Biomass industry leaders discuss priorities, challenges

By Anna Austin | April 17, 2012

Nearly 1,300 gathered at the International Biomass Conference & Expo held in Denver, Colo., April 16-19, to hear leaders of biomass industry sectors discuss current challenges, opportunities and goals.

During the general session discussion “Director’s Roundtable: Priorities for Industry Growth in an Election Year,” Gary Melow, Biomass Power Association state projects coordinator, gave an overview of the biomass power industry’s history, pointing out that things have changed dramatically for producers over the years. He also explained how the industry got where it is today.

“Our industry was born back in the 1980s as a result of federal PURPA (Public Utilities Regulatory Policy Act) legislation, which required utilities to purchase power form independent power producers,” Melow said. 

But coal reserves found in the Western U.S. in the 1990s drove down the price of coal, and subsequently, energy prices. “As a result, states were deregulating their electricity markets,” Melow said. “So you had this perfect storm of utilities selling contracts and biomass power facilities upside down on their fuel contracts—and without subsidies or incentives or other economic financial instruments—so we started to see plants close.”

Things changed again in the 2000s, when the country began to see states adopt renewable portfolio standards (RPS), and plants started to come back online, according to Melow. “We started seeing some small coal plants convert to biomass, and in the last few years, we’ve seen some green developments.”

Unfortunately, little or no growth has occurred in states without an RPS, he said.  

Melow said the BPA’s main initiative is emphasizing to lawmakers the benefits of biomass power. “We’re sort of going back to the future,  promoting and marketing the intrinsic values that have been the core of our industry since the beginning,” he said, adding that those include local resource utilization, support of jobs and local communities,  production of a high-value product that is delivered to the marketplace using existing infrastructure,  domesticity, and environmental benefits.

Melow said the BPA is weaving that story throughout its engagement with decision makers and policymakers on three fronts: watching activities at the EPA that can dramatically impact the industry; making sure that energy policy includes biomass power in an all-of-the-above strategy; and ensuring the availability and affordability of feedstock.

He added that while the Boiler Maximum Achievable Control Technology rules will impact the industry, BPA believes it can now meet the new emissions levels, but the association has some issues with the time frame for compliance. The Non-Hazardous Secondary Materials rule could also negatively affect the industry, but the Tailoring Rule is what the BPA really has its eye one. “I think it will have the longest-term impact,” Melow said. “We’re very concerned about the long-range impact on our industry. It’s very important that EPA get this right, because if it doesn’t, we will see plants close because they’ve lost fuel economics, we’ll see jobs associated with the projects go away, [fossil] fuel substitution that could reduce renewable energy in the country, and materials no longer considered fuels will have to find some other destination.”

Following Melow, Joseph Seymour, executive director of the Biomass Thermal Energy Council, and Jennifer Hedrick, executive director of the Pellet Fuels Institute, touched on issues affecting the biomass pellet and densified fuel industry.

Like BPA, BTEC and PFI are watching pending federal regulations such as Boiler MACT, and they have been working on ensuring that biomass thermal is included in any national renewable energy legislation. Seymour pointed out that it’s important for the industry to have trade organizations in order to unify the biomass thermal sector, and also to properly convey messages to policymakers. “When we walk into a congressperson’s office, they usually don’t understand biomass thermal, let alone biomass,” he said. “So what we try and do is avoid too many cooks in the kitchen.”

Seymour admitted one particular hurdle is competing with natural gas. “I won’t deny that natural gas is changing the economics of some thermal projects,” he said.

During her speech, Hedrick shined some optimism on the growing pellet stove market, telling the crowd that 1.5 million U.S. homes are currently heating with pellet stoves, and a small but growing number are utilizing pellet boilers and furnaces. “The residential market has been a steady market over the last several years,” she said.

In 2012, one major initiative of the PFI is rolling out its new standards program, which it has been working on with the U.S. EPA.  “We’ve had a standards program in place for quite some time, but the new one will be a third-party certification program,” Hedrick said.

Micheal McAdams, president of the Advanced Biofuels Association, discussed progress that his members—which include companies such as BP, Gevo and Honeywell— are making on their first commercial-scale advanced biofuel plants, emphasizing that the advanced biofuel industry is now a reality. “It was just a year and a half or two years ago that people were saying that it didn’t exist; that it was pixie dust and unicorns,” he said, adding that he recently witnessed renewable diesel and jet fuel production at Dynamic Fuels’ plant in New Orleans.

McAdams encouraged conference attendees to help spread the messages of the biomass industry as a whole. “This is an election year; you’re the voters. These people report to you, you pay their salaries, and you are the voice of this industry, whether it’s biopower, biofuels, thermal, chemical or whatever.”

In the 40 years McAdams has been working in the biomass industry, he said he has never seen Congress do less in terms of legislation, and pointed out that vital programs such as Biomass Crop Assistance Program have been defunded. The farm bill energy title is also in danger, he added, encouraging attendees to communicate with Congress. “You are the real faces, the real jobs in this country that bring this industry forward—we have to have you engaged. “

During his speech, Joe Jobe, president of the National Biodiesel Board, highlighted a milestone the biodiesel industry hit in 2011—reaching more than 1 billion gallons of production—and described the hurdles the industry encountered while trying to get there. “I’ve read about the biodiesel industry being an overnight success story, and that makes me chuckle because it was more of a 20-year overnight success story,” he said.

Jobe added that despite the industry suffering from the economic meltdown, the lapse of tax credits, implications from Renewable Identification Number fraud and the delay of implementation of the Renewable Fuel Standard 2 (RFS2) because of ongoing lawsuits against it, the industry has continued to prevail.