Friday Offcuts 6 July 2012
The Australian government's own modelling suggests electricity prices are going to rise about 10 per cent as a consequence of the carbon pricing which will be of concern to wood processing and manufacturing companies – as well as Australian households - and voters. For the first three years, polluters will be paying a fixed price for CO2 emissions, and then from July 2015, emissions trading with regular auctioning of pollution permits will kick in along with rules that will allow polluters to buy overseas emission reduction offsets. There is still marked uncertainty though for the business community with the very real possibility that with the next election, the policy could well be repealed.
New Zealand, the only country outside Europe with a comprehensive ETS, announced on Monday amendments to its own Emissions Trading Scheme (ETS). In short, it’s pushed out both the dates and levels at which the country will face higher carbon costs under its ETS. The business community think the ETS changes are reasonable. For forestry, the Government has turned down recommendations from the review committee to restrict the purchase of international carbon credits by New Zealand emitters. The decision has been described by one trader as "burying New Zealand's carbon market in a six-foot hole". Industry's concerns are outlined in the story below from the NZFOA.
With significant and ongoing changes in the local and international carbon trading markets (carbon prices in Europe have firmed for example by around 30% in the last month), interest is going to be very high for this regions’ annual carbon update, Carbon Forestry 2012 which runs in Auckland on 22-23 August 2012. For those looking at registering, remember the discounted early-bird registrations close in just two weeks.
Finally, in Australia the saga of the Gunns review is ticking along - albeit slowly - with the company’s shares still remaining in a trading halt. They haven’t traded on the Australian Securities Exchange since 9 March when they were at 16 cents. On Monday, the company announced that the declining woodchip market has forced them to review the value of their forestry assets, including the 200,000 hectare Tasmanian forest estate. For company shareholders, the picture is less than clear with the AU$400 million capital raising now having dragged on for more than three months and no end yet in sight.
This week we have for you:
Gunns now reviewing forestry asset salesGunns Ltd told the Australian Securities Exchange on Monday that it is reviewing the value of its forestry assets in the light of declining prices in the woodchip market. The company said its asset value review included the Tasmanian Forest Estate, which comprises 200,000 hectares of hardwood plantations.
The company said the declining woodchip market has forced a review of the value of the asset. The review is still underway and the company has not said how long it will take. Gunns said it would provide more details once the analysis was complete. In relation to the proposed AU$400 million capital raising underway to cut debt and support the development of a controversial AU$2.5 billion pulp mill at Bell Bay in Tasmania Gunns said it was still continuing talks with various potential investors.
NZ Government announces ETS amendmentsThe NZ Government has sided with advice from industry and farming lobbies, pushing out both the dates and levels at which New Zealand will face higher carbon costs under the country's emissions trading scheme.
The decisions announced on Monday also mean the scheme will not be reviewed again until 2015, a year later than previously proposed, reflecting submissions complaining of "review fatigue" on the four year-old scheme, Climate Change Minister Tim Groser said.
The temporary system whereby major emitters buy only half the offset units they need to cover half their emissions - known as "one-for-two" - will stay in place until "at least 2015", capped at $25 per tonne of carbon.
The government has also turned down recommendations from the review committee that reported last year to restrict the purchase of international carbon credits by New Zealand emitters.
Depressed global carbon prices have allowed emitters to purchase units for as little as $6 a tonne in recent times compared with the capped price of $25. However, the current weakness in carbon prices was an international political problem stemming from the European Union, and carbon prices were unlikely to be so low for long, said Groser. However, consultations will be undertaken on an auction system to encourage local emitters to buy New Zealand-produced offset units rather than import them.
Also announced is a deal for so-called pre-1990 forest owners, who will still be able to collect a second tranche of compensation at harvest, if they choose not to reforest the land. However, if they plant an offsetting forest elsewhere, such compensation won't be available, following changes to international rules on forestry offsetting at the Durban global climate change summit last December.
For releases relating to the announcement click here and here and reaction, here.
ETS changes don’t address carbon floodForest owners say the government appears to be unconcerned about the tide of European carbon credits flooding onto the New Zealand market.
“Their decision to honour the commitment to pay compensation to owners of pre-1990 forests for the liabilities they will face if they ever change their land-use is very welcome. But the recent announcements will not stimulate the new carbon-absorbing forestry planting the country needs,” says FOA chief executive David Rhodes.
“The government is making sure the carbon price doesn’t get too high, in order to protect jobs and exports at a time of global economic turmoil. But what about those who invest in low carbon technologies or plant carbon forests? They need protection from the price getting too low.”
Mr Rhodes says carbon markets exist only because governments see them as being effective tools for bringing about change. Left to their own devices the NZETS and other national carbon markets would fail.
“Getting the balance right between encouraging change and protecting emitters is tricky, but it isn’t all about finding the least cost short-term fix. The reason China, Korea, Japan and others are developing carbon markets is partly about saving the planet, and partly about future-proofing their industries so they can thrive in tomorrow’s green growth, carbon-constrained world.”
He says controlling both the supply and demand for carbon credits is important whether through auctioning or other mechanisms. Australia and the EU recognise the importance of restricting the supply of international carbon units and have struck a balance between what mitigation they will allow to be done offshore and what they expect to be done on-shore. Given New Zealand’s wish to align itself with these markets, we will eventually need to do the same.
“We are confident the government recognises the importance of forestry in offsetting national emissions. But we do not believe the NZETS in the form in which it exists is likely to deliver new forest investment, even taking into account the changes announced today.”
Mr Rhodes says the compensation paid to owners of pre-1990 forests is for the liability they face should they ever change their land-use. These people have no opportunity to earn carbon credits and while they can relocate their forests after harvest, the deforestation liability stays with them forever and reduces the value of their land.
“Honouring this commitment will help restore the confidence of forest owners that if the government limits their right to manage their land responsibly in the interests of their business, they will be compensated.”
Enhanced biomass utilisation through “Forest Power”Forest Power was a cross-border research project that has produced numerous biomass research bulletins. The project ran from 2009 to 2012, and has recently been completed. Collaboration took place between Finland, Sweden and Norway, with the aim of increasing the utilisation of forest biomass in the Botnia-Atlantica area.
The project had the goal of increasing the value and quality of products and services within the forest fuel supply, feed-stock conversion and combustion chains. The information obtained during the project is focussed on forest owners, heating plant managers, machine entrepreneurs and other forestry professionals.
The project was divided into 11 themes, categorised into six main themes. These are as follows:
• Thinning – Geometrical bioenergy-thinnings in young stands, multi-tree bioenergy-harvesting on difficult sites, and bioenergy from late thinnings.
• Final harvest – Logging residues from final harvests, and stump extraction.
• Fuel quality – Survey of small scale heating plants, and validation of combustion know-how.
• Conversion – Feed stock management, and feed stock characteristics.
• Briquetting – Upgrading forest fuels into briquettes.
• Business models – Self-employed energy wood contracting.
The various bulletins produced are too numerous to list in this newsletter. Anyone involved in biomass supply chains should invest the time to browse through the bulletins at www.forestpower.net
Source: R&D Works Newsletter
Virtual carbon tree illustrates carbon sequestrationIn June and July, the Think Corner of the University of Helsinki will house an interactive carbon tree. Visitors can experiment with how changes in the amount of light, the temperature, and the atmospheric CO2 content affect the tree’s carbon sequestration capacity. Visitors can adjust the living conditions of the tree using, for example, their breath or the warmth of their hand to influence the sensors.
The inspirational forebear of the carbon tree installation is a real tree growing in Juupajoki at the Hyytiälä Forestry Field Station. Its calculated carbon sequestration capacity has been monitored online for three years. Users have been able to select either the present conditions, sample conditions from different seasons or, as at the Think Corner, determine the conditions themselves.
In many ways, the carbon tree installation at the Think Corner is an updated version of the first carbon tree. This is the first time that it has been made wholly independent and taken outside the net. This makes it easier to use at different events, states project leader Eija Juurola from the Department of Forest Sciences at the University of Helsinki.
Growing the new carbon tree offline has taken a little less than a year. Artist Terike Haapoja, who designed the concept for the carbon flow animation, is very satisfied with the virtual tree’s new phase of life. The tree is much more dynamic than before. The carbon particles have been animated to make the tree appear three-dimensional and as if swaying in the wind. The installation also includes a soundscape reminiscent of the whisper of a forest that changes with the conditions. In future, the new carbon tree installation and the upcoming related website will be used in teaching.
Source: University of Helsinki
Australian Forest Research to reinvent itselfIn Australia there has been a stay of execution for the CRC for Forestry. Work is set to continue under the government's, yet to be decided, extension of the closure deadline. In a news release to the Australian industry earlier in the week Gordon Duff, CEO of the current CRC for Forestry, announced that there are now two new initiatives set to continue the work in this area. A new National Centre for Future Forest Industries (NCFFI) is budgeted for establishment and another alliance is set to be created in Queensland by CRC research manager Mark Brown.
The CRC for Forestry has reached the end of the seven-year Commonwealth contract, having successfully delivered against all contracted outputs and milestones. Meanwhile the Australian Government, via the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE), has agreed to provide AU$2.5 million of seed funding to help establish the National Centre.
The new centre will initially focus on three main themes:
Future options: Options and opportunities for higher value uses of the now-maturing plantation hardwood resource, in the context of declining industrial access to native forests.
Productivity: Urgently needed solutions to second rotation productivity decline in hardwood
plantations, developed in a multi-rotation, economic framework. Innovations in logistics and
applications of emerging technologies to forest operations will be a key focus.
Risk Mitigation: Reduction of the investment risk associated with new species/environment combinations in industrial, farm-forestry and environmental services (e.g. carbon,
biodiversity, salinity management) tree plantings.
While all this has been taking place, in Queensland Mark Brown has been working towards the
establishment of the Australian Forest Operations Research Alliance (AFORA), which grew out of the CRC for Forestry Program 3—Harvesting and Operations. AFORA is similarly national in scope, with the headquarters located at the University of the Sunshine Coast. Brown and Duffy are in agreement that there will be a close affiliation between AFORA and the new Centre.
Source: CRC for Forestry
New restrictions on CCA treated timber useNew restrictions on the use of copper chrome arsenate (CCA) for treating timber in Australia come into place from 1 July 2012. CCA has been used to preserve wood in a variety of situations such as for telegraph poles, decking and fencing. It was also used for children's playground equipment.
The APVMA began a review of CCA timber treatments in July 2003, following concerns that arsenic could be absorbed through the skin or after swallowing, or inhaled if the treated timber was burnt. In March 2005, the APVMA advised that CCA was not to be used in timber for playground equipment or other high-contact structures.
"Following this review, CCA has now been declared a restricted chemical product from 1 July", APVMA Pesticides Program Manager, Dr Raj Bhula, said. "This means CCA products can only be supplied to, and used by, suitably trained persons authorised under a relevant state or territory law from that date.
"The APVMA does not have regulatory powers to control the use of CCA-treated end-products—our powers extend only to the point of sale of the chemical itself—and this step tightens up the requirements for industry and retailers to ensure users of such products are well-informed of the risks and permitted uses."
CCA can continue to be used on timber intended for outdoor uses such as telegraph poles, fencing and landscaping. It cannot be used on high-contact timber structures: this includes garden furniture, picnic tables, exterior seating, children's play equipment, patio and domestic decking, and handrails.
"The APVMA reminds users and retailers that CCA-treated timber must be clearly identified with the words 'Treated with copper chrome arsenate' up to point of first use. This requirement has been in place since March 2005", Dr Bhula said. Source: APVMA
Stafford announces close of timberlands fundStafford Timberland has announced a final close for Stafford International Timberland Fund VI (‘SIT VI’) of EUR 301.7 million from investors in the UK, Europe and Australia. The Fund had targeted raising EUR 300 million and closed early on an oversubscribed basis.
SIT VI is a specialist timberland fund of funds investing in primary timberland fund investments, co-investments, and secondary positions in existing timberland funds.
Daan Oranje, partner of Stafford, said: “This is a very pleasing result in a challenging market environment. We are grateful for the strong support shown by existing investors and are delighted to welcome a number of new investors to our client base.”
SIT VI had its first close in September 2011 and has already made investments totalling approximately EUR 100 million, mainly through secondary transactions. Stafford Timberland is a global timberland investment organisation that manages approximately USD 1.25 billion on behalf of institutional investors. They have offices in the UK, Australia and the USA, and manage and advise on timberland investments located in the US, Canada, Central America, Brazil, Chile, Uruguay, New Zealand and Australia.
The Splinter wooden carWe ran this story before – but check out this video.
A high-performance, mid-engined supercar is being built from wood composites as a graduate project at North Carolina State University. Wood is being used whereever possible, including the chassis, body, and large percentages of the suspension components and wheels. The car has a target weight of 2500lbs and a power goal of over 600 horsepower.
They aren't trying to sell anything; they aren't trying to save the world, and they aren't advocating that everyone should drive a wooden car. This project is a scholastic endeavour in which the team is simply trying to explore materials, learn, teach, share ideas, and stimulate creativity. Details can also be found on www.joeharmondesign.com
Wood. Naturally Better.™ returns to TVAcross Australia from 1st August, the successful Wood. Naturally Better.™ TV commercial, under Planet Ark’sEnvironmental Edge brand returns to free-to-air and pay TV. After the last campaign, tracking research showed that the 33% of respondents recalled seeing the ad (an exceptional result for a new commercial) and that, after viewing the spot, 43% of people said they would be more likely to choose wood over other materials.
In the commercial, Peter Maddison, award-winning architect and host of Grand Designs Australia, explains that wood stores carbon and that carbon is better locked away in wood than free in the environment. He ends by suggesting that by choosing wood, people are doing good.
The Wood. Naturally Better.™ commercial is co-branded with Planet Ark’s Environmental Edge, a series of advertisements designed to provide people with facts to help them make more informed environmental decisions. The commercial is aimed at environmentally conscious people aged 25 to 54, and it is anticipated that it will be seen at least once by more than 60% of the target audience.
On free to air TV, the spot will feature in programs such as How I Met Your Mother, Revenge, Home & Away, Downtown Abby, Seven News, Better Homes & Gardens, Masterchef, The Living Room, AFL and Today Tonight.
The commercial can be viewed here
Green adhesives: options for the Australian industry“Green adhesives: Options for the Australian industry” is a summary of recent research into green adhesives from renewable materials and identification of those that are closest to commercial uptake. Over the last decade researchers have been searching for wood glues that are environmentally friendly and very cost-effective.
These ‘green’ adhesives may have great advantages in being made of renewable materials, instead of price-variable petrochemicals, as well as being free of, or having very low levels of, formaldehyde (a known carcinogen) and other volatile organic compounds that occur in glues derived from petrochemicals.
Legislation in the USA and Japan has already reduced the allowed levels of formaldehyde emissions from composite wood products, and it is probable that similar changes will occur in Australia and New Zealand within the next five to ten years, especially as consumers becomes more environmentally aware. New market opportunities and the demands of export markets may accelerate the need to find an economically viable ‘green’ glue.
This report reviewed in detail potential wood adhesives made using renewable materials such as tannins, lignin, oils, and proteins (in particular soy protein), and looked at the chemical structure of a number of the adhesives. Although the use of renewable materials has been researched actively for a very long time, many of the adhesive technologies are currently at the pre-commercial, pilot or laboratory scale demonstration phase.
The ‘green’ adhesives closest to commercial uptake are the Dynea AsWood technology (protein based) and the Ashland/Hercules Soyad system (soy protein based). The Ashland/Hercules Soyad system is advertised as suitable for producing particleboard, medium density fibreboard (MDF) and non-structural hardwood plywood. As of 2012 some of the protein-based ‘green’ adhesives are starting to appear in the Australian market because of their environmental credentials.
Currently these ‘green’ adhesives are more expensive than existing adhesives but they may have a niche market where there are strict controls on formaldehyde emissions. It is important to note that all of the ‘green’ adhesive technologies either still have a large component derived from petrochemicals or the renewable material has been chemically modified with petrochemicals.
The report recommends the Australian wood panels industry monitor the introduction of these ‘green’ adhesives technologies as they develop on an industrial scale internationally. The Engineered Wood Products Association of Australasia (EWPAA) is monitoring ongoing advances and keeping members aware of developments.
Source: R&D Works
Gunns confirms sale of sawmill siteTimber company Gunns has announced that it has sold its Launceston offices and its Lindsay Street sawmill site for AU$14 million. In an announcement to the stock exchange this week, Gunns said the contract which was signed in July last year was now unconditional and that the sale is scheduled to be completed by the end of the month. It is understood that hardware chain Bunnings has purchased the site. Gunns said that it will continue to rent the offices until the end of the year. Source: The Examiner
Industry changes expected from pine beetleThe mountain pine beetle epidemic has now infected and/or killed over 17.5 million ha (43.2 million acres) of B.C. lodgepole pine forest (an area roughly double the size of New Brunswick or Austria). B.C. government reports indicate that 51% of the merchantable lodgepole pine volume in the province had been killed by 2010, and the most recent estimates are that 58% will be killed by 2016 as the epidemic tapers off. As the rate of new infection finally winds down, the mid- and long-term impacts are coming into focus.
It has now been ten years since the B.C. government released its first mountain pine beetle action plan. Sawmills in the hardest-hit regions of the B.C. Interior are now facing the challenge of cutting logs that have been dead for eight to ten years (or more). Some timber supply management areas have begun to see MPB-related reductions in the allowable annual cut (AAC). From the current (2012) Interior AAC of 60 million m3 (both public and private land), the AAC is expected to decline to about 40 million m3, a reduction of 20 million m3 (33%).
While the impact of the MPB epidemic will be significant, the future may not be as dire as it would appear at first glance. Because 22 mills (not including Lakeland) have already closed, the drop in saw log availability will not be as high as the peak-to-trough decline in AAC. Over the next decade, there will be an increase in residual fibre and pulp logs, eventually followed by a decline. Prices will be the key determinant in how long sawmills can operate using drier timber, and also in what percentage of biomass will be economic to harvest.
The next few years will doubtless be challenging. Low lumber prices and increasing processing costs may cause more mills to close (even before the log supply is reduced). However, in 2014 and 2015, demand and prices are forecast to improve, boosting producers’ bottom lines and opening up timber options that would otherwise be uneconomic. (Extracted from B.C. Mountain Pine Beetle: Evolving Impacts and Opportunities).
Source: International Wood Markets Group, www.woodmarkets.com
World timber engineering conference runs this monthThe World Conference on Timber Engineering running on 15-19 July is the largest event in timber engineering with a worldwide reach. It started following the Pacific Timber Engineering Conferences that originated in New Zealand in the 1980’s. The NZ Timber Design Society has devoted considerable effort with the support of SESOC and FWPA (Australia) to get WCTE to the southern hemisphere for the first time.
The WCTE 2012 will provide a once in a career opportunity for local engineers, architects and industry to participate in a truly international conference right on our own doorstep in Auckland. The event provides an opportunity for New Zealanders and Australians to learn about the latest developments in the field, network with people at the leading edge of timber manufacture, architecture and research and promote the significance of NZ innovation.
Around 550 industry people, engineers, architects and researchers from 36 countries and will attend and there will be 240 high quality presentations in 6 parallel streams providing for range of technical interest. More >>. For further information on the programme, click here
Buy and Sell
...and one to end the week on...now that must have hurt!!
V8 Land-Cruiser in Saudi falls down a 60m well.
And on that note, drive carefully and have a great weekend. Cheers.
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