Possibilities of reducing CO2 emissions from energy-intensive industries by the increased use of forest-derived fuels in Ireland

A range of EU environmental policies support the goal of reducing fossil-fuel use in commercial thermal applications. Combustion installations which are covered by the EU Emissions Trading Scheme now face a substantial opportunity cost for fossil-fuel CO2 emissions. However, it is unclear whether the EU ETS will provide a sufficient incentive for switching to forest-derived biomass fuel by energy-intensive installations currently firing on coal or peat. Using Ireland as a case study, the paper analyses the availability and cost competitiveness of forest residues produced within the vicinity of three cement kilns. EU Allowance prices observed during much of 2007 and 2008 would appear to be sufficient to equalise the carbon-adjusted purchase costs between chipped pulpwood and bituminous coal. However, no such fuel switching has been observed to date by kiln operators and none appears to be envisaged. The apparent reasons for this include (1) a ready availability of cheaper substitute fuels such as Meat and Bone Meal; (2) technical issues regarding the chemical consistency of the woodchip; and (3) the prospect of pulpwood prices rising in the medium term due a growing supply shortage. The prospect of such a constraint is an unintended consequence of Irish government policy to promote biomass co-firing in peat-fired power stations.