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BioRES Report Summary

Project ID: 645994

Periodic Reporting for period 1 - BioRES (Sustainable Regional Supply Chains for Woody Bioenergy)

Reporting period: 2015-01-01 to 2016-03-31

Summary of the context and overall objectives of the project

Gas, oil and lignite are widely used in Eastern Europe. The efficient generation of heat and electricity using woody biomass, however, is still in its infancy. The EU Horizon 2020 funded project BioRES – Sustainable Regional Supply Chains for Woody Bioenergy introduces the concept of “Biomass Logistic and Trade Centres” (BLTCs) in Serbia, Croatia and Bulgaria, based on international cooperation with European technology leaders in Germany, Austria and Finland. The overall objective of BioRES is to increase market uptake of domestic supply chains for quality-controlled woody bioenergy products, from sustainable forestry and wood residues, by means of developing BLTCs as regional hubs. With this overall objective, BioRES will contribute to the development of the bioenergy sector, implementing woody bioenergy as a reliable and standardised fuel, and to ensuring its sustainability by means of promoting the use of a supply of verified woody bioenergy.

The increase of domestic demand for woody bioenergy will contribute to the development of economies of scale and to increasing the production and use of woody bioenergy products in the two new EU member countries, and in Serbia as an EU accession country, in South-East Europe. This will serve to contribute to the achievement of the EU targets set out in the RES Directive.

Local woody bioenergy providers - BLTCs - organise provision, processing and dispatching of woody bioenergy products. These services are often complemented by heat contracting and maintenance. BLTCs are regional hubs which link wood supply from forest owners, saw mills and other wood producers with demand from bulk and small buyers. The focus lies on domestic market uptake with short transport distances. BLTCs assure quality and negotiate delivery contracts. Thus, a reliable service along regional value chains will develop. At the initial investment stage, focus may be on marketing and sales. Once the local market reaches critical volumes, allowing for the decreasing cost of investments, these platforms can develop into fully-fledged BLTCs with their own production, storage and logistic facilities. This phased approach reduces the economic risk for investors.

In Slovenia, Austria, Germany and Finland BLTCs of different types, with their own production, storage and logistic facilities, are competitively operating. Serbia, Croatia and Bulgaria are forest rich countries, hence there is potential, but the sector is not very developed as of yet. Of the current sources of renewable energy in the region, biomass is the most significant, with the forestry sector being the main biomass supplier. After facilitating direct interaction of key actors from Serbia, Croatia and Bulgaria, with best practice examples of BLTCs in Slovenia, Austria and Germany, it has come to be recognised that these BLTCs are an important regional factor in the promotion of woody biomass as a locally available energy source. This can help to diversify energy supply, creating jobs, particularly in rural areas, and ensuring that investments are local and that greenhouse gas emissions are reduced.

It is important that woody bioenergy production follows resource efficiency principles. This means extracting more energy from the same material input, as well as avoiding negative environmental effects. This is not currently the case in Serbia, Croatia or Bulgaria, where firewood is used for heating, but mainly burnt in inefficient domestic stoves and fireplaces, which also cause additional hazards, such as particulates in the air. Local and regional governments, forest owners and interested local investors are important key actors in developing local value chains for resource efficient mobilisation of woody bioenergy products from verified sources. In order to use woody bioenergy as a renewable energy source, it needs to be sustainably managed - from the forest through to combustion. In this way the high quality of woody bioenergy products and their long-term availability is guaranteed. This is essential for woody bioenergy to be a climate and eco-friendly energy source of the future.

In the countries concerned much of the forest is certified by the management standards of the Forest Stewardship Council (FSC). 78% of Croatia’s forests are state owned and these are FSC certified. In Bulgaria, forests belong mainly to the state (74%) and FSC certification is increasing, presently covering around 25% of the forests. About half of Serbian forests are state owned and certified against FSC. At the moment local markets are not extensively developed and the majority of forest products are exported. Prices for export are usually higher than those on the local market. As a consequence a lot of biomass is exported, leading to long transport distances and bringing the resource efficiency of biomass into question.

The growing share of exports, along with the enforcement of the EU Timber Regulation in March 2013, has added increased pressure to address sustainability and quality assurance issues for biomass for energy. The project provides information and support on safeguarding measures to ensure that all mobilised woody biomass originates from verified, sustainably harvested timber.

In Serbia, Bulgaria and Croatia the local market for woody bioenergy products, apart from firewood, is still in its infancy and requires strong efforts in local market development on the demand side. All three countries mostly import and use fossil fuels for heating and producing electricity – often with old and inefficient combustion technology, from small scale household ovens up to large scale heating plants. The end of the first decade and the beginning of the second decade of the new millennium was characterised by rising fossil fuel prices, leading to higher spending on energy by municipalities and towns, with continued dependency. However, as the already low oil price continues to fall, there is a concern that this is influencing decisions to switch fuel-type use by users in Serbia, Croatia and Bulgaria.

Thus far, in Bulgaria and Croatia a few examples of fuel-switch do exist, while in Serbia, plans for a fuel-switch of district heating facilities are progressing in different cities which would require reliable wood chip supply once operating. Current demand for different products, such as processed fire wood, wood chips, wood pellets, wood briquettes and/or provision of heat energy and associated services, were one of the essential criteria assessed by the consortium. This was in order to identify optimum areas for new BLTCs as hubs for managing biomass supply to meet local demand.

BioRES works in 15 priority areas (six in Croatia, six in Serbia and three in Bulgaria), most of which have potential biomass availability, as well as existing demand, within a radius of 30-40 km. This decreases transport distances and leads to improved overall energy balance and carbon footprint of woody bioenergy. In the priority areas local investor groups, considered to be potential BLTC operators, are being identified during a trust-building process with key stakeholders and in local stakeholder workshops. As a result 21 actors already involved in forestry, woody bioenergy or district heating operations within the selected priority locations signed Letters of Intent, expressing their willingness to become a BLTC operator or be part of a BLTC operator consortium. Based on lessons learned from best practice examples, BioRES elaborated a set of criteria to find the optimum sites for establishing BLTCs. Different options for developing the optimum BLTC business models and ownership structures, under the specific local market conditions, are being assessed based on experiences from Central-Europe and Finland. BioRES is supporting 13 site-specific feasibility studies in locations where local authorities support the fuel-switch, and support the process of forming BLTCs. BioRES provides training on specific needs, based on trainer training seminars, which are performed in the hope of reaching at least 6-8 BLTCs managing supply and demand within the project duration.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

The overall objective of BioRES is to establish and strengthen domestic supply chains for quality-controlled woody bioenergy products from sustainable forestry and wood residues in Bulgaria, Croatia and Serbia. The project cooperates with technology leaders from Europe, in particular Austria, Slovenia, Germany and Finland, to promote the innovative concept of Biomass Logistic and Trade Centers (BLTCs) in the three stated countries.

Project implementation follows closely the initially planned activities in the eight work packages. In a nutshell, the following sequence of activities was implemented:

a) Clarifying rules of engagement
To become an effective consortium, its members discussed and clarified its modus operandi, ie how it intends working together, which rules it sets for itself (e.g. how deliverables are prepared, feedback provided, quality ensured and products finalized) and how communication within the consortium and between the consortium and other stakeholders (eg INEA) shall be organized. Most of these rules of engagement were documented in the Project Management Plan (D1.1).

The project’s website,, as an important communication tool of the project, was established early on. Essential tools for establishing and running a BLTC – like monthly market information updates (D8.4) can be found here.

b) Generation of knowledge and assessment of status quo
BLTCs are not a new concept. Such centers already exist in Austria, Finland and Germany. The contribution of BioRES is to transfer the knowledge generated in these countries to Bulgaria, Croatia and Serbia and to prepare tools and adopt processes that could be replicated throughout Europe.

Before transfer of knowledge can start, the potentials and limitations were assessed for transfering of European good practices to Bulgaria, Croatia and Serbia (D2.1). The three BioRES partners in the recipient countries, together with local stakeholders, reviewed the best practices and verified to what extent these were applicable to their context.

Quality assurance and sustainability of biomass are criteria BioRES regards as highly important. It was thus decided to conduct an inventory and gap analysis on the implementation status of legality and sustainability of national, EU regulation and on certification schemes in Bulgaria, Croatia and Serbia. The result of this work was published in two reports
- Status report on sustainability in forestry and along woody bioenergy supply chains in Bulgaria, Croatia and Serbia (D5.1); and
- Inventory of applicable quality standards for woody bioenergy products in chains in Bulgaria, Croatia and Serbia, compared to the EU (D5.2).

c) Identification of priority locations
Based on the experience of the consortium and the findings of the review of good practices, BioRES established a checklist for the selection of priority regions/priority locations of new BLTCs in Bulgaria, Croatia and Serbia (D3.1). Together with national stakeholders were applied in the three countries to establish a list of priority areas with highest potential for setting-up a new BLTC. The result of this work is documented in a “Report about priority locations for new BLTCs in Bulgaria, Croatia and Serbia” (D3.2).

d) Increasing capacity of potential BLTC operators and other stakeholders
A central aspect of BioRES is to transfer knowledge from Austria, Germany and Finland to the three recipient countries. The capacity development work of the project had several facets in the first 15 months of implementation, including:
- Study tour with joint international technology transfer workshop. BioRES organized visits to BLTCs in operation in Austria (D6.1)
- A train the trainer seminars (D6.3)
- An international webinar on criteria for identification of priority locations of BLTCs was conducted. More webinars on other topics will follow at national level and in national language in the second half of project implementation (D8.2)
- Information brochure on the requirements and benefits of sustainability and quality assurance measures for BLTC consortia (D5.3)
- An short video, uploaded on YouTube (, for maximum outreach on the concept of BLTCs

In addition, a training manual including three training modules (D6.2) was produced and translated into three languages. This manual will be used for training seminars that will be held in the second reporting period.

The second reporting period will foresee the actual establishment of BLTCs in the three countries (WP4), more support on aspects of quality assurance and sustainability (WP5), continued capacity development (WP6), greater stimulation of the demand side by raising awareness of consumers (WP7) and continued communication and dissemination of results

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

After full implementation of BioRES, three direct impacts are expected as well as a range of indirect impact areas. The following discusses to what extent these impacts are already achieved and to what extent the current progress in implementation and project outcome is deemed sufficient and well-directed to target the expected impact at the end of the reporting period.

Expected direct impact
a) Impact area 1: The share of sustainable woody bioenergy in the final energy consumption in Bulgaria, Croatia and Serbia is increased.

Indicator 1.1: A total of at least 15 priority areas for new BLTC are identified in Bulgaria, Croatia and Serbia
COMPLETED. A total of 15 priority areas have been identified with the following breakdown: Croatia (6 areas), Serbia (6 areas) and Bulgaria (3 areas)

Indicator 1.2: In at least 6 - 8 of the identified priority areas, distributed over at least 2 of the 3 countries, new local BLTCs start at least with web-based or shop-based operations
GOOD PROGRESS: Feasibility studies for BLTCs are conducted in six areas in Croatia, four in Serbia and three in Bulgaria (hence a total of 13). After the finalization of these studies, potential BLTCs will be selected for conducting business plans. Letters of intents in all 13 cases have been signed by the responsible authority. It is thus very likely that 6-8 priority areas will start BLTC at least with web-based or shop-based operations

Indicator 1.3: An overall total of at least 100 potential agreements/contracts for sales of a total of at least 8,000 tons of woody bioenergy products are at different stages of preparation/negotiation in the new BLTCs.
GOOD PROGRESS: According to conducted 13 feasibility studies, the goal of 8,000 tons of woody bioenergy will be exceeded with a great margin as some of the planned BLTC’s are producing more than 10 000 tons of products per year by themselves. The final number of sales agreements/contracts is depending on the BLTCs’ customer base. According to the feasibility studies conducted thus far, the following potential Agreements are considered:

Pellets (t): 38.025
Wood chips (t): 28.500
Firewood (t): 6.325
Wood residues (t): 11.500

b) Impact area 2: Transaction costs have been reduced for project developers of BLTCs and their commercial partners on the demand and supply side, as well as for the permitting authorities, whilst addressing needs for environmental protection, social and economic local development, public engagement and improvement of local, regional and national energy balances.

Indicator 2.1: Initial investment cost and related economic risks for the start of a new web- or shop-based BLTCs are minimised (may be less than 10,000 EUR per new BLTC, depending on local conditions)
GOOD PROGRESS: Standard tools and templates for feasibility study, canvas business plan, calculation sheets and customer information have been developed to reduce costs and clearly indicate risks setting up BLTCs. In addition, careful planning during the project (selection of priority locations based on the decision criteria, conducted feasibility studies and final selection of 6-8 priority areas) will decrease the economic risks for the start of BLTCs.

Indicator 2.2: Lead time required for the design, planning, financing, licensing, construction on site and commissioning of a new BLTC to less than 1.5 year from the selection of the site and the formation of local interest groups
GOOD PROGRESS: The work conducted in BioRES (training manuals and practitioners guidebooks, models of feasibility studies and business plans) will help new BLTCs operators and investors overcome the critical steps in the planning and design stages.

Indicator 2.3: A total of at least 80 local actors/citizens participate in local market networks of new BLTCs.
GOOD PROGRESS: Local actors are the key success factors of local BLTC operations. BioRES project has identified local actors and organized workshops in order to facilitate actors/citizens awareness of BLTCs. In the formation of BLTC local investor/operator consortia a total of 149 local actors were involved:
In Serbia
Bajina Basta 10.09.2015 16
Sabac 30.09.2015 9
Zlatar 01.10.2015 cancelled
Leskovac 02.10.2015 6
Zrenjanin 26.10.2015 11
Priboj 12.11.2015 8
Total Serbia 50

In Croatia
Pokupsko 1.10.2015 12
Josipdol 9.10.2015 12
Slunj 14.10.2015 9
Jastrebarsko 30.10.2015 6
Velika Gorica 4.11.2015 6
Sv. Križ Začretje20.11.2015 20
Total Croatia 65

In Bulgaria
Devin 06.10.2015 9
Smolyan 08.10.2015 10
Chepelare 08.10.2015 8
Plovdiv 17.10.2015 7
Total Bulgaria 34

Grand Total 149

Indicator 2.4: A total of at least 80 SMEs participate in the supply chain as producers and service providers for the newly established BLTCs
The final evaluation of this indicator will be possible only after the establishment of new BLTCs, which is planned in the second half of the project. In total 6-8 BLTCs should be established and on average 10-13 SMEs should be involved in the supply chain for each BLTC. Most of the SMEs are expected to fall in the category of private forest owners and providers of services related to forest biomass procurement (including transport).

Indicator 2.5: A total of approximately 100-150 new jobs (part-time or full-time) are created in the new BLTCs, and at different stages of the related local supply chains, a majority of these jobs in SMEs (production, logistics and sales)
PENDING: can only be calculated once the 6-8 new BLTCs are operating.

Indicator 2.6: Fossil energy demand for heating is reduced by a total of at least 4,000 tons of oil equivalent per year in the first year of operation of 6 - 8 new BLTCs, which are delivering all together at least 8,000 tons of woody bioenergy products
PENDING: can only be calculated once the 6-8 new BLTCs are operating.

Indicator 2.7: Transport distances for woody bioenergy products will be reduced from more than 750 km (international exports) to less than 100 km (local supply)
GOOD PROGRESS: Priority locations were selected based on the premise of short transport distances (see checklist for selection of priority locations- - D3.1).

Quote D3.1:
“In the assessment process for prioritising feasible BLTC locations and dialogue with local stakeholders and potential investors for BLTCs all listed criteria below need to be evaluated.
A) Biomass potential in the region (30-40 Km as orientation):
• (technically and economically feasible) availability of wooden raw material;
• sources of biomass (forests, plantation, wood processing industry);
• ownership structure of forests (private, state owned, church);
• suppliers and their location;

Indicator 2.8: CO2 emission reduction will amount to at least 12,800 tons of CO2 during the first year of operation of the new BLTCs delivering together a total of at least 8,000 ton of woody bioenergy products
PENDING: Can only be calculated once the BLTCs are operating, but according to conducted feasibility studies, the reduction will be achieved with a great margin.

Indicator 2.9: At least 2 of the new BLTCs will be chain of custody certified by end of the project time
PENDING: Can only be verified at the end of project implementation. At the moment certification seems to be a relatively low priority for the possible investors. Costs and limited local demand for certification are deemed too high at the moment. In order to address this, the benefits of certification is explained through a brochure (additional documents will be generated in the second half of BioRES implementation).

c) Impact area 3: Better local policy, market support, and commercial frameworks for BLTCs, at national, regional, and local level are developed.

Indicator 3.1: Local authorities support the establishment and operation of new BLTCs.
GOOD PROGRESS: Local authorities were involved in all preparatory steps of conducting feasibility studies (D4.1), participated in trainings and awareness raising seminars and were frequently consulted by the BioRES partners in Serbia, Croatia and Bulgaria:
- In Croatia for all priority locations local authorities expressed support for the establishment of BLTCs. In Pokupsko the BLTC is planned to be established by (at least in part) the municipality of Pokupsko, while in Josipdol it is planned to be established by the War Veterans Association Kapela which was founded by three local authorities and 12 war veterans. Thus in these cases local authorities are directly involved in the establishment. In other locations local authorities see the BLTCs as generators of new economic activity and local employment and this is one of the main reasons for their support.
- In case of Bulgaria, for instance, there is a strong local support for BLTC operation in Smolyan as can be proven by the Letters of Intent signed.
- In Serbia for all priority locations local authorities expressed support for establishment of BLTCs, and their representatives participated in the interview survey and the workshops organized by BioRES. however none of the municipalities in questions was ready to invest and be involved directly in BLTC development. Nevertheless, in four priority locations local private companies expressed the interest to participate in development of BLTCs.

Indicator 3.2: Local actors join forces to provide the financial means for at least the start-up investment in web- or shop- based BLTCs operations.
GOOD PROGRESS: BioRES partners are in frequent contact with local authorities to inform them on funding opportunities. In Croatia for instance, REGEA worked closely with local authorities on obtaining EU funds. In Serbia, the project applied for SIDA funding to support BLTCs. In Bulgaria, recommendations for attracting investments were included as items in training workshops.

Expected indirect impacts
Indicator 4.1: Establishing BLTCs as regional hubs/service providers will create new impulses for local economic development.
PENDING: Can only be calculated once the BLTCs are operating. It is expected though that the newly established BLTCs will have positive impacts on the local economy through all the services and products required, such as tree cutting, wood delivery, weighing and quality control of logs, wood processing, delivery services and maintenance.

Indicator 4.2: Increasing local bioenergy production will create additional income and promote entrepreneurship, and contribute to the socio-economic strengthening and stabilization of communities in rural areas
GOOD PROGRESS: While income effects can only be measured once the BLTCs are operating, BioRES remains very positive that the stated effects will materialize. Based on the preliminary results of feasibility studies for BLTCs (Deliverables 4.1.) which are in preparation, the establishment of BLTCs will have a positive impact in all mentioned areas.

A study in this regard, partially covering locations in Serbia where new BLTCs are planned to be established, can be found here:

Indicator 4.3: Positive socio-economic impacts may be further enhanced by the creation of local business opportunities triggered by investments in energy efficient boilers and heat or power generation facilities replacing fossil fuels by woody bioenergy. Clear and reliable model contracts will help to increase security of sales and supply for producers and users of woody bioenergy products, as well as for potential operators of BLTCs.
PENDING: Can only be calculated once the BLTCs are operating.

Indicator 4.4: An increasing number of public and private energy consumers will be encouraged to switch from fossil fuels to woody bioenergy and thus contribute to the revitalisation of the economy of their countries, particularly in rural areas, and to the achievement of European CO2 emission reduction targets
GOOD PROGRESS: Project informs about benefits of BLTCs and is in frequent contact with public consumers (example: support to local authorities operating schools in Zagreb county, Croatia). Outreach to private consumers will increase in the second half of BioRES implementation.

Indicator 4.5: Increasing local demand for woody bioenergy products reduces the need for long-distance transports and provides locally sourced alternatives to fossil fuels, decreasing dependency on oil, coal and gas
GOOD PROGRESS: In accordance with the criteria established for the selection of priority location, all future BLTCs are embedded in a local economy with limited transport distances.

Indicator 4.6: Actors trained during and beyond this project build an increasing group of motivated and qualified trend setters promoting the local production and use of woody bioenergy products through their decision making, investments, or business operations.
PENDING: Can only be calculated once the BLTCs are operating.

Indicator 4.7: The introduction of quality standards and sustainability requirements into the supply chain for woody bioenergy products will reduce the risk of overexploitation of forests and/or illegal sourcing of wood for the industrial production of woody bioenergy products
GOOD PROGRESS: A status report on sustainability in forestry and along woody bioenergy supply chains in Bulgaria Croatia and Serbia was done in order to identify the status quo. Then an inventory of relevant quality and sustainability standards was compiled, pointing out the most up to date standards and certification schemes. In order to communicate these standards and certification options to the BLTC consortia, encouraging and facilitating their adoption, an information brochure was created. This brochure outlines the requirements and benefits of sustainability and quality assurance measures to be taken by the BLTC consortia.

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