Forest2Fuel E-Newsletter

September/October 2010

In This Issue
BCAP Update
Definition of Biomass Clarified
Definition of Renewable Energy Sources
Wood-to-Energy Market News
Economic Impact: Boiler MACT Rule
Pete Stewart to Speak in Atlanta
Quick Links

Top 3 Stories from the July/August Issue
On October 5, Doug Duncan, the Executive Director of the North Carolina Association of Professional Loggers spoke with Kelly Novak, Biomass Crop Assistance Program Specialist for the USDA about the new rules for the program. While Novak was unable to share specifics about subsidy rates and ceilings, she did offer insight into the definitions and processes that will be used to implement the program going forward. For the matching payments program:

  • The definitions of both biomass conversion facility and eligible biomass will remain consistent with those outlined in the 2008 Farm Bill.
  • All conversion facilities will have to reapply for eligibility, however, and the process will be much slower than it was under previous program rules. Conversion facilities should expect qualification to take 3 months.
North Carolina
Wood Chips and Conveyor
In August 2007, the State of North Carolina became the second state in the South to implement a renewable electricity standard. (Texas was the first.) The standards were set at the following levels:

  • 6% of 2014 North Carolina retail sales by 2015
  • 10% of 2017 North Carolina retail sales by 2018
  • 12.5% of 2020 North Carolina retail sales by 2021
A utility company may meet the requirements in one or more of the following ways:

  • Generate electric power at a new renewable energy facility.
  • Use a renewable energy resource to generate electric power at a generating facility (co-firing a renewable source with coal, for instance)
Power Plant
The importance of a Renewable Electricity Standard (RES) to wood-to-energy markets cannot be overstated. According to the Environmental Protection Agency, because the RES is a market-based program, it:

  • Achieves policy objectives at a relatively modest cost (ratepayer impacts range from less than 1 percent increases to 0.5 percent savings)
  • Spreads compliance costs among all customers
  • Minimizes the need for ongoing government intervention
  • Functions in both regulated and unregulated state electricity markets
  • Provides a clear and long-term target for renewable energy generation that can increase investors' and developers' confidence in the prospects for renewable energy
After months of halting progress in wood-to-energy markets, two companies have announced significant contract milestones. These advancements help strengthen the argument for biomass energy at a time when economic uncertainty continues to hamper investment in as yet unproven technology and government agencies propose standards that could place wood-burning plants in financial hardship.

Advanced biofuels technology loan guarantee programs (offered by the USDA and DOE) require that biofuels projects finalize credit worthy contracts in three areas before loan guarantees will be approved. BlueFire Renewables' planned Fulton, MS cellulosic ethanol plant has become the first facility to meet these requirements.
In June 2010, the Environmental Protection Agency proposed a new Industrial Boiler Maximum Achievable Control Technology (MACT) Rule. This version replaced the original 2004 standard that was vacated in 2007 by the U.S. Court of Appeals for being too lenient. The new rule lumps many wood-burning boilers with incinerators, a move which will drastically increase regulation and oversight on wood-power facilities. The MACT standards as outlined in the proposed rule are so severe and costly to implement that many proposed facilities are being reconsidered or re-engineered for natural gas, since the rule does not currently apply to natural gas burning boilers.

A new study commissioned by the Council of Industrial Boiler Owners (CIBO) and conducted by IHS Global Insight quantifies the economic impact the rule will have on the industry. With data provided by CIBO members and other experts, IHS Global Insight looked at the negative impact the rule will have. The report considers five key areas of economic activity: employment, labor income, value added, industry output, and tax implications. The study also looks at total economic impact, or the total direct, indirect and induced impacts the rule will have.
Pete StewartSE Biomass Conference/Trade Show Nov. 4
Forest2Market's President and CEO, Pete Stewart, will talk about the ways in which wood bioenergy markets--specifically electricity generation--are maturing in the South.

Stewart will outline the reasons that big utilities are emerging as development leaders in the industry, such as balance sheet financing, cost pass-throughs and experience in energy markets. He will also outline the role smaller developers will play in the future of the industry.
14045 Ballantyne Corporate Place, Suite 150
Charlotte, NC 28277-2845
 Phone: (704) 540-1440
Fax: (704) 540-6301