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U.K. rails and ports face squeeze from biomass imports

May 10, 2013, London,  England – The U.K.'s growing biomass imports could put increasing pressure on its rail and port logistics, adding to existing concerns about the potential introduction of freight specific rail charges for the industry.


May 10, 2013
By Argus Media

New
projects in the U.K. could bring in an estimated 30 million tons per year of wood
pellets  five years if they all successfully come
on line.

The
new biomass generation capacity is located at coal-fired power stations
that have converted units to burn wood pellets, meaning it will use
existing coal rail infrastructure for transport links.

The
main concern is the cost of converting the supply chain to
handle biomass, rather than capacity requirements.

“Capacity is not a
problem, the existing rail network should be able to handle the increase
in volumes as it can operate throughout the night,” said Philippa Edmunds, U.K. rail freight
operator group Freight on Rail manager.
“The issue is with converting and building the supply chain to handle
biomass.”

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Several
market participants have expressed concerns that there will be a higher
risk of bottlenecks on the rail network — for every wagon of coal,
approximately 1.5 railcars would be needs to transport the same volume
of biomass. There is also the issue of keeping wood pellets stored
correctly and not exposed to rain during the unloading and transporting
process, which could add significant delays during the U.K. winter season.

It
appears that several investors are waiting to see whether rail freight
charges will be implemented before committing to invest in converting
the supply chain. The proposed rail freight charges for biomass, which
may come into force in 2016, could ease any pressure on existing
infrastructure as it may become too expensive to move pellets by rail
and push people out of the market as road transport is not a viable
alternative.

The
Office of Rail Regulation (ORR) is due to reveal its decision on
whether it will implement rail freight charges for the biomass industry
on June 12, after the consultation period closed on March 28.

“We
believe that the ORR's proposal to increase freight charges contravenes
the government's policy to encourage the conversion of existing
coal-fired power stations,” Edmunds said. “At the moment, there is an
inconsistent message from government with its regulator proposing
increased transportation charges which could undermine an important
source of energy for the U.K.”


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