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Potential Biomass Demand Impact on Forest Markets and Resources. Bob Abt NC State University bob_abt@ncsu.edu. Context . Forest resource modeler focused on regional outlooks for the medium run 5-20 years. Usually take current inventory, growth, and removals as a starting point –

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potential biomass demand impact on forest markets and resources

Potential Biomass Demand Impact on Forest Markets and Resources

Bob Abt

NC State University

bob_abt@ncsu.edu

SAF 3/3/09

context
Context
  • Forest resource modeler focused on regional outlooks for the medium run 5-20 years.
  • Usually take current inventory, growth, and removals as a starting point –
  • Then look at the impact of various demand scenarios

SAF 3/3/09

slide3
SAF 3/3/09

AF&PA 1/14/09

3

bioenergy approach
Bioenergy Approach
  • The challenge of projecting emerging bio-energy markets
  • A few unknowns: which technologies, using which feedstocks, at what scale, where, and when?

SAF 3/3/09

key factors examined
Key Factors Examined

Demand for wood as an energy source

Potential (policy driven)

Observed (“announcements” are observed many actual plants are potential)

What would a woody biomass supply curve look like?

How important are logging residuals?

Determines timing and size of impact on roundwood markets

SAF 3/3/09

outline
Outline
  • Policy Driven Scale
    • Implied by NC RPS
    • Implied by national RFS “regionalized”
    • Relative to Logging Residuals
  • The Relationship between Residuals and Roundwood Feedstock Supply
  • Announced Capacity Regional Case Study
    • Role of Residuals
    • Impact on Economic / Physical Sustainability
    • Impact on Traditional Forest Based Industry

SAF 3/3/09

nc rps impact
NC RPS Impact

SAF 3/3/09

nc rps impact9
NC RPS Impact

SAF 3/3/09

gulf coast biomass impact
Gulf Coast Biomass Impact

Demand (2008) from F&W Forestry

3 new plants

15 proposed or under consideration

Emphasis on pine

Potential demand of 5.75 mill green tons annually

SAF 3/3/09

gulf coast biomass impact13
Gulf Coast Biomass Impact

Demand Scenario

.5%/yr demand increase for current products

Over 10 yr period (2007 – 2016) increase demand by .575 mill tons/yr

100% pine

Reduce demand by available logging residuals (45%,35%,25%,15% recovery)

SAF 3/3/09

AF&PA 1/14/09

gulf coast ppw removals
Gulf Coast PPW Removals

AF&PA 1/14/09

SAF 3/3/09

demand increase
Demand Increase

SAF 3/3/09

price harvest inventory impact
Price/Harvest/Inventory Impact

No Roundwood Biomass Demand

Max Roundwood Biomass Demand

SAF 3/3/09

caveats
Caveats

“Worst Case Scenario” for traditional wood-users or “Best Case” if you are a timberland owner

Everything being considered adds to demand

Biomass demand perfectly inelastic (no short run substitutes)

No silvicultural response, energy crops, or non-wood substitution

SAF 3/3/09

caveats21
Caveats

On the other hand:

Power companies already negotiating long term supply agreements

New projects announced monthly

Current roundwood prices are very attractive

These runs don’t include timberland loss (1.5%/yr)

Plantation plantings are down significantly

SAF 3/3/09

market sustainability
Market-Sustainability

Residuals could be important but current demand will quickly exceed residual availability

Inelastic timber supply means that there will likely be a higher price than harvest response

Energy and biofuel firms are looking at roundwood first

Resulting higher wood prices may make other renewable energy sources look better and reduce “realized” biomass demand

Timing - this is the transition period – recession for traditional forest product industries – boom for bio-energy – makes roundwood use more attractive

SAF 3/3/09

policy
Policy

Expansive policies focused on demand and technology

Restrictive policies focused on supply (e.g. certification, natural stands, residuals)

Not a good combination, will likely lead to unanticipated policy “leakage”

Incentives and outcomes will result from interaction of energy, forest, agriculture, environmental, and carbon policy

SAF 3/3/09

questions
QUESTIONS

SAF 3/3/09