Wood Panel Industries Federation                            DEF0007

Written evidence submitted by the Wood Panel Industries Federation

Introduction

The Wood Panel Industries Federation (WPIF) is a representative organisation giving voice to the industrial manufacturers in the United kingdom of Wood Chipboard, Oriented Strand Board (OSB)

and Medium Density Fibreboard (MDF).

The three constituent members of WPIF - Norbord (a West Fraser company), Egger and Kronospan - operate across six sites, located in England, Scotland and Wales. As well as supplying approximately two thirds of the UK’s consumption of products that are essential to the building and furniture markets, the industry makes a significant contribution to the UK economy by supporting regional employment and supply chains.

We therefore have a keen interest in ensuring the  sustainable growth of this domestic industry by addressing our members' concerns relating to both energy policy and wood security.

Summary of Key Points

●        The wood panel manufacturing sector uses over 25% of the 11 million tonnes of wood delivered from UK forestry every year in total and manufactures approximately 65% of the total UK annual consumption of wood–based panel types (Chipboard, Oriented Strand Board and Medium Density Fibreboard)

●        The wood panel industry is reliant upon a sustainable, long-term wood supply to maintain and enhance domestic production. Given that ‘peak wood’ is coming within the next decade, a long-term correction is required to reverse the steady decline in planting

●        WPIF welcomes the overall ambition for the UK to plant 30,000 hectares per year by 2025. Beyond this, we should look for closer alignment with the Climate Change’s target of 50,000 hectares per year.

●        To support UK industries and to move away from our current dependence on imported timber, WPIF is calling for the majority of new planting to support productive forestry within current targets.With greater investment in productive forestry, the wood panel industry will be able to make even greater contributions to the UK economy, while supporting vital Net Zero targets.

●        Wood is too valuable to waste and future energy policy should follow the principles of a wood hierarchy to prioritise sustainable uses over the burning of biomass. A return to tariff-based subsidies for biomass would see increased competition, putting at risk the sustainability of wood-dependent industries and undermining efforts to decarbonise energy generation.

Supporting the Economy

The domestic wood panel sector are the principal processors of UK timber and its conversion into materials for construction and furniture. The wood panel manufacturing sector uses over 25% of the 11 million tonnes of wood delivered from UK forestry every year in total and manufactures approximately 65% of the total UK annual consumption of wood–based panel types (Chipboard, Oriented Strand Board and Medium Density Fibreboard). Manufactured wood-based panel products (Chipboard, Oriented Strand Board and Medium Density Fibreboard) can be identified in virtually every home, office and shop and are extensively used in the construction, furniture making, packaging and transportation industries.

Growing the UK Timber Industry

Easing the tightening of the wood supply will assist the wood panel processing sector in playing a greater role in the economic recovery from Covid-19 and bolstering job opportunities. The three member companies of the WPIF had a combined turnover in excess of £900 million in 2018. This generated £12.4 million in UK corporation tax for the exchequer, with £44.5 million generated in VAT. The estimated total gross employment attributable to wood panel manufacturing is 7,500, with the average salary of those employed within the industry at £36, 235 in 2018. The total tax paid on 2,125 employees reached over £25 million in 2018/19.

The wood panel sector has the ability to do more and with increased productive forestry. The wood panel industry is reliant upon a sustainable, long-term wood supply to maintain and enhance domestic production. Given that ‘peak wood’ is coming within the next decade, a long-term correction is required to reverse the steady decline in planting since the 1970s. The WPIF is asking the UK Government to work with industry in recognising the historically low annual supply and woodland coverage across the UK, and commit to aligning policy across the UK with a focus upon improving long-term wood security through productive forestry planting.

Tree Planting Targets

WPIF welcomes and supports the UK Government’s ambition to plant 30,000 hectares of new woodland per year by 2025. This target will be important in safeguarding our domestic timber supply, and offer some security to wood-dependent industries such as the wood panel sector.

However, as has been acknowledged by the Environment, Food and Rural Affairs Committee, there is a “steep climb” for England to meet its 7,000 hectares per year share of that target. WPIF therefore also supports the Committee’s call for the introduction of an annual target for England to ensure that the UK’s overall level of ambition is met.

The majority of the 30,000 hectare per year target will come from Scotland, where the Scottish Government has an ambitious aim to plant 18,000 hectares per year. With Scotland setting the pace for forestry investment, we hope that England and Wales will be encouraged to raise their tree planting rates further. Indeed, the Climate Change Committee has recommended that UK forestry planting should reach 50,000 hectares per year between 2035 and 2050. We hope to see the UK Government adopt this increased target as we look beyond 2025, with England and Wales raising their planting levels higher still to reflect the standard set by Scotland.

When compared with Europe, the levels of wood cover seen in the UK are small (13% for the UK compared to 46% for Europe). It will therefore be important for the ambition for wood cover in England to be raised and WPIF will be responding to this point in detail as part of the Department’s Environmental Targets consultation.

Incentivising Tree Planting

WPIF further welcomes the Environment, Food and Rural Affairs Committee’s recommendation for DEFRA and BEIS to publish, by September 2022, an action plan to increase the use of domestically grown timber in the UK. We fully endorse the suggestions to introduce annual milestones for the proportion of domestically grown timber used in the UK, with an aim to double the amount of domestically grown timber used by 2030.

There is a need to plant the right tree in the right place with a balance between native and productive forestry. To support UK industries and to move away from our current dependence on imported timber, WPIF believes that increases in forestry investment should focus on the planting of productive species. Higher rates of productive planting, to increase the amount of domestically grown timber available, will do much to support the sustainable growth of the wood panel sector and other wood-dependent industries.

The wood panel manufacturing sector alone uses over 25% of the 11 million tonnes of wood delivered from UK forestry. WPIF will continue to provide a market for their product if more trees are planted. Productive species and the products resulting from them will also be important as we move toward Net Zero, offering significant opportunities for carbon sequestration through the trees themselves and from the manufactured products made from them, which are able to act as ‘carbon sinks’ to lock away emissions.

The England Trees Action Plan includes a commitment to work with stakeholders to formulate and bring forward a policy roadmap for the use of timber in construction. WPIF is keen to contribute to this work and I would be grateful for details on how we can engage with the Government’s working group. We are aware that the Environmental Audit Committee has recently called for this roadmap to be delivered by the end of 2022 and we agree that this important piece of work should be prioritised.

Hierarchy of Wood Use

The UK’s transition from a carbon intensive economy, focused on traditional sources of energy such as coal, has prompted a significant rise in the use of biomass for electricity and heat generation. In 2019, renewable heat generation from technologies increased by 2.4% to 5.2 Mtoe. Of that, almost 60% was derived from wood as the principal source, followed by 21% for plant biomass and 15% for heat pumps. The rise of biomass, subsidised on an industrial scale by the UK Government under the Renewable Heat Incentive (RHI) exacerbated restrictions on wood supply for domestic manufacturers, namely the wood panel industry.

The UK’s wood supply is finite with a critical need to prioritise how this resource is used. Rather than burning wood, as previously encouraged under the Renewable Heat Incentive, UK timber should be used in the most effective way possible.

The Climate Change Committee has set out a hierarchy which prioritises the use of wood in construction and a transition away from using wood to heat buildings or to generate power. Wood is too valuable to waste and future energy policy should follow the principles of a wood hierarchy to prioritise sustainable uses over the burning of biomass.

From the industry’s perspective, it would be entirely counter-productive to return to tariff-based subsidies or introduce new financial incentives to support biomass and therefore disrupt the ability of all wood users to compete on a level playing field by incentivising the burning of wood biomass.  All wood users should be able to compete openly. There is a risk that increased support for biomass using domestically grown wood could increase competition and undermine efforts to decarbonise energy generation. We stress that this is not just an issue for our own industry but also has serious implications for the entire construction sector and, in particular, the Government’s house-building objectives.

August 2022