Future Use of Biomass Energy

Biomass is the second-largest of the renewable energy sectors (after conventional hydroelectric), with wood comprising the largest component of biomass energy. The largest use of wood for energy occurs in the Forest Products Industry. Congress is discussing several bills that would increase the quantity of renewables used to generate electricity. Three important factors should be considered by policymakers as they see ways to increase the use of renewables in electricity generation:

• By far, the largest proportion of current wood-based electricity generation occurs in the Forest Products Industry (there are now only a handful of wood-fired utilities in the United States).
  
  
• Primary forest product industries are located in close proximity to timber resources. In contrast, utilities are generally located near population centers. This is of particular concern to generating plants wishing to fire with wood-based products, because transportation of wood-based energy products is much less economical than for coal.44
  
  
• The supply of commercial forest resources is limited and distributed among competing uses.45Forest product industries enjoy a well-established supply infrastructure and would be reluctant to force prices higher for pulp and other products due to an increased demand for fiber in generating electricity.
  
  

Some scenarios for greatly increased biomass-energy use rely heavily on the assumption that fluidized-bed combustion (FBC) units and combined cycle generators will offset possibly higher biomass fuel costs through energy-efficient operation. This assumption is likely to be true for generation-only plants. As  Table FE1 shows, however, FBC technology generally does not have very good economic, energy, or environmental characteristics in the near term, when applied by pulp and paper manufacturing.

Biomass-oriented generating plants yet to be built could indeed have an energy-efficiency advantage over some of the conventional combustion systems now in use in the Forest Products Industry. However, in the near term they are certain to face disadvantages. Biomass-gener ating plants must locate near46fuel resources, especially because of their established fuel supply infrastructure. At the same time, these facilities need to be located near existing electricity transmission lines. In contrast, pulp and paper manufacturing plants are located near their fuel resources as well as the point of electricity demand. These issues are only a few of the two-edged considera tions associated with possible legislative mandates for higher renewable electric generation. Another is the cost-effectiveness of locating generating facilities near population centers, where the cost of land is high or possibly prohibitive. Yet biomass energy has demonstra ted favorable environmental, employment, and energy security characteristics and is generally considered to be CO₂-neutral. The challenge of broader implementation of biomass for energy is to gain the wider involvement of those entities most able to participate, as well as to stimulate new industry.

Although certain sectors of the Forest Product Industry would indeed resist diverting more biomass resources for energy, the fact is that the majority of timber grown in the United States is available to the winning bidder. Forest product industry members are generally not self-sufficient in supply, so they purchase needed biomass products from producers or other intermediaries. Generally, these resources are nonindustrial private forest landowners not under long-term contract. Fur ther, current forest removal (i.e., utilization) rates are such that a substantial supply of logging residue is available. Therefore, at a sufficient price, energy interests could obtain additional biomass resources. The above statements are generally more true in the East, where most wood is purchased directly from the producer.47

Another factor operating in energy interests' favor is that a significant volume of wood is consumed as fuel wood for home heating. The value of forest removals for this purpose is generally less than that of timber removed for industrial products. Thus, energy interests could obtain additional fuelwood without having to compete with industrial interests.

Finally, forest products companies are seeking new ways to increase timber resource utilization. One pos sibility is to convert logging slash into a usable product. Members of the Forest Products Industry, a very signifi cant potential participant, have mixed views on the increased use of wood for electricity generation. Some, such as those in the pulp and paper subgroup, believe that increased demand on wood supply would drive up resource costs and place a greater strain on already tight profit margins. Others in the industry who are well situated with respect to resource ownership, or whose resource divisions are very profitable, may view biomass energy as a favorable opportunity. Regardless of resource position, biomass energy producers may increase their generation if they can operate profitably on wood fuel priced competitively with stumpage that might otherwise go for pulp and paper manufacturing. Considering all viewpoints, however, two key questions relating to the area of governmental policy seem to be emerging: Will renewable energy mandates, if enacted, stimulate the birth of a new renewable-based generating industry, with survival qualities yet to be determined? Will the Forest Products Industry overall be a formidable obstacle or a willing participant in addi tional biomass energy generation?

Contact:

Fred Mayes

fred.mayes@eia.doe.gov

Phone: (202) 287-1750