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BIOMASS CROP ASSISTANCE PROGRAM |
A Primer
In an effort to encourage the building of a sustainable biomass market, the 2008 Farm Bill created the Biomass Crop Assistance Program (BCAP). BCAP has two provisions, one that establishes project areas and payments to encourage landowners to grow biomass (the Project Areas Program) and one that provides matching payments to eligible material owners for the sale and delivery of biomass to bioenergy plants. The latter program is called the CHST (Collection, Harvest, Storage and Transportation) Matching Payment Program. In May, President Obama signed a Presidential Directive that led Tom Vilsak, the Secretary of Agriculture, to expedite the CHST program. More...
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BIOENERGY COMPANIES AND BCAP |
Action Required
While bioenergy companies are not eligible for payments under BCAP, the benefits of the program for the biopower and biofuels producers are significant.
The most significant risk bioenergy companies face is that of a steady, affordable and sustainable feedstock supply. In most cases, landowners biomass is not currently being collected; it is left in the woods as a nutrient base and to prevent erosion. Most loggers lack the equipment to collect and deliver biomass and the means to purchase the necessary equipment. Because they will be eligible for matching payments if they deliver to a qualified biomass conversion facility (BCF), landowners, loggers, and other operators will choose qualified BCFs over other wood consuming facilities. And because BCFs will be preferred partners, securing a steady supply of biomass will be easier.
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BIOMASS SUPPLIERS AND BCAP |
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While the County FSA Offices will not begin making payments to biomass suppliers until 2010, a few practical steps can be taken by landowners, loggers and other operators in the interim. Our recommendations:
- Sign up to receive all announcements that have to do with the BCAP program at the FSA's website. To register, go to www.fsa.usda.gov.
- Get to know the County FSA Office and its staff.
- Reconsider your timber sales contracts.
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WOOD FIBER SUPPLY AGREEMENTS |
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Will Bioenergy Have an Effect?
Globally, securing a steady and affordable supply of feedstock has become critical path for the wood bioenergy industry. As plant completion dates draw nearer, many energy producers are in discussions with wood suppliers as part of the process of understanding their supply sheds (what forestry professionals call wood basins), identifying suppliers and determining the characteristics of mutually beneficial supply agreements.
One of the largest gaps between energy producers and wood suppliers can be found in their differing perspectives on the length of supply agreements.
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EUROPEAN DEMAND FOR WOOD FIBER |
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Recently, the Wall Street Journal's Russell Gold reported that the wood pellet industry in the United States is being driven largely by European utility companies. European Union member countries are required to produce 20 percent of their electricity from renewable sources by 2020. Because of this standard, the European Union imported nearly $100 million wood pellets and other wood fuels in 1Q2009, which Gold points out is 62 percent higher than 1Q2008.
Wood pellets are in high demand because they are ideal for co-firing with coal. The pellets are dry enough that they can be re-pulverized and then burned at much the same rate that pulverized coal burns. In addition, pellets meet phyto-sanitary requirements for export and they are easily shipped.
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FOREST2MARKET NEWS |
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Look for Pete's article in the Fall 2009 issue of Engineered Wood Journal, The Effect of the Wood-to-Electricity Industry on Wood Fiber Markets. The article looks at state and federal renewable electricity standards and their effects on the supply chain. | |
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