Biomass Policy: States Doing Their Part

With much of the federal legislative and regulatory activity with potential to benefit biomass on hold for now, state activities can make a big difference in the future of the biomass industry.
By Bob Cleaves | September 25, 2016

With Washington and the rest of the country focusing on the November elections, the Clean Power Plan stuck in the courts, and U.S. EPA’s Science Advisory Board unable to conclude its five-year odyssey on biogenic accounting, you would think that not much is happening to promote biomass energy. In fact, from Maine to California, states are embracing biomass energy through administrative and legislative actions.

Take Maine as an example. More than 15 years ago, in a landmark decision, the Maine Public Utilities Commission ruled that a 50-MW biomass plant—now owned and operated by ReEnergy—could sell power to an adjacent sawmill (Stratton Lumber)—without being regulated as a local utility. I was on hand this week to witness what can happen when sensible state policy—here applying to combined heat and power—is done right. In part because of its ability to purchase biomass power, Stratton Lumber now counts 100 employees. The lumber mill purchases 2 MW of power purchased from ReEnergy using 25,000 tons of waste bark that would otherwise be landfilled. Without that ruling by the Maine PUC, the success in Stratton may never have happened.

The next stop on our tour was Athens.

Maine Wood Pellets in Athens, Maine, the state’s largest manufacturer of wood pellets, is installing a biomass electric facility to produce both electricity for sale to the grid, and heat for use in the pellet drying process. Under development for years, this project has a power purchase agreement (PPA) approved by the Maine Public Utilities in August 2013. This project will help diversify what is already a well-run pellet mill, and the use of the heat in addition to electricity generation will improve the facility’s profit margins.

Maine is not the only state to recognize the need for strong policy to support biomass power. The California state government is also doing its part to help biomass.  First, the background. Currently, California is experiencing a massive tree mortality problem with around 66 million dead trees—an estimated 50 million tons of fiber—lying fallow in California forestlands. On top of that, many biomass facilities are experiencing difficulties renewing PPAs that have recently expired due to stiff competition from other energy sources. With the closure of biomass facilities, in addition to potentially removing a destination to put dead tree wood to productive use, other fuels like abundant agriculture residues and urban construction waste are in danger of going unused. Please view our recently released Bioenergy Day 2016 video on biomass power in California for a more detailed overview, at www.usabiomass.org.

Fortunately, California’s state government is aware of the problem and is actively implementing solutions to alleviate the burden on biomass. In September, the state’s legislature approved SB 859, a bill that requires certain utilities to purchase power from biomass facilities for a period of five years. The bill outlines specific conditions for the purchase of biomass power:

• 125 MW to be shared by investor-owned utilities and municipalities with 100,000-plus customers.

• Contracts are limited to five years.

• 80 percent of the fuel shall come from a byproduct of sustainable forestry management, including from lands that fall into Tier 1 and Tier 2 fire risk classifications (the highest risk areas near homes, recreation, infrastructure, community developments and watersheds). At least 60 percent must come from Tier 1 and Tier 2 lands and not from lands that have been clear-cut.

SB 859 provides policy direction on many other issues, including the use of the state’s Greenhouse Gas Reduction Fund, the growing pot of money California collects as part of its groundbreaking cap-and-trade system. Added to the “BioRAM” initiative by Gov. Jerry Brown last year mandating a purchase of 50 MW of biomass power, the new requirements make significant progress toward keeping facilities open for the foreseeable future.

With much of the federal legislative and regulatory activity with potential to benefit biomass on hold for now, state activities can make a big difference in the future of the biomass industry. Please contact me directly if you would like to discuss any of the details.
 


Author: Bob Cleaves
President, Biomass Power Association
bob@biomasspowerassociation.com
www.biomasspowerassociation.com