Proving Biomass Power Economics

Biomass Power Association President and CEO Bob Cleaves reiterates the symbiotic relationship between responsible forest management, sustainable forests and the biomass power industry.
By Bob Cleaves | April 10, 2015

Following the U.S. EPA’s Framework for Assessing Biogenic CO2 Emissions from Stationary Sources released in November, the volume of the debate about the wisdom of the framework and its accompanying memo to states has, not surprisingly, been turned up considerably.

Much has been made about the potential future effects of (correctly) counting biomass power as a “zero-emissions” power source. Will this cause all of the U.S. coal plants to convert to biomass? Will this lead to widespread forest devastation?

As all in the biomass industry are aware, the answer to these questions is a resounding “no.” The reason for this, beyond environmental concerns, politics, policy or regulatory barriers—all of which are important forces on their own—is simple: economics. The feedstocks used for biomass in the U.S. are primarily wastes derived from other industries. Given the relatively low energy prices in the U.S., now and for the foreseeable future, no rational landowner would sell high-value fiber like sawlogs or pulp for the prices commanded by using wood for energy.

The universe of fuels used in our plants is entirely a function of power prices. Energy has and always will be the least attractive market for biomass.

In late March, I spoke at the EPA’s Scientific Advisory Board hearing on biogenic emissions to deliver this message. The comments submitted by the Biomass Power Association encouraged the EPA to classify biomass as “zero carbon,” once and for all.

One way that we can demonstrate the role of economics is by looking at two of the biggest biomass states, California and Maine. Historically, the California industry heavily relied upon forest-derived biomass. As the California forest products industry shrank, plants were increasingly forced to source their fuel elsewhere. Today, California’s biomass sector remains strong, relying upon forest residues for only 13 percent of its fuel, with the remainder from a wide variety of sources.

In contrast is Maine, which ranks fifth in the U.S. for the production of biomass power. Biomass is responsible for 25 percent of Maine’s overall power supply and represents 60 percent of the state’s renewable portfolio. Wood accounts for almost one-third of New England’s entire renewable supply, with Maine supplying a significant amount to the region.

Maine’s forest products industry is healthy and sustainable. As the largest privately owned, contiguous working forest in the U.S., it is a model for what can happen—both for rural communities and for the health of forests—when low-value wood is utilized for power. Pulpwood represents 56 percent of the 459 million cubic feet that was harvested from Maine’s woods in 2011; sawlogs make up 23 percent; biomass for electricity accounts for 18 percent; and pellets and firewood, 2 percent. All of these uses coexist, and each contributes to the economic health of the forest, allowing landowners to manage “forests as forests” and have access to markets for all parts of the tree. It is precisely because of these markets that Maine boasts a 97 percent regeneration rate and twice the standing wood volume today than it did in 1950.

Regardless of region, all biomass plants throughout the country share the same basic principle: They cannot compete with higher-value uses like sawlogs and merchantable pulp. As a result, even if EPA were to conclude that all biomass is carbon neutral, the fear that biomass electricity would somehow undertake major harvests and compete with the value of pulp and sawlogs is fantasy. Use of fuel is not a function of carbon accounting—it’s a function of price.

Author: Bob Cleaves
President and CEO, Biomass Power Association
www.biomasspowerassociation.com
bob@biomasspowerassociation.com