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Europeans Tour Southeast Forests, Discuss Pellet Supply Chains
By Sue Retka Schill | October 31, 2013 Meeting the sustainability requirements of the growing market for pellet exports to Europe was the focus of a workshop held in Savannah, Ga., Oct. 23-24. Organized by the Pinchot Institute for Conservation and the International Energy Agency Bioenergy Tasks 40 and 43, the workshop brought together over 60 experts and stakeholders representing conservation organizations, government agencies, universities, and the forest and renewable energy industries from nine different countries. The Savannah workshop explored the potential application of sustainability criteria being developed by European governments and industry within U.S. forests. Other sponsors of the dialogue included the Sustainable Forestry Initiative Inc., Programme for the Endorsement of Forest Certification, E.ON, Georgia Forestry Commission, Weyerhaeuser, MeadWestvaco Foundation and Plum Creek. Representatives of U.S. pellet producers, European purchasers, conservation organizations and U.S., Canadian, and European policymakers met over two days to analyze and debate sustainability issues. The first day’s session moved from presentations covering a broad discussion of sustainability to a description of forest management in the Southeast and looking at the supply chain in pellet production. On the second day, participants toured industrial timberlands certified to SFI’s Forest Management standard, a nonindustrial family forest and the Georgia Biomass LLC pellet mill. The field tour showcased several tools to mitigate environmental risks along the biomass supply chain. Pinchot and the IEA task forces will release a report in early December summarizing the workshop and identifying opportunities for aligning U.S. forestry systems and European Union sustainability criteria, said Pinchot project director Brian Kittler. The project team will also use feedback gathered at the workshop to provide recommendations to SFI, which is currently undergoing a standards revision process. “Bringing European biomass consumers and U.S. biomass producers together has made it abundantly clear that there is a need to align sustainability criteria with the realities and complexities of North American forest management, and to that end, the sort of dialogue fostered by this event is essential,” said Martin Junginger of Utrecht University in the Netherlands and the IEA Bioenergy Task 40. “This dialogue focused on finding practical solutions for ensuring that the benefits of robust markets for forest biomass can further advance our nation’s conservation achievements,” said Al Sample, president of the Pinchot Institute. “The Pinchot Institute is committed to building understanding of the multiple perspectives on sustainable sourcing, sustainable forestry and greenhouse gas balance.” Presentations and other event materials can be found here. Continue reading
Panel Discusses Wood Biomass Sustainability, Coming Regulations
By Tim Portz | October 30, 2013 Nigel Burdett, head of environment at Drax Power, addresses the audience at the U.S. Industrial Pellet Association’s 3rd Annual Exporting Pellets conference. Tim Portz. . . Nigel Burdett, head of environment at Drax Power, kicked off a panel discussion at the U.S. Industrial Pellet Association’s 3rd annual Exporting Pellets Conference, by commenting on the role of sustainability in the transition from coal to wood pellets. “We need to be sustainable in order to capture the subsidy and make the business work,” he said. The panel focused on the sustainable attributes of renewable power produced via wood pellet combustion. The subsidies Burdett spoke of are Renewable Obligation Certificates (ROCs) issued by the U.K. Office of Gas and Electricity Markets. These ROCs are financial instruments that power generators can sell on the open market, boosting the economics of generating renewable energy. In September, the U.K. Department of Energy and Climate Change confirmed that biomass would play a significant role in the march toward the de-carbonization of the U.K. energy sector, but that biomass burned by its power generators must come from sustainable sources if those generators expect to receive ROCs. While final rulemaking has yet to be established by the DECC, power generators in the U.K., pellet suppliers in the North America and elsewhere, and the loggers and landowners that supply biomass to pellet facilities are all preparing for the coming legislation. They are also offering their perspective to policymakers on what they feel are realistic, yet adequately stringent, requirements. At the same time, a larger, more expansive effort is underway to frame up for the general public the vital role that biomass-derived power can, and should, play in driving geologic carbon out of the world’s energy mix. Geologic carbon, the carbon found in fossil fuels and sequestered there for millions of years, is released into the atmosphere when it is combusted for energy. Bob Malmsheimer, professor at the State University of New York College of Environmental Science and Forestry, urged attendees to recognize the inherent differences between geologic carbon and biogenic carbon saying, “When we make products and energy from biogenic carbon instead of geologic carbon, we’ve done something positive for climate change.” Recognizing that the public is continually presented with different studies and models, he continued by stating, “While the timing aspect is debated, the long term benefit is not debatable.” Echoing Malmsheimer’s comments, and diving deeper into an explanation of the science as well as many of the reasons for widespread confusion about the issue, was Martin Junginger, assistant professor at the Copernicus Institute for Sustainability Development at the University of Utrecht. Junginger pointed out that many of the studies that industry critics use to question the sustainability of woody biomass are flawed because they investigate the carbon cycle at a stand level, as opposed to looking at the carbon cycle in the context of a broader forest ecosystem. “Scientists have realized that looking at the landscape of level is the most appropriate,” said Junginger. He explained that if 1 acre of land is converted into biomass feedstocks and burned, there is carbon released into the atmosphere certainly, but that the overall forest system was taking up more carbon as a whole than was being released during the combustion of a percentage of that biomass during energy generation. The panel concluded the discussion by driving home the point that the worst-case scenario for global forests were declining markets for forest products, including woody biomass for pellet production. Repeating an argument that is continually being made by the largest forest owner associations in North America, including the National Alliance of Forest Owners and the Forest Landowners Association, the panel argued that strong markets for all grades and types of forests was the best way to stave off the largest threat to forests, emerging higher economic values for forested acres, including redevelopment. Recognizing that proving the sustainable nature of their supply chains will be a vital aspect of Drax’s business, Burdett underscored the importance of preparing for the coming feedstock tracking requirements saying, “We are going to see a great deal of data being required of suppliers,” and stressing that non-compliance ultimately would cost Drax the most. “We have canceled contracts because adequate data was not available,” he added. Continue reading
Will Farmland Bust? Here Are 3 Key Variables
Is the farmland market — one many experts say is starting to level off from the boom in values over much of the last decade — just taking a “breather” from its rocket ride higher, or is the expected leveling an inevitable function of the marketplace? History has certainly proven the cyclical nature of the land market; the last century of land market observations reveals a few common drivers of that cycle. But is today different? “Speculation on what is and what will happen to Iowa farmland values abounds,” says Iowa State University Extension ag economist and farmland values expert Mike Duffy. Obviously farm income’s the primary key to rising or falling land values. And, just as it’s so important to the farmland equation, it’s also far from clear exactly where the average farm’s income is headed in the near future, and how that’s going to manifest itself as a key land variable, Duffy says. “What happens to farm income will have a direct bearing on land values. While it isn’t a perfect correlation, it is a strong one,” he says. “I think some of the factors that created the busts we saw after the past 2 booms haven’t been as strong this time.” So since income’s something of a wildcard right now, Duffy has stepped back to examine those 2 “land booms” of the last century, how they’ve unfolded and what ultimately happened to the land market and those with stakes therein. The first of these “golden eras” was from 1900 to 1920, Duffy says, a time when rising corn prices sent land in Iowa up almost 500% in the first 19 years of the century. Then came the early 1970s. “The second boom period, 1973 to 1981, has been referred to as the second golden era in agriculture. Land values in Iowa increased by over 30% per year in 1973, 1974 and 1975. Over the entire boom period Iowa farmland values went from $482 an acre in 1972 to $2,147 an acre in 1981, an increase of 345%,” he says. Prices & returns Those 2 past boom times have some similarities and some differences when viewed with the meteoric rise in land values of most of the last 8 to 10 years. But, though these cloud the crystal ball, there are 3 common features of the boom cycles that could shed light on how the current one’s going to unfold. The first is a simple matter of dollars and cents. “One feature is the booms were driven by increasing prices and returns. A 1967 publication by the State Historical Society described the first boom period as, ‘For agriculture this was prosperity piled on top of prosperity,'” Duffy says. “The second boom in the early 1970s was fueled by the rapid rise in commodity prices due in part to the opening of major export markets. Corn prices in Iowa averaged $1.04 per bushel in 1972 and they averaged $2.58 per bushel in 1974.” Continue reading
