Jan. 23, 2015 - North American pellet producers are on edge, waiting for the Netherlands to define the terms that will determine whether wood pellets have been sustainably harvested. Rather than reach out to the public at large for consultations and in an effort to avoid making an unpopular decision, the government asked the NGOs (such as Greenpeace and other environmental groups) to sit down and negotiate a sustainability system with the power companies.
By Amie Silverwood
The utilities involved were unable to reach an agreement with the environmental groups and walked away from the process, not wanting to be put in a position where they may be targeted by the NGOs in a smear campaign.
The NGOs have specified that any biomass used in the Netherlands’ utilities will have to be FSC-certified. The problem for Canadian producers is that most forests in Canada have undergone CSA or SFI certification, which is PEFC-endorsed rather than FSC-certified, and would not qualify under these sustainability terms.
“From a Canadian perspective, we’ve sent in two protest letters to the WTO and then we’re also following up with the European Commission. But until the Dutch are emphatic about what they’re going to do, it’s hard to put in a complaint to the commission,” executive director of WPAC Gordon Murray explains.
WPAC’s complaint is that it is against international trade laws to specify which certification scheme is to be accepted. Murray says that this is no different than endorsing one brand and refusing to accept another. “Under international trade law, you’re not allowed to specify one supplier,” he says. As long as the supplier meets the basic requirements, other forms of certification cannot be refused.
If PEFC-endorced systems are allowed, Canadian producers will be in a solid position to compete. But this will still raise an issue, as far as Murray is concerned. “On the one hand, you’d think we’d be delighted if they said everything has to be certified and they did accept PEFC. Then we’d have a competitive advantage over the Americans but the problem is that the four Dutch utilities will need to invest significant capital to convert their power plants to be modern biomass generators.”
At present, there is only one coal plant that is equiped to co-fire wood pellets. The utilities will have to determine whether it makes good business sense to undergo the conversions. If the regulations prove to be too onerous and only Canadian pellets meet the sustainability standards required to qualify for the subsidy, the utilities may decide there is too much supply risk to go ahead with the investment.
“They may say if all we’re going to get is Canadian supply and Canadians are already selling to the U.K. and Belgium, we’re probably not going to get much so maybe we just won’t go ahead afterall,” says Murray. “If they did that, Canadians would be left high and dry.”