BioFuel Subsidy sends wood prices soaring

According to recent press, Government ministers and MPs have been warned that the level of biofuel subsidies in the UK are damaging British manufacturing by causing raw material prices to rocket.

A report commissioned by Furniture Industry Research Association FIRA and the British Furniture Confederation (BFC), detailed at a meeting in the House of Lords last month, showed that the price of wood had risen more than 55% in the past five years alone, as furniture manufacturers have been forced to compete with energy companies.

The problems started in 2002 when the Government introduced a subsidy to compensate electricity generators for burning renewable fuel, including wood and wood products. The subsidy is paid by consumers, through their electricity bills.

FIRA and the BFC are now calling on the Government to reform the wood biomass subsidy to prevent it damaging UK manufacturers and retailers and undermining the already fragile economy. FIRA and BFC are also calling for a suspension to the building of new dedicated woody biomass energy plants until a thorough review of the impact of the subsidy is investigated.

As part of the report, the FIRA/BFC questioned whether it was sustainable to build so many large scale power plants and that the most sustainable way of using wood would be for it to go through a lifecycle from planting to manufacturing before being recycled and eventually burnt for energy.

Currently and over recent years there has been an increase in the burning of virgin timber, which FIRA/BFC say, is putting strain on the availability of sustainable supplies.

Whilst waste woody material can be burnt for fuel, it is obviously not suitable for the manufacturing industry and FIRA/BFC also noted that energy prices have been under scrutiny since the big six energy retailers put up their prices – these are affected by the woody biomass subsidy.

A spokesperson was quoted as saying,

“Any future investigations into energy prices in the UK need to consider whether it is equitable for consumers to pay for renewable energy forms which distort the market perversely against the British consumer and British manufacturing.”