UNCOVERING BARRIERS TO DOMESTIC BIOMASS INVESTMENT

by

Karan Gupta

William K. Stroud

_____________________________________

Dr. Daniel D. Richter, Adviser

December 2015

Masters project submitted in partial fulfillment of the requirements for the

Master of Environmental Management and Master of Forestry degree in the

Nicholas School of the Environment of Duke University

2015

TABLE OF CONTENTS

EXECUTIVE SUMMARY ...................................................................................................................1

INTRODUCTION ...............................................................................................................................3

WHAT IS BIOMASS? ................................................................................................................................. 3

HISTORY OF BIOMASS ............................................................................................................................. 4

OBJECTIVE ................................................................................................................................................ 4

LITERATURE REVIEW .....................................................................................................................5

CLIMATE CHANGE AND OTHER ENERGY SOURCES ............................................................................. 5

PROS AND CONS OF BIOMASS ................................................................................................................ 7

FUEL TYPES ............................................................................................................................................ 10

APPLICATIONS ....................................................................................................................................... 14

STATE OF THE MARKET ........................................................................................................................ 17

METHODOLOGY ............................................................................................................................22 GENERAL INTERVIEWS .......................................................................................................................... 22

CASE STUDIES ........................................................................................................................................ 23

STUDY DESIGN ........................................................................................................................................ 24

RESULTS ........................................................................................................................................25

GENERAL INTERVIEWS .......................................................................................................................... 25

CASE STUDIES ........................................................................................................................................ 29

DISCUSSION ...................................................................................................................................32

ANALYSIS OF RESULTS ......................................................................................................................... 32

RECOMMENDATIONS ............................................................................................................................. 38

AN EXAMPLE IN PRACTICE : UPPER AUSTRIA ..................................................................................... 40

LIMITATIONS OF THE STUDY/OPPORTUNITIES FOR FURTHER RESEARCH ....................................... 41

REFERENCES .................................................................................................................................43

APPENDICES ..................................................................................................................................48

IRB EXEMPTION REQUEST MATERIALS .............................................................................................. 48

GENERAL INTERVIEW TRANSCRIPTS ................................................................................................... 53

CASE STUDY INTERVIEW TRANSCRIPTS .............................................................................................. 84

CASE STUDY FACILITY MAP .............................................................................................................. 102

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I. EXECUTIVE SUMMARY

What are the barriers to investment in domestic biomass facilities? This is the central

research question that this report aims to answer. Biomass is broadly defined as organic plant and

animal material in which all energy has been stored from photosynthesis. While wood resources

still account for 9% of the global total primary energy supply, traditional uses such as heating

and cooking with open fires make up the majority of demand. Bioenergy is a very broad term,

and can refer to the use of woody and non-woody plant sources, animal fats and manure, and

human waste, including municipal solid waste, for heat, power, or the conversion to liquid fuels

for transportation. It is important to note that the context of the central research question

specifically addresses forest-sourced biomass for modern heat and power applications in the

United States.

Biomass offers a number of advantages over other common energy sources for heat and

power. Unlike fossil fuels, biomass is a renewable resource, and can provide energy security by

reducing dependence on foreign fuel imports. It is widely available throughout the US, and can

be obtained at low cost in many regions. It is a familiar resource and can readily be utilized in

existing or repurposed coal plants. Because it can be stored, it can also meet 24/7 base power

needs, an advantage over other renewable resources such as wind and solar. At the same time,

biomass does have some disadvantages. Compared to fossil fuels, it is less energy dense,

meaning it has less heat content per unit mass, resulting in lower efficiency. Biomass combustion

can also result in high carbon monoxide and particulate emissions. While costs can be low in

certain areas, they are also variable, and as opposed to wind and solar energy, a constant fuel

supply is necessary. The production of biomass fuels also requires land and water resources and

can have negative ecological and socioeconomic impacts if not properly managed. Perhaps the

most important question about the use of biomass regards its carbon neutrality, which for the

time being could be considered an advantage or a disadvantage, depending on the point of view

taken.

While the carbon debate has yet to be settled, woody biomass has been used for modern

heat and power in the US for several decades, and there are policies in place to promote its

continued development, while the technology also continues to evolve. The development of the

domestic industry has been far outpaced by biomass development in Europe, however, and

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owing to the much greater wood supply available in the US, we became curious as to the causes

for this discrepancy. Using a combination of interviews with general stakeholders in the

domestic biomass industry and interviews with operators at successful biomass facilities, we

sought to uncover the barriers to investment.

The most commonly identified barriers for woody biomass for heat and power in the US

were in the areas of economics, policy, and public perception. With regard to economics, we

found location to be a key determinant of facility viability. Proximity to existing forest products

infrastructure was the top driver for success, as such infrastructure could reduce operational costs

for the collection, transportation, and processing of fuel. This is of critical importance because

fuel was consistently cited as the greatest share of operational costs for biomass facilities. The

use of secondary wastes and residuals also keeps fuel costs low, and for the same reason, is

contingent on location near existing forest products industries producing higher-value primary

products. But even when optimally sited, low prices for alternative fuels, particularly natural gas,

can still preclude new biomass generating capacity.

State Renewable Portfolio Standards, by which a predetermined percentage of electricity

sold in a state must come from renewable sources, were thought to be a key enabling policy that

could boost the competitiveness of biomass facilities. Such standards would have to define

biomass as a renewable resource, with additional requirements around sustainable fuel sourcing

practices and use of efficient technologies to make the best use of the heat content of fuels.

Public perception, often negative and fueled by uncertainty over the sustainability of

biomass, was the final major barrier. Woody biomass for domestic applications most commonly

uses wastes and residuals, rather than pellets, which are often primary products of a relatively

new industry. By proactively clarifying this distinction and honestly expounding the benefits of

biomass without exaggeration, facility owners and operators can address public concerns and

create more favorable investment environments.

Finally, tying back to both public perception and policy, is the scientific debate about the

carbon neutrality of biomass. Further, conclusive study, with life-cycle analysis that accounts for

direct and indirect land-use change, will be necessary to determine the carbon impacts of

different biomass feedstocks in different applications and in different geographies. Localized

approaches to such studies are of critical importance so as not to prematurely approve or

disapprove biomass as part of a national or global energy solution to climate change. The

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findings of carbon studies will inform public opinion and policy, and color the impressions of

potential biomass investors.

While we had good sector coverage of the domestic biomass industry, our study could

have benefited from additional interviews with stakeholder types not included here, as well as

more interviews within each of the included categories. The same applies for our case study

interviews, where more facilities would have lent greater statistical significance to the

conclusions of our report. More time would be necessary to account for non-response from

potential interviewees. If detailed financial data could be obtained on individual facilities, a

comparative financial analysis could also offer further insight. Finally, a GIS analysis of

proximity of biomass facilities to forest products infrastructure could help quantitatively assess

the validity of conclusions about the role of location in facility success.

II. INTRODUCTION

As long as 350,000 years ago, far before the advent of civilization, the controlled use of

fire first became routine1 and wood was the primary source of energy for proto-humans. Even

today, all uses of wood energy account for 9% of the global total primary energy supply (and

one-third of global renewable energy consumption) 2. Over two billion people in the modern

world depend on wood for cooking and/or heat, which are collectively referred to as “traditional”

uses of biomass.

i. WHAT IS BIOMASS?

Biomass is broadly defined as organic plant and animal material, in which all energy has

been stored, either directly (in the case of plants) or indirectly (in the case of animals, including

humans), from photosynthesis. Biomass can come from a variety of sources, whether woody or

non-woody plant sources, or human or animal fats and proteins. This report concerns woody

biomass, for the purposes of producing heat and electricity. In the hundreds of thousands of years

1 Ross, P. (2014, December 15). When Did Man Discover Fire? Ancestors Of Modern Humans Used Fire 350,000 Years Ago, New Study Suggests. Retrieved July 18, 2015, from http://www.ibtimes.com/when-­‐did-­‐man-­‐discover-­‐fire-­‐ancestors-­‐modern-­‐humans-­‐used-­‐fire-­‐350000-­‐years-­‐ago-­‐new-­‐1758607 2 Wood Energy. (2015). Retrieved July 18, 2015, from http://www.fao.org/forestry/energy/en/

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since the discovery of fire, wood has remained a leading energy source, though in recent times,

other sources have risen to dominance. In 2012, fossil fuels made up 82% of global total primary

energy demand3. The shift from wood to coal, oil, and natural gas over the last 200 years has

been driven by the high energy density and fungibility of those resources.

ii. HISTORY OF BIOMASS

Though archaeological records show that the first known use of coal energy, like wood

energy, was hundreds of thousands of years ago, it was not until the mid-1800s that it achieved

widespread use in the United States, first for cooking and heating, later for steam power and steel

furnaces, and finally for large-scale energy generation4. The dual use of coal for power and steel

production drove the Industrial Revolution, bringing with it previously unseen standards of

living. Along with prosperity came SOx, NOx, CO2, and particulate emissions5, which were

severely damaging for air quality and human health, while fatal mining accidents were a

common and tragic occurrence6. During the same period, natural gas was a popular lighting fuel,

though more recently, it has become a major fuel for heat and power production, due in large

part to its low cost7. Oil also has a long history and a modern importance that is impossible to

overstate, but in current times, it is primarily a transportation fuel. Nonetheless, it is still

commonly used in parts of the country for supplying building heat8.

iii. OBJECTIVE

The objective of this report is to assess the current state of the woody biomass market for

heat and power in the United States and the risk factors for investment in new facilities. At the

3 Organisation for Economic Co-­‐operation and Development/International Energy Agency. (2014). World Energy Outlook 2014. Paris, France. 4 A Brief History of Coal Use in the United States. (n.d.). Retrieved July 18, 2015, from http://www.fossil.energy.gov/education/energylessons/coal/coal_history.html 5 Coal. (n.d.). Retrieved July 18, 2015, from http://www.c2es.org/energy/source/coal 6 District 1 History -­‐ Coal Mine Safety and Health History of Anthracite Coal Mining. (n.d.). Retrieved July 18, 2015, from http://www.msha.gov/District/Dist_01/History/history.htm 7 Uses of Natural Gas. (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/our-­‐energy-­‐choices/coal-­‐and-­‐other-­‐fossil-­‐fuels/uses-­‐of-­‐natural-­‐gas.html#.Va1VavlVhBc 8 Frequently Asked Questions. (n.d.). Retrieved July 18, 2015, from http://www.eia.gov/tools/faqs/faq.cfm?id=41&t=6

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heart of our study is the question, “What are the barriers to investment in domestic biomass

facilities?” The type of biomass facilities examined in this report are those that make use of

wood-based fuel combustion for the purposes of electricity generation, industrial process heat,

space heating, water heating, or steam production, depending on the application. In addition to

creating a picture of the current investment landscape, we hope to draw conclusions about the

direction of future development, examining new opportunities, barriers to entry and growth,

emerging technologies, key market players, and policy drivers.

Most official reports on the topic are released either by industry sources or by

environmental non-governmental organizations, both of which have vested interests in the

eventual direction of biomass production9. Our report will detail many of the advantages and

disadvantages of biomass energy in an unbiased fashion. It is our hope that this report will be

accessible and informative to students, professionals, and government officials seeking to gain a

better understanding of the biomass market in the United States as it exists today, and as it may

evolve into the future, as well as to provide a basis for designing policy and making investment

decisions.

III. LITERATURE REVIEW

i. CLIMATE CHANGE AND OTHER ENERGY SOURCES

While the contributions of fossil fuels to society as we know it cannot be ignored, the

realization of the associated costs has become a major concern over the last few decades.

Anthropogenic global warming, driven by carbon emissions, poses threats to the entire world

population. Rising sea levels, flooding, droughts, extreme temperatures, more violent storms,

9 Fuelling a Biomess. (2011, November 2). Retrieved July 18, 2015, from http://www.greenpeace.org/canada/en/campaigns/forests/boreal/Resources/Reports/Fuelling-­‐a-­‐Biomess/ Upton, J. (2015, October 20). Pulp Fiction. Retrieved October 21, 2015, from http://reports.climatecentral.org/pulp-­‐fiction/1/ Biomass Sustainability and Carbon Policy Study. (2010, June 1). Retrieved July 18, 2015, from https://www.manomet.org/sites/default/files/publications_and_tools/Manomet_Biomass_Report_Full_June2010.pdf Woodworth, E. (2012). Inherent Sustainability & Carbon Benefits of the US Wood Pellet Industry. Retrieved July 18, 2015, from http://www.envivabiomass.com/wp-­‐content/uploads/inherent-­‐sustainability-­‐carbon-­‐benefits-­‐20121005.pdf

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food and water insecurity, spreading disease vectors, civil unrest, and loss of biodiversity are but

some of the potential effects of climate change. According the Energy Information

Administration, “[e]nergy-related carbon dioxide emissions accounted for 98 percent of U.S.

carbon dioxide emissions in 2009” and, “[t]he predominant share of carbon dioxide emissions

comes from fossil fuel combustion10.” As finite resources with restoration periods over

geological time, fossil fuels are reservoirs for tremendous amounts of carbon that once burned

and released, cannot be restored to the lithosphere for millions of years, irrevocably changing the

earth’s climate.

a) NUCLEAR POWER

Among non-fossil sources of modern energy, nuclear power is at the forefront. First

harnessed for electricity generation in 195111, nuclear power has remained a sizeable and

important source of energy in the United States since then, but there are concerns over waste

disposal, nuclear weapons proliferation, operational safety, and capital costs of new plant

construction12. Hydroelectric power is the largest source of renewable energy in the United

States today, followed by wind, woody biomass, geothermal, and solar, in that order13.

b) NON-BIOMASS RENEWABLES

Though non-biomass renewable energy sources come without some of the disadvantages

of fossil fuels and nuclear power, there are other factors that limit their use at present. While

hydroelectric plants have traditionally been considered renewable and sustainable sources of

energy, there has been contention around those claims, particularly the latter, in recent times. As

far as the renewability of hydropower, droughts, anticipated to increase in frequency and

10 Emissions of Greenhouse Gases in the U.S. (2011, March 31). Retrieved July 18, 2015, from http://www.eia.gov/environment/emissions/ghg_report/ghg_carbon.cfm 11 Outline History of Nuclear Energy. (2014, March 1). Retrieved July 18, 2015, from http://www.world-­‐nuclear.org/info/Current-­‐and-­‐Future-­‐Generation/Outline-­‐History-­‐of-­‐Nuclear-­‐Energy/ 12 Brain, M., & Lamb, R. (n.d.). How Nuclear Power Works. Retrieved July 18, 2015, from http://science.howstuffworks.com/nuclear-­‐power4.htm 13 Electric Power Monthly: July 2015. (2015, September 24). Retrieved October 4, 2015, from http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_1_1_a

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magnitude with climate change, can limit production from dams. From a sustainability

standpoint, the construction of dams may flood vegetated areas, resulting in methane emissions,

as well as limiting alternative uses of land, such as wildlife habitat, residential development and

agriculture14. Wind and solar energy are truly renewable, and have great promise, though they

are limited by intermittency and lack of infrastructure. Because the wind does not always blow

and the sun does not always shine, energy generated by these sources must either be stored or be

optimally supplied to match demand. In the absence of cost-effective, large-scale energy storage

and smart grid technologies, wind and solar energy cannot meet baseload power demand15.

Furthermore, there are key areas where wind and solar resources are most abundant, but in some

cases, the necessary transmission and distribution infrastructure does not exist to capitalize on

resource availability16. Geothermal energy is particularly limited geographically, but where

available, has great promise for the future17.

ii. PROS AND CONS OF BIOMASS

Because wood is approximately 50% carbon by weight, and trees grow over relatively

short timespans compared to the formation of fossil fuels, woody biomass has the potential to

circulate existing atmospheric and biogenic carbon rather than releasing carbon that has been

stored over millions of years18. Wood is a renewable resource, and is disputably carbon neutral,

at least on a timescale orders of magnitude less than fossil fuels. Furthermore, reforestation and

afforestation efforts have contributed to greater wood fiber supply in certain key regions of the

United States. It is a familiar resource and does not require advanced technology to be utilized, at

least not for direct combustion applications. Minimal cost and effort are necessary to co-fire

wood with coal, or to repurpose coal thermal power stations to burn wood. In markets where it

14 Hydropower. (n.d.). Retrieved July 18, 2015, from http://www.c2es.org/technology/factsheet/hydropower 15 Fares, R. (2015, March 11). Renewable Energy Intermittency Explained: Challenges, Solutions, and Opportunities. Retrieved July 18, 2015, from http://blogs.scientificamerican.com/plugged-­‐in/renewable-­‐energy-­‐intermittency-­‐explained-­‐challenges-­‐solutions-­‐and-­‐opportunities/ 16 Barriers to Renewable Energy Technologies. (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/smart-­‐energy-­‐solutions/increase-­‐renewables/barriers-­‐to-­‐renewable-­‐energy.html#.VgL0U_lViko 17 Geothermal Energy. (n.d.). Retrieved July 18, 2015, from http://www.altenergy.org/renewables/geothermal.html 18 Cushman, J., Marland, G., & Schlamadinger, B. (n.d.). Biomass Fuels, Energy, Carbon, and Global Climate Change. Retrieved July 18, 2015, from http://web.ornl.gov/info/ornlreview/rev28_2/text/bio.htm

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grows locally, woody biomass can reduce reliance on costly fuel imports and provide energy

security, though prices can vary considerably depending on location and purchase quantity19. In

thermal power applications, woody biomass offers baseload stability. Wood fuels can be stored

and consistently burned to meet around-the-clock energy demand. As the enabling technologies

to make intermittent sources viable for baseload applications continue to develop and improve,

woody biomass can provide a more favorable carbon profile in the transition away from fossil

fuels. Wood energy also does not come with the safety or cost issues associated with nuclear

energy.

At the same time, wood energy is not without its unique disadvantages. Particularly for

residential uses in developing countries, wood combustion is associated with high carbon

monoxide and particulate emissions and can contribute significantly to human mortality and

global warming20. Growing energy demand, coupled with slow forest growth rates, can lead to

deforestation and substantial alteration of landscapes, resulting in loss of wildlife habitat, soil

erosion and nutrient depletion, and reduced water storage capacity21. These effects can have

lasting impacts as in the case of European lands cleared for agriculture and pasture as long as

3,000 years ago22. In a modern context, biomass crops purposefully planted as energy resources

can create competition for land where competing uses might be conservation areas, wildlife

habitat, timber production, pastureland, agricultural production, or urban development23.

Furthermore, intensively managed forest plantations may put pressure on groundwater resources,

which in certain regions of the world, are becoming increasingly limited24. Finally, there is the

question of the carbon neutrality of wood energy. There is still no scientific consensus on this

issue, so only objective claims from both sides of the argument shall be presented here.

19 Bioenergy. (n.d.). Retrieved July 18, 2015, from https://www.iea.org/topics/renewables/subtopics/bioenergy/ 20 Traditional use of Biomass. (n.d.). Retrieved July 18, 2015, from http://www.unep.org/climatechange/mitigation/Bioenergy/Issues/TraditionaluseofBiomass/tabid/29473/Default.aspx 21 Bradford, A. (2015, March 4). Deforestation: Facts, Causes & Effects. Retrieved July 18, 2015, from http://www.livescience.com/27692-­‐deforestation.html 22 Kaplan, J., Krumhardt, K., & Zimmermann, N. (2009). The prehistoric and preindustrial deforestation of Europe. Quaternary Science Reviews, 28 (27-­‐28), 3016-­‐3034. doi:10.1016 23 Searchinger, T. (2015, January 28). Why Dedicating Land to Bioenergy Won't Curb Climate Change. Retrieved July 18, 2015, from http://www.wri.org/blog/2015/01/why-­‐dedicating-­‐land-­‐bioenergy-­‐wont-­‐curb-­‐climate-­‐change 24 Dijk, A., & Keenan, R. (2007). Planted forests and water in perspective. Forest Ecology and Management, 251 (1-­‐2), 1-­‐9. doi:10.1016

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a) CARBON NEUTRALITY

On the one hand, there is the argument that the carbon released from the combustion of

wood fuels is carbon that was taken from the atmosphere over the growth lifetime of that

biomass. In the absence of collection, the trees, wastes, and residuals used for fuel would

eventually die and decompose, releasing that carbon to the atmosphere anyway. Those in favor

of wood energy argue that it is better to burn the biomass, releasing biogenic CO2 and displacing

fossil fuel combustion that would otherwise release additional carbon stored over millions of

years without the ability to recapture it on any meaningful timescale25.

The other side of the argument states that the management of woody biomass resources

over their lifespan is inherently energy intensive, from planting, to fertilization and thinning, to

harvest operations. Processing wood into fuel (fuel types are described in the next section) and

transporting that fuel to market further contribute to the energy input and carbon footprint of

woody biomass. The answer or answers to the question of “additionality” would ultimately

determine the carbon footprint of biomass. If use of biomass does not result in direct land use

change, there is no net benefit as the carbon absorbed by those fuels would have been absorbed

anyway. Only if biomass utilization results in additional plant growth relative to a base case

scenario, would there be additional carbon sequestration benefits. There are further indirect

effects that also must be considered, however, including the emissions from production of

biomass fuels as compared to emissions from production of conventional fossil fuels. Indirect

land use change, where demand for biomass energy can result in the displacement of agricultural

crops, may result in land conversion elsewhere to make up food production, and can cause

landscape carbon loss. Life-cycle analyses accounting for indirect carbon effects must be carried

out for different fuel types in different geographies to fully understand the impacts of biomass

use26. The arguments against biomass also give more weight to the value of stored carbon in the

form of standing forests, and make the point that a sudden release of carbon from combustion

25 How Biomass Energy Works. (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/our-­‐energy-­‐choices/renewable-­‐energy/how-­‐biomass-­‐energy-­‐works.html#.VaPpAvlVhBd 26 Searchinger, T. (2010). Biofuels and the need for additional carbon. Environmental Research Letters, 5(2). Retrieved July 18, 2015, from http://iopscience.iop.org/article/10.1088/1748-­‐9326/5/2/024007/meta;jsessionid=AED153CF498DBE2A9E667348BEA30FD7.c4.iopscience.cld.iop.org

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has greater neart-term consequence for climate change than carbon released from decomposition

over a period of years or decades27. The species of trees used for fuel, and the time period over

which net carbon emissions are evaluated can dramatically change emissions values. The

recommendations contained in this report are contingent on the variation in climate impact

estimates from different sources using different accounting procedures.

iii. FUEL TYPES

While the focus of this report is on the use of woody biomass for heat and power in the

United States, it is important to provide a broader view of global bioenergy, as a whole, for

context. Bioenergy, besides being heat and power (biopower), can also include biofuels, most

commonly used for transportation, but also in industrial equipment. Feedstocks, as already

mentioned, can come from forest resources, but also from the agriculture and waste sectors.

Agricultural feedstocks may be dedicated energy crops, agricultural residues, or animal manure,

while waste feedstocks may be human waste or municipal solid waste (MSW). In many cases,

feedstocks can be used directly, in other cases, they may undergo a series of conversion

processes resulting in solid, liquid, or gaseous forms28. The following section will address forest-

sourced biomass for heat and power, both as direct and processed fuels.

a) WASTES AND RESIDUALS

Woody biomass sources are essentially wood and wood waste, such as whole trees

harvested from plantations, lumber and paper mill wastes, urban wood waste, and forest

residues29. Waste resources are ecologically preferable over dedicated biomass plantations to

avoid the impacts of land-use change as described in the previous section, and also because they

can generally be obtained at lower cost. Fuel resources may be provided in forms that are already

useable, or can be processed into wood chips, sawdust, or wood pellets, the most common fuel

27 Fuelling a Biomess. (2011, November 2). Retrieved July 18, 2015, from http://www.greenpeace.org/canada/en/campaigns/forests/boreal/Resources/Reports/Fuelling-­‐a-­‐Biomess/ 28 Bioenergy (Biofuels and Biomass). (n.d.). Retrieved July 18, 2015, from http://www.eesi.org/topics/bioenergy-­‐biofuels-­‐biomass/description 29 What is Wood Biomass. (n.d.). Retrieved July 18, 2015, from http://www.woodbiomass.com/aboutBiomass.html

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types for direct combustion. Such processing is necessary due to the physical form of whole trees

and logs and their moisture content, which makes them difficult to transport and store, and unfit

to burn directly in modern applications. Forest residues and urban waste are commonly

processed into wood chips for transport and disposal, making them convenient resource streams

for wood energy facilities, where they can produce heat and power rather than being left to

decompose. Both options would result in identical carbon emissions, though the former would

allow for the displacement of some fossil fuel use. Sawdust is a common byproduct of sawmill

operations and is also well-suited for direct combustion. Some amount of moisture must be

removed from both wood chips and sawdust, either through passive or active drying. Passive

drying is slower, but requires no additional energy input, while active drying is faster and

requires energy input, which adds cost and increases the carbon footprint of the fuel. Wastes and

residuals are the most commonly used woody biomass fuel types for domestic heat and power

applications.

b) PELLETS

Wood fuels, whether from dedicated biomass plantations, or waste from other timber

operations, can be processed into wood chips or sawdust with relative ease. Pellets require a

more involved process, where raw wood is reduced to fine consistency through a hammer mill

and pressed into pellets at high pressure, plasticizing the lignin within and providing durability.

Buyers of wood pellets have exacting standards for consistency, density, strength, size, heat and

moisture content, and dust and ash content30. The pellet market in the United States is very

limited, mostly for residential scale wood stoves, while European demand at the utility scale is

significantly larger, as later described in the “State of the Market” section.

c) TORREFIED WOOD

Wood chips, sawdust, and wood pellets can all be transported and stored, but are

vulnerable to moisture, which can render them unfit for effective combustion. Torrefaction is a

30 Christiansen, R. (n.d.). The Art of Biomass Pelletizing. Retrieved July 18, 2015, from http://biomassmagazine.com/articles/2465/the-­‐art-­‐of-­‐biomass-­‐pelletizing

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form of pyrolysis in which biomass is subjected to temperatures between 200°C and 300°C in the

absence of oxygen and at atmospheric pressure31. The process removes moisture and volatile

compounds and partially decomposes hemicelluloses, increasing the energy density of the fuel,

making it more homogeneous and water repellant, terminating biologic activity that could result

in further decomposition, and improving the grindability for further processing. The volatiles

released during heating can be used as fuel for further heating, making torrefaction a self-

sufficient process. The end product can be compacted into pellets or briquettes, further

increasing bulk density. Torrefied and densified wood provides the uniformity and heat content

to make it a more versatile fuel for co-firing and all other applications, including gasification,

while also being better suited for transport and storage due to its hydrophobic properties and lack

of biological activity. Despite the advantages of torrefaction, it is not widely used at present.

d) PYROLYSIS OIL

The production of pyrolysis oil relies on a similar process of heating in the absence of

oxygen. Biomass must first be pre-treated by drying and reduced in size to increase surface area.

It is then heated in an airtight, oxygen-free pyrolysis reactor at temperatures of 400°C to 650°C,

producing raw gases containing volatiles. These gases are then purified using a cyclone separator

to collect char, and the purified gas is quenched with cool water and condensed into pyrolysis oil,

also known bio-oil, biocrude, and bioleum. Purified gas that is not condensed is recycled by

feeding it back into the combustor of the pyrolysis reactor32. At present, the technology to

produce pyrolysis oil is not yet mature or cost-effective, and the end product is highly acidic and

corrosive, limiting its applications for petroleum replacement, while also making it difficult to

store and transport33. It is still useful for basic heat and power generation applications, though.

31 Sokhansanj, S. (2013, October 7). Torrefaction: Pre-­‐ or Post-­‐Pelletization. Retrieved July 18, 2015, from http://biomassmagazine.com/articles/9522/torrefaction-­‐pre-­‐or-­‐post-­‐pelletization/ 32 Process of Pyrolysis. (2013, January 8). Retrieved July 18, 2015, from https://www.youtube.com/watch?v=Ut3I7OIPFR8 33 Wolff, R. (2010, December 2). Pyrolysis Oil Challenges and Solutions. Retrieved July 18, 2015, from http://biomassmagazine.com/articles/6642/pyrolysis-­‐oil-­‐challenges-­‐and-­‐solutions

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e) BLACK LIQUOR

Black liquor is a byproduct of the pulp and paper industry and another common liquid

fuel source, most often used on-site for both heat and power. Wood chips are combined with

water and white liquor (an alkaline pulping solution consisting mostly of sodium hydroxide and

sodium sulfide) and subjected to heat and pressure to separate lignin from cellulose fibers. Once

the cellulose fibers are extracted, the remaining solution is known as weak black liquor. Water is

removed and recycled back into the separation process, and the leftover solution is concentrated

into heavy black liquor. Heavy black liquor is approximately 60% dissolved solids and 40%

water and can be burned in recovery boilers to produce electricity, hot water, or steam. Some of

the solids in the heavy black liquor may not be completely burned, and are instead processed

back into white liquor for the pulping process34. Black liquor is a commonly used fuel for on-site

operations at pulp and paper mills.

f) SYNGAS (PRODUCER GAS)

Gasification is a multi-stage process that turns biomass into synthetic gas, better known

as syngas or producer gas. The process begins with dehydration, where wood feedstocks are

dried at temperatures around 100°C to remove moisture. The next step also uses pyrolysis, where

the dried wood is subjected to temperatures of 200°C to 300°C in the absence of oxygen,

resulting in decomposition and the release of liquid and gaseous volatiles (tars), leaving behind

solid charcoal. The tars and some of the char then react with oxygen and undergo combustion,

producing carbon monoxide, carbon dioxide, and the heat to drive the following steps of

gasification. In the reduction phase, carbon dioxide (from the combustion phase) or water vapor

are passed over the hot charcoal, which strips oxygen to produce carbon monoxide and hydrogen

gas, which together form the desired producer gas35. Producer gas is a high quality fuel that can

readily be combusted for heat and electricity applications. It can also be used for electricity

34 What, exactly, is black liquor? Just ask the tax man. (2010, May 24). Retrieved July 18, 2015, from http://www.risiinfo.com/blogs/What-­‐exactly-­‐is-­‐black-­‐liquor-­‐Just-­‐ask-­‐the-­‐tax-­‐man.html 35 How Gasification Works. (n.d.). Retrieved July 18, 2015, from http://www.allpowerlabs.com/info/gasification-­‐basics/gasification-­‐explained

14

production through fuel cells, but that use is beyond the scope of this report. Gasification is still

limited in application by its high cost and need for further technology refinement.

iv. APPLICATIONS

The heat and electricity applications of woody biomass can be more accurately described

as thermal and thermal power, respectively. Thermal applications provide heat for industry and

buildings. The most basic and common form of thermal wood energy is direct combustion,

where fuels are combined with oxygen and an ignition source to produce heat, carbon dioxide,

and water. Owing to the impurities in fuel and incomplete combustion, there are also other

byproducts such as carbon monoxide, hydrocarbons, and particulates. The heat produced in the

combustion reaction is the desired output for thermal applications.

a) THERMAL APPLICATIONS

At present, thermal applications of wood energy are the dominant uses throughout the

world, providing heat for homes and for cooking, as well as light. At a larger scale, owing to

their essentially free cost, forest industry waste byproducts are commonly burned at lumber and

paper mills where the resulting heat may be useful for various on-site processes36. There are even

more advanced uses of biomass heat, such as district heating, where networks of insulated pipes

deliver heat from a central point of combustion to decentralized points of use via hot water or

steam, whether in industrial settings, work or school campuses, small communities, or even

whole cities37. In the United States, district heating is most prevalent on educational campuses,

but has not gained more widespread use at larger scales as in Europe. All the fuel types

previously discussed can be used for the thermal applications listed here. Such applications tend

to be inherently efficient, especially as the scale increases. At the smallest scale, however,

residential wood combustion in developing countries for heat and cooking, there are significant

36 Trossero, M. (n.d.). Wood energy: The way ahead. Retrieved July 18, 2015, from http://www.fao.org/docrep/005/y4450e/y4450e02.htm 37 What is District Heating? (n.d.). Retrieved July 18, 2015, from http://www.theade.co.uk/what-­‐is-­‐district-­‐heating_191.html

15

inefficiencies that can be remedied with simple, cost-effective technologies such as improved

cookstoves (which like fuel cells, are beyond the scope of this report).

b) PURE THERMAL POWER

Thermal power applications still rely on combustion, but only as a first step in a more

complex series of conversions to produce electricity. The heat from combustion is applied to

water in a boiler to produce steam. This high-pressure steam is then run through a steam turbine

connected to a generator to produce electricity, a high-grade form of energy that can then be

converted for a variety of uses. After running through the turbine, the steam is cooled and

condensed back to water so it can again be converted to steam.

The process for thermal power generation is essentially the same, regardless of the fuel.

All the fuel types mentioned in the previous section can be utilized, and there are at least a few

working examples in the world for each. Dedicated biomass plants tend to be newer and are

purpose-built to accept biomass to fuel their boilers, but they must be designed for the specific

fuel type they will use. Also relatively common is co-firing, where biomass is mixed with

another fuel, usually coal, at an optimally determined ratio and fed into the boiler. Co-firing

requires minimal modification to existing fossil fuel thermal power stations and has a negligible

effect on plant efficiency. Demonstrations have successfully proven the viability of up to 15%

energy input from biomass, which can curb carbon dioxide emissions, and especially sulfurous

gas and nitrogen oxide emissions38. Going a step further, existing plants can be repurposed to

accept wood fuels. Biomass conversions have been most prevalent in the United Kingdom,

where the largest coal plant, Drax Power Station, is converting its generation units to accept

biomass in an attempt to meet a 20% renewable energy target by 202039. Again, these are usually

coal plants, and they require little modification for the fuel switch, though slightly more than

would be the case for co-firing. Owing to the lower heat content of wood fuels, efficiencies may

drop for the types of plants discussed here.

38 Biomass Cofiring: A Renewable Alternative for Utilities. (2000, June 1). Retrieved July 18, 2015, from http://www.nrel.gov/docs/fy00osti/28009.pdf 39 Loria, K. (2014, March 23). UK Coal-­‐to-­‐Pellet Conversions Ahead . Retrieved July 18, 2015, from http://biomassmagazine.com/articles/10130/uk-­‐coal-­‐to-­‐pellet-­‐conversionsahead

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c) COMBINED HEAT AND POWER (CHP OR CO-GENERATION)

To combat low efficiency and make better use of the heat content of fuel, co-generation,

also known as combined heat and power (CHP), may be employed. In this design, steam from

the boiler containing excess heat after passing through the generator turbine is redirected to other

uses40. These uses may be any of the medium to large scale thermal applications described

earlier, including industrial process and space heating. According to the International Energy

Agency, the global average conversion efficiency of co-generation plants in 2011 was 58%,

compared to 36% for conventional thermal power stations41. There are several examples of CHP

being combined with district heating networks in Austria, efficiently producing heat and

electricity for buildings42.

d) INTEGRATED GASIFICATION COMBINED CYCLE (IGCC)

Integrated gasification combined cycle (IGCC) plants use gasifiers to produce syngas

from biomass and steam and then run the syngas through a purification process and finally

through a combustion turbine to produce electricity. The heat from the exhaust gas is then

captured by a heat recovery steam generator, which produces steam for another turbine to

generate additional electricity43. The steam coming out of the turbine can then be fed back into

the gasifier to produce more syngas. As mentioned in the section on fuel types, gasification is not

yet a commercial technology.

40 Basic Information. (n.d.). Retrieved July 18, 2015, from http://www.epa.gov/chp/basic/ 41 What’s holding back co-­‐generation and efficient district heating and cooling? (2014, May 21). Retrieved July 18, 2015, from http://www.iea.org/newsroomandevents/news/2014/may/whats-­‐holding-­‐back-­‐co-­‐generation-­‐and-­‐efficient-­‐district-­‐heating-­‐and-­‐cooling.html 42 Egger, C., Ohlinger, C., Auinger, B., Brandstatter, B., Richler, N., & Dell, G. (n.d.). Biomass heating in Upper Austria: Green energy, green jobs. Retrieved July 18, 2015, from https://www.biomassthermal.org/resource/PDFs/Austria_Biomass_heating_2010.pdf 43 How IGCC Works. (n.d.). Retrieved July 18, 2015, from https://www.duke-­‐energy.com/about-­‐us/how-­‐igcc-­‐works.asp

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e) CARBON CAPTURE AND SEQUESTRATION (CCS)

Like coal combustion, wood combustion releases carbon dioxide and will require some

form pollution control if it is to be a truly sustainable option for meeting future heat and power

needs. Carbon capture and sequestration, though still in early stages of development, has much

promise in this regard, though for biomass energy with carbon capture and storage (BECCS) to

be most effective, the biomass must come from sustainable sources in the first place.

There are three main types of carbon capture, post-combustion, pre-combustion, and oxy-

fuel combustion. Post-combustion captures carbon dioxide from the power station exhaust

stream using specially formulated liquids, from which the carbon dioxide is then extracted,

compressed, and stored underground. Pre-combustion capture is essentially the use of

gasification to convert biomass fuel into syngas, and the carbon dioxide from the process can be

separately captured, compressed, and stored as in post-combustion capture. In oxy-fuel capture,

the fuel is burned in oxygen, rather than air, which results in a more concentrated emission

stream of carbon dioxide, which is easier to capture. CCS technologies can capture up to 90% of

carbon dioxide emissions from power generation44, though with potentially significant

generation efficiency losses known as energy penalties45. These technologies are also targeted

for future cost reductions through additional development and refinement.

v. STATE OF THE MARKET

In analyzing the literature, current implementation and future adoption of biomass usually

did not distinguish between woody and non-woody sources. Besides wood and wood-derived

resources, the number values in the following discussion may also include resources from crop

residues, biogas, municipal solid waste (MSW), and others. Where values are specific to woody

biomass, they are explicitly called out. Furthermore, much of the literature does not distinguish

between biomass for heat and power versus biomass as a feedstock for biofuel production. While

woody biomass is the dominant biomass resource in use today for the purposes of heat and

44 Frequently asked questions. (n.d.). Retrieved July 18, 2015, from http://www.ccsassociation.org/faqs/ccs-­‐capture/ 45 Harkin, T., Hoadley, A., & Hooper, B. (2010). Reducing the energy penalty of CO2 capture and compression using pinch analysis. Journal of Cleaner Production, 18(9), 857-­‐866. doi:10.1016

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power production, the greatest growth in the future is expected to come from dedicated energy

crops and agricultural residues, primarily for biofuels. The following table shows biomass supply

in 2012 by source. The data is taken from the World Biomass Association Global Energy

Statistics 201546.

Fuelwood makes up an outsize share of supply sources, and is employed for traditional

uses of heating and cooking. Even excluding fuelwood, however, forestry sector resources

contribute more to global biomass supply than the agriculture and waste sectors combined. The

table below also uses WBA data and shows global biomass consumption in 2012 by end-use.

Residential use is clearly the dominant application, further demonstrating the importance of

traditional heating and cooking, even in the modern day. There is considerable biomass

consumption for modern industrial heat applications as previously described, as well.

46 Kummamuru, B. (2015, June 1). WBA Global Bioenergy Statistics 2015. Retrieved July 18, 2015, from http://www.worldbioenergy.org/sites/default/files/WBA Global Bioenergy Statistics 2015 (press quality).pdf

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a) FUTURE ADOPTION

According to data from the US Energy Information Administration (EIA), 4.6 quadrillion

BTU of biomass energy were consumed in the United States in 2013. The EIA projects this

figure to rise to 5.6 quadrillion BTU in 2040. Present electric generating capacity from biomass

is approximately 11 GW, making it the third largest renewable power resource after hydro and

wind47. While the average current biomass boiler has a capacity of 38 MW, there are several

plants in the planning or construction process in the 50 – 110 MW range48.

A 2005 DOE study, updated in 2011, identified the potential for 368 million dry tons of

forest-derived biomass to be sustainably produced on an annual basis, more than two-and-a-half

times annual consumption at the time of publication49. A 2007 EIA study projected 75 GW of

wood and other biomass capacity and 620 billion kWh of annual generation (dedicated biomass

and co-firing combined) by 2025 based on a 2007 Annual Energy Outlook reference case, with

the addition of a 25% Renewable Portfolio Standard and a 25% Renewable Fuel Standard50. A

2007 NREL study estimated 423 million metric tons of biomass availability each year51. Another

assessment by the Union of Concerned Scientists (UCS) estimated 680 million tons of biomass

production each year by 2030, which if used exclusively for electricity, could provide 732 billion

kWh or 19% of 2010 US consumption. It is important to note that these resources would consist

mostly of energy crops, followed by agricultural residues, with wood resources only providing a

small fraction52. The US Department of Energy (DOE) projects the 258-340 million dry tons per

year available now to increase to 767-1600 million tons by 203053.

47 Electricity from Biomass. (n.d.). Retrieved July 18, 2015, from http://www.powerscorecard.org/tech_detail.cfm?resource_id=1 48 Biomass energy overview. (2011, March 17). Retrieved July 18, 2015, from http://www.pfpi.net/biomass-­‐basics-­‐2 49 Biomass as Feedstock for a Bioenergy and Bioproducts Industry: The Feasibility of a Billion-­‐Ton Annual Supply. (2005, April 1). Retrieved July 18, 2015, from http://feedstockreview.ornl.gov/pdf/billion_ton_vision.pdf 50 Energy and Economic Impacts of Implementing Both a 25-­‐Percent Renewable Portfolio Standard and a 25-­‐ Percent Renewable Fuel Standard by 2025. (2007, August 1). Retrieved July 18, 2015, from http://www.eia.gov/analysis/requests/2007/eeim/pdf/sroiaf(2007)05.pdf 51 How Biomass Energy Works. (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/our-­‐energy-­‐choices/renewable-­‐energy/how-­‐biomass-­‐energy-­‐works.html#.VaVbIPlVhBd 52 Biomass Resources in the United Staets. (2012, September 1). Retrieved July 18, 2015, from http://www.ucsusa.org/sites/default/files/legacy/assets/documents/clean_vehicles/Biomass-­‐Resource-­‐Assessment.pdf 53 Shelly, J. (n.d.). Woody Biomass Factsheet. Retrieved July 18, 2015, from http://www.pelletheat.org/assets/docs/industry-­‐data/infoguides43284.pdf

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b) POLICIES

There are a number of policies in place that are driving biomass demand growth in the

US. The first of these policies, the Public Utility Regulatory Policy Act (PURPA) dates back to

1978. Prior to the passage of PURPA, power plants could only be owned and operated by utility

companies. The law mandated that utilities purchase power from independent producers that

could provide power at lower cost than that for utilities to generate power themselves54. PURPA

has been instrumental in building non-hydro renewable generating capacity, including that from

biomass, and many of the biomass facilities in operation today are decades old. An

Environmental Protection Agency (EPA) exemption for biomass facilities from greenhouse gas

permitting requirements has partially contributed to more recent facility construction, but the

exemption (originally granted until July 21, 2014) was overturned by the D.C. District Court on

July 12, 201355. The case is currently awaiting rehearing.

In states where biomass meets the definition of renewable resources, Renewable Portfolio

Standards (RPS) have further driven demand. These standards vary by state, and are binding

targets for a predefined percentage of all electricity sold within a state to come from renewable

sources. As utilities attempt to meet compliance, biomass resource availability and low prices

can make it an attractive option. RPS targets have driven these utilities to invest in dedicated

biomass, co-firing, and conversions. In other cases, utilities can purchase credits from industrial

facilities using biomass for heat and/or power. Such facilities include lumber and paper mills,

where biomass resources are abundant and in close proximity. There are also energy production

tax credits (PTCs) and investment tax credits (ITCs) that reduce tax burdens for biomass

facilities on the basis of energy produced or a portion of development costs incurred,

respectively. Plant developers can only choose one or the other. The Biomass Crop Assistance

Program (BCAP), under the US Department of Agriculture (USDA), also provides fuel subsidies

for biomass plants, reducing operating costs and making them more competitive56.

54 Public Utility Regulatory Policy Act (PURPA). (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/smart-­‐energy-­‐solutions/strengthen-­‐policy/public-­‐utility-­‐regulatory.html#.VhGM2XpViko 55 Childers, A. (2014, March 26). EPA Begins to Address Biomass Emissions in Permits Following Court Decision. Retrieved July 18, 2015, from http://www.bna.com/epa-­‐begins-­‐address-­‐n17179889189/ 56 Biomass energy overview. (2011, March 17). Retrieved July 18, 2015, from http://www.pfpi.net/biomass-­‐basics-­‐2

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Also worth mention is the Renewable Fuel Standard (RFS), originated with the Energy

Policy Act of 2005 (RFS1) and updated by Congress (RFS2) through the Energy Independence

and Security Act of 2007 (EISA). Similar to RPS, RFS requires that a fixed percentage of

petroleum transportation fuels be replaced by renewable fuels. RFS2 pertains only to biofuels

and volume requirements are defined through 2022 at 36 billion gallons, of which no more than

15 billion gallons can come from corn starch57. These requirements are the primary driver for the

disproportionate growth expected for biofuels as compared to biopower. The competing forces of

increased demand for wood feedstocks for cellulosic biofuels and land resource demand for

agricultural biofuel feedstocks could create significant supply pressures that would increase fuel

costs for wood-based biomass heat and power.

At the same time as domestic demand is increasing, there is growing supply pressure

from European demand. Several European nations have committed to reducing greenhouse gas

emissions 18% below 1990 levels from 2013 to 2020 under the Kyoto Protocol58, while

European Union policy calls for 20% of European energy consumption to come from renewable

sources by 202059. The United Kingdom has aggressively pursued biomass as it is fast and cost-

effective to co-fire and repurpose coal plants for wood pellets60. According to the EIA, the Drax

plant, mentioned in the applications section, “accounted for more than 80% of all of the United

Kingdom's wood pellet imports from the United States, and almost 60% of all U.S. wood pellet

exports to all countries61.” The EU Forest Action Plan, adopted in 2006, identifies as one of its

key actions to “[p]romote the use of forest biomass for energy generation” under the idea that

“[m]ore than half of the EU’s renewable energy already comes from biomass, 80% of which is

wood biomass. Wood can play an important role as a provider of biomass energy to offset fossil

fuel emissions, and as an environmentally friendly material62.”

57 Renewable Fuel Standard. (n.d.). Retrieved July 18, 2015, from http://www.c2es.org/federal/executive/renewable-­‐fuel-­‐standard 58 Kyoto Protocol. (n.d.). Retrieved July 18, 2015, from http://unfccc.int/kyoto_protocol/items/2830.php 59 The 2020 climate and energy package. (n.d.). Retrieved July 18, 2015, from http://ec.europa.eu/clima/policies/package/index_en.htm 60 Evans, S. (2015, May 11). Investigation: Does the UK's biomass burning help solve climate change? Retrieved July 18, 2015, from http://www.carbonbrief.org/blog/2015/05/investigation-­‐does-­‐the-­‐uks-­‐biomass-­‐burning-­‐help-­‐solve-­‐climate-­‐change/ 61 UK's renewable energy targets drive increases in U.S. wood pellet exports. (2015, April 22). Retrieved July 18, 2015, from http://www.eia.gov/todayinenergy/detail.cfm?id=20912 62 Walker, T., Cardellichio, P., Colnes, A., Gunn, J., Kittler, B., Perschel, B., . . . Saah, D. (2010, June 1). Biomass Sustainability and Carbon Policy Study. Retrieved July 18, 2015, from

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IV. METHODOLOGY

In carrying out our analysis of the current state of woody biomass in the United States

and barriers and risk factors for investment, we relied primarily on general interviews with

industry stakeholders and more targeted case study interviews with biomass facility operators.

For the general interviews, we solicited perspectives from a land manager, education and

outreach foresters, government agents, non-governmental organization representatives, and

biomass energy consultants, among others. In doing so, we made our best efforts to condense and

objectively present the factual information in a format that is easy to understand.

i. GENERAL INTERVIEWS

We established our first general interview contacts through our academic adviser, Dan

Richter. Through conversations with those initial contacts, we were introduced to further

potential interviewees. In other cases, we were not introduced directly, but additional

organizations and individuals were recommended by interview subjects, and we used web

research to find the necessary contact information. In selecting interviewees, we attempted to

represent the industry broadly, with input from academics, investors, consultants, NGO and non-

profit representatives, and others. The table below provides a breakdown of industry coverage by

stakeholder type.

https://www.manomet.org/sites/default/files/publications_and_tools/Manomet_Biomass_Report_Full_June2010.pdf

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ii. CASE STUDIES

For our case studies, we cast a wide net, reaching out to operators at dedicated biomass

plants, repurposed fossil fuel plants, industrial combined heat and power facilities, and district

heating networks of varying sizes. We relied extensively on internet research to compile a list of

facilities relevant to our study, as well as contact information for the specific facilities or the

organizations that own them. The ultimate selection of facilities for our case studies was based

on which contacts responded to us, and which facilities had further information available online.

The individual respondents included facility managers, fuels managers, and a facility owner.

Our case studies sought to answer the central question posed in the objective, as well as

to make extrapolations for wider policy and financial implications. Where have investments in

woody biomass succeeded and failed, and why? Can the lessons from specific cases be applied

more broadly, or are there special conditions that must exist? Hypothesized drivers of success or

failure included policy, economics, technology, public perception, and logistical issues,

particularly with regard to fuel supply. Based on these types of drivers, we posed largely

economic and technical, as well as organizational and societal theories for why facilities succeed

or fail.

Our case study methodology was based on the book Case Study Research: Design and

Methods, 5th edition by Robert K. Yin. Our research questions were how and why questions, and

we as researchers, had no control over behavioral events. Furthermore, the focus of the study was

contemporary. With the massive amounts of time and capital required for the construction and

operation of biomass facilities, the nature of our project was not conducive to experiments or

trials. We sought to address common concerns over the rigor of case study research by using

systematic procedures. Our procedure was thoroughly documented, with records kept of our IRB

exemption request and approval, interview transcripts, email records of interviewees’ agreement

to participate, informed consent forms, and rigorous notes. IRB exemption was sought as our

research was largely based on data from interviews and our interview questions were framed to

capture expert opinion on industry and markets with relative objectivity. In addition to informed

consent, great care was taken in designing our research methods to avoid harm or deception to

interview subjects, as well as to protect their privacy and confidentiality. Given the targeted

24

nature of our research, there was little concern over equitable selection of research subjects or

effects on especially vulnerable groups.

iii. STUDY DESIGN

Our design is replicable as it relies on a standard set of questions (though with some

flexibility for improvisation according to individual expertise). This replicability produced some

contrasting results among case studies, but for anticipatable reasons. Our central research

question provided a common starting point from which to launch an investigation into individual

facilities, which was our unit of analysis.

Using a combination of interviews with facility managers and online research, we hoped

to collect substantial data in order to paint a clear picture of the intrinsic and extrinsic factors that

determine the success of biomass facilities. This data included basic facility information, such as

name, owner, location, and capacity. Broad, qualitative financial information, such as

descriptions of major capital and operating costs, was critical in assessing viability. We also

considered the political, economic, and social environments in which facilities were designed,

permitted, and built, as well as explored logistical constraints, primarily as they related to supply

procurement.

For the general interviews we performed a quantitative analysis of the data we collected,

calculating and reporting proportions of interviewees responding similarly, though owing to the

small sample size, these proportions cannot be extrapolated for the industry at large with

statistical significance. Between the broad representation of stakeholder groups interviewed and

extensive information available on the internet, there were sufficient resources to make

generalizations about the matters of interest. Though the even smaller sample size of case study

responses and the unique circumstances inherent to each facility did not conform to such a

quantitative analysis, the case study interviews did provide qualitative examples of how

individual successful facilities deal with some of the barriers uncovered in the general

interviews. Analyzing the case studies one-by-one, then comparing and contrasting interviewee

responses, we then attempted to draw broader conclusions. Our central research questions,

besides being asked of interviewees, are the very questions posed to ourselves. Contained in the

appendices are lists of all additional questions asked to our general interview subjects, as well as

25

to our case study interview subjects. All of our data has been preserved in retrievable form, with

the interview transcripts in additional appendices.

V. RESULTS

Through our interviews and case studies, we uncovered a wealth of information about the

current state of woody biomass for heat and power in the United States. The implications of our

results span the spheres of economics, policy, society, and technology.

i. GENERAL INTERVIEWS

The results of our general interviews are presented below. The responses to identification

questions have been omitted here as they are not directly relevant to addressing our central

research question. Further analysis of general interview responses is provided in the discussion

section. The first opinion question asked of general interviewees concerned their views on the

largest barrier to widespread biomass energy use in the United States. The responses are

categorized in the following table.

Though there were only ten interviewees and we asked for a single barrier in response to

this question, one interviewee replied with two answers that he felt were equally important,

leading to eleven total answers. As can be seen from the table, the most commonly identified

barrier was economics. The primary economic issues included the low price of alternative fuels

(especially natural gas), cost variability of biomass resources, and high operational costs of

biomass fuel procurement. Procurement concerns were closely related to infrastructure concerns,

26

which arise from difficulties in collecting and transporting woody material from the forest floor

to heat and power facilities.

After economics, public perception and policy were the next most commonly identified

barriers to woody biomass adoption. Again, these issues were closely linked and were thought to

be driven by scientific uncertainty around the carbon impacts of biomass. These issues were

further confounded by confusion between feedstock utilization (pellets versus residuals) and

application (pure electricity versus thermal and combined heat and power applications). Policy

barriers also took the form of inconsistent standards between municipalities, states, regions, and

the federal government, as well as temporally variable policy shifts (including financial

incentives). The last two barriers, atmospheric carbon and infrastructure are tied back to public

perception/policy and economics, respectively, as described above.

After identifying a single greatest barrier to adoption, interviewees were also asked to list

other barriers they thought might pose difficulty for investment in, and construction and

operation of, successful biomass facilities. Those responses are summarized in the table below.

Because interviewees were allowed to provide multiple answers for this question, there

are fifteen response occurrences for the ten interviewees. For this question, policy was the most

frequently occurring response, and concerns were similar to those for the previous question,

including geographic and temporal inconsistency, scientific uncertainty, and negative public

perception. The last two concerns were also identified independently as barriers to biomass

adoption, with scientific uncertainty primarily involving carbon impacts of biomass

implementation and negative public perception stemming from that uncertainty, as well as lack

of technical understanding and influence from environmental groups.

27

Infrastructure also occurred again as a response, and once again closely relates to the

economic feasibility of biomass facility operations. Proximity to a healthy forest products

industry was the key driver of infrastructure concerns. These industries provide a robust

secondary market for forest product wastes and residuals that can cost-effectively be utilized as

fuels for biomass facilities. In the absence of these industries, on the other hand, facility

operators become responsible for their own fuel collection and transportation, precipitating the

need for new capital investments rather than taking advantage of sunk costs of existing

infrastructure.

The final barrier was sustainable supply, which is contingent on localized fuel markets,

and creates an issue of scale. As biomass facilities approach utility scale, fuel requirements can

increase drastically, straining local forest and land resources. These issues are also deeply

interconnected with the economics of biomass operations and public perception.

Having discussed barriers, we then asked interviewees about potential solutions. The

solutions provided are shown in the table below.

Our interviewees most frequently cited changes in policy as the best way to increase

adoption of biomass. Four interviewees thought changes at the state level would be more

effective, while two thought that changes at the federal level would most successful. State level

policy changes include more aggressive Renewable Portfolio Standards that define biomass as a

renewable resource and tighter standards on wood sourcing (ensuring sustainable supply) and

application efficiency (maximizing utilization of the heat content of fuels). Policy at the federal

level revolves around the Clean Power Plan’s treatment of biomass resources. Announced on

August 3rd, 2015, the Clean Power Plan Final Rule requires existing power plants to cut carbon

emissions 32% compared to a 2005 baseline by 2030. Individual states are responsible for setting

28

their own policies to meet compliance, and while biomass may be a part of the solution, the

111D rule requires analysis or demonstration that those resources indeed have carbon benefits, as

well as monitoring and verification that feedstocks are sustainably procured63. In essence, this

federal policy would have the same implications as biomass policies at the state level, more

broadly applied, but with flexibility in approach and subject to high-level qualitative constraints.

After policy, shift in public opinion was the next most often cited solution. With greater

clarity on the differences between feedstocks and application types, greater public support, or at

least less resistance, could allow for more effective policymaking to promote the use of biomass.

The last two solutions were macroeconomics and shift in supply. Higher fossil fuel prices would

make alternative fuels such as biomass more economically attractive, while shift in supply from

roundwood feedstocks (used for foreign pellet exports) exclusively to residuals (as is the case for

most domestic applications) could ease public concerns and create a more favorable investment

environment for biomass facilities. One interviewee was skeptical about the future of woody

biomass for heat and power in the United States.

Moving beyond economics and politics, we then asked interviewees for which

applications they saw the most promise for biomass in the next ten years. Reponses are

summarized in the table below.

Again, there were more responses than interviewees because certain interviewees saw

multiple fields of promise going forward. District heating was cited as the application with the

brightest future, followed by combined heat and power. What these two applications have in

common is the utilization of biomass fuels for heat rather than for electricity only. This is a

63 Simet, A. (2015, August 3). EPA releases Clean Power Plan, uncertainty for biomass remains. Retrieved November 18, 2015, from http://biomassmagazine.com/articles/12260/epa-­‐releases-­‐clean-­‐power-­‐plan-­‐uncertainty-­‐for-­‐biomass-­‐remains

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significant distinction because thermal applications are inherently more efficient uses of the heat

content of fuel than combustion for power generation alone. Relating back to earlier concerns

about economics and infrastructure, small scale energy stations can more readily be sited to take

advantage of existing forest products infrastructure and fuel resource availability, resulting in

more attractive financial conditions for biomass facility operations. The final area of promise

was pellets, though not necessarily for energy uses. The rise of the pellet industry has created

new demand for wood fiber, and a system to cost-effectively produce and distribute a uniform

product. The current demand for that product comes from European energy production, and one

of our interviewees expects that market to continue for at least the next decade, however, another

interviewee predicts new growth in the demand for pellets from the bioechemicals industry.

Furthermore, continued demand for the roundwood feedstocks used to create pellets could

contribute to an economic environment that causes landowners to keep their land in forests rather

than converting to agriculture or development.

ii. CASE STUDIES

As with the general interviews, full case study interview transcripts can be found in the

appendix. Due to the small sample size of case study interviews conducted, the results of the

interviews for each facility are presented in the following section on an individual facility basis.

The issues discussed commonly center on economics, policy, public perception, and operational

considerations, and further analysis and conclusions are provided in the discussion section.

Our first case study was Biomass One LP, a dedicated biomass plant located in White

City, OR. It is a 30 MW facility producing power for PacifiCorp, a utility company based in

Portland, OR. We interviewed Todd Hansen, the fuel manager, as well as Greg Blair, the

majority owner in the limited partnership that manages the facility. The plant began operations as

a co-generation facility in 1986 with two 15 MW turbines, one producing electricity and the

other extracting steam to run a lumber kiln. There were a number of tax advantages provided

under PURPA that made plant construction financially attractive. In the years following plant

commissioning, federal regulations that severely limited timber harvest operations on federal

lands resulted in the closure of many mills in the area, including that associated with Biomass

One’s lumber drying operation. The collapse of the forest products industry in the region resulted

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in fuel price increases that created financial instability for the plant. Subsequently, the steam

extraction turbine was replaced with another 15 MW biomass turbine, and the plant exclusively

generated electricity. Around the same time, new fuel procurement strategies were put in place.

Biomass One developed tighter relationships with nearby mills still in operation, expanded its

supply base to a larger radius, and began accepting residential landscaping and construction

wood waste. Fuel costs are the major controllable operating expense, and are driven primarily by

transportation and processing. While actual material costs are generally predictable, competition

for fiber with the forest products industry can result in temporary price increases, with

transportation accounting for the greatest variability in fuel cost. In the shoulder months, when

power demand is low, PacifiCorp tends to rely on cheap hydropower and Biomass One receives

payments to power down and perform maintenance. While Todd Hansen said that there are

plenty of technological improvements that could be made to boost plant efficiency, the capital is

not currently available for those upgrades. Public perception appeared to be a non-issue for

Biomass One.

The next case study was the Kettle Falls Generating Station, owned by Avista Utilities

and located in Kettle Falls, WA. The utility has a relatively low carbon footprint as a result of its

diverse base of generating resources, including hydropower, coal, natural gas, and biomass.

Kettle Falls is a 50 MW power generation facility that has been burning wood as its primary fuel

for the last thirty years. We spoke with Ron Gray, the fuel manager for the facility. While

upfront construction costs contributed the greatest share of capital expenses, fuel costs were

identified as the long-term determinant of plant viability. At the time of construction,

uncontrolled burning of wood waste from mills was outlawed, creating a free fuel source. In the

present day, transportation costs are the largest driver of fuel costs, and Kettle Falls relies largely

on supply from across the Canadian border in a synergistic relationship with paper mills where

chip trucks that would otherwise be empty come back with waste from mills. As is the case with

Biomass One, hydropower is often a more cost-effective generation resource during shoulder

months, resulting in downtime for maintenance at Kettle Falls. On the other hand, as the biomass

boilers are slow to modulate generating capacity, the facility also owns a 6 MW backup gas

turbine as a peak load resource to deal with unexpected surges in demand (though it is expensive

to run). Ron mentioned that as part of his responsibility as Fuel Manager, he proactively reaches

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out to the public to educate them about the benefits of biomass energy and the sustainability

efforts of the plant and the utility.

Our third case study was the Harvard Forest District Heating Facility in Petersham, MA.

We interviewed Edythe Ellin (Edie), the Director of Administration and Jon Wisnewski, Woods

Crew Supervisor. The facility uses three wood gasification boilers producing a total of 0.5

mmBTU and a propane-fired secondary boiler producing 1.5 mmBTU to provide space heating

for five buildings totaling 41,255 square feet of floor area. The boilers are fired a few times each

day and a 2,500 gallon thermal storage tank services heating demand at night, but is insufficient

for the colder parts of the season, requiring operation of the secondary propane boiler. The

current system was installed in October 2013, and the major costs (in decreasing order) were the

thermal storage system (particularly the excavation and piping), renovation of the boiler

building, and the boilers themselves. Three small units were chosen over one large one for the

ability to match variable heating demand, particularly during shoulder seasons. The facilities

division is currently in discussions about the potential of adding a fourth biomass boiler. What is

unique about this facility’s fuel procurement approach is that the facility owner, Harvard Forest,

also owns 3,500 acres immediately adjacent, with 800 acres of managed forest from which to

draw fuel. Besides owning the land, Harvard Forest also employs the harvest crew and recently

invested in new equipment to collect, transport, and process the fuel, streamlining operations and

keeping costs low and predictable. With regard to public perception, Edie said that there has not

been much resistance to the biomass facility, particularly considering that the old boiler, which

was converted from coal to biomass following coal shortages during World War II, emitted

tremendous amounts of black smoke, while the new one does not. That being said, she was also

careful to point out that the conditions in which her facility operates are very unique and could

not be readily replicated everywhere.

Our final case study interview was with Dennis Kennedy, the Utilities Manager at

Longwood University in Farmville, VA. The Longwood University Biomass Heating Plant has a

steam capacity of 40,000 lbs/hr and services the entire campus. There is no thermal storage, but

there is a backup oil boiler which supplements the biomass boiler in extreme weather, though it

is expensive to run. An additional 25,000 lb/hr biomass boiler that can also burn non-woody

plant biomass is scheduled for installation next year. While the capital costs of the system are not

unique to biomass, they are unique to solid fuel, as opposed to gas or oil. The additional costs

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come from specialized boilers and fuel handling equipment, including conveyors and storage.

Like with Harvard Forest, Longwood University has a unique fuel procurement situation in that

the campus is located in the middle of a sixty-mile radius that encompasses seventeen sawmills

from which the university purchases waste, in the form of sawdust and wood chips. Longwood

also keeps a reserve pile of fuel, which is particularly necessary during periods of bad weather

when sawmills shut down and waste supplies are limited. One of the greatest operational

difficulties is managing the moisture content of fuel, which when too high, can significantly

decrease the efficiency of the boiler. As a state-funded school not burning coal or oil, there was

great political support from the state legislature and governor at the time of facility construction,

and continued support as plans for the addition of the new boiler are implemented. While public

perception was not initially favorable, open and honest communication efforts have improved

public relations.

VI. DISCUSSION

i. ANALYSIS OF RESULTS

In all our conversations with various stakeholders about biomass adoption in the United

States, three key areas were repeatedly cited as barriers, and potentially, as opportunities. These

areas were economics, policy, and public perception. The following discussion addresses each of

these barriers individually, though there is considerable interaction between barriers and their

solutions.

a) ECONOMICS

The most cited economic issue preventing further adoption of woody biomass for heat

and power was the low cost of alternative energy sources, specifically natural gas. Lew

McCreery of the US Forest Service unequivocally stated, “I think there are a number of factors

here… The most recent development is the declining price of fossil fuels. That seems to be

having an impact on projects, particularly places where there’s natural gas readily available.”

Todd Hansen of Biomass One LP echoed this thought, “I know a lot of pulp and paper operators

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that have the ability to burn wood and oil, but they’re not burning wood right now. They’re

burning oil. It’s that much cheaper.” Low fossil fuel prices make it difficult for biomass facilities

to compete, creating an unfavorable investment environment for new facilities, and a difficult

operational environment for existing facilities. In the absence of carbon pricing schemes or

policies to remove fossil fuel subsidies, both of which would increase fossil fuel costs, this

barrier could continue to pose problems for biomass into the foreseeable future.

While it is difficult to control the price of natural gas, except perhaps from a policymaker

perspective (and even then, there is considerable difficulty), the other dimension is that the cost

of biomass fuels can be controlled, at least to some extent. Greg Blair, majority owner of

Biomass One LP said that, “the largest controllable cost that determines profitability and

represents about 50% of our revenue is fuel. If you’re able to get a handle on that and buy fuel

more judiciously... you’ll have greater success.” The number one factor determining fuel costs is

facility location, and more specifically, how favorable that location is for collecting, transporting,

and processing fuels. Zander Evans of the Forest Guild stated that, “[t]he biggest issue is the

general difficulty of moving low value material in the woods to some kind of final use as energy.

It’s the basic logistics. That’s wrapped up in cost. You can think about it as the difficulty of

moving awkward material that has little value, great distances.” Proximity to a robust forest

products industry can allow facility operators to tap into existing infrastructure to most cost-

effectively obtain biomass resources. Ron Gray, Fuels Manager at the Kettle Falls Generating

Station, further elaborated, “[w]e also have synergy working with some paper mills. Wood chips

flow north into the paper mills and we tie into that transportation network wise. The trucks can

bring hog fuel back. The synergy is that there’s full utilization of a chip truck. Instead of going

back empty, we can fill up the truck on the way back. It helps us increase our haul distance by

adding to the usefulness of that truck.” In the absence of existing infrastructure, costly

investments would be necessary to achieve the same ends.

Beyond just transportation considerations, if biomass facilities can successfully co-locate

near healthy forest products industries, then they can also take advantage of more economical

fuel sources in the form of waste material from the production of more valuable primary

products. Greg Blair supports this practice, saying, “plants that convert wood to energy can only

feasibly do it when that wood is a waste source. The wood material needs to be a secondary

byproduct from another industry where another, higher value product is produced.” In the case of

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Biomass One, those secondary products are from nearby sawmills and waste from residential

landscaping and construction. The additional successful examples of Kettle Falls and Longwood

University similarly use waste from paper mills and sawmills, respectively. Besides being lower

cost and readily available resources, waste material like sawdust and chips requires little to no

processing for utilization as fuel. An alternate approach to synergizing with existing forest

products industries would be to vertically integrate as in the case of Harvard Forest, where the

facility owner also controls the means of production for its fuel supply. This approach requires

substantial upfront capital investments, however, and is unlikely to be feasible for power

producers operating on thin margins.

As an aside, the use of wastes and residuals, rather than more valuable pulpwood as used

in the production of wood pellets allows biomass facilities to not only operate more

competitively, but also with a lower carbon impact than would otherwise be the case. David Carr

of the Southern Environmental Law Center said that, “[w]e, and others, have done studies that

show that burning standing trees whether as pellets or chips, increases atmospheric carbon and it

takes anywhere from three to five decades to recover that.” He goes on to say, “[i]f, in fact, you

have access to waste wood or material that was going to go unused and decompose over time,

then you can use that to generate energy. Particularly if there’s effort to re-plant or regenerate

that forest.”

Though there is not a large domestic market for wood pellets, European demand still has

ramifications for waste and residual sources, particularly as it can create supply pressure for both

wood fiber, and the land on which it is grown. Amanda Lang, Partner and Senior Consultant at

Forisk Consulting LLC, told us that, “[w]ithin local markets where a pellet plant might come in

and use wood, we could see some price increases. However, what we’ve found is that those price

increases are not great enough to cause landowners to want to shift their management regimes. A

big reason for that is just that there’s a huge price increase that they get from producing

sawtimber. It’s so much greater than the increased value of pulpwood.” Bob Abt, Professor of

Forestry at North Carolina State University felt differently, stating, “I don’t agree with folks that

say that the pellet impact doesn’t matter because it’s a low-value resource. It’s coming into this

market at a time where it potentially could have an impact, including competing with pine pulp

mills for a limited resource.” While it is unclear whether foreign pellet demand will strain

resource supply for pulp and paper mills or send a strong enough market signal for landowners to

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keep more lands in forests, it seems likely that demand will continue well into the future.

Speaking of the pellet industry, Amanda said, “I think that’s an industry that’s developing now

and will certainly be around for another ten years” and Bob said, “I think the biomass pellet

industry, specifically, might continue whether or not the energy use continues, because what it’s

done is create wood fiber as a commodity that’s cheap to ship. So there’s already examples of

pellets being shipped to biorefineries, not for energy, but just for biochemicals.”

b) POLICY

After economics, policy was cited as the next greatest barrier to increased adoption of

woody biomass for heat and power. Inconsistencies in policy from state to state and over time,

and lack of decisive policy at the federal level create uncertainties that can prevent investors

from committing to biomass facilities. Rob Rizzo of the Massachusetts Department of Energy

Resources stated that, “[t]he largest barrier is that we’re lacking standards. We don’t have any

standard for woodchips. We have a voluntary wood pellets standard, but that doesn’t go far

enough.” Rob’s statement is with regard to US biomass policy at the national level, but in

reference to the Massachusetts RPS, he says, “[b]iomass in Massachusetts has to be efficient,

ultra low-emitting in terms of particulate matter, and it has to be from a sustainable source.” The

specifics of the Massachusetts RPS are the result of a state-commissioned study on the

sustainability of biomass resources and their applications. The incentives for qualifying facilities

can be lucrative, but qualifying under the standard is subject to stringent criteria. As discussed in

the literature review, thermal and CHP applications make more efficient use of the heat content

of fuels than pure electricity applications, and, “if you want to qualify for the RPS with a

biomass project in Massachusetts you have to demonstrate efficiency of at least 60%.” This

requirement essentially eliminates pure electricity applications. Additionally, qualifying facilities

must be able to prove sustainability of fuel supply through a rigorous tracking system.

Describing another well-conceived state policy, Tad Mason, CEO of TSS Consultants,

said, “California just passed a bill known as SB 1122, which, long story short, there is a very

aggressive Renewable Portfolio Standard in California right now, basically 50% renewable by

2030. Basically, that same legislature also suggested that small scale, distributed generation

could make a lot of sense, especially in strategic locations in rural California. Where 3 MW scale

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facilities and less can be sited along distribution lines that have the capacity to take that

generation, but also near forested locations and communities that are at risk to wildfire.” Again,

the definition of biomass as a qualifying RPS resource is a critical component to enable the

buildout of generation capacity, but also fuel sourcing and application type are important

considerations. In this case, fuels are not necessarily secondary byproducts of the forest products

industry, but rather fire hazards to local communities. Burning the waste from hazardous fuel

reduction operations not only provides a community service in the form of fire safety, but by

combusting it at heat and power generation facilities, particulates can be controlled more

effectively than by burning it in slash piles. Of equal importance, the wood stays out of landfills

where it would decompose and release CO2 anyway, and can displace fossil fuels in the process.

Location was previously discussed with regard to fuel supply, but in the context described by

Tad, it is also critical with regard to transmission and distribution infrastructure. Besides being

able to cost-effectively acquire fuel supplies, facilities must also be able to effectively distribute

their services (heat and/or power) to end-users to be viable. The scale of these facilities can be a

major determinant in flexibly siting them, and it is for that reason that small scale generating

stations were mentioned as areas of promise.

While the standards in place in Massachusetts and California work well in those states,

localized approaches must be taken that account for regional differences in rates of tree growth,

species distributions, and economic landscapes. Rob Rizzo again, “I don’t have much confidence

in the federal government coming up with anything that’s beneficial. One size does not fit all, so

it might not even work that way. We’re so different than the forests of Montana. There are

different issues in different places. I think it needs to be handled at the state level and the

regional level, through state laws and regional cooperatives.” Despite Rob’s skepticism on

federal policy, other interviewees had higher hopes for consistent national treatment of biomass.

Tom Reed, Vice President of the Atlantic South Region at Plum Creek, said, “I think the biggest

barrier right now is that we don’t have a policy in the United States for how we’re going to look

at biomass. How is it going to be considered? There’s a big debate right now about whether

biomass energy is carbon neutral.” The answer to the question of the carbon neutrality of

biomass could ultimately define its place in a national policy to address climate change. Should

biomass be deemed a part of the solution, such a policy could act as a modern-day analogue to

PURPA, which was passed in response to spiking energy prices following the Arab Oil

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Embargo. That act was responsible for the construction of many non-hydro renewable generating

facilities. Greg Blair said of Biomass One, “[t]he facility was conceived in 1984. In the wake of

the passage of the PURPA[...] There was a tax advantage of 10% of the original capital invested

and an energy tax advantage of 11%, then there was a 5-year recovery of all development costs

of the renewable resource, so all the boilers, turbines, transformers, pumps, fans, etc.”

Tying together concerns around state and federal biomass policy, as well as the question

of biomass carbon neutrality, is the Clean Power Plan. Though a federal policy, the plan leaves it

to state legislatures on how best to implement biomass to meet existing power plant compliance

requirements of 32% carbon emission reductions from a 2005 baseline by 2030. Contingent on

further scientific study, this approach could create a national push for more biomass capacity, but

with the flexibility of state-level decision-making. It also creates a framework to establish a

scientific consensus on the environmental impacts of biomass, which until now, has been

lacking. The absence of such consensus has made policymaking difficult at all levels, and by

extension, creates uncertainty for investors.

c) PUBLIC PERCEPTION

The scientific uncertainty around the impacts of biomass also feeds into the final major

barrier, public perception. Bob Abt of NCSU said, “you have to be careful. It’s hard to tell a

concrete story because there is variability on the resource side. So there’s a risk in terms of

knowing what you’re actually doing in terms of CO2[...] And that’s enhanced by the fact that the

public perception of that variability is slanted toward the negative side.” Zander Evans similarly

states that, “[p]olicy clarity based on science is sort of emerging. The EPA has some committees

advising them and then they’re setting rules based on those.” These statements again underline

the need for conclusive science on the carbon question, and perhaps the need for policy to drive

the necessary research. Any studies must make use of full life-cycle analyses, accounting for

direct and indirect land-use change. Further contributing to negative public perceptions of

biomass is confusion over feedstock supplies. Adam Sherman, Manager of the Biomass Energy

Resource Center, told us, “[t]he word biomass itself means a very specific thing to a forester, it’s

a very specific part of their inventory. You say the same thing to someone off of the street, they

have no idea what you’re talking about.” While the pellet industry relies on pulpwood, domestic

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heat and power applications make use of waste and residuals. Campaigns by ENGOs deliver a

powerful visual impact through images of clearcuts and piles of roundwood awaiting processing.

Unfortunately, such operations are frequently conflated with the operations of facilities like those

in our case studies, despite their significant differences. Just as there is confusion over supply

resources, there is also confusion over the applications of biomass. Adam went on to say,

“different forms of biomass energy are a lot different and have different costs and benefits, yet

it’s always described and painted in a singular brushstroke.” More specifically, he was referring

to the efficiency differences between pure electricity applications and thermal or CHP

applications.

ii. RECOMMENDATIONS

If woody biomass is to be further utilized for heat and power in the US, there are a

number of recommendations that can make investment more attractive, by way of reduced

capital and operations costs, more favorable political conditions, and improved public image.

The recommendations below are divided according to the three major barriers they seek to

overcome: economics, policy, and public perception. It should be noted that some

recommendations can have crossover effects for multiple barriers.

a) ECONOMICS

The importance of location in siting biomass facilities cannot be understated when

making recommendations for cost reductions. The foremost consideration in choosing a location

is proximity to existing forest products industries and their associated infrastructure. As many

interviewees explained, and our case studies supported, existing infrastructure alleviates the cost

burden on biomass facilities for the collection, transport, and processing of fuels. Without such

infrastructure, new capital has to be dedicated to collecting fuel from forest floors, transporting it

to heat and power facilities, and processing it into useable form (processing could also take place

at the point of collection, prior to transportation). The real benefit of existing industries is that

they produce primary products of higher value, and it is the secondary wastes and residuals that

can be used as fuel, again eliminating the time, cost, and effort of collection, and largely, of

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processing. By the same token, transportation infrastructure would then already be in place by

which to get that fuel to the point of use. Beyond concerns of location, are the application types

of biomass facilities. As previously discussed, pure electricity generation is not an efficient use

of the heat content of fuel compared to thermal uses. For these reasons, applications such as

district heating, and combined heat and power should be prioritized over standalone thermal

power. These technologies derive more useful end-use services per unit of fuel, thereby making

them more cost-effective applications for those fuels. Small scale generating stations also show

promise, with the flexibility in siting to take advantage of low-cost fuel resources and

transmission and distribution infrastructure to put power on the grid. Finally, where possible,

capital investments for streamlined operations can have rapid paybacks. The capital may not

always be available to invest in costly new equipment such as fuel processing machinery, but

even simple upgrades such as covering fuel storage facilities to prevent moisture infiltration can

help reduce operations costs.

b) POLICY

Policy recommendations apply at both the state and federal levels. The most critical

policy that state legislatures could pass to enable increased adoption of woody biomass for heat

and power would be to establish aggressive Renewable Portfolio Standards and define biomass

as a qualifying resource. But beyond just establishing compliance drivers for utilities to use more

biomass, there must also be standards in place to ensure sustainability of fuel supply as well as

facility efficiency requirements in order to make the best use of the heat content of those fuels.

The exact definition of these standards should be left to the individual state legislatures so that

policies can be effective given the unique needs of different geographies, end-uses, and forest

types. However, logging wastes, mill residuals and fire hazard risk materials are sensible fuel

supplies that ought to be promoted for their sustainability. States should also consider the energy

efficiency of the specific biomass application being utilized. Percentage efficiency requirements

(such as the requirement in Massachusetts for ≥60% efficiency) could eliminate applications

designed to only generate power and favor more efficient uses such as district heating and

combined heat and power. In other cases, such applications could be called out specifically in the

statutes. Given the need for flexible, localized approaches, federal policy on biomass would be

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most effective if designed like the Clean Power Plan, recognizing the need for carbon reductions

and setting targets, while leaving it to individual states to decide how best to meet those targets.

The most important mandates to be laid out at the national level are those requiring clarity about

how baselines are determined, and sound scientific monitoring and verification procedures for

claimed carbon reductions. Finally, more government funding for research and development of

biomass technologies, including improved combustion efficiency, gasification, and carbon

capture and sequestration, could further accelerate the development of biomass facilities

producing clean heat and power.

c) PUBLIC PERCEPTION

There are a number of specific recommendations for biomass facility owners and

operators to address public concerns, but at the most basic level, proactive public education and

open and honest communications with local communities and environmental groups can have

powerful positive outcomes. The more specific recommendations involve communicating the

many benefits of biomass, but without hyperbolizing them or failing to mention drawbacks. Such

drawbacks could include particulate emissions or poorly controlled fuel sourcing practices. The

benefits include local job creation in the forestry and power industries, efficient and controlled

disposal of forest wastes, residuals, and hazardous fuels (in the context of fire risk), displacement

of fossil fuels, and reduced landfill input.

iii. AN EXAMPLE IN PRACTICE: UPPER AUSTRIA

Upper Austria provides an excellent example of the success of woody biomass for heat

and power. Farmers and forest owners in the early 1980s sought revenues from unusable and

unsaleable forest residues. The invention of automatic wood pellet heating systems in 1996,

combined with state policies that provided investment grants for the purchase of biomass boilers

and the connection of buildings to biomass district heating networks created a robust new market

for these residues. As a result, 15% of total primary energy supply and 31% of thermal energy in

Austria are supplied by woody biomass today, and sustainability is ensured by tight emissions

and efficiency standards. The state government is targeting 100% renewable energy for space

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heating and electricity by 2030. The Austrian climate provides the heating demand for woody

biomass supply, but building and appliance efficiency keeps that demand manageable. Rich

forest resources are responsibly managed by the local forestry industry. All these efforts are

supplemented by energy advice, training and education, information campaigns, competitions,

local energy action plans, sustainable energy business networks, and state funding for research

and development64. The Austrian example provides a sound model for the continued

development of the US biomass heat and power industry.

iv. LIMITATIONS OF THE STUDY/ OPPORTUNITIES FOR FURTHER RESEARCH

There were some limitations of our study, the primary one being the small sample size of

interviewees and case studies. While we did cover a broad representation of industry

stakeholders, there were certain groups that were omitted, whether because they did not respond,

we could not find contact information, or we simply failed to consider such groups. Furthermore,

we were only able to conduct interviews with one or two representatives for each stakeholder

group. Were our research to be continued, one of the first areas for additional work would be the

completion of more interviews, with greater breadth of stakeholder types and greater depth

within each category. With enough response, interviewees could be split by demographic, such

as stakeholder type and geography, and responses could be classified along those lines to

uncover unseen trends. Perhaps new barriers and solutions would emerge, and perhaps the

inferences made in this report would be validated or repudiated.

As with the general interviews, more case study interviews could bolster the statistical

significance of our findings, where common trends were found. Facilities could be classified

according to size, application type (industrial and district heat, power, combined heat and power,

etc.), and owner type (utility, independent power producer, public or private school, etc.), and

data could again be analyzed along those lines.

We had also hoped to conduct comparative financial analysis between various case study

facilities, but it was difficult to access such data consistently. The type of data that would allow

64 Egger, C., Ohlinger, C., Auinger, B., Brandstatter, B., Richler, N., & Dell, G. (n.d.). Biomass heating in Upper Austria: Green energy, green jobs. Retrieved July 18, 2015, from https://www.biomassthermal.org/resource/PDFs/Austria_Biomass_heating_2010.pdf

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for such analysis would include details on capital and operating costs for facilities, including

land acquisition, permitting, construction, and fuel costs allocated by collection, transportation,

and processing. For publicly-owned assets, high-level financial information might be available

online from the Securities Exchange Commission in the form of 10-K or 10-Q forms, but it

would not offer the level of granularity to conduct the type of analysis we had in mind. In the

case of assets with private owners, the general preference is to keep such data confidential. In

both cases, it is even possible that such records are not kept at all.

A final opportunity for further research would be a GIS analysis of biomass facility

locations and their proximity to forest products infrastructure in the form of timberlands, logging

roads, pulp and paper mills, sawmills, and construction materials manufacturers for the purposes

of testing the hypothesis that facility success is contingent on the existence of such infrastructure

nearby.

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VII. REFERENCES

1 Ross, P. (2014, December 15). When Did Man Discover Fire? Ancestors Of Modern Humans Used Fire 350,000 Years Ago, New Study Suggests. Retrieved July 18, 2015, from http://www.ibtimes.com/when-did-man-discover-fire-ancestors-modern-humans-used-fire-350000-years-ago-new-1758607 2 Wood Energy. (2015). Retrieved July 18, 2015, from http://www.fao.org/forestry/energy/en/ 3 Organisation for Economic Co-operation and Development/International Energy Agency. (2014). World Energy Outlook 2014. Paris, France. 4 A Brief History of Coal Use in the United States. (n.d.). Retrieved July 18, 2015, from http://www.fossil.energy.gov/education/energylessons/coal/coal_history.html 5 Coal. (n.d.). Retrieved July 18, 2015, from http://www.c2es.org/energy/source/coal 6 District 1 History - Coal Mine Safety and Health History of Anthracite Coal Mining. (n.d.). Retrieved July 18, 2015, from http://www.msha.gov/District/Dist_01/History/history.htm 7 Uses of Natural Gas. (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/our-energy-choices/coal-and-other-fossil-fuels/uses-of-natural-gas.html#.Va1VavlVhBc 8 Frequently Asked Questions. (n.d.). Retrieved July 18, 2015, from http://www.eia.gov/tools/faqs/faq.cfm?id=41&t=6 9 Upton, J. (2015, October 20). Pulp Fiction. Retrieved October 21, 2015, from http://reports.climatecentral.org/pulp-fiction/1/ Biomass Sustainability and Carbon Policy Study. (2010, June 1). Retrieved July 18, 2015, from https://www.manomet.org/sites/default/files/publications_and_tools/Manomet_Biomass_Report_Full_June2010.pdf Woodworth, E. (2012). Inherent Sustainability & Carbon Benefits of the US Wood Pellet Industry. Retrieved July 18, 2015, from http://www.envivabiomass.com/wp-content/uploads/inherent-sustainability-carbon-benefits-20121005.pdf 10 Emissions of Greenhouse Gases in the U.S. (2011, March 31). Retrieved July 18, 2015, from http://www.eia.gov/environment/emissions/ghg_report/ghg_carbon.cfm 11 Outline History of Nuclear Energy. (2014, March 1). Retrieved July 18, 2015, from http://www.world-nuclear.org/info/Current-and-Future-Generation/Outline-History-of-Nuclear-Energy/

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12 Brain, M., & Lamb, R. (n.d.). How Nuclear Power Works. Retrieved July 18, 2015, from http://science.howstuffworks.com/nuclear-power4.htm 13 Electric Power Monthly: July 2015. (2015, September 24). Retrieved October 4, 2015, from http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_1_1_a 14 Hydropower. (n.d.). Retrieved July 18, 2015, from http://www.c2es.org/technology/factsheet/hydropower 15 Fares, R. (2015, March 11). Renewable Energy Intermittency Explained: Challenges, Solutions, and Opportunities. Retrieved July 18, 2015, from http://blogs.scientificamerican.com/plugged-in/renewable-energy-intermittency-explained-challenges-solutions-and-opportunities/ 16 Barriers to Renewable Energy Technologies. (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/smart-energy-solutions/increase-renewables/barriers-to-renewable-energy.html#.VgL0U_lViko 17 Geothermal Energy. (n.d.). Retrieved July 18, 2015, from http://www.altenergy.org/renewables/geothermal.html 18 Cushman, J., Marland, G., & Schlamadinger, B. (n.d.). Biomass Fuels, Energy, Carbon, and Global Climate Change. Retrieved July 18, 2015, from http://web.ornl.gov/info/ornlreview/rev28_2/text/bio.htm 19 Bioenergy. (n.d.). Retrieved July 18, 2015, from https://www.iea.org/topics/renewables/subtopics/bioenergy/ 20 Traditional use of Biomass. (n.d.). Retrieved July 18, 2015, from http://www.unep.org/climatechange/mitigation/Bioenergy/Issues/TraditionaluseofBiomass/tabid/29473/Default.aspx 21 Bradford, A. (2015, March 4). Deforestation: Facts, Causes & Effects. Retrieved July 18, 2015, from http://www.livescience.com/27692-deforestation.html 22 Kaplan, J., Krumhardt, K., & Zimmermann, N. (2009). The prehistoric and preindustrial deforestation of Europe. Quaternary Science Reviews, 28 (27-28), 3016-3034. doi:10.1016 23 Searchinger, T. (2015, January 28). Why Dedicating Land to Bioenergy Won't Curb Climate Change. Retrieved July 18, 2015, from http://www.wri.org/blog/2015/01/why-dedicating-land-bioenergy-wont-curb-climate-change 24 Dijk, A., & Keenan, R. (2007). Planted forests and water in perspective. Forest Ecology and Management, 251 (1-2), 1-9. doi:10.1016

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25 How Biomass Energy Works. (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/our-energy-choices/renewable-energy/how-biomass-energy-works.html#.VaPpAvlVhBd 26 Searchinger, T. (2010). Biofuels and the need for additional carbon. Environmental Research Letters, 5(2). Retrieved July 18, 2015, from http://iopscience.iop.org/article/10.1088/1748-9326/5/2/024007/meta;jsessionid=AED153CF498DBE2A9E667348BEA30FD7.c4.iopscience.cld.iop.org 27 Fuelling a Biomess. (2011, November 2). Retrieved July 18, 2015, from http://www.greenpeace.org/canada/en/campaigns/forests/boreal/Resources/Reports/Fuelling-a-Biomess/ 28 Bioenergy (Biofuels and Biomass). (n.d.). Retrieved July 18, 2015, from http://www.eesi.org/topics/bioenergy-biofuels-biomass/description 29 What is Wood Biomass. (n.d.). Retrieved July 18, 2015, from http://www.woodbiomass.com/aboutBiomass.html 30 Christiansen, R. (n.d.). The Art of Biomass Pelletizing. Retrieved July 18, 2015, from http://biomassmagazine.com/articles/2465/the-art-of-biomass-pelletizing 31 Sokhansanj, S. (2013, October 7). Torrefaction: Pre- or Post-Pelletization. Retrieved July 18, 2015, from http://biomassmagazine.com/articles/9522/torrefaction-pre-or-post-pelletization/ 32 Process of Pyrolysis. (2013, January 8). Retrieved July 18, 2015, from https://www.youtube.com/watch?v=Ut3I7OIPFR8 33 Wolff, R. (2010, December 2). Pyrolysis Oil Challenges and Solutions. Retrieved July 18, 2015, from http://biomassmagazine.com/articles/6642/pyrolysis-oil-challenges-and-solutions 34 What, exactly, is black liquor? Just ask the tax man. (2010, May 24). Retrieved July 18, 2015, from http://www.risiinfo.com/blogs/What-exactly-is-black-liquor-Just-ask-the-tax-man.html 35 How Gasification Works. (n.d.). Retrieved July 18, 2015, from http://www.allpowerlabs.com/info/gasification-basics/gasification-explained 37 Trossero, M. (n.d.). Wood energy: The way ahead. Retrieved July 18, 2015, from http://www.fao.org/docrep/005/y4450e/y4450e02.htm 38 What is District Heating? (n.d.). Retrieved July 18, 2015, from http://www.theade.co.uk/what-is-district-heating_191.html 39 Biomass Cofiring: A Renewable Alternative for Utilities. (2000, June 1). Retrieved July 18, 2015, from http://www.nrel.gov/docs/fy00osti/28009.pdf

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40 Loria, K. (2014, March 23). UK Coal-to-Pellet Conversions Ahead . Retrieved July 18, 2015, from http://biomassmagazine.com/articles/10130/uk-coal-to-pellet-conversionsahead 41 Basic Information. (n.d.). Retrieved July 18, 2015, from http://www.epa.gov/chp/basic/ 42 What’s holding back co-generation and efficient district heating and cooling? (2014, May 21). Retrieved July 18, 2015, from http://www.iea.org/newsroomandevents/news/2014/may/whats-holding-back-co-generation-and-efficient-district-heating-and-cooling.html 43 Egger, C., Ohlinger, C., Auinger, B., Brandstatter, B., Richler, N., & Dell, G. (n.d.). Biomass heating in Upper Austria: Green energy, green jobs. Retrieved July 18, 2015, from https://www.biomassthermal.org/resource/PDFs/Austria_Biomass_heating_2010.pdf 44 How IGCC Works. (n.d.). Retrieved July 18, 2015, from https://www.duke-energy.com/about-us/how-igcc-works.asp 45 Frequently asked questions. (n.d.). Retrieved July 18, 2015, from http://www.ccsassociation.org/faqs/ccs-capture/ 46 Harkin, T., Hoadley, A., & Hooper, B. (2010). Reducing the energy penalty of CO2 capture and compression using pinch analysis. Journal of Cleaner Production, 18(9), 857-866. doi:10.1016 47 Kummamuru, B. (2015, June 1). WBA Global Bioenergy Statistics 2015. Retrieved July 18, 2015, from http://www.worldbioenergy.org/sites/default/files/WBA Global Bioenergy Statistics 2015 (press quality).pdf 50 Electricity from Biomass. (n.d.). Retrieved July 18, 2015, from http://www.powerscorecard.org/tech_detail.cfm?resource_id=1 51 Biomass energy overview. (2011, March 17). Retrieved July 18, 2015, from http://www.pfpi.net/biomass-basics-2 52 Biomass as Feedstock for a Bioenergy and Bioproducts Industry: The Feasibility of a Billion-Ton Annual Supply. (2005, April 1). Retrieved July 18, 2015, from http://feedstockreview.ornl.gov/pdf/billion_ton_vision.pdf 53 Energy and Economic Impacts of Implementing Both a 25-Percent Renewable Portfolio Standard and a 25- Percent Renewable Fuel Standard by 2025. (2007, August 1). Retrieved July 18, 2015, from http://www.eia.gov/analysis/requests/2007/eeim/pdf/sroiaf(2007)05.pdf 54 How Biomass Energy Works. (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/our-energy-choices/renewable-energy/how-biomass-energy-works.html#.VaVbIPlVhBd

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55 Biomass Resources in the United Staets. (2012, September 1). Retrieved July 18, 2015, from http://www.ucsusa.org/sites/default/files/legacy/assets/documents/clean_vehicles/Biomass-Resource-Assessment.pdf 56 Shelly, J. (n.d.). Woody Biomass Factsheet. Retrieved July 18, 2015, from http://www.pelletheat.org/assets/docs/industry-data/infoguides43284.pdf 57 Public Utility Regulatory Policy Act (PURPA). (n.d.). Retrieved July 18, 2015, from http://www.ucsusa.org/clean_energy/smart-energy-solutions/strengthen-policy/public-utility-regulatory.html#.VhGM2XpViko 58 Childers, A. (2014, March 26). EPA Begins to Address Biomass Emissions in Permits Following Court Decision. Retrieved July 18, 2015, from http://www.bna.com/epa-begins-address-n17179889189/ 59 Biomass energy overview. (2011, March 17). Retrieved July 18, 2015, from http://www.pfpi.net/biomass-basics-2 60 Renewable Fuel Standard. (n.d.). Retrieved July 18, 2015, from http://www.c2es.org/federal/executive/renewable-fuel-standard 61 Kyoto Protocol. (n.d.). Retrieved July 18, 2015, from http://unfccc.int/kyoto_protocol/items/2830.php 62 The 2020 climate and energy package. (n.d.). Retrieved July 18, 2015, from http://ec.europa.eu/clima/policies/package/index_en.htm 63 Evans, S. (2015, May 11). Investigation: Does the UK's biomass burning help solve climate change? Retrieved July 18, 2015, from http://www.carbonbrief.org/blog/2015/05/investigation-does-the-uks-biomass-burning-help-solve-climate-change/ 64 UK's renewable energy targets drive increases in U.S. wood pellet exports. (2015, April 22). Retrieved July 18, 2015, from http://www.eia.gov/todayinenergy/detail.cfm?id=20912 65 Walker, T., Cardellichio, P., Colnes, A., Gunn, J., Kittler, B., Perschel, B., . . . Saah, D. (2010, June 1). Biomass Sustainability and Carbon Policy Study. Retrieved July 18, 2015, from https://www.manomet.org/sites/default/files/publications_and_tools/Manomet_Biomass_Report_Full_June2010.pdf 66 Simet, A. (2015, August 3). EPA releases Clean Power Plan, uncertainty for biomass remains. Retrieved November 18, 2015, from http://biomassmagazine.com/articles/12260/epa-releases-clean-power-plan-uncertainty-for-biomass-remains 67 Egger, C., Ohlinger, C., Auinger, B., Brandstatter, B., Richler, N., & Dell, G. (n.d.). Biomass heating in Upper Austria: Green energy, green jobs. Retrieved July 18, 2015, from https://www.biomassthermal.org/resource/PDFs/Austria_Biomass_heating_2010.pdf

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VIII. APPENDICES

i. INTERNAL REVIEW BOARD (IRB) EXEMPTION REQUEST MATERIALS

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1. Research Design The biomass industry has been burgeoning in the United States for the last decade, but it has consistently proven difficult to obtain funding for new projects. The purpose of our study is to collect stakeholder opinions on the current state of the industry and possible barriers to new investment. As an abundant resource with great promise, we hope to uncover solutions that facilitate financial entry and accelerate the growth of the industry. There are numerous stakeholder groups in the domestic biomass industry, and it is our intention to interview a broad sample of such stakeholders to gain a diversity of perspectives and inform an unbiased report. There will be a list of standardized questions asked across all groups and depending on the individual’s area of expertise and background, we will follow up with more pointed questions on the spot. We do not anticipate any interview taking longer than an hour. As far as our follow-­up questions, the topics will exclusively concern the current state of the market and thoughts on future potential or constraints according to the interviewee’s unique perspective. Below is a list of standardized questions.

1. What is the name of the organization for which you work? What does your organization do? 2. What is your position within the organization and what are your responsibilities? 3. What stake does your organization have in the future of biomass adoption in the United States? 4. What do you see as barriers to widespread adoption of biomass in the United States? Could you

please elaborate? Do you have any examples of where such barriers may have crippled potential projects? Policy considerations? Technology limitations? Public perception? Supply constraints?

5. How might these barriers be overcome? Does this seem likely? On what timescale? Can you point to any specific examples in the field?

6. Where do you see promise for biomass in the US? 7. Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your

organization’s strategy? 8. Thank you so much for your time and your insight. Are there any other individuals with whom you

recommend we speak for further information on anything we might have discussed today? We will collect identifiable data, such as the interviewee’s name, organization, and position/role. The identifiable information we collect will only be used to provide context for answers to our questions. Where interviewees request to remain anonymous, or to comment off the record, those requests will be honored in such a way that readers of our report will not be able to identify the source of comments. 2. Subject Selection Our subjects will come from a variety of stakeholder groups within the domestic biomass industry. We are only seeking to interview subject matter experts, and so we will not be going outside the bounds of the industry to speak with individuals lacking professional insight. Below are some examples of stakeholder groups from which we might select subjects for interview. Stakeholder Groups

• timber harvester operators/engineers • biomass facility operators/engineers • supply manufacture operators • forest landowners • forest products suppliers • energy/forestry investors • policymakers • ENGO representatives

We have already identified a number of interview subjects through networking with our professors and their contacts. We will further recruit subjects through internet research and by having our respondents

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pass on our contact information to their professional networks. We will directly contact industry stakeholders via email or by phone.

3. Informed Consent

Mr./Ms. ___________ We are writing to ask for your participation in an interview concerning the future of biomass energy in the United States and potential barriers to development. We are graduate students in the Nicholas School of the Environment at Duke University seeking to uncover such barriers so as to gain a better understanding of why this energy source has not been more widely adopted domestically. The interview process should not take more than half an hour. Your participation is entirely voluntary, and you may stop the interview at any time for any reason. While we intend to record our conversation, you are free to choose not to answer any questions as you prefer. If you have comments you would rather provide anonymously or keep off the record, we also promise to respect those wishes. The recordings will be destroyed once the interviews have been transcribed. The results of our study will be published and available to the general public. The most likely uses include informed investment and policymaking decisions, though other unforeseen uses are certainly possible. If you agree to participate in an interview, and to let us collect, store, and use your name, please sign and date on the appropriate lines below, and also please remember that you are not obligated to provide any information you would rather not provide. Should you decide to participate, we will contact you briefly to establish a time, date, and method for the interview. Thank you for taking the time to read about our research project, and we hope to speak with you in the near future. Sincerely, Karan Gupta & William K. Stroud Karan Gupta karan.gupta@duke.edu (919) 491-­7719 Daniel Richter Jr. Daniel.Richter@duke.edu (919) 613-­8031

William K. Stroud william.stroud@duke.edu (916) 893-­4060 Duke University Office of Research Support ors-­info@duke.edu (919) 684-­3030

____________________________ ____________________________ Print Name Date ____________________________ Signature

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ii. GENERAL INTERVIEWS

General Interview Questions

Respondent Identification Questions:

1. What is your name?

2. What is the name of the organization that you work for, and what does your organization do?

3. What is your position within the organization, and what are your responsibilities?

4. What stake does your organization have in the future of biomass adoption in the United States?

Common Questions and Biomass Stakeholder Opinions:

5. What do you see as the largest barrier to widespread biomass energy use in the United States?

6. What other barriers do you think will have an effect on the industry? Examples could issues such

as supply constraints, policy considerations, technology limitations, public perceptions, and

economics.

7. Do you have any examples of where such barriers may have crippled potential projects?

8. How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can

you point to any specific examples in the field?

9. Where do you see promise for biomass in the US?

10. Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your

organization’s strategy?

End of interview Question: 11. Thank you so much for your time and your insight. Are there any other individuals with whom you

recommend we speak for further information on anything we might have discussed today?

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Adam Sherman Biomass Energy Resource Center (BERC)

Manager asherman@biomasscenter.org

(802) 540-­7863 November 4, 2015

Karan Gupta: What is your name? Adam Sherman: Adam Sherman. KG: What is the name of the organization that you work for, and what does your organization do? AS: I am the manager of the Biomass Energy Resource Center. It is a program of the Vermont Energy Investment Program. It is a mission driven program that has a mission of reducing the economic and environmental impacts of energy usage. KG: What stake does your organization have in the future of biomass adoption in the United States? AS: As a mission driven non-­profit, we’re part of a non-­partial independent objective advisor on technical on what best-­in-­class biomass energy looks like. We also are strong advocates of community scale high efficiency local thermal biomass energy. What we call modern wood heating from the residential scale all the way up to district heating across North America. We have helped advance the concept of modern wood heating across America. KG: What do you see as the largest barrier to widespread biomass energy use in the United States? AS: Public awareness and understanding of what it is and its benefits. The word biomass itself means a very specific thing to a forester, it’s a very specific part of their inventory. You say the same thing to someone off of the street and they have no idea what you’re talking about. Biomass to a farmer might mean alfalfa. The terminology seems so broad and nebulous. The fact that different forms of biomass energy are a lot different and have different costs and benefits, yet it’s always described and painted in a singular brushstroke. Within the political arena and to the NGOs the word biomass is an immediate red flag, it’s big, it’s bad, it’s horrible, yet there are forms of biomass energy that are very sustainable high efficiency, and yield better economic and environmental energy that the alternative of continuing to use fossil fuels, especially for heating. KG: What other barriers do you think will have an effect on the industry? Examples could issues such as supply constraints, policy considerations, technology limitations, public perceptions, and economics. AS: I’m going to answer that question from the perspective of a very specific form of biomass energy, modern wood heating. For that form of biomass energy, one of the biggest policy constraints is just that we have regulatory policy and frameworks in place that encourage the use of energy efficiency and renewable use in the energy sector, but very limited use in the and regulatory frameworks for advancing efficiency and renewables in the thermal sector. I think that’s one of the greatest limitations as to why we’re not seeing greater adoption of this technology that is just off-­the-­shelf. It’s not someone in a lab coat and a beaker full of liquid in a lab somewhere. It’s off-­the-­shelf technology that can be used for heating right this minute. KG: Do you have any examples of where such barriers may have crippled potential projects? AS: I was speaking from a landscape level, as a barrier in a broader sense. In the granular level, there have been countless times where there have been incentives for someone to put in a photovoltaic unit, but the high capital cost of putting in a wood chip heating system, that’s a large investment, and there’s no assistance to pay for it. There’s hundreds of examples of that at the project level.

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KG: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field? AS: There are a lot of different approaches to it. Sticking with the policy theme, there have been states that have tried to develop incentives, like a thermal RPS in New Hampshire, so not just electricity but thermal energy as well. Projects have also been done in MA, there are other states that have looked at carbon taxes on heating fuels. Many states have a hard time with that because it’s a regressive policy. People feel it will affect the most income sensitive people who really need to have the heat in the winter. Just making it more expensive for them is not a popular thing to do. KG: Where do you see promise for biomass in the US? AS: Personally, geographically, I think the Northeastern US, where you have the convergence of critical factors. The lake states as well. Throughout the intermountain Rocky Mountains and the Northwest, you have the convergence of 3 factors, long cold winters, local fuel sources, and communities that are highly dependent on expensive foreign fuel sources like propane and heating oil. Where you have the convergence of those three factors, forests, long cold winters, and expensive fuel costs, that’s where you’ll start to see more modern wood heating take off. KG: Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your organization’s strategy? AS: My tenure isn’t for biomass in the US, it’s compared to where we’ve been with the USDA and the USDOE spending billions of dollars trying to commercialize cellulosic ethanol so people can run around in their SUVs getting 12 miles to the gallon. Until they start to incentivize off the shelf technologies like modern wood heating, we won’t be supported on a national scale. We need to concentrate on areas where those three factors I just mentioned come into play. Once we do that, we’ll see things start to go federal. We’ll be able to keep dollars local as well as have environmental and carbon benefits. How that aligns with our organization’s strategy, it’s very aligned with our strategy. We want to help federal and state organizations design and implement programs that do exactly that. It’s a combination of technical know-­how, outreach, financial support, to achieve market adoption of market wood heating. KG: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today? AS: BTEC Biomass Thermal Energy Council I would talk to them. The executive director is named Joel Stronberg. Based in DC. Charlie Meedling, on the board of BTEC. In the Midwest, Heat the Midwest, Brian Bradshaw, he may be with the USFS in Madison. Julie Tucker with USFS.

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Amanda Lang Forisk Consulting LLC

Partner and Senior Consultant ahlang@forisk.com (770) 725-­8447 July 31, 2015

Will Stroud: Hi, this is Will Stroud interviewing Amanda Lang. I’d like to go ahead and get started with some general questions. What’s your name? Amanda Lang: Amanda Lang. WS: What is the name of the organization that you work for and what does your organization do? AL: I work with Forisk Consulting. We’re a research and consulting firm based in Athens, GA. We primarily research wood markets, but we’ll do research on anything that involves timberland prices and timberland ownership. Our key clients are timberland owners, mill owners, and forest managers. WS: What is your position within the organization, and what are your responsibilities? AL: I am a partner here and a senior consultant. I am also in charge of our biomass program here, so I’m tracking biomass energy projects and researching the markets as they relate to wood use. WS: What stake does your organization have in the future of biomass adoption in the United States? AL: We’re an information provider and researcher, so we track the industry as it grows or contracts and try to help others better understand timber markets and wood fiber use. My job specifically is to inform our clients and the public in general of current biomass trends. WS: What do you see as the largest barrier to widespread biomass energy use in the United States? AL: There are many different applications of biomass energy, from liquid biomass to power cars, to pellets, to cogeneration and they all have unique challenges, but really the overarching issue is the cost of biomass. It’s an economic barrier. When you look at alternatives to biomass energy, whether it’s for transportation or for power, there are other alternatives that are much cheaper, and I think that’s been a big hindrance to biomass development in the US. However, I think that relates to a lot of other barriers, so if I had to boil it down to one particular issue, economics would probably be it. WS: What other barriers do you think will have an effect on the industry? Examples could issues such as supply constraints, policy considerations, technology limitations, public perceptions, and economics. AL: Well, if economics is your number one barrier, then policy is how that issue has to be resolved. In order to overcome that economic barrier, people in the US or elsewhere need to come together and say “biomass has other benefits besides being just the cheapest option.” In that way, policy can be a barrier if it doesn’t support the use of biomass. I think another barrier is technology, primarily for biomass use in transportation. There have been several companies that have tried to develop liquid fuels from biomass, and they have failed. It’s very expensive to do, it’s very time consuming to do, and I think that’s a big problem… The technology risk and the cost associated with overcoming that risk. WS: Do you have any examples of where such barriers may have crippled potential projects? AL: Yeah, we have a lot of examples. Going back to the cost and economic example, one that comes to mind is Oglethorpe Power Corporation. They announced plans to develop several large biomass power plants here in Georgia. They did market studies, selected sites, and got pretty far along in the permitting process, but then natural gas prices went down. As a result, they decided to build a natural gas plant instead. One example tied to technology is KiOR. They’re a pretty recent example. They started up a

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plant in Columbus, MS. They made a little fuel, but they ended up needing more financing to pursue technological hurdles required to operate more efficiently. They ended up folding as a company because they weren’t able to overcome the technology barrier. WS: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field? AL: I think, um, anything’s possible. How? There’s different scenarios: one is that fossil fuels or natural gas became more expensive, and once the alternatives become more expensive biomass looks more attractive. Another one is tied to policy. If public opinion or politicians decided that biomass is a good option for energy for environmental or political sustainability reasons, then policy could subsidize biomass or make it cheaper. If we were to internalize external environmental costs of using coal or natural gas, things could certainly change. So there’s certainly a chance. Is it likely? I don’t know if it’s likely or not. I don’t do much policy forecasting. I will say that given recent history, it doesn’t seem likely that it will happen in the short term. WS: Where do you see promise for biomass in the US? AL: Tracking the projects that have been announced in the last several years, there have been several that have been successful. Some of them have been the pellet plants. While those pellets are not being used here, we are supporting world use of biomass by doing that. I think that’s an industry that’s developing now and will certainly be around for another ten years. I think another use that’s actually been expanding is the use of biomass for power and heat in industrial facilities. That’s actually been around for awhile, especially in the forest products industry. Their plants commonly have boilers that burn bark and residuals that are made during the manufacturing process. Some sawmills have it as well. I think that use of biomass will continue, and I think it’s been successful. WS: Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your organization’s strategy? AL: We don’t like to forecast. We prefer to rely on physical facts and what’s going on today. Given that pellet plants are definitely still going in, and there is a small home heating market for that domestically. Liquid fuels will be a pretty challenging. Electricity is tied to policy. WS: Do you see any possibility for renewable energy policy change within the United States? AL: I think it’s possible. When, I’m not sure. I think we’ll have to see what happens in the upcoming election. See what the American people want to do. I think, overall, coming out of the recession people want to spend less if they can, so coming up with an option that may force people to spend more might be unfavorable. But I do think that we’re seeing more of an environmental focus. If that continues, we could see some changes. WS: In your opinion, will the current EU policies be altered within the foreseeable future? AL: The EU has been slowing down their support for biomass for several reasons. One is economics;; it’s very expensive. Especially in the UK, which is where we send most of our pellets now. The government and just the public in general would like to see lower electricity prices, and subsidies aren’t helping that. Another thing that shines through is that wood is not viewed as favorable as other sorts of renewable energy: solar, wind and options like that. People are very sensitive when it comes to cutting down trees. People don’t like to see it happen, even when biomass can be used in direct substitution for coal. Given all of that, I’m not sure that the EU policies will be completely done away with in the future, but I do think that we are seeing a dampening of interest in using wood. I think that’s going to continue. WS: What are some of the differences between pellet feedstocks and biomass feedstocks? AL: For a biomass energy plant, they tend to be very price sensitive about what they can buy and they

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like to buy waste material. Any type of urban fuel or forest residuals and bark, lower end mill residuals would be good for them. In the south, they tend to stick to those types of materials. For pellet plants, they use different feedstock. Historically, when serving the domestic market, plants have used mill residuals like sawdust. Some of them are co-­located with lumber facilities. However one feedstock that’s really emerged in the last year or so is pulpwood. Many of the facilities that are coming in trying to export pellets are really focused on that feedstock. One reason is that they can use that and really control the quality of the pellets, it’s a security of supply issue. That being said, they are competing directly with other traditional users of that material like pulp and paper mills. WS: How do you think this increased demand for pulpwood has affected land use and land cover change, and how does it shift the carbon dynamic? AL: We’ve done some modeling work to look at timberland owner responses to increased use to biomass, and one way we were able to look at that was to look at how stumpage prices might increase with new pellet plant demand. Within local markets where a pellet plant might come in and use wood, we could see some price increases. However, what we’ve found is that those price increases are not great enough to cause landowners to want to shift their management regimes. A big reason for that is just that there’s a huge price increase that they get from producing sawtimber. It’s so much greater than the increased value of pulpwood. There would have to be crazy increases in the pulpwood price, much greater than what I think would be possible, for landowners to switch management activities. There could be some spot opportunities with weather or something. Maybe harvesting a year early to take advantage of increased spot pricing, but in terms of our overall management activities, we don’t think there’s going to be that much of a change.

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Bob Abt NC State University

Professor, Natural Resource Management/Economics Co-­Director of SOFAC bobabt@ncsu.edu +1 (919) 515-­7791 October 21, 2015

Karan Gupta: What is your name? Bob Abt: I’m Bob Abt. I’m a professor of Natural Resource Economics at NC State. KG: Great, what are your responsibilities in this role? BA: I teach and do research on natural resource management. My research has been focused on resource supply issues in the south and lately, the effect of bioenergy on resource supply and markets in the south has been a focal point. KG: What stake does your organization, NC State, have in the future of biomass adoption in the United States? BA: I would say, there is a stake in that we are trying to work on the scientific dimensions of bioenergy. So we have carbon scientists, we have biomaterials people working on ethanol conversion and those kinds of things. So there is some industry support for working out the technological and scientific basis for this industry and then because it has a potential effect on resource, there is a broad interest among the faculty on how it plays out. KG: I’m going to ask you questions about the industry at large. What do you see as the largest barrier to widespread biomass energy use for heat and power in the United States? BA: I think our infrastructure is not really set up for using it except for maybe in a co-­firing sense. We don’t have many district heating opportunities, maybe prisons and hospitals and schools. I think it’s somewhat controversial, so some folks that might be interested in going for it because it’s a green technology would have second thoughts if there were protests about doing that. I think UNC Chapel Hill was going to convert a boiler over, I’m not sure if they did or not. So anyway, I think a lot of the folks who are interested would be interested in being seen as doing the right renewable power thing, but the public perception of it creates a negative, which is not to do something that is controversial and so it would be easier to do a solar panel and have everyone pat you on the back. So I think the public perception about, well there’s questions about the science in terms of the carbon impact. It’s not an easy answer. The public perceptions about increased harvests and what that means in terms of resources to a public that’s not necessarily in the resource business all the time and our desire, apparently, for cheap power. The south is one of the cheapest power regions in the whole US and I think anything that is promoted as increasing power costs would be a hard sell to a cost-­conscious legislature, and possibly the public, as well. KG: So you laid out a few barriers there: public perception, science, infrastructure. Of those, which would you say is the greatest? BA: I think there are some real science questions. In other words, I think there are ways that you can use wood that is not beneficial to CO2 and so you have to be careful. It’s hard to tell a concrete story because there is variability on the resource side. So there’s a risk in terms of knowing what you’re actually doing in terms of CO2 in the atmosphere because there are so many stages to the process. So that, I would call, sort of a neutral assessment of the scientific basis for this, which has a lot variability in it, and that creates risk. And that’s enhanced by the fact that the public perception of that variability is slanted toward the negative side and so those two things together – you know, there is real variance. The variance allows folks to have valid views on both sides of the issue, but the public perception I think is key. So I would

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say, maybe, the science being dependent on many stages in a complicated process is the main one. And the public perception of that variance in terms of what it means in negatives, would be second I would think. KG: Do you have any examples of where such barriers may have crippled potential biomass projects? BA: Well I guess yes. I was in conversations with Southern Company about co-­firing and this was before natural gas prices went down. And at that time, the conversations were seen as a real opportunity, both in terms of a low-­cost resource surrounding Southern Company (that’s the company that’s in Alabama and Georgia and Florida), and so a real cost advantage in terms of using old coal capacity, and the idea that they would be doing the right renewable energy thing. And then two things happened, and it’s hard to disentangle which one was the key driver. One was natural gas prices go down, so that changed the cost picture. I think it was clear that part of it was that their use of wood would not necessarily get a stamp of approval as being the right thing to do by the public at large and so there was noise in the PR piece of that that dampened their interest. It could have happened just because of natural gas, but I think the natural gas prices and the idea that this wasn’t going to be as clean a renewable story as they would like changed their path. And Duke Energy was in the same boat, actually, but there I think it’s easier to see that they switched to natural gas turbines quickly. KG: So, how might some of these barriers be overcome, and does this seem likely? BA: I think that’s a good question. My own view is that we know enough about the science that there are some safe circumstances to know that we’re doing better than using fossil fuels. This is not a carbon neutral question, it’s better than fossil fuels. I tend to be a cynic about the public moving forward on a progressive issue, so I would say that I’m skeptical because the UK, which has shown amazing political fortitude on this issue, is now incurring higher energy costs and the science remains controversial and I think they have more of a stomach to address that than the US political system does. So that makes me skeptical about it having a long-­term stable future, I guess. KG: Where do you see promise for biomass in the US? BA: Well if the science provides some clarity, in other words, if folks could agree, even if it was something like using residues would be acceptable, then small-­scale residential or district boilers and those kinds of things I could see happening. As long as high natural gas prices would be something that would change the game. KG: Describe your ten-­year vision for biomass in the US. BA: So here’s one thought. I see the UK and EU dependence on pellets as, whether it’s planned that way or not, sort of being a bridge to some other kind of renewable energy in the future. So maybe a ten-­year bridge. But I think the biomass pellet industry, specifically, might continue whether or not the energy use continues, because what it’s done is create wood fiber as a commodity that’s cheap to ship. So there’s already examples of pellets being shipped to biorefineries, not for energy, but just for biochemicals. So biomass and pellets in particular, may have a future as providing wood as a commodity input into a whole different biochemical system, independent of whether it’s used for energy or not. KG: And would that be overseas or would that be domestic industry? BA: It could be both. If you think about, transportation and drying and the heterogeneity of resource are a huge impediment to an industrial scale use of wood in general. But now we have pretty large capacity of plants that take wood, pulverize it, put it into dried pellets that are very efficient to move in bulk carriers to a lot of places, and so just making wood a) a commodity, and b) transportable, I think that’s a pretty powerful innovation driven by this process that may not be so dependent on the energy use. KG: What do you see as some of the supply issues facing domestic biomass projects, and how serious are these issues?

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BA: I’m thinking only from a US South perspective. In the long-­run, I don’t really see a lot of supply issues. In the short-­run I do, partly because this sector is driven by sawtimber and sawtimber is weak. And so that does two things. One is it puts the sector in a weak position in terms of landowners being interested in planting trees or doing a final harvest that leads them to plant the next generation of trees. So I think that’s a hindrance in the short-­term and that does two things. One is it makes income to landowners from pellets more important than it would normally be because there’s not much else happening in the market. But I think that in the long-­run, maybe I would say it depends on agriculture. So in the US South, here’s a vision for the future. If agriculture in the US South becomes less important, trees become more important. And so policies, maybe a carbon policy that favors trees or ag policies that reduce subsidies to agriculture, could enhance future supply, and the silvilcultural technology is evolving. So I would say I see some short-­term constraints, but I still am of the belief that more demand for wood products in a privately-­owned southern resource in the long-­run leads to more forestland than there would have been otherwise. Maybe not the forestland that everyone wants to hike in, but at least as opposed to agriculture, more carbon on the landscape. KG: So do you see competition for wood fiber supply from other sectors? BA: That’s part of my short-­term issue is, there hasn’t been a lot planting. There’s been a drop in planting around 1999. So there’s been a drop in planting and what we need to turn that planting around is two things is for landowners to think that they should invest in trees and the literature suggests that the current price is how they form their view of the future because no one can predict the long-­run future. And so with pine sawtimber prices only being two-­and-­a-­half times pulpwood prices in the south, where they’re normally five times, that creates a bad financial picture for landowners thinking of other land uses and whether they should invest in trees. So that’s the short-­term problem. And to me, coupled with that is the fact that we have a large supply of sawtimber where people are hoping prices come back and they’re not harvesting and the best way to predict who plants is who harvests. And so if people don’t harvest, there’s not a planting opportunity. I guess my sense is I don’t agree with folks that say that the pellet impact doesn’t matter because it’s a low-­value resource. It’s coming into this market at a time where it potentially could have an impact, including competing with pine pulp mills for a limited resource in terms of thinning age or that kind of thing. The south-­wide average can hide a lot of variability, both good and bad across the landscape. In the long-­run, I trust markets. I trust that when housing comes back and mill residues are available and people start planting the next generation of trees, that we’ll go through another long-­wave cycle and this will just show up as one of the stages in the long-­wave cycle. KG: Now you have a unique and particularly in-­depth perspective on domestic biomass, so I was just curious, what are some of the research questions you’re currently working on and what are some of the answers you’re starting to see on those questions? BA: So in a way, the last year, I’ve been focused by policy-­driven questions about this resource. So one would be the EPA Science Advisory Board. I’ll say something about my own path of research, but right now I’m spending a lot of time interpreting my research in terms of what it means for this resource in a policy context, which isn’t my normal home. So the EPA Science Advisory Board was a nice discussion where a bunch of scientists both on the biological and economic side got together to try to lay out the issues that determine the carbon footprint of using wood. So to me, contributing to that process and being a part of that discussion is very important. There’s not a US policy right now that’s driving things and so it’s not so much that it’s going to affect policy, although the Clean Power Plan, it might have some impact on the Clean Power Plan and how it’s implemented. But to me, to have all those folks in the room in an EPA setting, in a public forum, allowed this debate to happen among scientists in a sort of formal setting. And I think the fact that that was a messy process and that the document is going to be messy and it’s going to not say what’s right or wrong, but say what issues matter, I think that’s an important process. And as a matter of fact, that’s being looked at by folks in the EU, as well, because the EPA making a statement about wood influences their conversation, as well. And I’m working on some contracts with the EU Commission Director of the Environment and with the Department of Energy and Climate Change in the UK, and they’re doing something similar to what you’re doing. They’re surveying experts, trying to see what they think about bioenergy, and I’m not working on the survey part of that, but I am providing a

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modeling analogue to that, the point being that the US South’s forest resource is a dynamic resource that links agriculture and forest sectors. And so, you can get almost any answer you want by either looking at a small area and getting a big impact or looking at a short timetable and not having the forest recover. So a lot of the stuff I do, some of this with Christopher Galik at Duke, is sort of focused on the impacts of spatial and temporal scale and the influence of markets and land-­use change on how ultimate carbon story comes out. And where that leaves me and my role in some of these studies is, I can’t say whether using wood in Canada is a good thing and I can’t say whether the Manomet study of the northeast was right or wrong, but I’m pretty sure that the US South, where we have a landscape that’s a fragmented marginal agricultural forest landscape owned by 95% private landowners who will respond to markets (and we have a rich historical landscape of them responding to markets), I think the US South is sort of the right laboratory to see how a demand for wood could play out in a way that actually affects carbon on the landscape, whereas in the Pacific Northwest, it would be more of a policy question for federal ownership. In the northeast, there’s not an ag-­forest mix that competes in the same way, so one thing that’s come out to me is the US South is sort of a unique place, and an answer that we might find here may not apply to any other place in the world. KG: Last question. Well first, I’d like to thank you so much for your time and your insight, and I was wondering if there are any other individuals with whom you recommend we speak, for further information on anything we might have discussed today. BA: I’ll mention Karen, my wife, who’s written the US Forest Service position paper on pellets, at least (and I was a co-­author) and then Christopher Galik at Duke is my link to the policy world. And I think that’s a small circle of people I work with a lot, but I can answer more intelligently about my stuff by working with those folks because they sort of broaden my reach.

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David Carr Southern Environmental Law Center

General Counsel dcarr@selcva (434) 977-­4090

November 10, 2015 Will Stroud: What is your name? David Carr: David Carr. WS: What is the name of the organization that you work for, and what does your organization do? DC: Southern Environmental Law Center, is a regional public interest advocacy organization. We focus on protecting our region’s air, water, forests and other special places. I’ll add that we cover six states: Georgia, Alabama, the Carolinas, Tennessee, and Virginia. My position is General Counsel and renewable energy expert. WS: What stake does your organization have in the future of biomass adoption in the United States? DC: We have a huge stake. Our largest project, and the thing we spend the most time on is climate change and energy, and biomass fits right into that. It also fits right into that we have a long standing protection project that’s focused more on national forests but also on private forests. That also overlaps with the biomass issues. WS: What do you see as the largest barrier to widespread biomass energy use in the United States? DC: The ongoing potential for biomass to increase atmospheric carbon concentrations. WS: What other barriers do you think will have an effect on the industry? Examples could issues such as supply constraints, policy considerations, technology limitations, public perceptions, and economics. DC: The carbon and climate change issue is the largest, but the reliance on standing forests, considering that forests are our largest carbon sink in the US, absorbing up to 15% of our carbon emissions. Cutting those down and burning them, for electrical power particularly, has major problems and raises major questions. Also the scale that’s required to produce electric power for the grid puts a major demand on forest resources. It’s huge. That’s demonstrated by the pellet industry, and Europe’s demand for wood from the forests of the US has greatly increased the amount of clearcutting and forest harvests that have taken place. The demand is huge, and it’s growing rapidly. There’s a big problem with the impact on forest systems and biodiversity. You have a lot of wildlife and biodiversity that’s dependent on forests and the pellet industry has chosen to go after forested wetlands and bottomland wetlands in North Carolina and Virginia. That has major wildlife implications in addition to carbon. WS: Do you have any examples of where you’ve used some of these issues to stop potential projects? And if so, then what’s the strategy? Is it public outreach, or would you use a legal injunction? DC: The strategies are multiple. It’s important to educate the public. Those that are in the areas just adjacent to the plants where air pollution is an issue or those in a sourcing area where clearcutting is occurring. When you tell people that we’re cutting down forests, and people understand a little bit about the carbon cycle and climate change, and we’re burning those trees in power plants to supposedly create power, and it’s supposed to address some of those problems, they start shaking their heads. WS: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field? How can these operations become sustainable?

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DC: The initial assumptions by the Europeans is that these facilities would be burning waste wood, and so instead of that wood decomposing and releasing carbon into the atmosphere that way you could burn it for and get some energy out of it. But the scale for electric power generation, there’s just not waste wood available. The forest products industry and the pulp and paper industry are already using waste wood, either to make products or in their own boilers for heat or whatever steam needs they had. So the assumption that there was waste wood out there to be used turned out not to be true. WS: So, your main issue in terms of supply is based upon the fact that the pellet industry is using pulpwood rather than sawmill residuals or slash from logging operations? DC: Exactly. They’re cutting down forests that would not have been cut down to source the pellets. That’s happening in the power industry as well to some degree, but most of that activity, that pulpwood is going to the pellet mills. The idea of forest residue being available, there’s potential for that, but the challenge is that in terms of the pellet industry they don’t want residues. They want the trunks and boles of the trees. They don’t want the impurities from the bark that would come with picking up scraps after a logging operation. The pellet industry doesn’t want it. Also economically, it’s challenging to pick up that forest residue. In some situations, it’s possible. Some of that’s going into power plants in VA. Dominion has converted three 50MW power plants from coal to wood. They are probably using some pulpwood, but probably more tops and limbs and chips that are coming out of the woods. WS: Where do you see promise for biomass in the US? Is there a sustainable path forward? DC: Yes, with using the right kind of feedstock and the right kind of energy conversion. If, in fact, you have access to waste wood or material that was going to go unused and decompose over time, then you can use that to generate energy. Particularly if there’s effort to re-­plant or regenerate that forest. So you can recapture some of that carbon that’s coming out of the stack. However, it’s much more efficient to use it in terms of heat or combined heat and power. Electrical generation is 25% efficient whereas CHP and Heat might be 85%. WS: Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your organization’s strategy? DC: It’s a matter of scale. Dominion had an existing 80 MW plant and between them and Westrock in Covington, VA, they captured much of the waste material that’s available. In VA there’s not a lot of room for power generation on the utility scale. The other issue for energy generation, and this goes back to the carbon issue, is solar is now cheaper than biomass. Solar doesn’t have the carbon quandary that biomass does. They’re competitive renewals. We don’t see a large future for biomass in the utility sector. In terms of smaller scale heating, there’s already a number of projects out there. If they have reasonable access to a feedstock more on the waste wood end of things then that makes sense. Though the waste wood is generated more where you have an active timber or pulp and paper industry. You’ve got to be careful where you locate those facilities, and you have understand the local pulp and paper industry. Westrock is very concerned about the competition from the pulp and paper industry. WS: How do you see domestic biomass energy use affecting atmospheric carbon? DC: I’ve already addressed that. If you’re using biomass from standing trees, you’ve got to do full carbon accounting. We, and others, have done studies that show that burning standing trees whether as pellets or chips, increases atmospheric carbon and it takes anywhere from three to five decades to recover that. That’s not adequate. We need to reduce carbon within the next 20 years. You can’t have a 35-­50 year carbon debt. WS: How have policy considerations changed biomass energy use? Specifically the Clean Power Plan and state level RPS plans. DC: Well the Clean Power Plan, the EPA has recognized that biomass is not carbon neutral. They’ve at least done better than the Europeans, who are still assuming that biomass is carbon neutral, though the

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Dutch are looking at criteria that challenge the carbon neutrality issue. That’s a key decision by the EPA. The Clean Power Plan talks about qualified biomass as a definition that biomass should contribute to reductions in CO2. It hasn’t been well defined though. It’s not clear how it’s going to be defined. There’s also potential for a loophole in the Clean Power Plan, which, the Clean Power Plan regulates existing sources and their emissions, and it appears, if you use a mass balanced approach, the clean power plan would allow utilities to build a biomass plant and run that and it wouldn’t be regulated because it’s a new source. By running that they could reduce their running a coal or gas plant and count that as a reduction of emissions. The problem of course being that the biomass is emitting more CO2 per unit of weight than the coal or natural gas plant. As for the RPS, NC has a mandatory RPS, VA has a voluntary one. Given VA’s standard, Dominion has enough hydro and out of state renewables that it doesn’t need biomass to meet VA’s renewable standard. It was a factor in Dominion’s decision to convert from coal to biomass, but it wasn’t why they did it. They told the VA State Corporation Commission they did it because they could sell the renewable energy credits as tier one credits in the Northeast, and they got a biomass tax credit, so they were using those financial incentives to make those conversion, but it wasn’t necessary. So just to summarize, we like the idea of an RPS that recognizes the use of wood waste, but the big problem is the scale. 4 million dried tons of pellets, that’s 8 million tons of green wood. We’re gonna hit 6 million by 2019, that requires clearcutting 100 square miles. That’s a lot of forest being cut and a lot of carbon getting put into the atmosphere.

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Lew McCreery US Forest Service

Acting Director, Wood Education and Resource Center (WERC) lmccreery@fs.fed.us (304) 285-­1538 October 23, 2015

Will Stroud: What is your name? Lew McCreery: Lew McCreery WS: What is the name of the organization that you work for, and what does your organization do? WS: I work with the US Forest Service, state and private forestry organization in our Northeastern area. We work with state forestry agencies, non-­profits, public and private organization to maintain and enhance the forests of the northeast and Midwest. We work from MN to MO, from MD to ME. 20 states. WS: What is your position within the organization, and what are your responsibilities? LM: Specifically I’m the woody biomass coordinator for that area of the forest service. As woody biomass coordinator, I work with state energy organizations, our state wood energy teams, state energy offices, state forestry agencies, non-­profits and private businesses, and other private and public entities that are interested in trying to utilize woody biomass for bioenergy and other higher value products. WS: What stake does your organization have in the future of biomass adoption in the United States? LM: From an agency perspective, without markets for material that needs to be removed when dealing with fire hazards or forest restoration, whether that restoration comes for fire or for insects and diseases or as a response to climate change, if we don’t have markets for that material, we can’t do those operations cost effectively. We just don’t have the financial resources to do the treatments that are needed without some sort of commercial timber sale from those efforts. WS: What do you see as the largest barrier to widespread biomass energy use in the United States? LM: I think there are a number of factors here. Probably the most recent development is the declining price of fossil fuels. That seems to be having an impact on projects, particularly places where there’s natural gas readily available. The projects that we’re looking at have to be smaller projects. I think another issue is the perception of people, potential investors, perceptions of the use of wood energy. They all think of it as “oh, you’re gonna cut up firewood, or we’re gonna have an outdoor heater that smokes like crazy.” The perception that there’s gonna be a lot more management of the system required, and that it’s gonna be dirty. There’s gonna be air quality issues. The second question they ask is, “where are we gonna get the wood? Is there gonna be enough wood out there?” So there’s an idea that it’s going to be more work, dirtier work, and that we don’t know about a consistent supply. So those two things are often the first things that we have to deal with, public perceptions and economic cost. WS: What other barriers do you think will have an effect on the industry? Examples could be issues such as supply constraints, policy considerations, technology limitations, public perceptions, and economics. LM: We run into the same issues that are impacting any forest users. The aging of the harvesting workforce, and the infrastructure that allows restoration treatments. More intensive forest management with an aging workforce and a declining forest products infrastructure. We’re losing paper mills and saw mills. Some of those things are because of the electronic age, the reduction in the housing market has knocked out a whole bunch of sawmills. In the Northeast and Midwest, we are lucky that we still have that harvesting infrastructure, but we can see what happens when we lose that. One sawmill in CO? Come on? From a policy prospective, if we are gonna respond to different issues in the forest in the future, we have to have those users. We don’t have enough money to do things.

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WS: So you think there’s a problem with the forest products infrastructure collapsing onto itself due to a combination of policy considerations and economic constraints? LM: Right. If we use chips, we can’t even compete with natural gas. Where we have projects that have a certain energy load there’s still a price differential in favor of wood chips in terms of price per BTUs in certain situations. However, if we lose that production infrastructure and those prices go up, then it becomes problematic. Right now, all in, it’s mission impossible to do pellet projects when compared to natural gas. Or, in a lot of situations, propane, because of the cost of pellets per million BTUs verse natural gas or propane. In a lot of places, you can still do it against gas, but that may not be true much longer. There may be some owners who would be interested in doing a conversion from fossil fuels to wood even if the price of wood is more than fossil fuels, but not many. WS: Do you have any examples of where such barriers may have crippled potential projects? LM: Yes, we’ve seen that happen in MO, where propane costs were such that we just couldn’t do the projects. MN and WI we’ve seen the same thing. In those agricultural states, the price of propane is pretty low because of grain drying, so those facilities are able to get access to propane much cheaper than in a lot of other states like in New England. It’s a lot more expensive there. Propane is pretty amazing… the pricing structure for that stuff. If you look at a bulk price, it’s like 50 cents a gallon, and the prices vary by as much 350% from one area to another. We looked at a school in MN, but they were getting propane for $1.35 a gallon and they couldn’t pay for the project while using biomass… So there are opportunities lost due to pricing structure all the time. WS: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field? LM: In terms of perceptions, what we like to do if we can, is take the facility manager to an operating system and have them kick the tires, and talk to their counterparts, and talk to people who are making these kind of systems work on a daily basis. This isn’t rocket science. It works and it works well. Most of those facility managers come away thinking, “yeah, I can do this.” So that kind of treatment starts to overcome some of the barriers. Sometimes, if it’s the general public, we can take a whole group of people. There are also many projects that are stopped by economics. In that sense, I think it’s difficult to solve on a local level. You’re going to find projects that work and projects that don’t work. One of things we try to talk to people about is that you need to look at the positive benefits. If you have a project that will have healthy cash flows and will save you money and pay for itself in 5 years people are all over it, but make that 15 years, and people don’t feel as ready. Especially with public projects, think about the life of one of these plants in the 20-­25-­year range, that’s not a bad project because that money that you’re spending will end up back in the local economy. There’s positive public benefits that accrue to that kind of project, and your energy dollars are gonna stay local. WS: Where do you see promise for biomass in the US? LM: The Promise I see for biomass is in the use of biomass for thermal and combined heat and power in district energy systems. In addition, I see promise for the increased use of wood in construction, both commercial as well as residential. I think that as we move forward with climate change issues there will be more of a market for that type of wood as carbon storage for those type of buildings. It would move faster if there were a carbon tax, but who knows if that’s gonna happen. Despite that, I think there will be increased use of wood in those type of systems. The big 800 pound gorilla in the room is the Clean Power Plan. If a lot of states select co-­firing wood and coal as a strategy that could substantially increase the use of wood for energy. On the one hand, that helps put wood use into public policy. On the other hand, it’s just that some of those systems are at best 30% efficient, which just isn’t that good. I hope that there is an increase in public policy push for distributed energy systems and that part of that public push is to produce those type of power plants at locations where that heat can be utilized. In a number of countries in Europe, if you want to build a power plant, you have to put it on a district heating system. If you take a look at Vienna Austria, they have a trash burner on their district heating system. Whether you

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use wood, or coal, or natural gas, if you’re creating power, then you should be capturing the heat and using that as well. Denmark and Germany both have the same kind of deal. WS: Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your organization’s strategy? LM: The use of wood for both wood and higher value products because energy is the lowest value product, depends a lot on the price of fossil fuels. It’s hard to understand if wood use will go up because paper use is declining. We may be using the same amount of wood, just in different uses. You won’t see this Little House on the Prairie surrounded by clear-­cuts and starting farms now… That’s just not the times. There are new uses and new harvest systems. I’m not sure how things are gonna add up for power. The Clean Power Plan is kinda the missing piece right now… we’ll see, but I feel like the decrease in demand for wood will be made up for with other sources. Hopefully things will shift to some of those other industries that provide more jobs than power plant. A 50 MW power facility uses about as much wood as a paper mill, only it provides less jobs and at much lower salaries than a paper mill does, so I hope we can find something with that kind of economic impact.

WS: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today?

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Rob Rizzo Massachusetts Department of Energy Resources (MA DOER)

Renewable Energy Program Manager robert.rizzo@state.ma.us

(413) 262-­9037 October 30, 2015

Karan Gupta: What is your name? Rob Rizzo: Rob Rizzo, and I’ll just continue from there. KG: What is the name of the organization that you work for, and what does your organization do? RR: I am the Renewable Energy Program Manager for MA DOER. In that capacity I’m responsible for numerous programs, initiatives, regulations, associated with a bunch of different renewable technologies for heating and cooling, from the residential all the way up to the large industrial and commercial and then everything in between. I also have two decades of biomass work. I happen to be a forester in the energy office. An unusual combination. I was recruited to work at the DOER because of my work on biomass combustion previous to my current position. They really needed somebody to address what they saw was a growing field with a lot of potential if done correctly and a lot of opportunities to mess it up if it’s not done correctly. I’ve been involved for a bunch of years with the department, first writing regulation for the MA RPS. I helped further define the qualifications of woody biomass into that standard. Before 2010, basically the regulation was written so that if you have a biomass plant in MA that you qualified under the RPS, and there was nothing itself in there about the larger picture of biomass combustion for energy use. I initiated the Manomet report. We did a bunch of modeling for us about turning biomass from the forest and what that meant in terms of carbon. It became known as the Manomet report. It said that biomass is not necessarily carbon neutral. It depends upon where it comes from and how you use it. In some instances, it can be harmful. One of the things we learned through the whole process was that using biomass for electrical generation only doesn’t make a lot of sense, from a carbon perspective, as well as in terms of using a renewable, but limited resource. In MA, we have a lot of very slow growing non-­industrial land. That limits the pool of where you can harvest biomass. As opposed to some of the very large industrial holdings that might be in other part of the country. That doesn’t exist in MA. As a result, we decided we needed to re-­write the regulations and requalify biomass into the RPS. We did that in a multiyear process with stakeholders from all over the world. We came up with a large set of criteria. Including the idea that if you want to qualify for the RPS with a biomass project in MA you have to demonstrate efficiency of at least 60%. A typical electrical plant is only 20-­25% efficient. A lot of that had to do with our understanding that we have a limited renewable resource. That really restricted the number of new biomass plant being built for electrical generation only. We started to focus on CHP and thermal applications. There hasn’t been too much uptake of the biomass energy sources, primarily because the price of natural gas is so low right now. Eventually that will kick in. However on the thermal side we’ve had lots of interest from residential to municipal to private companies. That’s been our main focus over the past several years. We have been criticized a great deal for our report and the focus of our program. A lot of people did not like the Manomet report. We developed harvest guidelines that are mandatory. It’s all based on soil fertility. We have a complicated spreadsheet to allow users to determine the tons of fuel they were able to remove per acre depending on the soils. The NRCS helped us a great deal with that. So we track every ton of wood that’s being utilized under our RPS standard, so we know where everything comes from. The largest one that’s qualified right now is a 50MW power plant, and we can tell you where they got every woodchip. It’s worth it to them because the RPS benefits are phenomenal, tens of millions of dollars a year. Our public utilities pass some cost on the consumer, so there is a very strong marketing ability. It’s a good business to be in. We’ve made what I think to be a sound scientific case for our direction in biomass. There are many people from academics to industry that dispute our modeling. Biomass in MA has to be efficient, ultra low-­emitting in terms of particulate matter, and it has to be from a sustainable source. I don’t envision a stand alone electrical generation facility being proposed in the near future in MA because it just won’t work out. The future we think, is with clean sustainable wood chips and with efficient usage. We are providing funds for private businesses to get started. These chipping machines are extremely expensive, so we give grants to support that type of forest infrastructure. (Drops

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Phone) Let me get back on track for you. I could talk at length about this, but I want to help you answer your questions. Where do you want to go from here? KG: What do you see as the largest barrier to widespread biomass energy use in the United States? RR: I would say the largest barrier is that we’re lacking standards. We don’t have any standard for woodchips. We have a voluntary wood pellets standard, but that doesn’t go far enough. I think that not having those kind of standards creates issues for all of the stakeholders involved in the process. The obvious stakeholders are the biomass energy, both electrical and thermal, foresters, loggers, the forest products industry, NGOs, ENGOs, and the individual consumers. Those latter groups are the ones that question the sustainability of biomass as a resource, and they will be able to continue to find fault in the practices of the people in the industry until there is an acceptable standard that everyone can agree to. They will have the ability to slow down or stop projects until that happens. The forest products industry doesn’t have any real recourse other than to just say, “look, there’s plenty of wood out there.” It’s hard to say anything definitively about the sustainability of the resource. I think that’s the biggest hurdle. I think the electrical power industry is not interested in developing standards or any kind of regulation for that matter. I think that they don’t understand that it’s actually holding their industry back. If there aren’t any changes, I think that industry will decline over the next couple decades. KG: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field? RR: I don’t have much confidence in the federal government coming up with anything that’s beneficial. One size does not fit all, so it might not even work that way. We’re so different than the forests of Montana. There are different issues in different places. I think it needs to be handled at the state level and the regional level, through state laws and regional cooperatives. We’re doing that in the northeast. We don’t agree all the time but we meet a lot with other colleagues in the northeast to talk about some of the issues with regard to biomass. So, it has to come from the states, and there has to be a regional context to it. KG: Where do you see promise for biomass in the US? RR: Promise? I envision that we have to change paradigms, then you can start to put in small thermal applications around it. I think we need to take a different look, and recognize we need to provide incentives and education to folks about producing energy at a smaller scale. Numerous smaller markets instead of one large market. We need to go in that direction, and we’re starting to go in that direction, but it may take some time. KG: Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your organization’s strategy? RR: I think biomass within the US will be in decline unless some of the stakeholders I mentioned earlier start coming together and realize that they need to change their way of thinking. Everything is scrutinized by the public. We can’t do things as they’ve been done in the past. We have to come together to ensure sustainability. KG: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today?

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Respondent Asked for Confidentiality

WS: What is your name? C: Confidential. WS: What is the name of the organization that you work for, and what does your organization do? C: Confidential. WS: What is your position within the organization, and what are your responsibilities? C: Confidential WS: What stake does your organization have in the future of biomass adoption in the United States? C: It’s an added product. As a land manager it is good to see new economic value being placed upon the goods and services you provide. PC Services has been able to leverage our knowledge of the wood fiber supply chain, as well as our experience in data base management in order to help pellet manufacturers site their facility and control the sustainability, both economic and environmental sustainability of their supply.

WS: What do you see as the largest barrier to widespread biomass energy use in the United States? C: Economics and policy. Without policy incentive, these projects would not add up in terms of dollars and cents. The policy in Europe has received a lot of criticism. In order for the industry to succeed, the policy must continue. WS: What other barriers do you think will have an effect on the industry? Examples could issues such as supply constraints, policy considerations, technology limitations, public perceptions, and economics. C: There are supply issues. Pellet facilities compete with paper mills for pulpwood, yet paper mills have a larger profit margin;; the paper mills can price out the pellet mills if they would like. WS: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field? C: The European policy comes up for review soon. WS: Where do you see promise for biomass in the US? C: As long as there is a policy in place, I see the pellet industry growing. WS: Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your organization’s strategy? C: We see the pellet industry expanding, and we would like to expand our role in that business. We always like to see new products coming from our forests. We can be very useful, both in terms of supplying new pellet mills, and helping with their wood procurement in general.

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Tad Mason TSS Consultants

CEO tmason@tssconsultants.com

(916) 600-­4174 October 21, 2015

WS: What is your name? Tad Mason: My name is Tad Mason. WS: What is the name of the organization that you work for, and what does your organization do? TM: I work for TSS consultants, and we are a consulting firm that specializes in renewable energy. We provide financial analysis, as well as feedstock analysis, and life cycle analysis… really anything else our clients might need in regard to any renewable energy project whether that be biomass, solar, or geothermal, we’ve done it all. We work with financial institutions, WS: What is your position within the organization, and what are your responsibilities? TM: I am currently the CEO of TSS Consultants. I’m a forester by trade, and coming straight out of college, I took a job working for Pacific Energy. Originally that job was focused around utilities forestry, but as time went on, and some of these biomass waste facilities came online, I worked more and more on the procurement side of the business, helping to supply 4 biomass facilities with wood waste and fuel. I spent about 12 years doing that before coming here to TSS consultants. After a few years, I became CEO. My main role is project development. Working with facilities and utilities to get these projects started. I also do a great deal of policy interpretation and development as well as financial analysis and feedstock analysis for some of these firms. WS: What stake does your organization have in the future of biomass adoption in the United States? TM: We really serve as advisors. So, in that role, I suppose that I do have a financial stake in the industry, but not as direct investor, but as someone who does business with some of the companies involved. We’re especially involved here in California, and have worked a lot advising policy makers about some of the recent laws that have been passed.

WS: What do you see as the largest barrier to widespread biomass energy use in the United States? TM: Well really there’s an economic issue. Investors would be willing to fund some more of these projects if there were long-­term contracts available to support some of these investments. There’s a large number of biomass power assets out west that are sitting idle, just waiting for investment, but that will not happen until they can get some long-­term power purchase agreements. Power purchase agreements need to be brought into a price point that will make these projects of interest to the private sector. WS: What other barriers do you think will have an effect on the industry? Examples could issues such as supply constraints, policy considerations, technology limitations, public perceptions, and economics. TM: A few of these things are linked… I mean out west, we have plenty of fuel, whether that be downed woody debris in the forest or agricultural waste, there’s no doubt about that. But, in order to overcome some of these economic issues, there really needs to be some kind of policy that supports these facilities because the power utilities just do not have the incentive to offer biomass assets favorable contracts. We Saw some of that with PURPA, and that got some of these facilities built, but a lot of those original contracts have run out, and assets are looking for new contracts. WS: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field?

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TM: As you’re probably aware, Will, many of the states out west have a public utilities type organization. In AZ it’s called the “Corporations Commission,” in CA it’s called the “Public Utilities Commission,” and these commissions provide oversight over investor owned utilities and it really would be helpful if state legislatures would mandate policies to these public utilities commissions to help the investor owned utilities see the real benefits of bio-­energy and biomass power. When you look at all of the benefits that are out there, and it isn’t just about renewable energy, but also about extending the service life for example of landfills. Right now, especially in certain parts of southern California, we’re seeing very large landfills begin to close, and because of issues regarding the siting of new landfills, we’re actually seeing a push to rail waste out to the desert to find alternative methods of disposal. Well, if you can divert some of that wood waste away from those landfills, then you can really extend the life of those landfills significantly. That’s one example that many people aren’t aware of, as far as indirect benefits that biomass power has to offer, in addition to some of the obvious benefits that are out there. Ultimately it’s going to take some policy moves primarily on the state level to make some of these utility commissions come together and actually work with the utilities to provide power purchase agreements that make sense. On the federal level, we’d like to see a level playing field for renewable energy production tax credits, not the current situation where solar and wind actually receive double the tax credits as opposed to biomass and geothermal. There’s a couple examples, and one at the federal level, where we if you can address those policy issues we can hopefully re-­instate some of the existing capacity that we have. WS: Does this kind of policy change seem likely to you? TM: In certain states, they just haven’t seemed focused on it. At least, not till lately. The real driver lately has been wildfires, and with the wildfire situation in places like WA, OR, and CA, we’re seeing a top-­of-­mind issue with defensible communities and air quality and greenhouse gas mitigation, and a solution set, in many ways, for that set of problems, is bio-­energy utilization, as far as what it has to offer clean disposal options for forest fuel reduction operations and commercial timber residuals that are currently piled and burned. Not to mention agricultural byproducts, and then of coarse there’s construction wood and demolition wood that also needs to be disposed of. Those are some of the examples. WS: Where do you see promise for biomass in the US? TM: That’s a tough question. It would really have to be as a result of some changes at the federal level and the state side as well as far as policies. But also, the industry itself hasn’t done a great job of providing information to the public about why the bioenergy sector should continue to operate at some scale in the US. They need to do a better job of that for sure. Then as far as scale goes, I can give you an example, CA just passed a bill known as SB 1122, which, long story short, there is a very aggressive Renewable Portfolio Standard in CA right now, basically 50% renewable by 2030. Basically, that same legislature also suggested that small scale, distributed generation could make a lot of sense, especially in strategic locations in rural CA. Where 3 MW scale facilities and less can be sited along distribution lines that have the capacity to take that generation, but also near forested locations and communities that are at risk to wildfire. So this bill carves out 50 MW, not a lot, for these 3 MW and less facilities to be located in forested landscapes and they mandate that the industrial owned utilities buy the power from these facilities at a feed in tariff rate that is generated as a result of an auction. Long story short, there’s an auction that will take place next year to set the rates, and we estimate the rates will come in at around 13-­15 cents, which is probably enough of to create a private sector response. They’re tiny facilities, and the scale of the problem out here in the West is so severe that this can’t be the ultimate solution. But, we think they’ll demonstrate to the public that this type of technology is worth investment, and on a larger scale. With some of the issues we’re facing, especially climate change, as an aside, you would not believe the tree mortality we’re experiencing here in CA right now. It’s estimated that well over 12 million trees are standing dead in just the central and South Sierra right now. That inventory was conducted by the forest service. It’s bad… it’s extremely bad. It’s setting us up for next year’s fire season. Anyways, we really need to address these problems. These small projects can really be seen as a placeholder and a form of public outreach, so that other, larger projects can eventually be shepherded along. I think that there’s promise with regard to projects.

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WS: What do you think has been causing that large scale tree mortality? TM: Drought, drought and insect infestation. There’s no doubt about that. WS: Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your organization’s strategy? TM: Well, at least out west, we’re really focused on these small scale facilities, 3 MW and less. It’s been somewhat of a learning curve because at that scale standard boiler steam cycle technology doesn’t work so well, it’s really inefficient, so we’ve been working with gasification, which are typically European designed, or from India. We’re gonna see in that short-­term window, in the first few years, we’re just going to be bringing that technology online. The basic business model is to take low-­value wood waste, and convert it to gas in a gasifier, clean up that gas, compress it, feed it to an internal combustion engine, and attach that engine to a generator to create power. We see that as being the technology of choice for that type of small facility. Scaling it up to 10-­20 MW facilities what we might do is operate 4-­5 gasifiers at once to create syngas, and that gas will then of course be fed into 5-­6 internal combustion engines that would operate in parallel. We may see some of that. I would hope that over the next few years the state legislature would start to refurbish some of the existing facilities and start to work on fixing the PPA issue we talked about earlier to get some more of these facilities online. Within 5-­6 years hopefully we can see some of these larger facilities start to come back online. That’s kind of a short-­term window that we see. We’d like to, in the long-­term, see some biofuels projects work out. Right now that technology just doesn’t exist like we’d like it to, but people are continuing to do research working on that. Ultimately we would like to see some of those biofuels work out. WS: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today?

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Tom Reed Plum Creek

Vice President, Atlantic South Region tom.reed@plumcreek.com

(706) 583-­6708 June 19, 2015

Will Stroud: Hi this is Will Stroud interviewing Tom Reed from Plum Creek. To start off, I’ve got some basic Identification questions for you here. What’s your name? Tom Reed: Tom Reed WS: What is the name of the organization that you work for, and what does your organization do? TR: I work for Plum Creek, and we are a land management organization. We have a few mills in Montana, but our basic job or business is managing land across 19 different states in the US. WS: What is your position within the organization, and what are your responsibilities? TR: I am the Vice President of the Atlantic South Region, which goes from the Alabama Mississippi line up to Virginia. It’s a little over 2 million acres. My responsibility is basically to manage the people that take care of marketing and regenerating the land. WS: What stake does your organization have in the future of biomass adoption in the United States? TR: Well it can’t really be detrimental, but where it could be beneficial is that it just gives us one additional product we can get from our land. Since Plum Creek is not an integrated company, our job is to optimize the value of every acre. So, if you’re gonna get a little something else off of it, you can increase the value of that acre. So that’s where it could be beneficial. WS: So I’ve got some basic questions for you that we’re going to ask everybody. What do you see as the largest barrier to widespread biomass energy use in the United States? TR: Well, I think the biggest barrier right now is that we don’t have a policy in the United States for how we’re gonna look at biomass. How is it gonna be considered? There’s a big debate right now about whether biomass energy is carbon neutral. The states are working through that, and some of them are saying “yeah, it’s carbon neutral,” while others are not, but we gotta have an energy policy at the federal level. I think initially it’s gonna take a bit of research dollars to get us over the hump to figure out how it’s gonna be used. Whether it’s liquid fuels or pellets—how we’re gonna make it happen. But I think policy is the biggest thing. We’ve got to get over that hurdle before we worry about other things. WS: What other barriers do you think will have an effect on the industry? TR: Well I would say that part of it is the mentality of the people who come to buy biomass in the first place. When people first started putting in pellet facilities, they walked in with the mindset that we want to use something you currently don’t have a use for, and they wanted to come out and get it for nothing. We’re not in the business of doing anything for nothing. You don’t want anybody doing anything on your land that might cause some liabilities down the road for nothing, so the psychology of folks thinking, “oh, I can go in there and nobody’s using it, so it’ll be free” is detrimental. We gotta get folks used to the fact that they’re gonna have to pay for it if they’re gonna come on our land and get it. The other thing is, if you’re talking true biomass, there’s not much of it. When you look at a tree, a pine tree, and you look at the limbs and the needles and all, the needles make up the bulk of the weight of the biomass. If you were to just strip off the biomass, the limbs, the needles and the top above a two inch level, roughly 20-­30% of that is needle weight, which is gonna blow away in the wind. So there’s not a lot of true biomass out there. We’ve found that in a clear-­cut you might take 5-­6 loads of wood for every load

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of biomass you get. You gotta be able to gather it up, and that’s costly. So you gotta have consistency in how ya pay people. You can’t decide one day you’re gonna buy biomass and the next day you’re not because it takes a lot of equipment to get that done. Supply constraints, capital issues, and just the economics is just not there. WS: Do you have any examples of where such barriers may have crippled potential projects? TR: Well yes and no. We’re not collecting a lot of biomass right now, so that’s a very specific example. We’re just not doing it. We’ve had people ask “well, gosh, why don’t you do it,” and we reply that people just aren’t willing to make commitments. They want it today but they don’t want it tomorrow. The only spot where we’re making a little headway and grinding up biomass on logging jobs is down in Florida, with Gainseville Power. It’s helping us out. But even there we’ve got very simple chippers in those logging operations and they run $250,000 -­ $300,000. They’re very small chippers, they can’t chip big stuff. But Gainseville Power has given us enough of a commitment that we’ve got a logger or two with the right equipment. They took the risk as contractors to go out and buy a chipper. So the example is we’re not doing it. The only place we are doing it, it’s because we’ve got a commitment, and even there, we’ve only got one or two loggers doing it. We had a commitment with Rayonier for a while, it lasted about two years, but then they decided there were other ways for them to get it, and they decided “we want out of it.” It takes a lot of additional capital expenditures for a logger to pick that stuff up in the field. Really what ya need is a special trailer to put the biomass in and a chipper to blow it in. So you’re probably looking at $350,000 – 400,000. So they’ve got to have a regular customer. Can’t spend 400,000 without a regular customer! WS: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field? TR: Well, legislation, your guess is as good as mine. And I think there has to be some legislation that says, yes it’s important to us, and yes we’ll take advantage of it, and that’s gonna take some time. The other thing is, in a capitalist society, as long as coal and gas are economical, it’s going to be less and less likely that there will be legislation in favor of it, and more people that’re gonna push against it. So, as long as gas is this cheap, and there’s still coal out there, people are gonna use it. There needs to be legislation if you want to prevent that. The other thing is that when we talk about biomass there truly is a difference in how people think about it. Some people come in and talk about biomass when they’re talking about pelletizing material that’s ultimately pulpwood, which is totally different then true biomass. I think of true biomass as limbs and tops and needles, not something that could be on its way to a paper mill. On a side note, one of the interesting barriers for pellet producers is that a paper mills can run them out of business. A paper mill’s ability to pay for wood is very high. In some places they could pay $40 per ton if they wanted to. A pellet mill, there’s no way in the world they could do that, even with the subsidies. Anyways, when you talk about biomass, you’ve got to make sure you specify the product that you’re talking about. Right now there are a lot of paper mills, and they’re talking about sustainability, but it’s really the cost they’re concerned about. Sustainability sounds a lot nicer than costs and profit margins. Last year we bought MeadWestvaco, and you could see how nervous the procurement foresters were because the lost control of the wood they used to keep their costs down. As a result, we’ve had some very friendly debates with them where they said, “why can’t you shift that wood to us,” and we told them “because the outside market is willing to pay more.” “Pay us a bit more and we can talk.” The same thing is happening with a lot of the paper mills. Landowners like us are always gonna try to get the most value for our land, so across the south paper mills come and say the same thing to other landowners and get the same reply. So they come back with an argument about sustainability. The pellet producers know that, and so they site their mills in places where there’s plenty of pulpwood available and price competition is at a minimum. Luckily, in the south in general, there’s plenty of wood out there. So we’re not worried about things not being sustainable. I’m sure you could find a location where if you put

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something in you’d find “this is just not sustainable,” but it would most likely be economic sustainability rather than environmental sustainability. The paper mills can price them out of the market. WS: Where do you see promise for biomass in the US? TR: Well, one area I do see promise is actually with the pellet mills, and they’re trying to locate areas where right now we see that the price is low. There’s a lot of variation over the Atlantic South. Right now near Athens (GA), pulpwood goes for about $6-­8. Down along the coast we’ve gotten everything from $18-­27 a ton for pulpwood. There’s a 300% difference there. So there are good places to put them and bad places to put them. But for us it’s a good thing if a pellet mill goes in because we might be able to double the price for pulpwood overnight. WS: How does biomass energy harvesting change the way in which Plum Creek does forest management? TR: The only place we’re taking advantage of it right now is down in Florida, and it’s lowering our silvicultural costs. Some of the reasons that it’s lowering our silvicultural costs is that we’re able to clean the stand up very well so it doesn’t take as much chemicals to regenerate the stand. If we didn’t have the biomass harvests we would have to apply a little bit more chemical to get our trees established. The way it is now with biomass harvesting we can get it all cleaned up and get more area put back into trees. We don’t have slash piles or anything where we’ve had to push biomass together to get it out of the way. So biomass harvesting has reduced the cost of our site prep. Now that will vary depending on the exact location, but we probably save $30-­80 and acre on our site prep. WS: From a land manager’s perspective, does biomass compete directly with other forest products, such as pulpwood? TR: That’s where the definition is important. Pellets and true biomass are different. If you put a pellet mill even 100 miles down the road from a paper mill, that paper mill isn’t gonna be able to get all the wood that it used to get. It’s gonna be competing against the pellet mill and the price is gonna go up. Pellet mills will never be able to go head-­to-­head because there always comes a point where the paper mill can pay more, but it’ll compete from the standpoint that it’s gonna push the cost up. I think it’s less competing and more just making them pay what they should be paying! However, if you’re using true biomass—limbs, twigs, needles and all that— then it’s not gonna compete at all. The paper mills generate enough of that kind of residue and debris on their own that they don’t need to buy it. The only place that they’re buying biomass now is down at Graphic Packaging. They just put a new boiler in. MWV in Covington, West Virginia did the same thing, and they’re buying true biomass as well. Those two companies made commitments to loggers. The stuff wasn’t being used before, and they offered to pay for it. It’s not a competition though because the stuff wasn’t being used before. WS: Do you feel that harvesting biomass is sustainable, and can biomass harvests be incorporated into common silvicultural practice as time progresses? TR: True biomass is environmentally sustainable. People may not always get the volume they want, but it’s certainly sustainable. There’s no other market for it right now, but if you put a boiler in every mill in every little town, then everyone may not get the volume they want, but for now there’s plenty. With regard to pellet mills, my inclination is to say that now there is plenty of wood out there and I think price is going to take care of any sustainability issues. Pellet mills simply don’t have the margin to limit supply like that. We’ve got plenty of wood out there right now. I know there’s a lot of debate right now about Enviva up in North Carolina and they said “we’ve got to buy hardwood,” but the pellet mills that we sell to really don’t buy much hardwood. They buy almost 100% pine. However, when you do start going into the hardwood stands, sustainability is going to be a bit more of an issue. I think that’s true… It would be more of an issue there.

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WS: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today? TR: I’ll give you a list, but Charlie Cornish with RMS and Kirby Funderburke is with MeadWestvaco. They’d both be good people to talk to.

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Zander Evans The Forest Guild Research Director

zander@forestguild.org (505) 983-­8992 x 36 November 11, 2015

Will Stroud: What is your name? Zander Evans: Zander Evans. WS: What is the name of the organization that you work for, and what does your organization do? ZE: I work for The Forest Guild, and our mission is to promote socially responsible, economically, and environmentally sustainable forestry. WS: What stake does your organization have in the future of biomass adoption in the United States? ZE: Everything I have to say deals with the forest side of the equation, I know that there are grasses and agricultural products used as well, but we deal with the process of biomass removal as it relates to sustainable forestry. I’m the research director here. I do some primary research, but primarily what I do is synthetic research putting together biomass research and existing studies and answering questions that our members, professional foresters, have. For example, “if I have an opportunity to take everything out of the woods, is that good? Or do I need to leave stuff?” So that’s the prospective that I come at all these issues with. The kind of concerns that our members have. As far as the stake that our organization has in the future of biomass adoption in the US, we certainly don’t have any financial stake in anything. I guess if all biomass markets fell through, it wouldn’t particularly affect us or our members, but that being said, having a market for low-­value wood, whether that’s pallets, or biomass, or firewood, that is an advantage, so we have some minor interest in finding useful markets for low-­value wood and supporting those markets where they make sense. WS: What do you see as the largest barrier to widespread biomass energy use in the United States? ZE: The biggest issue is the general difficulty of moving low-­value material in the woods to some kind of final use as energy. It’s the basic logistics. That’s wrapped up in cost. You can think about it as the difficulty of moving awkward material that has little value great distances, or you can think about the financial cost of that, and it’s two sides of the same coin. You’re doing it yourself, and it’s a pain in the neck, or you’re paying someone else and it’s costing you a ton of money. This basic problem is that it’s not very energy dense, it’s low value, it’s dispersed, it can have lots of water weight, which is difficult to burn and heavy, it’s awkward in terms of moving it around, and it’s not sand, so it’s difficult to move around. I think that’s the biggest barrier. It’s partly the right equipment and I’m not sure that there’s a mechanical silver bullet, it’s the nature of the material itself. Particularly slash and small trees. WS: What other barriers do you think will have an effect on the industry? Examples could issues such as supply constraints, policy considerations, technology limitations, public perceptions, and economics. ZE: My second might be lumped in with public perception, but it’s really around the carbon question. It’s partly policy, but because so many NGOs have gotten involved, it’s really become public perception. Their method tends to be to rally public support. It’s also a scientific question. What type of biomass has a positive impact on the climate? That’s not obvious. There’s a lot of scientific papers on the topic. They kind of go back and forth, and the devil’s in the details;; it’s all sort of model nuance. Until there’s clarity on that, it’s gonna be very difficult to build much of an industry. It’s all predicated on this idea that we’re doing good because it’s not super cheap. If you want to do it cheaply then you probably use coal. If you want to be the most environmentally friendly, then you’re probably going solar. You have to have a reason to choose wood, and I think there are some in certain cases, but it’s a little bit muddy. Because public perception gets through to policy makers, and policies have huge impacts. I think that obviously, the

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easiest one to point to is when the European Union count in our carbon picture, and an entire industry was born. I was just in Baton Rouge for the SAF meeting, and right on the river there are these huge spheres that hold pellets on their way to Drax. If the European Union says “you know what, these don’t count anymore.” Then they could essentially make a policy decision tomorrow that would so change the economics and the incentive structure that those spheres would soon be empty. The policy ends up being the final switch, but it’s a product of these other issues rather than the cause. WS: How might these barriers be overcome? Does this seem likely? If so, on what timescale? Can you point to any specific examples in the field? How can these operations become sustainable? ZE: My inclination is towards small scale. What seems to work is efforts that are really very local, so restoration thinning feeding a small chip boiler or something. Working out the kinks that way. I think that’s how you get through barriers. Now, there’s a whole different set or barriers set around how do you understand this carbon picture. Policy clarity based on science is sort of emerging. The EPA has some committees advising them and then they’re setting rules based on those. As certainty emerges and all across the country people get more and more used to how to move biomass around. Here’s an example, we had a guy who was using a biomass market here in New Mexico, and one of the problems was the fuel got too dirty and the soil was causing problems on the burning end. His solution was to pave a lot of his woodlot, so that he could store the wood on dirt rather than on pavement. Little things like that start to add up across your supply chain. People paving yards to store them, getting proper chip vans to move ‘em, things like that start to add up. I don’t believe it’s gonna be a big technological breakthrough. Every month you hear some story about a guy who’s got a torrefaction machine he’s gonna take out to the woods. I don’t think that one inventor is gonna come up with something that solves all the problems because all of the problems are so different across the country. As you start to fit them all together then hey this is working! WS: Where do you see promise for biomass in the US? ZE: Certainly these small scale projects where they fit in nicely with other efforts. It’s sort of low hanging fruit. If an institution is on propane, that’s a good target for some of these wood heating systems. That’s where the promise is for me. I think those pencil out much better from a carbon prospective, though not yet from an economic prospective because of the price of natural gas, but that may be changing. That’s where I see promise. I still haven’t been convinced, even after 5-­10 years of presentations from liquid fuel people. I’m still not convinced about how promising that is. I’m also a little bit squeamish about big electricity plants. I do like the idea of combined heat and power. Those feel like the numbers work a little better. You can also scale them a little better. The closer you are to the wood, the less trucking you have to do, which is good for a lot of reasons. Where you can scale a small CHP plant, that has a lot of promise I think. The “Fuels for Schools” model, where they use locally sourced wood to heat schools. WS: Describe your 10-­year vision for biomass in the US. How does this trajectory fit into your organization’s strategy? ZE: Well there’s difference between my ideal vision and what’s most likely to happen. I’ll talk a bit more on what’s most likely to happen. I find the policy stuff so inscrutable, so I’m not sure that I have a good sense. My thought is that over the next few years, some form of wood energy, whether that be heat or electric, will be recognized as having a positive climate change impact, and it will be part of the mix going forward. I don’t think it’ll get the huge subsidies and expansion like in Europe, but I don’t think it’ll go away completely. I won’t even get started on the European demand for wood… Maybe, slow growth over the next ten years to become a piece of of the forest economy that’s here to stay. As for how that fits into our strategy? We really care about how the forest looks after the harvest. What’s important to us is making sure that the market, as it grows, that the pull can be quite significant. I want people to use that as a tool for improving forest health rather than undermining forest health. The classic thing is the opportunity to burn small diameter trees that are creating a forest health problem and creating energy for them is just intuitively a winner for me. I’d love to see that grow and become a consistent market that we can use for restoration.

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WS: How does harvesting for biomass change silvicultural management throughout the country, and does that depend on forest type/ecosystem or region? ZE: It definitely differs with all of those things. I will talk really quickly about three regions, the West, all fire dependent conifer forests in the West, the southeast wood basket, and then we can think about the lake states and the northeast. In the West, we basically have this problem where because of fire suppression, and other management decisions, we have more little trees than is healthy for forests. In most cases, that kind of biomass market, it’s a good thing. Otherwise we end up doing things like cutting those small trees, pilling them up, and burning them. That’s one where it makes you think, “why burn it in the woods, when we can burn ‘em in a plant and get energy and make less pollution?” That one’s fairly clear in terms of silviculture. In the southeast, a lot of forestry happens in a plantation context. Some longleaf pine might mimic what I was talking about in the West, but the majority of the managed forestland is planted pine. I think biomass then fits in with something like the paper market. It’s maybe not all that different in terms of what you would do silviculturally. I would them include the hardwood forests of the southeast, the bottomlands. These hardwood mixed species mixed forests are similar in some respects to the northeast, different in a lot of ways too, but I’ll kind of lump ‘em together. These forests are actually in some ways exciting opportunities silviculturally, because it’s so much more complex. There is an opportunity to use low-­value markets too. When you’re in a stand, you have some nice trees, some trees that can add a lot of value that can become veneer logs, your top notch trees, but you have other trees, diseased trees, or suppressed trees, they essentially come in the way, but you essentially have more options about what you can do, the ways in which you can mark a stand. You can encourage regeneration of certain species if you can get people to remove certain trees for you. Sometimes you say, “oh I wish this tree would go away” and you have to pay someone to make it go away. That’s the positive spin. There’s a lot of ways you could conceive of this low-­value market as being a real positive boon for doing good forestry. The negative spin, which is probably more of what I’ve written about, is that we can end up making our forests depauperate in some key attributes: large downed logs, standing dead trees, these things that help wildlife and a lot of other things. They have a role in the forest. Those show up as a little bit of a boogeyman. We have technology and economics that align such that we’re able to scrape out all of the potential biomass. In the UK for a while they were pulling out stumps and burning those. Once you get to that level, you’re having some real negative ecological impacts. The work the guild has done with our biomass harvesting guidelines is to say, look, there are some potential negatives, we don’t have all the data, but based on what we know today, lets make sure to leave some large downed logs, some snags. There’s a fairly wide area where we can do good things silviculturally and we can leave these attributes for wildlife and soil properties. WS: What are some of your greatest concerns about biomass energy harvests? ZE: This is very forest type and soil type specific. We can throw out some major concerns, but they aren’t gonna be applicable in all places. One is certainly, when we’re removing—and I just want to reiterate, we’re not talking about bole-­wood, we’re talking about branches and small stuff. Sometimes that assumption doesn’t hold up, but I’m talking about some of the smaller material… It does have a higher nutrient content. Certainly if we’re looking at systems that are bundling up leaves and needles, that can, particularly over time, if we’re thinking about multiple rotations, that can have an impact on soil productivity. Not all places all the time, but there are places where we do see it has an impact. That type of forest floor environment where you have dead material foliage and small branches, that’s important as habitat. There’s also fungal interaction and nitrogen fixation that can happen in logs based on the biota that colonizes them. Then we can move on to wildlife, which depending on where you are, take advantage of that material, whether it’s very small beetles or mice running around and taking cover or getting nutrients from various small diameter material. All the way up to bears using small downed logs with cavities as a den. There’s a full range of wildlife, there’s also some plant regeneration issues, depending on what species you’re looking to that take advantage of this material, some of this substrate. Snags play a big role for birds. We can look at a number of these perspectives. Even water… Having that material in the forest can slow a bit of water slowing erosion and reducing flooding, storing water and keeping things moist. Depending on which value you’re looking at, whether it’s clean water or wildlife, there’s some potential, and we’re talking about a really aggressive removal, where these concerns get larger and larger. If you’re just talking about a firewood operation they’re doing things the old fashioned

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way, and there’s really not too much concern. As you get to these Swedish systems that are bundling everything up and getting it all out of there, them your concerns really start to increase.

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iii. CASE STUDY INTERVIEWS

Case Study Interview Questions

General Facility Information:

1. What is the name of your biomass facility?

2. Who is the owner of your facility?

3. Who are the end users of your services?

4. What is the capacity of your facility?

Financial Barriers:

5. What made up the greatest portion of the upfront capital investment required to construct this

facility? Is this type of investment unique to biomass facilities?

6. What determines fuel costs and are these costs predictable? Is fiber supply a limiting factor?

7. Is there consistent demand for your services? If not, what operational difficulties do demand

fluctuations pose?

Economic, Social, & Political Barriers: 8. Under what social, economic, and political circumstances was this facility built? Did these

circumstances make construction more or less difficult?

9. Are there any changes in circumstances that would make this facility more or less successful or

change the likelihood that new facilities will be constructed? How likely are these changes to

occur?

10. Are there any new technologies that may increase or decrease the success of your facility?

11. What is the public perception of your facility, and has that perception led to operational

difficulties?

End of interview Question: 12. Thank you so much for your time and your insight. Are there any other individuals with whom you

recommend we speak for further information on anything we might have discussed today?

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Todd Hansen Biomass One LP Fuel Manager

thansen@biomassone.com (541) 826-­9422, ext. 102 September 25, 2015

Will Stroud: What is the name of your biomass facility? Todd Hansen: Biomass One LP. WS: Who is the owner of your facility? TH: Greg Blair. He became the owner several years ago. This particular plant was built by the Tisch family, from New York. They still own the New York Giants. They were instrumental in providing the funding to get the facility built. WS: Who are the end users of your services? TH: Our end user is a little bit different then a lot of other plants. We have our own drop-­off facility at our plant. We take in construction waste and tree and shrub trimmings and log yard material from some of the sawmills around here. If you look on Google Earth, you’ll see that there’s a conveyor belt running over the street from our log yard to our fuel pile. When they started using that waste, they created a lot of byproduct, which we now sell as landscaping products. So we’re a little unique in that respect. However, our core business is power production and we sell our power to Pacific Corp;; they’re our power customer. WS: What is the capacity of your facility? TH: We are a net 28.5 MW facility, gross 30 MW. Karan Gupta: Is that pure biomass or is that co-­generation? TH: No, we’re not co-­gen anymore. When the facility was first built it was. When I first got into this business this area was a pretty significant wood products region. There were sawmills, plywood mills, and if you were a young forester like I was, this was like Disneyland. You wouldn’t know that now. It’s pretty much a ghost town. They used to have a steam extraction turbine that was co-­gen and was used to help operate a lumber kiln next door. As a result of the timber wars and the additional restrictions put on federal lands in the West, a lot of those facilities dried up. And that sawmill was one of ‘em. After that we went from co-­generation to a standalone facility. They decided that it wasn’t efficient running the steam turbine without the kiln, and they bought a second biomass turbine, which we use today to produce a gross 30 MW. KG: So there’s no form of heat recapture. You’re running at 35-­40% efficiency. TH: Yeah… Probably a little closer to 40%. Greg would know more about that.

WS: What made up the greatest portion of the upfront capital investment required to construct this facility? Is this type of investment unique to biomass facilities? TH: I’m not exactly sure about the upfront capital. You should talk to Greg about that. This plant was kind of unique in that it was used as an investment shelter, but Mr. Blair could shed a little more light on that. WS: What determines fuel costs and are these costs predictable? Is fiber supply a limiting factor? TH: Fuel costs… One of the major issues around here is transportation. One of the main problems is how far we’ve got to go to get our fuel. When there was a wood products industry on every corner, it was

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easier to get what you needed closer in, and fuel costs were very low. We went through a period where we saw a huge decline in fuel availability as some of those places went out of business. Sitting here now, we are sourcing material from as far away as the north end of the state, and I’m at the south end. We’re talking about a five-­hour truck ride. The majority of our material comes from much closer by, but still we don’t have an abundance like we once had. The costs vary somewhat. They’re not exactly predictable, but they stay within a pretty tight bandwidth. Typically what’ll happen is that if there’s a composite panel maker, he’ll be competing with me for material. However, he can afford to pay more for the material. So if they’re running out of inventory, wood supply can get tight and prices can go up. The trucking cost is also a huge part of the variability. If you can get it close in, you can keep a good handle on your price, but sometimes you just don’t have a choice. We also have to maintain relationships with suppliers. Maybe we usually buy stuff from them that’s close in and we get a great price, but every so often we have to buy something from them that’s a little farther out and a little costlier just to maintain that relationship. You kind of do them a favor because they’re a good customer for ya. Fiber supply can be a limiting factor. In this area, we’re not a hotbed of industry activity. There’s not a lot of trucks that come this far south. I have a good relationship with the folks at Roseburg Forest Products, they have a big facility in Dillard Oregon. They have a co-­generation plant as well, and they could compete with us in a big way. However, I have a good relationship with them and traffic flows in all directions towards them, so I’m able to jump on that bandwagon and take advantage of how they kind of control trucking in the area. Without them my job would be a heck of a lot harder. WS: Is there consistent demand for your services? If not, what operational difficulties do demand fluctuations pose? TH: We have a great relationship with our customer. We’re a typical baseload, but we don’t operate twelve months out of the year. What we’ll do is a negotiated two-­month curtailment of operations during what they call the shoulder seasons. The shoulder season is when you’re not running your air conditioner, but you’re not running your heater yet. Pacific Corp. has access to energy produced from hydro up on the Columbia River. That can be a lot cheaper, so during those shoulder seasons, they may not have to use our power. It’s a real benefit. This plant was built in 1985, and power plants take a beating… this one certainly has. It’s difficult to maintain operations all the time. The two months off allows us to get out the duct tape and the bailing wire and kind of patch things up a little bit. They pay us not to run. It’s not as much as when we’re running though. Demand fluctuations kind of put strain on everybody. You line things up a certain way, so that you’ve got enough fuel and the energy’s flowing, and then all of a sudden there’s a chink in armor, and things aren’t working the way you thought they would. For us, a typical fluctuation is a breakdown. We don’t typically interrupt power unless there’s a problem with the plant.

WS: Under what social, economic, and political circumstances was this facility built? Did these circumstances make construction more or less difficult? TH: Greg could probably help you with these circumstances. If you’re familiar with PURPA, that legislation was enacted out of concern for rising energy costs and sustainability. A lot of these facilities were originally built with that in mind with 20-­30 year power contracts. California at one time, had sixty of these things, now there’s more like 28. Lots of ‘em are mothballed. WS: Are there any changes in circumstances that would make this facility more or less successful or change the likelihood that new facilities will be constructed? How likely are these changes to occur? TH: There would need to be some policy changes. Here in the Northwest, we have a lot of inexpensive and renewable hydropower. Natural gas has also dropped. That’s a big rival now too. I know a lot of pulp and paper operators that are have the ability to burn wood and oil, but they’re not burning wood right now. They’re burning oil. It’s that much cheaper. That’s the current environment out here, and there would need to be some policy or economic changes if that’s every going to be different. WS: Are there any new technologies that may increase or decrease the success of your facility?

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TH: Yeah there are! But they all require capital. Let me give you an example. Seneca is all covered, and everything’s automatic. They built that facility recently, and that’s how they did it. This facility was built in the ‘80s. Everything’s outside and we load it up with a bucket loader. We’re old school. So there are technologies that would help us increase our efficiency, but I don’t know that we can afford the capital outlay right now. WS: What is the public perception of your facility, and has that perception led to operational difficulties? TH: It’s funny… Most people I talk to don’t even know we’re a power plant. They’re familiarity with us might come from a TV commercial we had a while ago for our agricultural products. For the most part we’re able to fly under the radar. Our general manager seems to like it that way, especially given some of the animosity about biomass. The controversy about carbon neutrality. I think when you fly under the radar you can kind of avoid some of that. We had the local paper come in one time, and we took ‘em for a tour. We’ve got a cooling tower, not a smoke tower but a steam tower for cooling water. We made it a point to tell them, that’s just steam, there’s no smoke coming from there. It’s only steam from hot water. The next day there was a headline in the paper with a picture of the cooling tower saying, “pollution from biomass facility effects the local community.” It was bad so we like to fly under the radar. WS: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today?

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Greg Blair Biomass One LP Majority Owner (516) 721-­9890

September 25, 2015 Will Stroud: What is the name of your biomass facility? Greg Blair: Biomass One LP WS: Who is the owner of your facility? GB: It’s a limited partnership, and the facility and the partnership share the same name. WS: Who are the end users of your services? GB: The end user is Pacific Corp, formerly Pacific Power and Light, the distribution subsidiary of Pacific Corp, but now it’s just Pacific Corp. They are fully integrated… both wholesale and retail. WS: What is the capacity of your facility? GB: Gross 30 MW, and net 28.5. The 1.5 is called internal service, parasitic load. It’s what’s required to run the fans and stuff that keeps the facility operating. There’s a differential between the price of that we get on the revenue side and the retail price. You don’t ever want, by definition, to have a power plant that can buy its power for a lower price than it’s able to put it back out into the market. Karan Gupta: Todd mentioned that when the facility originally opened it was a cogeneration facility, but now it’s only biomass. Why is that? GB: I’ll take you through the history. The facility was conceived in 1984. In the wake of the passage of the PURPA, and PURPA had to go throughout a number of legal challenges before actual projects could be developed. The most famous of those being a case involving Con Edison where their attempt to block a PURPA plant being built was successfully overturned. I believe that was in 1982, and that kind of opened up the floodgates. Prior to that utilities were kind of against the fact that they’d be required to buy energy from alternative energy plants at a price equal to what they cost. So the plant was conceived in ‘84, construction started in ‘85, and things went commercial in ‘86. The original configuration of the plant was 25 MW, and there were two boilers. They were 15 MW each. They were used GE units pulled out of an old Canadian sawmill. One of them was an extraction turbine and they were able to extract steam for drying lumber. There were several engineers that helped develop the project, and the project was financed by the Tisch family, who owns Loews Corporation. It was a family investment established to promulgate renewable resources. It had lots of capital and investment advantages. There was a tax advantage of 10% of the original capital invested and an energy tax advantage of 11%, then there was a 5-­year recovery of all development costs of the renewable resource, so all the boilers, turbines, transformers, pumps, fans ect. So the Tisch family were the general partners and they provided all of the capital, but there were other minority partners who were in charge of some of the firms who mad the design and built the plant. The plant had a troubled existence for 3 or 4 years where the plant was originally predicated on $11 a bone-­dry ton fuel supply in order to provide energy at a profit, but the price of fuel didn’t come that cheap. Eventually the facility was able to turn the corner through cost cutting, higher energy prices, a better fuel acquisitions strategy, and improved mechanical operations. The facility, when I arrived there in 1995 was suffering from a variety of ills. It had recently overcome some of its mechanical difficulties, but nonetheless it was paying an extraordinary amount for fuel, there were limited suppliers because many mills had closed, and a lot of wood fiber plants had come into being. So, there was a shortage of fuel available on the marketplace. One would think, oh gee, there’s a tree out there in the forest, let’s grab it, but it doesn’t work that way. Even if you were able to buy a tree with $0 stumpage, it would cost about $70/ton to get it to the mill and chip it and dry it. I guess what I’m trying to say is that plants that convert wood to energy can only feasibly do it when that wood is a waste source. The wood

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material needs to be a secondary byproduct from another industry where another, higher value product is produced. However there’s often competition between end users of those byproducts. There are other people who provide alternative means of wood waste disposal. So we have to pay the cost of taking it from their facility or a premium if there are alternative uses for that wood. We get about one-­half dry ton of wood per ton of green wood we get. So if I had a physical ton of wood at 50% water, you’re going to have to use 1200 BTUs per pound to get rid of that water. The wood on the other hand is gonna have around 5800 BTUs once dried. So when everything’s spoken for you’ll have about 14,000,000 BTUs in that ton of fuel, and a significant amount of energy, about 2,400,000 BTUs is going to go towards just drying the wood. The bottom line is, you’re taking a relatively low value material, and you’re capturing the energy. It’s low value material because it’s a waste cost. Some of our wood comes through our gate at no cost other than transportation because otherwise people would have to dispose of it. Other material walks through our gate at no cost, but we have a cost to turn it into a useable fuel, which can be $5-­10/ton. Our most expensive fuel is in-­woods residuals left over from a logging site. Tops, limbs and bark. The loggers have to bring equipment out to the site to render it into dirty chips, or hog fuel using tub grinders and things of that nature. That fuel will cost us from $32-­50 a bone-­dry ton. Due to processing and transportation cost. Depends on how far away it is. The average truck will carry about 30,000 lbs. The truck gets 3-­5 miles per gallon, and the driver makes $26 per hour. The transportation adds a lot of variability to the cost. Depends on the size of the facility though. We have 16 employees. It takes four people to run the plant and there are four shifts. We have about 50 additional people that take up administrative and sales roles. We take up about 250,000 thousand bone-­dry tons annually, so double that and you’ve got green tons. About 30,000 of those tons come from our yard which processes peoples’ landscaping materials when they drop them off here. The balance is purchased from mills as mill waste: sawdust, bark, slab, edgings, things of that nature. Then there’s wood waste from in the woods, which loggers and contractors bring to us. WS: So Mr. Blair, it sounds like since 1986, you’ve really adjusted how you’re getting your fuel supply. Has that really been the major contributing factor to increasing the profitability and success of your facility? GB: Yes. Yes it has. We really didn’t have to adjust the operations staff. It costs what it costs to operate a utility plant. You perform maintenance, change out belts and bolts, but it’s like maintaining a vehicle. You just do the maintenance to produce power on a regular basis. Every once and awhile you get a surprise, where a turbine blows through a blade or something like that, but that’s an exception to the rule. Often times those are insurable costs too. But you’re absolutely right, the largest controllable cost that determines profitability and represents about 50% of our revenue is fuel. If you’re able to get a handle on that and buy fuel more judiciously, develop a successful strategy, acquiring more of the cheaper fuel and less of the expensive fuel, you’ll have greater success. There are facilities that closed down and ceased to operate because of fuel costs. All you have to do is think about, I’m operating on a contract that I signed in 2011 that was predicated on a gas pricing curve established in 2009. The gas prices are a great deal lower than what they had anticipated at that time. I would have real trouble operating in the black if they tried to renegotiate that contract now. The costs and revenues would not add up. However, the utility is not bearing that expense. The added expense is being passed on to the rate payer. In effect, I’m being subsidized without there ever being a law on the books. So the utility isn’t mad at me… Everyone’s making money, and we’re just a very small drop in the bucket. In addition, the societal benefit we provide is cheap disposal of wood waste and environmentally and economically sustainable utilization of that wood waste. It’s green energy. The logging waste out in the forest without our market participation, that wood gets a match with a water truck standing by to avoid a major conflagration. Instead we burn in a more controlled environment. We utilize the energy from that wood productively and we do a better job of capturing the particulates and the carbon pollution as well. There’s an avoided emission. Both from a coal plant and from the field. There are other alternatives, solar, nuclear, hydro, that produce no carbon emissions, but without us, the wood would still be burned in the field. Wood from the mills might be left to decompose in a landfill. Those are some of the other principle benefits of our facility. The wonderful benefit of harvesting wood is sequestered carbon. If wood is utilized well, it can go into a building where it will stay for a hundred years or more. Then the landowner replants the land, and the carbon is taken up at an even faster rate in the young trees. New carbon is sequestered in its place. Our participation is dealing with its waste. Where biomass energy could become economically sustainable of its own right, without

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the conditions we discussed earlier would be in a high cost alternative energy environment. If the cost of non-­carbon emitters was greater than our cost of generation, or if conventional fossil fuels went down in price compared favorably in price. WS: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today?

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Ron Gray Avista Utilities

Fuel Manager, Kettle Falls Generating Station ron.gray@avistacorp.com

(509) 738-­1502 September 21, 2015

Will Stroud: What is the name of your biomass facility? Ron Gray: It’s the Kettle Falls Generating Facility. WS: Who is the owner of your facility? RG: It is Avista Utilities. WS: Who are the end users of your services? RG: That would be our ratepayers. Karan Gupta: Is that a combination of both residential and commercial? RG: Yes. Avista Utilities is a regional energy provider to Western Idaho and Northeast Washington of natural gas and electricity. We also use renewables. We have one of the lowest carbon footprints of any utility in the United States. It’s something we’re very proud of. But we end up doing it all;; we create our energy, we distribute our energy, we get it to our end users. We do the whole thing, and we have a very diverse portfolio of hydro, coal, biomass, natural gas… Pretty much everything as far as energy production. WS: What is the capacity of your facility? RG: 50 MW.

WS: What made up the greatest portion of the upfront capital investment required to construct this facility? Is this type of investment unique to biomass facilities? RG: That’s a question I can’t answer. The plant is over 30 years old, and I’ve only been here about half that life. I know it wasn’t biomass. I think it would have to be the construction cost of the plant itself. It has been wood for 30 years though. When this plant was originally thought of in the early 80s there was another energy crunch going on and at the same time the EPA was outlawing what we out here in the West call the Wigwam, or Teepee, burners. Which were where they would take the waste from mills and burn it. There was no real environmental control prior to that time, so there were often clouds of blue smoke hanging over the cities on the West coast. Once they outlawed them, everybody thought, “what’re we gonna do with all this stuff.” It was good timing. Free fuel, low land prices, and energy costs were going up. Avista went in and built this facility and started another facility in BC by the way, we’re just about 30 miles from the Canadian border. The true long term cost of the facility is the cost of the fuel. Upfront costs are big, but fuel is really difficult. WS: What determines fuel costs and are these costs predictable? Is fiber supply a limiting factor? RG: Let’s talk about just our area;; I’d hate to make generalizations based upon this specific location. We’re really unique, and our operation would not fit in other locations. In this corner of Northeast Washington, especially while being so close to the border. Fuel costs are determined by availability, and down here most of the land is locked up in National Forest, while up there in the Crown Lands they have a bit more of a healthy forest products infrastructure. We need roughly 15,000 – 20,000 truckloads of hog fuel to keep us running, and if we couldn’t reach out a hundred miles to do that, we’d be in trouble. Our margins allow us to reach over the border to Canada, and well over half of our fuel comes from there. We

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also have synergy working with some paper mills. Wood chips flow north into the paper mills and we tie into that transportation network wise. The trucks can bring hog fuel back. The synergy is that there’s full utilization of a chip truck. Instead of going back empty, we can fill up the truck on the way back. It helps us increase our haul distance by adding to the usefulness of that truck. KG: Would you say that transportation cost is a major component of the fuel cost, or is it simply the cost of fuel? RG: Yeah, the transportation accounts for over 50% of the cost of the fuel. KG: How variable are those fuel costs? RG: The fuel costs stay pretty stable. There’s a lot of extra bark from the sawmills and a few plywood mills, which is what we’re all about. Those mills wanna get rid of it;; they need to get rid of it, and we have long term relationships with some of those suppliers. It’s not a limiting factor. However, we were stretching a lot farther in 2008-­2009. But for the most part, we are okay. That may not be the case in a lot of other locations though. WS: Is there consistent demand for your services? If not, what operational difficulties do demand fluctuations pose? RG: We compete with the other resources. There’s a pool of other resources, whether it be hydro, coal or whatever, so sometimes there isn’t demand. Not that we couldn’t produce it. It’s just that there’s a different source for it at a cheaper price. Because of that they do shut our facility down sometimes. It’s all orchestrated though. We still take hog fuel, and we increase inventory. Our staff is specialized, and so we keep them on site, and we do maintenance. We pride ourselves on being available, and we’re available over 90% of the time. There are operational difficulties in terms of heating the boiler up to put wood in it though. If we’re down cold, it takes us about 48 hours to really come online;; fill the boiler up with water, heat the tubes up, it’s a slow expansion. Our boiler’s on the roof rather than on the floor because it expands so much. I guess what I’m trying to say is that the delay in getting our boiler running is a real operational difficulty. The demand, if the utility wants us to come online, it takes a while to get things fired up. We can turn things up and down when demand fluctuates between night and day. We just keep the unit warm. It’s a readily available resource, but it takes a while to completely start and stop. We have a 6MW gas turbine, It’s basically a jet engine. We can get that fired up in an hour, and produce up to 6MW, but they’re expensive to run, so we only use that on the hottest of the summer days. The gas turbine is the peak resource while biomass serves as the baseload. WS: Is there a seasonality to the demand fluctuations? RG: Yup, that’s very typical. In the springtime, when the temperatures haven’t risen too much, and there’s lots of water, you’ve got hydro. They can sometimes operate at about half the cost that we can. So during the spring we’re often down for a bit. That’s when we really try to do our annual maintenance work. During the fall, when it’s pretty temperate, if there’s a big snowpack and hydro’s booming, we may be off for a bit as well. At the end of the day, it’s all about doing what’s best for the Avista rate payer. We, like any other regulated utility, are under tight regulation by the state of Washington. If we want to increase rates, then they’re gonna come back and look at us and say “did you run your units prudently and run operate your units the best you could given the restraints you had.” That’s part of working for a regulated utility. We’re allowed to pass a lot of our costs on to the ratepayers, but there’s pretty significant oversight into our operations. So I guess on the whole, It’s a bit difficult as a forester and a fiber buyer to balance the changing dynamics of the sawtimber market and the energy market, while maintaining inventory… It’s a balancing act, and, at the end of the day, you either have inventory… or not. If it’s not too often, I won’t have a job for much longer!

WS: Are there any changes in circumstances that would make this facility more or less successful or change the likelihood that new facilities will be constructed? How likely are these changes to occur?

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RG: When people perceive surplus wood, they see an opportunity. However, there are some major challenges in today’s green energy market. There’s enough wood for us here, but most of the residuals in this area, and there are quite a lot of residuals in this area, are all spoken for. If changes were to occur, they would be on the political front. That could come in the form of the EPA saying “you know what Avista, your Kettle Falls Generating Station isn’t green. We’re gonna clamp down on your carbon dioxide emissions.” The public around here is generally pretty understanding… In a couple of months now, the USFS and private landowners will start to burn slash piles, and people see smoke, and they say “why can’t we take that over to Avista, where they generate energy and burn things a little bit cleaner.” The issue is that there’s major economic barriers. Considering our whole portfolio, we can’t go out there and grab the rest of the slash and still produce energy on a cost effective basis. The extra cost would get passed along to the ratepayer, and the utility won’t allow us to operate ineffectively like that, so we have to rely on our long term relationships with mills to get the residuals. It’s an economic issue really. People want to do more energy subsidies and make more biomass facilities around here, but it just doesn’t work out economically. In the last farm bill there were some subsidies that created something of an artificial market for slash piles, but when that subsidy disappeared, the market crashed. WS: Is it just that dirty green chips from the woods are more expensive then the mill’s hog fuel? RG: Yes, yes it is. Basically the sawmill’s product, the lumber, pays for the creation of the residuals, and the chips go to the paper mill, and we’re kind of the bottom feeders when we get the bark. However, when you’re going out in the woods with a specially designed piece of equipment and going to a logging job, there’s very little left on the landings, but you still gotta grind it up. It’s expensive equipment too, hard to get that additional equipment up those windy roads to the logging sites. WS: Are there any new technologies that may increase or decrease the success of your facility? RG: Well, the whole biofuels idea is interesting. First you gotta solve the problem of how to get the slash out of the woods economically, but once you do that the possibility of creating a higher value product is really tempting. It’s not that biofuels are impossible to create, it’s just that no one’s been able to do it economically yet. There are some grants going around with Humboldt State and Oregon State right now working on that issue though. The barriers for green energy production are economic, but there are other industries that could crop up where the barriers are technological. As for our specific facilities, we do some really cool work with particulate capture, what we call char, where we run it through a screen and we capture some tiny pieces and then we’re able to put it back into the burner. It gets another MW of energy or so. WS: What is the public perception of your facility, and has that perception led to operational difficulties? RG: Part of my job, and I’m doing it right now, is talking about what we do. We did a purposeful 30th anniversary where we brought a lot of members of the public, including our congresswomen in, and we talked about the jobs that we provide as well as how we help the sawmills get rid of their waste products. I work a lot with the Northeast Forestry Coalition, a collaboration among NGOs sawmills, landowners and ourselves, and we do work in the public forestry realm. We’re very conscious about reaching out to our rate payers and educating them about the services that we provide, and the long term benefits provided by green energy, utilizing slash and residuals. I’ve been a part of a community where we’ve lost sawmills, plywood mills, paper mills—the mill where I previously worked— the town I lived in went from a town of 5,000 people to a ghost town, you had to drive 20 minutes down the road to buy a pair of socks. I left in 1998. Because of that experience, I think, I’ve learned a lot about the importance of engaging with the public and talking to them about the benefits of green renewable energy and of forestry in general. We don’t want to get the perception, like what happens a lot now in the southeast, that what we do is bad. We want to spread the word, so we purposefully open up our facility and have open dialogue with NGOs and members of the public, and we’ll continue to do so while I’m here. People need to understand what we do here. Other facilities around here have started to pick up that attitude of reaching out to the public, talking about green energy. It’s a great thing. We need to put the correct message out there instead of someone who doesn’t know what’s going on, or has no involvement in what’s going on, saying “I don’t like my forests logged and you guys do that, so I’m gonna find an avenue to stop you at all costs, whether it’s

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with an endangered animal, or restrictions on green energy or whatever.” There’s a lot of good to what we do as well. People should know that. After being part of the timber wars, we thought, we gotta do some things differently. Whether it’s the ESA or Water issues or air quality, we try to work closely with the agencies and the public. Like I said it’s important.

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Edythe Ellin Harvard Forest

Director of Administration ellin@fas.harvard.edu (978) 756-­6124 October 28, 2015

Will Stroud: What is the name of your biomass facility? Edythe Ellin: It is the Harvard Forest District Heating Facility. WS: Who is the owner of your facility? EE: The President Fellow of Harvard University, Harvard Forest is the department. That’s the technical name for Harvard University, by the way. WS: Who are the end users of your services? EE: The heat is supplied to staff, researchers and their families as well as the facilities here at the Harvard Forest, so labs, conference rooms, residences, and facilities support buildings. We just provide space heating. The one inferential I would say is that we heat a greenhouse as well. Not a tropical greenhouse, but just warming the plants so that they don’t die. WS: What is the capacity of your facility? EE: Interesting point. We have three units, and they’re supposed to be 170,000 each so 500 some odd. There’s some inherent heat loss in the distribution. There’s a heat exchanger as well. We have four boilers. One is propane, and is 1.5 million BTUs. We have 3 small wood boilers that are 173,000 each. Jon Wisnewski: They wanted a redundancy of pretty much the whole system. That’s why the propane is there. EE: We also have a 2,500 gallon thermal storage tank, but we need a 10,000 gallon thermal storage tank. We can’t afford it. JW: What we need depends on what engineer you talk to. The system we built was somewhat designed by committee. You get a moose when you do that… A beautiful animal, but it’s not the most pragmatic thing. Karan Gupta: As far as thermal storage, why is there a size issue? JW: The difference in size means that we can’t make energy during the day and store it and use it at night. EE: We have a woods crew that‘s here all day, and they fire the burner a few times a day, but there’s a point at which you can’t put any more energy away in thermal storage. If, it’s a cold night, by midnight you don’t have enough energy to keep things heated. We have to use propane at that point. We generally fire all three boilers during the day and then we can’t store up enough energy for the night. KG: In our research it seems that people are saying hot water is more efficient than steam. Does that seem to be the case for you as well? EE: Well, our distribution system stayed the same when we replaced the boilers, so it would’ve been very difficult for us to use steam. You also have to remember, we only have a few thousand square feet. We’re tiny, so our system doesn’t require steam. Our main building was constructed in the 1930s and originally had a coal fired boiler.

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JW: It was switched shortly after that though… WWII meant no coal back home, and we switched to burning wood because it was already around. EE: The coal was really inefficient though… stop me if you already knew this. I’m a city girl so it’s all been new to me, but coal burns low and wood burns high, so when you burn wood in a coal boiler there’s a big gap there and it’s incredibly inefficient. In addition, we never used steam because it requires a fire person to be on staff. It essentially came to two costs. Renovating the building came to about $255,000 and it was really necessary. It was an old pole barn, so we completely enclosed it and just re-­did the foundation and everything, but that was very expensive. The other part of the money, about $450,000, was for the biomass part. We got a grant for 200,000 as well. That helped with making it financially feasible. The boilers were probably 50,000 or less, but the thermal storage was pretty expensive, piping was expensive along with excavation. The piping was the most expensive part, it’s very complex. Our ideal situation would be to burn all wood, but to burn all wood in New England you’ve got the shoulder seasons. We could’ve bought an industrial boiler which starts at 500,000 BTUs, but it starts at about 300,000, so that didn’t work during the shoulder season. We can really turn down the BTUs on the 170,000 units. JW: We can really help out with labor, pollution, and efficiency. EE: We had a lot of debate about what kind and size of boiler to use, and we ended up going with these units because we though they would be the most pragmatic, however, the way it’s set up now isn’t necessarily the least expensive way to get things installed. The debate is ongoing as well. We have room for another boiler. This is the first year where we really have come to a better understanding of what we’re working with. We’ll be talking about the pros and cons of adding another boiler very soon.

WS: What determines fuel costs and are these costs predictable? Is fiber supply a limiting factor? EE: You’re about to get a very unique answer. We’re probably the only facility that gets its wood like this. Why I say that is it’s Harvard Forest, you have your own demonstration forest, we own 3,500 acres, you guys own a lot more than that, but it’s enough for us to have about 800 acres of managed forest. Jon is a licensed timber harvester. Another member of our crew is as well. We invested $100,000 in all new wood processing equipment to make the process a lot smoother. What makes us unique is that we are able to capture 100% of the production and usage of our wood. You don’t have to model. We own the equipment, employ the workers, and we’ve been trying to understand and document every aspect of our wood production. I have a spreadsheet that says how much of a difference all these new investments, a tractor a knuckle boom loader and a splitter as well as our new boilers. In the old system they had to handle the wood many times. The wood had to be handled to be moved so much by hand. These are 4 foot lengths of wood, so just huge amounts of manual labor and muscle. It was very easy for us to save money in terms of labor and efficiency. Part of what we’re doing is looking into the use of working forests. At Harvard there’s a lot of research into “the illusion of preservation.” WS: What type of operations do you get your wood from? JW: We mostly do small group selections. Right now we’re clearing land for a study on the effects of land use change. EE: Our perspective is we look see how much it would be buy cordwood, and we would be cutting most of this wood anyways. First we have over 40 miles of roads to keep open. This is also one of the most intensively researched forests on the continent. It’s the oldest studied temperate forest in the world as far as I know. We have hundreds of experiments going on here. We’re at the nexus of environmental management, ecology, and forestry. WS: Is there consistent demand for your services? If not, what operational difficulties do demand fluctuations pose? EE: Our crew works year round. We have a crew of four.

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JW: I guess the demand just comes from the fact that yes it gets cold here. EE: There is some conflict in that we have other projects we need folks working on, yet we need to keep all of the buildings open. One of the criteria that I had for the system was that any weakling could work it. The logs aren’t huge 4 foot firewood, its 22 inches now. Unfortunately the snow during the winter creates a lot of competition for labor from the crew. We could have made our own chips, but we wanted to do it all ourselves as simply as possible. We wanted to show how a working forest could produce its own green energy. We also thought that the price of cordwood and pellets is going up. We felt this was the most sustainable way to do things. One of the other things you should know about us is we have millions of dollars’ worth of experiments around this biomass, and all of the data taken on our biomass project was designed by the same researchers who collected data on our eddy flux tower. We’re the oldest functioning tower in the nation, and so we’ve got data going back to 88’ and every six years we get knew funding. Now we’re able to quantify how these emissions effect the forest ecologically. WS: Under what social, economic, and political circumstances was this facility built? Did these circumstances make construction more or less difficult? EE: The context with which we operate at Harvard means we have to be very aware. We have a very high profile here in the state as well as across the country. On all of these contentious issues. So on political issues, we operate in a state that was trying to put in five large biomass generating facilities. I think only one of those is still up for debate. So our context is that the governor was really excited by the prospect of biomass energy. There was such an outcry that the governor decided to commission a study to see what the science says. The Manomet report. It’s cited in the USDA report. The conclusion was that biomass energy was not necessarily the way to go. They did recommend small biomass heating systems. Combined heat and power as well. Because we are not CHP, we would have caught a lot of flak. Whenever you use wood to make energy, a lot of concern and outcry results. Are you using the energy efficiently? This worked out nicely, but maybe another type of system would not have been as simple from a publicity prospective. WS: Are there any changes in circumstances that would make this facility more or less successful or change the likelihood that new facilities will be constructed? How likely are these changes to occur? EE: Well oil prices are headed straight down right now. I think if you saw an increase in oil prices or a decrease in wood prices, you’d see a lot of school districts and municipalities start to take interest. That’s where I see big change. It’s all about dollars. If things continue on a downward spiral, it’ll be a lot more difficult to make these systems look good. As an academic institution, we recognize that we have a unique system and not many people can replicate it. But we can serve as an example to other schools. We have been able to help other schools get grants like ours. We’re very proud of this. In the western part of the state we’ve got a lot of forests. Not a lot of cities. However, there are political forces in the eastern part of the state, Boston and Cambridge, that believe that not a single tree should be cut. Every tree is sacred. When those forces carry too much weight, harvesting gets shut down completely on state or federal land. It’s, once again, the illusion of preservation. After NAFTA, things changed a lot. It’s adversely effected the economy here. It’s all political decisions. There are also some tribal areas where this type of system could be of great use. It’s hard for people to replicate our exact situations, but we’re looking for ways others do this kind of thing. We’re also working with the Harvard greening initiative in order to work out the effects of programs like ours. We’ve shifted from 60% of our greenhouse gases coming from oil and propane to 8% coming from oil and propane. There’s this idea about renewable, not carbon neutral—that’s a mess I don’t want to step into—but renewable. They’re not making too many dinosaurs these days. WS: Are there any new technologies that may increase or decrease the success of your facility? EE: Absolutely. It would’ve been great to get a boiler that, size wise, was somewhere between the industrial 500,000 and the 170,000s that we bought. That would’ve made us almost completely wood.

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There’s an underserved size range that we fall into. We want to show that there is a demand for this type of project. WS: What is the public perception of your facility, and has that perception led to operational difficulties? EE: In Cambridge, they’re thrilled, but still waiting to see results. Working on that right now. In the forestry community in general I think it’s great for people to see that there’s actually academics who believe that there is a place for working forests. Locally, people like that there’s not a huge cloud of black smoke running a mile up the road that used to come from our old converted coal boiler. All in all, it’s been very positive. Even the super adamant critics of biomass don’t have too much negative to say about the combined heat and power. But again, who the heck can replicate something like this. I think we get a lot of positive feedback. People never congratulate you when a problem disappears. We’ve been here a hundred and eight years. There’s such a small amount of people here, too. Folks here go along to get along. We’ve been in the community for a long time now. We’d have to do something pretty egregious to cause a real fervor. WS: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today?

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Dennis Kennedy Longwood University

Utilities Manager, Facilities Management kennedydm@longwood.edu

(434) 395-­2296 October 28, 2015

Will Stroud: What is the name of your biomass facility? Dennis Kennedy: I work at Longwood University’s Biomass Heating Plant. WS: Who is the owner of your facility? DK: Longwood University WS: Who are the end users of your services? DK: Our student body and the university itself. We provide heat for all the academic services and facilities themselves. Everything in the triangle. Karan Gupta: What is the capacity of your facility? And you can answer that in sq ft served or BTUs if you’d like. DK: We actually measure our capacity in pounds of steam. Right now, our biomass capacity is 40,000 lbs of steam per hour. As opposed to our other option, oil. It’s 90% back-­up and 10% need in the winter months. With the biomass plant as it is right now, we have another unit going in next year, which will bring us up to 65,000 lbs/hour. But until we do that, we have to burn a few thousand pounds of oil a day to make load for the campus. That will be an additional unit. We do not have thermal storage. KG: What made up the greatest portion of the upfront capital investment required to construct this facility? Is this type of investment unique to biomass facilities? DK: Yes and no. It’s equivalent to any other solid fuel plant like coal or pellets. If it was a gas or oil system you wouldn’t need all of the conveyors and storage. A $25 million plant the same size as ours might be $13-­15 million if its oil, where solid fuel makes it $25 million. That’s due to specialized boilers, and specialized fuel handling equipment. KG: What determines fuel costs and are these costs predictable? Is fiber supply a limiting factor? DK: Here, they are pretty predictable, but that’s because we’re in kind of a sweet spot in terms of availability of waste biomass products. When I say waste, I mean sawdust, chips, products that can be used for bedding or boiler fuel. We have a pretty good supply in this area. We have a lot of lumber companies. Because we have a pretty high volume of fuel availability, that helps hold the cost down some. We do some of our own transportation, which also helps. All of our fuel comes within a 60 mile radius. Some of it as close as 11 or 12 miles. We have 17 sawmills that we go out to bid for, and we have eight that we have standing purchase agreements with. That puts us in a really good position for fuel. The only time we’ve seen fuel supply as a limiting factor is if we’ve seen extended severe conditions during the winter months. We have a reserve pile, but we don’t want a whole bunch of mulch sitting out in that pile during March and April. We want it to be burnable fuel. If we hit a really bad stretch of weather, the mills will shut down, and their production cuts way back, and we have to pull more off of the pile. In addition to the supply getting constrained, the demand increases during those time periods. WS: Is there consistent demand for your services? If not, what operational difficulties do demand fluctuations pose?

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DK: 24 hours a day, 7 days a week, 365 days a year. Now in the summer months we’ll burn about 38 tons a day, and during the winter months we’ll burn about 75-­85 tons a day. In order to deal with maintenance, we pride ourselves in still being industrious when you only need one boiler. The other unit is down and available for maintenance. We will do a 4-­6-­week annual maintenance. All of our equipment is redundant. We have two of everything, so when we’re not operating at full capacity, we do maintenance on the units that aren’t operating. We can’t afford to burn oil. We burn oil for $18-­19 per MMBTU. We burn biomass for $4 per MMBTU. Natural gas would probably be a bit less, around $2.50/MMBTU. With the price of fuel right now, biomass has gone up and natural gas has gone down, but with oil we save $2.2-­2.5 million a year. When biomass was at its bottom, we were saving $4 million a year. Well we burn strictly wood waste products, not pellets or dry chips. You have to be subsidized to burn pellets. We get some kind of credits, but it’s not really subsidized. We do have some operational difficulties around fuel quality. We burn green sawdust. So it can be pine or hardwood or poplar… a variety of different products. We get wood from a pallet manufacturer, and the wood we get from them is so fine, it’s almost like dust. So we have to manage that. We take it back to our storage facility and we blend it in with wet longer fuel. We do burn some of the pine straight in the silos. In the winter time, if we get a few inches of snow, the first few inches of that sawdust is 70-­80% moisture. We have to take from the bottom and blend it in. Over time we’ve learned how to manage those kind of things though. It can be a high BTU fuel, but if it’s wet, that turns a 20,000 lb an hour boiler into a 14,000 lb an hour boiler. I’m using 25-­30% of my fuel just to reduce the moisture content. So there’s a lot of things you don’t have to deal with if you have an oil, gas, or coal fired plant. Biomass definitely has some operational issues.

KG: Under what social, economic, and political circumstances was this facility built? Did these circumstances make construction more or less difficult? DK: Well, in our case, it made it more. For one thing, we were the first biomass facility owned indirectly by the state of Virginia. That was something that the legislature and the governor absolutely wanted to see happen. We had a real driving force behind because we’re a state funded school, so the money had to come from the legislature. It was politically driven. DEQ was very cooperative. Because big picture, we’re not burning coal or oil. Longwood used to burn biomass in their co-­fired plant. It’s not a new process for them. They burned biomass in the coal boilers an awful lot, but they couldn’t quite get the efficiency you need. They have different designs. KG: Are there any changes in circumstances that would make this facility more or less successful or change the likelihood that new facilities will be constructed? How likely are these changes to occur? DK: We’re getting ready to increase our capacity by one-­third. We’re still committed to biomass, and so is the state legislature. From our point of view we don’t see much difficulty. We’re in the process with DEQ of changing our permit. We’re also in the process of learning how to blend wood with grasses. We’re gonna get a permit to see if we can have some emissions variances to see how well some of this switchgrass works. We’re committed to biomass. Switchgrass has about a 5% moisture. Much lower than wood. It is a locally grown product. It’s grown as a fuel. Right now the majority goes to Piedmont Geriatric, and they burn it during the winter months. There’s about 4000 acres under contract, and we’d like to take some of the fuel that they don’t need, and we can balance out some of our high moisture content. It’s about $11/MMBTU. If we can get our BTU values up, it might be worth it. WS: Are there any new technologies that may increase or decrease the success of your facility? DK: I think there are some down the road. Our new boiler is designed to burn everything you could imagine, oak hulls, acorn shells, I could go on and on. We plan on multiple types of test burns. We’re trying to partner with private groups to see what we can make happen. KG: What is the public perception of your facility, and has that perception led to operational difficulties? DK: In all fairness, we have not done as good of a job as some of the other universities that have switched to biomass at promoting ourselves. We had some startup issues. We weren’t exactly at the top of the town’s list of good neighbors. We’ve gotten better, and relations have drastically improved. It’s

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really about being open and honest: Why are we here? What are we doing? What are the environmental costs and benefits? It’s about not lying to people and deceiving them. We did the same thing at Duke. We spent millions and millions of dollars on making coal work as cleanly as possible. However, we never lied to students when they came on tours, we never said that we were a clean fuel. We just explained what we did, why we did it, and how we were trying to improve things. We spent a million dollars at Duke to put in flue gas re-­circulation to reduce our NOxs by 50%. We did that because it was the right thing to do. If you’re open and honest like that, things will work out. Your reputation will be okay. You just have to be honest and upfront. WS: Thank you so much for your time and your insight. Are there any other individuals with whom you recommend we speak for further information on anything we might have discussed today?

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iv. CASE STUDY MAP

Facility Name Location Capacity Application Type Fuel Type

Biomass One LP White Falls, OR 30 MW dedicated biomass, electricity only

landscaping and mill waste, wood chips

Avista Kettle Falls Generating Station

Kettle Falls, WA 50 MW repurposed biomass, electricity only

mill waste, wood chips

Harvard Forest Thermal Facility Petersham, MA

0.5 MMBTU biomass + 1.5 MMBTU propane backup

repurposed biomass, district heating

forest residues

Longwood University Biomass Heating Plant

Farmville, VA 40,000 lbs/hr steam

repurposed biomass, district heating

mill waste, sawdust