Sustainably managed forests: A proven source of sustainable biomass for bioenergy in the EU. Background paper for the Executive Committee of EUSTAFOR

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1 Sustainably managed forests: A proven source of sustainable biomass for bioenergy in the EU Background paper for the Executive Committee of EUSTAFOR Forestry and forest-based sector are progressively gaining importance within the policy debate that addresses the role of the LULUCF sector in climate change mitigation and working towards the decarbonization of the European economy through the transition to a bioeconomy 1, increasing the amount of bioenergy in the total energy consumption as well as through promoting resource efficiency. While these developments can create new opportunities for the forestry and forest-based sector, care needs to be taken to avoid policies, which create perverse or negative results not only for forestry and the forest-based sector, but also for their contribution to the post-2020 climate change targets. While discussions about the climate change mitigation effects of forestry, concerning the sink function of forests and wood products and the positive substitution effect of using biomass to replace fossil fuels or other highly energy consuming materials, are ongoing 2, it is important to highlight several key aspects concerning the contribution that forestry and the forest-based sector can make towards the sustainable sourcing of biomass for bioenergy. Based on the experiences and data gathered from State Forest Management Organizations (SFMOs), members of EUSTAFOR, the analysis below shows that establishing binding criteria, caps, or strict limitations on the use of certain categories of woody biomass from forests for bioenergy would lead to a decrease in the economic competitiveness of the forestry sector as a whole and would, in addition, limit forestry s potential to contribute to climate change mitigation. The analysis supports the view that Sustainable Forest Management (SFM) practices, which are well covered in national legislation and silvicultural guidelines, already ensure the sustainability of biomass sourcing and therefore this aspect does not require additional regulation at national level. At the same time, if the EU continues to push towards regulating sustainability of solid biomass sources in the bioenergy policy post-2020 context, a risk-based approach could be applied as a sufficient, realistic and credible solution, which uses as a basis these already existent national legislation SFM instruments and tools. 1 Mubareka S et al. Forest bio-based economy in Europe. In: European Atlas of Forest Tree Species. JRC European Commission; See also: IPCC. Guidelines for National Greenhouse Gas Inventories - Vol. 2; Pilli et al. EU mitigation potential of harvested wood products. Carbon Balance Manag Rüter S, Werner F, Forsell N, Prins C, Vial E, Levet A-L. ClimWood2030, Climate Benefits of Material Substitution by Forest Biomass and Harvested Wood Products: Perspective Final Report.; FAO. Forestry for a Low-Carbon Future: Integrating Forests and Wood Products in Climate Change Strategies b-d24dcdefbadf/ 1

2 The role of forest biomass for bioenergy Increasing the supply of available and sustainably sourced biomass for bioenergy may not only help to achieve EU 2030 climate and energy targets but also strengthen the sector s economic performance. Currently, renewable energy sources (RES) cover about the 16% of the EU s energy consumption. Of this, bioenergy represents 63% of RES consumption and wood covers about 70% of bioenergy consumption 3. The majority of biomass used for energy purposes in the EU is sourced domestically (with imports representing less than 4% of total biomass consumption) 4. Furthermore, there remains additional potential for European forests to provide biomass since, on average, the current annual harvest in European forests is about 60-70% of the net annual increment. There is even further potential for increasing mobilization of biomass from forests within sustainable limits by, among others, increasing market demand for lower quality assortments, thereby making more efficient use of forest residues 5 while at the same time improving the quality of forest ecosystems. Bioenergy derived from locally produced woody biomass can best contribute to achieving the objectives of the Energy Union through improving the energy security 6, supporting rural development through green growth and employment 7 and developing a sustainable bioeconomy 8. European state forests are a source of sustainable biomass The total area of European forests, has increased to 215 million hectares over the last 25 years and continues to expand every year by 0,4% 9. Approximately 49 million ha are managed by EUSTAFOR members. The annual increment of the European state forests managed by EUSTAFOR s members, is 200 million m 3, out of which only around 120 million m 3 or 60 % - are used every year. The remaining 40 % is accumulated as growing stock and a 3 Eurostat. Energy from Biomass In comparison, imports are close to 90% for petroleum and derived products, about 65% for Natural Gas, and about 44% for solid fossil fuels. 5 Verkerk PJ, Levers C, Kuemmerle T, et al. Mapping wood production in European forests. For Ecol Manage. 2015;357: doi: /j.foreco European Commission. EU Reference Scenario 2016; AIN_RESULTS (2)-web.pdf 7 European Commission. CORK 2.0 DECLARATION 2016 A Better Life in Rural Areas; European Commission. Communication from the Commission Innovating for Sustainable Growth: A Bioeconomy for Europe COM(2012) 60 final ( ). 9 FOREST EUROPE. State of Europe s Forests.;

3 considerable part of this could conceivably be used without causing any detriment to forest ecosystems 10. State-owned forests are sustainably managed regardless of the end use of the biomass produced. While the use of biomass is driven by dynamic societal and market needs, which are in turn dependent on the development of technology and innovation, state forest managers need to continue to regulate and balance the harvesting and regeneration of forests. This is accomplished through long-term forest management plans, established in line with the highest sustainability standards, sylvicultural guidance and national legislation, which is compulsory in state forests. In addition most state forests are certified by at least one of the major voluntary certification schemes (PEFC and/or FSC), providing additional proof of sustainability by an independent third party. Although timber harvesting is the main source of income for forest owners and managers, and thus the main source of financing of forest stewardship, state forests provide a wide array of products and services beyond the production of biomass. Any change in the end-use of forest products, for example biomass for bioenergy, would have no negative impacts on any of the other multiple ecosystem services and products provided by forests. This is because the overall objective of any state forest management organization includes maintaining and/or improving the robustness and vitality of forest ecosystems in order to ensure productivity and the provision of services in the long run. On the contrary, developing new markets and end uses for biomass from forests could increase or enhance the efficient use of currently unused raw materials such as harvesting or industrial residues. Woody biomass is used for many different purposes (pulp and paper, construction, furniture, energy ) and biomass for energy can be directly supplied from forests (for example, harvesting residues) or as a by-product from industry (e.g. saw dust or bark). It is not only the type or quality of biomass which determines its end use, but also the technical capabilities of forest-based industries as well as societal needs. Policy debate around the sustainability of solid biomass for energy EU Policy Options In the context of 2030 climate and energy discussions, the Commission has announced that it will establish an EU policy on sustainable bioenergy by the end of Recently, five policy options have been subject to analysis in the Commission s impact assessment, the first of which is a baseline approach, whereas the remaining four can be grouped together as regulatory approaches. Baseline Approach 1) Verifying how existing EU policies allow identified risks to be tackled. Regulatory Approaches (not mutually exclusive) 2) Extending existing biofuel sustainability criteria to all biomass 10 EUSTAFOR. European State Forests Boost the Bioeconomy;

4 3) Using a risk-based approach (RBA) for forestry biomass. The issue with this option is to make sure that it can be implemented at EU level in a way that would make sense in 28 Member States. 4) Promoting high energy efficiency installations (low energy installations could still run but not benefit from support schemes) 5) Limiting the use of biomass from roundwood The future position of EUSTAFOR as regards the above options needs to take into account a persisting push from other sectors, such as energy, environment and climate, to move from the current setup in which there is no EU wide sustainability scheme for solid biomass for cooling, heating and electricity, towards a system which would regulate it. On the other hand, one should remember that forest policy and sustainable forest management remains a competence of the Member States and the EU should avoid producing superfluous regulatory frameworks. Position of European forest-based Industries The European Confederation of Pulp and Paper Industries (CEPI) is the only one to have published its position paper 11 addressing sustainability criteria for solid biomass. Their concerns are mainly related to wood imports. CEPI s position is based on two main pillars: Biomass sourcing: Biomass should sourced be from countries where LULUCF has a consistent accounting in the long run. o A further burden of new means of proof should be avoided when competing with other industries and products based on fossil and more carbon-intensive raw materials as well as with forest industries based outside Europe. o Different voluntary instruments and tools addressing forest management should be evaluated and recognized. Biomass conversion: Both in terms of GHG savings (compared with fossils) and of efficiency (minimum of 70%). Position of environmental NGOs In a recent publication sponsored by the EU, the NGOs state that there are limits to the extent to which bioenergy can be used sustainably 12. The NGOs want to introduce safeguards to ensure that bioenergy is genuinely sustainable. In particular, NGOs focus on four main aspects to propose a new bioenergy policy: Limiting the use of biomass; Cascading of biomass to have an efficient and optimal use of it; Introducing a correct carbon accounting; Defining a binding set of sustainability criteria. The NGOs demand that the use and production of bioenergy meet some criteria irrespective of whether the raw materials are sourced within or outside the EU in order to be accounted towards the EU s 2030 renewable energy target and to be eligible for financial support. The criteria are: 11 CEPI. EU Bioenergy Sustainability Criteria; Various NGOs. A New Sustainable Bioenergy Policy; energy_policy_final.pdf 4

5 1. Overall limit on the amount of bioenergy used to meet 2030 targets a. It is proposed to set a limit in terms of energy produced (kwh) 2. Not be produced from the following high risk sources a. Areas designated for nature protection b. Crops from agricultural land c. Stumps and roundwood > 10 cm d. Invasive alien species grown to supply bioenergy e. Biomass from land with high biodiversity value or high carbon stock or peatlands 3. Soil, water and biodiversity should be protected during the harvesting of agricultural and forestry residues for bioenergy 4. Production and use of all biomass sources for energy should respect rights to land tenure, food security and human and labor rights 5. Use of biomass for energy should not cause displacement of other uses of biomass and be in line with the principles of cascading use and waste hierarchy 6. Bioenergy should be produced in the most efficient applications In addition to the criteria, NGOs ask for more strict obligations and requirements for compliance and reporting, on the basis of what is already in place for biofuels. Several policy measures, among which a cap to limit the use of biomass for energy to levels that can be sustainably supplied or the implementation of the principle of cascading use where identified in two recent (June and July 2016) studies commissioned by DG ENVI 13. EUSTAFOR s contributions to the current policy debate The ongoing debate concerning sustainability of solid biomass is being closely followed by European state forest management organizations that have formulated their comments based on their experience on the ground and with the knowledge that they are the ones who will need to incorporate any new requirements or legal frameworks in their day-to-day management. Therefore, EUSTAFOR shares an opinion that any scheme to prove sustainable sourcing of solid biomass from forests for bioenergy could be established only if this is absolutely necessary and when such a system does not interfere with national legislation and regulation on forests and their sustainable management nor negatively impacts policy competence between the EU and its Member States (MS). By establishing a new binding set of sustainability criteria for biomass, the EU would not only risk creating conflicts with the instruments already developed and 13 Olesen AS, Kittler B, Price W, Aguilar FX. Environmental Implications of Increased Reliance of the EU on Biomass from the South East US; European Commission. Study on Impacts on Resource Efficiency of Future EU Demand for Bioenergy (ReceBio); EN-N%20-%20final%20report.pdf 5

6 successfully applied by the MS, but would risk unnecessarily increasing administrative and financial burdens for forest managers. Extending existing biofuel sustainability criteria to woody biomass would not take into account the specificity of forests, the complexity of the demands put on forests and their management, or the existence of site-specific conditions and particular socio-economic circumstances in individual Member States. Ecolabels and certification schemes for forest-based wood products already exist. High resource efficiency cannot be ensured by setting limitations on biomass as a raw material regardless of how, where and for which purposes these are going to be used. Instead, certification schemes should be further encouraged to take into full account the climate change mitigation performances of the materials throughout the entire life cycle of the product, from the harvesting of raw materials to the production, use and end of life. For their part, forest managers must ensure the sustainability of forests while at the same time balancing a complex and sometimes conflicting set of demands from society at large. As previously mentioned, timber harvesting is the main source of income for forest owners. It is the income from this activity that has to finance all the environmental, social and other ecosystem services which forests provide. Like other market operators, traders in timber operate under free market rules, and this will lead to the best possible price for biomass. State forest managers are obliged by their Member States to classify the quality of their timber (a process known as grading ) in accordance with the schedules set out by the local legislation. The value is influenced by many factors including the quality and potential end use of the timber and serves many users including buyers, sellers and forest administrators. It must be understood that primary producers are not able to control the end use of their products. State forest managers are able to combine the need for bioenergy with carbonneutral targets 14. In fact, sustainable forest management practices regulate the replacement of harvested wood with forest growth. State forest managers also ensure the protection of forest ecosystems by leaving enough decaying biomass to create nutrients and biodiverse habitats while harvesting. The biomass used for bioenergy substitute the use of fossil energy sources, and the carbon released during the biomass combustion is compensated by the forest growth from which that biomass is sourced. Forests have the capacity to sequester carbon and encouraging the use of biomass for bioenergy is augmenting the contribution to climate change mitigation from forests. Models for carbon accounting need to take into account a long-term perspective on the entire natural forest carbon cycle and must avoid double accounting. Resource efficiency, in the form of reuse and cascading use, is an overarching principle which is already applied in the forest-based sector. Promote energy savings and the development of resource efficient productions must be continued and State Forest Organizations therefore strongly support the development of new products within the bioeconomy, such as biomaterials and biofuels. However, there is a limit to the extent to which materials can be recycled without creating negative 14 See for example: Koponen K, Sokka L, Salminen O, et al. Sustainability of Forest Energy in Northern Europe Sustainability of Forest Energy in Northern Europe;

7 economic and environmental effects. Rather than enforcing the cascade use principle through regulations, and consequently creating administrative barriers in the wood market and negative effects on the European forestry sector, European State Forest Organizations believe it would be more effective to support innovation in the emerging bioeconomy. The debate around sustainability cannot be confined to climate mitigation. The development of bioenergy supply chains creates leverage for rural development, employment, and environmental awareness 15. Promoting a more efficient use of biomass can be accomplished by supporting technological developments, industrial innovation and new environmentally compatible products rather than through the implementation of restrictive policies and regulations. Limiting market access or imposing caps risk reducing the competitiveness of the entire forest-based sector 16. Opportunities of current policy direction Is a risk-based approach (RBA) a way out? The Commission is continuing its work on a new bioenergy policy as a part of the Energy Union. Biofuels will play a significant role in the future bioenergy policy, and from a legislative point of view the major gap to cover is the sustainability criteria for solid biomass for bioenergy (sustainability of biofuels and bio-liquids have already been covered by the current Renewable Energy Directive). The key sustainability risks identified at EC level for post 2020 policy are related to: 1. Biodiversity Impacts; 2. GHG savings; 3. Efficient end use. Due to the specificity of the forestry and forest-based sector, a risk-based approach referring to the existing legislation (at EU and National levels) for solid biomass would take into account the specificity of each MS regulation related to forests and biomass. The sustainability of forests management would be demonstrated by the following means of proof: 1. Regeneration of forest stands; 2. Existence of protected areas; 3. Obligation of permits; 4. Ensured chain of custody. Solid biomass for bioenergy is one of the several Ecosystem Services of forests, for this reason its availability should be considered in the framework of forest management. Forest management is generally planned over several years time frames, in order to ensure the resilience of the forest ecosystem as a whole, and providing biomass as one of the ESs, regardless of the wood-based products. The current policy direction 15 See for example: Martire S et al. Sustainability impact assessment for local energy supplies development The case of the alpine area of Lake Como, Italy. Biomass and Bioenergy. 2015;83: doi: /j.biombioe Alanne K, Saari A. Distributed energy generation and sustainable development. Renew Sustain Energy Rev. 2006;10(6): doi: /j.rser See also: EUSTAFOR. European State Forests Boost the Bioeconomy.;

8 can positively contribute to enhance existing instruments and processes, as existing forest management plans or the FOREST EUROPE C&I for SFM, capable to ensure the sustainability of biomass by the definition of criteria and indicators that can be implemented inside and outside Europe. Consequently, a Risk-Based Approach following the EUTR can be the most practical and effective means to prove the sustainability sourcing of the biomass to the energy producers and - at the same time - be implementable by taking into account the country level regulations and instruments, and - if needed - forest management plans or forest certification schemes. A credible Risk-Based Approach should be based on existing Sustainable Forest Management instruments. In this way it can be an opportunity to endorse the sustainability of biomass from sustainably managed forests. Other emissions along the supply chain should be address by optimizing the logistic and improving the efficiency. This can bring an important benefit to the forest-based sector, and it should be pursued by technological and behavioral innovation. Negative Indirect Land Use Change (iluc ref) can be contrasted promoting more bioenergy production with biomass sourced by EU and SFM forests. It means also to set up the same rules of domestic productions to imports. Finally, it is important to recognize in the overall regulation framework the substitution effect of HWP and bioenergy in terms of GHG Emissions. 8