WE02/03

THEME ENERGY POLICIES

Wood Energy

ITEBE

in Spain, energy and forest policies Pedro Segovia - ITEBE

Wood-energy has considerable potential in Spain. However, in order to exploit it, greater investments and technological development are necessary.

THE WOOD-ENERGY SITUATION IN SPAIN In 2000 biomass represented 53.8% (3792 ktoe) of Spain’s primary energy consumptions of renewable origin (1 GWh=0.086 ktep) without taking hydro energy into consideration.

From a more global point of view, energy generated from biomass represents 3.1% of total energy consumption in Spain (124,281 ktoe).

Energy uses for biomass are split between the production of heat (94.1%) and the production of electricity (5.9%).

Just 30% of biomass used for energy purposes is marketed.

The rest is self-consumed by industries or consumed in rural areas for thermal applications.

The domestic sector represents more than half of consumptions, followed by the paper industry with 18%.

Wood-energy totals 69% of the biofuels used.

PLAN OF PROMOTION OF RENEWABLE ENERGIES IN SPAIN In December 1999 a strategic programme called the Plan de Fomento de las Energías Renovables de España (Spanish Programme of Promotion of Renewable Energies) was published by the Ministry for Industry and Energy.

In this plan, which follows the direct iv es o f t h e Whi te Pa pe r on Renewable Energies of the European Commission, the Spanish government committed itself to promoting activities and giving premiums which will allow renewable energies to meet 12% of Spanish energy demands in 2010 (16,639 ktoe of primar y energy).

This implies an increase of 9,526 ktoe compared to consumptions in 1998, and 74.4% (7,086 ktoe) will be supplied by biomass, i.e. 7% of the global energy demand.

A large part of this increase will be reserved to the production of electricity (5100 ktoe), a part to the production of heat (900 ktoe), and the rest to the production of liquid biofuels and biogas. With regard to the type of biofuel, energy cultivations will supply more than half of this contribution (Table nº 1) Depending on the product considered, the Plan de Fomento does not just encourage subsidies for investment, type of interest and production of fuels, but also exemptions (tax advantages) and the development of premiums awarded to producers of electricity from biomass (table nº2) To develop the wood-energy sector, the Plan de Fomento intends to undertake some “energy activities”.

These activities concern the forests with high biomass potential and those in which environmental action is necessary.

The creation of biomass distribution platforms is provided for to ensure the regular supplying of quality fuel.

It is estimated the Plan will create 30,000 jobs.

Spain

IDAE IDAE (Institute for Energy Diversification and Conservation) is a public body registered with the Ministry of

WOOD ENERGY N°2 / 2003

33

THEME ENERGY POLICIES TABLE 1 : INCREASE IN THE CONTRIBUTION OF SOLID BIOFUELS TO THE CONSUMPTION OF BIOMASSE FOR THE PRODUCTION OF ENERGY BASED ON THE PLAN DE FOMENTO Type di biofuel

2006 (ktoe)

Forest residues (150 000 ha x 3 toe/ha) Farm wood residues (850 000 ha x 0,39 toe/ha) Farm grass residues (1 350 000 ha x 2,88 toe/ha) Agro-industrial residues Energy cultivations TOTAL

220 171 659 241 1609 2900

2010 (ktoe)

2010 (%)

450 350 1350 500 3350 6000

7,5 5,8 22,5 8,3 55,8 100

Source: Plan de Fomento of renewable energies in Spain I.D.A.E., December 1999

TABLE 2: ESTIMATION OF THE ECONOMIC AID FOR THE PLAN DE FOMENTO Production Energy conditioning Exploitation Investment subsidies Generation

Type

Forest residues Farm wood lresidues Farm grass residues Forest industry residues Farm industry residues Energy cultivations

Heat applications Direct Aid

Industrial Type of interest subsidy

Electric application Domestic

Exemptions

Investment subsidiest

Type of interest subsidy

Exemptions

Investment subsidiest

Type of interest subsidy

Exemptions

YES

YES

10%

YES

YES

300 € / ha 24 €/toe

20%

50%

YES YES NO

63 € / ha

40%

20%

Source: Plan de Fomento of renewable energies in Spain I.D.A.E., December 1999

the Economy through the State Secretary for Energy, Industrial Development and PME. Its aim is to promote energy efficiency and the rational use of energy in Spain as well as the diversification of energy sources and the promotion of renewable energies.

The group’s plan of action can be consulted in the 4th IDAE Bulletin published in June 2002.

In this document an analysis of the results of the Plan de Fomento was carried out and it was shown that they are far from reaching their objectives and that progress is minimal.

By 2010 there should be at least 10 times more electric power installed and about 30% more biomass used for heating purposes than is currently the situation, which is very similar to the situation of 1998 when the Plan was published.

IDAE intends to strengthen the Plan de Fomento and at the beginning of 2002 it set up a workgroup with the Autonomous Communities to study the restrictions which prevent the adoption of biomass as a substitute for other fuels and to propose measures at all decisional levels.

WOOD ENERGY N°2 / 2003

34

FOREST POLICIES In Spain forests cover 22,755,067 ha, i.e. 45% of the country. It is divided as follows: - 10.6 million ha of woodland, of which 8.8 ha are regularly exploited and 1.8 ha irregularly,

- 0.6 million ha of complementary woodland, i.e. non productive areas such as forest paths, firebreaks, wood deposits, farm buildings and nurseries, - 2.5 million ha of other formations (formations of less than 0.5 ha and formations with less than 10% cover,

Forest cover in Spain (Source : Escuela de Ingenieros de Montes de Madrid)

40% 46%

11%

3%

forest

complementary land

other formations

bush and shrub

THEME ENERGY POLICIES

Distriribution of forest ownership (source Escuela de Ingenieros de Montes de Madrid) 6%

THE STATE ENCOURAGES THE PRODUCTION OF ELECTRICITY FROM WOOD

24%

66%

4%

State and autonomous communities

Private property villages

Local bodies

Private individuals

- 9 million ha of bush and shrub.

In Spain forestlands belong mainly to private individuals who are subject to ver y soft regulations, if not nonexistent.

FOREST REGULATION FOR WOOD-ENERGY From an environmental point of view, Spanish forest policies pay more a t t e n t i o n t o re f o re s t a t i o n o f degraded areas and the fight against fires than to the use of wood residues for energy purposes.

From an economic point of view, there is controversy over the specific regulation of biomass production in Spain. Forest regulation basically concerns the productive uses of forests but does not resolve the question of fuel production from forest residues.

Norms regulating renewable energies generated from biomass do not exist.

It is a danger for the development of the sector.

On the other hand, the decentralised organisation of the Spanish state poses problems.

Decentralisation multiplies the number of energy and forest policies and slows down the drafting of

uniform criteria for the use of biomass. It is therefore necessary to give the sector a national norm in line with the criteria of uniformity of the other countries of the Union.

It is necessary to establish conditions which encourage the use of wood for energy purposes in such a way as to make sure traditional uses are favoured in rural areas (which are dying out), taking into consideration seasons, type of wood, necessary precautions, and penalties and responsibilities deriving from the activity.

The quantity of wood biomass rendered by a forest is considerable and would provide fuel for several power stations, but it is necessary to consider the zone and the concrete problems in order to define a strategy.

On the whole it is necessar y to involve the whole forest sector in coordinating the provision of biomass and the traditional work of exploitation, increasing their efficiency.

It is necessary to ensure a stable supply of biomass so that power stations can sign long-term contracts at reasonable prices, permitting investment in other installations with higher performance.

Legislation on the production of renewable electricity in Spain and, as a result, of wood-energy is relatively recent. It is only since 1980 that there has been talk of electricity production under a “particular regime”.

Law 54/1997 of 27 November establishes the principles of a new way of operating in the electricity sector based on competition. This law encourages a policy of premiums in order to reach the objectives of the EU’s White Paper on Renewable Energies.

Royal Decree 2818/98 of 23 December 1998, which develops Law 54/1997, proposes a classification of the renewable energies to define the various groups. Biomass is mainly found in groups b6 and b7.

PRICE OF BUYING BACK ELECTRICITY FROM BIOMASS IN SPAIN In Spain, renewable electricity is sold at a special price. The producer has two choices of sale: e i t h e r a t a f i xe d p r i c e ( t h e distributing company is held to buy back if the conditions of payment respect the regulations), or at market price plus a premium. Both the fixed prices and the premiums a re d e c i d e d e a c h y e a r b y t h e central government.

With regard to wood-energy and without taking into consideration the drop in subsidies of all renewable energies in 2000, prices have been stable over the past few years.

This year we observe a drop of 2 . 5 1 % i n t h e p re m i u m a n d a n increase of 1.61% in the fixed price.

A considerable increase in subsidies for energy cultivations can be noted.

TABLE 4 : GROUPS OF THE “PARTICULAR REGIME” IN WHICH BIOMASS IS FOUND GROUP DESCRIPTION Groupe

Description

b6

Boiler plants which use primary biomass (all vegetation with less than a year’s growth: energy crops) as 90% (minimum) of the fuel supply based on the lower heating value.

Boiler plants which use secondary biomass (all first use residues used as biomass fuel) as 90% (minimum) of the fuel supply based on the lower heating value.

b7

Source : Royal Decree 2818/98 of 23 December 1998

WOOD ENERGY N°2 / 2003

35

THEME ENERGY POLICIES TABLE 3 : EVOLUTION OF PREMIUMS FOR ELECTRICITY SUPPLIED BY BIOMASS Energy cultivations (b6) €/MWh %

1999

Premium 30,47 Fixed p.

65,09 2000 Premium 27,71 Fixed p.

61,54 2001 Premium 27,71 Fixed p.

61,54 2002 Premium 27,89 Fixed p.

61,72 2003 Premium 33,24 Fixed p.

68,58 Source : O MONTE, First quarter 2003

POLICIES OF AUTONOMOUS COMMUNITIES, THE CASE OF GALICIA The Spanish state, as was highlighted earlier, is very decentralised.

The Spanish constitution has divided Spain into 17 Autonomous Communities.

This means there are as many forest policies as Autonomous Communities.

Galicia is the Community with the most forest cover. However, the situation is unusual because properties are small and numerous and it is very difficult to apply regulations. This means that today the management of forest residues is above all in the hands of the communes. Fires pose a major problem

CIS MADERA

Forest policies tend to encourage the use of residues generated when clearing undergrowth during forest maintenance to reduce the problem of fires.

WOOD ENERGY N°2 / 2003

36

-9,07 % -5,45 % 0,10 % -0,07 % 0,68 % 0,29 % 19,23 % 11,10 %

and for this reason forest policies tend to encourage the use of residues generated when clearing undergrowth during forest maintenance.

In order to evaluate the possibilities of sufficient supplies and the price of biomass, the government of Galicia (Xunta de Galicia) prepared an inventory of the residual biomass generated by forest practices, estimating a resource of 995,000 T/year.

This quantity would permit the installation of 100 MW from fuel generated by forest maintenance.

The energy generated from this power would be 70 ktep. In the period 2000-2010 the installation of 50 MW is planned. The Xunta is also working to establish a policy of residue management compatible

Other biomass (b7) €/MWh

%

28,25 62,87 25,60 59,44 25,78 59,38 25,78 59,62 25,12 60,58

-9,36 % -5,45 % 0,77 % -0,07 % -0,07 % 0,37 % -2,51 % 1,61 %

with the breadmaking industry, which is very deep-rooted and a great demander of sawdust.

EXPLOITATION AND CONCLUSIONS Spain has considerable potential for biomass and for wood-energy in particular but it is not exploited enough.

The main reason is that government aid is still not sufficient to encour a g e i n v e s t m e n t i n t h e s e c t o r.

Moreover, Spain’s decentralisation and the lack of information with the autonomies do not help this situation. Coordination between the communes, communities and the central government must be carried out to develop the sector and create the 30,000 jobs by 2010.