The first slide concerns Coillte panel products. The photographs give a flavour of the businesses. Mr. Gunning referred to the fact that these are successful businesses. Not everyone knows about them because they are somewhat under the radar. I appreciate that the photographs are small. Members will see two world-scale production plants. One is in Belview, County Kilkenny, and the other is in Clonmel, County Tipperary. These are the Coillte Panel Products plants — the Coillte side of the Irish panel industry. There are similar plants in Scarriff, County Clare, and Carrick-on-Shannon, County Leitrim. These plants have not just arrived on the scene. The Medite plant was brought to Ireland in 1983 and has gone through several different owners. These plants are not like a call centre which can be packed up into a few 40 ft. trucks and taken away in the morning. They have stood the test of time, adding value to Irish resources. These plants will use about 1.2 million cu. m. of fibre this year from thinnings and chip residue from sawmills. We manufacture two basic products: oriented strand board, OSB, and medium-density fibreboard, MDF. These are engineered wood products and represent an evolution from saw timber and plywood. They are modern materials used in construction. They are probably behind the furnishings and under the floor in this room. They are used in high-tech industries throughout Europe.
Today, Coillte Panel Products, having weathered the collapse of the Irish construction industry, come through the recession and dealt with exchange rate difficulties, is now exporting well over 90% of what it produces. Our turnover this year is probably in the region of €150 million, 90% to 95% of which goes directly back into the Irish economy. One would imagine this was an ideal business model for Ireland: an Irish-owned business with Irish employees, using Irish indigenous resources and highly committed to exports. A total of 400,000 tonnes of exports are going out through Irish ports, predominantly in the south east but also elsewhere. This represents a major export volume. Where do these products end up? They are utilised in state-of-the-art construction and high-tech furniture and flooring manufacture. It is an ideal business model.
As I have mentioned, the companies employ 325 people, with about the same number employed indirectly in associated businesses such as transportation of the final product to ports, engineering and so forth. There are many positives to Coillte Panel Products.
I will give one example of the type of business with which we are working and collaborating. Ireland Inc. is in a great position because of its proximity to the UK. That is especially the case for the forest products industry. The UK is a major importer of forest products and is at the leading edge in the development of energy efficient houses. We are working with the leading player in off-site construction, Stewart Milne, which has the capacity to manufacture 12,000 houses per annum at its factories in Scotland and Oxfordshire. There is no doubt that as the UK economy starts to pick up in the coming years, it will start to deliver 12,000 units of housing per year into the British economy. We are working with it at a collaborative stage in developing a highly energy efficient house called the Sigma home.
The fairly futuristic-looking house in the picture is actually located in a BRE Group innovation park in Oxford. It was built there about a year and a half ago and people have been living there experimentally to provide feedback on how it works. It is a zero carbon home, so all the energy used in the day-to-day running of the house is offset by savings in the construction fabric of and systems used in the house. The walls, floors and inside of the roof are made from OSB manufactured and produced in Belview from Irish spruce and pine logs. This demonstrates the type of cutting edge business that Coillte Panel Products is involved with. When construction starts to pick up again in Ireland, it is clear from our renewable energy targets that we will have to build similar types of houses and apartments. Coillte Panel Products is well positioned for this.
I will now turn to the issue of demand and supply. This is related to the concern outlined by Mr. Gunning about the availability of material. There may be a perception that there is a major surplus of wood fibre in Ireland as a result of the planting that has taken place over the past 20 to 30 years but the reality is somewhat different. Although the supply of material has steadily increased over the past 20 or 30 years, so too has the capacity and the demand of the existing industries. The chart illustrates projections for total demand vis-à-vis total supply and also the level of excess demand from 2010 to 2020.
Today, demand and supply are pretty much in balance as a result of development in various sectors. That demand is largely made up of sawmills, panel mills that use pulp wood and plants in between those that make pallets, fencing, animal bedding and so forth. Also shown is the energy demand over the same period. This energy demand will drive the increase in demand for wood over the next ten years and thus the supply deficit, which will grow to around 2 million cu. m. When we consider that the total supply in this country is projected, according to figures from the Department of Agriculture, Fisheries and Food, to grow to more than 5 million cu. m. in that time, we can see the considerable size of the gap that must be filled. That is the reason for our presence here today.
What are the impacts of the renewable energy feed-in tariff, REFIT, and the 30% co-firing target? In broad terms, there are three peat plants which could be adapted for co-firing. This would require 1 million tonnes of biomass. The policy is to go beyond 30% after 2015, but the 30% target requires 1 million tonnes at least. What are the consequences of doing that? It will frustrate the development of the more efficient CHP-led biomass energy sector in Ireland, where CHP is combined heat and power. This in turn will undermine the achievement of the Government's 2020 targets of 44% renewable energy use and 12% of heat produced through renewable energy.
From our perspective at Coillte Panel Products, the 30% co-firing target seriously distorts the fibre market. The distortion is about €23 per tonne, which is effectively a 60% premium on the current market prices for fibre. This is a considerable distortion which results from a significant subsidy for that market. It will inevitably undermine the viability of the existing panel industry, threatening all the value added products we have talked about, and will negate the carbon positive effect of using wood fibre to make building products for permanent constructions instead of burning it, which releases all the carbon dioxide back into the atmosphere. It is not just about Coillte Panel Products but also the wider panel product industry. We are not speaking for other companies today, but it will inevitably affect them as well. The effect will also extend to other areas such as the production of pallets and horticulture bark, which are vibrant businesses in Ireland today.