By DK Knight
Here is some information I recently collected while traveling, reading, listening and serving time with a computer. All of it is interesting and some of it could be useful in your business as the year plays out and the “new normal” slowly emerges.
Despite the weak economy and its numerous negative ripple effects, and new or proposed environmental regulations, the nascent wood-to-energy sector continues to be the buzz in the forest community. True, many projects are mired in financial-technical-permit muck, sidelined by federal regulatory threats or stalled by reduced product demand induced by the recession, but others are moving forward and bringing new markets with them. Several new projects will begin taking wood fiber in 2011.
With wood products demand at a low ebb and expected to remain that way for another couple of years, and with pulp, paper and paperboard production predicted to remain generally flat for the same period or longer, new markets are certainly welcome. Among other things, they encourage landowners to remain in the tree farming game, which benefits both established and emerging markets.
Pellet plants have the momentum now, particularly if they are export oriented. Among others, new and expanded projects are underway in Mississippi, Texas and Georgia, the region’s overall leader in bioenergy development with 30 projects total. Another major pellet exporter has near-term plans for a moderate size plant in eastern North Carolina. The buyer of the idle Dixie Pellets plant is said to be intent on reopening the Selma, Ala. operation to partial capacity and recasting some of its capacity in a new, smaller plant to be erected elsewhere in the state.
Torrefaction, a process similar to that used to dry and roast coffee beans, could be key in further kindling the biomass market. It evidently can overcome crucial biomass obstacles: moisture content, energy density, transport costs and logistics. With most smoke-producing organic compounds burned off in the process, torrefied biomass, also known as e-coal and bio-coal, can take the form of pellets, briquettes or “bricks.” These dense products are very stable, uniform, easy to ship, resist moisture and can even be stored outside without cover. Over time, torrefaction could have a tremendous impact on the volume of biomass used in generating electricity in both the U.S. and abroad. Several companies are now experimenting with the heat-treating process.
In an ongoing work, Forisk Consulting LLC, an Athens, Ga.-based entity that tracks the wood-to-energy sector, had identified 434 “announced and operating” projects in the U.S. as of October 26, 2010. Some projects, principally wood-fired power plants, date back to the early ’80s. The tally includes a few pulp-paper mills and wood products plants that burn wood for power or steam. Of the total, 192 are in the North, 151 in the South and 91 in the West. Furthermore, 234 are electricity projects, 162 are pellet and 38 are liquid fuel. Some projects are likely combination plants, an emerging concept, but Forisk doesn’t identify them.
Forisk has developed an internal viability screening methodology for the projects it tracks and its October update indicates that only 55% of its identified projects pass the test. Interestingly, 69% of Western projects pass, as do 67% of Northern projects, compared with only 41% in the South. This could be because the South has a disproportionate share of newly announced projects. At any rate, assuming that Forisk is on target in its latest assessment, these plants could require 66.5 million tons of wood fiber by 2020.
One reason some woody and/or herbaceous biomass plants falter or never materialize is that the companies behind them fail in their supply chain due diligence. They often wrongly assume that feedstocks are plentiful, cheap and easily rounded up and transported. And often this message is mistakenly conveyed by engineering and consulting firms that, for example, are experienced in recycling some types of materials but have no understanding of forestry or the wood supply chain.
classic example of this is found in the October 2010 issue of Biomass Thermal & Power magazine. In a story about the importance of a signed fiber supply agreement for developing power projects, the editor interviewed a principal in a Michigan-based engineering and consulting firm, who said: “Between 60 and 70% of that tree that’s cut down for wood is waste. That waste is some of the primary fuel supplies for these biomass power plants.”
Preposterous! I wonder if this guy’s previous job was with the federal government. A forest czar perhaps?
It’s worth noting, too, that in the short-term, demand for loose chip exports could accelerate, given the bulging demand in China and Europe and potentially heady demand in India. Only part of this growing demand is connected directly with energy projects.
So hang on. Better days and more markets are ahead.