Website now available for wood-to-energy checkoff program

The wood-to-energy checkoff initiative for the wood pellet fuel and biomass power industries recently launched a website to provide updated information about the program as well as a forum to ask questions about the initiative.

Over the past few years, a group of nine volunteers, including representation from three segments of the wood-to-energy sector—domestic pellet manufacturers, export pellet manufacturers and biomass power producers—have developed an ad hoc process to study the potential of the USDA Research and Promotion Program (referred to as a checkoff program) to aid the sector.

Checkoff programs have mainly been in the agricultural sector; however, more recently, softwood lumber and the paper and paper-based packaging industries have adopted programs. A few with well-recognized advertising campaigns include the Cattlemen’s Beef Board’s, “Beef. It’s what’s for dinner,” as well as the Dairy Management Board’s simple tagline, “Got milk?” These programs are formed through industry assessment and governed by a board of directors who are selected by the industry and approved by the secretary of agriculture. The programs help provide funding for research and promotion efforts to maintain, develop and expand domestic and foreign markets. The wood-to-energy working group’s primary purpose is to look for ways to expand markets for sustainable, renewable energy from wood.

In late 2015 and early 2016, following discussion of the program at PFI’s annual conference, straw poll feedback from wood pellet executives and woody biomass power producers indicated to the working group that industry’s support of the concept warranted exploring launching such a program. Now, a draft industry order will be developed to present to the USDA for review. Another straw poll will be distributed for this step to gauge industry support, and, if it remains favorable, a formal industry order will be submitted to the USDA which will be open for public comment.

Following a positive public comment period, the order will then be presented to the industry for a vote. Before a checkoff program as proposed for the wood-to-energy sector can be enacted, all affected (in the proposed population based upon production) members of the industry sector would have the opportunity to vote to approve the program. The initial referendum must be approved by both the majority of voting companies and majority of production of those voting companies.

This vote is organized, administered and tallied by the USDA. If the checkoff is accepted, the industry will continue to participate in periodic referendums to validate whether the program is bringing value to the industry. The initial referendum proposes for a seven-year program and the continuance referendum is every seven years.

For now, there is proposed information available on who will participate and what will be assessed, how the checkoff will be governed, what will be funded and what the program’s assessments and expenses will be. The proposed assessable bone dry tons (BDTs) of pre-consumer woody biomass are defined as: residuals from sawmills, paper mills, green wood, bark, arbor waste (urban, utility line cleaning), chips, logging debris, leaves and needles.

The program is proposed to be governed by an industry-representative board of directors, who are also representation of geographic distribution, size, industry sub-sector and diversity. Members are proposed to serve staggered three-year terms and nominations will come from a members’ respective industry sector.

Funding for the program comes from an annual assessment placed on all eligible companies within the industry segments. Coupled with other overhead, such as director salary, associated office costs, etc., to have a meaningful impact on the debate, the USDA Agricultural Marketing Service charges an annual fee in a range from $115,000 to $150,000 to cover the expenses of the services they provide to the checkoff program, according to the website.

Right now, there’s a proposed base target of $4 to $5 million in annual assessment receipts. The common assessment measure will be in BDTs. For pellet mills, the assessment value equals BDTs of pellet sales or total tons adjusted for moisture content. For biomass power producers, assessment value is assessable BDTs to produce net energy sold.

Once the assessment range is set and voted upon, it cannot be changed unless a new referendum is held. A range of values is proposed (for example 10 cents to 40 cents per BDT) to provide the board of directors with flexibility to raise or lower annual assessments based upon need without having to go for a revote.

It's also good to note that smaller companies are exempt from contributing to the program as there could be an “unnecessary burden for record keeping, inventories and other activities related to assessments.” A de minimus level was established for these companies to be exempt from the assessment yet not significantly impact annual assessment receipts. This proposed level includes pellet mills with less than 50,000 BDT in annual sales, biomass power producers with less than 50,000 BDT of annual woody biomass consumption, and the first 50,000 BDT for eligible companies is exempt from assessment as well.

There is quite a bit of flexibility as far as what research and promotions would be funded through the program, but they cannot be used for lobbying or directly influencing government policy or disparaging other commodities. A few proposed examples of research and promotions that could be funded include: greenhouse gas and carbon accounting for wood a source of energy, forest health and sustainability, value of wood for energy, and economic and employment impact of the industry.

The wood-to-energy checkoff working group has matching financial support from the U.S. Endowment for Forestry and Communities. Individuals from the following companies currently comprise the group: ReEnergy Holdings, The Westervelt Company, Forest Energy Holdings, GDF Suez Energy, Energex Corp., Enviva Biomass LLC, Marth Companies, Drax Biomass and Green Leaf Energy.

The wood-to-energy checkoff initiative website includes more information about the process and can be accessed here. (http://woodtoenergycheckoff.org/)