Biomass, Oil and Gas

The oil-and-gas association launched its annual report on the role of oil and gas in American energy. This time the report recognized renewable energy sources, which Cleaves says is an interesting development in the biomass sector.
By Bob Cleaves | February 04, 2015

Is Washington capable of change?

Historically (and understandably), the oil and gas lobby has been, well, all about oil and gas. However, there are some signs that this could be changing in favor of an “all of the above” policy that recognizes the role that renewable energy sources play.

The signs of change were on full display last week at American Petroleum Institute’s State of American Energy summit. At a well-attended lunch, the oil-and-gas association launched its annual report on the role of oil and gas in American energy. Only this time, the report devoted about 40 percent of its 50 pages (according to the news outlet Associations Now) to analysis of renewable energy sources and their future in American energy policy. At the invitation of API, Biomass Power Association contributed its own chapter to the report, along with other renewable energy trade associations.

“Rather than focus solely on the oil and natural gas industry, API this year is pleased to partner with organizations representing various energy sectors to highlight the contributions of each toward America’s current and future economic well-being, and collectively stress the importance of adopting a lasting ‘all of the above’ energy strategy,” API’s President and CEO, Jack Gerard, wrote in the introduction to the State of American Energy 2015 report.

This was an interesting development for the biomass sector. Not only is it significant that biomass is recognized as one of the foremost, essential energy sources in a report like API’s—a nod that may not have occurred as recently as a couple of years ago. But the report also shows that we stack up well when compared to other energy sources, both renewable and fossil.

Interestingly, rather than simply competing with traditional energy sources, biomass can also benefit, particularly when the result is more affordable transportation fuels.

Probably more than any other renewable form of energy, biomass benefits favorably from lower priced transportation fuels. The reason is that, unlike other renewables, biomass generators pay for fuel, and a significant component of that expense is transporting the fuel from forests and farms to an energy facility. In fact, recent studies have shown that for every $1.00 a gallon increase in diesel, the average cost of wood increases $4.20 a ton.

By bringing cheaper natural gas into the market, the shale gas revolution introduced the prospect of converting diesel to compressed natural gas (CNG)—an attractive idea given that CNG, on a gasoline gallon equivalent, is $1.61. But to everyone’s surprise, advances in natural gas exploration not only yield domestic, affordable natural gas, but significantly cheaper petroleum, at least for now. The dramatic drop in diesel has had an immediate and positive effect on the economics of biomass fuel deliveries.

As an industry, we can’t claim to be an entirely domestic, homegrown energy source if our fuel suppliers are forced to rely on foreign oil producers. Thankfully, diesel and natural gas used for transporting our fuels are now as homegrown as the electricity we produce. The success of the domestic oil and gas industry becomes our success. And that’s a good thing.

Author: Bob Cleaves
President and CEO, Biomass Power Association
[email protected]