As New Zealand’s primary sector tops out on its head count for cows, sheep and deer, supporters of forest bio-products believe they could be the next big growth area for adding value to land-based production.
Forestry bio products include wood-based fuels and chemical compounds extracted from forest material that are often also suitable replacement chemicals for conventionally sourced hydrocarbon-based products.
Brian McMath, business development manager for the NZ Product Accelerator programme, said an industry working group looking at potential in the forestry sector has estimated an industry worth $18 billion to $25bn a year lies beyond straight log and timber processing here.
The group has recently completed a report outlining the industry’s potential value to the NZ economy.
At present NZ exports 60% of its timber volume as low-value logs, with value-added products forming only 15% of the total. Despite the volume of logs being felled doubling in the past decade, domestic processing capacity remains the same as it was in 2000.
“This is a coalition of the willing, with all industry players realising they cannot do this on their own. The aim is to identify those ‘sticky’ industries in the NZ economy that provide potential for greater economic growth,” McMath said.
With the government advertising NZ as being open for business, McMath is hoping the lack of foreign investment, one of the biggest obstacles identified in the report, can be overcome soon.
The report notes that, despite the supply of high-quality, fast-growing forests to provide the raw material, NZ is not a particularly attractive place for investment at present.
The cost to establish and run a bio-refinery in NZ is higher than in other countries, and the sector is also handicapped by distance to markets, and slow consenting processes putting investors off.
The report cites the construction of a wood bio-pellet plant that included 10-15% for consenting fees, took over three years and ultimately put investors off going ahead.
NZ also offers investors fewer incentives than global competitors do, whether as tax breaks or through strong R&D programmes.
The report’s authors strongly encourage co-investment between government and private investors to kickstart the industry here to scale.
Finland, a world leader in wood bio-product technology and processing, uses state grants to support renewable energy R&D, and Canada’s Quebec province supports companies with grants and low-interest loans.
McMath said the programme is hopeful the government will be supportive of a private-public partnership to develop an innovation centre with Scion, similar to the Food Bowl innovation model in Auckland.
The Food Bowl provides a platform for start-up food businesses to trial and scale up technology before commercial release.
Globally the timber bio-products sector is worth about $105bn a year. As the world moves to reduce its hydrocarbon reliance and the technology advances this is anticipated to experience $500bn in growth over the next two decades.
“As a sector it also helps NZ tick the boxes around carbon emission reductions, and also offers a domestically sourced substitution for imported petroleum-based products.”
Trials at Genesis Energy’s Huntly coal-fired station late last year proved wood pellets offer a realistic alternative to coal, reducing emissions by 90%.
NZ does have some examples of successful forestry bio-products companies already operating.
Port Blakely Essential Oils in Otago distils Douglas fir foliage using steam. The oils are used in fragrance and aromatherapy markets globally.
NZ Bio Forestry uses proven IP to convert plantation forestry bio mass into bio-fuels, chemicals and new materials.
McMath said there is “plug and play” technology already available globally that NZ could hook into its existing forest stock, but there is also a need here for continuing research.
“It could be that we may find it is possible to harvest trees within a shorter timeframe to extract certain compounds from them.
“The key thing is that we need to move the dial to the next stage which is the development of a bio-innovation centre.”
