Growing the Wood-to-Energy Sector

A wood-energy checkoff would raise money for promotion, public education, new market exploration and research. All would contribute a small amount, to be administered by an industry-elected board, independent of trade associations.
By Jennifer Hedrick | September 11, 2014

What’s your mad cow?

That was the question asked by Carlton Owen at a series of meetings and conferences within the wood-to-energy sector over the past few months. You no doubt remember mad cow disease. It was rampant in the United Kingdom in the 1990s—killing cows and people, shattering consumer confidence throughout the U.K., and halting beef exports. The first case was discovered in the United States in 2003, which could have been a harbinger of the end of the U.S. beef industry.

Except that didn’t happen.

The beef industry very strategically utilized an existing program established more than 20 years earlier—the beef checkoff program—to research the U.S. beef supply and inform Americans that it was safe. As a result, beef consumption actually increased.

The beef checkoff program, widely recognized through its campaign, “Beef. It’s What’s for Dinner,” and other commodity checkoff programs created through the USDA Program for Research and Promotion, have raised millions of dollars through producer assessments that are dedicated toward increasing consumer awareness and consumption, and growing markets.

The beef checkoff is only one example. Cotton, eggs, popcorn, pork, milk, almonds and sorghum are others on a long list of existing programs. There is a paper and paper-based packaging checkoff that was launched just this year that is expected to raise $25 million annually. Carlton Owen and his staff at the Endowment for Forestry & Communities played a key role in the launch of the softwood lumber checkoff, which brings in $15 million per year.

The endowment has agreed to work with the wood-to-energy sector, including pellet manufacturers, power producers and possibly thermal energy producers, in the development of a checkoff program. It is already providing limited seed funding toward the exploration of the feasibility of such a program and has agreed to match the industry-raised dollars required for these early stages of development. This offer is not without a sunset, however, and we are approaching dusk.

A wood-energy checkoff would not be run by any of the trade associations. By law, it must be established by agreement of industry as a separate entity governed by an industry-elected board representing companies of varied size and geography. The board would determine the checkoff structure and goals, how much money would be raised, and how the money would be used.

Importantly, there would be no free riders. All would contribute a small amount (likely cents per ton), which would lead to a large amount from which all would benefit.

Money raised from checkoff programs can be dedicated to a range of initiatives, including:
- Domestic and international promotion.
- Research and development.
- Exploration of new markets.
- Public education.

With the highly anticipated release of the U.S. EPA’s biogenic framework, concerns with meeting sustainability requirements, plus growing markets, access to feedstock, achieving and adhering to U.S. and EU policy, not to mention being prepared to assure that the facts regarding biomass use and benefits are researched, available and presented to the public, there is no shortage of issues to address. While a checkoff program takes about two years to implement, these challenges will continue—and new ones will develop.

The beef industry stared down mad cow disease and today has built a checkoff program that, according to a 2013 analysis, achieves a return on investment of $11.20 for every dollar invested.

What is the wood-to-energy sector’s mad cow? How will we respond?  The clock is ticking.

Author: Jennifer Hedrick
Executive Director, Pellet Fuels Institute