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The Wood Energy Opportunity
The technology to turn residual wood material into environmentally friendly energy has long been utilized in the forest products industry
By Charles R. Cary
Date Posted: 11/3/2003
Wood residue is available in many states that can be used to produce heat for less than 50% of the cost of heat produced by oil and gas.
A recent National Renewable Energy Laboratory report concluded that, on average, each individual in
The technology to turn this residual wood material into environmentally friendly energy has long been utilized in the forest products industry. Combining this technology with supplies of wood residue can make American industries more competitive, stabilize their energy costs, create jobs, reduce environmentally harmful emissions from fossil fuels, and increase the country’s security and energy independence.
Why Not More?
After 18 years of marketing biomass energy technology, we see a classic chicken-and-egg barrier of confidence in the market. Projects of moderate scale (using less than three semi-truckloads of wood per day) are uncommon outside the forest products industry. As explained below, they will remain an unrealized opportunity without visible – not financial -- public support.
On the private sector developer side, overhead costs associated with quoting biomass projects outside the forest products industry create a huge barrier to developing new markets. The moderate scale biomass energy industry has never gained the strength to become horizontally integrated. Quoting projects requires coordination among many equipment suppliers and installation contractors. This task is made more difficult when a complete proposal must also include a dependable fuel supply that meets tight specifications at a firm price.
Currently, wood brokers are not marketing to industries with baseload steam requirements, and wood fuel is not being considered by industries. In this environment, finding niche opportunities is challenging and expensive. When there is little evidence that investment in quote preparation will result in a project, the limited industrial wood energy industry cannot be expected to be a leader developing this opportunity.
These overhead costs have moved the private sector towards finding economies of scale through large-scale development. Large centralized facilities have received most of the past investment in biomass energy while projects that match available local wood supply with local baseload steam production have not attracted investment capital. The energy service companies and engineering firms that I contacted during research for this article were not interested in projects less than $5 million.
Is Not Productive
This focus on large-scale plants increases the size of the required fuel sheds, which increases trucking and fuel costs. It also restricts the opportunity for wood energy systems because they require so much fuel. Finally, these large plants create a larger impact on surrounding areas and generate more local opposition.
Similarly, the chicken-and-egg barrier of confidence extends to industries that are not currently considering using locally available biomass for fuel. Any industry that has a continuous steam (heat) demand of more than 7,500 lbs. per hour is a potential candidate to cut their energy bills by more than 50% with wood. Although the capital investment required for wood energy systems is a barrier, most systems will pay for themselves in less than 2.5 years while stabilizing and reducing energy costs.
Yet, industries contacted about the opportunity to burn wood expressed concerns about fuel dependability, potential regulatory nightmares, and increased labor costs. So long as other plants in their industry do not use wood fuel, risk adverse plant managers shy away from being an industry guinea pig.
Government is currently playing a part in this chicken-and-egg barrier of confidence by focusing on: a) developing new biomass technologies, and b) electric generation. The unintended consequence of these efforts is to send a message to the private sector that: a) existing biomass technology in not market ready, and b) electric generation is the highest and best use for wood residue. In its defense, the public sector responds to private sector activity.
The chicken-and-egg confidence dilemma has kept the biomass energy industry scattered in the woods and unable to create effective advocacy for these moderate scale projects. As a result, the public sector has not thought through the life cycle environmental and economic risks and benefits of using available biomass for baseload steam production in industry. These benefits include job creation, less dollar exportation from energy importation, economic security for the region, more competitive local industries, reduced green house gas emissions, and potentially less sulfur, nitrogen and methane production.
On the risk side, issues of using material ‘from the waste stream’ create potential or perceived risks that need to be addressed. Without a focused public discussion on the benefits, biomass regulations are often confused with other, less homogenous ‘wastes,’ and the political and regulatory climate remains tenuous.
The real beauty of wood fuel is that it limits inputs, so emission outputs are limited. Yet public policy currently does not weigh the public and environmental benefits against the potential emissions and other risks. In many cases the risks are not fully documented or understood. The issues are not black and white and often involve numerous agencies, making them difficult for government to tackle.
This barrier of confidence is only going to be broken if government begins to include wood energy in its ‘smart growth’ strategy. This process begins with a determination by governors that the potential benefits of wood fuel outweigh potential costs.
State governments already process information on wood availability and industrial energy needs. Regional meetings involving officials from various agencies could easily identify opportunities for wood availability within trucking distance of industrial energy needs. State officials need only to write letters to the identified wood fuel suppliers and industries, encouraging them to investigate the wood energy opportunity. These letters would be tantamount to an endorsement of existing biomass energy technology. Such an endorsement would be a green light for wood suppliers and industries with baseload steam requirements to start asking the right questions of each other and the moderate scale wood energy industry. The private sector would do the rest.
This is one area where government subsidies are not needed -- although they always help!
(Editor’s Note: Charles R. Cary is BCS Principal of Biomass Combustion Systems, Inc., which supplies comprehensive evaluation, design and construction services for the biomass energy industry, including industrial wood fired boiler and furnace systems. He may be reached at (508) 393-4932.)