricity and heat
generation but high gas prices have pro-
vided a new growth impetus for the market.
Most of the current capacity is in the pulp
and paper industry using CHP systems.
The key market for future growth is,
however, expected to be in Asia where
the best short-term growth prospects
are in India, Indonesia, Thailand and the
Philippines, with China a good medium-
term opportunity (see ASEAN takes to
biomass congeneration, page 58). Biomass
power generation has already taken off in
Southeast Asia and offers excellent pros-
pects for investors. The region has a vast
amount of easily-available feedstock, both
in terms of wood and agricultural wastes
such as rice husks.
Latin America also offers good prospects, in
particular Brazil which has specific renew-
able energy targets in place and is a leader
in the adoption of biomass gasification
technologies. Biomass power generation has already taken off in Southeast Asia and offers excellent pros-
pects for investors. The region has a vast amount of easily available feedstock, both in terms of
Biomass CHP in europe: drivers & growth wood and agricultural wastes such as rice husks. (Farmer working in paddy field at Sekinchan,
prospects Malaysia).
The European Unions White Paper gives
biomass a key role in meeting Europes and above 5MW are 9.9
cents/kWh, 8.9 In Spain, the New Energy Plan (Plan
renewables energy targets, allocating three-
cents/kWh and 8.4
cents/kWh. Payments de Energias Renovables - PER) provides a
quarters of the increase in green energy for biomass power will continue for 20 favourable environment for renewable ener-
production to it. While the actual White years. gies and utilities are increasingly becoming
Paper targets are certainly not going to be Germany and Spain are expected to involved in the biomass sector.
met, biomass as a generation technology witness the highest growth rates over the Biomass is also regarded as having
suitable for base load applications - is well forecast period from 2006-2012. The UK is a key role in ensuring Europes security
placed to see an increasing share of invest- another market expected to witness sub- of energy supply, something that has
ments into the renewables sector despite stantial growth. The Scandinavian market taken on even greater importance as a
some countries currently focusing on wind will remain the largest in Europe but future result of recent issues with gas supplies
power. growth rates will be more modest as matu- from Russia and other Former Soviet
For example, in Germany, the largest rity is approached. Union states.
country in the EU, a new biomass payment The German market is driven by very Wood energy will continue to dominate
category at the higher rate of 11.5
cents/ favourable policies and regulations, includ- as the chief biomass feedstock but industrial
kWh has been introduced for capacity up to ing generous feed-in tariffs and priority grid wastes and energy crops will become more
150 kW. The rates for up to 500kW, 5MW access for renewables. prominent in the years ahead.

Continued frompage 54

and/or by a financial support programme of
about
8 billion per year, plus other meas-
ures like training, awareness-building, man-
agement of the supply chain, etc. If one-third
of this renewable heat is used to dismantle
electrical heating and two-thirds to replace
fossil heating, about 600TWh electricity
could be saved. This is one-fifth of the total
electricity production of Europe; one-third
of the thermal power stations could be shut
down. The CO2 emissions could be cut by
570M tonnes. This is about 15% of the total
greenhouse gas emissions. Such a programme
of shifting the European heating supply
towards renewables would create at least
600,000 new jobs.
These figures might vary by a few percent
given different assumptions. Still, they give
a clear picture of the required changes to
Europes heating systems to place 138Mtoe
of renewable heat in the market. Downtown

56 reFOCUS March/April 2007 www.re-focus.net


and in housing projects, new district heating
grids need to be built; in less densely-devel-
oped areas, micro-grids, contracting systems
or single-house solutions on the basis of pel-
lets, chips or other systems in combination
with solar collectors are adequate.
Heat and the European
energy policy
Friday 9 March 2007, was an important day
for the development of renewables in Europe
and worldwide. The European Council
decided to make a binding target of 20%
renewables in the European energy mix in
2020. This is a feasible but ambitious goal,
bearing in mind that 2004 renewables cov-
ered only 6.5% of the total energy mix.
To reach it member states will have to
come up with renewable energy action plans
in which they make clear which renewable
energy sources they will develop and which
energy markets they will supply: heat, trans-
portation fuels or electricity.
Member states need to direct at least
half the total renewable energy offer to the
heat/cool sector to gain a high conversion
efficiency at low cost.
www.re-focus.net
The Councils ambitious goal is attainable
only if strong and clear European legislation
follows on renewable heat, biofuels and elec-
tricity. Although there is a binding target of
20% renewables, indicative sectoral targets
would help member states to set up their
strategies. For examples, indicative targets of
at least 25% renewable heat, 25% renewable
electricity and 10% liquid fuels (binding)
would get them to their goal.
It is clear that the renewable energy mix
will differ between member states accord-
ing to their specific resources and degree of
development. Even so, as experience shows,
the new targets are reachable only if Council
sets out a strong policy for renewable heat
that reflects the potentials outlined above,
and it needs to do this quickly.
International aspects of
solid biomass
Everywhere one looks, the heat sector is
the elephant in the room that no-one
mentions. A brief comparison between
North and South America on the one side
and Europe on the other side shows big
differences. In South America biomass is
Focus
important in heating, but the technology
used is old-fashioned; automated systems
that are the norm in Europe are very seldom
found.
In North America there is a strong swing
to ethanol, to wind and new technologies in
the car industry. But biomass for heat is more
or less overlooked at the national level. That
said, it receives some attention on the basis
of wood or energy corn in some regions.
Following its new policy for RES, Europe
has a chance to set up bioenergy systems
based on efficiency and low cost, and thus
lead the world in the use of modern tech-
nologies for renewable heating. This offers
a bright future for the biomass sector in
Europe and beyond.
(See page 58 for case studies).
* For references contact the author / editor
Contact:
Heinz Kopetz, chairman, AEBIOM
The European Biomass Association (AEBIOM)
is an international non-profit association
established in 1990 for the promotion of
biomass production and implementation for
energy purposes in Europe dealing with bio-
mass for heat, electricity, liquid fuels, biogas
and production of biomass.
March/April 2007 reFOCUS 57
 Focus
Biomass around the world
ASEANs biomass congen affair
Southeast Asias vast and variegated agriculture
is giving it lead position in the global develop-
ment of biomass as a renewable and sustain-
able energy alternative to traditional electricity
generating technology. Rice husks and sugar
cane waste (bagasse), corn leaves, tapioca,
palm shell and woodchips provide biomass
alternative fuels in the major Association of
South East Asian Nations (ASEAN) economies of
Indonesia, Malaysia, the Philippines, Singapore,
Thailand and Vietnam. Singapore even has two
small generating stations fuelled by industrial
waste and tree and foliage cuttings.
The ASEAN countries produce a huge ton-
nage of agricultural waste, mainly from the
cultivation of rice, sugar cane and root crops
such as tapioca. Now every effort is being
made, encouraged by governments, to use
agriculture to provide feedstock to offset the
cost of expensively imported fossil fuels from
overseas. Biomass development on two fronts
is seen as viable in terms of automotive fuel as
well as fuel to generate electricity.
A major scheme to develop commercial
interest in thermal generating plants fuelled
by biomass was provided by Cogen, managed
jointly by the Asian Institute of Technology
(AIT), Bangkok, and Carl Bro International,
Sweden. The Cogen facility, culminating in
Cogen 3, was largely financed by the European
Commission (EC), and aimed at bringing Asian
entrepreneurs in touch with European manu-
facturers of biomass generating equipment.
Started in 2002 and completed at the end of
2004, a major achievement of Cogen 3 was the
implementation of Full-Scale Demonstration
Projects (FSDPs). Twenty-four projects were
selected, of which eight came to fruition.
Independently, Thailands AT Biopower
Company Limited (ATB) successfully launched
its 22MW (megawatt) rice husk-fuelled gener-
ating unit at the beginning of 2006, in Pichit,
a rice growing province some 340km north of
Bangkok.
Success with the Pichit plant has encour-
aged the ATB executive to plan more units,
but smaller to come within the VSPP (very
small power producer) subsidy range limited
by government to a maximum power output
of 10MW. Two plant sites are under review,
at Nakhon Pathom (around 50km west of
Bangkok) and Nakhon Sawan (about 240km to
the north of Thailands capital city).
58 reFOCUS March/April 2007
ATB is also investigating a different fuel
regime for the proposed plants. While ATB has
no trouble acquiring a daily 500 tonne of rice
husks to fuel Pichit, the new plants will prob-
ably be fed a fuel mix of rice husks and bagasse
(sugar cane residue).
The Pichit plant has no market in the Pichit
area for its steam, although ATB expects to get
carbon credits for its production. But the plant
employs 60-70 local people and contributes
over a million baht annually to the Tambon
(village) Administration Office (TAO) in local
taxes.
The Pichit plant is the first rice husk fuelled
power plant to use Suspension Firing System,
a technology from the US. Rice husk will
be ground before burning, resulting in high
efficiency and complete combustion. Apart
from highly efficient combustion, Electrostatic
Precipitator or ESP with 99.5% efficiency is
installed to prevent dust dispersed.
Pellets in US needs policy boost
Fram Renewable Fuels, LLC, headquartered
in Savannah, Georgia, USA, is constructing a
manufacturing facility in Baxley, Georgia, which
will produce wood fuel pellets for residential
and industrial purposes.
While Fram Fuels currently focuses on export
sales, it has one eye on the domestic market.
It has observed strong demand for wood pellet
fuel at the beginning of the heating season,
but mild winter weather in the US caused
demand to wane.
Fram Fuels believes biomass has a bright
future in the United States. Wood pellets will
be a key part of the emerging biomass industry
in the US, and they are easier to transport, a
source said.
As concern for the environment increases
in the US, ethanol, biodiesel, and electric cars
continue making headlines with government
support. Meanwhile, wood pellets are qui-
etly heating class rooms, office buildings, and
homes. Americans are becoming interested in
environmentally friendly alternatives to heat,
electricity, and transportation, and because
of their interest, the US wood pellet industry
is slowly developing. Thus far the US govern-
ment has not made a great effort to curb car-
bon emissions, but political forces and public
opinion seem to be shifting in that direction.
However, certain steps could be taken by the
US government to expedite the process, com-
pany sources maintain. First, stove emission
and fire place emission regulations would help
to sell more certified pellet stoves in the areas
where they are applied. Second, signing on to
the Kyoto Protocol or developing emissions
standards of their own would push many of
the big polluters to consider a renewable fuel
like wood pellets.
Of course, other challenges to growth exist,
such as warmer winters, which cannot be con-
trolled by the American or any other govern-
ment. While the wood pellet industry tries to
prevent global warming, global warming seems
to be fighting the wood pellet industry.
Americas forests are abundant, but increased
demand for pellets could lead to depletion of
those forests. Steps are required to ensure that
this does not happen. This can be done in many
ways, for example by using waste wood or by
looking to other waste streams, such as green
waste and agricultural residues. The US wood
pellet industry may be in its adolescent stages;
however, it is growing stronger all the time.
Welsh look to Ireland, Italy for export
UK, Bridgend-based Welsh Biofuels Limited is
rapidly increasing its output to cope with a rise
in export of its wood pellets. The demand for
pellets to fuel central heating systems has come
mainly from Ireland and Italy.
Managing Director, Ken Shaw said, The
increased sales to Ireland is related to the Irish
Governments aggressively subsidised, Bio Heat
Boiler Deployment Programme. The scheme
kick-started Irelands domestic and community
biomass market earlier this year with massive
grants for wood fuelled boilers.
Installations were subsidised to the tune
of
4,200, which in some early cases nearly
covered total costs. Irish boiler manufacturer
Gercross, for example, launched its biomass
unit in September last year and sales in the last
six months have gone from one per week to
over eighty a week, said Shaw.
Orders from Italy reflect the lack of supply
across Europe, and continued growth for the
UK is forecast.
Shaw believes that long term, the way
forward for the Renewable Energy Pellet is a
blended energy pellet made out of a range of
biomass material, including fast growing grass-
es such as Miscanthus, arable energy coppice,
co-products produced from the Bioethanol
Industry i.e. grain husks, co-products of the
Biodiesel Industry as well as a range of other
non toxic waste products.
www.re-focus.net