Crown-owned forest researcher Scion is set to present a report into the viability of generating biofuels from trees at the end of next month, a move that could throw a much-needed financial lifeline to the struggling sector.
Converting tree waste into biofuels and bioplastics has long been a Holy Grail for the forestry and wood-processing industry. It could turn pulp wood and sawmill waste into real revenue streams.
But while the technology has been proven in the lab, questions remain over the long-term commercial viability despite extensive research by forestry-dependent countries such as Canada and Sweden.
That's something Scion hopes to overcome with its Woodscape report, which follows what Scion head of sustainable design Trevor Stuthridge calls a techno-economic approach - or putting the numbers together with the science.
Funded by Woodco, the Ministry for Primary Industries, New Zealand Trade and Enterprise and Scion, the report will look at ways of generating the greatest return for the forestry and timber sector, with a heavy focus on biofuels.
Biofuels are a potential panacea of the renewable energy sector, providing a means to produce fuel on a carbon neutral basis, but the production process is fraught with problems because of its reliance on energy to turn organic material into hydrocarbons.
If that energy comes from power generated by fossil fuels, such as coal-fired power stations or boilers, it is no longer carbon neutral. And often the amount of energy input is greater than the equivalent units of biofuel produced.
Stuthridge believes that is where New Zealand is uniquely placed to play a leading role on the sector.
"Above the ground we have some of the biggest sustainable forest plantations, and below the largest energy resources in the form of geothermal," he said. "We have a tremendous opportunity to turn heat and steam into bioproducts."
Biofuels had huge economic upside potential for the country.
Stuthridge said if forest plantings doubled, about $5.5 billion worth of biofuels could be produced annually, effectively replacing imported oil. That would be on top of the $4.2b currently earned by the export of forestry and timber goods.
It could also potentially set New Zealand up to be an exporter of carbon neutral energy in the form of biocoal, which could be used in power stations in China, for example.
Should the investment case prove viable, it would be a lifeline for forest owners.
Andres Katz, a forestry economist at Resource Management Services, said previous attempts to quantify the forestry biofuel market by Canadian officials had showed opportunities were not huge.
"That doesn't mean we can't do it, especially once scale kicks in, but it's an untested and unproven market," he said.
- Fairfax Media