Markets for Low-Value Wood: a Model from Austria
It’s interesting to me how different parts of the world are more similar than different. I’ve had the opportunity to travel to unusual places and see how other people address the same problems we have. I recently saw an example in Austria while traveling with a small group of American foresters and engineers. We were seeking to answer: “How did Austria become the world’s expert in using wood for energy?” What we learned could (and should) be a treasury of good ideas applicable to Maryland.
A striking first impression of Austria is how similar it is to Maryland. Our itinerary kept us zig-zagging around the Danube valley region of Austria and southern Germany, which looks and feels like Baltimore or Carroll County. We never went into the Alps, although we saw them looming in the background for a couple of days. Curiously, Maryland could be a twin sister to Austria. We share highly similar statistics regarding population, urbanization, age class, land use distribution, etc. To us forestry folks, it became more similar. Forests cover 47% of their landscape and 80% of the forest is privately owned. Nearly all of the ownerships are less than 500 acres and 40% of forest landowners have just five acres of woods or less. Of the 200,000 forest owners, a handful (1.5%) own over half of the forest – a continuing legacy of their feudal history, which we fortunately do not share. Sawtimber markets provide the driving force of their forestry enterprises. Sound familiar?
Not once did we see a neglected woodlot. The woods are very healthy natural stands of spruce, pine, oak and beech. None of them appeared manicured as some sort of sterile fiber factory. On the contrary, they were all very natural – just well kept. Everywhere we saw family-owned forests, all with proper spacing, excellent structures, free from invasive species and abounding with wildlife.
Eighty percent of Austria's forests are privately owned. Farmers manage and harvest their own woodland. Harvested wood (firewood, logs, and fuel wood) are piled by roadside and air cured for up to a year. Farmers and landowners belong to cooperatives that will chip the wood and deliver to the district heating plant, owned by the cooperative. The heating plants contain a wood boiler and giant hot water tank. The wood heats the water and the water gets stored in the tank. Interestingly, there are no operators on-site. A person will swing by once a day just to make sure that everything he's seeing on his smart phone really is happening. The whole system in this case was supplying hot water to a couple thousand people (homes, offices, commercial places) and it was all managed remotely. Just like we pay for water or gas, the customer pays for the hot water used from the district. It's metered just like water or gas, and the customer gets a monthly bill. And, like our electric cooperatives, it's usually pretty cheap and the customer gets a year-end distribution of shared profits.
So what’s their secret? We think we discovered it: strong markets for low-grade wood. Just like here in Maryland, sawtimber markets are the financial backbone of silviculture but Austria deliberately created markets for low-grade wood. Those markets enable good forestry practices. They also have a supply chain and wood distribution system that captures production efficiencies so that very small producers can tap these markets. More on that in a future article perhaps.
Beginning in the 1990s, the Austrian government began heavily investing in the private development of renewable energy to deal with the dual issues of national security and climate change. They saw early on that even with solar and wind resources fully developed they could not come close to meeting their energy needs. And so they turned to wood. This came in the nick of time for forestry. Before government investments, sawmills had limited outlets for residues and landowners had none. Tapping the government cost-share (up to 40% of project costs), local mills and landowners formed cooperatives and built community scale district heating plants fueled by wood chips. It started slowly while the technology and concept was new, but results were significant and suddenly a new industry was born.
Today, Austria has over 1,400 plants heating communities with hot water piped underground into homes, offices, hospitals,and factories. There are also thousands of individual systems, all using wood grown and harvested nearby. As the Austrians developed wood for renewable energy, they primed economic development in scales beyond their expectations. Wood heat is so reliable, so price stable and so efficient that towns with wood-fired district heating systems became magnets for economic investment. Factories wanted to locate there. Cost of living expenses were also affordable, so employers could attract workers. The investment fed on itself, generating real prosperity.
Another benefit the Austrians discovered was that their forests become healthier. Now, landowners have a way to recover the cost of properly managing their woods. And as the woods improved they became more productive — increasing their value. Areas with wood energy plants were growing more wood and that provided feedstock for new and different forest enterprises to spring up. Again, it fed on itself and prosperity ensued. Ironically, Austrian foresters quietly lamented to us that their biggest problem today is a good problem to have: there’s actually too much wood. Forest growth outpaces mill production. Another outcome of strong markets is that the farmers are moving marginal land out of grain and pasture and into forestry.
The Americans relaxing with Christianne Egger, Deputy Director of Austria Energy Administration. We arranged our trip to coincide with the world's largest renewable energy conference and trade show, World Sustainable Energy Days. There were six conferences, three days of technical presentations, 660 participants, and 60 nations represented. We presented a very highly received poster addressing the challenges of developing wood energy in the United States.
In Austria, the general population has a very high understanding of energy. I spoke to dozens of people randomly during my trip - bookstore owner, a lady on the bus, a man waiting on his wife in the department store, you name it. To a person they could all tell you what their total energy bill (heating, cooling, electricity) was for the year. And they could discuss in great detail why they chose to use one fuel type over another (gas vs. solar vs. geothermal vs wood). Almost universally, most people had wood in their house. I heard that gas was unreliable (Putin has a habit of turning off their gas valve from Russia), solar thermal is ok but if the electricity goes out then the water pumps shut down, same with wind. They like firewood because it's reliable, it makes good heat and is available for purchase (or self-collection) on their demand.
What Austria accomplished is impressive and laudable. In thirty years, they turned around a struggling industry, addressed a national security crisis and mitigated climate concerns. They improved their economy and environment, because they decided to cook water with wood.
Could Maryland do the same? Yes! Should we try to replicate the Austrian model? Not in my opinion. Their history, resources and economy are unique and as similar as we are, our situation is much different — especially our culture. But, the Austrian model demonstrates that it is possible and that outcomes go beyond green energy. Particularly intriguing is how public money was invested into private solutions to address national issues. Backing wood energy in Maryland would eliminate out-of-state investments in high-cost fossil fuels for low-value heat, inject money into local economies, create jobs and new wealth, displace carbon and vastly improve our forests.
Dan Rider, Forest Stewardship & Utilization Program Manager, Maryland Forest Service.