Friday, June 12, 2009

Baptist, Bootleggers and Biomass

When I moved to North Mississippi to buy land in the late 60’s, I landed in a “dry county” where it was illegal to buy or have alcoholic beverages in your possession. Like most folks, I enjoyed an occasional adult beverage. And coming from an Italian family, this was a pretty foreign concept to me. I asked “Why?” and the answer came back “because of the Baptists and the bootleggers”!

It was a coalition of two diverse groups with very different reasons and objectives. The Baptists supported the “blue laws” for religious, moral and ethical reasons and the bootleggers supported the same laws for reasons of personal financial gain (although it was pretty widely known that some members of the latter group were widely outspoken members of the former group!). The differences in their motives were irrelevant with respect to their ability to create a strong coalition that maintained a common objective.

A similar coalition has evolved to oppose the development and use of renewable energy, specifically biomass. The group is composed of environmentalists, power companies and the pulp and paper industry. Strange bedfellows again.

The news media’s focus on renewable energy is pretty much confined to solar and wind and what might be. Here is a graph of what is - courtesy of The Energy Information Administration.

Renewable energy currently supplies a meager 7% of the nation’s energy consumption. A year ago it was 6% and 90% 0f that was equally split between hydropower and biomass. All of the rest combined represented less than 10% of that meager 6%! The significant growth in renewable energy in 2007 came from biomass, and to a lesser degree, from wind. Now, let’s take a look at the coalition and what is driving it.

Environmentalists: The environmental community has been a strong proponent of renewable energies up until the point of actually supporting their implementation. Following is a look at the rational and frequent hypocrisy of its “support” for renewable energy.

On Hydropower
Hydropower dropped from 45% of renewable energy consumption to 36% of renewable energy consumption in one year. Hydropower production of electricity has come at the expense of free flowing rivers and I know of no environmentalists that support the expansion of hydropower by damming additional rivers. In fact, I know of very few Americans at all that support expansion of hydropower by flooding more rivers. Even if there was support, it would be squashed by the “discovery” of an endangered minnow or mussel. There will be no more hydropower sites added and some likelihood that there will be calls to restore some rivers to a natural state creating a loss of hydropower. There may be some gains in efficiency but, for all practical purposes, what we have today is all we can expect. Increases in renewable energy will have to come from other sources.

On Wind
Wind and solar represented the energy mantra of the environmental community until engineers dramatically improved the efficiency of windmills to the point of making them actually cost-effective in many (windy) situations. The environmental downside of windmills includes damage to certain species of birds (call in the Endangered Species Act again) and aesthetics. The only places that aesthetics are at issue are the mountains, oceans, deserts and the places in between.

This is a link to a Grist article entitled The Wind and the Willful: RFK Jr. and other prominent enviros face off over Cape Cod wind farm, By Amanda Griscom Little. It starts with the following quote.
A long-simmering disagreement within the environmental community over a plan to build a massive wind farm off the coast of Cape Cod, Mass., is now boiling over into a highly public quarrel.
It is a good article illustrating the conflict in the environmental community. When the NIMBY attitude combined with the political clout of the Kennedy clan, the entire world watched as the environmental hypocrisy and political power of the Kennedy family emerged to create the reality of what it will take to actually implement renewable energy projects.

On Solar
Here are a few extracts from a FOX News article Feinstein: Don't Spoil Our Desert With Solar Panels.
“Sen. Dianne Feinstein said development of solar and wind facilities in California's Mojave Desert would violate the spirit of what conservationists had intended when they donated much of the land to the public.”
“"It would destroy the entire Mojave Desert ecosystem," said David Myers, executive director of The Wildlands Conservancy.”
"This is unacceptable," Feinstein said in a letter to Interior Secretary Ken Salazar. "I urge you to direct the BLM to suspend any further consideration of leases to develop former railroad lands for renewable energy or for any other purpose."
Need I say more?

On Biomass
There are others much more in tune than me with the battles that have raged recently over the definition of biomass in this year’s Energy Bill but I have seen enough of the terminology to understand the role of the environmentalists. In an effort to suppress a fear that natural forests would be converted to plantations they were successful in creating a definition that excluded most trees from the definition. In the end, more rational heads prevailed within the environmental community and they worked to provide a reasonable, workable definition. Still, biomass growing on our federal lands has been excluded as a source of renewable energy. And that’s a lot when you consider that about 1/3 of our forests are on federal lands.

On Nuclear Energy
Nuclear power is not technically classified as renewable but it too, is an option that could replace much of the coal and biomass for electrical production. One publication by an environmental organization claims that 30,000 deaths a year are caused by particulates from U. S. coal-fired power plants yet none (that’s zero) have ever been caused by a nuclear power plant. Environmentalists have done a very effective job at scaring the American public to the point where it is questionable whether we can look at nuclear power in a rational manner. IF we are going to do it, some folks in the environmental world will have to play a leadership role. What would the environmentalist’s position be if 30,000 people were killed each year in nuclear accidents? We have options and it is up to all of us to pursue them in rational manners without the scare tactics.

Power Companies:
The power companies have an industry pretty much built on coal. It’s not that they love coal, it’s that coal is the least expensive way to produce electricity and their customers want low cost power. As an industry, biomass as a replacement for coal is an expensive proposition and they want to hold their costs down so there is a good reason for the resistance to the move to biomass.

But not all power companies are in the same boat. A large part of the cost of coal is freight. The largest cost component of biomass is transportation. So look where the resource is and it is pretty easy to see which states have an economic incentive to support or oppose the utilization of biomass. Transporting low sulphur coal from Colorado to Georgia or wood from Georgia to Colorado doesn’t make a lot of sense economically or environmentally. The utilization of energy resources close to the power facility makes a lot of sense and that is what we are seeing evolve from the plans of the power companies. The power companies outside of the nation’s “woodbasket”, sitting on coal reserves, are and will continue to be a part of the coalition. The companies in the Southern woodbasket will remain a part of that coalition UNTIL the 15% renewable energy standard really is a standard, then biomass becomes the least expensive option. In fact, in the South, it is pretty much the only option for both carbon neutral and renewable energy so some of the companies are moving quickly to secure their woodbasket.

Pulp and Paper Industry:
The pulp and paper companies, like the power companies, are looking at both costs and their ability to survive. They are faced with increased global competition, severely declining demand and now a new threat that is competing for both their raw material and one of their primary energy sources. Although they probably use more renewable energy than any other industry, don’t expect them to embrace a national shift to biomass that will make it even more difficult for them to compete or survive. Inflation, followed by a weak dollar, may save the industry but “hope is not a strategy”. The industry must fight for its survival on all fronts and we should expect to see little change on the biomass front.

The question that the industry poses is whether or not the forest can sustain both the pulp and paper industry and a robust biomass industry. Collectively, is it sustainable? One solid argument is that the economic value of the pulp and paper industry (employment, value added, and multipliers) is much greater than can be achieved by the biomass industry. Below is a graph produced by the South Carolina Forestry Commission that illustrates how important pulp and paper is to the forestry sector in that state.

On the value added issue, it is questionable. The resource supply chain for the two industries is identical – stumpage, harvest, transport to mill, and woodyard handling. I’m not sure how many more people a pulp mill employs relative to a pellet mill. If you throw in the paper mill, you have to throw in the power generation plant on the other side of the equation. I’m not sure how much difference there really is AND I’m not convinced that there isn’t room for both. I just don’t accept the argument that it has to be one or the other.

The industry is crying “sustainability”. And they are doing it in an organized and deliberate fashion. As a 40-year veteran of the pulp and paper industry, I am disappointed with the industries position. Twenty years ago the industry would have taken a strong positive approach and embarked upon an effort to substantially increase planting, growth and future availability of wood. Landowner assistance programs would be growing and new ones would be sprouting. Tree improvement programs would be well-funded in an effort to grow more and better trees on each acre. This time the industry has taken a position that is negative to all of the components of their entire wood supply chain. Negative to the growers of the wood, the loggers who harvest it and to those that transport the wood to the mills. People remember such things.

Some Final Thoughts:
If a shift to renewable energy is to be successful, some environmentally responsible environmentalists must step up to the plate and show some leadership. It is doubtful if an effective renewable energy policy can be developed with an environmental community unified behind antagonistic policies for every form of renewable energy but hemp. Additional hydroelectric sites are out of the question. That leaves wind, solar, geothermal and biomass. The environmental community must decide how best to utilize and mix the combination of those four renewable energy options or oil, gas and coal will be the answer. The environmentalists continue to fiddle as Rome burns.

The power companies are looking strictly at cost. Most of them have some level of governmental support, usually in the form of a monopoly supported by government control of prices. If a national goal of energy self-sufficiency, with a strong component of renewable energy and carbon reduction, is the goal, the pricing issue is something the power companies can understand. That problem can go away quickly if Americans want renewable energy and are willing to pay for it. If Americans are not willing to pay for it, then the power companies are right on target with their objections.

The pulp and paper companies have traded a level of self-sufficiency (typically in the neighborhood of 25% - 30%) for the cash received for selling their land. This was a deliberate decision done after weighing the options and now the industry must live with it and it may not be pretty. The market will determine what products the new timberland owners will grow and sell. The pulp and paper industry has long touted its ability to compete in a fair and level playing field. The playing field has changed as the nation seeks energy independence, renewable energy sources and reduced carbon emissions.

If the anti-renewables coalition is not broken, Rome will be in ashes.

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  1. Quite informative post. thanks for sharing..

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  2. "The environmental community has been a strong proponent of renewable energies up until the point of actually supporting their implementation."

    Brian, I have never heard it said better. The world is awash in energy. We have no "energy crisis" other than what we have brought on ourselves. What we have is a crisis of will, political will. I have been working outside of the Forestry community for 2005 days and counting. I can tell you from the outside that the forestry community is silent.

    I think as you said, confilicting internal interests make it tough to count on the paper industry. I don't blame them. They have obligations to their shareholders to be what they purport to be.

    If Forestry professionals and landowners want to contribute to the debate its going to take getting out beyond the science journals, association meetings and the like.

    The positive message of Forestry, with all its promise and benefits is not only not being represented; its not even on the map.

    I heard Erin Burnett on CNBC last week laughing sarcastically about energy producers in Europe burning wood instead of coal for power generation due to cost considerations as if it was the most rediculous thing she had ever heard "Now we're burning trees for electricity?"

    I don't have the answers, but with carbon caps, taxes and the like making onto the front pages, this might be the chance of a lifetime for the Forestry community to step up and take its rightful place in the debate.

    Thanks for the article. Keep on keep'in on.


  3. One of the more comprehensive, concise, less-biased (or exposed bias) run-downs of the energy issue that I have come across. Like the auto industry, it seems that pulp and paper are making their plays overseas(while crying that they are producing jobs for Americans). Probably rightfully so for their shareholders. And mostly caused by the exorbitant regulatory structures and fees that we self-impose on our in-house industries. Overseas all you have to do is slip the "regulators" a few pesos under the table and you don't get all of these ridiculous (some are good, but most now excessive) regs.


  4. Right on- right on! The paper companies are missing an opportunity to leverage their investments in the timber supply chain to become net producers of biomass energy to the grid. What a waste! And if the environmentalists have to twist themselves anymore to take utterly contradictory positions... they'll just implode.

    All very well said, Brian- keep it up!