It is an exciting time to be in the biofuels industry and all forest owners are now in. In the last five years, the situation for forest producers in the southern U.S. had changed dramatically. Within easy driving distance (and so market distance) of my farms, three pellet mills have recently opened. Couple this with a probable return of demand for structural timber, plus the decision of utilities like Dominion Power to substitute wood chips for some coal and things are looking good.
I participated in an online seminar about the growing demand for wood pellets, sponsored by “Biomass Magazine” and learned some interesting things. Wood pellets represent an old technology. People use them for home heating. It has not been a very sexy part of the market because, unlike solar, wood pellet use tended to be concentrated among poorer parts of the population, especially ordinary folks in rural areas. The most important reason for this was availability. Wood pellets are bulky and so shipping them far from the forests they came from was cost prohibitive and unlike solar or wind power, which would also be cost prohibitive w/o subsidies, pellets got few breaks from governments. But that has changed.
The European Union wants to get 20% of its power generation to renewables by 2020. There is no way this can be done by ramping up solar and wind, even in the most optimistic scenarios. Only woody biomass can get them to their targets. Even in Germany, with its enormous subsidies for solar and wind power, 38% of non-fossil fuel energy is generated by wood & in Europe as a whole, about half of all renewable power comes from various incarnations of wood (sticks, chips, pellets or sawdust). In fact, good old-fashioned wood has been the chief beneficiary of renewable energy mandates and its role will grow for at least another quarter century. Europe consumed 13 million tons of wood pellets in 2012 and demand is expected to rise to 25m-30m a year by 2020.
The big practical advantage of wood is that it can be used in existing power generators and substituted for coal w/o major renovations and with only two caveats. The big differences between wood and coal have to do with its energy density and reaction to water. Wood is only about 2/3 as energy dense as coal, so more bulk is required. Coal is also essentially waterproof. It can get rained on for days and still burn just as well. Wood has to be kept dry. These disadvantages can be addressed. The bigger “problem” for the Europeans is that they cannot produce enough wood to meet their own energy demand. American forests have come to the rescue.
The southern U.S. sustainably produces enough wood every year to fuel as many generator plants as the Europeans are likely to convert to wood in the next twenty-five years. We have several advantages in being the big suppliers. Logistically, it is inexpensive and easy to move wood pellets from the eastern U.S. to Europe. Our forests are near roads and railroads that lead to ports that can take bulk cargoes. Once on board ship, it is about a ten day voyage to Europe. Sea transportation is efficient and cheap. Another important reason is that American forests are managed for sustainability.
Most of our forests have third party certification through organizations such as the American Tree Farm System, the world’s oldest third party certification & the Sustainable Forestry Initiative, the biggest forest certification program in the U.S..
Most of the wood used for pellets comes from “round wood,” i.e. stems too small to be used for lumber and or residue from logging operations. Some of this was/is used for pulp and paper, but that market has been declining.
Let me make the point that healthy forests MUST be thinned. If the trees grow too close together, you invite insect pests and all the trees grow more slowly and are not as healthy. There has never been a time since the last ice age when North American forests were not “managed” by humans. Native Americans regularly burned forests and so forests in Virginia in 1607 tended to be more open, i.e. fewer trees per acres and less understory, than they are today. We have learned to manage forests much better in recent decades, using good thinning techniques and proper use of fire. Most pine ecosystems are fire dependent and trees like oak and hickory require some fire in order to regenerate. Intelligent thinning of trees and some grazing can substitute for fire in some cases and is desirable where fire dangers are high.
Strong markets and sustainable forestry are mutually supportive. Forest owners rarely can afford to do good management if they cannot find a market for their forest products. If you just “let it grow” it will grow poorly, invaded by exotic bugs and invasive species, and be prone to disastrous fires, as well as devastating insect attacks.
Our goal is to protect biodiversity, preserve wildlife habitat & safeguard water quality while we sustainably harvest our trees and promptly regenerate the forests. To do that, we need help from markets and reasonable public policies. I don’t know enough about the relative value of pellets versus coal in an economic sense to voice a strong opinion. But in the ecological world, it is a great initiatives, not only or even primarily because it replaces a polluting fuel like coal, but because it helps us manage our forests the way they should be managed, the way we want to manage.
BTW – Americans forests sequester about 12% of the CO2 produced U.S. industry, cars and homes. Well managed forests do it better, not only in the wood, but also in soils. Wood is good.