Supply Chains of Forest Chip Production in Finland

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1 Supply Chains of Forest Chip Production in Finland Kalle Kärhä, Metsäteho Oy BIOENERGY 2009 Confenrence - Sustainable Bioenergy Business 31 st August - 4 th September 2009, Jyväskylä Paviljonki, Finland Sept. 2 nd, 2009 Kärhä: Kalle Supply Kärhä: Chains Forest of Forest Chip Production Chip Production in Finland Finland 1

2 Content Metsäteho Oy Company Forest Chips in Finland Supply Chains of Forest Chip Production: Logging residue chips Stump wood chips Chips from small-sized thinning wood Future Prospects Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 2

3 Metsäteho Oy Supports the development of its shareholders wood procurement and wood production operations Improves the operating preconditions for wood supply Sept. 04/09/ nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 3

4 Metsäteho s Shareholders Metsäteho is a limited company owned by: Finnish forest industry firms Metsähallitus (State Forest Enterprise) certain forestry organisations Sept. 04/09/ nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 4

5 Location of Metsäteho Office Helsinki, Finland Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 5

6 Current Focus Areas of Metsäteho Wood Resources Forest Resources and Harvesting Potential Forest Ownership Structure Forestry Profitability Resource Management Availability of Resources and Expertise Forest Work Productivity Standardization and Information Management Solutions Wood Procurement Logistics Year-round Harvesting and Long-distance Transportation Timber Measurement and Quality Management Use of Thinning Wood and Cost Efficiency of Harvesting Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 6

7 Logging Residues Small-diameter Wood Stumps Large-sized (rotten) Roundwood Sept nd, 2009 Kärhä: Kalle Kalle Kalle Kärhä Supply Kärhä: / Metsäteollisuuden Kärhä: / Puubiomassan Chains / Suomen Bioenergia Forest of metsäenergiapotentiaalit Forest hyödyntäminen Chip puuperäiset missä Production Chip mennään jätteet Production energian tällä & in Metsäenergiapuu hetkellä? Finland tuotannossa Kalle Finland Kärhä 7

8 Use of Forest Chips in Finland, *) *) Use of energy plants, i.e. heating and power plants. Sources: Ylitalo Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 8

9 Use of Forest Chips in Finland, 2008 Source: Ylitalo 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 9

10 Use of forest chips (GWh) in heating and power plants in Finland, 2008 Source: Ylitalo 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 10

11 Use of forest chips (GWh) in heating and power plants in Finland, 2008 Source: Ylitalo 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 11

12 Use of forest chips (GWh) in heating and power plants in Finland, 2008 Source: Ylitalo 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 12

13 Use of forest chips (GWh) in heating and power plants in Finland, 2008 Source: Ylitalo 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 13

14 Use of forest chips in heating and power plants in Finland, 2008 Source: Ylitalo 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 14

15 Use of Forest Chips in & Targets Set for Use of Forest Chips in Finland, 2010, 2015, and 2020 Sources: Ylitalo 2009, NFP 2010, NFP 2015, Long-term Climate and Energy 2008 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 15

16 Forest Chip Potentials vs. Realized Usage of Forest Chips in Finland, 2008 Domestic industrial roundwood cuttings were 57 mill. m 3 and the subsidy for chips from small-diameter thinning wood from young stands 4 /MWh. Sources: Ylitalo 2009, Kärhä et al Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 16

17 Supply Chains of Logging Residue Chips Sept. 2 nd,

18 Norway spruce dominated final felling sites Typical removal: MWh/ha Sept. 2 nd, 2009 Kärhä: Kalle Supply Kärhä: Chains Forest of Forest Chip Production Chip Production in Finland Finland 18

19 Optional chipping locations > Supply chains Harvesting site Roadside landing Terminal Energy plant > Terrain chipping > Roadside chipping > Terminal chipping > Chipping at plant Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 19

20 Terrain chipping Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 20

21 Roadside chipping (Sep. chipper & chip truck) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 21

22 Roadside chipping (Integ. chipper chip truck) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 22

23 Terminal chipping (Loose residues) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 23

24 Terminal chipping (Logging residue bundles) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 24

25 Chipping at plant (Loose residues) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 25

26 Chipping at plant (Logging residue bundles) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 26

27 Supply Chains in Production of Logging Residue Chips Source: Kärhä 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 27

28 Supply Chains of Stump Wood Chips Sept. 2 nd,

29 Terminal comminuting Sept. 2 nd, 2009 Kalle Kärhä: Forest Chip Production in Finland 29

30 Comminuting at plant Sept. 2 nd, 2009 Kalle Kärhä: Forest Chip Production in Finland 30

31 Supply Chains in Production of Stump Wood Chips Source: Kärhä 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 31

32 Supply Chains of Small-Sized Thinning Wood Chips Sept. 2 nd,

33 Small-diameter early thinning stands Typical removal: MWh/ha Sept. 2 nd, 2009 Kärhä: Kalle Supply Kärhä: Chains Forest of Forest Chip Production Chip Production in Finland Finland 33

34 Roadside chipping (Sep. chipper & chip truck) Two machine harvesting system Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 34

35 Roadside chipping (Sep. chipper & chip truck) Harwarder system Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 35

36 Roadside chipping (Integ. chipper chip truck) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 36

37 Terminal chipping (Loose small-sized wood) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 37

38 Chipping at plant (Loose small-sized wood) Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 38

39 Supply Chains in Production of Small-diameter Wood Chips Source: Kärhä 2009 Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 39

40 Supply Systems of Integrated Wood Procurement from Young Stands Sept. 2 nd, 2009 Kärhä: Kalle Supply Kärhä: Chains Forest of Forest Chip Production Chip Production in Finland Finland 40

41 Two separate pile cutting method Pulpwood fraction Energy wood fraction Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 41

42 Whole-tree bundling Pulpwood bundles Energy wood bundles Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 42

43 No universal supply system Several factors determine which forest chip supply system is used: Harvesting conditions, Roadside landing capacities, Road transportation distances, Operating volumes and storage capacities of energy plants, Availability of production machinery, The type of forest chips produced, and The total costs of supply systems. There is not any universal supply system! Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 43

44 Future Prospects Sept. 2 nd,

45 Future Prospects I Increase in the supply volumes of forest chips means more intensified procurement: Harvesting operations for smaller and weaker sites. Longer transportation distances. Cost pressures for supply costs. Better management of supply chains and costs. Better quality management for forest chips. Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 45

46 Future Prospects II Chipping will move from roadside locations closer to heating and power plants, partly to terminals, and partly directly to plants. More efficient long-distance transportation solutions are required. Rail transportation Water transportation Bundling. Status of terminals will be emphasized. Sept. 2 nd, 2009 Kärhä: Supply Chains of Forest Chip Production in Finland 46

47 Thank you! Sept. 2 nd, 2009 Kärhä: Kalle Supply Kärhä: Chains Forest of Forest Chip Production Chip Production in Finland Finland 47