Industry Convenes in Biomass Central
Enthusiasm was not lacking at the Southeast Biomass Conference & Trade Show, but the event, held Nov 2-4 in Atlanta, wasn’t all pie in the sky either. While the Southeast’s potential to become the country’s regional industry leader was emphasized—which included growing energy crops such as giant miscanthus and switchgrass, utilizing abundant woody biomass resources for power and fuel production and taking advantage of pellet export opportunities—speakers and attendees didn’t tiptoe around the major hurdles that the industry faces; namely, the U.S. EPA’s Greenhouse Gas Tailoring Rule, the Industrial Boiler Maximum Achievable Control Technology (IB MACT) rule, and the need for statewide and federal adoption of renewable portfolio standards.
Keynote speaker David Tenny, president and CEO of the National Alliance of Forest Owners, pointed out to attendees that the Tailoring Rule, if enforced on Jan. 2 as currently proposed, would no longer deem biomass combustion as a renewable energy generation method. The rule could drastically affect the relationship between forest owners and biomass markets, Tenny said, as it treats biomass carbon emissions the same as fossil fuels, not taking into account the biogenic carbon cycle.
Tenny emphasized that despite the increased use of biomass as an energy source, U.S. forest stocks have been steadily maintained over the past 100 years—the nation’s total forest land base constitutes about 755 million acres—and total growing stock has actually increased by 50 percent in the past 50 years. “From a carbon context, which is very important to forestry, we are netting about 800 million metric tons from these forests, which is about 8 percent of all net carbon sequestration, net that occurs from all land uses so it’s very significant,” Tenny said. The products produced from the forestry industry are sequestering an additional 100 million metric tons per year, he pointed out, and there has been continuous replanting of trees for many years.
Historically, the housing and paper/paperboard industries have been significant markets for the forest industry, but right now both are at an all-time slump and the paper industry capacity is not expected to recover, according to Tenny. These are two major markets that the forest industry has traditionally banked on, and if it is not amended, the Tailoring Rule will negatively affect an additional market—biomass energy.
“Now, biomass is a regulated source of carbon as opposed to a voluntary source of carbon offsets,” Tenny said. “In the forest products industry, just about every product has a residual use for energy. If it’s no longer economic or more efficient than a fossil fuel, that creates a very real consternation in terms of the marginal benefit that biomass energy is providing. It could be the difference between a profit and a loss in such a razor-thin market, and it will have a real impact on existing capacity and investment in biomass energy today.”
Tenny said forest owners were surprised at the final Tailoring Rule announcement, because there was no indication in the draft rule that biomass energy would be regulated identically to fossil fuels. “That’s the disconcerting aspect of the rule that has all of us concerned, as it is the ROI (return on investment) for forest owners,—the carbon stored in products and the environmental benefit that come from these markets over time—taking that off the table poses a very real question: What are the comparative advantages to biomass energy over fossil fuel energy under this policy?”
Those in states with renewable portfolio standards looking to receive credit are aware that the EPA will regulate biomass carbon emissions and may choose other sources of renewable energy, Tenny pointed out. “Other sources won’t have this conflict, of where you’re getting a benefit on one hand but creating costs on the other hand.”
Tenny encouraged attendees to educate their delegates about the impact the Tailoring Rule will have on their industry, and to seek an amendment that recognizes biomass carbon life cycles, measures forest carbon flux at a national scale, avoids differentiating between “good” and “bad” biomass, and fixes the problem now rather than deferring the solution.
Panelists during the first plenary panel, which examined the viability, benefits and potential downsides of co-firing biomass with coal in the Southeast, echoed Tenny’s message, saying the Tailoring Rule and the IB MACT are of great significance, and are currently cooling some utilities’ attitudes towards biomass.
Proceeding with Caution
Power utility Duke Energy is currently co-firing with biomass at its Lee Steam Station in South Carolina, and is waiting for permitting to use biomass at its Buck Steam Station in North Carolina. Additionally, the company has developed sites to demonstrate biomass woody and perennial plants and planting techniques.
“We are the first and only state to have a mandatory renewable portfolio standard (RPS) in the Southeast,” said Tracy Leslie, renewable energy strategy manager for Duke Energy. North Carolina, where Duke Energy does business, has a goal to replace 12.5 percent of its electricity with renewables by 2021. Despite the mandate, Duke Energy recognizes the opportunities for developing local fuel supplies and how that could benefit loggers and landowners, she added.
Although Duke Energy recently prevailed when it was determined that whole tree chips would be included in the definition of woody biomass in North Carolina’s RPS, the company has the same concerns as others looking to utilize biomass: price escalation, competition and having a sustainable supply, according to Leslie.
Unlike Duke Energy, Southern Co. operates in states where there is no RPS, said Jeff Wilson, senior engineer, research and development for the utility, which produces more than 40,000 megawatts of electricity in the southeast. And there is little demand for green power from consumers.
However, half of the company’s power is generated by coal and that will have to be cut in half using new generation sources by 2015.
The company is looking at several options including nuclear, biomass and natural gas. Initially it was determined that it would be viable to convert its Plant Mitchell to biomass even without an RPS because the cost of delivering coal to that plant is so high. That project has been put on hold until the EPA irons out the IB MACT and Tailoring Rule, he said.
“The EPA Tailoring Rule could kill biomass in its tracks,” he said. As for the IB MACT, Wilson said the EPA has created a “Franken-plant” with standards that may be unachievable.
In the meantime, the company has put competition aside and will continue to test biomass combustion options and is attempting to answer questions such as what will it do to boilers, selective catalytic reduction systems and fly ash.
Wilson criticized lawmakers for pushing biofuels and not biopower specifically. Wilson also touched on the negative press that biomass is currently enduring in light of the conclusions of a study conducted by the Manomet Center for Conservation Sciences that generated news stories concluding that woody biomass was worse than coal. The industry has also been unfairly criticized by people who think that biopower facilities are going to clear-cut forests to produce power.
Moving away from policy implications and hindrances, during the second and final plenary session speakers weighed in on the potential for biomass pellet exports from the Southeast to Europe, as demand there is growing and the EU aims to source 20 percent of its energy from renewable sources by 2020.
Examining Export Opportunities
There’s no question that tremendous potential exists in the Southeast U.S. to develop a robust wood pellet industry, according to Johnny Leggett, senior project manager of engineering firm Hunt, Guillot & Associates LLC. “It’s no surprise to anyone in this room that the world demand for renewable energy is increasing,” Leggett told attendees. The audience stayed silent when he asked if anyone thinks there is not a demand for pellets. “Come on,” he prodded, still met with silence broken by a few chuckles. Satisfied, he went on to share that the keys to awakening that giant in the Southeast are harvest techniques, pellet plant location, plant operation costs and plant performance.
Fellow speaker Saritha Peruri, manager of business development for California-based energy crop company Ceres Inc., introduced the crowd to another opportunity for pellets, dedicated energy crops. “There are more opportunities than just wood,” she said. Energy crops are favorable to woody crops in many ways, she added, including moisture content, yield and carbon life cycle.
“Biomass has a massive identity crisis in the U.S.,” she said, citing currently proposed unfavorable federal policies such as the Tailoring Rule and IB MACT. But energy crops are expected to be the most dominant type of biomass used in the European Union by 2020, she cited. “So American growers can focus on European export opportunities,” she said.
The Southeast U.S. is the most attractive region to supply the European demand, with its export logistics, superior biomass yields and availability of contiguous acres. This could start soon, especially with the reinstatement of the Biomass Crop Assistance Program, which makes the economics of energy crops favorable again with matching payments to support growers. Eventually, the U.S. can “jump on the bandwagon” and fire up its own domestic pellet markets when it’s ready, Peruri said, with many lessons already learned from the involvement of the Southeast region in the EU’s markets.
But the U.S. will not soon have a robust pellet market, so those European markets are crucial to any developing market in the Southeast, according to panelist Karl-Heinz Schulz, vice president of technology and engineering for North Carolina-based pellet manufacturing solution firm BiEnergy Group. Biomass encompasses a 65.8 percent share of the European renewables market, he cited. “Biomass is clearly the way to accomplish those (renewables) goals,” Schulz said.
Pellet exports from the Southeast will not come without challenges, however, and Schulz named five: location; long-term off-take and feedstock agreements; management of currency; management of shipping risks; and optimization of plant designs to match project-specific requirements.
Panelist Thomas Meth, executive vice president of sales and marketing for Virginia-based pellet manufacturer Enviva LP, discussed pellets themselves, along with the suppliers of today. He said Russia, South America and the Baltics will be competitors for North America in exports to Europe.
“There are 400 pellet plants in Europe,” Meth said. “We have a lot to learn.” But the potential is tremendous, according to Meth, and solid biomass will be the answer to meeting Europe’s goals.
“Biomass and pellets will take a leading role in achieving the binding European 2020 renewable energy sources targets,” Schulz added. “”Europe will remain dependent on international pellet imports.”
BBI International’s next regional event, the Pacific Northwest Biomass Conference & Trade Show, will be held Jan. 10-12 in Seattle. For more information, go to www.pacificwest.biomassconference.com.
Authors: Anna Austin
Associate Editor, Biomass Power & Thermal
Associate Editor, Biomass Power & Thermal
Editor, Biomass Power & Thermal