The Good and The Bad on Biomass News in North Carolina

Guest Blog | October 25, 2010 | Energy Policy

Rumor has it that Duke Energy plans to convert the Dan River power plant from coal to biomass fuel. However, the NCUC reached its decision when considering the relatively insignificant amount of biomass being used in two pilot co-firing projects.
Rumor has it that Duke Energy plans to convert the Dan River power plant from coal to biomass fuel. However, the NCUC reached its decision when considering the relatively insignificant amount of biomass being used in two pilot co-firing projects.

There was big news for biomass issued out of North Carolina this month (Charlotte Business Journal’s John Downey provided thorough coverage).  On Monday, October 11, 2010, the NC utilities commission (NCUC) issued a pivotal decision under the Renewable and Efficiency Portfolio Standard (REPS) of 2007, concluding:

… primary wood harvest products, including wood chips from whole trees, are “biomass resources” and “renewable energy resources” … the General Assembly did not intend to limit the scope of biomass resources qualifying as renewable energy resources to those resources specifically listed within the statute. (Commission order)

This decision essentially tells Duke Energy and the other electric utilities that anything goes – they can burn any undifferentiated woody biomass in their coal-fired steam plants – a ruling that makes many of us extremely uncomfortable. On the positive side, this decision appears to establish a clear and broad new standard for biomass in North Carolina, which creates the opportunity for significant energy diversity.

However, an “anything goes” decision raises serious concerns about the impacts of a growing industry on our state’s forests. Environmental Defense Fund and Southern Environmental Law Center correctly pointed out that North Carolina lacks sustainability provisions to protect our forests. Excessive demands on forests could lead to harmful land-use changes, climate impacts, soil fertility impacts, water impacts, wildlife losses, and ecosystem destruction.

Now that the NCUC has interpreted the definition of biomass in an expansive way, it is more urgent than ever that North Carolina environmentalists, forestry and industry work together to create policies to ensure the sustainability of all bioenergy.  So, let’s explore the implications of this decision, good and bad.

Good news?  A little less of this.
Good news? A little less of this.

With the NCUC decision, greater utilization of biomass and other resources can help displace coal from the grid.  Meaning that – in the near term – utilities will burn less dangerous, polluting, climate-forcing coal (that’s the good part).  Duke Energy will be allowed to burn clean sawdust, bark, industrial wood waste, forest thinnings — sources scientists agree are sustainable and climate-friendly.

While not required by any rule or law, Duke presented evidence that suggests it will use “wood waste” materials first, since they represent the most cost-effective woody biomass feedstock in the marketplace:

… Duke Energy Carolinas has and will seek to procure as much “wood waste” materials as economically possible before moving on to procure other woody biomass fuel.
However, the Company’s evaluation of woody biomass resources within its potential procurement area has revealed that there will simply not be enough ‘wood waste’ materials available in the marketplace to support its operational and development plans relating to its “brownfield” biomass projects, which will drive the use of “whole trees” in addition to wood waste. (Rebuttal testimony of Tracy Beer)

Our biggest concern (and this is the bad part) is whether or not the use of higher value “whole trees” will be sustainable.  Duke Energy thinks so (at least from an economic sustainability level).  The company reported that it includes harvest level and existing use constraints in its fuel forecasts.  For the unnamed plant it is considering repowering to biomass, Duke claims that its forecast shows adequate supplies “while maintaining 2008 harvest levels and without impacting the economic viability of any existing user of forest resources …”easternpineforest

While this forecast sounds rosy for Duke, SACE is very concerned that the ruling places no actual restrictions on environmental impacts or sustainability provisions for biomass procurement. Duke Energy or any future applicant can rely on this ruling to plan for the use of woody biomass from land-clearing as well as higher value large-diameter trees.  This broad reach of resources is bad news because the research science on the use of large diameter roundwood for energy (the “whole tree” issue) is not conclusive about what will be sustainable to realize carbon neutrality and maintain healthy forests, biodiversity and water quality.  The studies we’ve seen (Manomet and Abt & Galik, for example) are either incomplete, not regionally relevant, or too broad to indicate the climate benefit of any particular North Carolina biopower proposal.  Whole trees used for energy can provide some carbon reduction as compared to coal, but depending on the source of the trees and management of the land, this reduction might not outweigh the life-cycle emissions.

The root problem here is that our economy does not value the wood, trees, and forests as highly as our society does.  So while most people would cringe at the thought of a beautiful giant oak being chipped for boiler fuel, legally there is nothing to keep Duke Energy (or other biopower generators) from doing this.  This divergence between economic value and intrinsic value is a familiar one to us as environmentalists.

However, the problem is compounded by longstanding forest policy: For 40 or 50 years in the South, state and federal policies have encouraged landowners to plant pine trees for paper-pulp and other wood products.  We now have an oversupply of planted trees such that our pulpwood prices are the lowest in the world.

Left: Barge loaded with wood pellets, heading for export.  Right: Barge loaded with coal.
Left: Barge loaded with wood pellets, heading for export to Europe. Right: Barge loaded with coal.

European power companies are taking advantage of our low prices: buying our wood, grinding it, pelletizing it, and shipping it across the Atlantic to feed their power plants. (However, 90% of European biopower is fueled with European biomass.)  Green Circle Bio Energy in Cottondale, FL and RWE Innogy in Waycross, GA account for more than 1.3 million tons per year of wood pellet capacity, and still more pellet mills are being planned. European biopower projects can be inspiring, but the idea of the Southeast USA fueling Europe’s power plants can’t be anyone’s idea of a sustainable solution to global warming.

Some observers have already concluded that Duke is planning to do the same thing as the European utilities. Reading the articles, it’s easy to assume that Duke will clear-cut entire forests to feed their boilers. But, a basic understanding of forest economics shows that unless our energy prices begin to approach those in Europe (very unlikely), clear-cuts for energy will be rare or nonexistent simply because large diameter trees are much more valuable as wood products.

No informed forest analyst expects Duke or other North Carolina power generators to be able to afford large trees as boiler fuel – local sawmills will outbid them. As Duke’s Owen A. Smith wrote to the NCUC,

“the interests of the Company and it’s customers would not be served by investing in co-firing or repowering projects in locations where the procurement of biomass fuel could not be done in a reliable, sustainable, and cost effective manner.”

What next?

SACE continues to maintain that smart, sustainable biopower is a necessary tool for fighting climate change and reducing our excessive current dependence on dirty coal for power.  But, it will require either federal or state policies to ensure climate benefit, assurances of environmental sustainability, and restrictions to protect very special places — like old growth stands, wetlands, and other rare or imperiled ecosystems.  We know that forest health is an essential part of our ecosystem and we must set boundaries on what is acceptable from a sustainable perspective and what isn’t.

North Carolina, indeed the entire Southeast, needs to find agreement among stakeholders on the key principles of sustainability so that we can ask state legislators to clarify the legal definition of biomass. A clear definition of biomass, with effective implementation, could ensure economic sustainability and perhaps even environmental enhancement through biopower development.

Let’s use this NCUC decision as momentum to get moving with the big work to ensure that bioenergy development is smart and benefits all North Carolinians, now and in the future.  As the famous biofuels critic Dr. Tim Searchinger wrote (along with 10 other co-authors), society cannot afford to miss out on the global greenhouse gas reductions and the local environmental and societal benefits when biofuels are done right.

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