RED Revision: Will EU countries stop paying energy companies to burn forests?

21 Oktober 2022

RED Revision: Will EU countries stop paying energy companies to burn forests?

The words “renewable energy” are often associated with images of windmills and solar panels. Unfortunately, wood burning today remains the biggest source of energy that the EU considers ‘renewable’. Market incentives for woody biomass created by the EU’s renewable energy legislation wreak havoc in forests in Europe and abroad. Negotiations on these incentives in the Renewable Energy Directive (RED) are entering their final round in the midst of an unprecedented energy crisis. Cutting off public subsidies and considering Member States’ individual, uneven reliance on primary woody biomass may encourage fairer solutions, and stop the harm to global forests, biodiversity and the land carbon sink.   

In 2020, EU Member States obtained an average 41 per cent of their declared ‘renewable’ energy by burning “solid biomass fuels” – in other words, wood in all its forms. Most of the recent growth in biomass use came from the production of heat and power, incentivised by the EU’s renewable energy targets.

Assessing biomass impacts on the climate and biodiversity is complex and should consider many factors case by case (forest management, whether fossil fuels are replaced, source and type of wood …). But current RED incentives blindly reward all forms of wood burning, and the ‘sustainability criteria’ introduced by the 2018 RED revision make little, if any difference. 

As a result, forests around the world – even primary forests in Estonia, Romania, British Columbia – are crushed into wood pellets, and the companies burning them are rewarded with considerable public subsidies (€10 billion in 2018) and the right to avoid paying for their considerable, fast-increasing carbon dioxide emissions (see graph), which represented a €12 billion indirect subsidy in 2019.

Accordingly, the proportion of the EU wood harvest being burned for energy has strongly increased, from about 41 per cent in 2005 to 55 per cent in 2018. Even major pulp and paper companies such as the Finnish-Swedish Stora Enso now criticise EU biomass incentives. With current prices of fossil fuels largely higher than those of renewable sources, energy companies no longer need public subsidies to make profits from burning wood.   

To put it in simple terms, companies are burning forests in a worsening climate crisis, and EU taxpayers are paying them to do it. A recent investor’s analysis into the biomass business called this situation “a product of deranged European climate subsidies which incentivize the destruction of American forests so that European power companies can check a bureaucratic box”.   

The RED trilogues – the final negotiations between the Parliament, the Commission and the Council of the EU before the legislation’s revision is adopted – have now started and offer EU lawmakers the opportunity to fix this senseless situation.   

In particular, the European Parliament proposed to exclude solid fuels derived from primary woody biomass (wood extracted directly from forests) from public financial support, and to cap at current levels and then “phase down” the amounts of primary woody biomass that can count towards Member States’ renewable energy targets (FW 278). These two latter points may prove difficult, as Member States are loathe to make the chore of meeting their climate targets more difficult. 

As per our calculations based on Member States’ 2017 voluntary reporting, primary woody biomass (defined as all the wood extracted from the forest, not the Parliament’s narrower definition) supplies on average 19.6 per cent of countries’ renewable energy (about half of total woody biomass energy uses). But this average conceals very wide discrepancies. Primary woody biomass represents more than half the ‘renewable’ energy consumed by Hungary and Bulgaria. Similarly, most countries from Central and Eastern Europe where solar and wind energy are not very developed yet, use a 25 to 45 per cent proportion of primary woody biomass in their renewables mix. On the other hand, countries like Sweden, Spain, Austria or Germany consume less than 13 per cent of energy from primary woody biomass in their renewable energy consumption. France, Italy or Finland use around 20 per cent. Islands like Ireland, Malta and Cyprus hardly use any. 

RED negotiators could try to agree on a common, harmonised cap and phase-down for all Member States, but with such uneven national situations, a more differentiated approach – i.e., setting up accounting caps and reduction schedules per groups of countries in comparable situations – would likely be easier to agree on, and would also be fairer.   

Negotiators must stand up to the biomass industry’s irresponsible lobbying, and keep in mind that they are not haggling just over meeting legal obligations to increase energy production from poorly defined renewable sources: they are trying to protect EU and global citizens from the real-world consequences of the climate and energy crises. Continuing to pay energy companies to burn forests is worsening both. The stakes for the climate, forests and future generations could hardly be higher.  

Kategorien: News, Forest Watch, Bioenergy

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