For Canada’s Clean Fuel Standard, not all wood is good

Canada’s forthcoming Clean Fuels Standard (CFS) is notable because it goes beyond regulating the greenhouse gas (GHG) intensity of just liquid transport fuels to include gaseous and solid fuels in industry and buildings. Through the CFS, Canada plans to reduce its economy-wide GHG emissions by 30 million tonnes of CO2e annually by 2030.  The solid fuel pool, which includes non-power sector uses of coal, is expected to be the smallest contributor to the program’s broader target, but its implementation could have a substantial effect on the climate impact of the program overall.  The CFS could even incentivize the use of wood to produce biofuels for the transportation sector via the liquid fuel pool, underscoring the importance of getting the sustainability criteria for its inclusion right. A new study investigates the different ways that Canada’s forestry sector could respond to the CFS and the land-use change implications of this shift.

Let’s take a moment to unpack why using wood for bioenergy can do more harm than good. While bioenergy is sometimes generally considered “zero carbon” for the purposes of greenhouse gas accounting, such as in the European Union Emissions-Trading Scheme, the upfront land-use emissions associated with clearing forestland are massive. These one-time emissions can dwarf the annual carbon sequestration from forestland and the displacement of fossil fuels. Paying off that initial “carbon debt” can take many years of continuous forest growth after the initial clearing to breakeven prior to generating any net GHG reductions compared to fossil energy. Few studies find that bioenergy from whole trees or roundwood delivers GHG savings over a timescale meaningful for fighting climate change (generally considered to be 20-30 years). Often times, estimates of shorter payback periods for forest management are informed by overly-optimistic assumptions of forest management practices and yield improvements.

By 2030, Canada could require at least an additional 2 million to 5 million cubic meters of wood (in solid wood-equivalents) for bioenergy—or even more depending on how the CFS is implemented. With this conservative projection, new demand would drive an approximate 3.1%-5.6% increase over Canada’s 2015 wood usage, spread out across bioenergy uses, industry, and home heating. If Canada simply allows all wood to qualify for the CFS, how could the market respond? The figure below illustrates that Canada’s 2015 wood production is already largely spoken for—in fact, Canada already utilizes at least 3.3% more wood than it produces, though there is some uncertainty on the data about domestic wood production (see the “uncounted sources” bar on the left-hand side). The increased use of wood for bioenergy will therefore require some combination of increased production of new wood, higher collection of logging residues from existing forestry operations, and increased use of post-consumer wood.

Using more newly harvested wood is the riskiest source of solid fuel for the CFS. Even a small increase in dedicated logging for bioenergy would have adverse climate impacts over the next few decades. In fact, it could be more emissions-intensive than using fossil fuels to begin with. Currently, Canada’s proposed regulatory approach does not exclude biofuel produced from roundwood from generating credits under the CFS. Canada has proposed excluding crops from the CFS if they are grown on land that was recently forest, but this criterion does not apply to woody biomass – which means that roundwood from deforestation is eligible. Like other feedstocks, forest biomass must comply with a forthcoming set of sustainability criteria for protected areas, biodiversity, and forest management practices, but these aren’t enough to stop deforestation. A closer look at Canadian logging practices indicates that there is little evidence that market responses to bioenergy demand, like increased tree planting and site intensification, would mitigate the carbon debt from forest clearance. Only the increased collection of logging residues from current harvests that are currently burnt could provide a source of low-impact forest biomass, though the availability of these residues is limited.

In principle, it may be possible to meet new demand by collecting greater quantities of sawdust and other wood residues produced as a by-product of existing wood processing at industrial sites such as sawmills; these residues would not directly contribute to deforestation. However, the figure above illustrates that all of Canada’s wood residues like sawdust are already being collected for uses such as pellets for bioenergy or particle board, even in the absence of the CFS. Diverting these residues for the CFS would likely lead to increased wood harvests or increased production of substitute materials, which could even include fossil fuels. Even diverting wood from another bioenergy use not covered by the CFS, for example powering sawmills and pulpmills, to bioenergy use in a sector covered by the CFS, for example, steel production, could lead to increased use of fossil fuels and other energy sources to power the mills. The increased use of postconsumer wood, which today comprises a miniscule quantity of Canada’s wood flows, could also be used; however, from a climate perspective, it is often better to leave the wood in landfills where it stores carbon over time rather than releasing it into the atmosphere through combustion.

Decarbonizing Canada’s solid fuel pool under the CFS will likely prove challenging because there are so few viable low-carbon alternatives from the forestry sector. To start with, we recommend that Canada exclude roundwood from the CFS, as its high carbon debt undermines any GHG savings from its use. Canada could do this for the liquid, gaseous, and solid standards by simply applying the same land use criteria it uses for crops to forest biomass as well. This means Canada’s users of solid fuels will need other options to meet their CFS targets. For the CFS’s solid fuel target to be a success rather than a liability, the regulation must therefore ensure cross-sectoral flexibility rather than doubling down on high-emitting woody biomass. This would mean removing caps on the cross-sectoral crediting for the solid fuel pool to ensure that obligated parties currently using coal can comply with the standard by using alternative fuels with demonstrated carbon savings, such as electricity, hydrogen, or even advanced liquid biofuels. There is still plenty of time to address these problems before the regulations for liquid fuels are proposed later this year and in 2021 for solid and gaseous fuels.

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