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Chapter 3 Wood energy and economic development

Bioenergy context
Wood energy and forest industries
The forest itself
Land use and access
Policy in perspective
Market forces

Fossil-based fuels and hydro-power are predominant sources of energy for economic development in today's world, but abundant and relatively cheap supplies of energy from these sources cannot be expected to grow or last forever. The environmental risks of fossil-based or nuclear fuels also cast doubt on their future viability as staple energy sources.

Alternative, renewable sources of energy will in the long run have to be developed, even in relatively wealthy parts of the world. Policies, financial mechanisms and regulations that serve this need already apply in many countries, overturning the conventional economics of commodity supply and demand.

Wood energy can make a worthwhile contribution to economic growth at all levels of development, in environmentally sound ways that also improve living conditions and standards in rural areas. This section explores cases where forest fuels already boost productivity or profitability in industry or trade, and highlights new applications of wood energy that promise to bridge the gap between industrial, household and other modes of energy use. It also sets wood energy and its economic applications in the context of sustainable, multiple-use forestry, alongside the management of timber or non-wood forest product extraction and the service functions of forests and forest lands.

Bioenergy context

The giant potential for world energy from biomass has captured much recent research and development interest. The definition fits traditional fuels such as firewood or animal dung, but in most cases these have not been the main focus of developers' attention. Biomass fuels such as wood can also be converted into modern energy 'carriers', such as fuel alcohol or electricity. These can be substituted and mixed in a flexible way for fossil-based fuels, often at a relatively low investment cost.

Biofuels cannot only serve traditional domestic needs such as cooking, heating or lighting but also cater to new energy applications in industry, at a cost competitive with equivalent fossil-based technologies. Because bioenergy production operations are decentralised and labour-intensive, rural employment can be another economic benefit.

FIGURE 10 Wood energy in multiple-use forestry

Sustainable, multiple-use forestry is a management model for combined production harvesting of timber, fuel and non-wood forest products (NWFP) such as medicines, fruits and oils, within the same forest ecosystem, while enabling it to fulfil a range of service functions, including watershed protection, carbon sequestration and the conservation of biodiversity.

The point of this orchestrated approach is to add optimum value to the forest as a continual source of benefits, to the point where incentives to destroy or abuse it are outweighed. After lumber, woodfuels are popularly regarded as the most valuable products derived from forests but the model requires equal significance to be attached to all four kinds of forest asset if each is to remain available and sustainable.

Production facilities can be developed step-by-step and do not call for the heavy capital investment required by 'hi-tech' energy sources such as hydro-power or nuclear power. Moreover, while 'energy crops' are growing, they fix carbon through photosynthesis and so help mitigate risks of global warming and climate change.

The use of trees and forests as bioenergy resources takes on added significance in this respect, in view of the key carbon sequestration role of woody plant materials. In conjunction with other forms of forest production and the natural service functions forests provide, such as watershed protection, it also helps optimise the perceived value of forests and trees. This meets the Agenda 21 objective (Chapter 11), urging:

'... efficient utilization and assessment to recover full valuation of the goods and services provided by forests, forest lands and woodlands.'

Bioenergy can have drawbacks, too. Unsustainable exploitation of finite biomass sources can deplete natural forests and woodlands as production of annual crops for energy is often undertaken at the expense of forest clearance. Turning over agricultural land from other uses to 'energy farms' or plantations can also have unwanted social and economic impacts. Even so, with sound planning, consultation, monitoring and implementation, wood energy production and use can avoid these pitfalls.


Burkina Faso's unplanned use of forest resources has led to the deterioration of all forest areas around Ouagadougou, prompting a Government decision to develop effective management techniques. The project, financed by the United Nations Development Programme (UNDP) and executed by FAO, aims to develop a national programme for the sustainable and integrated production of wood and non-wood forests products, particularly fuelwood and charcoal.

In an area 150km around Ouagadougou, 80000ha are being managed with the active participation of local people using simple techniques to implement silvicultural operations. Supported by FAO, the Government of Burkina Faso has introduced a planned and more rational approach to forest resources. This has resulted in resource conservation and protection, as well as a 50 per cent income increase for local people, who are now able to fulfil urban demand for fuelwood and charcoal.

Plans are underway for the management of a further 570000ha in Burkina Faso. Other Sahelian countries, as well as those involved in RPTES (see page 29), have expressed interest in adopting a similar programme.

In developed countries, the further challenge of industrial and market restructuring lies ahead, while in developing countries gaps in technical and institutional capacity frequently obstruct or delay transition towards greater production and use of bioenergy in all its forms.

In either case, solutions may hinge not on treating household and industrial or trade applications as separate worlds but on devising bioenergy production approaches that cater to both. In this fusion the wealth of nations, the sustainability of natural resources and the well-being of neighbourhoods and families become interlinked concerns. Wood energy lends itself particularly well to bioenergy development on this composite model, for forests have always served plural functions in all these contexts.

Wood energy and forest industries

Activities that combine wood energy production with other forestry industry operations form a high-priority development objective in many countries. Commercial harvesting of trees for timber, pulp and board products casts aside large amounts of wood residues and litter at the point of extraction.

Further residues and wastes, mainly bark and sawdust, are created when forest products are processed. The timber and pulp processing industries have many options for putting these wastes and residues to economic use and have shown particular interest in converting them to wood energy.


Forestry wastes and residues could, it has been calculated, deliver about 25 per cent of Canada's entire energy demands if converted to biomass energy: at present their use accounts for some 4 per cent only Though costs of switching from fossil to biomass fuels are generally high, in specific industries, such as the pulp and paper industry, the switch can be made at little or no cost. Canada produces about 15 per cent of the world's pulp and 31 per cent of its newsprint. The pulp and paper industry is a huge energy user: operations such as drying, steam-heating and milling make it the source of 10 per cent of the entire country's carbon dioxide emissions.

Since the 1970s, the industry has raised the use of forest biomass as a fuel source to 75 per cent of total needs and reduced fossil-based fuel use by half at minimal capital cost and with the effect of substantially reducing its net output of greenhouse gases.

Woodfuel production and use commonly occur as adjuncts to regular harvesting and processing activities. They usually form part of a waste recovery cycle aimed at reducing energy costs and carbon emissions within industry itself. Energy products for resale on the open market are also created in many cases. In the 1970s and 1980s, integrated processes and installations taking advantage of these opportunities became commonplace in Brazil, Uruguay, North America and various Scandinavian countries. As such schemes emerged, other countries were attracted by their multiple benefits and took steps to adopt similar systems as part of their own forest industry development plans.

Some successful innovations resulted but others foundered because the novel multi-track production systems were not matched by forestry improvements, market development and other forms of system support outside the mill gate. Where marketable supplies of energy were achieved, the benefits were rarely felt by the ordinary energy consumer.

Often, power supply monopolies bar open sale of electrical or other power generated in private industry. Even where such marketing is allowed, industry may be deterred from making the extra effort to sell power to the national grid or set up a customer base in areas where no grid exists. In Thailand, for instance, private power supplies are allowed to supply base-load electricity. Small producers may also generate 24 hours a day, but there are certain penalties for unscheduled stops.

Flexible policies that are supportive to woodfuel utilization and decentralised power production within industry are a rarity, while state subsidies for fossil-based fuels or grid power frequently tend to undermine the economics of freelance approaches to energy production and use.

More to the point in a rural development context is the need to focus attention and investment on improving the viability of decentralised wood energy applications at local or intermediate levels. Also to introduce appropriate technologies, distribution facilities and economic incentives to stimulate wider use of these resources within sustainable woodfuel production systems.

Intermediate and appropriate technologies, including various schemes for more systematic production of charcoal, have been notably successful in places. Production and use of charcoal burning stoves have increased proportionally, in response to concerted marketing and promotion campaigns. Similar programmes to bring charcoal production under formal management, regulate its use and spur market demand have since begun in several other countries.

FIGURE 12 Woodfuels in agro-processing

The inefficiency of converting wood to charcoal, especially on a small scale, can mean that up to 5kg of wood may be required to make 1kg of charcoal. Larger-scale, more technically competent operations can improve this ratio to almost 4kg to 1kg but against this advantage must be set the cost of additional capital costs, skills and management inputs.

In favour of small-scale charcoal production is its role in employment generation. An FAO/UNDP household energy strategy study in the Philippines in 1992, showed that household use of wood yields one TJ of energy from about 62 tonnes of fuelwood and 100-170 person-days of labour, whereas just 33 tonnes of charcoal provides the same energy yield but creates a labour requirement of 200-350 person-days.

Charcoal processing and combustion contribute more to carbon dioxide emissions and the global warming effect. The same Philippines' study measured carbon dioxide emissions from fuelwood at 450 grams per kilogram of wood, while charcoal processing and combustion emitted more than 2000 grams per kilogram. This drawback would matter little if the system of production were sustainable, as the growing trees would absorb commensurate amounts of carbon dioxide. But this is usually far from the case.

The forest itself

In practice, less attention is paid to the limits of biological growth, tree production and the forest itself, than to maximising energy yield and economic reward from processing technologies and the energy product. Other supply-side constraints that can hamper efficient and sustainable wood energy production include technical or logistical shortcomings such as lack of suitable harvesting equipment, transportation or roads. The biological productivity of trees grown for any economic use depends on factors that vary widely from place to place, including temperature, sunlight, soil, water and other physical circumstances that affect plant growth. Also important are the types of tree species or species mixtures grown and their vulnerability to pests and diseases. The extraction and storage of the forest product matters, too, in view of harvest and postharvest losses.

These are concerns of productive forestry anywhere, whether in natural or man-made forests, whether managed commercially or for communal use, whether on a large or small scale and whether directed towards energy production, timber extraction, life support or any other goal.

Even so, adding industrial biomass energy production to the repertoire of forest use can introduce new opportunities for forestry operations.

Exceptionally reliable wood harvests are needed to keep advanced systems of wood energy production flowing, so it becomes critically important to match rates of production to industrial and market demand for the product. Greater use of wood for energy also further underlines the essential need to produce and harvest trees sustainably, in ways that do not harm the forest's capacity to support new generations of trees. This priority is universal: it is nowadays expected to govern the actions not just of large commercial forestry enterprises, but of all who rely on trees and forests for products or services of any kind.

Land use and access

In many countries, moves to reform the tenure of forests and forest lands, whether through nationalization, privatization, regulation or deregulation, have tended to restrict or penalise access by local people to woodfuels which they have long regarded and treated as common property.


In the USA, it has been estimated that advanced wood-fired gasifiers could produce electricity at rates commercially competitive with coalfired power stations, using wood harvested in short-rotation coppice plantations on the more than 139 million hectares of US forest lands that are classified as environmentally sensitive or under-stocked.

Such opportunities are not confined to highly industrialised countries. In Brazil, for example, researchers have estimated that electricity generation based on plantation forestry could, if all available land were planted, produce more than 150 per cent of the country's total 1990 energy consumption, at less than half the cost of equivalent oil inputs.

In Europe, improved tree varieties selected for woodfuel production have been planted extensively in recent years. In Sweden, fast-growing varieties of willow form the main stock for trials underway since the 1970s, situated mainly on ill-drained lands unsuited to arable farming. In Britain and elsewhere, clones of poplar developed in Belgium have also been planted for trial on marginal agricultural land.

The wood energy yield from these trials compares well with that of other biomass fuels. Poplar coppice can, for example, provide about 6TOE (tonnes of oil equivalent) per hectare, compared with only 1TOE per hectare for oilseed rape, a crop widely grown for conversion into 'biodiesel' in Germany and Austria. If all suitable farmland in Britain were planted with oilseed rape, it would provide only a diesel substitute equivalent to about 2 per cent of national liquid fuel requirements, whereas just one million hectares of woodfuel plantation could meet 10 per cent of UK solid fuel needs.

The tree varieties developed as energy plantation crops do not, however, always match specified growth rates to the consistent degree expected of agricultural crops. In some parts of Europe, environmental groups have been critical of the uniform appearance of energy plantations and their impact on wildlife in riverbank and wetland habitats. US Federal and European Union regulations discourage farmers from using 'set-aside' farm subsidy mechanisms to finance the establishment of short-rotation coppice woodfuel lots. Once such obstacles have been removed, this form of land use is likely to grow apace in Europe and North America.

Outlawing such access or branding local people as 'exploiters' of forest resources makes poor sense. Given guaranteed access to the forest and stewardship over it, they usually prove effective resource guardians. Where exclusion is inevitable, agroforestry or social forestry projects enabling wood to be grown for energy use in conjunction with farming operations or on purpose-grown community woodlots, can foster constructive alternatives.

Investment in other land uses, particularly farming, tends to take precedence over forestry in many developing countries, even where productive surplus land is available for energy farming. Furthermore, annual crops or their residues are still liable to be preferred over wood as staple biomass energy sources, particularly for fuel alcohol production. High-yielding agricultural crops such as sugarcane or sweet sorghum yield most kinds of liquid biofuel more amply than equivalent areas of forest or energy plantation.

Waste or surplus materials generated by run-of-the-mill sugar or edible oil production can provide energy feedstock as a byproduct. This dual-purpose application doubly commends such crops for biomass fuel production. However, research continues into processes that combine forest biomass with field crops to produce transportation fuels.

Unlike sugarcane and other field crops, wood energy plantations can be grown on lands that are only marginally productive or have been abandoned after unsustainable farming practices have reduced their arable worth. An estimated 700 to 1000 million hectares - about half - of the world's farmland now belongs in these categories.

Another potential new area for wood energy production is 'set-aside' farmland in the USA and European Union, designated under policy and financial mechanisms aimed at avoiding food surpluses by issuing pro rata compensation payments to farmers for land left fallow or put to uses other than food production.

Whatever the short-term advantages of turning to annual crops as standard sources of biomass for fuel, the use of trees and forests as an energy crop can have a more benign impact on soil and water resources in the long run, besides sequestering more carbon and requiring fewer costly agrochemical inputs.

Policy in perspective

Wood energy development is recognised in the Tropical Forestry Action Programme (TFAP), and other international policy perspectives on forestry development, as one of the most open fields for new thinking on national strategic planning and the setting of priorities for further development investment in forests. Nonetheless, restrictive policies that stifle initiatives for renewable sources of energy development still abound.

Some countries have introduced tax 'breaks' or disincentives, price policies and subsidies as levers to encourage such innovations. But unless accompanied by steps to consult users, modernise conversion systems, optimise forest resources, improve skills and infrastructure and modify consumer perceptions, these mechanisms rarely suffice to alter established patterns of wood energy production and use.

Links between forestry and energy policies are still urgently needed, along with mechanisms for joint implementation of activities to introduce and improve the performance of wood energy systems.

Popular participation in shaping and managing development schemes is also vital to their success. Measures for increased wood energy production and utilization planned and implemented from the 'top down' will only have a fraction of their intended effect if they do not command the approval and support of local people, on whose stewardship the fate of the primary forest resource almost always depends.

Mature technologies are available for commercial wood energy development, but many of them can also be geared to the requirements of subsistence woodfuel users. More research and development efforts are needed to put technology to work on behalf of such users. In general, there is an abiding need to incorporate sustainable wood energy development provisions into national energy policies, in combination with other energy sources and applications, including the use of fossil-based fuels.

Market forces

A key principle tabled and approved at UNCED was: sustainability, reduction of poverty and improvements in nutrition through the development of sound, sustainable, profitable and efficient trade.

As pressure on forest resources increases, plantation forestry grows in importance as a source of woodfuels, likely to be increasingly destined for commercial sale as management becomes more organized and overheads multiply.

More information is needed about the value of particular forests as sources of industrial energy and of woodfuels and other forest products that can be traded for household and other small-scale uses at local or district levels. Such information can be used to attract investment to areas where potential for both kinds of use is high and the benefits - in jobs and incomes - of one can enable people to afford to pay for the other. Both make funds available for expansion and better management of the primary resource.

'States should cooperate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries, to better address the problems of environmental degradation...'

Rio Declaration, Principle 12

'Combating poverty: the long-term objective [is that] of enabling all people to achieve sustainable livelihoods... [and] to provide all persons urgently with the opportunity to earn a sustainable livelihood.'

Agenda 21, Chapter 3

Even at a global trade level, movements of wood for energy applications are proliferating, reversing the general North-South flow of trade in energy commodities: for instance, Brazil exports substantial quantities of wood chips to Germany and Scandinavia, mainly for use in metallurgical processing. No matter how large or small the marketplace, it is important that all movements of wood energy commodities result in reciprocal benefits or reinvestment dividends for local economies and communities at the product's point of origin.

Unless this circle is closed, the living standards and prospects of local people will not gain by increased trade. Fair trade can help ensure that the flow of local benefits is maintained, but nothing will ultimately come of this process unless the forests and trees that support it are cared for sustainably.


Wood energy is one of the five priority concerns of the Tropical Forest Action Plan (TFAP), launched in 1985 to address the most urgent aspects of tropical deforestation. The bioenergy programme outlined in the TFAP addresses a wide range of related social, agricultural and cultural issues as well as basic energy and forestry concerns, including land use, employment generation and environmental care.

Within this multi-disciplinary framework, technologies such as biofuel production and electricity from wood and agricultural residues are explored as potential supports to more efficient energy conversion, conservation and substitution procedures.

To further the bioenergy programme, national TFAP strategies are being prepared, with a view to reviewing, assessing and monitoring wood energy activities under all the headings mentioned above. Also to develop coordinated plans of action involving all public and independent sector stakeholders in wood energy development.

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