Renewable power is expected to give a much-needed boost to the ailing U.S. timber industry.
That was the view of industry experts at the recent International Biomass Conference & Expo in Portland.
"Forest products are probably best suited to take advantage of the biomass energy industry," said Dave McEntee, vice president of operational services and external affairs at the Simpson Lumber Co.'s investment division.
Renewable power mandates in many states have stimulated entrepreneur interest in developing electricity facilities fueled by biomass like lumber by-products, McEntee said.
Whereas new companies must start from scratch and have little experience with biomass procurement, timber and lumber companies have the necessary processes in place, he said.
"Much of the infrastructure and costs of permitting already exist," McEntee said.
Though generating and selling energy won't offset financial losses from poor lumber demand, it does provide the timber industry with another income source, he said.
"It may not be the light at the end of the tunnel, but it is a flicker," McEntee said.
There's a lot of excitement about turning woody biomass into cellulosic ethanol, but the most realistic method is also the most old-fashioned, said Pete Stewart, president and CEO of the Forest2Market consulting firm.
Burning wood waste in boilers to generate electricity makes sense for forest products companies because the process generates a lot of heat, he said.
Sawmills use the heat to dry wood, and plywood mills also use it to pre-treat logs, Stewart said.
Without a purpose for the heat, the process isn't very efficient, he said.
While independent power generators would need to set up the boiler system and then try to find a use for the heat, forest products companies don't need to worry about that, he said.
"They're the perfect candidate," Stewart said.
Independent developers also lack experience with procuring wood, and many overestimate how much biomass they can obtain, he said.
Such companies must build high-capacity facilities to be financially feasible, but they often don't fully consider the supply of wood waste in their vicinity, Stewart said.
Forest products companies have another source of revenue, so they can build smaller combined-heat-and-power facilities to suit their existing stream of by-products, he said.
"It's all about the size of the plant," Stewart said. "If you size your plant to the resource, you're going to be fine."
Combined-heat-and-power facilities are nothing new in the timber industry, but actions by state governments will probably cause more forest products companies to adopt the technology, McEntee said.
Currently, 24 states require power utilities to obtain a portion of their electricity supply from renewable sources, according to the U.S. Department of Energy.
Oregon will require 25 percent by 2025, California will require 20 percent by 2010, and Washington will require 15 percent by 2020, according to the department.
To comply with those standards, utilities will likely be willing to pay a premium for electricity from suppliers, said Claude Yearwood, chief operating officer of Price BIOstock, a wood chip service company.
Such premiums will be necessary to justify burning wood by-products, since they're already sold for other purposes, he said.
"There is very little valueless waste," Yearwood said. "Sawmills sell lumber to pay the bills and by-products to make money."
Given the competition for wood by-products, the amount of electricity generated by forest products companies will probably be limited, Stewart said. Many states' renewable power standards will be difficult to achieve because of technological and practical realities.
"There is going to be a lot more talk than action," Stewart said.
Staff writer Mateusz Perkowski is based in Salem, Ore. E-mail: email@example.com.
Posted on Thu, May 7, 2009
by Mateusz Perkowski, Capital Press