Biomass Summit, Panel 4: Policy and Financial Incentives

By Nicole Strong, Oregon State University Extension

Panel Summary

Steve Forrester from the City of Prineville started us off with an overview of Prineville’s growth and energy needs. Prineville is situated in a place and time that offers an opportunity to make biomass utilization a feasible enterprise. In light of the recent growth of data centers, power consumption has grown from 10 megawatts to 100 megawatts. At this rate of growth, Prineville stands to surpass the current load capacities of current suppliers. This creates an opportunity and incentive for Prineville to begin to create its own power. Prineville has a proven track record with innovative problem-solving, including the recent development of a waste water treatment wetlands, the Crooked River Wetlands Complex. Biomass utilization could be a next step for this kind of innovative work. Steve Forrester, our first presenter on this panel, was optimistic in his resolve that power generation could be a feasible endeavor for Prineville’s current and future power needs, creating jobs and restoration our rangelands and forests.

Marcus Kauffman is a statewide biomass resources specialist for the Oregon Department of Forestry. He acknowledged that enthusiasm about biomass has ebbed and flowed over the last several decades. This latest shift however, involved the need for low-carbon and renewable sources of energy, for which biomass certainly qualifies.

Kauffman also highlighted two global markets with potential to influence biomass markets here in Oregon:

• Exporting Pellets to European countries. There are currently 32 export wood pellets in the Southeastern United States, with a 9.4-million-ton capacity. There could be an opportunity for the Pacific Northwest to enter this market.
• Asian Carbon Policy. Japan and South Korea both require renewable energy that surpass their production ability, which requires them to import renewable energy products. Canada is currently the largest supplier of pellets for Japan, and Vietnam is the largest supplier to South Korea, but there could be an opportunity for the United States to enter this market. Marcus did note that there is a new competitor in the form of palm kernel shells.

Oregon is currently engaged in a carbon cap and invest conversation, which includes biomass. Marcus stated that at this point in the conversation it is too soon to see how forests will be treated, but there is an opportunity for stakeholders to get engaged in the process if they want to see biomass utilization included in any policies that are developed. Several resources for those interested in further pursuing biomass initiatives include:

• USFS national Bio-Energy Technical Team: https://www.fs.fed.us/science-technology/energy-forest-products/wood-innovation
• Oregon Statewide Wood Energy Team: https://www.oregon.gov/ODF/Board/Pages/SWET.aspx
• USFS Wood Innovations Fund: https://www.fs.fed.us/science-technology/energy-forest-products/wood-innovations-grants
• Also, free technical assistance is always available from Marcus himself.

Energy Trust of Oregon is an independent nonprofit organization dedicated to helping Oregon’s 1.6 million residential, business and nonprofit utility ratepayers use less energy, save on energy costs and move to renewable resources.

Dave Moldal from Energy Trust of Oregon helped us better understand how current efforts by the Energy Trust could dovetail with local interests to utilize biomass materials. Energy Trust provides support for municipal project development assistance including, but not limited to: “grant writing assistance, feasibility studies, final design, permitting, utility interconnection and construction management”. They may pay up to 50% of the cost to conduct these activities, up to $200,000. The best fit with forest restoration work would be “biopower”: anaerobic digestion of wood waste to create steam and electricity. Moldal shared with us that utilizing technology that can create both heat and power are most viable given fluctuating markets.

David Smith, Oregon State University Professor Emeritus, has been working in the forest products industry for 45 years. Over the course of this time he has seen interest in biomass come and go. There have been some small successes, and many failures (or learning opportunities as some of us like to call them!).

So what does Dr. Smith think we need for a successful biomass business?

1. Adequate wood supply. Somewhere around 2000 truckloads a year, every year.
   
2. Manufacturing Facility and High-Quality Products. An investment ($10 million) in a mill that can make a high-quality product, made to meet the specifications and expectations of markets made up of professional customers who will keep paying at least $5 million dollars for those products annually. This mill would employ at least 12 skilled full-time employees.
   
3. Business Climate. Sensible regulation and trust between the public and private entities involved. Assured log supply.
   
4. A Project Champion and a Well-Articulated Business Plan. The enterprise must be led by a team that is committed to success and knows what they’re doing. Forest treatments that generate biomass are often seasonal. They need to understand their products and the dynamics of the markets. If you’re going to attract investors, or get corporate support, all of these questions and more must be addressed in a solid business plan.

Dr Smith recommended two resources for anyone interested in planning a potential project:

• Biomass Enterprise Economic Model. Tool for estimating CapEx and OpEx for various biomass plant sizes and configurations http://owic.oregonstate.edu/biomass-enterprise-economic-model
• CBH- 4, Community Biomass Handbook, Vol.4. Enterprise Development for Integrated Wood Manufacturing, Eini Lowell, PNW Research Station , 2017 https://www.fs.usda.gov/treesearch/pubs/53956

And finally, to quote Dr. Smith:

“Et tu’ biomass? I believe the promise is true, and biomass utilization will grow, because it is in all of our best interest, for the sake of the forest, for the sake of rural economies, for the sake of the climate, and for the good of society, I call on industry and entrepreneurs to make it so.”

Key Takeaways and Application to Crook County

• Given current industrial growth and population increases in Prineville, biomass could provide important supplemental power and heat in the near future.
• Quantifying current annual supply of woody biomass can incentivize investors in the needed facilities and work force.
• We are really lucky in Oregon to have many technical and financial assistance opportunities.
• There are also potential growing international markets that can be considered in a business plan.
• There needs to an identified Project Champion. This Project Champion could tap into all the available resources identified in this panel to develop a feasibility study and business plan.

Possible Next Steps

• Crook County could self-identify as a Project Champion, and apply for an Energy Trust of Oregon feasibility analysis, including estimating county-level annual supply and potential markets.