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Wood For Energy and Bio-refining. American Loggers Council March 10, 2005. Discussion Items. Forest Industry Business Condition Industry Actions Forest Industry Outlook Logging Sector Finding new market opportunity. 1997-2002 Import/ Export Imbalance Deteriorated

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wood for energy and bio refining

Wood For Energy and Bio-refining

American Loggers Council

March 10, 2005

discussion items
Discussion Items
  • Forest Industry Business Condition
  • Industry Actions
  • Forest Industry Outlook
    • Logging Sector
    • Finding new market opportunity
forest business conditions
1997-2002 Import/ Export Imbalance Deteriorated

Excess Capacity Worldwide for pulp and paper production

Forest Industry under pressure:

Aging Facilities

Excess Global Capacity

High Financial Leverage

Strong U. S. $

Substitutes

Limited End Uses Demand

2002–2005 Structural Change significant with recovery underway

Paper Markets improving

Solid wood markets Strengthen

Mergers Consolidation of Industry major players

Energy Impacts cost of production of timber

Reduction in overall capacity of logging drops by 20-26%

Forest Business Conditions
slide5

Merger & Acquisition Activity Affecting Alabama Companies

Mead & Westvaco

Weyerhaeuser & Willamette

Bowater & Alliance Forest Products

Georgia-Pacific & Fort James

Plum Creek & The Timber Company

International Paper & Champion International

Weyerhaeuser & Trus Joist International

Weyerhaeuser & MacMillan Bloedel

International Paper & Union Camp

Stone Container & Jefferson Smurfit

Bowater & Avenor

James River & Fort Howard

Kimberly-Clark & Scott Paper

timber market conditions
Timber Market Conditions
  • Soft Timber Markets
    • Capacity related downtime
    • Reduced local market competition
    • Increased Recycle
    • Weak Product Pricing
  • Will Product Market strength transfer to timber market?
    • Abundant supply will cap price for pulpwood
forest industry actions
Forest Industry Actions
  • Significant Movement in Forest Operations
    • Increased merger and acquisition
      • 14 million ton loss of production in 2000 2001 in pulpwood production FL, GA, MS, AR,TX
      • Permanent closure of high cost mills
      • Market related downtime at production facilities
      • Divestiture of Timberland Assets
        • TIMO’ s
        • REIT” s
outlook for forest industry
Outlook for Forest Industry
  • New Pulp Mills Highly Unlikely
    • Worldwide demand, Slow Domestic Demand, Cost Competitive issues, Environmental Constraints
    • Incremental Expansion possible but not likely unless accompanied with Bio-refining or energy options
    • Additional Shutdowns possible but slower pace
    • Major capital investment milestones, New Environmental Regulations
forest products bio refining and energy
Forest Products Bio-refining and Energy
  • Forest resource Overview
  • Forest Residues
  • Managing Forest for Biomass fuels
2002 if wildfires were converted to energy
2002 If wildfires were converted to energy???
  • 7 million acres burned would equal
    • 7000btu/kw or enough electricity to supply U S with 22% of annual demand
    • 973 billion barrels of oil
forest residues
Forest Residues
  • Forest operations yield significant volume of wood residue:
    • Up to 30 tons of woody biomass at age seven in salvage operations
    • Up to 20 to 25 tons per acre on first thin of southern pine plantations
alabama forest resources
Alabama Forest Resources
  • 23 Million acres Timber
    • 46% Hardwood
    • 35% Pine
      • Approximately 20% plantations
    • 19% Mixed Pine Hardwood
    • 900 Million Tons of Dry woody biomass
    • Production off 22% since 1997 or about 7 million tons per year
logging residue
Logging Residue
  • Alabama generates 2.6 million dry tons annually from logging
  • Most logging residue is not recovered
  • These residues represent a cost to subsequent forest operations
is it sustainable
Is it Sustainable ?
  • Alabama’s total timber inventory is 138% larger than it was fifty years ago, and is the largest ever recorded
  • Alabama’s annual harvest increased by 150% between 1963 and 1998. Harvests peaked in 1998 and have declined by about 25% since then
  • Alabama’s pine timber inventory is 125% larger than it was fifty years ago, and is the largest ever recorded.
  • Alabama’s hardwood timber inventory is 150% larger than it was fifty years ago, and is the largest ever recorded
slide17
Finding Markets?Approximately 15% of pine saw timber volume is left as woody debris, for hardwood almost 24% according to USFS research
  • Alabama Could recover 5.4 million tons of forest residues annually
  • Amount equal to 15 million barrels of crude oil
  • These residues are currently not recovered and represent a cost to logging operations
slide18
Two Ways to manage for Woody Biomass
    • 1) Energy Crops
      • Some research done mostly outside of the south
      • Economics have not been previously viable
      • More research is needed
    • 2) Co- manage for Energy and Conventional Products
      • Economics have not been available
      • Requires market development for biomass
      • New research needed for development and management
woody biomass status and outlook
Woody Biomass Status and Outlook
  • Existing Forest Biomass Operations
  • Potential for expanded use of woody biomass
  • Needs to Stimulate Development
  • Potential Public Benefits
existing woody biomass operations in al
Existing Woody Biomass Operations in AL
  • Five to Six operations on Forest Harvesting Sites (Fincher, Castleberry, Baseline, Farley, Mobile Forest)
  • Yield on Pine Plantations:
    • AGE 10-12 First Thin 1/1
    • Age 14-17 Second Thin 2/1
    • Age 20-22 Saw Timber 4/1
    • Over 25 about 15% of total wood is residue
    • For Hardwood about 24% is wood residue
what are the benefits of developing wood biomass markets
What are the benefits of developing wood biomass markets?

Logging only Vs.

Logging with Fuel Wood Markets

1) Economic Benefits - new markets for timberland owners- new jobs to grow, harvest & transport woody biomass fuels- new incentives to invest in productive forests- new investment in energy conversion technologies

2) Environmental Benefits- reduction in greenhouse gases & noxious emissions from fossil fuels - additional carbon sequestration from managing forests for energy

outlook for wood residue markets
Outlook for Wood Residue Markets
  • 1) Increased Use of Woody Biomass Within the Forest Industry- mills still using natural gas are converting steadily to wood2) Growing Interest in Woody Biomass in Other Industries- mills using natural gas are interested due to cost factors - mills using coal & fuel oil are interested due to environmental factors- unfamiliarity & complexity = risk - initial capital investment - economic incentives are definitely growing, but are not compelling 3) Use of Woody Biomass by Electric Utilities Is the Key to Development of a Woody Biomass Fuel Industry- including a small percentage in the fuel mix could have big impact - incentives are needed to induce utilities to action
natural gas
Natural Gas ?

Tenaska Peeking Plant Billingsly AL

conclusions
Conclusions !!!
  • Forest industry is emerging from a difficult business period which has resulted in a down-sizing of the industry and reduced demand for timber, particularly for pulpwood.
  • Our public and private forests are growing in both timberland area and timber inventory volume, and have never been more productive.
  • A decrease in timber demand and an increase in timber supply has resulted in weak prices, particularly for pulpwood and low-valued timber.
  • There are abundant sources of woody biomass within the existing forestry system that could be used for energy purposes at the present time.
  • The development of a viable market for woody biomass fuels would likely result in productive new systems for managing forests for energy production.
  • Public policy initiatives are needed to provide the leadership and incentives needed to make woody biomass an attractive and sustainable source of energy.
  • There are multiple and substantial benefits that could result from the large-scale use of woody biomass for energy, both to Alabama and to the Nation.
bio energy what are we waiting for
Bio Energy ! What are we waiting for?

Special Thanks to:

Ken Muehlenfeld Auburn University

John Tourtelotte TALLC

Scott Spear AIME

Dan Daly AIME

Gene Quick SAUBR

bio energy needs assessment
Bio Energy Needs Assessment
  • Clearinghouse for Technology Development and Investment
    • SAUBR Southern Alliance for the Utilization of Biomass Resources needs full time coordinator. SAUBR needs allied group in each sub-region up to one million annually partnered with appropriate University systems for a period of five years at which time investment should take on responsibility for funding.
  • Open loop Bio mass language in JOBS Bill must recognize longer investment period to attract capital and extend investment tax credits and capital to harvest operations
  • Tax credits extended to co-firing and syn-gas operations
  • Find incentives for states to go to a net metering system
  • Amplify emission credits for conversion to blended fuels
  • Demonstration Projects funded
  • Market development for liquid fuels
  • Loans over $25 million limited to Coops- Expand the range of B&I USDA loan program.