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Home , Lavassaare, Peat energy in Finland, Ramsi, Tootsi, Ulila, Vanaja (Finland)

PROJECT REPORT PRO2/P2079/05 30.12.2005

FUEL PEAT INDUSTRY IN EU Country reports Finland Ireland Sweden Estonia Latvia Lithuania

Authors Teuvo Paappanen & Arvo Leinonen (editors)

Publicity: Confidential

VTT PROCESSES

PREFACE

This work was ordered and funded by European Peat and Growing Media Association (EPAGMA), with Kati Kaskeala as a contact person.

The work was coordinated by VTT in Finland and the person in charge was Arvo Leinonen. The authors of the country reports were: Biosystem Engineering, NovaUCD from Ireland, Matti Parikka from Sweden, Sulev Soosaar from Estonia, Ansis Šnore from Latvia, Albinas Cerniauskas and Juozas Daukantas from Lithuania and Teuvo Paappanen, Arvo Leinonen, Martti Flyktman and Kari Hillebrand from Finland.

The separate summary report has been made by VTT according to results of the country reports. The summary report is published under the title “Fuel peat industry in EU, summary report 2006”.

Editors

3 04.01.2006

FUEL PEAT INDUSTRY IN FINLAND Authors Teuvo Paappanen, Arvo Leinonen, Martti Flyktman and Kari Hillebrand

SUMMARY

The objective of the study is to give a clear picture of the overall socio-economic and energy impact of peat used for energy purposes in the European Union. This breafing is a country report of Finland. The breafing describes the peat industry related to production and use of fuel peat and shows the socio-economic and energy impacts on national, regional and local level.

Finland has three major peat producers, Vapo Oy (total production area 50 500 hectares), Turveruukki Oy (6 900 hectares) and small-scale producers (about 250 producers, 7600 hectares). The typical annual production volume in 2000’s has been 11 – 25 TWh, and on average about 19 TWh, 1 630 ktoe. The share of milled peat has typically been 92 % and the rest is sod peat. The manufacturing of peat pellets started in 2004 and the volume is about 45 000 tons.

Peat is mainly used in CHP-power plants. The total number of largest power plants is about 60, from which 20 are municipal, 27 industrial plants and 10 plants produce condensing power. The categorization of plants is not unambiguous, because many power plants serve both public and private sector and the production of condensing power is determined by energy markets and fuel prices. The boiler capacity of individual plants is 20 – 550 MWth being about 7 200 MWth in total. The annual peat use in municipal plants in 2000’s has been 690 – 1030 ktoe (8 – 12 TWh), in industry 515 – 600 ktoe (6 – 7 TWh) and on production of condensing power 260 – 860 ktoe (3 – 10 TWh). Industrial power plants are mainly on forest sector, where peat is used to compensate the poor heat value of own fuels, e.g. by-products like bark and sludges. The number of district heating plants is over 120 and the peat use about 170 ktoe.

The use of energy peat on recent years has been 5 – 7 % from the total energy consumption, being 6,6 % in 2003. In 2003 about 8 % of all electricity was produced with peat. In municipal CHP-plants this share was about 16 %, in industry about 6 % and in condensing power generation about 8 %. Considering the households connected to district heating network and fuels used on heat production, it can be estimated that the calculatory number of people getting heat from peat is about 480 000. Similarly, the electricity which is produced with peat and delivered to network could heat about 310 000 average size detached houses.

The peat use is lowest on southern parts of the country and it increases towards north- east. The highest share of peat use on county level was about 83 % from the total fuel use and the average share was about 40 %.

The total employment effects of peat at present production level can be estimated to be about 7000 man-years, which include direct and indirect employment. The employment of production is 3300 man-years, transport 850, processing of peat 160, power plants 2500, consulting services and R&D 110 and covernmental activities 50 man-years. The total direct employment effects are 3400 and indirect effects 3600 man-years. The employment effects at regional level are emphasized, because production volume is

largest on the northern and eastern parts of the country. These parts have less living opportunities than on more populated southern parts of the country. Peat brings also extra income to farmers, whose living is limited by the small farm size and poor climate conditions.

The value of domestic peat sales at present situation is about 200 million euros. At the moment the international trade of fuel peat is not significant.

The basic idea of Finnish energy management is to emphasize the decentralized energy production, which forms of many fuels and delivery sources and has sufficient domestic content. Due to this, the production and use of domestic fuels has been developed.

Large investments have been made to peat-fired plants and to the integrated use of peat and wood in recent years. The use of peat and wood is strongly tied together. Existing power plants use wood fuels as much as availability and technical restrictions of boilers allow. Peat is either main fuel or it supports and supplements the use of wood, when problems arise on availability and quality of wood. The volumes of reserve supply of peat in 1990’s has correspond to 9 – 17 months use which, together with stable price of peat makes peat a good fuel for power plants.

The predicted weakening position of peat on energy market and the substitution peat has been studied. Wood (forest chips and by-products) and agro-biomasses are the domestic alternatives to peat. By-products can be divided to saw dust and bark. The replaceability of peat depends on the power plant’s fuel handling system, boiler technique and the properties of a fuel.

On fluidized bed boilers by-products can be used as an only fuel, but in practice the low energy content limits the use. The increase of by-products is possible only if production capacity of forest sector or production increases, if the starting point is to secure the upgrading of by-products with present volumes. The availability of forest chips varies between regions. The main restricting factor of forest chips use is the boiler technique. The combustion of chips produces slag layers to superheaters, which weakens the heat transfer. The difficulty on agro-biomass use is the low energy density of fuel.

The replaceability of peat with imported fuels like coal, oil and natural gas depends on the individual boiler. Some power plants can theoretically replace all peat with coal. In practice, the quality and availability of coal and transport of coal can become a problem. Bubbling bed boilers are the most common type of fluidized bed boilers and in these boilers the use of coal is limited. The use of natural gas is limited by the distribution network, which covers only minor part of southern Finland.

PREFACE

This breafing describes the effects and importance the fuel peat industry in Finland. The work was ordered and funded by EPAGMA (European Peat and Growing Media Association).

This report was made in VTT Processes, which is one research unit of Technical Research Centre of Finland. The person in charge of this work was Arvo Leinonen from VTT Processes. Teuvo Paappanen, Kari Hillebrand and Martti Flyktman from VTT participated also to the preparation of the report. The breafing is based on research results and clearings made by VTT, ElectroWatt-Ekono, Ministry of Trade and Industry, Thule Institute and peat producers and users, to mention the most important ones.

CONTENTS

SUMMARY ...... 2

PREFACE...... 4

1 BACKGROUND AND TARGET...... 6

2 INDUSTRY AND PEAT...... 6 2.1 PEAT PRODUCERS...... 6 2.2 PEAT USERS...... 7 2.3 MACHINE MANUFACTURERS ...... 8 2.4 CONTRACTORS...... 9 2.5 SERVICE COMPANIES...... 9

3 IMPORTANCE OF PEAT ...... 9 3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL ...... 9 3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL...... 10 3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL...... 12 3.4 ECONOMIC ASSESMENT...... 14 3.5 PEAT SALES...... 15 3.6 INTERNATIONAL TRADE ...... 16

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY ...... 16

5 STAKEHOLDERS ...... 17

1 BACKGROUND AND TARGET

The objective of the study is to give a clear picture of the overall socio-economic and energy impact of peat used for energy purposes in the European Union. The study covers all uses of peat for energy, including electricity generation, combined heat and power, district heating, domestic heating and industrial use. The most important users of energy peat within European Union, Finland, Ireland, Sweden, Latvia, Lithuania, Estonia and Scotland, are included in the study.

2 INDUSTRY AND PEAT

2.1 PEAT PRODUCERS

Finland has three groups of producers. Vapo Oy Energy and Turveruukki Oy are major companies, which act nationwide or on large geographical area. Also many power plants have their own peat production. The third group is small-scale producers, the number of which is about 100. These producers have established combinations by which they secure the fuel supply to large power plants.

Peat production volume over the recent years has been from 5 TWh to 31 TWh (figure 1). From year 1990 to 2004, the average annual production volume has been about 19 TWh, 1630 ktoe. The share of milled peat is 92 % and the rest is sod peat. The manufacturing of pellets started in 2004 and the amount is 20 ktoe.

Fuel peat production, TWh 5

2 3 4 3 4 995 996 1990 1991 199 199 199 1 1 1997 1998 1999 2000 2001 2002 200 200

Figure 1. Fuel peat production in Finland.

The total production area of producers is about 65 000 ha (table 1). Another 65 000 ha is kept as reserve areas.

Table 1. Peat production area of producers in Finland.

Producer Production area, hectares Vapo Oy 50 500 Turveruukki Oy 6 900 Small-scale producers 7 600 Total, hectares 65 000

The total surface area of peat soils in Finland is 9,39 million ha, from which 8,9 million ha is regarded as biological peat soils, according to definition which assumes that ground is covered with peat or 75% of the vegetation is typical to peat soils. The surface area of geological bogs is 5,1 million ha. These are areas on which peat layer is over 30 cm thick and the surface area exceeds 20 ha. The surface area of bogs under 20 ha is 2,6 million ha. The amount of commercially utilized peat production areas is 0,6 % from total peat soils in Finland.

Vapo Oy is a state-owned company, which focuses on domestic, local fuels (wood, peat, and REF), as well as production of heat and power and processing of waste and development of it. Other main business areas are mechanical processing of wood and production of garden peat. The main owner of Turveruukki Oy is the city of Oulu. The other owners are the neighboring municipalities and their owned power plants, which use domestic biofuels. The private producers have their entire living from peat or they practice also forestry, agriculture or different kind of contracting work.

2.2 PEAT USERS

The peat use has been about 25 TWh, 2150 ktoe during recent years. The main volume of peat is used on CHP-plants in Finland, which are municipal or industrial power plants. Typically these plants produce two-thirds heat and one-third electricity. Almost all plants use fluidized-bed boiler. Industrial power plants act mainly on forest sector and some of these plants serve also public sector.

Finland has one true peat-fired power plant producing condensing power. In addition, 18 power plants produce condensing power varying amounts, but they more or less act like CHP plants.

The number of district heating plants in Finland is over one hundred. Earlier these plants used peat, but the launch of wood chips has decreased peat use. Only few plant uses peat as a primary fuel nowadays. The total use of peat in these plants is however some what significant. The description of the peat-fired power plants by category is shown on table 2 and the list of major CHP-plants is on appendix 1. It must be noticed that peat use in table 2 shows only total peat use of plants. Because many plants serve both public and private sector and the production of condensing power varies, the

correct statistics for municipal and industrial peat use as well as production of condensing power is shown in table 4.

Table 2. The description of the power plants using fuel peat (year 2003).

Power plant Number of plants Boiler capacity Peat use, ktoe category

Municipal CHP power 20 20 – 270 MWth 435 plants total 1360 MWth Industrial CHP power 27 20 – 270 MWth 575 plants total 3130 MWth Plants for condensing 18 84 – 550 MWth 1260 power total 2685 MWth District heating plants over 120 170

2.3 MACHINE MANUFACTURERS

Peat production needs machines, tractors and transport vehicles. The use of peat employs also boiler manufacturers. The number of machine manufacturers is shown on table 3.

Table 3. Machine manufacturers.

Manufacturer Number of companies Production machine manufacturers 5 Transport equipment manufacturers 11 Boiler manufacturers 4

Production machines are manufactured in Finland. Milled peat production uses three different production methods, which are designed for different production areas and different conditions. The production area size of one chain varies between 20 and 300 and the corresponding number of machines is typically 3 – 8. Also the preparation of new areas and maintenance the exiting ones has their own machinery. Drawing engine of the machines is a normal agricultural tractor, which has sufficient motor power. Machine manufacturers are listed in appendix 1. Some of them also export machines. The direct employment effect of the production machinery manufacturing is estimated to be 50 – 60 man-years.

The transport of peat is mainly done with trucks. New trucks are delivered without subframes and load containers, which are build by finnish companies. The load size is 110 – 130 m3 and transport distance varies between 30 and 200 km, the average distance being about 100 km. At the present use level of peat, the transport employs directly about 600 man-years and indirectly about 300 man-years.

There are three major boiler manufacturers, which act internationally. Between years 2000 – 2004 11 new power plants were build in Finland. The boiler capacity of these plants was 32 – 550 MWth and the total capacity is 1600 MWth. At the same time three

conversions of old plants was conducted. The boiler capacity varied between 50 and 270 MWth and the total capacity of renovated plants was 500 MWth. Although peat is not the only reason for this modernization, quite large investments have been made to power plants to ensure the use of domestic solid fuels.

2.4 CONTRACTORS

Peat production employs several hundred contractors, which have subcontractors. Usually contractors practice agriculture or forestry or some kind of contracting work.

2.5 SERVICE COMPANIES

Peat production needs services, which are related to production area planning, provision of production licenses and R&D. Geological Survey of Finland makes the elementary studies on natural state bogs and these results are used on planning of utilization of peat resources. Production area planning is a procedure where the infrastructure of an area is designed so that the production activities work properly and environmental protection is done according to regulations. Group of engineering offices prepare these production area plans. Also visualization of planned production sites to different interest groups has been done on targets which locate near settlement.

On areas which are over 10 hectares, the environmental effects must be clarified before production license is applied. Areas which are over 150 hectares are submitted to YVA- procedure (evaluation of environmental effects), which is more profound study from effects of peat production. Some consultants have specialized to do these clearings.

Research and development has been one factor to keep peat as a competitive fuel. Research has employed research institutes on different disciplines, such as development of machinery, drying of peat, environmental protection, occupational health, green house gases etc.

3 IMPORTANCE OF PEAT

3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL

The number of people living in houses, which use district heat from CHP or DH power plants is 2.44 million. The share of peat in these power plants is on average about 20 % from the total fuel use. So it can be said that about 480 000 people get heating from

peat. Similarly, the electricity which is produced with peat and delivered to network could heat about 310 000 average size detached houses.

The use of peat in 2000´s on different consumer sectors has varied and it is presented on table 4.

Table 4. Peat use in different consumer sectors.

Consumer sector Peat use, ktoe Industry 515 – 600 Municipal CHP 690 – 1030 Condensing power 260 – 860 District heating about 170

3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL

Figure 2 shows the use of fuel peat compared to other fuels in different counties in 2003. The peat use is lowest on southern parts of the country and it increases towards north-east. The highest share of peat use on a county level was about 83 % and the average share was about 40 %. The peat use is highest besides on west cost, also on central and northern parts of the country, where peat production and use create jobs to rural areas.

Figure 2. The use of fuel peat and other fuels on counties, statistics is from year 2003.

3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL

Two peat-fired power plants are introduced here. One is a municipal power plant in Seinäjoki and the other is a plant, which produces heat and power to the paper mill and also district heat.

Case 1 – Vaskiluodon Voima, power plant at Seinäjoki

Power plant locates outskirts of Seinäjoki, which is a town in southern Ostrobothnia. Power plant produces electricity and district heat. The main fuel is peat. This case is an example of a large power plant, which uses peat as a primary fuel. Finland has altogether about 20 municipal CHP-plants with total boiler capacity of 1360 MWth. The peat use in these power plants has varied between 690 – 1030 ktoe.

Plant has a fluidized bed boiler (CFB) with maximum fuel power of 325 MW and thermal output of 300 MWth. The electrical output is 120 MW and heat output 100 MW. The total use of fuels in 2003 was about 2400 GWh, of which 90 % was peat. The use of by-products, mainly sawdust, was 190 GWh and use of forest chips was 46 GWh. The use of auxiliary fuels, such as coal and heavy fuel oil was 6 GWh.

Power plant has two peat suppliers, Vapo Oy and group of private producers. Plant has also its own production. The total peat production area to fulfill the need is about 4300 - 6800 hectares. The size of individual production sites is 50 – 1000 hectares and the total number sites is 40 – 60. The transport distance to power plant is 20 – 70 km, on average about 50 km. The direct employment effect of the peat production-transport-use chain is about 350 man-years and the indirect effects about the same.

Figure 4. Vaskiluodon Voima Oy, Seinäjoki power plant.

Case 2 – Jämsänkosken Voima Oy

Power plant was built to fulfill the energy demand of the near by paper mill in Jämsänkoski. Jämsänkoski locates on the southern part of central Finland. Paper mill has four paper machines producing coated and uncoated magazine paper and label paper. The annual production volume is 850 000 tons. Pulp is made using integrated thermomechanical pulping. This case is an example of industrial power plants, which often are on the forest sector. The total number of plants is 27 and the boiler capacity 2700 MWth and the peat use in recent years 515 - 600 ktoe.

Plant has a fluidized bed boiler with maximum fuel power of 205 MW and thermal output of 185 MWth. Plant produces process steam, electricity and district heat. The electrical output is 46 MW and heat output 138 MW. The electrical efficiency is 22 %, the overall efficiency 90 % and power to heat ratio 33 %. The annual use of process steam is 630 GWh, use of electricity 205 GWh and use of district heat 29 GWh.

Power plant was designed for wood and peat fuels. The main fuels are by-products from paper mill, wood chips and peat. By-products include bark and sludge from the effluent treatment plant. Power plant has a crusher, which is used to crush loose and baled logging residue, stumps and paper residue from the mill and construction residue. Peat and wood based fuels are blended before feeding to the boiler. The annual use of forest

chips is 270 GWh, by-products 300 GWh and peat 400 GWh. The share of fuel peat is about 41 % from the total fuel use.

The use of peat improves the quality of fuel mixture, because the heat value of wet bark and sludge is poor. Although heat value of wood chips can be as high as on peat, the seasonal quality variation of peat is clearly lower compared to wood chips, and therefore fossil fuels are not needed. The plant can burn nearly all combustible waste and by-products and therefore very little material is transported to dumping site.

The annual peat production volume to fill the demand of the power plant is over 400 000 m3 peat, which corresponds the surface area of about 850 hectares. The production of this peat volume has the employment effect of 130 man-years, from which about half is direct effects.

Figure 5. Power plant alongside paper mill on Jämsänkoski.

3.4 ECONOMIC ASSESMENT

According to study, the total employment effects of peat at present production level can be estimated to be about 7000 man-years. Figure 6 shows the division of employment on the production and delivery chain. Also direct and indirect employment is shown.

4000

3500

3000

2500 Indirect 2000 Direct 1500

1000 Employment, man-years 500

0 Production Tranport Processing Power plants R&D Government

Figure 6. Direct and indirect employment of peat production and use.

The employment effects at regional level are emphasized, because production volume is largest on the northern and eastern parts of the country. These parts have less living opportunities than on more populated southern parts of the country. Peat brings also extra income to farmers, whose living is limited by the small farm size and poor climate conditions.

3.5 PEAT SALES

Peat sales divided between products and producers is shown in table 5 and 6. Peat sales shows the value of fuel, when the volume of peat is multiplied with average market price of peat, the statistics is from year 2004. Table 7 shows the selling prices of peat, which include also energy taxes and other fiscal payments.

Table 5. The value on peat sales.

ktoe million EUR Milled peat 1980 184 Sod peat 170 16 Pellets started in 2004

Table 6. The peat sales divided between producers.

Share from the total sales Vapo Oy 78 % Turveruukki Oy 10 % Private producers 12 %

Table 7. The price of different fuels at present situation.

Price in Heat Production Price in Electricity Production €/MWh €/MWh Milled peat 9,8 8,0 Heavy fuel oil 28,0 22,5 Natural gas 17,0 15,0 Hard coal 13,5 7,0

3.6 INTERNATIONAL TRADE

The fuel peat export in 2004 was about 81 GWh, including all fuel peat products. At the moment the export has no practical value compared to domestic use. The export of garden peat has however more significant role.

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY

The most important domestic fuels are energy peat and solid wood fuels. Finland is rich in peat soils, under 1 % of all peat soils is commercially utilized at the moment. This enables even to increase production volume and still the reserves would last long into the future.

The availability, good quality, stable and predictable price of these fuels are important factors to the users. Large investments have been made to peat-fired plants and to the integrated use of peat and wood in recent years. The use of peat and wood is strongly tied together. Existing power plants use wood fuels as much as availability and technical restrictions of boilers allow. Peat is either main fuel or it supports and supplements the use of wood, when problems arise on availability and quality of wood. The volumes of reserve supply of peat in 1990’s has correspond to 9 – 17 months use which, together with stable price of peat makes peat a good fuel for power plants. Due to rainy summer in 2004 the production fell down, when at the same time the reserve supply was quite low and the demand high, which led to serious discussion to better prepare for unexpected situations.

The predicted weakening position of peat on energy market and the substitution peat have been studied. Wood (forest chips and by-products) and agro-biomasses are the domestic alternatives to peat. By-products can be divided to saw dust and bark. The replaceability of peat depends on the power plant’s fuel handling system, boiler technique and the properties of a fuel.

On fluidized bed boilers by-products can be used as a only fuel, but in practice the low energy content limits the use. The increase of by-products is possible only if production capacity of forest sector or production increases, if the starting point is to secure the upgrading of by-products with present volumes. The availability of forest chips varies between regions. The main restricting factor of forest chips use is the boiler technique. The combustion of chips produce slag layers to superheaters, which weakens the heat transfer. Due to this fact, many power plants can not use volumes, where the share of forest chips exceeds 25 % from the total fuel input.

The difficulty on agro-biomass use is the low energy density of fuel. In order to get the same energy input to the boiler, the volume flow of agro-biomass must be three times higher than that with peat, which is a hard demand for a conveyor system of a plant. In addition, particularly straw contains alkali metals and chlorine, which cause same kind of bedding of slag like forest chips.

The replaceability of peat with imported fuels like coal, oil and natural gas depends on the individual boiler. Some power plants can theoretically replace all peat with coal. In practice, the quality and availability of coal and transport of coal can become a problem. In bubling bed boilers the share of coal could be up to 10 %, assuming that coal can be crushed and blended well with peat. In circulating bed boilers the share could be 70 %. On large peat boilers the share of oil could be 40 – 50 %, but long transport distances limit the use. The use of natural gas is limited by the distribution network, which covers only minor part of southern Finland.

5 STAKEHOLDERS

The list of stakeholders related to peat production and use is shown on table 8.

Table 8. Stakeholders of peat industry.

Peat producers Contact information Fortum Power and Heat Kammintie 2, FIN-40100 Jyväskylä tel: +358 1045 45111 Kuopion Energia Snellmaninkatu 25, FIN 70100 Kuopio tel: +358 0205 2070 Oy Alholmens Kraft Ab BO Box 250, FIN 68601 Pietarsaari tel. +358 (0)204 16 115 Small-scale producers Kuhankeittäjänkatu 20, FIN-50190 Mikkeli (about 100, total area 6000 ha) tel. 050 596 6808 Turveruukki Oy Teknologiantie 12 A, FIN 190570 Oulu tel: +358 8 551 5500 Vapo Oy Energia Yrjönkatu 42, FIN 40101 Jyväskylä tel: +358 14 623 623 Vaskiluodon Voima Frilundintie 7, FIN 65100 Vaasa tel: +358 6 337 5311 Peat users See appendix 1 Production machine manufacturers Insinööritoimisto Reijo Mäki-kyyny Taipaleentie 3, Kauhajoki tel: +358 6232 1388 Raiselift Oy Raivalantie 524, FIN-39920 Suomijärvi +358 2 544 4141 Raussin Metalli ky 46 710 Sippola +358 5366 6295 Suokone Oy FIN-88610 Vuokatti tel: +358 8666 2011 Vapo Oy Yrjönkatu 42, FIN 40101 Jyväskylä tel: +358 14 623 623 Transport equipment manufacturers Jyki Oy Jykintie 10, FIN-35400 Längelmäki

Kome Oy Komentie 1, FIN-85800 Haapajärvi

Kome Oy/RKP Parkatintie 19, FIN-74120 Iisalmi

Konepaja Antti Ranta Oy Pajapolku 10, FIN-80400 Ylämylly

Laurell ky Levonahontie, FIN-31760 Urjala

Malkki Oy PL 26, FIN-57201 Savonlinna

Matec-Trailer Oy Teollisuustie 7, FIN-63800 Soini

Närko Oy Pl 16, FIN-64201 Närpiö

Toplift Oy Hopeatie, FIN-54100 Joutseno

Tyllis Oy Ab Ängsgatan 4 - Niittykatu 4 67100 Karleby – Kokkola

Weckman Telivaunu Oy Paininpuuntie 23, FIN-18100 Heinola

Table 8. Stakeholders of peat industry, continued... .

Boiler manufacturers Foster Wheeler Energia Oy P.O. Box 45, FIN-00401 Helsinki tel: +358 10 39311 Kvärner Power Oy P.O. Box 109, FIN- 33101 Tampere

Novikat Oy Metallitie 3-4, FIN-23100 Mynämäki

Putkimaa Oy Kallisentie 3, FIN-90400 Oulu tel: +358 8 534 73 00 Termopoint Oy Vipusenkatu 14, FIN-15230 Lahti tel: +358 3 872 111 Wärtsilä P.O. Box 196, FIN-00531 Helsinki Tel. +358 10 709 0000 Associations Koneyrittäjien liitto Sitratie 7, FIN-00420 Helsinki tel: +358 9 566 0010 Suomen turvetuottajat ry Kuhankeittäjänkatu 20, FIN-50190 Mikkeli tel. 050 596 6808 Turveteollisuusliitto ry Vapaudenkatu 12, FIN-40100 Jyväskylä tel. +358 14 338 5400 Research institutes Department of mechanical Engineering, P.O.Box 20, FIN -53851 Lappeenranta Lappeenranta University of technology tel: +358 5 621 11 Department of mechanical Engineering, P.O Box 4200, FIN-90014 Oulun yliopisto University of Oulu tel: +358 (0) 8 553 2020 Finnish Environmantal Institute Mechelininkatu 34a, FIN-00251 Helsinki tel: + 358 9 403 000 Finnish Institute of Occupational Health, Neulaniementie 4, FIN-70701 Kuopio Kuopio tel. +358 30 4741 Finnish meteorological Institute Erik Palménin aukio 1, FIN-00560 Helsinki +358 (0) 9 192 91 Geological Survey of Finland Betonimiehenkuja 4, FIN-02151 Espoo tel: 010 603 000 Tampere University of Technology, P.O. Box 589, FIN-33101 Tampere Institute of Energy and Process Engineering tel. +358 3 311 511 Thule Institute, University of Oulu P.O. Box 7300, FIN-90014 Oulu tel: +358 (0) 8 55 33560 University of Helsinki, Viikinkaari 11,FIN-00014 University of Helsinki Faculty of Agriculture and Forestry fax: + 358 - 9 1915 8575 VTT Processes Koivurannantie 1 FIN-40101 Jyväskylä tel: +358 20 722 111 Åbo Akademi Strandgatan 2, FIN-65101 VAASA tel: +358-6-3247 111

APPENDIX 1

Table. List of most important peat-fired power plants in Finland.

Boiler Share of capacity, Peat use, peat,

Plant Locality Boiler type MWth ktoe % Municipal power plants, CHP Total 1360 435 Jyväskylän Energiantuotanto, Rauhalahti Jyväskylä BFB 267 122 61 % Tampereen Sähkölaitos, Naistenlahti Tampere BFB 190 74 17 % Porin Lämpövoima Oy, Aittaluoto Pori BFB 206 69 60 % Rovaniemen Energia, Suosiola Rovaniemi CFB 96 55 87 % Kokkolan Voima Oy Kokkola BFB 70 19 71 % Savon Voima Lämpö Oy, Pieksämäki Pieksämäki BFB 35 17 88 % Savon Voima Lämpö Oy, Iisalmi Iisalmi BFB 45 13 64 % Kankaanpään Kaukolämpö Oy Kankaanpää BFB 24 12 99 % Herrfors Oy, Ylivieska Ylivieska BFB 24 9 83 % Forssan Energia Oy Forssa BFB 57 9 32 % Fortum, Vanaja Hämeenlinna BFB 55 8 11 % Lahti Energia Oy, Heinolan voimalaitos Heinola BFB 7 19 % Vapo Oy Voima, Sotkamo Sotkamo BFB 20 6 79 % Fortum Lämpö Oy, Vammala Vammala BFB 40 4 33 % Fortum, Toranki Kuusamo BFB 24 3 34 % Porin Lämpövoima Oy, Pihlava Pori CFB 30 3 17 % Järvi Suomen Voima Oy, Savonlinna Savonlinna BFB 72 3 11 % Kotkan Energia Oy Kotka BFB 65 2 7 % Turku Energia Oriketo Turku BFB 40 1 2 % Porvoon Energia Oy Porvoo BFB 0.3 1 % Industrial power plants, CHP Total 3129 575 Stora Enso Fine Papers Oy, Oulu Oulu BFB 246 76 55 % Stora Enso, Veitsiluodon Voima Oy Kemi BFB 246 61 46 % Metsä-Serla Oy, Simpele Rautjärvi BFB 113 35 55 % Stora Enso, Heinolan flutingtehdas Heinola BFB 107 34 60 % Jämsänkosken Voima Oy Jämsänkoski BFB 185 34 41 % Mäntän Energia Oy Mänttä BFB 94 34 80 % UPM-Kymmene Oy Rauma CFB 160 30 23 % Kemira Chemicals Oy, Oulun tehtaat Oulu BFB+CFB 97 30 63 % UPM-Kymmene Oy, Tervasaari Valkeakoski BFB 78 30 56 % Powerflute Oy Savon Sellu Kuopio BFB 94 28 85 % Fortum, Säterin voimalaitos Valkeakoski BFB 50 26 51 % Vamy Oy, Myllykoski Anjalankoski BFB 88 22 24 % Mreal Oy, Kemin tehtaat Kemi BFB 115 20 31 % UPM-Kymmene, Kaipola Jämsä BFB 104 18 36 % Äänevoima Oy Äänekoski BFB 157 17 20 % Fortum, Kauttua Eura CFB 67 14 42 % Fortum, Valio Lapinlahti Lapinlahti BFB 25 13 100 % Stora Enso, Varkauden sellutehdas Varkaus CFB 150 10 12 % Kymin Voima Oy Kuusankoski BFB 269 10 10 % Altia Oy, Koskenkorva Ilmajoki BFB 20 10 79 % Voimavasu Oy, Salo Salo BFB 32 7 36 % Vapo Oy, Kevätniemen voimalaitos Lieksa CFB 30 4 42 % Stora Enso, Anjalankoski Anjalankoski BFB 234 4 2 % Järvi Suomen Voima Pellos Ristiina BFB 74 4 10 % Stora Enso, Summan tehtaat Hamina BFB 65 2 4 % Stora Enso, Imatran tehtaat Imatra BFB 203 1 1 % Schauman Wood Oy, Joensuu Joensuu grate comb. 26 0.4 5 % Condensing power plants Total 2687 1258 Oulun Energia, Toppila 1 & 2 Oulu BFB+CFB 532 311 89 % Oy Alholmens Kraft Ab, AK2 Pietarsaari CFB 550 218 55 % Vaskiluodon Voima Oy Seinäjoen voimalaitos Seinäjoki CFB 299 189 90 % Fortum, Haapaveden voimalaitos Haapavesi pulv.fuel. 390 158 99 % Kuopion Energia, Haapaniemi 1 & 2 Kuopio pulv.fuel. 298 154 93 % Kainuun Voima Oy, Kajaani Kajaani CFB 240 77 53 % EON, Joensuun voimalaitos Joensuu BFB 196 63 53 % Fortum, Kokkolan voimalaitos Kokkola CFB 98 54 62 % Etelä-Savon Energia Oy, Pursiala Mikkeli CFB 84 33 44 %

TOTAL 7176 2268

THE FUEL PEAT INDUSTRY IN IRELAND Authors BIOSYSTEMS ENGINEERING NovaUCD Belfield Innovation Park University College Dublin Belfield, Dublin 4, Ireland

Phone: +353 1 716 7472 Email: [email protected]

SUMMARY

Peat production has a net positive effect in Ireland, not only does it create employment but also plays a role in security of energy supply. The use of indigenous energy sources has a positive effect on the country’s balance of trade through lowering imports of energy.

In 2005 peat in Ireland produced 5%of the total energy demand and 8.5% of the energy source for electricity generation. Ireland’s reliance on peat has fallen in recent years but it has now stabilized with the recent opening of three new peat-burning power stations.

These power stations have a licensed life span of 15 years. As to what happens after that, three outcomes are possible.

(1) They continue operating as they are (2) They will close (3) They will be updated or replaced by new peat-burning stations that employ advanced peat burning techniques that raise efficiencies above the present 38% (4) Co-fueling with a CO2 neutral fuel

The ESB predicts that future demand for electricity will grow by 3% per annum 2000- 2015, if this is the case then it may prove imperative that these power plants are kept running.

Sod peat harvested by contractors for domestic use will continue as it has in the past and Bord na Mona’s Briquetting and horticultural peat sectors predict no major change.

Peat is economically important in Ireland at local level, much less so at regional and national level. The employment it creates is considered stable, and the areas in which it creates this employment are heavily reliant on agriculture, peatlands and forestry for income.

The future of bogs is uncertain, both natural and cutaway. Much study has been carried out on the after use of cutaway bogs involving, afforestation, energy crops and wetlands. This study is ongoing.

Peat production does effect the environment, but its effects can be controlled (e.g. Siltation). Peat also has lower SOx and NOx versus coal and oil and also the after use of peatlands offers a greater biodiversity for the natural environment.

Overall in 2005 the Irish peat industry is in a healthy position its future however is uncertain.

PREFACE

One of Ireland's most characteristic features is the bog. Covering 1,200,000 hectares (1/6th) of the island, Ireland contains more bog, relatively speaking, than any country in Europe except Finland. Across Europe, as well as in Ireland, bogs have been exploited in recent centuries as a source of fuel. Although most bogs appear similar, there are in fact two very distinct types:

Blanket Bogs are expansive, generally formed in wet or uplands areas

Raised Bogs are smaller, generally formed in lowland areas.

Blanket bogs are found wherever there is high rainfall, which is typically in western Ireland and also in mountainous areas. They are called blanket bogs because of their appearance from a distance they appear homogeneous and they hug the topography like a blanket. With almost 1 million hectares of Ireland covered by blanket bog, it is far more common than the smaller-scale raised bogs.

Raised bogs are found almost exclusively in central Ireland, chiefly in the Shannon basin. There are a few examples in Ulster and Munster, but the vast majority are to found in the midlands. To understand raised bogs, one has to realise that Ireland's vegetation landscape is very young - it began to form only at the end of the Ice Age about 10,000 years ago. When the land surface was new, the glacial morraine left behind created a hummocky and chaotic plain which had poor drainage as a consequence. The depressions filled with water, creating thousands of tiny lakes. It was these tiny lakes that, over the 10 intervening millennia, have become the raised bogs.

Most intact raised bogs vary between 3 to 12 metres in thickness, with a mean of 7 metres (23 feet).

Starting in the 1700s, the raised bogs of Ireland were exploited as a source of cheap fuel. Most of this was cut by hand, and laid in the sun to dry before being burned. At the time of the famine1840’s, peat (called 'turf' when cut) was often the only source of fuel available. (Feehan, J; McIlveen, S)

Harvesting of peat in 2005 is now a highly mechanized process, providing peat for domestic use, but more importantly for generation of electricity.

The objective of this report is to give an overview of the importance of peat use for energy in Ireland especially at local level and in supply security.

CONTENTS

SUMMARY ...... 2

PREFACE...... 3

1 BACKGROUND AND TARGET...... 5

2 INDUSTRY AND PEAT...... 5 2.1 PEAT PRODUCERS...... 5 2.2 PEAT USERS...... 8 2.3 MACHINE MANUFACTURERS ...... 10

3 IMPORTANCE OF PEAT ...... 11 3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL ...... 11 3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL...... 13 Midlands Economy...... 14

3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL...... 16 3.4 ECONOMIC ASSESMENT...... 17 3.5 PEAT SALES...... 18 3.6 INTERNATIONAL TRADE ...... 19

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY ...... 19

5 STAKEHOLDERS ...... 22

THE FUEL PEAT INDUSTRY IN SCOTLAND

1. INTRODUCTION………………………………………………………………… 24

2. PEAT USERS…………………………………………………………………….. 24

3. PEATLANDS PROTECTION…………………………………….……………... 24

4. CONCLUSIONS…………………………………………………………………. 25

5. REFERENCES………...………………………………………………………...... 26

1 BACKGROUND AND TARGET

The objective of this report is to give a clear picture of the overall socio-economic and energy impact of peat used for energy purposes in Ireland. The study covers peat used for energy and domestic heating. The last detailed study carried out on Irish peatlands was in 1996. Much has changed in the 9 years since then, most notably the growth in the Irish economy and the subsequent large rise in energy consumption.

The harvesting and transport techniques have changed little since 1996; they were then supplying 5 peat-burning power stations with a total output of 420MW (12% of Irelands electricity needs). They now supply 3 new power stations total output 370MW (6% of Irelands electricity needs). These plants using fluidised bed techniques produce 30% more electricity for the same fuel input as the older plants.

Peat harvesting of an area over 50ha now also requires an IPC license (integrated pollution control) from the Environmental Protection Agency (EPA).

2 INDUSTRY AND PEAT

2.1 PEAT PRODUCERS

Bord na Mona

Bord na Mona was founded in 1946 when energy supplies in Europe were scarce and expensive. It is the main industrial producer and supplier of peat in Ireland. It was estimated that in 1920 some 1.5 million Irish people were completely reliant on turf for fuel and that annual consumption was approx 6 million tonnes. Today the number of people cutting turf for private consumption has greatly reduced yet Bord na Mona’s output makes up for this.

Bord na Mona output 2004 -2005

Milled peat = 4.164 million tonne Horticulture = 1.8 million cubic meters ( @ 450,000 tonnes) Briquettes = 209,000 tonnes

Bord na Mona owns 80 000ha of peatlands, total peat reserves are in the region of 100 million tonnes.

Bord na Mona results 2004/2005

Turnover 258 million Euro Profit before tax 17 million Numbers employed at peak 2,177 Average numbers employed 1,885

The main output for Bord na Mona is the supply of milled peat to 3 electricity generation stations, 2 of these stations are run by the ESB ( Electricity Supply Board ) the third is privately run by Edenderry Power Ltd who then sell their electricity to the ESB.

Peat fired power stations

West Offaly Power = 150 Megawatts Lough Ree Power = 100 Megawatts Edenderry Power = 128 Megawatts

There are an estimated 300 sod peat contractors operating in Ireland. These contractors are working on a small scale usually a 2-man operation and produce sod turf for domestic use. Their combined share of the peat market is 20% ( McGettigan & Duffy 2001). The vast majority of peat, 80% is produced by Bord na Mona.

Milled Peat

It its simplest form the production of milled peat involves: milling, harrowing, ridging, harvesting and stockpiling. Firstly the bog is laid out in a series of drying fields approx 1000m long by 15m wide. These fields are drained and the drains deepened as more peat is removed. Agricultural tractors are used to pull milling machines along these fields, a rotating drum with spikes fitted mills the top surface to create peat in crumb form. The depth of mill is weather reliant ( 4mm in poor conditions 6-8mm in excellent drying conditions) (Feehan et al, 1996).

Drying of the peat crumb takes 2 to 3 days weather permitting and is accelerated by harrowing. The dry milled peat 40%-50% moisture is then ridged. This involves another tractor pass, which scrapes or brushes the beat into a long low ridge running the length of the field.

For harvesting the output of every 10 ridges is transported to a large central pile (rail pile) where it is loaded to be transported to the stockpile or PowerStation. Other methods include loading each ridge separately into a tractor drawn trailers for transport to stockpile.

Briquette

The raw material for peat briquettes is milled peat; each briquette is a small block of highly compressed dry milled peat. Because briquettes are much drier than the traditional sod turf they are easier to light. They produce more heat when burned and less smoke. Modern technology has been used to ensure consistency of product. The low sulphur emissions from briquettes along with other low-smoke fuels, has played a significant part in making the air of the cities Dublin and Cork cleaner.

Peat which has been milled on the surface of the bog is air dried and stored. It is then brought by narrow gauge railway across the bogs to the factory. Briquetting requires a feedstock of constant characteristics to obtain maximum production efficiency. Different grades of peat are carefully blended in the factory to ensure raw material consistency. It is then ground to a fine particle size and dried to about 10% moisture content using heat from large industrial boilers. These boilers burn peat from the stock pile to create heat to dry the milled peat, and power to drive the compression and transport systems of the plant.

At this stage the peat is a fine powdery material. It is then extruded through a twin- stamp briquette press. The compression is sufficient to bind the remaining water with the peat, so forming the briquette. Accelerated wear occurs in the briquette extrusion press if the ash content of the peat is too high, also briquette quality would suffer if the moisture or bulk density was either too high or too low (Mc Donnell 1996). When the briquettes have cooled they are baled and automatically palletised.

Bord na Móna Peat Briquettes are manufactured at two locations in Ireland, Littleton in Co. Tipperary and Derrinlough in Co. Offaly. Meter meters metres.

Sod Turf

There are a number of small contractors who harvest sod turf for domestic use.

The principle method used is a hopper system; this is a two-man operation where an excavator digs the turf from the bank and fills the hopper. The hopper can be either self- propelled or tractor drawn. The hopper then compresses the turf and spreads it out over the cutaway bog for the turf to be sun/air dried. Depending on hopper size the spread will be 1 meter wide (8-10 sods) and 75 meters long. A hopper will contain roughly 2200 –2400 sods and contractors charge €38-€40 per hopper load.

This system is labour intensive, as the turf has to be manually turned, stacked and loaded. It is however a very successful method especially when considering that many of the bogs in Ireland are divided up in to small plots that are owned by local farmers. Large expenditure on machinery is not needed as tractors and track machines can be used all year round doing different work. Sod turf provides fuel and income for these farmers. It also helps to carry on a long tradition of turf cutting that dates back hundreds of years.

2.2 PEAT USERS

ESB (Electricity Supply Board)

The ESB was founded in 1929 and is a statutory corporation in the Republic of Ireland. It is 95% owned by the Irish government while the remaining shares are held by an employee share option trust. The ESB employs 9,600 people and is the leading Irish company in the energy utility sector. The ESB run 15 power stations with a total capacity of 4463MW. Two of its power stations West Offaly 150MW and Lough Ree 100MW are peat fired

West Offaly burns 1,245,000 tonnes of peat per annum

Performance data Electric output 150Mwe Steam data 165/33Bar, 560/560C Live steam flow 111kg/s Cooling water 12ºC Efficiency 38%

Lough Ree burns 800,000 tonnes of peat per annum

Performance data Electric output 100Mwe Steam data 1140/33.4Bar, 560/560C Live steam flow 77.6kg/s Cooling water 12ºC Efficiency 38%

Edenderry Power limited is Irelands first independent power producer creating 120MW in its peat burning station which it sells to the ESB. This 120MW is roughly 3% of Irelands electricity needs.

Edenderry burns 1,000,000 tonnes of peat per annum

Performance data Electric output 120Mwe Turbine - two cylinder, triple pressure-condensing machine operating a 3,000rpm Bed temp 910ºC Efficiency 38.4%

Consumption of peat energy (McGettigan and Duffy 2001)

As can be seen from the diagram above 1/3 of the peat produces is burned in either sod form or briquette. This is virtually all for domestic use in the houses of Ireland where it is burned for heating and cooking much in the same way as it has in the past. Turf burns low and evenly it may not give of the heat of coal or wood but its advantages are many; cheap, smog free, safe does not splinter, readily available and pleasant smelling.

Other uses of peat

Greenplan a company engaged in nutrient management has secured the availability of an annual output of 40,000 tonnes of peat fly ash from Edenderry power station for use in agricultural fertilizer.

Edenderry power station is also seeking planning permission for co-fuelling with peat up to 60,000 tonnes per annum of SMBMO (Safe Meat & Bone Meal). These carcasses will be rendered in dedicated rendering plants, and the resulting meat and bone meal used as a fuel. Since the BSE crisis Ireland has heavily subsidised the production storage and export of SMBMO, recently the department of Agriculture has suspended subventions of €160 per tonne to export meat and bonemeal for incineration to UK or Germany, whereas the product could have a value of €30 per tonne as energy

2.3 MACHINE MANUFACTURERS

During the 1990’s Bord na Mona moved away from the traditionally used self propelled machines, to machines towed and powered by conventional agricultural tractors. This led to greater efficiency and reliability.

For the Edenderry project a full field fuel peat miller was designed after initial prototypes trials utilising a conventional miller with sections added. This machine can be towed by a 135kW (180hp) tractor replacing two conventional millers towed by 105kW (140hp) tractors.

A new peat harrow was also designed for turning the peat during the drying process. The most significant feature of the new design was the ability to lift all the harrow spoons while the machine is moving using the hydraulic system of the tractor.

Other innovations include extensions to the arm of peat loading excavator and the fabrication of a low ground bearing pressure bulldozer based on the chassis of a BnM designed rail-laying machine. (Bord na Mona, 2005).

Transportation

The majority of peat supplied to power stations and briquetting plants is carried by rail wagons on narrow gauge tracks. The train consists of a BnM designed and fabricated locomotive, pulling 16-20 milled peat wagons called a ‘rake’. These wagons are loaded from the stockpile using excavators.

The excavators and tractors used are all purchased; Bord na Mona is regularly the largest single buyer of tractors in Europe. New Holland is the main supplier of tractor although recently John Deere have also been used.

New Holland = W.R Shaw Ltd, Rosenallis, Co Laois John Deere = Templetouhy Farm Machinery, Co Tipperary.

3 IMPORTANCE OF PEAT

3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL

In 2005 peat at national level produced 5% of the total energy requirement this is compared to 12% in 1993 and 14.5% in 1980 although our reliance on peat is falling the current level is still high compared to the European average <1%.

The total primary energy requirement is a measure of all the energy consumed in Ireland including that, which is lost in transformation and distribution process. These processes include electricity generation, transmission, distribution and oil refining.

Total primary energy requirments (Mtoe) 2005

0.43 0.83 1.89

4.23 peat coal oil natural gas renewables

8.23

(Mtoe) = Million tonnes of oil equivalent

(toe) = Tonne of oil equivalent – is a conventional standardised unit for measuring energy, defined on the basis of a tonne of oil with net calorific value of 41 868 kilojoules/kg

Projected primary energy requirments (Mtoe) 2010

0.61 0.48 1.83

5.18 peat coal oil natural gas renewables

9.25

While the existing power plants have fuel supply contracts for 15 years, the design life of the plants is 25-30 years. Given our tight power supply situation, it is unlikely that these plants will close after 15 years. They are most likely to continue in operation as multi-fuel plants, burning a combination of peat, wood and clean biomass. The domestic use of turf for heating is predicted to continue as it has in the past.

Kyoto Protocol

Ireland faces a serious challenge in achieving its emissions target under the Kyoto Protocol. The country must limit its greenhouse gas emissions to 13% above 1990 levels by 2008 to 2012. Emissions grew by 24% from 1990 levels by 2000 and are believed to have grown substantially since then. CO2 emissions, which make up over 65% of GHG, have grown even more reaching more than 40% above 1990 levels in 2001. Much of this growth is due too the expansion of the Irish economy.

The implementation of the emissions – cutting measures outlined in the National Climate Change strategy is a matter of urgency. A significant reduction in GHG emissions could be achieved by the closure of Moneypoint coal fired power station (915 MW), however this would have to be replaced by Gas, Peat, Oil or Wind

Emissions from the combustion of peat are for the present well controlled owing to the relatively low natural SO2 content of peat and the use of new boiler techniques, as a result of which NOx emissions have been kept at a reasonable level. It been seen in Finland changing over from coal to peat has significantly reduced the SO2 load in towns with large power plants.

Further development of peat-for-power in Ireland is possible but unlikely. Both the security of supply issue and the price of imported energy would have to seriously threaten the economic and social well being of the State for it to make sense.

Primary energy sources for electricity generation

peat oil coal gas renewable hydro

3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL

Peat production is a major industrial employer in many small rural communities. Communities that for various reasons missed out on the economic upturn of the Irish economy. These areas usually have higher than average dependence on agriculture and unemployment levels are usually above average.

Results from 2004 show that at peak during the summer Bord na Mona employ 2,177 and have an average employment of 1,885 plus many more indirectly through transport, supplies and services. This employment has major positive spin-off effects for the local communities.

On the electricity production side.

Edendery power employs 45 people West Offaly power 41 people Lough Ree power 41 people

These plants also create indirect employment through services and supplies.

Irish economy

In the face of global downturn in recent years the Irish economy has been highly resilient. The Irish economy grew last year by 4.9% in GNP and 5.3% in GDP terms. In the fourth quarter of 2003 there were 1,828,900 people in employment this meant an employment rate of 65.7% up 46,600 or(2.6%) on 2002 figures.(Dept Finance)

Employment grew in the following sectors.

Health = + 12,100 Construction = + 9,300 Production / financial = + 14,000 Agri / Fishing / Forest = - 200

As can be agriculture and forestry are in decline this is a constant trend and is set to continue. The peat producing areas that are so closely linked to agriculture and forestry are also in decline.

Midlands Economy

The midlands as a whole in economically quiet strong as can be seen from the diagram below (CSOQNHS) with unemployment levels at roughly 5%.

For economic reasons Ireland is divided into two regions

BMW = Border Midlands West ( peat producing area) SE = South East

BMW work participation = 58.3% SE ------= 60.9%

Unemployment

BMW = 4.9% SE = 4.4%

In 2003 the rate of employment in the BMW region grew by 4.5% or 21,000 jobs. Long term and short-term unemployment levels also fell. Irelands average annual growth rate for the last number of years has been roughly 1.8% this is in stark contrast to the EU average of 0.2%.

With the country in such a healthy economic state the processing of peat and the employment it creates is now far less significant for the economy as it was in the past, this trend is set to continue as peat remains important at local level only in (Offaly, Westmeath, South Kildare, Roscommon-Longford and Tipperary) and far less at regional and national level.

3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL

Case Study Co Offaly

The county of Offaly is situated in the midlands of Ireland it forms part of the central plain and is mostly flat with some sections covered by the Bog of Allen. The Slieve Bloom Mountains form its south eastern border with the River Shannon forming its western border.

AREA sq miles =1996 sq km Population = 59,117 Offaly's workforce is roughly 24,000 of which approx 750 work full time in the fuel peat industry and a further 300 work on a seasonal basis. Key industries are: Agriculture, peat harvesting; electricity generation; healthcare; public services; building & construction. Figures released by the Central Statistics Office 2002 showed that Offaly had one of the lowest disposable incomes per capital of all counties in Ireland.

Offaly is located in Irelands objective 1 region BMW. Designation as an objective 1 region means that 50% of jobs created in Ireland from Foreign Direct Investment (FDI) between 2000 and 2006 will be in the Border, Midlands Western region. However new investment in Offaly has been slow, with traditional and existing employment being lost. Peat harvesting by Bord na Mona and electricity generation by the ESB have been a mainstay of the economy in the county since the 1950’s. Over 1300 jobs have been lost in these companies since 1986, most of these in county Offaly. Jobs have also been lost through the closure of other companies many of those who lost there jobs have secured other employment but it is mostly outside the county. The county has an ageing population. Young people tend to leave to pursue education and in many cases never return to live or work. This in turn affects the attractiveness of the county for employers.

If the county of Offaly has found it hard to develop as quickly as the rest of Ireland then one thing that hasn’t changed is its natural reserve of peat. These reserves have been used for hundreds of years and with the building of West Offaly Power station (2005) and Edenderry Power station (2000) it will be used for at least the next 15 years if not more. The harvesting of sod turf by small contractors for use in local homes is likely to continue as it has in the past.

The West Offaly Power station took 2 years to build and involved 1.6 million man- hours. At its peak in involved over 700 people making it the largest construction project in the midlands.

The plant directly employs 41 ESB staff and burns 1,245,000 tonnes of peat per annum this peat is supplied by Bord na Mona works from local production supplemented when necessary by road deliveries. These jobs created in ESB and Bord na Mona are guaranteed for 15 years.

The plant also provides a large tourism potential the ‘hot water stretch’ at Shannonbridge is a well known location for the angling community. It arises from the cooling water discharge from the power station heating the surrounding water creating the ideal breeding area for fish. The months from April to September being particularly busy.

Edenderry Power Limited was Irelands first independent power producer, it is located outside the town of Edenderry close to the village of Clonbulloge.

There are 45 people in direct employment; the peat is supplied by Bord na Mona from local production. The company claim to have indirectly created 250 jobs through supplies and services directly to the plant.

There are also a number of small contractors who harvest sod turf for domestic use.

3.4 ECONOMIC ASSESMENT

The use of indigenous energy sources have a positive effect on the country’s balance of trade through lowering imports of energy.

Bord na Mona results 2004

Turnover 258 million Euro Profit before tax 17 million Numbers employed at peak 2,177 Average numbers employed 1,885

Edendery power employs 45 people West Offaly power 41 people Lough Ree power 41 people

Results from Central Statistics Office 2003 combine Peat extraction with mining of coal and ignite, extraction of crude petroleum, natural gas and service activities.

For these combined activities – Gross output = € 1,070 million Net output = € 588 million Wages and salaries = € 216 million Persons engaged = 6,033

Unfortunately there is no singular break down for peat on its own, except the fact that mining for coal and ignite in Ireland is virtually nonexistent as is the extraction of crude petroleum. Therefore the above figures relate mainly to peat and gas activities.

3.5 PEAT SALES

Bord na Mona output 2004 -2005

Milled peat = 4.164 million tonne Horticulture = 1.8 million cubic meters Briquettes = 209,000 tonnes

Sales

Milled peat

To power stations 1,981 million tonnes To Bord na Mona factories 0,878 million tonnes Horticulture 1,818 million cubic meters Briquettes 0,225 million tonne

Bord na Mona – peat sales to power plants in 2004/05 were not typical, as this was the year of change over from the old ESB stations to new plants at Lough Ree and West Offaly. The normal sales to power plants would be c. 3 million tonnes.

Value of sales

Milled peat to power stations = € 50,563 million Horticulture = € 54,030 million Briquettes = € 32,018 million * production of milled peat in the summer of 2004 was 4.2 million tonnes or 108% of the years target. This compared with 5.1 million tonnes in the particularly dry year of 2003

Individual value

Milled peat delivered to power station = € 25.00 / tonne Briquettes = € 150.00 / tonne Horticultural peat = € 18.40 / cubic meter delivered (local price)

In the midlands and west of Ireland local people for domestic use, cut a further 1 million tonnes of sod turf annually. (www.bnm.ie/downloads/ peat_for_domestic_heating).

The value of this turf is difficult to quantify as quality can vary greatly and turf is purchased by the bag or trailer load rather than by weight. Nevertheless sod turf fills a large part of the market in areas where it is readily available.

The value of this peat is believe to be roughly €70 a tonne. This would give a sale value of €70 million.

3.6 INTERNATIONAL TRADE

The export of peat for fuel from Ireland is nonexistent.

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY

Ireland is around 90% dependent on imported energy. Our main imports are oil, which accounts for nearly 60% of our total energy requirement and natural gas accounting for a further 25%. By 2007 over 60% of electricity generation will be fuelled by gas. The vast majority of Irish energy needs are met by fossil fuels. About 98% of the Republic of Ireland's final energy demand is produced by burning oil, coal natural gas and peat. This over reliance on imported fossil fuels has left Ireland vulnerable to international price fluctuations

Imports

Oil 9.0 Mtoe Coal 1.9 Mtoe Natural gas 4.2 Mtoe

Produced in Ireland

Peat 1.2 Mtoe Wind 345 MW depending on wind speed Natural gas 1.1 Mtoe

Our energy chart in divided into three slices of roughly equal size: heat, electricity and transport.

During the past year, there have been a number of red alerts at ESB headquarters when the demand for electricity came uncomfortably close to the supply capacity available. An ESB report on generation capacity requirements from 2000 to 2006 says that there is an immediate need for extra capacity.

Ireland is an island country and due to its relative isolation, modest domestic fuel resources and lack of extensive international energy connections. Existing energy resources must be utilised to a maximum. If only for security reasons the peat reserves offer a fall back plan as was seen during WWII when oil and coal became scarce.

One of the principle energy sectors in Ireland is the electricity sector and of this peat holds 8.5%.

The trend however is towards imported energy; this comes at a price both financially and environmentally. Ireland is under pressure to reduce emissions as set out in the Kyoto Protocol yet it still imports coal and oil for electricity generation. Ireland’s geography and natural resources means that these imports will continue for the near future at least and probably beyond unless something drastic happens to change Ireland’s view of energy utilisation.

49% of electricity generated in Ireland comes from gas-fired power stations. Approximately three quarters of the gas used comes through one pipeline the inter- connector originating at Moffat, western Scotland. In the longer term the British government expects to be importing around three quarters of Britain’s gas requirements by 2015. Britain holds just 11 days of gas in reserve this is compared to 55 days worth in continental Europe. If a break down were to happen these supplies would run out after a winter week of sub zero temperatures. Although Britain is legally obliged to keep gas flowing through the inter-connector, Ireland does not hold stockpiles of gas in reserve. This legal obligation is not considered unbreakable in the event of an emergency.

ESRI Report September 2005 “a move towards the use of wind or nuclear power stations to generate Irelands electricity would be un economical”.

Peat is the largest natural resource, peat lands cover 16% of the land mass of Ireland 17.2% of the area of the Republic of Ireland ( BnM factsheet 1995). This amounts to 1,216,180ha half of this is high level blanket bog 565,950ha which in general proves unsuitable for large scale mechanical harvesting.

Bord na Mona owns 80,000 ha of peatlands, total peat reserves are in the region of 100 million tonnes. At a projected harvesting rate of 4 million tonnes annually, reserves will last for 25 years.

An additional 140 million tonnes is estimated to be in place, of which 120 is deemed to be recoverable ( Irish WEC Member Committee report 1999). It is important that indigenous resources Peat / hydro / Gas remain a significant contributor to the total energy demand in Ireland as part of a balanced energy strategy and also as security.

Reserves of other fuel

Ireland’s reserves of oil and coal are small to nonexistent.

Natural Gas

Natural gas proved recoverable reserves at end of 2002 were 20 billion cubic meters consumption is roughly 4.3 billion cubic meters annually this at present rates would mean a reserve of only 4.65 years. Most of the gas consumed in Ireland is imported this is done to preserve the reserve of gas in case of a shortage.

Wind

Irelands prevailing southwesterly winds from the Atlantic Ocean give a feasible wind resource that has been estimated to be as high as 179 GW or some 40 times the country’s current generating capacity. However, the accessible resource is about 2190 MW and in reality, the practicable resource is estimated to be 812 MW. (World Energy Council 2004)

There are currently 37 wind farms in Ireland with a total output of 343.89MW. The largest of which is Meentycat Con Donegal 72.4MW opened 2005.

Wave

Wave energy research has been undertaken in Ireland since 1980 much of the work being conducted at University College Cork. Prototypes of hinged raft wave energy conversion systems have being tested on Irelands west coast. Results have been positive but as of yet no wave energy plant has been built.

Renewable

The ESB run 6 Hydroelectric stations

Liffey 38MW Ardnacrusha 86MW Erne 65MW Clady 4MW Lee 27MW Turlough Hill 292MW (Pump Storage)

The station at Turlough Hill involves the use of two lakes, an upper and lower lake. At night when the draw on electricity is low, water is pumped from the lower to the upper lake. During the day when draw on power is greatest water is then released from the upper lake to turn the turbines thus generating electricity.

Biofuel has created much interest in Ireland as a means of reducing dependence on imported energy and reducing emissions. The input of biofuels to the overall balance of energy in Ireland still remains very small.

Biofuel is a term used for biomass, which is being used to provide bioenergy. Biofuel can be either solid biofuel (firewood, for example) or liquid biofuel (oil produced for oilseed rape, for example, which can be used as a vehicle fuel).

5 STAKEHOLDERS

Bord na Mona www.bnm.ie

ESB www.esb.ie

Sustainable Energy Ireland www.irish-energy.ie

Irish peatlands conservation society www.ipcc

University College Dublin www.ucd.ie

Department of Communications, Marine and Natural Resources www.dcmnr.gov.ie

Department of Agriculture www.agriculture.gov.ie

University College Cork www.ucc.ie

Department of the Environment www.environ.ie

Edenderry Power www.edenderrypower.ie

Coillte www.coillte.ie

International Peat Society www.peatsociety.org

IPC LICENCE

Bord na Mona Energy Ltd operates under 9 IPC Licences issued by the Environmental Protection Agency.

Under section 83(1) of the EPA Act 1992, it is required to apply for an IPC Licence under the following activity: The extraction of peat in the course of business, which involves an area exceeding 50 hectares.

Bord na Mona has 9 IPC licenses covering the following areas

Boora, Blackwater, Mountdillon (Shannon Catchment), Oweninny (Oweninny Catchment), Derrygreenagh (Boyne Catchment), Allen (Barrow Catchment), Kilberry (Barrow & Liffey Catchment), Cuil na Mona (Nore Catchment), Littleton (Suir & Nore Catchments)

The licences contain 14 conditions relation to management, reporting, monitoring, emissions to water, air & land etc. These conditions required BnM to make certain improvements to its environmental management of the production within certain time frames. i.e. 3, 6, 9 12 months up to 3 years. These involved the establishment of procedures and codes of good practice, utilising BAT (best available technology), for peat production.

Feehan, J; McIlveen, S; "The Atlas of the Irish Rural Landscape", Cork University Press, 1997.

McGettigan & Duffy 2001 Consumption of Peat Energy

Feehan J and O Donovan G.1996 The Bogs of Ireland – An introduction to the Natural, cultural and Industrial Heritage of Irish Peatlands.

McDonnell K. 1996 The Peat Industry in Ireland.

Bord na Mona 2004/2005 Annual Report

Edenderry Power Ltd 2005. Plant Description and Operation

ESB 2005. Electricity Supply Board power stations

Bord na Mona 2001. Facing the Challenge – An Extractive Industry Review.

Stapleton l, Lehane M and Toner P, 2000 Irelands Environment – A Millennium Report.

Bord na Mona 2005. Mona Engineering www.bnm.ie

Department of Finance 2004/2005. Annual Review

CSOQNHS 2004. Variations of the Participation / Unemployment Rate.

Central Statistics Office, 2005. Census of Industrial Production 2003

Central Statistics Office, 2005. Industrial Employment March-June 2005

ESRI Report September 2005, Energy Consumption in Ireland.

Irish WEC Member Committee report 1999.

Smyth, B. 2005 Personal Communication, IPC LICENSE. Bord na Mona Ireland.

World Energy Council 2004. Survey of Energy Resources.

24 10/04/2006

SWEDISH PEAT INDUSTRY Authors Matti Parikka

Swedish University of Agricultural Sciences, Department of Bioenergy, Uppsala, Sweden

SUMMARY

The most important users of energy peat within European Union, Finland, Ireland, Sweden, Latvia, Lithuania, Estonia and Scotland, are included in the study. This particular report is about peat in Sweden.

Sweden is one of the peat richest countries in the world. The total peat land area of Sweden is 10 mill. hectares. There are about 6,3 mill. hectares of peat land (about 15% of the total land area) which have a peat layer thicker than 30 cm. About 350 000 hectares are estimated to be suitable for energy peat extraction.

The total peat production area was about 8000 hectares (2004) in Sweden. There are about 43400 hectares of concessions for peat recovery in Sweden.

There are about 20 energy peat producers in Sweden. The total production of energy peat was 152 ktoe (about 1,9 TWh) in 2004.

There were about 20 heating plants and CHP plants in Sweden using peat, 2004. Electricity production from CHP using peat was 95 ktoe, district heat production from CHP was 125 ktoe and district heat production from stand alone systems was 146 ktoe. In addition about 7 ktoe peat was used in industry for energy purposes. The total use of peat for energy purposes in Sweden was 373 toe in 2004.

During 2004 the total import quantity of energy peat was 107 ktoe (405 000 tonnes), there was an increase of 5% compared 2003. Between 2001 and 2004 the total increase was almost 80%.

The average prise of milled peat was 147 Euro per toe, and 159 Euro per toe for sod peat in Sweden (2004).

PREFACE

This country report is based on official information about peat in Sweden. Writer of this report is Dr. Matti Parikka from Department of Bioenergy (SLU).

CONTENTS

SUMMARY ...... 2

PREFACE...... 3

1 BACKGROUND AND TARGET...... 5

2 INDUSTRY AND PEAT...... 5 2.1 PEAT PRODUCERS...... 5 2.2 PEAT USERS...... 7 2.3 MACHINE MANUFACTURERS ...... 8 2.4 CONTRACTORS...... 8 2.5 SERVICE COMPANIES and consultants...... 9

3 IMPORTANCE OF PEAT ...... 9 3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL ...... 9 3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL...... 11 3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL...... 13 3.4 ECONOMIC ASSESSMENT...... 15 3.5 PEAT SALES...... 16 3.6 INTERNATIONAL TRADE ...... 18

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY ...... 22

5 STAKEHOLDERS ...... 23 5.1 Associations...... 23 5.2 Information of peat lands...... 23 5.3 Research ...... 24 5.4 Information / Statistics ...... 24 5.5 Authorities ...... 24 5.6 Energy peat producers and peat sellers ...... 24 5.7 Equipment manufacturers...... 25 5.8 Entrepreneurs...... 25 5.9 Transports...... 25 5.10 Consultants ...... 25

6 REFERENCES ...... 27

APPENDIX 1. Peat users for district heat production ...... 28

APPENDIX 2. Peat users for CHP production ...... 29

1 BACKGROUND AND TARGET

Sweden is one of the peat richest countries in the world. The total peat land area of Sweden is 10 mill. hectares. There are about 6,3 mill. hectares of peat land (about 15% of the total land area) which have a peat layer thicker than 30 cm (Statistics Sweden 2005a). About 350 000 hectares are estimated to be suitable for energy peat extraction (Statens Offentliga Utredningar 2002).

The units that are used in the report are:

- Tonnes of oil equivalents (toe) in energy context,

- Megawatt (MW) in boiler capacity context,

- Hectare (ha) in area context and

- Currency unit Euro (€) in sale context. 1 Euro = 9.2 SEK

2 INDUSTRY AND PEAT

2.1 PEAT PRODUCERS

A list of Swedish energy peat producers is presented in section 5.6 “Swedish energy peat producers”. These companies are members of the Swedish Peat Producers Association (http://www.torvproducenterna.se), STPF. There are totally 22 active energy peat producers in Sweden (Statistics Sweden 2005a).

Table 1 shows the total peat production area, peat land area which is reserved or purchased, but is not yet on production. Peat production area was about 8000 hectares in Sweden in 2004. There are about 43400 hectares of licenses (concessions) for peat recovery in Sweden (Swedish Peat Producers Association 2005) .

Table 1. Productive area for peat production and licenses for peat recovery in Sweden, 2004

Region Licenses, number Licenses, hectares Productive area, hectares

Active Resting Active Resting Total Size of object

Götaland 26 15 3840 3535 2298 88

Svealand 17 14 2655 3707 1415 83

N Norrland 34 38 6364 4879 2001 59

Ö Norrland 13 43 8285 10141 2316 178

Sweden 90 110 21144 22262 8030 89

Source: Swedish Peat Producers Association 2005

The average production level per object is between 34,4 and 43,0 toe per hectare and year (Table 2). If we assume this production level (34,4-43,0 toe per hectare) and a productive peat recovery area of 8030 hectares (Table 1), we can calculate that there is a practical production potential of 258 – 344 ktoe of peat per year in Sweden. The total production potential of peat based on active and resting licenses (about 43400 hectares) is 1500-1900 ktoe per year in Sweden.

Table 2. Average production level per hectare, toe

-93 -94 -95 -96 -97 -98 -99

Sod peat 24,8 51,2 33,3 39,7 43,0 6,5 47,3

Milled peat 25,0 45,6 22,0 28,7 33,3 3,2 25,9

Average 24,9 48,6 28,5 34,4 35,8 5,0 29,0

Source: Swedish Peat Producers Association 2005

Figure 1 shows production of fuel peat (milled peat, sod peat) in Sweden.

Figure 1. Production of milled peat (frästorv) and sod peat (stycketorv) in Sweden. Source: Statistics Sweden 2005a.

Note: Smultorv = A variant of sod peat

A majority of the peat production companies are private limited companies (AB) in Sweden. Several companies are associated with: 1) the forest industry (e.g. SCA Skog / Norrbränsle, Mellanskog, Södra Skogsenergi AB), 2) the energy industry (e.g. Vattenfall AB, Sydkraft Mälardalen Värme AB, Skellefteå Kraft AB), 3) the local municipality (e.g. Kommunbränsle i Ådalen AB, Tekniska Verken i Kiruna AB). In addition, there are companies with no such association (e.g. Markaryds Fastbränsle AB, Pello Torv AB).

2.2 PEAT USERS

The latest available statistics from the Swedish District Heating Association (2005) shows that there were 22 district heating plants and CHP plants in Sweden using peat, in 2004.

Electricity production from CHP using peat was 95 ktoe, district heat production from CHP was 125 ktoe and district heat production from stand alone systems was 146 ktoe. In addition, about 7 ktoe peat was used in industry for energy purposes. The total use of peat for energy purposes in Sweden was 373 ktoe in 2004 (Statistics Sweden 2005a & 2005b).

Table 3. Use of energy peat in Sweden, ktoe

Year Industry Electricity District heat District heat Total from CHP from CHP from stand alone systems

2003 6 22,8 138,0 174,0 340,8

2004 7 95,0 125,0 146,0 373,0

Source: Statistics Sweden 2005a & 2005b

2.3 MACHINE MANUFACTURERS

Ivarsson i Metsjö AB, http://www.ivarssonsimetsjo.se/

G&S Handel och Ekonomi AB, http://www.goshandel.se/

Valtra, http://www.valtra.se/Products

Saxlunds, http://www.saxlund.se/om_saxlund.html

Trädgårdteknik, http://www.tradgardsteknik.se/

Swebo, Flis och Energi, http://www.swebo.com/frames/index3.htm

2.4 CONTRACTORS

2.4.1 Entrepreneurs

Rödde Torv & Entreprenad, http://www.roddetorv.se

Varnums Jord & Skogsentreprenad, http://www.varnumsjordskog.se

G&S Handel och Ekonomi AB, http://www.goshandel.se

ATL AB Transport and Logistics, http://www.alt.se

2.4.2 Transports

Sten Claesson Åkeri AB, http://www.scaab.se

Härjelast AB, http://www.harjelast.se/?pageid=38%E2%8A%82=38

Gadelius Åkeri AB, http://www.gadeliusakeri.se

Aros handelshus, http://www.aroshandelshus.com

ATL AB Transport and Logistics, http://www.alt.se

2.5 SERVICE COMPANIES AND CONSULTANTS

Scandiaconsult Sverige AB, http://www.scc.se

Ångpanneföreningen, http://www.af.se/index.asp?id=16387

Dalatorv AB, Tele: 0246-23630, Telefax: 0246-23218, Kontaktperson: Håkan Staffansson, E-mail: [email protected]

3 IMPORTANCE OF PEAT

3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL

The total energy supply in Sweden was 55632 ktoe in 2004 (Swedish Energy Agency, 2005). The share of biofuels and peat was 9458 ktoe, of which 377 ktoe was peat (Statistics Sweden 2005a & 2005b). Figure 2 shows details of different biofuels use in Sweden.

Biofuels for electricity production 9%

Other biofuels 4%

Peat 4% Black liquour Municipal solid 35% waste 7%

Recovered wood 2%

Densified wood fuels 6%

Split firewood 9% Forest industry solid by-products Forest and 13% logging residues 11%

Figure 2. Share of different biofuels in the Swedish energy supply. Sources: Swedish Energy Agency 2005, Statistics Sweden 2005a & 2005b, Swedish National Board of Forestry 2005

Sweden lacks of fossil fuel resources. The potential of wood fuels is about 10318 ktoe (Gross potential), about 6449 ktoe is environmentally, technically, and economically available (Parikka & Vikinge 2001; Parikka, 2005).

There were 22 district heating plants and CHP plants in Sweden using peat in 2004 (Swedish District Heating Association 2005, Statistic Sweden 2005a). Electricity production from CHP using peat was 95 ktoe, district heat production from CHP was 125 ktoe and district heat production from stand alone systems was 146 ktoe. In addition, about 7 ktoe peat was used in industry for energy purposes. The total use of peat for energy purposes in Sweden was 373 ktoe (Statistics Sweden 2005a & 2005b).

3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL

Enclosed a description of importance of peat production and use in regional level is given.

3.2.1 Production of peat

The total production of energy peat in Sweden is shown in Table 4.

The annual production of energy peat was 152 ktoe (about 1,9 mill. m3) in 2004. The corresponding figure for year 2003 was 212 ktoe (Statistics Sweden 2005a).

Table 4. Production of energy peat in Sweden, 2000-2004, ktoe and 1000 m3

Year Milled peat Sod peat Other sod peat Total for energy1

1000 ktoe 1000 ktoe 1000 ktoe 1000 ktoe m3 m3 m3 m3

2004 929 64 925 87 16 1 1870 152

2003 1304 90 1174 111 166 11 2644 212

2002 1603 110 1075 102 207 14 2885 226

2001 994 68 1363 129 140 10 2497 206

2000 506 35 748 71 118 8 1372 114

1 Smultorv = A variant of sod peat, 1 toe=14,54 m3

Source: Statistics Sweden 2005a

In figure 3 regional energy peat production in Sweden is presented.

Figure 3. Production of energy peat per county in Sweden, 1000 m3. Source: Statistics Sweden 2005a

3.2.2 Use of energy peat

Regional use of energy peat in Sweden is shown in figure 4 in 2003. It could be seen from the figure that there is a strong concentration of peat use for energy purposes in Uppsala, Västerås, Södertälje and Mölndal.

Figure 4. Use of energy peat in district heating by county in Sweden, 2003. Source: Statistics Sweden 2005a. Note: GW should be GWh

3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL

Umeå Energy (based on information from http://www.umeaenergi.se)

Umeå Energy produces, distributes, and sells energy to some 54 000 private and corporate customers. The company offers environmentally friendly district heating and district cooling as well as electrical power, telecom and broadband services. Their head office is located in Umeå – in the north of Sweden with 110 000 inhabitants, The company has some 270 employees and an annual turnover of just over SEK 1 billion.

Group Sales and profit: 2004 (2003)

Total sales, SEK million: 1040 (995)

Profit after net financial items, SEK million: 73 (65)

Investments, SEK million: 275 (190)

Return on adjusted equity, %: 13.5 (10.3)

Solvency, %: 30.8 (30.6)

The company is certified in accordance with ISO 14001, an international standard for environmental management system. This means, among other things, that the company is subject to annual auditing by independent auditors. In addition, the company has an

occupational health and safety management system that fulfils the requirements of AFS 2001:1.

Umeå Energy owns a number of production plants. The two largest plants are Dåva combined heat and power plant, and the Ålidhem plant, which is a pure heating plant. Dåva combined heat and power plant just outside the city of Umeå is energy effective and environmentally friendly plant using wood chips (forest chips, logging residues), wood pellets, peat and also municipal solid waste as fuels.

Photo 1. Dåva combined heat and power plant in the city of Umeå, Sweden.

Today, more than 70 per cent of the total indoor area in Umeå is heated by district heating and the figure continues to rise. Also to mentioned here is that Umeå Energy uses absorption refrigerators to produce district cooling – the biggest is located next to the Ålidhem heating plant.

Umeå Energy is also a broadband operator. The company owns UmeNet, an optical fibre-based network in Umeå and in surrounding areas.

The electricity network covers more than 4 400 kilometre.

3.4 ECONOMIC ASSESSMENT

Table 5 shows turnover in the Swedish energy peat industry in mill. Euro.

Table 5. Turnover in the Swedish energy peat industry, 1997-2002, mill. Euro

1997 1998 1999 2000 2001 2002

Energy peat 55 56 65 48 59 64

Source: Statistics Sweden 2005a

Table 6 shows an estimation for employment in peat industry by counties and a summary at country level. Totally about 580 persons are directly involved in the peat industry in Sweden (Statistics Sweden 2005a).

Table 6. Employment in peat industry by counties in Sweden

County Number of employees (direct)

Norrbotten 40 Västerbotten 25 Jämtland 160 Dalarna 2 Västernorrland 10 Gävleborg 75 Värmland 5 Kronobergs län 30 Jönköpings län 45 Örebro län 45 Halland 0 Kalmar 0 Östergötlands län 55 Uppsala län 20 Skåne 5 Västmanland 45 Södermanland § Västra Götaland 20 Blekinge 0 Stockholm 0 Gotland 0 Total 580 Source: Statistics Sweden 2005a

From table 6 could be seen that in regional / local level the direct employment effect of peat industry is considerable. In national level the direct effect is rather moderate. Unfortunately, there are no estimations on indirect effects available.

3.5 PEAT SALES

Table 7 shows information of energy peat delivery during 1990-2001. Unfortunately the statistical base is insufficient. Large quantities are imported, mainly from the Baltic states and Belarus. Therefore, it is difficult to show accurate figures what is produced in Sweden and what is imported (Swedish Peat Producers Association 2005).

Table 7. Delivery of energy peat in Sweden, ktoe, 1990-2001

90 – 91 – 92 – 93 – 94 – 95 – 96 – 97 – 98 – 99- 00- 91 92 93 94 95 96 97 98 99 00 01 ktoe 256 303 271 239 285 297 271 207 173 176 124

Source: Swedish Peat Producers Association 2005

Table 8 shows a list of peat sellers divided in peat product categories. These companies have distributed information to the Swedish Peat Producers Association. Peat sales operators are divided in the following main groups in Sweden: 1) Producing companies and private producers selling directly to users.

Table 8. Peat sellers in Sweden, 2004

Company Sod peat Milled peat

SCA Skog/Norrbränslen X X Gällivare Torv AB X Härjedalens Miljöbränsle AB X X Jämtkraft AB X Järle Torv AB/Econova Kommunbränsle i Ådalen AB X X Tekniska Verken i Kiruna AB X Krontorp AB Markaryds Fastbränsle AB X Mellanskog X X Norrheden Torv AB X Pello Torv AB X Råsjö/Svenska Torv AB X X Röcklamyren AB X Skellefteå Kraft AB X X Södra Skogsenergi AB X X Torvströfabrikernas Centralförb. Vattenfall AB X Svalöf Weibull Torv AB X Vänertorv AB/Rölunda Västerbergslagens Värme AB X Sydkraft Mälardalen Värme X X Source: Swedish Peat Producers Association 2005

In table 9 prices of different fuel peat are shown. Prices of other biofuels are shown in table 10.

Table 9. Prices for milled peat, and sod peat, 1993–2004, excluding tax, Euro per toe and SEK per MWh

Actual price

Milled peat Sod peat

Year SEK / MWh Euro / toe SEK / MWh Euro / toe

2004 116 147 126 159

2003 116 147 110 139

2002 114 144 114 144

2001 113 143 110 139

Source: Statistics Sweden 2005a

Table 10. Prices for other biofuels in Sweden, 2001 – 2004, actual prices, excluding tax, Euro per toe and SEK per MWh

2002 2003 2004

Fuel SEK/MWh Euro/toe SEK/MWh Euro/toe SEK/MWh Euro/toe

Pellets and briquettes 178 225 196 248 206 260

1Wood fuel, industry 123 155 131 166 125 158

1Wood fuel, heating 124 157 126 159 138 174 plants

2Industrial by-products, 79 100 90 114 112 142 industry

2Industrial by-products, 104 131 109 138 114 144 heating plants

3Re-cycled wood 69 87 71 90 74 94

1Chipped or crushed forest and logging residues; 2Saw dust, bark, decayed or damaged wood; ; 3Building waste, old wooden furniture, pallets etc

Source: Swedish Energy Agency 2005

3.6 INTERNATIONAL TRADE

Foreign trade statistics for peat is presented annually as export and import of peat. There is no division to different peat assortments. Import of peat consist in large extent of energy peat. Horticultural peat could be found in small quantities. Export of peat consist foremost of horticultural peat (Statistics Sweden 2005a).

Peat import has increased during the recent years. During 2004 the total import quantity of peat was 405 000 tonnes (1,3 mill. m3 ~ 107 ktoe), there was an increase of 5% compared to 2003. Between 2001 and 2004 the total increase was almost 80%. The total value of this import was 17,2 mill. Euro, i.e. about 42,3 Euro per tonne of peat (Statistics Sweden 2005a).

Energy peat is mostly imported (1forwarded) from Latvia and Estonia. Import from Latvia was about 64% of the total peat import (Statistics Sweden 2005a).

The amount of imported and exported fuel peat is shown in figure 5. Import of peat by origin country is shown in figure 6.

Figure 5. Export and import of peat, 1980-2004. Source: Statistics Sweden 2005a

Note: All export is horticultural peat

1 This means that peat could originate from another country.

Figure 6. Import of peat, 1980-2004, by forwarder country. Explanation: “Övriga länder = Other countries”; “Storbritanien och Nordirland = Great Britain and Northern Ireland”; “Finland = Finland”; “Lettland = Latvia”; “Estland = Estonia”

Source: Statistics Sweden 2005a

3.6.1 List of main ports

There are many ports available for fuel transport along the coast of Sweden (Table 11). There are also possibilities to use channels to the inland lake system. So it is possible transport goods to ports located around bigger lakes in Sweden, i.e. lake Mälaren.

Table 11. List and location of main ports in Sweden

Map Port

Gävle Hargshamn Hudiksvall Härnösand Kramfors Luleå Norrsundet Piteå Rundvik Skellefteå Skärnäs Sundsvall Söderhamn Söråker Umeå Örnsköldsvik

Bergkvara Falkenberg Gotland Göteborg Halmstad Helsingborg Kalmar Karlshamn Karlskrona Köping (= Lake Mälar port) Landskrona Lysekil Malmö Mönsterås Norrköping Norrtälje Oskarshamn Oxelösund Stenungsund Stockholm Stromstad Surte Södertälje Sölvesborg Trelleborg Uddevalla Varberg 21

Vänern Västervik Västerås (=Lake Mälar port) Wallhamn Ystad Åhus Source: Sveriges Hamnar 2005

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY

The total energy supply in Sweden was 55632 ktoe 2004 (Swedish Energy Agency, 2005). The share of biofuels and peat was 9456 ktoe (Swedish Energy Agency, 2005), of which 373 ktoe was peat (Statistics Sweden, 2005a & 2005b). Peat is mostly used in district heating and combined heat and power production.

Sweden lacks of fossil fuel resources. The potential of wood fuels is about 10300 ktoe (Gross potential), about 6449 ktoe is environmentally, technically, and economically available (Parikka & Vikinge, 2001; Parikka, 2005).

Figure 7 shows the use of fuels for district heating in Sweden 1980 – 2004.

Figure 8 shows the total energy supply in Sweden 1970-2004.

Figure 7. Use of fuels in district heating in Sweden 1980-2003. Source: Swedish Energy Agency 2005

Figure 8. Energy supply in Sweden 1970-2003, TWh. Source: Swedish Energy Agency 2005

5 STAKEHOLDERS

The list of Swedish stakeholders covers the following categories of stakeholders: wholesalers, associations, research organisations, peat producers, equipment manufacturers, government officials responsible for energy policy.

5.1 ASSOCIATIONS

Swedish Peat Producers Association, http://www.torvproducenterna.se/index- ENG.shtml

District Heating Association of Sweden, http://www.fjarrvarme.se

Swedish Wood Fuel Association, http://www. http://www.novator.se/tradbransle/index.html

5.2 INFORMATION OF PEAT LANDS

Soil maps, http://www-markinfo.slu.se/sve/mark/jman/trv1.html

Geological Survey of Sweden, http://www.sgu.se

5.3 RESEARCH

Peat Research Association of Sweden, http://www.torvforsk.se

Swedish Forest Research Institute, http://www.skogforsk.se

Swedish University of Agricultural Sciences, http://www.slu.se

5.4 INFORMATION / STATISTICS

Statistics Sweden , http://www.scb.se

5.5 AUTHORITIES

Swedish Board of Agriculture, http://www.sjv.se

Swedish Board of Forestry, http://www.svo.se

Swedish Environmental Protection Office, http://www.naturvardsverket.se

Swedish Energy Agency, http://www.stem.se

Swedish Technical Development Agency, http://www.nutek.se

5.6 ENERGY PEAT PRODUCERS AND PEAT SELLERS

The following energy peat producers are members of the Swedish Peat Producers Association (STPF).

1 Gällivare Värmeverk AB (Gällivare)

2 Härjedalens Mineral AB (Sveg) 3 Jämtkraft AB (Östersund) 4 Kommunbränsle i Ådalen AB (Sollefteå) 5 Krontorp AB (Kristinehamn) 6 Naturbränsle AB (Enköping) 7 Norrheden Torv AB (Skellefteå) 8 Råsjö Torv AB (Hudiksvall) 9 SCA Norrbränsle (Piteå) 10 Skellefteå Kraft AB (Skellefteå) 11 Sydkraft Mälarvärme AB (Östersund) 12 Sävne Torv AB (Sävne, Sala) 13 Södra Skogsenergi AB (Ronneby) 14 Umeå Energi (Umeå)

5.7 EQUIPMENT MANUFACTURERS

Ivarsson i Metsjö AB, http://www.ivarssonsimetsjo.se

G&S Handel och Ekonomi AB, http://www.goshandel.se

Valtra AB, http://www.valtra.se

Saxlunds AB, http://www.saxlund.se

Dafo Brand AB, http://www.dafo.se

Bruks Klöcker AB, http://www.bruks-klocker.com

Profilvågen, http://www.dalnet.se/~tangring

Trädgårdteknik, http://www.tradgardsteknik.se

Swebo, Flis och Energi, http://www.swebo.com/frames/index3.htm

5.8 ENTREPRENEURS

Rödde Torv & Entreprenad, http://www.roddetorv.se

Varnums Jord & Skogsentreprenad, http://www.varnumsjordskog.se

G&S Handel och Ekonomi AB, http://www.goshandel.se

ATL AB Transport and Logistics, http://www.alt.se

5.9 TRANSPORTS

Sten Claesson Åkeri AB, http://www.scaab.se

Härjelast AB, http://www.harjelast.se/?pageid=38%E2%8A%82=38

Gadelius Åkeri AB, http://www.gadeliusakeri.se/

ATL AB Transport and Logistics, http://www.alt.se

5.10 CONSULTANTS

Scandiaconsult Sverige AB, http://www.scc.se

Ångpanneföreningen, http://www.af.se/index.asp?id=16387

Dalatorv AB, Tele: 0246-23630, Telefax: 0246-23218, Kontaktperson: Håkan Staffansson, E-mail: [email protected]

6 REFERENCES

Literature

Parikka, M. & Vikinge, B. 2001. Swedish wood fuel supply in the medium time perspective. In: World Renewable Energy Congress IV. Brighton, UK. July 2001. Ed. Sayigh, A., A., M. pp1412-1416

Parikka, M. 2005. Energy wood potential in Europe. In workshop proceedings: Bioenergy 2005. Veliky Novgorod, Russia. 16-17 juni, 2005

Statens Offentliga Utredningar. 2002. Uthållig användning av torv (Sustainable use of peat). SOU 2002:100.

Swedish District Heating Association. 2005. Statistik över fjärrvärme- och kraftvärmedistribution i Sverige (District heating and CHP statistics of Sweden). http://www.svenskfjarrvarme.se

Swedish Energy Agency. 2005. Energy in Sweden 2004. http://www.stem.se

Swedish National Board of Forestry 2005. Forestry Statistics. http://www.svo.se

Swedish Peat Producers Association (STPF). 2005. Torvåret 2004. Statistik över Sveriges torvproduktion 2004 (Peat 2004. Peat production statistics of Sweden). STPF- Rapport. http://www.torvproducenterna.se

Statistics Sweden (SCB). 2005a. Torv 2004. Produktion, användning, miljöeffekter (Peat 2004. Production, use, and environmental impacts). MI 25 SM 0501. http://www.scb.se

Statistics Sweden (SCB). 2005b. Bränslen. Leveranser och förbrukning av bränsle (Fuels. Delivery and use of fuels). EN 31 SM 0501. http://www.scb.se

Web-sites

Sveriges Hamnar. 2005. http://www.transportgruppen.se/templates/SvHamnarNormal1Col____4217.asp

Svensk Fjärrvärme. 2005. http://www.svenskfjarrvarme.se

Statistics Sweden. 2005. http://www.scb.se

Swedish Peat Producers Association. 2005. http://www.torvproducenterna.se.

Swedish Energy Agency. 2005. http://www.stem.se

Umeå Energy. 2005. http://www.umeaenergi.se

APPENDIX 1. PEAT USERS FOR DISTRICT HEAT PRODUCTION

County Municipality Member Stockholm FORTUM VÄRME, AB totalt Uppsala län Uppsala VATTENFALL AB Östergötlands län Mjölby MJÖLBY-SVARTÅDALEN ENERGI AB Kronobergs län Växjö VÄXJÖ ENERGI AB Kronobergs län Ljungby LJUNGBY ENERGI AB Västra Götalands län Mölndal MÖLNDAL ENERGI AB Västra Götalands län Uddevalla UDDEVALLA ENERGI AB Örebro län Örebro SYDKRAFT MÄLAR VÄRME AB Örebro län Karlskoga KARLSKOGA ENERGI & MILJÖ AB Västmanlands län Surahammar SURAHAMMARS KOMMUNALTEKNIK AB Västmanlands län Västerås MÄLARENERGI AB Västmanlands län Fagersta VÄSTERBERGSLAGENS VÄRME AB Gävleborgs län Ljusdal LJUSDAL ENERGI AB Gävleborgs län Sandviken SANDVIKEN ENERGI AB Västernorrlands län Härnösand HÄRNÖSAND ENERGI & MILJÖ AB Västernorrlands län Kramfors KRAMFORS FJÄRRVÄRME AB Jämtlands län Östersund JÄMTKRAFT AB Västerbottens län Umeå UMEÅ ENERGI AB Västerbottens län Lycksele LYCKSELE ENERGI AB Västerbottens län Skellefteå SKELLEFTEÅ KRAFT AB Norrbottens län Gällivare GÄLLIVARE VÄRMEVERK AB Norrbottens län Kiruna TEKNISKA VERKEN I KIRUNA AB Source: Swedish District Heating Association 2005

APPENDIX 2. PEAT USERS FOR CHP PRODUCTION

County Municipality Member Stockholms län Fortum Värme Totalt Uppsala län Uppsala VATTENFALL AB Kronobergs län Växjö VÄXJÖ ENERGI AB Örebro län Örebro SYDKRAFT MÄLARVÄRME AB Örebro län Karlskoga KARLSKOGA ENERGI & MILJÖ AB Västmanlands län Västerås MÄLARENERGI AB Gävleborgs län Sandviken SANDVIKEN ENERGI AB Västernorrlands län Härnösand HÄRNÖSAND ENERGI & MILJÖ AB Jämtlands län Östersund JÄMTKRAFT AB Västerbottens län Lycksele LYCKSELE ENERGI AB Västerbottens län Skellefteå SKELLEFTEÅ KRAFT AB Norrbottens län Kiruna TEKNISKA VERKEN I KIRUNA AB Source: Swedish District Heating Association 2005

PEAT INDUSTRY IN ESTONIA Author Sulev Soosaar

EnPro Engineers Bureau Ltd.

Tallinn, December 2005

Peat industry in Estonia ENPRO ENGINEERS BUREAU

SUMMARY

Estonia is rich in peat resources – almost a quarter of Estonia’s territory is covered by mires. The total area of mires is approximately one million hectares. Utilization of peat in Estonia has a long history: already in 19th century the peat was cut in almost three hundred mires. The first peat fired power plant in Estonia was commissioned in 1918 and in 1939 the first peat briquette plant started operation. The annual extraction of peat was very high in the period between 1974 and 1986 reaching the annual peak in 1986 with the total amount of 2.9 million tons. In the 1990-ies the consumption of peat decreased substantially. During last years some increase has taken place.

In Estonia, peat is the third important indigenous fuel, after oil shale and wood. In 2003 more than a half of the peat was utilized as the raw material for producing peat briquettes. In Estonia there are three plants manufacturing peat briquettes. Approximately one third of peat was used in heat production. The use for generation of electricity is very small – peat is used only in two small CHP plants. The share of peat in total fuel consumption in counties is very different, being in range from zero (in four counties) to approximately 15% (in Tartu) and 30% (in Pärnu county). Two counties – Pärnu and Tartu – account for approximately 90% of peat consumption in Estonia.

In Estonia the most of peat harvesting and processing companies have joined into the Estonian Peat Association, which includes more than 30 enterprises and institutions. There are more than 1400 employees in EPA member companies.

A large share of peat produced in Estonia is exported. The total annual volume of exports has been around one million tons. More than two thirds of exports go to four countries: Germany, Sweden, the Netherlands and to Belgium. As to transport, the major share of peat is exported using sea transport.

In spite of the minor share (approximately 2%) of peat fuels in Estonia’s energy supply, peat has a certain role in increasing the security of energy supply in Estonia, especially when utilized together with wood fuels. Wider introduction of CHP plants in Estonia, as an element of distributed energy concept, would make it also possible to use more peat as a fuel.

2 Peat industry in Estonia ENPRO ENGINEERS BUREAU

PREFACE

The current overview of the peat industry in Estonia has been compiled in frames of the Study of the impact of peat used for energy purposes in the European Union carried out for the European Peat and Growing Media Association (Epagma).

The work was coordinated by Technical Research Centre (VTT) of Finland. In Estonia the data and statistics were collected, analyzed and the report compiled by the EnPro Engineers Bureau Ltd (EnPro Inseneribüroo OÜ) according to the contract with the VTT. The responsibility on the contract and for the current report in EnPro lies with Mr. Sulev Soosaar (manager, R&D).

The authors thank Mr. Erki Niitlaan (Estonian Peat Association), Ms. Kai Mäeleht and Mr. Tiit Saarmets (both Tootsi Turvas AS) for their assistance.

3 Peat industry in Estonia ENPRO ENGINEERS BUREAU

CONTENTS

SUMMARY...... 2

PREFACE ...... 3

1 BACKGROUND AND TARGET...... 5

2 INDUSTRY AND PEAT ...... 7

2.1 PEAT PRODUCERS...... 7 2.2 PEAT USERS...... 12 2.3 MACHINE MANUFACTURERS ...... 14 2.4 SERVICE COMPANIES...... 15 3 IMPORTANCE OF PEAT...... 16

3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL ...... 16 3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL...... 18 3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL...... 20 3.4 ECONOMIC ASSESSMENT...... 22 3.5 PEAT SALES...... 24 3.6 INTERNATIONAL TRADE ...... 26 4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY ...... 28

5 STAKEHOLDERS...... 30

4 Peat industry in Estonia ENPRO ENGINEERS BUREAU

1 BACKGROUND AND TARGET

The objective of the study is to give a picture of the overall socio-economic and energy impact of peat used for energy purposes in the European Union. The study covers all uses of peat for energy, including electricity generation, combined heat and power, district heating, domestic heating and industrial use. The most important users of energy peat within European Union, Finland, Ireland, Sweden, Latvia, Lithuania, Estonia and Scotland, are included in the study.

The units that are used in the report are: ¾ toe in energy context, ¾ MW in boiler capacity context, ¾ ha in area context and ¾ euro in sale context. Almost one quarter of Estonia’s territory is covered by mires. The total area of mires is approximately one million hectares. Of 1626 peat deposits registered, 520 are large mires with a thick layer of peat. Currently, approximately 22% of mires area is under environmental conservation. 322 peat deposits (as of 1 January 2005) are included in the mineral resources balance list drawn up by the state-owned company Geological Survey of Estonia. The most important deposits are Ellamaa (Harju county), Epu-Kakerdi (Järva), Lavassaare (Pärnu), Puhatu (Ida-Viru) and Sangla (Tartu).

Utilization of peat in Estonia has a history of several centuries. It is known that in mid of 19th century the peat was cut in almost three hundred mires. There are notes of first mechanized harvesting from the year 1861. The first peat fired power plant in Estonia was commissioned already in 1918. In 1939 the first peat briquette plant started operation. The fastest development of peat harvesting took place in 1950-ies. The annual extraction of peat was very high in the period between 1974 and 1986. In 1986 the all-time harvesting record was reached – 2.9 million tons. In the beginning of 1990- ies the use of bedding peat in agriculture was almost terminated and consumption as fuel decreased substantially. During last years some increase in use of peat could be noticed.

It should be noted that in Estonia during earlier years several terms have been used for classification of peat varieties. Terms like “litter peat”, “peat dust”, “peat for fuel and fertilizer” and some others have been used in statistics. In present survey the following terms are used for classifying of resources as well as for extracted peat: ¾ low-decomposition (<25%) (LD) peat (H1 … H3 on von Post scale) (in Estonian vähelagunenud turvas); ¾ highly (>25%) decomposed (HD) peat (H4 … H10 on von Post scale) (in Estonian hästilagunenud turvas). Only HD peat is suitable for energy use. In comparisons it should be kept in mind that Statistical Office usually uses conventional tons (i.e. with moisture content of 40%), but Customs Board uses natural tons in its data on peat. Nevertheless, quite often it is not

5 Peat industry in Estonia ENPRO ENGINEERS BUREAU

clear what units are used. Additionally, the enterprises of peat extraction use cubic meters to measure their production.

The total peat resources amount to 1.64 billion tons, of which active resources make up 1.12 billion tons. The exploitable peat resources in deposits are classified as presented in Table 1.

Table 1. Exploitable peat deposits as of 1 January 2004 (million t) Deposits Active Passive LD peat 60.3 11.1 HD peat 241.1 60.4 Total 301.4 71.5 In classification presented above the following definitions are used: ¾ active deposits – deposits, exploitation of which is economically and ecologically feasible; ¾ passive deposits – exploitation is not expedient. It can be seen in Table 1 that the peat suitable for combustion (HD peat) constitutes 86% of total active deposits.

As to extraction and use of peat, several limitations are to be taken into account in Estonia. Referring to the Sustainable Development Act the Government has issued a regulation (no. 213, 14.08.1996) on sustainable utilization of peat introducing limitations on annual extraction volume, as well as fixing sizes of critical and exploitable deposits for every county (see Table 2). These provisions are in force up to the year 2006.

6 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Table 2. Restrictions on exploitation of peat deposits by county (million t). Annual County Deposits extraction critical exploitable quota Harju 158 107 0.35 Hiiu 9 2 0.01 Ida-Viru 102 136 0.45 Jõgeva 160 51 0.15 Järva 173 29 0.17 Lääne 122 13 0.10 Lääne-Viru 62 23 0.08 Põlva 40 12 0.04 Pärnu 228 165 0.55 Rapla 115 28 0.10 Saare 18 4 0.02 Tartu 179 71 0.35 Valga 45 17 0.06 Viljandi 148 63 0.20 Võru 31 54 0.15 Total 1590 775 2.78

2 INDUSTRY AND PEAT

2.1 PEAT PRODUCERS

The data on actual extraction of peat are given in Table 3. It has to be pointed out that the changing weather conditions can leave a great impact on the annual extraction quantities of peat. The analysis of data from the last ten years indicates that the greatest differences in annual extraction volumes have been: 4.5 times (1508.2 in 2002 and 333.5 thousand tons in 1998) for the total harvesting and 5.5 times (687.0 in 1996 and 125.4 thousand t in 2001) for the HD peat (see also chapter 4).

As can be seen from tables above the annual actual extraction volume (Table 3) has been essentially lower than the annual quota (see Table 2) – from 12% in 1998 to 48% in 1992.

7 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Table 3. Extraction of peat in 2003 County LD peat HD peat Total 103 t 103 t 106 t Harju 44.9 32.6 0.0775 Hiiu 4.5 0 0.0045 Ida-Viru 5.1 189.6 0.1947 Jõgeva 17.6 2.2 0.0198 Järva 5.9 33.7 0.0396 Lääne 18.4 26.3 0.0447 Lääne-Viru 16.6 2.6 0.0192 Põlva 3.9 2.0 0.0059 Pärnu 285.7 157.4 0.4431 Rapla 32.1 19.1 0.0512 Saare 6.8 1.0 0.0078 Tartu 16.4 55.4 0.0718 Valga 0.2 11.1 0.0113 Viljandi 14.2 0.0 0.0142 Võru 6.3 0.0 0.0063 Total 478.6 533.0 1.0116

The Estonian Peat Association (EPA) includes more than 30 enterprises and institutions dealing with peat related activities, most of them with the extraction of peat. There are more than 1400 employees in EPA member companies, including up to thousand directly involved in peat harvesting. The share of peat produced by members of EPA has been approximately 70-80% of the total production volume in Estonia. 17 companies extract annually more than 100 thousand m3 of peat, four largest companies extract annually more than 200 thousand m3. The average yield of HD peat has been 1353 m3/ha, while that of for LD peat is 600 m3/ha. The data on peat production areas of larger members of EPA as well as on total for EPA are given in Table 4. The total production area of EPA members constitutes approximately 65% of the total territory allocated for peat harvesting in Estonia. As can be seen, for EPA as a whole one fourth of area has been kept in reserve.

8 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Table 4. Production areas in EPA member companies (ha; as of 14.10.2004) (total of LD and HD production areas) Company /EPA Total in area operation EPA total, 12 601 9 519 including Tootsi Turvas AS 3 031 2 241 Sangla Turvas AS 1 070 566 Prelvex AS 1 050 780 Torfex AS 687 687 Ramsi Turvas AS 607 607 In Table 5 the similar data is presented separately by both types of peat.

Table 5. Production areas in EPA member companies (ha; as of 14.10.2004) LD peat area HD peat area Company / EPA Total in Company / EPA Total in operation operation EPA total, 7 869 6 135 EPA total, 4 732 3 384 including including Tootsi Turvas AS 1 121 756 Tootsi Turvas AS 1 910 1 485 Torfex AS 617 617 Sangla Turvas AS 842 446 Ramsi Turvas AS 607 607 Prelvex AS 571 380 Torf AS 607 480 ETT AS 393 393 Elva EPT AS 554 256 Farve AS 260 102 The data indicates that almost two thirds (62.4%) of the area is for harvesting horticultural peat. The share of areas kept in reserve is slightly larger for HD peat (28.5%) than that for LD peat (22.0%).

In 2003 41 companies declared to operate in the branch of peat industry. The total turnover of these companies was 47.3 MEUR. The following ranking table (Table 6) contains data on 28 companies with total turnover of 45.7 MEUR, which is 97% of market volume for the branch.

Regarding the ownership of peat producing companies, there is no detailed information available, but the majority of larger companies are either fully or partially owned by foreign owners. There is no peat company in Estonia owned by state or by any municipality. The ownership concentration level is quite high already. For example, the large Finnish group Vapo Oy has acquired several Estonian companies operating in the peat sector. In 2002 Vapo Oy acquired AS Tootsi Turvas. Later, AS Tootsi Turvas has acquired AS Puhatu Turvas (in 2003) and Biomix AS (in 2003) together with its daughter companies AS ETT, AS Kose Põllumajandustehnika and OÜ Turtrans. As a result, at present the AS Tootsi Turvas, a company established in 1937, is fully owned by Vapo Oy (Finland). It has the turnover of 14 MEUR and the number of employees is over 400. Being initially located only in Pärnu county, AS Tootsi Turvas has now departments in five locations: Tootsi, Lavassaare, Puhatu, Ellamaa and Kose. The peat

9 Peat industry in Estonia ENPRO ENGINEERS BUREAU

production area has exceeded 3000 hectares and is planned to reach 4300 ha by 2010. In 2003 AS Tootsi Turvas produced more than 100 thousand t oe of fuel peat (milled peat 60% and sod peat 40%) and 70 thousand t of peat briquettes. A daughter company of Vapo Oy in Finland – Kekkilä Oyj ownes a company in Estonia – Langham OÜ, which operates in the field of horticultural peat.

Table 6. Peat producing companies, (sales in 1000 EUR, 2003) Tootsi Turvas AS F 12 450 ASB Greenworld Eesti OÜ H 3 925 Mikskaar AS H 3 765 Prelvex AS F 2 491 Sangla Turvas AS F 2 232 Langham OÜ H 2 203 Rakvere Põllumajandustehnika OÜ H 2 173 Ramsi Turvas AS H 1 842 Saare EPT AS F 1 655 Torfex AS H 1 649 Eesti Turbatooted AS H 1 263 Elva E.P.T. AS H 1 226 Baltic Peat AS F 1 135 ERA Valduse AS F 1 091 Biolan Baltic OÜ H 1 081 Kagu-Eesti Turvas AS F 1 010 Farve AS H 754 Torf AS F 715 Treffex AS F 510 Vestur OÜ F 408 Kraver AS F 301 Ahtol AS F 293 Siimusti Känd OÜ F 278 Matureks AS F 272 Hiiu Turvas AS F 261 Alutaguse Turvas OÜ F 241 Nurme Turvas AS F 238 Tara-Torf AS F 195 F/H – major type of harvested peat: F – fuel peat; H – horticultural peat; EPA – member of Estonian Peat Association

As to other foreign companies in Estonian peat industry, the Greenworld (Germany) is represented by ASB Greenworld Eesti OÜ; Biolan Oy (Finland) by Biolan Baltic OÜ. Foreign capital is present in several other companies as well, e.g. Baltic Peat AS, Kraver AS, Torfex AS, Treffex AS, etc. According to the purpose of utilization the peat produced in Estonia can be classified as horticultural one (milled and sod peat) and fuel peat (also milled or sod peat). As a sub- type of horticultural peat the peat substrata can be named. Peat substratum is the LD peat to which lime minerals, fertilizers and some microelements are added. The peat

10 Peat industry in Estonia ENPRO ENGINEERS BUREAU

substrata are mostly used for horticultural plant cultivation. As to peat suitable for energy use, the highly decomposed peat is extracted as milled peat and sod peat. A part of extracted milled peat is used for manufacturing of peat briquettes. There is no production of peat pellets in Estonia. The official statistics includes only some data on peat products as commodities. For example, statistics on industry covers the total peat production (indicating fuel peat separately) and manufacturing of peat briquettes (Table 7).

Table 7. Peat production in statistics of industry (thousand tons) Year Total production* incl. fuel peat Peat briquettes 2000 775.7 346.6 86.2 2001 823.8 348.0 114.2 2002 1 518.6 626.2 128.2 2003 1 088.6 534.3 120.3 * – total excluding the production of briquettes

The statistics on national energy balance includes data on peat products used as fuels (Table 8).

Table 8. Peat production in statistics of energy sector (thousand tons) Year Milled peat Sod peat Peat briquettes 2000 250 103 86 2001 229 119 113 2002 536 146 128 2003 248 114 120 2004 201 78 68 In addition to official statistics data from the Estonian Peat Association (EPA) are available (Table 9 and Table 10).

Table 9. EPA data on production of fuel peat (thousand m3) Year Milled peat Sod peat Total 2000 1 266 630 1 896 2001 1 177 689 1 866 2002 2 008 791 2 799 2003 1 116 389 1 505 Table 10. EPA data on production of horticultural peat (thousand m3) Year Milled peat Sod peat Total Peat substrates 2000 1 841 100 1 941 14 2001 2 199 69 2 268 66 2002 3 950 92 4 042 n.a. 2003 2 560 61 2 621 n.a.

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It has to be emphasized that the data in Table 9 and in Table 10 reflect the production volumes of EPA members only.

2.2 PEAT USERS

Milled peat is mainly used for production of peat briquettes, partially also as a boiler fuel, mainly in steams boilers of peat briquette factories and in one large DH boiler plant in Tartu city. In the beginning of nineties sod peat production was started again after a break of about 25 years. The original idea was to establish sod peat production capacity to replace imported boiler fuels by domestic fuels. By now the sod peat has become an important product for export (see Table 23) as more than 50% of sod peat is exported. The main consumers on domestic market are one larger and several small or medium scale DH boiler houses.

In Soviet time peat briquette was an important fuel for households. In nineties the price of peat briquette increased and many households stopped to use peat briquettes. At present, peat briquette is mainly produced for international market, i.e. for export. In some boilers (local and small scale DH boilers) this fuel might be also used as additional fuel. As peat briquette export is based on long term contracts, domestic use cannot be very stable.

The data on utilization of peat in energy sector is presented in Table 11.

Table 11. Peat in energy balance of Estonia (2003) Balance item Milled peat Sod peat Peat briquettes 103 t 103 t oe 103 t 103 t oe 103 t 103 t oe In stocks at the beginning of the year 208 43.2 54 15.4 28 10.7 Production 248 51.5 114 32.8 120 46.0 Resources 456 94.7 168 48.2 148 56.7 Exports 0 0.0 65 18.7 101 38.8 In stocks at the end of the year 94 19.5 40 11.3 27 10.2 Supply of energy 362 75.2 63 18.2 20 7.7 Conversion to other forms of energy 348 72.2 1.48 17.8 0.07 1.1 for electricity generation 25 5.1 0.00 0.0 0.00 0.0 for heat generation 97 20.2 1.48 17.8 0.07 1.1 for conversion to other fuels 226 47.0 0.00 0.0 0.00 0.0 Final consumption 14 3.0 0.02 0.3 0.41 6.6 incl. consumption by households 0 0.0 0.02 0.2 0.36 5.8

According to the data published by Statistics Office, 428 thousand t of fuel peat (i.e. sod and milled peat) were used in 2003 (see Table 12).

In 2003 the largest share (52.8%) of peat was utilized as the raw material for peat briquettes. 37.1 % was used in heat production and 5.8% for generation of electricity. Regarding to allocation of consumption, the analysis indicates that ca 90% (91.3% in 2003) of fuel peat is used in two counties – Pärnumaa (59.8%) and Tartumaa (31.5%),

12 Peat industry in Estonia ENPRO ENGINEERS BUREAU

the rest is utilized in several counties. According to Statistics Office, in four counties (Hiiumaa, Põlvamaa, Viljandimaa and Võrumaa), there was no consumption of fuel peat at all (in 2003).

Table 12. Consumption of fuel peat and peat briquettes in 2003 (103 t) Peat Briquettes Conversion 410 3 • for electricity generation 25 – • for heat production 159 3 • for fuel production 226 – Final consumption 17 17 • for production of non-ferrous metals 14 • by commercial and public services – 2 • by households 1 15 Total 428 20

In electricity generation the peat is used only in two small CHP plants. Both CHP plants are owned by peat producing companies – AS Tootsi Turvas and AS Sangla Turvas. 95 thousand tons of milled peat was burned in these CHP plants in 2003, producing 20 GWh of electricity and 146 GWh of heat. The peat based electricity constitutes only 0.2% of the total electricity generation in Estonia. The use of peat in heat only boiler plants is wider but still quite modest one (see Table 13).

Table 13. Data boiler plants (2003) Total Boilers firing peat (all fuels) number share in total Number of boilers 4 059 40 1.0% Installed capacity, MW 5 547 58 1.0% Fuel consumption, 103 t oe 637.2 25.2 3.9% Heat production, GWh 6 305 241 3.8% Some data on boilers firing peat given by economy branch are presented in Table 14.

Table 14. Data on peat boilers by branch of economy (2003) Sector Number of Total capacity, Heat boilers MW production, GWh Industry 7 8 4 Energy sector 17 42 223 Agriculture 1 1 0 Commercial sector 15 7 14 Total 40 58 241 In 2003 25.2 thousand t oe of peat was used for heat production in boilers installed in DH plants and other enterprises.

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In Estonia there are three plants manufacturing peat briquettes: Tootsi Turvas AS, Sangla Turvas AS and Kiviõli Keemiatööstus OÜ. The first two of these companies are the ones with the largest production areas, therefore utilizing their own milled HD peat for production of briquettes. Kiviõli Keemiatööstus OÜ is an oil shale processing chemical plant core activity of which is the manufacturing of shale oil.

Regarding the future development of peat consumption in Estonia the relation with the emission trading system has to be pointed out. The EU Emission Trading Scheme (ETS) was officially started on 1 January 2005. Estonia’s National Allocation Plan (NAP) had been accepted on 20 October 2004 by the European Commission. The plan includes 42 installations: 35 in the energy production, five in the mineral industry sector and two in the group of “other activities” (pulp and paper industry). District heating installations with a capacity exceeding 20 MW form the largest group on the list – 20 installations. The NAP includes eight companies firing peat (as of 2005). In case of three utilities there is a plan to increase the peat consumption, but some companies are planning to switch from peat to wood fuels. Therefore, the question about possibilities to give the peat a neutral status in the frames of ETS has been raised lately in Estonia.

2.3 MACHINE MANUFACTURERS

There is no overview available on types and origin of peat harvesting and processing machinery in operation in Estonia. In general, it can be concluded that the situation is quite different depending on many factors.

As to newer equipment, mainly machines from Vapo, Valtra Valmet, Premier Tech, Kobelco and from some other manufacturers are in operation. Nevertheless, in companies with the longer history, there the quite old and out-of-data machines manufactured in factories of the Soviet Union. Some of these machines have been renovated and improved.

In 1990-ies several types of machines for peat harvesting were manufactured by Estonian companies, like Eesti Talleks (Tallinn, Mõisaküla), Paide Masinatehas. At present, there are some factories in Estonia, which have manufactured some machines for peat producing companies. One of these factories – KT Arengu AS – is even a member of Estonian Peat Association (EPA). Also, one foreign machine supplier – Premier Tech – is a member of EPA as well.

The larger peat producing companies have departments for technical services, capable for designing and constructing some machines themselves. Usually, these locally made machines are copies of foreign ones.

For example, the situation in Tootsi Turvas AS is quite similar, but may be still not typical for average peat producing company in Estonia. Tootsi Turvas AS is owned by Finnish Vapo Oy, therefore mainly machines manufactured by Vapo are used. Still, there are quite many old machines in operation, e.g. tractors DT (Russia) and MTC (Belorus). At the same time Valtra Valmet tractors are in use as well. Several machines

14 Peat industry in Estonia ENPRO ENGINEERS BUREAU

in operation have been constructed by the technical maintenance staff of the Tootsi Turvas AS.

As to other peat producing companies, which have built some machines themselves, Ahtol AS, Elva EPT AS, ERA Valduse AS, Rakvere Põllumajandustehnika OÜ, Saare EPT AS, Torfex AS and some others.

In peat briquette factories some machines could be exhibits in a museum. For example, in Tootsi Turvas AS some German manufactured (e.g. Wolf Buckau) machines from the very beginning of the plant in 1939 are still in operation!

2.4 SERVICE COMPANIES

Regarding technical services, the maintenance and also repairs of machines is carried out by the staff of technical maintenance departments of peat companies themselves, except cases with new equipment for which the maintenance and needed repair operations during the warranty period are carried out by suppliers.

As to different tasks needed for preparation of new production areas, specialized firms are usually involved on contract basis. In Estonia all geodetic and cartographic works need license, which are issued either to persons or to specialized firms. At present there are 168 licensed entities in the relevant register. Contact data on some firms from this register are included in Chapter 5 of the current report.

In Estonia it is mandatory to carry out environmental impact assessment of activities that cause significant environmental impact. In relation of peat extraction the environmental impact is considered significant if the area of the new peat extraction site or a site where extraction will be terminated exceeds 150 hectares. The impact assessment is a licensed activity on personal basis. There is a quite large number of experts having license for environmental impact assessment, 43 of them have specialized on mining activities. Contact data on some firms employing licensed experts in this field are included in Chapter 5 of the current report. In addition to the cooperation with these experts for a certain production area of one only peat producing company, the example of a regional plan exist. In 2003 AS Maves (project leader T. Ideon, license no. KMH0015) conducted a research and compiled the development plan for peat deposits in Pärnu county.

Another group of services to peat companies is related to transport and logistics in general. For example, in Port of Pärnu the stevedore services are rendered by AS Transcom, OÜ Pärnu Stividorid and by AS A & O. In winter, the Pärnu Bay is generally covered with ice, as a rule for about two to three months and an icebreaker must be used to keep the port open. Pärnu Sadam AS takes care of icebreaking in the water area of the port. Icebreaking along the public waterway leading to the port is the responsibility of the national Maritime Administration.

15 Peat industry in Estonia ENPRO ENGINEERS BUREAU

3 IMPORTANCE OF PEAT

3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL

Regarding energy supply, Estonia is the only country in the world using oil shale as a major primary source of energy. Oil shale is a solid fuel with the low calorific value and high ash content. Wood is the next important primary energy source as more than a half of the Estonia’s territory is covered with forests. The third important indigenous fuel is peat. The structure of the primary energy supply in Estonia is presented in Figure 1.

140 136.43

120

100

PJ 60

30.13 40 27.90 20.46

20 2.31 0.37 -6.76

-20 Oil shale Liquid fuels Natural gas Wood fuels Fuel peat Other fuels Electricity

Figure 1. Structure of primary energy supply in 2003

Estonia’s dependency on imported energy sources is 35–40%. The share of fossil fuels on total primary energy consumption is very high – almost 90%. There are no indigenous oil, natural gas or coal resources in Estonia. Even more, as there are no crude oil refineries, all petroleum products are imported. Nevertheless, a part of oil shale is processed into fuel oil – shale oil. The structure of the total fuel consumption in Estonia is given in Figure 2.

16 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Coal HFO Shale oil Peat 0.5% 0.5% Petrol 2.0% 1.7% 5.3% Other fuels 0.7% Gasoil 9.7%

Firewood 10.1%

Natural gas Oil shale 11.7% 57.8%

Figure 2. Structure of total fuel consumption in 2003 Due to the very centralized and poorly diversified electricity production system in Estonia the cogeneration of heat and electricity is not a widespread option and therefore the peat as a fuel for cogeneration is used only in two CHP plants, both operated by peat briquette plant.

A brief summary of some indicators reflecting the role of peat in the energy sector of Estonia is given in Table 15.

Table 15. The role of peat in the Estonia’s energy sector (2003) Item Share Peat in primary energy resources 2.4% Peat in consumption of primary energy 1.9% Peat in production of indigenous fuels 2.2% Peat in the input to conversion 2.2% incl. input for electricity generation 0.2% for heat production* 3.7% for conversion to other fuels 6.3% Peat briquettes in production of secondary fuels 8.0% Peat fuels in total final consumption 0.4% Peat fuels in final consumption of fuels 0.7% Peat briquettes in total consumption of households 0.6% Peat briquettes in consumption of fuels by households 1.0% Peat fuels in exports of fuels 19.0% incl. sod peat fuels in exports of fuels 6.2% peat briquettes in exports of fuels 12.8% * – consumption by households excluded

17 Peat industry in Estonia ENPRO ENGINEERS BUREAU

3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL

The share of peat in total fuel consumption in counties is very different, being in range from 0% (Hiiu, Põlva, Viljandi, Võru) to approximately 15% in Tartu and 30% in Pärnu counties. The structure of fuels used for electricity (in two cases only) and heat production by county is given in Figure 3.

Figure 3. Fuel consumption structure by county (2003)

The data on consumption of peat for energy production by county is given in Table 16. These data indicates clearly the concentration of peat consumption into two counties – the total consumption of fuel peat (milled and sod peat) in Pärnu and Tartu counties constitutes more than 90% of fuel peat utilization in Estonia. Very similar is the situation with consumption of briquettes – in counties where the briquette factories are located (Ida-Viru, Pärnu and Tartu) approximately 90% of peat briquettes are used.

18 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Table 16. Consumption of peat as a fuel by county (2003, thousand t) County Peat Briquettes Harju 17 1 Hiiu 0 0 Ida-Viru 5 5 Jõgeva 3 0 Järva 1 1 Lääne 5 0 Lääne-Viru 1 0 Põlva 0 0 Pärnu 254 9 Rapla 2 0 Saare 2 0 Tartu 134 4 Valga 1 0 Viljandi 0 0 Võru 0 0 Total 425 20 The Table 17 presents the data on boilers, which use peat as a main fuel. Table 17 covers only boilers owned by legal bodies, i.e. households are excluded.

Table 17. Boilers firing peat as the main fuel (2002) Capacity Production County Number MW MWh Harju 4 7 6.61 Hiiu 0 0 0.00 Ida-Viru 0 0 0.00 Jõgeva 6 2 3.70 Järva 4 3 3.08 Lääne 5 6 11.19 Lääne-Viru 1 n.a. 2.87 Põlva 3 n.a. 0.39 Pärnu 22 26 122.21 Rapla 4 4 4.90 Saare 1 2 4.31 Tartu 1 1 51.40 Valga 4 7 4.64 Viljandi 0 0 0.04 Võru 0 0 0.00 Total 55 58 215.32 In Table 18 a brief summary of deposits, annual allowable extraction quotas, as well as production and consumption volumes are presented. There may be some inconsistencies with some data as the table is compiled from several sources.

19 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Table 18. Deposits, production and consumption of peat by county Consumption as Deposits Production in 2003 Annual a fuel County exploi- quota LD HD Bri- critical Total Peat table peat peat quettes 106 t 106 t 103 t 103 t 103 t 103 t 103 t 103 t Harju 158 107 350 77.5 44.9 32.6 17 1 Hiiu 9 2 10 4.5 4.50.0 0 0 Ida-Viru 102 136 450 194.7 5.1 189.6 5 5 Jõgeva 160 51 150 19.8 17.6 2.2 3 0 Järva 173 29 170 39.6 5.9 33.7 1 1 Lääne 122 13 100 44.7 18.4 26.3 5 0 Lääne-Viru 62 23 80 19.2 16.6 2.6 1 0 Põlva 40 12 40 5.9 3.9 2.0 0 0 Pärnu 228 165 550 443.1 285.7157.4 254 9 Rapla 115 28 100 51.2 32.1 19.1 2 0 Saare 18 4 20 7.8 6.8 1.0 2 0 Tartu 179 71 350 71.8 16.4 55.4 134 4 Valga 45 17 60 11.3 0.2 11.1 1 0 Viljandi 148 63 200 14.2 14.2 0.0 0 0 Võru 31 54 150 6.3 6.3 0.0 0 0 Total 1 590 775 2 780 1 011.6 478.6 533 425 20

3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL

Pärnu county (Pärnumaa) is located in the south-western part of Estonia. The area of Pärnu county, the largest among 15 counties of Estonia is 4 806 km2 making 11% of the Estonia’s territory. A significant part of economic activity of the region is based on local resources. Peat can be considered the most important mineral resource of Pärnu region, the others include ceramic clay, dolomite, sand and gravel. Approximately one fourth of the county’s territory is covered by mires. The total number of mires is 271 and one third of these can be considered as peat deposits with estimated resource of 470 million tons, including 270 million tons of active deposits. Peat can be harvested only from deposits included in national registry, at present 28 deposits (ca 60 thousand hectares) from Pärnu county are in the registry, 13 of them classified as exploitable ones. The largest is the Lavassaare deposit (19.7 thousand ha; considered among the largests in Europe) situated on the territory of five municipalities: Audru, Are, Halinga, Koonga and Sauga. According to estimations some 60 million t of peat can be harvested from the active resources in deposits included in the national registry. Taking in account the annual extraction quota of 550 thousand t (see Table 2) there are peat resources for more than hundred years in Pärnu county. At present, the six deposits are used for harvesting. 286 thousand t of LD peat and 157 thousand t of HD was produced in 2003. Finnish, German and Dutch companies have made investments into local peat mining industry. A number of well-known trademarks, e.g. the Finnish Vapo Oy, the owner of the biggest local producer Tootsi Turvas AS, and the German ASB Greenworld are represented. AS Tootsi Turvas, AS Torfex, ASB Greenworld Eesti OÜ and AS Nurme

20 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Turvas are the largest producers, but there are quite many smaller companies active as well – Biolan Baltic OÜ, Corpus R&R OÜ, Treffex AS and some others.

There is no detailed analyses available on structure of economy in Pärnu county, but as it is based on polyfunctional principles the share of peat related activities is not high. Despite the great share of produced peat is exported, the mineral fuels account only for 5% of regional exports. Detailed data on labour force is not available either, but peat harvesting, transport and other related activities have created at least hundreds of jobs in this region. Thus, the peat production together with the related infrastructure have certainly contributed in the low unemployment rate in Pärnu county (7.5%), while the national average is 10% (2003). Additionally, there are more indirect impacts of peat on the community in Pärnu region, e.g. the heat supply in Pärnu city is currently based mainly on peat, as the local DH utility Pärnu Soojus AS uses sod peat as a major fuel. Pärnu Soojus AS operates a DH network of 40 km and supplies heat to more than 300 buildings in Pärnu city. Peat is used also in the CHP plant of Tootsi Turvas AS and in some smaller boiler plants in Pärnu county.

Apart from Pärnu region there are some municipalities where the economic activities are based on peat production and processing only. Some cases can be briefly summarized here.

Municipality of Puhja is situated in the central Estonia, in western part of Tartu county. A large share (approximately 35%) of the municipality’s territory is covered by mires. Peat is the major local natural resource, which is harvested by AS Sangla Turvas from the Laugesoo deposit. The population of the municipality is 2512. The economic activities in the municipality are dominated by the Sangla Turvas AS, as up to one fourth of local labour force are employees of the peat plant (at present 115 persons). The peat for the fuel but also for horticulture is produced and briquettes manufactured. In the municipality there are also some agricultural, food processing, transport and service sector activities, but with minor importance. Sangla Turvas AS has a small CHP plant supplying heat to the small town of Puhja – the centre of the municipality. Therefore, the local community is very dependent on the situation with the peat production. The success of the plant depends heavily on the weather conditions. The annual briquette production volume has changed a lot (e.g. 24 000 in 2000, 40 000 in 2001), while the installed capacity is 50 000. Approximately 90% of briquette production is exported, mainly to Sweden. There have been several crisis situations due to weather conditions. For example, in autumn of 1998 the plant had to stop the briquette production and to discharge most of the two hundred employees, keeping only some 30 to operate the CHP plant and some auxiliary services. Nevertheless, the proper management enabled to survive and to continue in next year. By now, there have been proposed the idea of starting manufacturing of wood briquettes using the same equipment as for peat briquettes. In 2001 the test operation was carried out.

In Estonia there is a negative example related to peat processing from the late past. In small town of Oru in Ida-Viru county a factory for manufacturing of peat briquettes (Oru Turbakombinaat) was constructed in the beginning of 1960-ies. Peat was harvested in a large deposit of Puhatu. The factory was once among the world's largest peat processing plants – with two production lines of six briquette squeezers each. The

21 Peat industry in Estonia ENPRO ENGINEERS BUREAU

planned capacity was 250 thousand t of briquettes per year. The factory had initially staff of almost a thousand, being the main employer in the town of Oru with the population of more than two and a half thousand. The factory’s boiler plant supplied heat to the whole settlement. In 1994 the factory was privatized to the Mikskaar AS, who had to pay for it a symbolic 1 (one) Estonian kroon (in 1994 100 EEK = 6.51 ECU). Nevertheless, 10.6 MEEK (0.692 MECU) of assigned liabilities were transferred to the new owner, together with the obligation to invest 3 MEEK (0.195 MECU) in the briquette plant and to ensure jobs for at least 300 employees. In 1995 the number of employees was over 400 and the factory produced 42.5 thousand t of briquettes, 90% of it was exported to Sweden. The production plan for 1996 was 60 thousand tons, but in summer 1996 there was a great fire at the Oru peat fields. The fire destroyed more than 65 thousand tons of peat and created for AS Oru losses amounting to 511.3 thousand euros. The company faced financial difficulties and in November 1996 the Oru peat factory had to stop producing peat and went into bankruptcy. The total sum of debts was 1.73 million euros, including 147 thousand euros to the three hundred employees in unpaid salaries for five months. It took more than year to arrange some debts as a result of bankruptcy procedures. During this process the plant equipment was sold as 5000 tons of scrap metal. Later the most of the factory buildings were demolished as well. The case with the Oru plant has been a serious warning for Estonia’s community, especially for mono-functional settlements. In case of Oru there had been several reasons for such an economic disaster, most of them related to management of a large plant in new economic situation. The great fire was only an additional factor that triggered the final of the process. At present, the peat from Puhatu deposit (1300 ha) is harvested by Tootsi Turvas AS, which in 2003 acquired Puhatu Turvas AS, that had extracted peat there for some years. The Puhatu department employs the staff of 24. The heat to the Oru is supplied from the new gas firing boiler plant.

3.4 ECONOMIC ASSESSMENT

Making economic assessments on peat related industry in Estonia is difficult due to very poor official statistics available. Most of relevant statistics is aggregated under the mining classification group. In Estonia the mining industry includes 70 enterprises, amongst which the oil shale mining company dominates with its 4500 employees a sales of 111 MEUR. On the other hand, there are also many enterprises extracting sand, clay, gravel, etc. The most general macro level data on mining in Estonia is given in Table 19.

Table 19. All economic activities and mining, MEUR (2003) Indicator All economic Mining Share of activities mining Net sales 5 863.3 164.9 2.8% Exports 2 478.3 33.2 1.3% Number of enterprises 5 086 70 1.4% Average number of employees 142 521 6 077 4.3%

22 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Some industry level indicators characterizing peat production can still be calculated (see Table 20).

Table 20. Annual economic indicators for industry, mining and peat production, MEUR (2003) Share of peat Extraction Indicator Industry Mining extraction of peat in industry in mining Industrial production 4 868.6 158.9 36.6 0.75% 23.0% Total sales in industry 4 858.4 153.7 35.2 0.72% 22.9% Exports of industrial 2 303.5 27.5 24.0 1.04% 87.2% products Industrial production 35 267 26 104 22 149 62.8% 84.8% per employee, EUR Share of exports in 47.4% 17.9% 68.2% – – total sales As can be seen, the share of peat producing branch in the total sales volume of the whole industry is less than 1%, and that of in total exports approximately 1% only. As to exports of mining industry, the peat harvesting and processing have a quite high share (87%) of it. It has to be noted that more than two thirds (68%) of peat industry’s production was exported in 2003. The corresponding percentage for the whole industry is 47%.

Sale volumes of Estonia’s 28 largest peat producing companies are presented in Table 6. According to Estonian statistical classification of economic activities 41 companies operated in the branch of peat industry in 2003. The total turnover of these companies was 47.3 MEUR.

Regarding employment, only very approximate estimations can be made. According to official statistics the total number of employees in the mining sector was 6077. On the other hand, the number of personnel in member companies of the Estonian Peat Association (EPA) is 1413, including 957 directly engaged with peat harvesting and processing. Considering these figures together with the proportions of total peat production and that of by members of EPA enables to make a estimation that the total number of employees in peat sector can be in range of 1800 – 2400, including from 1200 to 1600 persons directly engaged with peat operations. This is still only up to 1.7% of the total employed labour force in Estonia. The peat related indirect effect on employment is wider – taking in account logistics (regional and national transportation, plus exports) related personnel, also research and development staff, design and preparation of deposit areas for extraction, etc. Unfortunately, this type of analysis or even overview of peat related activities has not been carried out in Estonia.

23 Peat industry in Estonia ENPRO ENGINEERS BUREAU

3.5 PEAT SALES

In Estonia there is no official statistics on sales of peat as commodity. Some information is available from the market survey carried out by the Competition Board for the situation in 2002 (see Table 21).

Table 21. Sales of peat on Estonian market (thousand t; 2002) Commodity Quantity Fuel peat, milled 40.1 Fuel peat, sod 58.4 Peat briquettes 14.8 Horticultural peat 314.3 incl. un-prepacked 298.0 prepacked 16.3 The sale of peat and peat products is arranged in quite different ways depending on many factors, like size and specialization of the company, cooperation contacts with wholesale and/or retail firms, type of product (fuel or horticultural, milled or sod/block peat), etc.

For example, the largest peat producer in Estonia, the Tootsi Turvas AS market sells its products on domestic mainly to end-users directly, but most of them are large consumers. The volume of retail sales is of minor importance. The foreign sales, i.e. the exports are arranged either via wholesale firm or via the firms preparing and selling peat mixtures. In several cases the trade is arranged inside an international group of companies including Estonian subsidiary or a long-term trade partner. For example, Kraver AS is supplier of sphagnum peat products for professional horticulture to the Sphagnum Products B.V. in the Netherlands. The peat moss harvested from bogs in Estonia is fully certified by the Dutch R.H.P. quality organization. Similar system works between Lauka Turvas OÜ and its owner Nevema BV (the Netherlands), within the Greenworld group companies, etc. Another example is Biolan Baltic OÜ which is the subsidiary of Finnish company Biolan Oy that develops, manufactures and markets growing media, organic fertilizers, soil improvement materials and wide range of products for composting. About 50% of the Biolan Group's export volume is delivered directly from Estonia, with the other half coming from Finland. Biolan Oy markets the products manufactured by the members of the Group in many EU countries, in the Middle East, in the Far East, in Southeast Asia as well as in North and South America – in a total of 50 countries.

On domestic market, the AS Tartu Jõujaam, a daughter company of AS Fortum Tartu, whose main area of activities is the supplying of Fortum Tartu Group's enterprises with local fuel, purchases peat from peat harvesting companies supplying it to the plants of the same group, e.g. milled peat to Anne DH plant and sod peat to Ropka DH plant (both in Tartu city). As the demand for peat is large – at present almost 190 thousand of sod and milled peat is needed annually – the purchases have to be made from several suppliers and in some cases from the distance of more than 100 km.

24 Peat industry in Estonia ENPRO ENGINEERS BUREAU

In case of sales to household consumers, the contracts are concluded with quite many firms of retail trade. This is the case for horticultural peat, but also for peat briquettes. Briquettes for households are usually sold by numerous firms supplying households also with fire wood, wood briquettes, pellets, coal, etc.

In Estonia the most of fuel prices are market based. The only exception is pricing of oil shale, and prices of natural gas for small (non-eligible) consumers. The taxes imposed on fuels include VAT and excise duties. A kind of indirect taxation is related to impact of fuel consumption on environment – certain charges (fees) have to be paid for the release of pollutants or waste into the environment. Peat, together with wood fuels, is exempted from paying one component of the pollution charges – from the CO2 charge. All fuels and energy types in Estonia, as a rule, are subject to taxation with the value added tax (VAT). In Estonia the standard VAT rate is 18% of the pre-tax value (i.e. 15.3% of end-user price). The VAT is recoverable for most of enterprises. In case of fuels, the only exception has been made for peat, peat briquettes, coal and fuel wood, sold to households, housing associations, and churches, also to enterprises financed from state or municipal budget. For these fuels the exemption provides VAT rate of 5% up to the 30 June 2007. The same provision is applied also to the district heat sold to these institutions. Since 1 July 2007 the standard VAT rate (18%) will be applied, meaning the price increase of 12.4%.

The average prices of boiler fuels purchased by energy utilities are presented in Table 22. These prices do not include VAT, the excise taxes are included.

Table 22. Prices of fuels in energy utilities (excl. VAT) 2003 2004 Fuel Unit EUR/unit EUR/t oe EUR/unit EUR/t oe Coal t 55.66 94.66 56.81 96.61 Oil shale t 8.04 37.35 7.86 36.49 Milled peat t 7.84 36.90 8.42 39.65 Sod peat t 18.76 64.63 20.40 70.30 Peat briquettes t 51.58 130.00 53.56 134.99 Firewood m3 s 10.40 57.52 10.74 59.42 Wood waste, chips m3 s 7.49 51.13 8.13 55.52 Natural gas 103 m3 90.90 113.36 85.74 106.92 HFO t 119.58 124.82 124.22 129.66 Shale oil t 121.72 130.01 116.60 124.54 LFO t 288.17 280.83 302.97 295.26 The development of prices during the last five years can be seen in Figure 4, where the annual average prices of fuels purchased by energy utilities (covers all power plants and majority of boiler plants) are presented on basis of energy content.

25 Peat industry in Estonia ENPRO ENGINEERS BUREAU

350

300 2000 2001 2002 2003 2004 250

200

EUR/t oe EUR/t 150

100

0 LFO Natural gas HFO Shale oil Coal Sod peat Wood Wood logs waste, chips

Figure 4. Prices of fuel in energy utilities (excl. VAT)

All prices given in tables and figures above present the level of purchase prices in enterprises and institutions, i.e. prices paid by legal bodies. Prices paid by households are higher, as a rule. As to peat fuels, only briquettes are quite widely used by households. During last years the prices of peat briquettes for households have been up to 110 EUR/t, while that of wood briquettes were up to 115 EUR/t, and the price of coal for households has been in range of 70 – 80 EUR/t. Lately there have been made available also brown coal (lignite) imported from Russia, with the price of 53 – 56 EUR/t.

3.6 INTERNATIONAL TRADE

A large share of peat produced in Estonia is exported. Unfortunately, there is no official data available on peat exports by type of peat. According to expert opinions approximately 65% of fuel peat is exported, mainly to Sweden. Another source estimates that in 2001 875 thousand t (measured as supplied) of peat was exported; 180 thousand t (20.6%) of it was fuel peat, the rest (79.4%) being the horticultural peat. The market analysis carried out in 2003 by the Competition Board gave the shares of peat export in the total production volume by type of peat in 2002 as presented in Table 23.

Table 23. The share of export by type of peat (2002) Type of peat Share of export Sod peat (as fuel) 57% Horticultural peat (packed) 84% Horticultural peat (unpacked) 57% Peat briquettes 89% The official data on foreign trade of peat is presented in Table 24.

26 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Table 24. Exports and imports of peat (tons)

Year Exports Imports 1998 593 658 327 1999 424 208 1 332 2000 788 773 430 2001 868 297 474 2002 1 021 927 626 2003 992 297 397 The overview of peat export from Estonia by recipient country is given in Table 25. More than two thirds (68.1% in 2003) of exports goes to four countries: Germany, Sweden, the Netherlands and to Belgium.

Table 25. Peat export from Estonia by country (2003) Country t 1000 EUR EUR/t Germany 227 272 5 209 22.92 Swenen 174 373 7 120 40.83 Holland 157 331 3 762 23.91 Belgium 117 180 2 799 23.89 France 67 115 1 758 26.19 Italy 60 097 2 753 45.82 Great Britain 53 518 1 164 21.75 Spain 37 066 2 257 60.89 Ireland 26 119 498 19.06 Poland 16 736 532 31.80 Denmark 9 434 667 70.67 Israel 8 144 626 76.86 Others 37 912 3 466 91.43 Total 992 297 32 611 32.86 As to transport, the major share of peat is exported using sea transport. In 2001 the share of sea transport in the total volume of peat exports was approximately 90%. The list of Estonian ports where the shipping of peat is made from is in Table 26. The proportions of the total exports between ports are approximate ones and based on the situation in 2001.

It has to be noted that the shares may be different depending for example on the winter conditions, as there may be problems with using port of Pärnu when the bay is frozen.

During last years the role of road transport has increased to some extent, especially for exporting to countries in Central and Southern Europe. In this case the logistics firms usually combine the use of trucks for the export of peat with the import of some commodities from the peat recipient countries. Then the North – South motorway Via Baltica (Tallinn – Riga – Kaunas – Warsaw) is used.

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Table 26. Ports in Estonia shipping exported peat (2001) Share of peat Port export by sea Pärnu 61.5% Paldiski 12.8% Tallinn (Muuga) 12.2% Kunda 11.7% Kuressaare 1.8%

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY

As described in section 3.1, the share of peat fuels in Estonia’s energy supply is approximately 2%: 2.4% of primary energy resources, 1.9% of primary energy consumption, 2.2% of domestic fuels production (on basis of primary energy). Nevertheless, the peat resources in Estonia would allow larger consumption. To guarantee the sustainable utilization of peat resources, the Government has fixed the annual extraction quota as 2.78 million tons. During last ten years the peat harvesting volumes have made up as an average only about one third (35%) of the quota. Due to heavy dependency on weather the actual annual volumes have been from 334 thousand t (in 1998; 12% of the quota) to 1508 thousand t (in 2002; 54%) (Figure 5).

600 1600

1400 500

1200

400 1000

300 800

600 Precipitation (mm) Precipitation 200

400 Peat production (thousand t) Precipitation 100 Peat production 200

0 0 1997 1998 1999 2000 2001 2002 2003 2004

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Figure 5. Weather conditions and peat production volume

Still, both the harvesting of peat and utilization of it as a fuel can be increased, in principle. It has to be taken in account that essential increase of peat harvesting takes years – at least three to five years are needed to prepare mire for the harvesting procedures. So, this type of actions can increase the mid-term energy supply security only. Finally, the annual production volumes will always depend on weather conditions. Considering shorter-term supply security the quantities of peat fuel stocks should be analyzed (Table 27).

Table 27. Annual consumption and stocks (beginning of year) of peat fuels (thousand t oe, 2003) Fuel In stocks Consumption Share of stocks Milled peat 43.2 75.2 57.4% Sod peat 15.4 18.2 84.6% Peat briquettes 10.7 7.7 139.0% Regarding the national policy for energy supply security, only liquid fuels are considered. As a member state of the EU, Estonia has to comply with the relevant acquis. The Directives 68/414/EEC and 98/93/EC impose an obligation on member states to maintain 90 days minimum stocks of crude oil and/or petroleum products to mitigate the effects of difficulties in the supply of these fuels. As a result of accession negotiations Estonia was granted a transitional period up to 2010 to introduce these requirements gradually (see Table 28).

Table 28. Gradual introduction of liquid fuel stocks in Estonia From the date … Volume of stocks … At present for 20 days 1. January 2006 for 35 days 1. January 2007 for 45 days 1. January 2008 for 50 days 1. January 2009 for 65 days 1. January 2010 for 90 days The Liquid Fuel Stocks Act provides the bases for the establishment, maintenance and holding of compulsory liquid fuel stocks. There are three categories of stocks: ¾ stock category I: motor vehicle petrol, aviation spirit, spirit type jet fuel; ¾ stock category II: diesel fuel, light heating oil, kerosene and jet fuel (aviation kerosene); ¾ stock category III: heavy fuel oil. In addition to the obligatory stocks of liquid fuels at national level, Estonia has an indigenous source for producing liquid fuel suitable for burning in both large and small boilers. This source is the oil shale that can be processed into liquid fuel oil – shale oil. 305 thousand tons (286 thousand t oe) of shale oil was produced in 2003.

29 Peat industry in Estonia ENPRO ENGINEERS BUREAU

It can be concluded that peat has a certain role in increasing the security of energy supply in Estonia, especially when utilized together with wood fuels. Wider introduction of CHP plants in Estonia, as an element of distributed energy concept, would make it also possible to use more peat as a fuel.

5 STAKEHOLDERS

Governmental institutions. Ministry of Environment.

Department of Environmental Management and Technology: Narva mnt. 7A, 15172 Tallinn. Head of Department: Mr. Rein Raudsep, phone: 626 2971, e-mail: [email protected].

Tasks of the Department include: ¾ activities related to environmental impact assessment and environmental auditing; ¾ development of environmental provisions; ¾ regulating the use and protection of surface areas; ¾ promotion of sustainable technologies; ¾ counseling on the national environmental monitoring programme.

Ministry of Economic Affairs and Communication.

The Energy Department: Harju 11, 15072 Tallinn. Head of Department: Mr. Einari Kisel, phone: 625 6488, e-mail: [email protected].

The Department is responsible for regulation necessary for the functioning of national fuel and energy sector. The main task of the department is the elaboration of national development plans and programmes for effective, competitive and environment friendly fuel and energy sector and to guarantee their implementation.

The Estonian Land Board.

The Estonian Land Board: Mustamäe tee 51, 10602 Tallinn; phone: 665 0600; e-mail: [email protected]

The Estonian Land Board is responsible to the Minister of Environment for the maintenance of the Land Cadastre, co-ordination and execution of land reform in the conformity with valid laws, supervision, organisation and co-ordination of the activities in the field of land consolidation, land assessment, geodesy, cartography, geographical information. The Land Board also manages contracts for cadastral and geodetic surveys, and for topographic mapping.

30 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Environmental departments in counties. In all 15 county governments there are environmental departments with the following tasks:

¾ implement national environmental, nature protection, forest and fisheries programmes and action plans in the counties; ¾ co-ordinate and manage protection and use of the counties’ natural environment, ¾ issue, if necessary, permits for the use of environmental and natural resources and manage relevant data bases; ¾ manage information gathering and reporting in the field of environment and nature use; ¾ submit the relevant reports to the Ministry and the County Governor; ¾ manage the protection of ground water quality and resources including bored wells and important springs; ¾ keep and maintain registers of the counties’ mineral resources; ¾ participate, if so provided, in environmental impact assessments; ¾ review and give opinions on designs and plans, if and to the extent provided by law; ¾ notify the Ministry’s management, the County Governor, the Environmental Inspectorate and the public of any accidents having impact on the nature; ¾ counsel the county-based government agencies and local municipalities on matters within their competence. In following tables there are contact data on enterprises, firms and other institutions which take part in peat related activities.

The Estonian Peat Association (Eesti Turbaliit): Pärnu mnt. 238, Tallinn 11624; managing director Mr. Erki Niitlaan; phone 614 0261, e-mail [email protected]. The list of members of the Association is given in Table 29 and in Table 30.

Table 29. Peat producers, members of the Estonian Peat Association. Address (settlement/street, Name municipality, zip code; Telephone e-mail county) ASB Greenworld Eesti Nurme, Sauga m., 76605; tiidermann@ 445 9530 OÜ Pärnu asbgreenworld.ee Aisa 27, Pärnu city 80017; ou.corpus@ Corpus R & R OÜ 654 2745 Pärnu neti.ee Elva EPT AS Kirde 3, Elva 61506; Tartu 745 6386 [email protected] Metsanurga 2, Märjamaa ERA Valduse AS 730 8357 [email protected] 78301; Rapla Linnamäe, Keila m. 76605; Farve AS 604 5252 [email protected] Harju Kõrgessaare, Kärdla 92412; Hiiu Turvas AS 463 1366 [email protected] Hiiu Väike 2, Viljandi 71004; navdgriendt@ Kraver AS 433 31 32 Viljandi sphagnum.nl Langham OÜ Ehte 9, Haapsalu 90503; 472 9406 raoul.johanson@

31 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Läänemaa kekkila.ee Gonsiori 29, Tallinn 10147; martpuhmaste Mikskaar AS 610 1736 Harju @mikskaar.com Tallinna 61, Kuressaare 93818; MV Turvas OÜ 455 6631 [email protected] Saaremaa Nurme Turvas AS Sauga m., 80044; Pärnu 444 3821 [email protected] Prelvex AS Tehnika 3, Türi 72213; Järva 387 8456 [email protected] Põlva Maaparandus AS Raudtee 3, Põlva 63306; Põlva 799 5865 [email protected] Rakvere Puiestee 2, Sõmeru 44201; rakvere.pmt Põllumajandustehnika 322 825 Lääne-Viru @neti.ee OÜ jaanus@ Ramsi Turvas AS Ramsi 71101; Viljandi 433 3302 ramsiturvas.ee info@ Sangla Turvas AS Puhja 61301; Tartu 730 3686 sanglaturvas.ee siimusti.kand@ Siimusti Känd OÜ Siimusti 48402; Jõgeva 773 9331 mail.ee Pajusi mnt. 18, Põltsamaa; Tara-Torf AS 776 9808 [email protected] Jõgeva Tööstuse 1, Tootsi 87501; tiitsaarmets@ Tootsi Turvas AS 447 1530 Pärnu hot.ee Nurme 14, Taebla 90801; Torf AS 479 6439 [email protected] Läänemaa Paide mnt. 19B, Paikuse Torfex AS 445 5133 [email protected] 80046; Pärnu Keskuse tee 1, Alu 79601; Turvas AS 486 8246 [email protected] Rapla Kesk 7, Ulila, Puhja m. 61302; Uleks Turvas OÜ 517 5899 [email protected] Tartu Tamsalu mnt. 1, Väike-Maarja Vestur OÜ 326 1235 [email protected] 46201; Lääne-Viru

Table 30. Other members of the Estonian Peat Association Address (settlement/street, Name municipality, zip code; Telephone e-mail county) Mäe 17, Lavassaare 78301; kaupo.varik@ Biolan Baltic OÜ 446 3381 Pärnu biolan.com Eesti Geoloogiakeskus Kadaka tee 82, 12618 Tallinn; 672 0094 [email protected] OÜ Harju karmen@ Estiko Plastar AS Tehase 16, Tartu 50107; Tartu 730 8357 estiko.ee Ranna tee 4, Tabasalu 76901; karl.renser@ KT Arengu AS 716393 Harju ktarengu.ee Tietgens Plads 1, Aarhus C 458 620 perm@ Premier Tech 8000; Denmark 1189 premiertech.com Peterburi tee 2, Tallinn 11415; Stender Estonia OÜ 600 5081 [email protected] Harju

32 Peat industry in Estonia ENPRO ENGINEERS BUREAU

Esplanaadi 10-416, Pärnu Strenge OÜ 504 8040 [email protected] 80010; Pärnu Narva mnt. 124, Tartu 50303; margo.kulaots@ Tartu Jõujaam AS 748 8727 Tartu fortumtartu.ee

Some other stakeholders of the peat industry, like service and consultancy firms, research institutions, etc., are listed in Table 31.

Table 31. Other stakeholders. Address (settlement/street, Name municipality, zip code; Telephone e-mail county) Ecoman OÜ Endla 4, Tallinn 10142; Harju 626 3307 [email protected] Hendrikson & Ko. Raekoja 8, Tartu 51004; Tartu 527 3671 [email protected] Entec AS Rävala 8, Tallinn 10143; Harju 660 4547 [email protected] Estonian Combustible Natural Resources and Sõpruse 233-48, Tallinn rein.veski@ 652 9297 Wastes. (Journal; former 13420; Harju mail.ee Estonian Peat) Geoestonia AS Estonia pst 15, Tallinn 10141 610 3971 [email protected] Geotehnika Välja 18, Tallinn 10616; Harju 656 5359 [email protected] Inseneribüroo AS Institute of Ecology at Kevade 2, Tallinn 10137; 662 2187 [email protected] Tallinn University Harju Teguri 37B, Tartu 50107; Kobras AS 730 0319 anne@kobras Tartu Institute of Geology in Estonia pst. 7, Tallinn 10143; Tallinn University of 644 4189 [email protected] Harju Geology meelis@ Keskkonnaprojekt OÜ Turu 45D, Tartu 51004; Tartu 745 7700 keskkonnaprojekt.ee Marja 4D, Tallinn 10617, Maves AS 656 7300 [email protected] Harju Mining Department in Ehitajate 5, Tallinn 19086; Tallinn University of 620 3850 [email protected] Harju Technology Projekteerimisbüroo Maa Mustamäe tee 33, Tallinn kalev@ 652 8408 ja Vesi AS 10616; Harju maajavesi.ee SEI Tallinn, pk 160; Tallinn Säästva Eesti Instituut 627 6100 [email protected] 10502; Harju Thermal Engineering Kopli 116, Tallinn 11712; Department in Tallinn 620 3900 [email protected] Harju University of Technology

NATIONAL REPORT OF LATVIA

FUEL PEAT INDUSTRY IN EUROPEAN UNION

ANSIS ŠNORE Latvian Peat Producers Association

2005

CONTENT

SUMMARY 3 PREFACE 4 1. BACKGROUND AND TARGET 6 2. INDUSTRY AND PEAT 7 2.1. Peat producers 7 2.2. Peat users 9 2.3. Machine manufacturers 9 2.4. Contractors 9 2.5. Service companies 9 3. IMPORTANCE OF PEAT 10 3.1. In national level 10 3.2. In regional level 15 3.3. In local level 15 3.4. Economic assessment 16 3.5. Peat sales 16 3.6. International trade 16 4. THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY 17 5. STAKEHOLDERS 18

SUMMARY

Peat Producers Over the recent years the fuel peat production in Latvia has virtually ceased. In 2004 only 20 000 t (2003 - 9000 t) of fuel peat were produced. During the recent 5 years fuel peat in small quantities was produced by 12 companies.

Peat Users It can be considered that in Latvia there are virtually no consumers of fuel peat left. However, in the PHARE research “Peat extraction and usage in energy sector” (1997) it was calculated that apart from household usage, it would be useful to utilize peat in 26 places with total boiler capacities 590 MW and peat consumption up to 1000 000 – 1200 000 t a year.

The role of peat in the national level In 2004 peat made up 0,05% of the total consumption of primary energy resources in Latvia. At the same time according to the National Energy programme (1997) the share of peat among the primary energy resources should have been 3,6-5,1% in 2005.

Sales of peat and international trade of peat Fuel peat is being sold by the enterprises producing this kind of peat. Fuel peat is not being sold in retail. Fuel peat was exported from Latvia (4000-5000 t) only in 2000 and 2001. Fuel peat is not being imported.

PREFACE

Peat extraction and usage is a traditional trade in Latvia. Also extraction and usage of fuel peat. And that is not a coincidence. Bogs make up 10,7% of the Latvian territory. The total volume of peat resources there are 1500 million tons, including 230 million tons or 57,2 million toe of peat which can be used for energy production. It is also important that the imported energy resources in Latvia make up almost 70% of the total energy consumption.

The maximum amount of fuel peat production was reached in the early 1970s, when more than 2 million tons (0,47 million toe) a year were produced. At the same time the maximum volume of peat briquette production was reached – 0,18 million tons. The largest peat consumer in Latvia was Riga CHP-1. It consumed up to 1 million tons a year. Over the recent decades fuel peat extraction and usage in Latvia (see Chapter 2) has substantially decreased and at present moment, unfortunately, it can be considered to be stopped, mainly in favor of imported fossil fuels. In 2004 only 9 000 tons of fuel peat were used. Of course, the prices of fossil fuels are constantly raising. Since these fossil fuels are mainly received from Russia, one needs to take into account that these supplies can be unstable, and may be used as means to reach political aims. The situation of energy resources will be even worth in the coming years after the closure of Ignalina (Lithuania) nuclear power plant. Latvia is receiving a considerable share of electricity from that plant. There are several research papers and recommendations (also international, such as PHARE 1997, 1999) about the usefulness of peat usage and its role as energy resource in Latvia. There is also a National Programme of Latvia concerning this issue. Companies have been granted licenses to extract peat in areas exceeding 23 000 ha. At present only about 600 000 tons of various kinds of peat a year are being extracted at these areas. However, that figure could be 3-4 times higher. Regardless the above-mentioned, now this is the state policy of the government – not to use peat as energy resource. 4 One might thing that the situation will change in future. An indication is the fact that the government has acknowledged peat as regenerative energy resource (2001) with all the consequences. Given this specific situation in the country, this report can not claim to find all the answers to all the stated questions. However, we have tried to show the possible future development of this sector. A development that would only be logical and correspond to research studies, expert recommendations and national interests.

Ansis Šnore ( * 1945) Deputy Chairman of the Latvian Peat Producers Association

Expertise Usage of Peat deposits Civil engineering

Qualification Dipl. Engineer (1968) Publications 2004. Peat in Latvia. LPPA. Riga.- 64 p. 2002. Peat combustion heat. Enerģētika un automatizācija, 4, 48– 49 p. (in Latvian) 2000. Peat in Latvia. LPPA. Riga. 48 p. 2000. Peat – the pasts and future fuel in Latvia? Enerģija un pasaule, 4, 70 – 74 p. (in Latvian) 1996. Latvian peatlands and peat. Latvijas ģeoloģijas vēstis, 7, 30 – 34 p. (in Latvian) 1996. Latvian Peat resources. World Peat resources IPS, 101 – 105 p.

Collaboration 1998.- 2000. Peat utilization programme. Part 1 and 2. in Energy Latvian Development Agency. projects 1997. Peat extraction and usage in energy sector. PHARE. (since 1995) 1996. Development of peat industry in the enlarged Europe. National Report of Latvia. VTT.

1. BACKGROUND AND TARGET

The objective of this study is to show the influence of the fuel peat utilization on the social economy and energy sector in the European Union. The most important users of fuel peat within European Union: Finland, Ireland, Sweden, Latvia, Lithuania, Estonia and Scotland are included in the study. The objective of the current report about Latvia is to show the present and potential situation in Latvia.

2. INDUSTRY AND PEAT

2.1. Peat Producers In 2004 596000 tons of all kinds of peat were extracted in Latvia, including 20000 tons or 3,4% fuel peat. Peat briquettes are not produced in Latvia since 2001. Recently efforts have been made to master the production of peat pellets. Figure 1 Extraction of fuel peat in Latvia (1000 t)

450

400 384 391 26 29 350 Sod peat 321 328 28 Milled peat 300 26

250

200 358 362 150 295 300 130

100 80 71 2 61 5 50 15 66 78 20 46 9 5 12 0 4 8 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Table 1 Production of peat briquettes in Latvia (1000 t)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Volume 26 28 22 11 6 2 1 - - -

Given the fact that at the moment fuel peat is produced to a very small extent in Latvia, the list of production companies (Table 2) includes all those enterprises, which have produced fuel peat at least for a year over the course of the recent 5 years.

7 Table 2 Producers of fuel peat and volume of the produced fuel peat (1000 t)

Enterprise 2000 2003 2002 2003 2004 Product type a/s Seda 12,0 11,7 25,2 3,9 8,0 milled peat a/s Misas kūdra 13,0 12,4 18,7 - - milled peat SIA Līvānu kūdras fabrika 0,2 - - - - sod peat SIA Kūdras enerģija 3,2 0,8 2,4 0,3 - sod peat a/s Olaines kūdra - 11,7 19,6 1,0 0,4 milled peat, sod peat SIA Ēnavas - - 5,3 - - milled peat SIA Florobalt - - - - 2,2 sod peat SIA Gargrode 2,0 5,2 - - 3,1 milled peat, sod peat a/s Baloži 30,8 32,6 47,7 2,0 4,9 milled peat, sod peat SIA Enagro un Ko - 0,8 1,8 1,4 1,7 sod peat SIA Pabažu kūdra 10,0 5,0 9,2 - - milled peat Total 71,2 80,2 129,9 8,6 20,3 a/s Stružānu kūdras fabrika 2 1 - - - briquettes

Table 3 shows the areas managed by these enterprises. That is those areas, which they have rights to use for peat production in accordance with a license issued by the licensing department. Usually today in reality just a fraction of these areas are being used. Table 3 shows also the largest owners of these companies. In order to characterize the actual potential of peat production, the table shows production figures of all kinds of peat (not only fuel peat) in 2004. Table 3 Peatland area (ha) managed by the fuel peat producers and the volume of produced peat of all kinds (1000 t) in 2004

Volume of Enterprise all kinds of Area Owners peat a/s Seda 56 1416 Vapo a/s Misas kūdra 46 656 Peat invest SIA Līvānu kūdras fabrika 28 2201 Baltic kudra Handels und Produktion SIA Kūdras enerģija 27 689 H.Strenge a/s Olaines kūdra 23 1656 Mono SIA Ēnavas 22 319 Misas kūdra SIA Florobalt 14 467 H.Strenge SIA Gargrode 13 258 Florobalt a/s Baloži 11 664 Pinstrup Mosebrug SIA Enagro un Ko 2 196 Rika SIA Pabažu kūdra 1 78 V.Čaupals a/s Stružānu kūdras fabrika 32 2858 Rika

2.2. Peat users As it was mentioned above, one can consider that there are no fuel peat users in Latvia any longer. However, in the voluminous PHARE study “Peat extraction and usage in energy sector” (1997) it was calculated that in base case it would be useful to use fuel peat in Latvia in 12 towns with 18 boilers for peat-fired heating stations with 5- 10 MW boiler capacities (incl. One 20 MW) and two places for CHP plants (one

15 MWe/30 MWt and one 30 MWe/60 MWt). Altogether this means 150 MW of peat-firing boiler capacity in heating stations and another 150 MW boiler capacity in peat-fired CHP plants. Calculated in peat amounts 300 MW boiler capacity with base load means 500 000 – 600 000 tons of peat annually.

In the optimistic scenario, 3 more CHP plants (one 30 MWe/60 MWt and two 15

MWe/30 MWt) and 9 heating stations with 5-20 MW capacities could be built for peat. These CHP plants represent 200 MW boiler capacity and the heating stations 90 MW boiler capacity. The optimistic scenario creates additionally 500 000 – 600 000 tons peat use potential annually. Of course, peat can also be used in households.

2.3. Machine manufacturers Peat production machinery is no longer produced in Latvia.

2.4. Contractors Fuel peat producers are described in 2.1. There are no transportation enterprises in Latvia, which deal exclusively with peat, incl. fuel peat transport. Peat is transported by general transportation companies and by enterprises which deal with transportation of wood chips.

2.5. Service companies Licensing department of the Latvian Environment, geology and meteorology agency issues licenses for peat production if an entrepreneur has his/her own peatland areas, or there is a corresponding rent agreement with the owner. Peatlands research is carried out by SIA Baltijas zemes resursi. See contact information in chapter 5.

3. IMPORTANCE OF PEAT

3.1. In national level Over the recent years the overall consumption of fuel peat in Latvia is decreasing. After the main consumer Riga CHP-1 stopped to consume peat, in 2004 peat usage as fuel has practically ceased. Producing and usage of peat briquettes was discontinued back in 2001. In 2004 peat made up 0,05% of the total consumption of primary energy resources in Latvia (Figure 2). According to the National Energy programme (1997) the share of peat among the primary energy resources should have been about 3,6-5,2% in 2004 (Table 5). That would be a substantial share, especially given that 70% of the energy resources consumed in Latvia are being imported.

Table 4 Consumption of primary energy resources in 2004 (1000 toe)

Energy resources Volume Oil products 1374,7 Coal 61,3 Natural gas 1479,3 Imported electricity 180,2 Hydro energy 71,3 Peat 2,1 Fuel wood 1369,1 Others 21,7 Total 4759,7

Figure 2 Consumption of primary energy resources in 2004 (%)

Others 0,40% Oil products Fuelwood 28,90% 28,75%

Peat Coal 0,05% 1,30% Hydro energy 5,70%

Imported electricity 3,80% Natural gas 31,10%

Below (Table 5) we can see the planned figures. Unfortunately, they are quite different from the actual situation.

Table 5 Share of peat among the primary energy resources according to the National Energy programme (%)

1997 1998 1999 2000 2005 2010 2015 2020 Basis scenario 2,3 3,3 3,5 3,5 3,6 3,8 3,8 4,0 Optimistic scenario 5,4 5,4 5,4 5,2 5,1 4,9 5,0 5,2

Table 6 Consumption of fuel peat (1000 t)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 380 348 345 240 139 244 124 99 91 9

Table 7 Consumption of peat briquettes (1000 t)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

26 28 22 11 6 2 1 - - -

Figure 3 Consumption of peat briquettes and fuel peat, totally (1000 toe)

120 101,1 100 93,9 90,9

80 62,8 59,2 60

34,8 40 30,1 23,7 21,8 20 2,1 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Figure 4 Consumption of peat and peat briquettes from the total consumption of primary energy resources (%)

2,5 2,2 2 2 1,9

1,5 1,4 1,4

1 0,8 0,7 0,5 0,5 0,5 0,05 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Table 8 Consumption of peat and peat briquettes out of the total fuel consumption (%) (total fuel – primary energy resources minus electricity and hydro energy)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

2,4 2,2 2,1 1,5 0,9 1,6 0,7 0,6 0,5 0,05

Table 9 Peat and briquettes in % out of local fuel consumption (%) (local fuel – peat plus wood)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 8,7 7,6 7,3 5,0 2,8 5,1 2,4 1,9 1,7 0,16

Peat and briquette consumers categorized are listed in the following tables. Table 10 Consumers of peat and briquettes (1000 toe)

1995 2000 2001 2002 2003 2004 Total peat consumption 91,5 58,5 29,7 23,7 21,8 2,1 Transformation 80,0 51,1 28,5 23,7 15,8 1,5 public CHP 58,3 44,1 24,7 22,5 14,4 - public heat plants 4,3 2,9 2,1 1,2 1,2 1,5 autoproducer CHP 6,8 3,1 1,2 - - - autoproducer heat plants 1,2 - - - 0,2 - peat briquettes production 9,4 1,0 0,5 - - - Energy sector 10,8 5,8 1,2 - 0,2 0,2 Losses - 1,4 - - 5,8 0,2 Final consumption 0,7 0,2 - - - 0,2 of which: industry sector - - - - - 0,2 other sectors 0,7 0,2 - - - - agriculture, forestry, hunting, fishing 0,2 - - - - - households 0,5 0,2 - - - - other consumers ------

1995 2000 2001 2002 2003 2004 Total consumption of briquettes 9,6 0,7 0,4 - - - Transformation 2,6 - - - - - public heat plants 1,9 - - - - - autoproducer heat plants 0,7 - - - - - Final consumption 7,0 0,7 0,4 - - - of which: industry sector 0,4 - - - - - other sectors 6,6 0,7 0,4 - - - agriculture, forestry, hunting, fishing 0,4 - - - - - households 5,5 - - - - - other consumers 0,7 0,7 0,4 - - -

Table 11 Consumers of peat and briquettes, totally (1000 toe)

1995 2000 2001 2002 2003 2004 Total consumption of peat and peat briquettes 101,1 59,2 30,1 23,7 21,8 2,1 Transformation 82,6 51,1 28,5 23,7 15,8 1,5 public CHP 58,3 44,1 24,7 22,5 14,4 - public heat plants 6,2 2,9 2,1 1,2 1,2 1,5 autoproducer CHP 6,8 3,1 1,2 - - - autoproducer heat plants 1,9 - - - 0,2 - peat briquettes production 9,4 1,0 0,5 - - - Energy sector 10,8 5,8 1,2 - 0,2 0,2 Losses - 1,4 - - 5,8 0,2 Final consumption 7,7 0,9 0,4 - - 0,2 of which: industry sector 0,4 - - - - 0,2 other sectors 7,3 0,9 0,4 - - - agriculture, forestry, hunting, fishing 0,6 - - - - - households 6,0 0,2 - - - - other consumers 0,7 0,7 0,4 - - -

Table 12 Structure of fuel consumption in 2004 in public heat plants (%)

Natural gas 55,5 Fuel wood 35,0 Heavy fuel oils 7,6 Coal 0,9 Peat 0,3 Others 0,7 Total 100

3.2. In regional level Although peat is practically not used as fuel in Latvia any longer, in order to characterize peat consumption in times when it was used to a larger extent, as illustration we provide data about final peat consumption in households in 1997.

Table 13 Final consumption of fuel in households in 1997 (%)

Heavy Diesel Natural Fuel Region Coal fuel LPG Peat Total oil gas wood oils Center 4,9 1,1 0,0 1,6 14,4 0,5 77,5 100,0 Kurzeme 5,5 1,2 0,0 2,5 4,1 0,6 86,1 100,0 Latgale 5,6 1,3 0,0 3,4 1,3 0,6 87,9 100,0 Vidzeme 5,0 1,1 0,0 8,0 6,9 0,5 78,5 100,0 Zemgale 4,7 1,1 0,0 11,5 8,9 0,5 73,4 100,0 Northern- vidzeme 5,0 1,1 0,0 5,7 9,5 0,5 78,3 100,0 Total 5,1 1,1 0,0 3,9 9,2 0,5 80,1 100,0

3.3. In local level Here we define in more detail the above-mentioned information about the regions. These regions contain the following administrative parts of Latvia: Center – Rīga, Rīgas district, Jūrmala; Kurzeme – Liepāja, Ventspils, Kuldīga, Saldus, Talsi and Tukums districts; Zemgale – Jelgava, Dobele and Bauska districts; Latgale – Rēzekne, Ludza, Daugavpils, Preiļi, Krāslava and Balvi districts; Vidzeme – Aizkraukle, Cēsis, Gulbene, Jēkabpils, Madona and Ogre districts; 15 Northernvidzeme – Alūksne, Limbaži, Valka and Valmiera districts.

3.4. Economic assessment Given the small extent of fuel peat production and consumption in the recent years, there are no reliable data neither nationally nor regionally that would reveal economic assessment of fuel peat. Fuel peat extraction is possible in all the regions of Latvia. Particularly important it would be in Latgale (Eastern Latvia), because it contains the largest peat resources (39%) and there is the highest unemployment in the country. In certain regions it reaches 25 – 30%.

3.5. Peat sales There are no specialized fuel peat sellers in Latvia. Fuel peat (e.g. milled and sod peat) is sold by the producers themselves (see contact information in Chapter 5) or by enterprises, which sell peat in general.. Fuel peat is not available in retail.

Table 14 Average prices of fuel (without VAT) in 2004 (EUR/toe)

Fuel Price Heavy fuel oils 156 Natural gas 136 Coal 91 Fuel wood (chips) 83 Sod peat 64 Milled peat 52

3.6. International trade Fuel peat was exported from Latvia at more or less substantial amounts in 2000 and 2001. In 2000 4000 tons and in 2001 - 5000 tons. That is 5,6% and 6,2% accordingly from the produced fuel peat. Peat was exported from Riga port. Fuel peat is not being imported to Latvia.

4. THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY

At the moment the role of peat to guarantee safe energy supply technically equals zero. However, this role could and it should be considerable. Both as substantial share of primary energy resources – up to 5,2%, and as reserves, which can be prepared during years favorable for peat extraction. Given the previously mentioned reasons, peat is very important in Latvia as a local fuel. At the moment technically there are no fuel peat reserves that are prepared and stored in Latvia.

17 5. STAKEHOLDERS

Fuel peat – a/s Seda S.Cepeļevs producers t. 4756103 – a/s Misas kūdra A.Ieviņš t. 3943273 – SIA Līvānu kūdras fabrika P.Romanovskis t. 5307123 – SIA Kūdras enerģija G.Cankalis t. 5161410 – a/s Olaines kūdra P.Šakuns t. 7964254 – SIA Ēnavas A.Ieviņš t. 3943273 – SIA Florobalt G.Cankalis t. 5133611 – SIA Gargrode G.Cankalis t. 5263504 – a/s Baloži Z.Buholcs t. 7917445 – SIA Enagro un Ko E.Samulis t. 9272595 – SIA Pabažu kūdra V.Čaupals t. 6555461 – a/s Stružānu kūdras fabrika E.Samulis t. 4607510 Peatland research – SIA Baltijas zemes resursi G.Sičovs t. 7297597 Associations – Latvian Peat Producers Association V.Kozlovs t. 7605096 – Association of Heat Entrepreneurs of Latvia A.Akermanis t. 7605706 State and Municipal – Ministry of Economics of the Republic of bodies Latvia Energy Department U.Sarma t. 7013169 – Latvian Environment, geology and meteorology agency Licensing Department A.Graudiņš t. 7770005 Department of Subsoil Resources A.Lācis t. 7770003 – Latvian Investment and Development J.Reķis Agency t. 7039462 Energy Department – Latvian Association of Local and Regional P.Barons Governments t. 7508563 Note: When calling from outside Latvia, dial the country code –371

18 14.12.2005

Lithuanian Peat Producers Association

Study of Fuel Peat Industry

2005-11-25

ALBINAS CERNIAUSKAS

President of Peat Producers Association

LITHUANIA

Eiciai village, LT-37145 Taurage district

FUEL PEAT INDUSTRY Authors Lithuanian Peat Producers Association

President Albinas Cerniauskas, Executive manager Juozas Daukantas

SUMMARY

The socio-economic impact of fuel peat is not so significant in the Lithuanian economy. The consumption of fuel peat is constant several years already. Even if the fuel peat has little of sulphur compounds in environment protection view they are of less propriety than natural gas or wood fuel. In the discussion concerning the rising of environment pollution taxes due to “thermal effect” the Government of Lithuania has expressed opinion that the energy generation from peat is not perspective and the Government is not encouraging the use of peat for energy purposes.

Though this study is not very comprehensive, we have tried to answer all the questions.

PREFACE

This study was fulfilled by Lithuanian Peat Association unifying 14 biggest peat producers in Lithuania or 68 % of Lithuanian Peat Industry. These companies produce almost all amount of fuel peat supplied for the consumers in Lithuania. Performing the work the cooperation with state energy companies and the Ministry of Economy was necessary.

Mainly fuel peat in Lithuania is used for municipal district heating and domestic heating. Fuel peat is not used for other purposes in Lithuania. The price of the fuel peat is at the same level as wood and coal. The consumers give preference for wood but as the prices of solid fuel are raising the demand for fuel peat is growing. Coal is not popular because of its polluting features. Despite all these factors the development of fuel peat industry in Lithuania is considerably low rate. The government is considering peat as slowly renewing biomass resource and is not encouraging the development of its consumption. Equipment used for the sod peat or semi-briquettes production is very old, uneconomical and electricity consuming. And because of the environment protection problems the attitude of the Government to this industry branch as alternative energy source is quite sceptical.

CONTENTS

SUMMARY ...... 2

PREFACE...... 3

1 BACKGROUND AND TARGET...... 5

2 INDUSTRY AND PEAT...... 5 2.1 PEAT PRODUCERS...... 6 2.2 PEAT USERS...... 6 2.3 MACHINE MANUFACTURERS ...... 9 2.4 CONTRACTORS...... 9 2.5 SERVICE COMPANIES...... 9

3 IMPORTANCE OF PEAT ...... 10 3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL ...... 10 3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL...... 13 3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL...... 13 3.4 ECONOMIC ASSESMENT...... 14 3.5 PEAT SALES...... 14 3.6 INTERNATIONAL TRADE ...... 15

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY ...... 15

5 STAKEHOLDERS ...... 16

1 BACKGROUND AND TARGET

The units that are used in the report are:

- toe in energy context,

- MW in boiler capacity context,

- ha in area context and

- euro in sale context.

2 INDUSTRY AND PEAT

Peat lands in Lithuania cover 6,4 % of all territory of the country. 71 % of all peat sources in the country are of high decomposition and are suitable for the fuel peat production. The peat in the peat fields under exploitation and in the ones desolated makes 93,5 million tons. The distribution of the peat lands in the territory of Lithuania is very uneven. Most of the peat lands under exploitation are upland bog type. The upper layer of these peat bogs is less turfy and only after removing the less decomposed layer the production of fuel peat can be started.

The distance economically worth for the fuel peat to be transported from the peat bog in which they are produced is 30-50 kilometres. If the distance extends the cost of fuel peat becomes non-competitive with the other types of solid fuel. At the moment all the peat lands under exploitation in Lithuania are dislocated in 50-70 kilometres radius distance.

In the 9-th decade in Lithuania 52-56 peat fields were in production constantly. After Lithuania regained independence, approximately from 1993 due to objective and subjective reasons the number of the fields under exploitation declined roughly. At the same time the volumes of production declined. For the moment only the biggest peat bogs of Lithuania are producing the fuel peat. However the volumes of production are lower as well. In the domestic market of Lithuania the most selling peat product (peat, peat substrates) is fuel peat.

The distribution of the peat sources in the districts of Lithuania

District Resources of fuel peat in peat bogs under exploitation and desolated peat bogs / million tons 1 Alytus 1,26 2 Kaunas 7,22 3 Klaipeda 9,51 4 Marijampole 3,9 5 Panevezys 13,84 6 Siauliai 32,30 7 Taurage 4,46 8 Telsiai 3,54 9 Utena 7,03 10 Vilnius 10,44 Total 93,50

2.1 PEAT PRODUCERS

The volumes of fuel peat production in Lithuania as well as range of production are defined by resources of different types of peat and production capacity.

1960-1970 in Lithuania 1 million 500 thousand tons of fuel peat were produced every year, in 1997 the volume decreased down to 76-80 thousand tons. Production of the peat semi-briquettes decreased, production of briquettes was stopped.

Producers of fuel peat and volumes of production in thousand of tons

Name of company 2003 2003 2004 Kursenu tyras 6,8 5,08 4,0 Durpeta 0,4 0,15 0,28 Silutes durpes 1,04 0,67 0,3 Laukesa-WTL 1,0 0 2,8 Ezerelio durpes 27,4 30,44 31,02 Gedrimu durpes 0,6 0,37 0,21 Sulinkiai 1,5 1,5 1,5 Renavo durpynas 1,6 1,8 1,3 Tyruliai 1,6 1,4 1,7 Tytuvenu tyrelis 9,0 8,0 6,0 Small companies 12,5 Total 50,94 49,41 65,6

The fuel peat produced in Lithuania are milled fuel peat, sod peat and semi-briquettes. Briquettes and peat pellet was not in production in Lithuania in 2004.

Milled fuel peat is loose peat and is used for heating in industrial boiler houses or used to produce semi-briquettes. Diameters of dimension vary 0,5-25 mm, ash content is less than 5 %.

Fuel sod peat is 300x100x90 mm or 250x80x80 sods of peat naturally dried in the peat site. Amount of fines does not exceed 15 %, moisture 50 %, ash of dry mass less than 23 %.

Semi-briquettes in Lithuania are produced in the sods shaped in 80-200x40-75x15-70 bricks, moisture up to 25 %, produced from lowland bog peat with high level of decomposition, ash content is about 20 %.

In recent years the volume of production is constant and there is no tendency of growing.

All peat companies in Lithuania are private, main shareholders are representatives of German, Danish, and Lithuanian business.

2.2 PEAT USERS

In Lithuania peat fuel is used exceptionally only to cover the demand for energy purposes and mostly for individual customers. As an example can serve the fact that in Lithuania the consumption of fuel peat including imported peat is 65.600 tons. Industrial boiler houses consume only 18,7 % (12.296 tons or 2.566 t.o.e. or tons of chosen fuel in oil equivalent) of all peat fuel used in Lithuania. Rest of the amount is used by the owners of the individual houses domains.

70,5 % of heat energy users are the individual customers. From all organized and individual energy users 83,7 % are using gas, 5,6 % fuel oil and only 10 % use types of ecologic fuel like peat, wood, thatch. Peat makes only 0,26 % of all fuel sources.

Heating Energy Consumption 2004

Business/Ind ustrial Budget companies; Organization 13,2% s; 8,5% Other Consumers; 7,8% Domestic Consumers; 70,5%

Data displayed in this table refers to the biomass produced in 2004.

Biomass Units of measure Internal sources

Peat for fuel Thousand tons 46,8 Peat semi briquettes Thousand tons 18,8 Wood and wood tailings Thousand m3 3520,4 Thatch Thousand tons 11,3

The possibilities to increase the extraction of fuel peat correspond to the demand and are favourable because the reserves are big.

In our opinion the owners of private houses domains will use more of the fuel peat in the future. Milled peat fuel is more used in industrial boiler houses. In the last years the demand for this fuel is slightly growing because the district heating boilers are being repaired for heating using thatch-peat, sawdust-peat mixes.

Milled peat fuel is used by 100 % of power plants of this kind:

- Heating boiler house of Taurage which is the district heating provider for houses in Laukesa settlement (500 inhabitants).

- Heating boiler house of Ezerelis settlement in Kaunas district is heating Ezerelis settlement (2200 inhabitants).

- Paliai settlement heating boiler house in Prienai district is providing heating energy for settlement of Igliauka (950 inhabitants).

Equipment used in heating power plants is:

- DKVR – 4,5-13, produces 3 MWH of heating energy (produced Russia)

- DE – 6, produces 4 MWH of heating energy (produced Russia)

- DKVR – 6,5-13, producers 4,5 MWH of heating energy (produced Russia)

The autonomic domestic fuel users consume about 28.000 tons of sod peat and about 20.000 tons of semi-briquettes of peat. In total about 15,04 t.o.e. Owners of the private houses usually use the kettle-boilers of small capacity produced in Lithuania. List of producers:

- UMEGA and KAZLU RŪDOS METALAS ([email protected], [email protected] )

- KALVIS ([email protected] )

- ATRAMA ([email protected] )

- VIENYVE ([email protected] )

2.3 MACHINE MANUFACTURERS

The machinery for fuel peat production used in Lithuania is as follows:

- MTF- 13, 22, 23, 33, 43, 71, this machinery is produced by Russian manufactures.

Lithuania does not produce the machinery needed for peat extraction and production.

From the peat sites peat is distributed in wagons of narrow railway or by tractors.

2.4 CONTRACTORS

The mentioned peat producing companies do not have contractors in peat production. For the peat distribution own of hired transport is used.

There are no special contractors for this industry in Lithuania.

2.5 SERVICE COMPANIES

There are no peat companies that would produce only the fuel peat in Lithuania. The main production of the peat companies is peat and peat substrates and only small part of production is fuel peat. These companies are functioning decades according to the construction plans prepared long years ago. The special planning organizations for peat

companies do not exit. Licenses are issued by Geological survey under Ministry of Environment.

3 IMPORTANCE OF PEAT

The socio-economic impact of fuel peat is not so significant for the Lithuanian economy. Firstly the number of consumers is limited, secondly due to high transportation costs and non-competitiveness with other types of solid fuel the importance is more of local nature. Government is not supporting this branch of industry because of strict environment protection policy.

3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL

As mentioned before the importance of fuel peat in national level is not significant. In the heating energy production fuel peat makes only 2,7 % of other fuels used or 0,26 % of all solid fuel (coal, wood, thatch, sawdust, etc.) used in energetics.

Dinamics of fuel consumption 1997-2004

90,0 83,7 80,1 82,3 80,0 75,5 72,0 68,5 70,0 59,1 60,0 52,5 50,0 44,1 38,1 40,0 27,3 30,0 22,7 17,2 18,7 20,0 9,7 10,0 7,2 5,6 10,0 3,0 4,0 5,0 1,2 2,01,5 2,00,8 2,00,6 1,3 0,8 0,8 0,8 0,0 1997 1998 1999 2000 2001 2002 2003 2004

Natural gas Fuel oil Renew ing energy sources Other fuels

Fuel Consumption by types 2004 Renewing energy sources; Fuel oil; Other fuel; 10,0% 5,6% 0,8%

Natural gas; 83,7%

Heating Small Garment Total of Fuel oil Peat Natural Biogas Liquid Coal Diesel Timber Shale-oil Wood Sawdust Thatch Pineal Company gasoil boilers tailings equivalent gas t.o.e t.o.e t.o.e t.o.e gas, t.o.e t.o.e t.o.e fuel, t.o.e t.o.e t.o.e t.o.e t.o.e t.o.e t.o.e t.o.e t.o.e fuel, t.o.e 1 JSC Vilnius energija 7.067,0 298.554,0 15,0 6,0 2,0 305.644,0 2 SC Kauno energija 4.112,0 1.393,0 15.096,0 557,0 1,0 29,0 6,0 *378 159,0 4,0 21.357,0 3 SC Klaipedos energija 3.276,0 69.035,0 72.311,0 4 JSC Litesco 2.239,0 78.163,0 58,0 394,0 15.216,0 988,0 97.058,0 5 SC Panavezio energija 6.009,0 8,0 58.024,0 43,0 794,0 13,0 11.336,0 456,0 16,0 371,0 77.070,0 6 SC Siauliu energija 1.777,0 51.688,0 53.465,0 7 JSC E energija 99,0 53,0 32.012,0 240,0 299,0 498,0 33.201,0 8 JSC MaZeikiU Silumos Tinklai 8.557,0 865,0 1.461,0 8.895,0 19.778,0 9 SC Jonavos Silumos Tinklai 223,0 3,0 17.687,0 764,0 84,0 18.761,0 10 JSC Utenos Silumos Tinklai 2.153,0 8.444,0 4.977,0 1,0 1.073,0 16.648,0 11 JSC Silutes Silumos Tinklai 5.835,0 90,0 45,0 289,0 3.774,0 50,0 10.083,0 12 JSC Taurages Silumos Tinklai 3.858,0 237,0 132,0 10,0 4.278,0 439,0 8.954,0 13 JSC Plunges Silumos Tinklai 4.022,0 14,0 4,0 518,0 4.558,0 14 JSC Radviliskio Silumos Tinklai 47,6 5.667,9 0,2 **65,2 234,0 5.949,7 15 JSC Raseiniu Silumos Tinklai 4.489,0 5,0 825,0 192,0 3,0 358,0 5.872,0 16 JSC Anyksciu siluma 4.058,0 62,0 312,0 189,0 437,0 69,0 5.127,0 17 JSC Kaisiadoriu siluma 4.394,0 5,0 319,0 4.718,0 18 JSC Svencioniu energija 41,0 980,0 164,0 3.369,0 4.554,0 19 JSC Ignalinos silumos tinklai 1,0 57,0 3.895,0 248,0 4.201,0 20 JSC Sirvintu siluma 273,0 37,0 2.948,0 3.258,0 21 JSC Silales silumos tinklai 288,0 200,0 2.886,0 3.374,0 22 JSC Moletu siluma 37,0 10,0 2.709,0 187,0 2.943,0 23 JSC Prankuojo siluma 49,0 1.703,0 44,0 954,0 2.750,0 24 JSC Sakiu silumos tinklai 1.202,0 6,0 1.138,0 550,0 ***110 2.896,0 25 JSC Birstono siluma 1.041,0 1.438,0 2.479,0 26 JSC Lazdiju siluma 2.149,0 0,3 2.149,3 JSC Vilniaus rajono silumos 27 7,0 20,8 2,0 282,0 1.286,0 48,0 1.645,8 tinklai 28 Municipality company Skuodo siluma 901,0 4,0 644,0 84,0 1.633,0 Fuel for purchased energy: 3.347,4 163.537,5 8.610,0 910,0 4.575,0 180.979,9 Total of the fuel equivalent (t.o.e.): 54.128,0 2.566,0 815.557,2 557,0 120,0 267,2 1.080,2 1.135,0 67,0 64.355,4 4.980,0 4.621,9 24.010,2 16,0 957,0 4,0 974.422,1 56.659,9 12.296,0 1.017.631,6 1.178,0 109,0 279,2 1.134,8 2.150,0 67,0 377.176,0 36.813,0 27.721,3 237.216,1 56,0 2.794,0 64,0 Total of natural fuel: (t) (t) (t.m³) (t.m³) (t.m³) (t) (t) (t) (t) (ktm) (t) (m³) (erdv.m.) (t) (t) (m³) *Chips, **Oil waste, ***Hards 12

Comparative Calorific value of fuel

Fuel type Gcal/t Gcal/m3 Gcal/1000 m3 Natural gas 8,00 Fuel oil 9,55 Heating gasoil 10,08 Diesel 10,22 Liquid gas 11,10 Shale-oil 9,37 Peat 2,80 Wood 1,96

3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL

In regional level fuel peat is more important for six regions of Lithuania: Kaunas, Marijampole, Taurage, Siauliai, Panevezys and Telsiai. In these regions small settlements from 100 to 500 inhabitants, established near peat extracting companies, are using district heating. But these villages make very small part in the region’s energy consumption. These boiler houses are using milled fuel peat. Sod fuel peat is used by the owners of neighbouring house steadings and sometimes by the owners of private houses in towns.

These are the numbers of fuel peat production in different regions:

District Fuel peat/ thousand tons Kaunas 1,6 Marijampole 26,7 Siauliai 18,8 Taurage 2,78 Panevezys 0,28 Telsiai 1,15

3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL

Importance of the fuel peat in local level is more significant. The peat extracting companies are employing people of the region; neighbouring settlements can use cheaper heating energy of the peat. The most important company producing fuel peat in Lithuania is JSC Ezerelio durpes which has the biggest extracting sites. The area is 836,2 hectares and company produces 47,6 % of all fuel peat produced in Lithuania. In 2004 this company had produced 31 thousand tons. This number covers 21 thousand tons of milled peat, 10 thousand tons of sod peat and 10 thousand tons of semi-

briquettes. The sales for industrial boiler houses was 7,8 thousand tons of milled peat, for individual customers of neighbouring settlements was 10 thousand tons of sod peat, and 11,2 thousand tons of fuel semi-briquettes.

3.4 ECONOMIC ASSESMENT

Peat products produced by companies in Lithuania are:

- natural peat of low decomposition for agriculture

- different formula substrates from peat of low decomposition

- fuel peat used directly for heating energy production and peat processed into sod peat or semi-briquettes.

Fuel peat makes only small part of turnover of peat companies, the percentage is 5,9 %.

At the moment peat companies have 960 employees. To distinguish the ones working in fuel production is complicated because the same employees are serving other spheres of peat companies’ activity. There are no companies that would produce only fuel peat in Lithuania. If the Government would support this branch of industry the number of the consumers would grow. At the same time this would give the possibility to expand the areas for extraction in the peat bogs under exploitation as well as in desolated peat bogs. Sod fuel peat could substitute coal, expensive heating gasoil and fuel oil. This would raise the production volumes of other branches of industry – production of machinery for peat extraction, boiler production and etc. Supporting services for the developing industry branch would be needed; the new working places would be created. These processes would let to renew the production in desolated peat bogs, and again the new labor force would be needed for the extraction, services for supporting and transportation and etc. The fire level in desolated peat bogs would decline.

3.5 PEAT SALES

The sales of different fuel peat types in Lithuania are 65.600 tons. This number consists of:

- peat semi briquettes – 23,6 thousand tons

- sod fuel peat – 27 thousand tons

- milled fuel peat – 15 thousand tons

13.300 tons are sold for district heating power plants and about 57.000 tons for individual customers. Fuel peat producers sell peat to wholesalers and wholesalers to the individual consumers directly.

The main wholesalers of fuel peat in Lithuania are:

JSC Sarcina Vilnius, sells fuel peat

JSC Kursenu tyras, sells fuel peat

JSC Gedaleksas, sells coal and peat briquettes imported from Byelorussia.

Prices of energy sources in Lithuania

Types Prices Gas 159,4 EUR/m3 Heating gasoil 0,55 EUR/litre Diesel 0,75 EUR/litre Timber 52,20-72,50 Eur/m3 Wood 17,40-23,20 EUR/m3 Sawdust briquettes 104,30 EUR/ton Black coal (Kuzbas, Russia) 92,70-101,50 EUR/ton Brown coal (Russia) 63,80 EUR/ton Milled peat 27,50 EUR/ton Sod fuel peat 36,20-43,50 EUR/ton Semi-briquette 44,90-49,20 EUR/ton Briquette (Byelorussia) 63,70 EUR/ton

3.6 INTERNATIONAL TRADE

Fuel peat from Lithuania is exported only to Germany. Export volume is 5000 tons of sod fuel peat per year. Peat is transported by motor transport.

Import to Lithuania is from Byelorussia and is about 5000 tons of fuel briquettes per year. It is transported by motor transport. This make 7,6 % of all fuel peat consumed in Lithuania.

Through the terminal of Klaipeda sea port named “Lietuvisku durpiu krova” the briquettes of fuel peat are re-exported from Byelorussia to Sweden. Annual volume is about 6000 tons.

4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY

The role of the peat securing the heating energy supply in Lithuania is not significant. 34 % of Lithuanian territory is covered with forests. There is enough of reserve to produce wood fuel. This type of fuel is the most popular for individual consumption. Besides the alternative types of fuel such as briquettes from wood tailings, thatch, bio-

fuel of osier biomass are starting to be used. Also this industry is not supported by Lithuanian Government.

The reserves of the fuel peat supply in Lithuania are big and the volumes of extraction depend upon demand. Other types of fuel such as coal are imported from Russia, Poland, gas and fuel oil from Russia.

5 STAKEHOLDERS

Fuel peat Produsers: JSC "Ezerelio durpes" Phone: + 370 37 534285 Fax: + 370 37 534292 [email protected] Other producers are small of week production capacity Wholesalers: 1. JSC "Kursenu tyras" Phone: + 370 41 581758 Fax: + 370 41 585995 2. JSC "Sarcina" Phone + 370 5 2122498 Fax: + 370 5 2122197 [email protected] Associations : 1. Lietuvos energetikos agentūra prie Ūkio ministerijos/ Energy Agency of Lithuania under Ministry of Economy Phone: + 370 5 2629731 Fax: + 370 5 2623974 [email protected]

2. Lietuvos silumos tiekeju asociacija/ Lithuanian district heating suppliers association Phone: + 370 5 2356045 Fax: + 370 5 2356044 [email protected]

3. Lietuvos biokuro gamintoju ir tiekėju asociacija/ Lithuanian association of bio-fuels producers and suppliers Phone: + 370 614 06564 [email protected]