It is certainly a challenge to ensure winter energy security for the 3.5 million households that depend on firewood, but a short-term emergency solution must not distract us from long-term strategies with a deeper impact on the entire Romanian society. The Romanian Association of the Wood Industry – Prolemn proposes a debate that will bring together the authorities and the business community in the industry for a strategic fruition of Romania’s green potential.
The support announced by the Government for subsidizing the price of firewood with 150 lei/cu.m. may be a breath of fresh air for a large part of the country’s population, but it is also an artificial intervention in the wood market, given that no measures are adopted to increase the availability of legally sourced timber in the market. The increase in the consumption of firewood by the population – stimulated by artificial cheapening – implicitly leads to the reduction of availability for the industry. As such, it has the potential to lead to major imbalances, affecting a vital industry for Romania.
Moreover, there are administrative mechanisms that direct the priority fuelwood resource to communities in forest-rich areas, leaving very little wood on the open market to be directed to heavily forest-deficient areas. These lead to an explosion in the price of firewood on the open market. The less firewood is available on the free market, the demand and supply are unbalanced, the price rises artificially, directly affecting the availability of the resource with which the wood industry is supplied.
As has already been seen since the beginning of this year, the competition between domestic consumers and industrial users of resources (as well as well as the public policy prioritization of the former) is creating major economic imbalances. Thus, the industry registers an artificial shortage of raw materials and high costs, the trade balance leans towards expensive imports, reductions in production capacities follow, as well as unemployment and underdevelopment. The discussion is not only theoretical – see the reduction of the processing capacities of one of the largest wood processors in Romania in Suceava county.
Paradoxically, the timber industry is the main – if not the only – economic engine of many communities dependent on firewood for heating.
In these areas, wood mills are seen as “bread factories” – the forestry sector and the wood industry support more than 142,000 direct jobs. And the impact of the forest-timber sector on the Romanian economy and society is considerable. Wood-based industries contribute 3.5% to the formation of Romania’s GDP and represent 16% of the cumulative turnover of all industrial branches in Romania.
The needs of industry are the needs of society. We must not put them in opposition to the needs of the population.
For further illustration, let’s look at what happens in other industries following interventions in the energy and gas market. An example is the fertilizer market. Chemical company Azomureș stopped production in the spring, because it had become unprofitable at gas prices on the free market in Romania. The fertilizer market has become dependent on imports, mostly from neighboring countries. Fertilizer prices and imports have already increased threefold. These prices are translated into costs for agriculture, and then to the population.
But stopping Azomureș also results in unemployment and increases in imports, with the effect of unbalancing the trade balance (1 billion Euros from fertilizers alone), and more expensive long-term state loans.
Similarly, the balance also works on wood, oscillating between the industrial use of wood, through which products with higher added value are made, and the destination of the resource as firewood. And the balance is skewed by the measures to direct the priority resource to firewood, with prices controlled at artificially low levels – see the prices for selling firewood to the population practiced by RNP Romsilva and town halls.
This balance will become even more lopsided by the implementation of the measure to grant an aid of 150 lei/cu.m. of firewood purchased by the population. Why is there a need for an aid of 150 lei/cu.m. of firewood for those who purchase firewood at very low prices, of 200-250 lei/cu.m., the prices at which RNP Romsilva and town halls sell? The subsidy should only go to those who do not have access to the cheap resource, otherwise those who buy cheap now will buy even cheaper, and those who already buy very expensive will buy even more expensive: we will see a cascading rise in price firewood on the open market.
However, there are healthy economic mechanisms that can lead to lower prices.
How do we profit from the green potential of biomass in Romania?
First and foremost, RNP Romsilva and town halls can bring more wood to market. Thus the supply will balance the demand, and the final prices can be kept at an acceptable level for the population. Romania legally harvests approximately 18-20 million cubic meters of wood annually, but the total, sustainable possibility, established through forest management plans, is 25-26 million cubic meters.
Concrete measures must therefore be taken to put more of the wood resource on the market. Forestry sector support and investments are still very low – low allocations in the National Strategic Plan and PNRR. Moreover, we have the known blockages in mobilizing the resource: the environmental assessment of the forest management units, the SUMAL bureaucracy for the markings in the areas owned by private persons and in the vegetation outside the forest fund, the administrative decisions to switch to shaped wood at RNP Romsilva without the ability to put the resource on the market, lack of funding. All this must be approached realistically, in a wide-open horizon that considers the needs of the population and the needs of society.
The strategic options, which will support a vital sector of the national economy in the long term, will include not only increased mobilization of the forest biomass, but also increased energy efficiency.
The consumption of firewood in households is currently extremely inefficient, with energy yields of around 30%, when we know that yields can be over 90% in the case of cogeneration of electricity and heat.
The energy based on the wood resource – predominantly thermal energy – already represents over 60% of the renewable energy produced in Romania, over 5 times more than the electricity currently produced from wind and solar sources.
The energy potential of biomass is assessed, in Romania’s energy strategy recently relaunched in the debate, at a total of 318,000 TJ/year, having an equivalent of 7.6 million TOE (tons of oil equivalent). This potential results from:
- agricultural waste (cereals, corn stalks, plant residues of vines, etc.) – 63%;
- residues from forestry operations and firewood – 16%;
- residues from livestock farms – 8%;
- wood waste – sawdust and other wood scraps resulting from industrial processing – 6%;
- urban household waste and residues – 7%.
How big is this biomass potential? The potential of 7.6 million TOE in electrical energy measurement units means over 80,000 GWh of energy, i.e. approximately 8 (eight) times the electrical energy of Romania’s nuclear reactors.
Currently, firewood is practically the only biomass utilized, and that with very low energy yields, as we have shown above. Agricultural biomass, which has three times more potential and quantitative availability than forest biomass, is very little used. Not to mention urban household waste.
The strategic options are on the discussion table; what remains – at the level of decision-makers, industry, and other segments of Romanian society – is to choose the most sustainable measures, with a positive and lasting impact in a wider horizon. The current context, in which the new National Forestry Strategy is being drawn up and the energy security of the entire European continent is threatened by the war started by Russia in Ukraine, requires not only speed, but also lucidity in order not to take measures that the Romanian society will later regret.
For a smart, green industry
Through the SMART GREEN INDUSTRY conference (September 28-29, 2022) organized by the Romanian Association of the Wood Industry – Prolemn and the Chamber of Commerce and Industry of Romania, we want to open new lines of dialogue for capturing and using the green potential of a future industry. We invited representatives from the top of the relevant ministries (Environment, Agriculture, Economy, Energy, European Funds) to speak on the first day of the conference, to present the vision and plans for the sector. The presentations will include the National Forestry Strategy project, but also studies on the forest-timber sector and its impact from INCDS “Marin Drăcea”, AIL – Prolemn or PriceWaterhouse Coopers.
On the second day, there will be thematic workshops attended by representatives of the technical management of the ministries.
At the center of the debates – a strategy for the development of the wood industry, for superior exploitation of the wood resource from the sustainably managed forests of Romania, for ensuring energy security and supporting smart economic growth in relation to the objectives on the line to combat climate change.