Pellets Please EU Palates


European pellet markets, which are better developed and incentivize industrial biomass use, are being targeted by international biomass companies seeking markets for their products.  Some EU-based companies such as German utility RWE Innogy have even set up wood pellet plants in the US  and then  shipping pellets back to the parent power plants in Europe.  The proximity of the North East of the United States to Europe means that shipping costs (a cost that is also factored into EU carbon sustainability requirements) is a massive incentive to exploit the feedstocks of the North Eastern forests.

However, the same policy issues that plagued the now defunct paper industry are getting in the way.  Despite the fact that there is more forest in the North East of the United States than there was during the American Revolutionary War, forest management has become a target for environmentalists.  Most insist that no trees at all should be cut down, despite the fact that unmanaged forests are at serious risk of forest fires.  Others are critical of the poorly managed logging methods practiced by those who should know better, such as Yale University’s unsustainable logging methods in their land trusts in the northern New Hampshire.   But what environmentalists fail to take into account is the fact that few biomass companies would set up shop without a sustainable feedstock to pelletize and that forest growth exceeds timber harvests across the nation.

Another factor that is holding the industry in a bit of a stranglehold is biomass carbon emissions.  The long term presumption that energy from woody biomass is carbon neutral is increasingly being called into question. Concerns have been raised that the potential for degrading and clearing natural forests for use as biomass will result in reducing the present efficacy of forests to act as carbon sinks.  At present, the EPA estimates that forests result in net carbon sequestration of 940.3 Tg Co2e, representing an offset of 16% of total US carbon dioxide emissions or 14% of total greenhouse gas emissions in 2008.  Forests in the US are a net carbon sink offsetting about 15% of the nations’s annual emissions from burning fossil fuels.

In addition the EPA has determined that the burning of wood emits the same amount of CO2 as that emitted by burning the equivalent amount coal, if the complete carbon cycle of the wood is not taken into account.

The biomass industry could change if the US adopts the measures that the EU has already put in place, i.e. allowing reliable carbon accounting for all energy sources including wood.   A carbon tax would be the most efficient mechanism to achieve this—that or a cap and trade system.  In addition the  removal of  the many subsidies currently enjoyed by the fossil fuel industries in the US would even out the playing field for biomass and other forms of sustainable energy.

This must happen for the US to meet the demands set out in the Energy Independence and Security Act of 2007.  The EIA (Energy  Information Agency) expects wind and biomass to provide the greatest increase in renewable energy by 2035 with biomass providing nearly half of the projected non-hydro renewable energy by 2035.  Forestry derived wood would be the initial biomass resource with agriculture residues and dedicated energy crops tripling forestry’s contribution which would contribute three quads of energy to the estimated 12 quads from all forms of biomass.  It remains to be seen, however, whether the US has the political will to meet these requirements.

Categories: Biofuels, Economic Indicators, Uncategorized

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