Gas shortages, freezing temperatures, firewood hoarding: Just how bad could things get this winter?
Natural gas prices across Europe have quadrupled this year. Looking ahead to winter and imagining the new heights energy values may hit, consumers are starting to opt for an alternative (old) form of heating – wood. Huge demand for combustibles, as well as for wood stoves, has been detected in several Western states.
In Germany, where almost a half of homes are heated with gas, people are turning to a more guaranteed energy source. Firewood sellers tell local media that they are barely coping with the demand. The country is also witnessing a rise in cases of wood theft.
Next door, in the Netherlands, business owners note that their clients are buying wood earlier than ever. In Belgium, wood producers are struggling with demand, while prices are going up – as they are across the region.
In Denmark, one local stove manufacturer told the media that, while demand for his product was on the rise since the start of the Covid pandemic, this year’s profit is forecast to reach over 16 million kroner (€2 million), compared with 2.4 million in 2019. A huge increase.
Even Hungary, a country that didn’t support the EU’s decision to phase out Russian fossil fuels and agreed a new gas purchase with Moscow this summer, is making preparations for a tough winter. The country has announced a ban on the export of firewood and relaxed some restrictions on logging. The World Wildlife Fund Hungary has expressed its concern on the matter, declaring:
“There has been no precedent for such a decision in our country for decades.”
In fact, the conflict in Ukraine is not the only reason for the energy crisis. The increase in prices had already been observed in 2021.
“It was the effect of supply chain interruptions due to COVID, a very cold winter, very hot summer and China’s energy crisis, that led to [the] buying [of] huge amounts of LNG around the world,” says Professor Phoebe Koundouri, Director of the Research laboratory on Socio-Economic and Environmental Sustainability at Athens University of Economics and Business, and President of the European Association of Environmental and Resource Economists.
When the conflict in Ukraine came about, the sanctions against Russia – followed by Moscow's response to the restrictions – sent prices through roof.
“Europe really needs to act as a negotiator between NATO, Russia and Ukraine, and include China in the discussions, in order to find a solution that is meaningful for the millions of people that are being affected by this geopolitical crisis,” Prof. Koundourisays.
‘Eco-friendly’ wood burning
Burning wood for energy is nothing new in the EU. In the last decade, it was even considered one of the best ways for achieving the bloc’s environmental targets. In 2009, the EU published the first version of its Renewable Energy Directive (RED), a document which mandates levels of renewable energy use within the bloc.
According to the text, renewable energy sources “shall mean renewable non-fossil energy sources (wind, solar, geothermal, wave, tidal, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases).” Biomass refers to “biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste.”
The document pointed out that burning wood should be considered among the preferable sources of energy – a point that has since been debated by a number of environmentalists.
According to data presented by the Natural Resources Defense Council activist organization in 2019, European nations are spending $7 billion a year on subsidies for the burning of wood for power or heat. It also found that, as of 2017, “more than half the biomass energy subsidies paid out in 2017 across all 15 EU member states assessed were in Germany and the UK.”
The EU is the largest wood pellet market, consuming 23.1 million metric tons (MMT) in 2021, a record that is expected to be beaten this year. That’s according to a report published by the US Department of Agriculture Foreign Agricultural Service’s Global Agricultural Information Network.
“In 2022, EU demand is expected to further grow to 24.3 MMT, based on expansion of residential markets, mainly in Germany and France, boosted by support programs for the installation of biomass boilers and the high price of fossil fuels. EU demand for pellets has significantly outpaced domestic production for the past ten years, and it has resulted in increased imports from mainly Russia, the United States, Belarus, and Ukraine.”
After the outbreak of the Ukraine conflict, the EU banned wood imports from Russia and Belarus, while exports from Ukraine were disrupted by the hostilities. Meanwhile, analysts note that the gap is being filled by the US. The country’s export volume, which has climbed steadily over the past decade, “is running ahead of last year, when a record of more than 7.4 million metric tons of US wood pellets were sold abroad,” the Wall Street Journal reports, citing the Foreign Agricultural Service. “The average price before insurance and shipping costs has risen to nearly $170 a metric ton, from around $140 last year.”
Rethinking the policy
As of now, citizens of Germany, for example, can benefit from subsidies when turning to wood as a means of heating. The Dutch government, however, has become less friendly to wood burning. This year, the government decided to stop giving subsidies for the use of biomass in city heating schemes and for heating greenhouses.
In the UK, there’s an ongoing row regarding Drax – the country’s biggest renewable energy plant. In 2021, the company received £893mn ($1bn) in government subsidies for burning forest biomass. Just recently, the Guardian reported that the Business and Energy Secretary, Kwasi Kwarteng, told a private meeting of MPs that importing wood to burn at Drax power station “is not sustainable” and “doesn’t make any sense.” Most of the wood pellets used by Drax come from the US and Canada. “There’s no point getting it from Louisiana – that isn’t sustainable … transporting these wood pellets halfway across the world – that doesn’t make any sense to me at all,” Kwarteng added.
This year, the European Parliament’s environment committee voted on new rules defining what can be considered “sustainable biomass” under the revised renewable energy directive. So it was decided that primary wood biomass – essentially unprocessed wood – should not be considered a source of renewable energy and shouldn’t be eligible for incentives. From an environmental point of view, burning wood is a questionable measure, to say the least. According to Intergovernmental Panel on Climate Change (IPCC) data, the CO2 content of wood per unit of energy is more comparable to coal, and is much higher than gas.
“We should be clear – at least I am clear – that the EU should make all its policies clear on the fact that biomass use, including wood burning, cannot be done on a large scale,” Prof. Koundouri says. She explains that a possible biodiversity crisis is an even bigger threat than the climate crisis itself. “The biodiversity crisis is caused by the collapse of ecosystem services, and ecosystem services robustness and continuity are based on the ability of the ecosystems to have a rich biodiversity, sustaining a rich food supply chain.” It's clear that the EU rethinking its reliance on burning wood for electricity is the right step, Prof. Koundouri notes, but in her view, the region needs to move faster.
Facing the crisis
“The European Union has been investing a lot of money, as well as applying a lot of other efforts – like human resources or intellectual resources – in order to improve the quality of the environment,” Professor Aleksandar Djikic from the International Business College Mitrovica in Serbia says. “This crisis will definitely change a lot of these environmental achievements.”
And it’s something that we see right now: In July, the European Parliament supported a proposal to label natural gas and nuclear power plants as climate-friendly investments, unleashing a new environmental debate.
“We, as Europeans, have committed to a Green Deal, which says that by 2030 we are going to reduce CO2 emissions by 55% and we’re going to become climate neutral by 2050,” Prof. Koundouri explains. “When you have a visionary mission to face climate change, and you turn this vision into policies and investment packages, it’s expected that you will be facing certain crises during the transition period. Fighting climate change is a huge transformation. We have never had such a huge transformation of the health and well-being sectors, of the education sector, of the way we build our communities and our cities and the ways we use our land and water.”
For her, the current situation is not a reason to abandon the environmental agenda. “If you face an unexpected event, two things happen. One thing – you realize what you’ve done and what you have not done in order to be safe against the crisis. Europe needed to have been invested faster in renewables. The second thing – you say “OK, I was not fast enough, now I have to accept the reality that I’m going to use coal and nuclear, but I will know that these will be used only for a short period and there will be no new investments in natural gas and coal and nuclear, any new investments will be made in renewables”.
According to Prof. Djikic, the EU will now have to take many steps back. Plus, he expects the bloc’s poorer countries to be exposed to deforestation.
“The European Union, in my opinion, has entered this ‘adventure’ without preparing in advance” he states.
So, putting strategic goals aside: What about average citizens who are facing growing energy prices and just want to be warm in winter? “People cannot do too much, they depend on the politics of their countries. If the politicians sit and think and try to find a solution, it would be good for the people. If not, the energy crisis will affect everyday life,” Prof. Djikic says. “Governments have to think twice, to reconsider what they can do for the benefit of the people.”
Dialogue is the only means of finding a way out, Prof. Koundouri concludes. “This is the responsibility of the political leaders to sit down and seriously consider how they are going to solve this problem; this is the only way to win as a human race. If we continue to be distracted with one another, then the whole situation cannot end well.”
