From its very inception, California has fostered the entrepreneurial spirit&mdash;from the 1849 Gold Rush right through to present-day Silicon Valley.&nbsp; The Golden State has traditionally been a hotbed of innovation, and that remains true today, particularly when it comes to renewable energy generation. But three decades after California led the country in creating one of the world&rsquo;s most viable biomass industries, the state&rsquo;s sector is literally fighting for its long-term survival.&nbsp; A confluence of low natural gas prices, expiring power purchase agreements (PPAs), expiration of price guarantees on continuing PPAs, and cheap and plentiful solar alternatives have deeply cut into the state&rsquo;s biomass-to-energy production.&nbsp; In many ways, during his second term ending in 1983, current California Gov. Jerry Brown was the architect and inspiration behind the state&rsquo;s once-burgeoning biomass industry. At one time, the state saw more than 60 plants incorporating a mix of ag waste, forest product waste and residues, as well as urban construction and demolition (C&amp;D) waste.&nbsp; Today, Brown is under pressure from both biomass plant operators and fuel suppliers who are increasingly looking to leadership from Sacramento for a way out of what may shape up to be biomass&rsquo;s worst year ever in California.&nbsp; Past Biomass Glory At its peak in the early 1990s, the California biomass energy industry produced almost 4.5 billion kilowatt-hours (KWh) per year of electricity, according to the national renewable energy laboratory.&nbsp; &ldquo;There are currently 23 California biomass plants operating with a collective capacity of 550 MW,&rdquo; says Gregg Morris, a Berkeley-based bioenergy consultant. &ldquo;Seven or eight plants are idle but refurbishable.&rdquo; Thus, he says, there is probably 150 MW of capacity that could come back online if the facilities were to secure PPAs.&nbsp; Six biomass plants have shut down in the past two years. Covanta&rsquo;s Mendota biomass plant is just the latest casualty, closing in December. Morris says two or three are facing closure if they don&rsquo;t get a new contract this year. He expects another half dozen to close next year.&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Long-term PPAs are expiring at the same time that we are seeing historically low natural gas prices, says Carrie Annand, vice president of external affairs at the Biomass Power Association in Washington, D.C.&nbsp; She says that is causing uncertainty for all California biomass producers. Biomass currently only provides California with less than six percent of its renewable energy; compared to an all-time high of more than 15 percent.&nbsp; The industry uses some five to six million tons total per year of biomass total.&nbsp; &ldquo;In a normal year, we would have 100 percent of our fuel supply already contracted,&rdquo; says Rick Spurlock, plant manager of Rio Bravo Fresno, a 25-MW plant owned by IHI Power Services Corp. &ldquo;But we don&rsquo;t have an energy price agreement past July 31.&rdquo;&nbsp; Thus, Spurlock says they are not going to contract fuel without an energy price agreement in place, a decision that boils down to economics. &ldquo;If the biomass plants go off the fixed rate, that means the price per KWh will drop by five to six cents,&rdquo; says Lynch.&nbsp; &ldquo;They can buy wind and solar for five to six cents.&rdquo;&nbsp; Thus, it&rsquo;s no surprise that Covanta&rsquo;s five California biomass plants have all been shut down. Current power purchase prices are not sufficient to cover operations and fuel and the company has been unable to secure PPAs to continue operations, says James Regan, spokesman for Covanta in Morristown, New Jersey. &ldquo;We will continue to evaluate their future, but [only] getting a PPA at the right price will enable us to operate,&rdquo; Regan says.&nbsp; Clock is Ticking The California legislature can appropriate greenhouse gas (GHG) reduction funds, says Kelly Covello, president of the Almond Hullers &amp; Processors Association in Ripon. But the utilities still need to sign contracts, the California Public Utility Commission needs to approve them and a mechanism to get the funds passed through to the utility needs to be created, she says.&nbsp; Finally, to benefit ag and almond growers, the contracts and funds need to flow to the plants that are located in or near the valley to take ag biomass material, Covello says. The AHPA has developed a coalition of biomass producers, forestry professionals, urban waste collectors, agricultural entities and city sanitation district advocates to develop a strategy to address the immediate crisis and build a model for a sustainable biomass industry, according to Covello, but chipping rates have already increased from $350 per acre to over $1200 per acre. &ldquo;Ultimately, we will not know until the governor signs the state budget in June if PPAs will be signed and what the details will be,&rdquo; she says. Unfortunately, that may be too late for many operators. &ldquo;If we are unable to reach agreement on an extension to our fixed energy price, the plant would most likely shutdown this summer,&rdquo; says Spurlock.&nbsp; &ldquo;Current SRAC (short-run avoided cost) pricing would not even cover the cost of the plant&rsquo;s fuel.&rdquo; That means this summer, prices Spurlock would be offered for the plant&rsquo;s power could drop to as low as 3 cents per KWh. &ldquo;If that happens, we would no longer be able to supply wood to the Rio Bravo plant at the equivalent of 3 cents per KWh,&rdquo; says Harley Phillips, tipping manager with Wilson Ag in California&rsquo;s Central Valley. Phillips says the only alternative would be to raise the price for taking out orchard residues to the point where it would not be economically feasible for the growers. &ldquo;If all of this happens, we&rsquo;re going to have to develop something else to do with this wood,&rdquo; he says. &ldquo;We&rsquo;re trying to see how much can be incorporated back into the ground in the orchard where it came from.&rdquo;&nbsp; Disposal of Mounting Biomass Further north in Chico, Tim Lynch of Agra Marketing Group, an ag waste fuel supplier, also says if nothing changes soon, his company will be in dire straits this summer. If these biomass plants can&rsquo;t get fair, 5- to 10-year terms on price per KWh, Lynch says, it could result in an environmental disaster. &ldquo;There&rsquo;s so many millions of tons of this material, it&rsquo;s got no place to go,&rdquo; says Lynch.&nbsp; Does this mean that the growers will go back to open burning? South of Sacramento, in the San Joaquin Valley, one of the worst air districts in the U.S., burning permits are again being issued.&nbsp; &ldquo;When they start this open burning again, the farmers are going to get blamed,&rdquo; says Lynch. The effects of California&rsquo;s four-year drought and subsequent bark beetle infestation on much of the state&rsquo;s forests, could provide a helpful reprieve from such low rates. The U.S. Forest Service estimates that more than 22 million trees have already died. And as Gov. Jerry Brown has noted, state and federal agencies are actively surveying the most hazardous forest zones in California as a target of removing such dead wood. Biomass fuel suppliers and biomass plant operators are pinning their hopes on passage of draft resolution E-4770 put forth by the California Public Utility Commission. The PUC failed to initially pass a resolution that would require three of these utilities to get some 80 percent of their biomass fuel from forest residues under threat from drought and bark beetle infestation. These new, short-term emergency PPAs would only be contracted for five years.&nbsp; Although there may be some changes in its final wording, at press time, Morris felt confident that the PUC would pass some version of its existing resolution on March 17. In part, the PUC resolution orders the utilities to hold a solicitation to contract 50 MW worth of biomass power. He says San Diego Gas and Electric will get 5 to 10 MW, and Pacific Gas and Electric and Southern California Edison will split the rest of that that allotment. Morris says the overarching goal is to keep the biomass industry operating. That means taking as much material out of those dead trees as the forest service, Cal Fire and any private landowners can produce. As Kim Carr, an assistant deputy director of the California department of forestry and fire protection (Cal Fire) explains, Cal Fire and the state&rsquo;s office of emergency services have been designated by the governor to create a task force of stakeholders to coordinate emergency protective actions and monitor ongoing conditions on this epidemic. As part of the CPUC resolution, Carr says, the utilities are to offer auctions that allow for higher power prices for existing and new facilities that use biomass from areas designated for purposes of the emergency proclamation, as high hazard zones. Rio Bravo Fresno in Fresno County is ideally located to receive fuel from three of the six county areas affected by southern Sierra tree mortality, Spurlock says. He notes that major highways run east from the city of Fresno into the mountainous areas of Madera, Fresno and Tulare County, adding that Rio Bravo Fresno is also negotiating a short-term contract with a southern Sierra biomass fuel supplier. Biomass&rsquo;s Future in California The endgame for the current crisis remains murky, but Annand hopes to eventually see federal support in the form of tax credits for at least some of these biomass facilities. But, she says it&rsquo;s unlikely to come until well after this fall&rsquo;s presidential elections. Congress and state lawmakers will need to be reminded that biomass provides much in the way of waste disposal, she adds, and that&rsquo;s not something that wind and solar can offer.&nbsp; Unfortunately, biomass is not the cheapest renewable out there, Morris points out. So the question remains:&nbsp; How can the biomass industry best be compensated for these extra services?&nbsp; In the end, if California&rsquo;s biomass industry is to continue, it will need the hallmarks of the state&rsquo;s well-earned reputation for innovation to make it so. Exactly what form such innovation will ultimately take is anyone&rsquo;s guess. But, in the long-term, it may take new more efficient technology to lower plant operating costs.&nbsp; In the short-term, survival will likely come in the form of state and federal tax credits and incentives. If California can weather the current storm, what it learns would likely have follow-on benefits that will ripple across the U.S. biomass industry as a whole. Author: Bruce Dorminey Science journalist/author brucedorminey@gmail.com Twitter:@bdorminey

STAYING ALIVE: Rio Bravo Fresno is one of only a couple dozen biomass power plants that are still operating in California, which at its peak hosted more than 60 facilities.

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FOGGY FUTURE: Rio Bravo Fresno, a 25-MW plant operating in central California, normally has all of its annual  fuel supply contracted at this time of year, but thatâ€™s not the case right now, as the near-term fate of the facility is unclear.

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TRAGEDY TO TRIUMPH: The effects of Californiaâ€™s four-year drought and subsequent bark beetle infestation on much of the stateâ€™s forests, coupled with the governmentâ€™s focus on removing the material and getting it to bioenergy facilities could p

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While California's biomass power industry continues its struggle for survival, fuel suppliers are left without a home for mounting materials. 

Staving Off a Sunset

In the first few months of 2016, Maine lawmakers and the media have shown that when the (wood) chips are down, they will rally to do everything in their power to keep plants open. Biomass currently provides 25 percent of Maine&rsquo;s total power, not just renewable electricity, and it is encouraging to see that many Mainers want to keep it that way. On Jan. 1, Massachusetts put into effect new regulations that require any biomass facility selling power on the New England grid to meet an arbitrary 50 percent efficiency standard to qualify for Massachusetts renewable energy credits (RECs). This disqualifies any standalone biomass facility without a steam host, a category into which falls the entire New England biomass fleet operating today. As a result, two Maine facilities have announced impending closure by the end of March, if the policy is not reversed. The hope is that Massachusetts will reconsider its requirement, allowing the Maine facilities to remain online. This will not happen overnight, however. In the meantime, Maine lawmakers are looking at creative measures to help fill in the gaps&mdash;supporting not only biomass, but also the loggers and other rural workers who benefit from the existence of a strong biomass market. Maine media and lawmakers have been fully supportive of biomass, going on the record for an unambiguous defense of our industry and its many benefits. Maine Gov. Paul LePage, in this year&rsquo;s State of the State letter, recognized the economic role of biomass in Maine, and later held a briefing with Maine loggers and biomass power providers to hear about the current challenges and pledge the continued help of his staff in finding a solution Some of the media stories of the past month have included: &bull; A Portland Press Herald story that explored the link between biomass and the state&rsquo;s forestry economy, with several quotes from loggers and sawmill executives on the important role biomass plays for their businesses. &bull; Several Maine newspapers ran lengthy editorials on the need to reconsider state policies that are endangering Maine biomass. On the need to prevent potential job loss, the editorial said, &ldquo;To help avoid that outcome, Maine should pursue policies favorable to biomass, even if that means marginally pushing up energy rates with above-market contracts. Any rate increase would be more than offset by the economic benefits of a homegrown energy supply that also means so much to forest products industry. &bull; Sen. Angus King, I-Maine, interviewed me for a nearly 15-minute segment on WGAN&rsquo;s &ldquo;Inside Maine,&rdquo; during which we discussed the biomass industry and the policy solutions that could help keep plants open. &bull; A Portland Press Herald op-ed by Patrick Strauch further drove home the environmental benefits of biomass, and the adverse effects of state policies that make it more difficult to use biomass as a fuel for generating power. He also recognized King and Sen. Susan Collins, R-Maine, for their carbon neutrality amendment to the Senate energy bill. It&rsquo;s not yet clear what policy solutions will result from this wave of strong biomass support being vocalized in Maine. But we know that many Maine legislators are aware of the issue and are working to find a solution. The biomass industry is highly appreciative of these efforts. &nbsp; Author: Bob Cleaves President, Biomass Power Association bob@usabiomass.org www.usabiomass.org

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In the first few months of 2016, Maine lawmakers and the media have shown that when the (wood) chips are down, they will rally to do everything in their power to keep plants open.

Biomass Power's  Momentum in Maine

Clariant honored for its sunliquid technology Clariant was honored for its innovative sunliquid technology for the production of cellulosic ethanol from agricultural residues as part of the 2015 German Innovation Prize for Climate and Environment. The biotechnological process was awarded first place in the process innovations category. Velocys appoints CEO Velocys plc has appointed David Pummell as CEO. Pummell has more than 30 years of energy and oil industry experience. Prior to joining Velocys, he served as CEO of ACAL Energy Ltd. Pummell also previously served as CEO of MAPS Technology Ltd., where he successfully commercialized the technology prior to its acquisition by GE. He also served as CEO of Ceres Power Group plc, a developer of fuel cell micro combined-heat-and-power (CHP) products for the domestic stationary power sector. Hamer, Fischbein Americas to merge operations Hamer and Fischbein Americas have announced plans to merge operations. The Hamer-Fischbein union combines almost 200 years of industrial bag closing and automated packaging experience. The company will continue to focus on its core businesses, including bag filling, bag closing, automated bagging and robotic palletizing.&nbsp; Doppstadt appoints Ecoverse exclusive distributor Doppstadt has appointed Ecoverse Industries exclusive distributor for all Doppstadt sales and rentals in California, Oregon, Washington, Arizona, Idaho, Montana and Hawaii. Ecoverse has worked alongside Doppstadt in the North American market for more than 13 years and has strong experience with Doppstadt products and their application across the market. In addition to supplying&nbsp; new machines, Ecoverse will also provide service, parts and full after-market support for all new and existing Doppstadt customers, including technician and field training to support the complete Doppstadt product range. RusForest begins operations at Russian pellet mill RusForestAB has announced the first sales from its 30,000-ton-per-year pellet mill in Magistralny, Russia. Following successful test runs in November, the company commenced production and delivery of wood pellets to its European trading partner in December.&nbsp; Stora Enso to add pellet production capacity at Sweden site Stora Enso has announced plans to invest &euro;16 million ($14.13 million) to integrate pellet production at its Ala Sawmill in Sweden. The investment will also allow the company to update its boiler at the site. Pellet production is expected to begin during the second quarter of next year. NDC Technologies delivers equipment to Zilkha&nbsp; NDC Technologies has delivered an in-process Near-Infrared (NIR) moisture monitoring system to Zilkha Biomass Energy. The system solution includes the installation of multiple NDC CM710e NIR moisture gauges with HMIs and operator workstations to better control the quality of the company&rsquo;s Zilkha Black Pellet product and to improve process performance. &nbsp; Gevo adds board member Gevo Inc. has appointed William H. Baum to its board of directors. Baum has worked in the chemical and biobased products and technology industries during his career, with a focus on business development and strategic alliances.&nbsp; He has been employed in renewable fuels and chemicals the past 18 years with Verenium Corp., Diversa Corp. and Genomatica Inc.&nbsp; Baum currently serves as a member of the board of directors of Genomatica and previously served as executive chairman of the board of Genomatica. Covanta acquires Chief Industrial Services Covanta has announced that its subsidiary, Covanta Environmental Solutions, has acquired Chief Industrial Services, a privately-held environmental services company located in Wisconsin. The acquisition will expand and complement Covanta&rsquo;s existing capabilities in the Midwest. Chief specializes in tailored non-hazardous waste management and industrial cleaning services for industrial and commercial customers in the Midwest. Air Products receives certification for biogas separation products Air Products&rsquo; PRISM Membranes division in St. Louis, Missouri, has received pressure equipment directive certification for two new sizes of membrane separators for biogas upgrading applications. This certification, from DNV GL Business Assurance Italia S.r.l., confirms that Air Products&rsquo; biogas separation products meet the European standards for design, manufacture, and safe operation of pressurized equipment.&nbsp; Solegear adds team member Solegear Bioplastic Technologies Inc. has added Brent Ostrowski as director of business development to support the company&rsquo;s 2016 office products growth initiatives. He has more than 15 years of experience in sourcing and producing exclusive branded products and packaging for major retailers Target and Best Buy.
Rentech appoints CFO Rentech Inc. has appointed Jeffrey R. Spain chief financial officer (CFO) of Rentech and the general partner of Rentech Nitrogen Partners L.P. Spain will be responsible for overseeing the finance and accounting functions for both companies. He replaces Dan J. Cohrs. Before being appointed CFO, Spain served as senior vice president of finance, accounting and administration for Rentech&rsquo;s wood fibre group. He has held various senior financial and accounting roles at Rentech since 2011, and most recently played a critical role in the financial turnaround of Fulghum Fibres. Spain&rsquo;s experience spans over 20 years and includes investment banking and operations management and chief financial officer roles. His past employers include Credit Suisse First Boston, LeadPoint Inc., eNutrition Inc. and Kimberly-Clark Corp.&nbsp;&nbsp; Director of LBNL appointed The University of California Board of Regents has approved Michael Witherell, vice chancellor for research at UC Santa Barbara, as director of Lawrence Berkeley National Laboratory. Witherell is a leading physicist with a highly distinguished career in teaching, research and managing complex organizations. He has received numerous honors and recognitions for his scientific contributions and achievements. He is the former director of the Fermi National Accelerator Laboratory in northern Illinois and currently holds the presidential chair in Physics at UC Santa Barbara. BioAmber earns certifications for Sarnia plant BioAmber Inc. has announced that its Sarnia, Ontario, production plant, jointly owned with Mitsui &amp; Co., has received ISO 9001, ISO 14001, OHSAS 18001 and FSSC 22000 certifications.&nbsp; These certifications were granted by accredited certification bodies following audits of the Sarnia plant during the fourth quarter of 2015. By achieving these certifications, BioAmber has demonstrated its commitment to enhancing customer satisfaction through the implementation of an integrated management system.&nbsp; BioAmber has put in place processes that ensure continual improvement and conformity to customer, statutory and regulatory requirements.&nbsp; Metabolix relocates headquarters&nbsp; Metabolix Inc. has signed a 10.5-year lease agreement for 30,000 square feet of state-of-the-art laboratory and office space in Woburn, Massachusetts. Metabolix expects to take occupancy of the space as its corporate headquarters in June as it exits space in Cambridge, Massachusetts. Metabolix also plans to exit office space it currently occupies in Lowell, Massachusetts, in May 2017 and to consolidate its biopolymers sales, marketing and administrative offices and biopolymers research and development laboratories in the Woburn facility. The new laboratory facilities will include a microbial fermentation lab and an expanded biopolymers applications development lab.&nbsp; Pending the spinout of its Yield10 crop science program, Metabolix will also relocate its Massachusetts-based crop science laboratory and personnel to the facility in Woburn. Dale honored for work in biological engineering The American Institute for Medical and Biological Engineering has announced the induction of Bruce Dale, Michigan State University professor of chemical engineering and materials science, to its College of Fellows. Dale was nominated, reviewed and elected by peers and members of the College of Fellows for outstanding contributions in the biological engineering of transforming plant biomass to food and fuel to achieve a sustainable bioeconomy. The College of Fellows is composed of the top 2 percent of medical and biological engineers in the country. AIMBE&rsquo;s mission is to recognize excellence in, and advocate for, the fields of medical and biological engineering in order to advance society. SBP appoints CEO The Sustainable Biomass Partnership has appointed Carsten Huljus as CEO. Huljus is experienced in forest management and chain of custody certification schemes. As CEO, he will be responsible for the leadership and management of SBP, including engagement with its many stakeholders, such as biomass supply chain actors, policy makers and environmental NGOs. The current executive director, Peter Wilson, will take up the new post of standards director with Simon Armstrong continuing as technical director. Biogas expert recognized&nbsp; Abraham Engeda, a professor of mechanical engineering at Michigan State University, is one of 10 professors worldwide to earn the Fulbright Global Flex Award. He will use the award to support two years of power-generation research in remote parts of China and Ethiopia. The Fulbright Global Flex Scholars Award is funded by the U.S. Department of State. It helps U.S. academic and professional experts engage in regional or transregional research and teaching through visits to multiple countries. Engeda is an expert in turbomachinery, including power plant cooling, experimental thermofluids, turbomachinery flow analysis and design, gas turbine and biogas. He is a fellow of the American Society of Mechanical Engineers and a recipient of the ASME Fluid Machinery Award. Floreat Group launches company specializing in biomass Floreat Group has committed $50 million to the U.K. biomass sector and launched FCM Bioenergy Ltd., trading as Vesta, an energy supply company specializing in providing low-cost, long-term green energy contracts using biomass to the manufacturing, agriculture and care home sectors. The venture will be funded through a mixture of equity and debt, all funded privately by the group.

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Business Briefs

At press time, registrants from 25 countries were signed up for this year&rsquo;s International Biomass Conference &amp; Expo. Last year, recognizing that as the companion issue for the event, our coverage in the April issue of Biomass Magazine should examine the global nature of the industry, so we fixed our editorial gaze on import and export stories. This year, we returned to that same theme, and have found that the biomass market is very much global, both in the nature of its opportunities and its participants. This quarter&rsquo;s Biomass Construction Update, on page 14, is a rich illustration of the global nature of this business. A careful examination of the 22 projects featured in the update make it clear that foreign marketplaces ultimately lead to installed production capacity stateside. Projects not generating energy products for foreign markets still leverage a global knowledge base, deploying technologies developed outside of the U.S. The impact of a growing industrial wood pellet market is easy to see in projects like Colombo Energy in South Carolina, Blue Sky Biomass in Georgia, and Highland Pellets in Arkansas. In other projects, technologies and expertise are tapped instead of markets. A German engineering and construction has been hired to build a biomass power plant in Hawaii. An Italian firm is the technology provider and constructor for two North American biogas plants, a relationship that Katie Fletcher highlights in her page-52 biogas feature &ldquo;Growing the Local Home Base.&rdquo; Underpinning, and often complicating, all of this is policy. This issue&rsquo;s stories make it clear that while foreign policies, as well as state policies such as those explored in Senior Editor Ron Kotrba&rsquo;s page-62 story, &ldquo;Importing to Meet California Demand,&rdquo; successfully generate real opportunities for domestic producers, they also bring increased foreign interest and competition. Kotrba&rsquo;s story makes it clear that California&rsquo;s Low Carbon Fuel Standard has led to a dramatic increase in the state&rsquo;s biodiesel consumption. In just four years, it has grown 20-fold, and the state&rsquo;s inclusion rate, once nominal, now rivals Minnesota and Illinois at just less than 10 percent. Still, biodiesel producers in the U.S. often find themselves outside of this rapidly-growing marketplace, watching foreign producers from Argentina and Singapore capture a sizeable portion of that state&rsquo;s market. The dynamics Kotrba outlines in his story are playing out across this industry in every segment. Meanwhile, governments continue to wrestle with policies that deliver the environmental benefits for which they were devised, while also keeping an eye on domestic economic development and maintaining a favorable trade balance.
&nbsp;
Author: Tim Portz Vice President of Content &amp; Executive Editor tportz@bbiinternational.com

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A Delicate Balance 

The U.S. imported a record volume of biomass-based diesel in 2015. Imports of biodiesel and renewable diesel soared to an estimated 670 million gallons in 2015, up from 510 million gallons in 2014, according to U.S. EPA data. This increase in imports is particularly interesting because 2015 was a year with no forward-looking $1-per-gallon blender&rsquo;s tax credit, and, for 11 months of the year, no RFS targets were in play. In 2013, however, an increased RFS mandate over 2012 coupled with a forward-looking tax credit made for another record year of imports. Nearly 350 million gallons biodiesel entered the U.S. in 2013, and more than 200 million gallons of renewable diesel from Neste Corp.&rsquo;s Singapore production facility alone entered U.S. ports. That&rsquo;s according to Susan Olson, who leads the ag and biofuels division at Genscape Inc., which hosted a webinar March 3 titled &ldquo;Impacts of International Trade on the U.S. Biofuels Market.&rdquo; U.S. production in 2015 remained flat at about 1.42 billion gallons, compared with around 1.47 billion gallons in 2014 and 1.50 billion gallons in 2013. Olson says biodiesel imports to the U.S. have been much more substantial since 2013. &ldquo;The core factors influencing this are RFS increases, California&rsquo;s Low Carbon Fuel Standard, foreign exchange rates and the existence&mdash;or nonexistence&mdash;of the blender&rsquo;s tax credit,&rdquo; she says. In 2013, imports saw a big jump, from less than 50 million gallons in 2012 to nearly 350 million in 2013. The make-up of countries exporting biodiesel to the U.S. has changed since 2013, too. Argentina and Canada have increased their flows while the EU is not exporting much to the U.S. at all now, Olson says. U.S. imports are expected to grow even more this year over 2015&rsquo;s record volumes, Olson says, primarily because of the forward-looking tax credit that is in effect through the end of this year, and the additional 170 million gallons of biomass-based diesel growth in RFS volume obligations. Olson adds that diesel prices continue to be too low for exports from Argentina to North Africa to be economical, and entrants into the CARBIO survey program&mdash;an EPA-approved alternative feedstock tracking mechanism for RFS registration to generate RINs&mdash;have implemented the program over the past year. Imports from Argentina are expected to increase by 20 to 25 percent in 2016, totaling upwards of 240 million gallons this year, Olson says. She adds, however, that Argentina&rsquo;s recent increase in export taxes is worth watching, as it could affect projected volume increases. Matthew Stone, managing director of Prima Markets, provides some perspective to the Argentinian export tax hike. He says the Argentinian government caused a lot of confusion by mistakenly publishing a tenfold hike in the biodiesel export tax in its official journal following the Oct. 25 election. &ldquo;In actual fact,&rdquo; Stone says, &ldquo;biodiesel export taxes were actually reduced to zero through November and December from 3.31 percent in October, rising to 1.69 percent in January and 3.89 percent in February.&rdquo; At press time, Argentina raised export taxes yet again, from 3.89 to 6.4 percent through March. As to why Argentina did this, Stone says, &ldquo;They are balancing their ambition to turbocharge Argentina&rsquo;s agriculture-based exports against the need to keep cash rolling into the treasury coffers.&rdquo; He says so far this uptick in export taxes from 1.69 percent in January to 6.4 percent through March has increased costs by $35 a ton, or nearly 12 cents a gallon. Of 2015&rsquo;s 670 million gallons of imports, a majority of those specific biodiesel volumes entered the U.S. through the Gulf Coast, followed by the East Coast, then into California and on through the Midwest via Canada. The California Market The carbon market developing in California as a result of AB 32 (The Global Warming Solutions Act of 2006) and LCFS is a pioneering achievement, one only rivaled by Germany, Stone says. &ldquo;The transition toward carbon savings is the main justification for biofuel&rsquo;s existence,&rdquo; says Stone, who gave a presentation at the 2016 National Biodiesel Conference &amp; Expo in Tampa, Florida, titled, &ldquo;Global Biodiesel: Preparing to Cut Carbon.&rdquo; Stone highlighted California and Germany as two unilateral carbon pioneers, and he said carbon will be the main driving force of this industry moving forward. The LCFS was readopted in 2015, and legacy pathway and carbon intensity (CI) values associated with the various feedstocks for biodiesel and renewable diesel will expire Dec. 31, according to Shelby Neal, director of state governmental affairs for the National Biodiesel Board. &ldquo;California Air Resources Board is doing things differently now,&rdquo; Neal says. &ldquo;Before, it had default pathways, but now every producer goes in and enters their own numbers, and each fuel has its own CI.&rdquo; This new approach takes more variables into account, such as individual processing techniques and transportation, to name a few. &ldquo;Having said that,&rdquo; Neal says, &ldquo;they do have reference values because people want an idea of what it is, but these are generally worst-case scenarios.&rdquo; Soy, canola and distillers corn oil biodiesels were the most affected by the changes; soy and canola CI reference values improved compared to their previous CIs&mdash;moving from 83.25 to 51.83 and 62.99 to 50.23, respectively&mdash;while distillers corn oil increased significantly from a CI of 4 to 28.68. Tallow also improved from 40.18 to 32.83. Used cooking oil increased slightly from 18.44 to 19.87. &nbsp;&ldquo;California is the only market in the U.S. at the moment that allows producers to differentiate pricing based on the carbon credentials of their product, and this has already had a tangible effect on import flows,&rdquo; Stone says. &ldquo;This is something that&rsquo;s going to develop this year, and we can take away lessons as to how to develop and gain insight into wider U.S. and overseas markets as policy develops to carbon savings. This is a trend producers are well-advised to get ahead of.&rdquo; Biomass Magazine caught up with Stone and Prima Markets&rsquo; analyst Heather Zhang after the NBC in Tampa, Florida, to further discuss the California market, which Stone calls &ldquo;red hot&rdquo; right now. Though biodiesel and renewable diesel imports to California in 2015 are rather anticlimactic compared to overall U.S. imports, Zhang says they are on the rise and expected to grow in coming years. Zhang says biodiesel imports in 2015 topped out at 44.6 million gallons, 4.6 million of which were from Argentina. According to Stone, California imported slightly more than 32 million gallons of biodiesel in 2014. &ldquo;Argentina is not really relevant as a supply source to the LCFS biofuel economy at present because none of the pathways registered under CARB is from Argentina, to the best of my knowledge,&rdquo; Zhang says. &ldquo;That means Argentine biodiesel consumed in California can&rsquo;t be counted toward LCFS offsets.&rdquo; Stone says unless Argentinian biodiesel producers successfully register under CARB, he doesn&rsquo;t expect the volume to go up. &ldquo;Inflows will be restricted to just occasional shipments, perhaps to plug some shorts or because of other logistical issues,&rdquo; he says. Of the 40 million gallons of biodiesel that can generate LCFS credits, Zhang says 20.4 million gallons came from Korea, 18 million from Canada and 1.5 million from Taiwan. &ldquo;These volumes represent material declared customs cleared at California ports,&rdquo; Zhang says. &ldquo;So the figures don&rsquo;t necessarily mean these volumes have actually been sold for consumption within California, especially the Argentina portion. We estimate, however, that most of the biodiesel imported into California ends up being consumed in-state excluding Argentina biodiesel.&rdquo; The import volumes to California provided by Genscape via Olson are more robust than Zhang&rsquo;s and Stone&rsquo;s. &ldquo;Our independent access to customs records and proprietary ship tracking indicate 56 million gallons of biodiesel imported to California,&rdquo; Olson says. &ldquo;These shipments came from Canada, South Korea and Argentina.&rdquo; The conversion factor used is 300.8 gallons per metric ton. &ldquo;For biodiesel, the things to watch are additional shipments from South Korea and potential movement of biodiesel into California from Argentina,&rdquo; Olson says. In addition, she points out that a new, RFS-qualified biodiesel producer in Hong Kong just registered in February. The company is ASB Bio-Diesel Hong Kong, and it carries a 30 MMgy production capacity. &ldquo;New producers registering for LCFS is a trend we are tracking,&rdquo; Olson adds. California imported nearly 126 million gallons of renewable diesel in 2015, up from about 107 million gallons in 2014, Stone says. Again, Genscape&rsquo;s figures on renewable diesel imports in 2015 are higher than Prima&rsquo;s, as Olson says 164 million gallons entered California ports last year. &ldquo;These shipments all came from Neste&rsquo;s Singapore facility,&rdquo; Olson says, adding that the conversion factor used for renewable diesel is 339.3 gallons per metric ton. &ldquo;The majority of renewable diesel product we get into the U.S. is from Neste&rsquo;s Singapore plant. Seventy-nine percent of renewable diesel imports from Singapore enter California ports. Neste is definitely taking advantage of the LCFS credit, as well as RINs and the blender&rsquo;s tax credit.&rdquo; She says if additional waste feedstock or new qualified feedstock streams become available for renewable diesel production in Singapore, there would be an increased potential for qualified LCFS deliveries to California in 2016. &ldquo;We&rsquo;re continuing to monitor deliveries on a weekly basis as the year continues,&rdquo; Olson says. Neste is currently the only source of renewable diesel imports to the U.S., and its financial reporting indicates the renewable diesel production capacity utilization rate at its three facilities (two in Europe and one in Singapore) is 94 percent, meaning there&rsquo;s not a lot of room for production supply increases. However, as Olson points out, the company&rsquo;s 2015 split for product sales was 31 percent to North America and 69 percent to Europe, with a 4 percent shift toward North America from 2014 to 2015. With the forward-looking federal blender&rsquo;s credit, increased RFS volume obligations and higher LCFS GHG reduction requirements pushing up carbon credit prices, Olson says the economics could shift more product to the U.S. When Neste was asked whether the company will shift shipments from Europe to North America to take advantage of the favorable economics currently in play, Osmo Kammonen, senior vice president of communications and brand marketing for Neste, responded, &ldquo;Our first priority is take care of our customer commitments. With the rest of the volumes, we look for the best market at any given time. Therefore, it is difficult to predict the shifts between markets.&rdquo; Consumption of both biodiesel and renewable diesel in California topped out at an estimated 285 million gallons, according to Neal, who adds that CARB&rsquo;s final numbers on this aren&rsquo;t out yet. &ldquo;California is really kind of a microcosm of the national picture,&rdquo; he says. &ldquo;From a volume standpoint, it&rsquo;s been a really positive, impressive picture. California consumption has gone from 14 million gallons in 2011 to 285 million gallons in 2015. Do the math on that and we&rsquo;ve gone from a decimal point to 8 or 9 percent of diesel fuel in California, which is probably the third-highest blend rate in the country behind Illinois and Minnesota.&rdquo; In-state production of biomass-based diesel in California last year topped off at around 33 million gallons, or just 12 percent of demand. &ldquo;We are enjoying the environmental benefits of the LCFS, but the vast majority of the economic benefit is being enjoyed by South America, Asia and other parts of the United States,&rdquo; says Jennifer Case, president of San Diego-based New Leaf Biofuel and chair of the California Biodiesel Alliance. Brazilian Sugarcane Ethanol The discussion on imports of advanced biofuels into California would not be complete without highlighting the importance of Brazilian sugarcane ethanol to meeting the LCFS mandate. According to Will Martin, lead ethanol analyst at Genscape, CARB plans on a lot of Brazilian ethanol hitting the ports. &ldquo;It&rsquo;s how they plan on meeting the mandate initially,&rdquo; he says. Overall, ethanol imports into the U.S. are relatively small at less than of 1 percent of consumption, Martin says. According to Martin, California received a considerable amount of Brazilian ethanol in the latter part of 2015, which coincides with a dramatic increase in LCFS credit prices. &ldquo;We&rsquo;ve seen them jump from $40 to $120 already,&rdquo; Martin says. &ldquo;So there&rsquo;s the potential for a lot more imports into California. That&rsquo;ll be one of the major factors looking toward 2016&mdash;are those LCFS credit prices going to keep encouraging imports into California? Right now, it&rsquo;s unclear whether that arbitrage window is still open, just based on how much more expensive Brazilian ethanol is at the moment. And who knows where LCFS credit prices are going?&rdquo; Stone says last July the price was about $50, after spiking from the $20s in June. &ldquo;The readoption of the LCFS scheme confirmed the need for obligated parties to secure tickets against their carbon offset requirements over the next few years,&rdquo; Stone says. &ldquo;The compliance scheme is set to get steadily tougher, stoking a scramble for short covering against pending offset obligations. Given the ticket scheme is currently price-capped at $200, some participants were scrambling to secure tickets at lower prices to offset their obligation given fears that the price spiral would soon send ticket prices toward the cap.&rdquo; From Q2 through Q4 2015, three California ports&mdash;Los Angeles, San Francisco and Carquinez Straight&mdash;imported a total of more than 40.6 million gallons of Brazilian ethanol, according to Martin. &ldquo;A major player in this is the LCFS market and the price of those credits,&rdquo; Martin says. Stone adds that the Brazilian domestic ethanol price is high compared with low U.S. domestic prices. &ldquo;The price relationship between the U.S. and Brazilian markets might start to change when the new Brazilian sugar crop harvest gets into full swing from April, and supply starts to reemerge,&rdquo; Stone explains, adding that most of the LCFS market is expecting ticket prices to continue rising. &ldquo;California has sufficient sources of supply to cover immediate requirements, but the market is not likely to become oversupplied because it is faced with sharp rises in yearly compliance,&rdquo; he says. Foreseen Growth The new LCFS implementation schedule is less linear and more like a hockey stick, so demand for advanced biofuels will pick up increasingly through 2020. In 2015, a 1 percent reduction in GHGs from transportation fuels was required; in 2016, this is doubled to 2 percent; in 2017, it moves to 3.5 percent; in 2018, the reduction requirement is 5 percent; in 2019, the target is 7.5 percent; and finally, in 2020, a 10 percent reduction in GHGs from transportation fuels must be met. According to Neal, CARB laid out what it calls &ldquo;illustrative scenarios&rdquo; on what sort of biodiesel and renewable diesel demand this stepped increase in GHG reductions might provide. CARB&rsquo;s illustrative scenario is 379 million gallons for 2016; 460 million gallons for 2017; and 785 million gallons for 2023. &ldquo;Five years ago, in-state production was just 3 million gallons a year,&rdquo; Neal says. &ldquo;Then, last year, it was above 30 million gallons. On a percentage basis, that&rsquo;s a tenfold increase in five years. In-state capacity is now 75 MMgy.&rdquo; He says the LCFS never really took off like people thought. &ldquo;People made investments and they thought it would be smooth, but it got stuck in neutral for a few years. This had a significant effect on our members. Now, implementation is going well, the lawsuits have been dealt with and the future is more certain. But we&rsquo;re facing an onslaught of imports. The dollar is strong, there&rsquo;s weak demand in China and India for diesel, we have robust RIN and LCFS prices, and the blender&rsquo;s tax credit. Add all those up and it makes sense why California is swamped with foreign product.&rdquo; Neal says restructuring the federal biodiesel and renewable diesel blender&rsquo;s tax credit to a producer&rsquo;s credit &ldquo;would go a long way in straightening out this issue.&rdquo; Domestic product still has the advantage, he says, and there is a lot of growth to be had in California. &ldquo;The LCFS scheme should start altering feedstock pricing patterns in the U.S. to reflect the advantage that low carbon waste fuels in particular enjoy under the LCFS program relative to the feedstock-undifferentiated RFS program,&rdquo; Stone says. &ldquo;To an EU observer used to higher prices for waste fuels than those for agriculture-based fuels, it makes little sense to see low carbon waste feedstock such as corn oil price at a discount to soybean oil, although this is quite natural given the format of the RFS program. The uptake of LCFS-style schemes in neighboring states and Canadian provinces will accelerate this trend.&rdquo; Author: Ron Kotrba Senior Editor, Biomass Magazine 218-745-8347<a style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" title="Call: 218-745-8347" href="#"><img style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" title="Call: 218-745-8347" src="data:image/png;base64,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" alt="" /></a> rkotrba@bbiinternational.com

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IMPORT UPTICK: Imports of Brazilian sugarcane ethanol, an advanced biofuel, rose significantly in the second half of 2015, which coincided with a sharp rise in LCFS credit prices.

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Increased reductions of greenhouse gas emissions from transportation fuels required by California's Low Carbon Fuel Standard are driving up carbon credit prices, demand for advanced biofuels and imports. 

Importing to Meet California Demand

Last year saw record markets for advanced biofuels in the U.S., where expansion is continuing, thanks in large part to the stabilization of the renewable fuel standard. But a troubling trend is emerging: growing imports of foreign fuels that undercut our U.S. industries. The 2015 year-end figures demonstrate biodiesel&rsquo;s rising popularity and its continued success as America&rsquo;s first and only U.S. EPA-designated advanced biofuel to reach commercial-scale production nationwide. The U.S. biodiesel market reached nearly 2.1 billion gallons, or more than 5 percent of the 30 billion gallon on-road diesel market. With room to grow, our domestic production capacity currently sits at more than 3.2 billion gallons. But the trend over the past several years has been exponential growth of foreign imports of biodiesel and renewable diesel. Noticeable volumes of foreign imports of biomass-based diesel into the U.S. began in 2011, with just under 50 million gallons, and have grown to over 670 million gallons. Many of these gallons receive government support from programs in their home countries before departing for our shores, where they then double dip into our domestic programs like the biodiesel blender&rsquo;s tax incentive. This has had a major impact on our domestic market conditions, as our producers are not only competing with historically low petroleum prices, but also now against already subsidized, foreign-produced biodiesel and renewable diesel. One of the National Biodiesel Board&rsquo;s top priorities this year is to reform the $1-per-gallon biodiesel tax incentive from a blender&rsquo;s credit to a production credit. This is a change that would focus U.S. tax dollars on U.S. economic activity. The change would also save taxpayers an estimated $90 million annually, according to the Joint Committee on Taxation. This simple change would go a long way toward relieving the current imbalance of cost-competitiveness among domestic and imported fuels, while saving U.S. taxpayers significantly. The effort to move to a production credit has been in the works for several years. The cause gained significant momentum last year when Sens. Charles Grassley, R-Iowa, and Maria Cantwell, D-Washington, and Reps. Kristi Noem, R-South Dakota, and Bill Pascrell, D-New Jersey, introduced legislation in Congress. The bill gained significant support, but didn&rsquo;t pass after Congress let tax issues slip late into the year and passed a straight-line renewal of expired tax provisions. This included extending the biodiesel tax incentive as a blender&rsquo;s credit retroactively for 2015, and forward through 2016. Restoring the tax incentive supports jobs and economic activity at biodiesel plants across the country, but the impact won&rsquo;t be as strong as it could be, because the extension continues to allow foreign biodiesel to qualify for the incentive. We are already seeing a shrinking legislative calendar this year, as the politics of a heated election season takes center stage. But with strong industry champions in both the House and Senate from both sides of the aisle, and with a commonsense reform as our goal, our industry is in a good position. The U.S. biodiesel industry needs an equal playing field in the market, and the change to a producer&rsquo;s tax credit will restore market balance. NBB and biodiesel supporters will continue to advocate for the change, as the industry has proved that it can successfully increase biodiesel volumes year to year. The biodiesel industry has been tremendously successful in reducing emissions and diversifying our fuel supply. This simple change to the structure of how the tax credit is administered will ensure that the success continues and that we don&rsquo;t miss an opportunity to lead that growth from right here at home by supporting our own American industry. Author: Anne Steckel Vice President of Federal Affairs, National Biodiesel Board asteckel@biodiesel.org www.nbb.org l www.biodiesel.org

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Last year saw record markets for advanced biofuels in the U.S., but foreign biodiesel imports have had a major impact on domestic market conditions.

Leveling the Playing Field For  US Advanced Biofuel Producers

At the end of 2014, the European Biogas Association reported Europe had 17,240 biogas plants, with a total installed capacity of 8,293 MW, in its 2015 statistical report on the European anaerobic digestion (AD) industry and markets. The number of biogas plants represented an 18 percent growth over 2013, and certain European countries boasted rocketing growth rates, such as the U.K., where the number of biogas plants doubled to 813 in just one year. The report quantifies the total amount of electricity produced from biogas at 63.3 terawatt-hours, which corresponds to the annual consumption of 14.6 million European households. These stats alone demonstrate the European biogas industry is mature. Near the end of 2014, the USDA, U.S. EPA and U.S. DOE reported the U.S. had more than 2,000 sites producing biogas in the 2014 Biogas Opportunities Roadmap. The roadmap found that more than 11,000 additional biogas systems could be deployed in the U.S., producing enough energy to power more than 3 million American homes and reduce methane emissions equivalent to 4 to 54 million metric tons of greenhouse gas emissions (GHG) in 2030. The U.S. biogas industry is young, but has the potential to mature to Europe&rsquo;s industry standard with the right support. Will the U.S. work to reach its potential by sourcing technology providers and contractors here, with their boots already on the ground, or look toward their European counterparts who, due to the right market conditions, have successfully brought the biogas industry to where it is today? Resourceful Competitor European biogas expertise and technology have made their presence known in North America. Projects like Blue Sphere Corp.&rsquo;s under-construction AD projects in Charlotte, Virginia, and Johnston, Rhode Island, utilize the Italian company Austep S.p.A. as the project&rsquo;s technology provider and engineering, procurement and construction (EPC) contractor. Southern California-based CR&amp;R, a recycling and waste collection company, decided to implement German-based Eisenmann&rsquo;s biogas technology for its multiphase biogas-to-fuel project in Perris, California. Project developers and technology providers in the U.S. believe there is a place for companies both foreign- and domestic-based North America, and as the industry matures, opportunity for the local biogas home base to grow will become great. &ldquo;There are more opportunities to do projects in the biogas space than can ever be exhausted in our lifetime or our children&rsquo;s lifetimes,&rdquo; says Caroline Henry, vice president of marketing with quasar energy group. &ldquo;While we do compete with both U.S. and European digester technologies to secure new projects, there are more than enough opportunities for everyone to be successful.&rdquo; Based in Cleveland, Ohio, quasar is a renewable energy and organics management firm that specializes in the deployment of sustainable technology solutions in agricultural, municipal and industrial applications. According to Henry, quasar has designed, engineered and constructed 14 AD facilities across four states&mdash;Ohio, New York, Massachusetts and Maine&mdash;with a combined capacity to annually process over 800,000 wet tons of organic material and generate 80,000 megawatt hours (MWh) of electricity per year. &ldquo;As technology providers operating in a new frontier, we need to see each other as resources rather than competitors,&rdquo; Henry says. &ldquo;The American Biogas Council has taken on the role of uniting the biogas industry under a central banner and mission.&nbsp;&nbsp; Under its leadership, competitors collaborate to advocate for the collective benefit of the industry.&rdquo; Tried-and-True, Too Wisconsin-based DVO Inc. has a patented digester design that was first deployed in 2001. Since then, Melissa VanOrnum, marketing manager with DVO, says the company has installed over 100 digesters at over 80 sites in 17 states, and has a handful of others outside the U.S. including Siberia, China, Chile and Canada. The company has about 10 other projects currently under construction and a contract for a project in Korea. DVO specializes in industrial and agricultural digesters, which collectively produce over 75 MW of renewable power. &ldquo;Our technology is tried-and-true,&rdquo; VanOrnum says. &ldquo;We actually find we compete very well with European systems, on a cost basis, on an OEM basis and on a production basis.&rdquo; The company trademarked the two-stage, mixed plug-flow digestion system design. According to DVO, traditional European above-ground digesters have three primary drawbacks. The first is no guaranteed retention time, because sometimes not all the waste is in the digester long enough for complete digestion to occur, leaving both energy and pathogens in the waste. Another drawback DVO identifies with above-ground, upright tank solutions is difficulty in maintaining consistent temperatures. In a mixed digester, since the digester is exposed to extreme heat and cold through the year, from both internal waste inputs and weather conditions, it&rsquo;s hard to operate at peak efficiency. The last drawback DVO identifies is the amount of parasitic loading required to move the machinery in a mixed digester, so there is less power to export or sell. VanOrnum adds that the markets are completely different in Europe. &ldquo;We have people who we work with who won&rsquo;t look at European systems, because they were developed in a very different market, and in a lot of cases, they weren&rsquo;t developed to handle the heavy-strength waste that we have here in the U.S. on large farms,&rdquo; she says. &ldquo;There are a lot of digesters in Europe, but that doesn&rsquo;t mean that only good digesters come out of Europe.&rdquo; CleanWorld joins the other U.S.-based biogas companies like DVO and quasar that provide technology to the market. So far, CleanWorld is solely working in California, with three commercial digesters in Davis, Natomas and Sacramento, but according to Ethan Hanohano, who works on feedstock procurement and business development for the company, they are looking to expand soon, when the appropriate project becomes available. &ldquo;CleanWorld initially licensed the technology from Professor Ruihong Zhang of University of California, Davis,&rdquo; Hanohano says. &ldquo;The goal was to create commercial-size anaerobic digesters. While anaerobic digestion has been relevant in Europe for a long time, CleanWorld's initial goal was to become the first high-solids anaerobic digestion technology company in the U.S.&rdquo; The company&rsquo;s technology is a three-stage proprietary digestion process, which allows digesters to accept feedstock with up to 50 percent solids content. Hanohano says although he believes there is quite a bit of technology in the market created outside of the U.S., being based in the states has its advantages. &ldquo;Being U.S.-based and using multiple U.S.-based pieces of equipment allows CleanWorld to build digesters in record time,&rdquo; he says. &ldquo;This also means we have very quick turnaround on replaceable parts.&rdquo; Overall, many stateside biogas technology providers pride themselves on sourcing domestically. &ldquo;We maintain our dedication to sourcing components in the U.S.,&rdquo; Henry says. &ldquo;We continue to refine and enhance our systems as we learn and grow.&rdquo; Whereas quasar&rsquo;s and DVO&rsquo;s technology has a core presence in the agricultural sector, CleanWorld focuses on food waste. &ldquo;There seems to be quite a bit of competition for farm-based or dairy manure digesters,&rdquo; Hanohano says. &ldquo;Food waste digesters, like the ones CleanWorld owns and operates, are rare. This is most likely due to the difficulty in locking down food waste contracts.&rdquo; North American renewable energy project developer Harvest Power, has also tapped into the food waste arena, and Ashwani Kumar, who helps oversee project development and engineering for Harvest Power, believes the AD technology itself is not a problem for the North American biogas sector, it is other project hurdles that have to be overcome. &ldquo;The challenge&nbsp; has always been preprocessing, which is fairly unique to every situation, it&rsquo;s also digestate management, how you handle the gas, how you meet local regulations,&rdquo; he says. &ldquo;A lot of local expertise is needed&mdash;local engineering, local project development expertise&mdash;so the limitation is not the technology. I think the limitation is the understanding and having the right project development skills, which is a big hindrance in the U.S. market.&rdquo; According to Kumar, today, the U.S. spends $218 billion&mdash;1.3 percent of gross domestic product&mdash;on growing, processing, transporting and disposing of food that is never eaten, most of which goes to a landfill. This is why Harvest Power began working toward a solution. The company has developed three &ldquo;energy gardens&rdquo; in Richmond, British Columbia; London, Ontario; and Orlando, Florida, as well as a pipeline projects in California that will handle food waste scraps coming from northern part of the state. Kumar says Harvest Power is involved in technology evaluation for its projects, but selects an experienced general contractor who is responsible for its construction and making sure the system delivers the performance. The high-solids AD technology provider for the Richmond energy garden is German-based GICON. Other contractors they&rsquo;ve worked with have included foreign technology partners Global Water &amp; Engineering based in Belgium and Entech Renewable Energy Solutions out of Australia. Kumar says they mainly partner with North American construction and engineering companies on their projects, and a majority of the components associated with their development are sourced domestically. An example Kumar provided is the company&rsquo;s project in California. He highlighted four key components to the project including preprocessing, the digester, digestate handling and gas handling. He said that of those four components, only the digester came from Germany and, even within the digester technology, much of the hardware was sourced from North America. &ldquo;I would say as North America has has adapted these technologies, the European content has reduced a lot,&rdquo; Kumar says. &ldquo;There is no core competence that cannot be replicated in North America.&rdquo; Roadmap to Realization&nbsp;&nbsp;&nbsp;&nbsp; It&rsquo;s evident foreign-based biogas companies have found success in the North American biogas sector, and many abroad see further market opportunity here. &ldquo;European technology providers see America as a virgin market,&rdquo; Kumar says. &ldquo;What they don&rsquo;t understand is the challenges&mdash;the policy challenges, permitting challenges, the project financing challenges&mdash;that the U.S. faces, they are very different than the European ones.&rdquo; The biggest challenge Kumar perceives with food-based AD project development in the states is the project financing risk. &ldquo;What the financing community needs is inherently missing in these kinds of projects,&rdquo;&nbsp; he says. &ldquo;They don&rsquo;t have long-term feedstock and off-take contracts, the technology risk is high, as these are not repeatable and kind of unique in each case, and there is no infrastructure to support these projects.&rdquo;&nbsp; Kumar adds, &ldquo;These are challenges that do not exist in Europe because there is a lot of organic support that has mushroomed up around these projects. The government provides long-term power purchase agreement, and feedstock support for some of these projects to be financially viable.&rdquo; Another difference Kumar references between European biogas project development and North American is digestate handling. Kumar believes digestate waste fertilizer should be listed under the USDA National Organic Program in order to receive organic certification. &ldquo;It&rsquo;s a nutrient, but right now it&rsquo;s not handled right, and digestate is a big challenge in North America, but it&rsquo;s not a concern in Europe. Nearly every digester applies it on the land there, and here you have to treat it.&rdquo; Although Europe has support mechanisms that allowed the biogas market there to grow, the U.S. has made strides in the past few years to help move the industry forward. In June 2013, President Obama directed the administration to develop a strategy to reduce methane emissions and ultimately grow the biogas energy industry through his Climate Action Plan. Since then, the Biogas Opportunities Roadmap was created to build on progress made to date. It outlines voluntary actions that can be taken to reduce methane emissions through the use of biogas systems and outlines strategies to overcome barriers limiting further expansion and development of a robust biogas industry in the U.S. The EPA&rsquo;s AgSTAR helps promote the use of biogas recovery systems at livestock operations, and the EPA&rsquo;s Landfill Methane Outreach Program helps reduce methane emissions from landfills by encouraging the recovery and beneficial use of landfill gas as a renewable energy source. Starting in 2012, EPA Region 9 convened a state, federal and local working group to facilitate the proliferation of dairy digesters in California, which is the nation&rsquo;s largest dairy producer. DVO&rsquo;s VanOrnum says she thinks it&rsquo;s initiatives like this in certain areas of the country that will lead the way. &ldquo;New York City has their landfill diversion ban, we have states like California that are putting in really good incentives for anaerobic digesters, so I think there are going to be certain parts of the U.S. that are going to take off faster than others, and I believe they&rsquo;ll end up leading the way for the country,&rdquo; she says. Biogas not only manages waste, but can also improve profitability for operations through energy production, coproduct sales, nutrient recovery and avoided energy costs. Opportunities like those highlighted in the roadmap leave those in the space hopeful for what the future could bring. &ldquo;I absolutely believe anaerobic digestion is here to stay,&rdquo; Hanohano says. &ldquo;New bills are being passed that have forced businesses to find a solution for their food waste. An infrastructure of AD facilities will need to be built in order to capture all of that waste.&rdquo; VanOrnum foresees not only DVO&rsquo;s U.S.-based projects picking up, but more work for the company abroad and in markets beyond agriculture, like municipalities, landfill diversion and food processing waste. &ldquo;At the end of the day, digesters make sense,&rdquo; she says. &ldquo;They make economic sense. They make environmental sense. They make societal sense. I think as more and more people learn about them and the benefits they provide that demand will increase.&rdquo; Support is needed to drive development within the biogas sector ahead. Kumar with Harvest Power points out that the U.S.&rsquo;s three prominent sectors for AD technology require different kinds of support. Those that are farm-based will require government subsidy support, biosolid AD technology is paid by the taxpayer at locations like municipal wastewater treatment plants, and the third segment&mdash;which Kumar sees the most potential for&mdash;is merchant plants, like Harvest, that independently develop ways to divert organics. &ldquo;I definitely see a strong will in having the right foundations here to move forward,&rdquo; Kumar says. &ldquo;I wouldn&rsquo;t be surprised if 10 years from now the U.S. would lead that market more than any other European technology or European country.&rdquo; Henry at quasar acknowledges that the digester industry in the U.S. is still relatively new compared to the developed industry the in Europe, where Germany alone has more than 6,800 systems in operation. But to her, failure is not an option. &ldquo;Every project that puts a shovel in the ground needs to be well-planned, skillfully designed, responsibly financed and expertly operated,&rdquo; she says. &ldquo;When projects fail, the reputation of anaerobic digesters and the potential for the industry is brought into question.&rdquo; Author: Katie Fletcher Associate Editor, Biomass Magazine 701-738-4920<a title="Call: 701-738-4920" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" href="#"><img title="Call: 701-738-4920" alt="" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" src="data:image/png;base64,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" /></a> kfletcher@bbiinternational.com

Improving Infrastructure: Ohio-based quasar energy group entered into a long-term contract with the city of Wooster to retrofit, operate and monitor existing anaerobic digesters located at the Wooster Water Pollution Control Plant. 


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Food Waste Potential: Harvest Powerâ€™s energy garden in Orlando is unique in that the digestion technology handles food waste from the Disney property as well as biosolids from a wastewater treatment plant. The company sources a majority of its proj

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Niagara County: The U.S. anaerobic digestion technology operated and designed by quasar in Buffalo, New York, produces up to 768 kilowatts of renewable electricity per hour, which is then sold to New York State Electric and Gas.

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Source Separation: CleanWorldâ€™s project focus has been on processing food waste in California. The companyâ€™s technology can accept high-solids materials (up to 50 percent) with high levels of contamination. 

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Even though Europe is home to tried-and-true biogas technology, 
North American plant developers don't necessarily look abroad. 

Growing The Local Home Base

This is my last biogas column for Biomass Magazine. I am still committed to helping move biogas projects and policy forward, but I&rsquo;ll do so from a slightly different role in the future.&nbsp; I was recently promoted at the Great Plains Institute to government affairs and communications director. In this position, I will be developing, directing and implementing state government affairs for GPI projects that have a state policy and&nbsp; regulatory component, and also directing GPI&rsquo;s communications strategy and operation. I will be working across GPI&rsquo;s seven programmatic areas: energy efficiency, energy infrastructure, fossil energy, international collaboration, renewable energy and fuels, sustainable communities and transportation. Biogas energy development touches several aspects of GPI&rsquo;s seven program areas and will remain a thread of my work as I transition into my new position. I began writing a biogas column for Biomass Magazine three years ago this month. The title of my first column, &ldquo;Bright Future for Biogas Energy Systems,&rdquo; is just as true today as it was back then. When I look back over the past three years, it is remarkable to reflect on the growth in the biogas sector. The evidence of this growth is prevalent in the transportation sector. When the renewable fuel standard (RFS) was expanded in 2007, biogas used as a transportation fuel qualified as an advanced biofuel. It wasn&rsquo;t until 2013 that we saw the first notable amounts of biogas-based gallons reported for RFS compliance. Biogas projects across the U.S. produced 26 million gallons of biogas-based transportation fuel in 2013. The amount of biogas-based fuel doubled in 2014, and in 2015, over 126 million gallons of biogas fuel credits were produced. Partway through 2014, the U.S. EPA allowed biogas fuel to generate cellulosic fuel credits in addition to advanced fuel credits, and the biogas market hasn&rsquo;t looked back. Biogas transportation fuel projects can now receive an attractive market premium through the RFS for the sale of their fuel, and the economic case becomes even more attractive when stacked with credit values under California&rsquo;s Low Carbon Fuel Standard. The RFS is in effect until 2022 and the LCFS until 2020, ensuring continued market growth and access for the next several years. The scale and scope of biogas projects have also increased in the past three years. For several decades, we mostly saw biogas projects developed at livestock operations, landfills or wastewater treatment facilities. Development is still occurring in those foundational sectors, while recent project development has expanded the number of feedstocks (food waste, fats, oils, greases, crop residues) processed in partnership with local units of government or private businesses. We are looking more holistically at waste management ranging from individual residents to food manufacturers, and everything in between, to identify the opportunities to transform organic waste into a clean energy resource. The potential for biogas energy systems to help supply a reliable and consistent form of clean energy has also resulted in an unprecedented cooperation among federal agencies. The Biogas Opportunities Roadmap coordinated and supported by the EPA, U.S. DOE and USDA provides a solid framework for addressing near- and long-term policy and project barriers to increase biogas development. State and local governments have also devoted time and attention to determine how biogas energy systems can fit into clean energy development and address waste management challenges. Several jurisdictions have implemented policy or custom programs to divert organic material from landfill disposal and instead turn those organics into a higher-value product while capturing the nutrient value.&nbsp; At no other time in my career has the future for biogas energy development looked so bright and held so much promise. I look forward to continuing to help move biogas projects and policy forward, even if you won&rsquo;t be hearing from me regularly in my bimonthly column. It has been a pleasure to contribute to the biogas dialogue, and I express my sincere gratitude to Biomass Magazine for giving the forum to do so. Authors: Amanda Bilek Government Affairs and Communications Director, Great Plains Institute 612-278-7118<a title="Call: 612-278-7118" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" href="#"><img title="Call: 612-278-7118" alt="" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" src="data:image/png;base64,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" /></a> abilek@gpisd.net

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Biogas projects across the U.S. produced 26 million gallons of biogas-based transportation fuel in 2013. The amount of biogas-based fuel doubled in 2014, and in 2015, over 126 million gallons of biogas fuel credits were produced. 

Future Remains Bright  for Biogas Energy 

The Irish forestry sector annually contributes &euro;2.3 billion ($2.5 billion) to the country&rsquo;s gross domestic product, and supports approximately 12,000 jobs, mainly in rural locations, according to the Irish Forestry and Forest Products Association. Annual production of wood from Irish forests is estimated at 2.95 million cubic meters, with Coillte, the semi-state forestry organization, producing 2.43 million cubic meters, and the balance coming from the emerging private sector forestry resource, and a small amount of imports. This annual production volume can be categorized into large saw log (1.81 million cubic meters), fencing (0.15 million cubic meters) and small-diameter pulpwood (0.99 million cubic meters). The markets for these products are the construction sector, packaging, fencing, wood-based panel board production, and most recently, the emerging biomass energy market. Today, supply and demand are largely in equilibrium, but it is expected that as the requirement for biomass energy increases, a new market dynamic will be created. Demand for biomass for cofiring, biomass power generation and both industrial heat and combined heat and power (CHP) are all expected to increase. This demand will be met by local sawmill residues, pulpwood from our forest estate, and potentially, biomass imports. Today, pulpwood is primarily consumed by Ireland&rsquo;s wood-based panel board manufacturing sector, which produces in excess of 773,000 cubic meters of board products annually. Medium density fibreboard (MDF) is produced by Medite, oriented strand board (OSB) is produced by Smartply, and Masonite produces door skin panels.&nbsp; Of all wood-based panel board products, 86 percent is produced products produced in ireland, 86 percent are exported. Medite and Smartply are both Coillte-owned, and recently, Coillte commenced a &euro;59 million reinvestment in SmartPly&rsquo;s facility in Belview, County Waterford. The investment will secure the plant as one of the region&rsquo;s most important export industries, and support a number of high-skilled research and development positions. The plant uses pulp harvested mainly in the southern part of the country, to manufacture innovative and sustainable wood panel products used by building companies in flooring, building frames, roofing, and many other applications. Overall, the forest products sector is buoyant and optimistic about the future growth of the market. Ireland&rsquo;s Bioenergy Sector Large-scale electricity generation in Ireland is dominated by natural gas, accounting for 45 percent of total primary input, followed by coal, accounting for 22 percent of the fuel mix. In addition, Ireland has three peat-powered generation plants, one of which, Edenderry Power Ltd., has commenced cofiring with biomass. Local landowners have now started to show an interest in growing energy crops (e.g., willow) to supply the plant, but uptake has been slow. The Sustainable Energy Authority of Ireland reports that fossil fuels account for 90 percent of all energy used in the country, and there remains an opportunity for local biomass to displace imports. Oil is the dominant fuel used for thermal applications, but in recent years, renewable heat as an alternative has faced significant challenges. For large thermal energy users, the project economics associated with new, capital-intensive biomass installations has made investment decisions challenging. Notwithstanding, there were a number of early adopters who now represent the pinnacle of high-quality biomass installations throughout the country. These industrial-scale biomass installations now reduce Ireland&rsquo;s reliance on fossil fuel imports and reduce our greenhouse gas emissions, thereby improving domestic fuel security. In addition, they support many jobs across the local bioenergy supply chain.&nbsp; Despite these recent success stories, uptake has been slow, and with fossil fuel prices now at an all-time low, new projects are unlikely to proceed in the current environment. The Irish government white paper on energy policy set a target of 12 percent of thermal energy to come from renewable energy sources by 2020. The renewable heat sector remains largely undeveloped, however, having grown slowly to 6.5 percent in 2014, mainly as a result of wood waste utilization in the timber processing sector. Based on its current heat from renewable energy sources (RES-H) trajectory, Ireland&rsquo;s 2020 target will not be achieved (Figure 1), and Ireland now faces potential EU fines. The Sustainable Energy Authority of Ireland has estimated the cost to Ireland may be up to &euro;150 million for each percentage point Ireland falls short of its overall combined RES target of 16 percent. Under the EU Tracking Roadmap prepared for the European Commission in 2014, it was noted that Ireland had no programs for the development of certain technologies such as biomass or high-efficiency CHP. One of the recommendations from that report was to introduce a reliable RES-H strategy with appropriate support schemes. It stated that Ireland was deploying less biomass than planned and that previous support programs had expired. In response, the Department of Communications, Energy and Natural Resources published a draft bioenergy plan in October 2014, whereby it acknowledged a gap in meeting Ireland&rsquo;s 2020 RES-H target of up to 200 kilotonnes of oil equivalent, and announced the intention to introduce a renewable heat incentive (RHI) in 2016. This demand-led incentive should provide the much-needed catalyst to stimulate new investment in the bioenergy sector. Investor confidence is critical to shift investments toward renewable technologies, and any renewable heat policy should aim to accelerate market growth by removing the economic barriers currently preventing major capital projects from proceeding. Reducing Ireland&rsquo;s reliance on fossil fuel imports, reducing national greenhouse gas emissions and improving domestic fuel security are key pillars for developing a green economy. The bioenergy sector stimulates rural development and local job creation through the many jobs required in the processing and logistics of biomass and in the design, installation and maintenance of boiler technology. It provides an outlet for the country&rsquo;s growing private timber resource, and a channel to market for growers of energy crops. Stimulating increased demand with the RHI will mobilize our forest resource, and allow the establishment of local grower groups that will be able to supply biomass energy to local industry with the economic benefits shared locally. The Biomass Supply Chain Coillte, the state forestry company, is already at the forefront of mobilizing the bioenergy sector here in Ireland. Coillte now underpins the future sustainable energy supply of a range of industrial-scale clients through its regional biomass supply hubs. These long-term biomass supply contracts displace several thousand liters of imported fossil fuel per week by providing more competitive energy costs for the businesses concerned, thereby helping maintain competiveness and securing local jobs. Coillte plan to establish new hubs as new demand for wood chip arises. Through these regional hubs, wood chips are supplied to clients in the pharmaceutical, textile, industrial and hotel sectors and include companies such as Glaxosmithkline, Astellas and Radisson SAS. Each regional biomass fuel supply hub operated by Coillte is typically comprised of a secure, 8-hectare log storage yard and covered wood chip fuel storage sheds. In addition, a weighbridge and a quality testing laboratory are vital for operation. Each hub has a range of specialist chipping machinery and equipment capable of producing wood chip and access to a range of delivery vehicles for haulage. Coillte is committed to a strategy that matches renewable energy requirements with local biomass supply. Small-diameter pulpwood is sourced through a local Coillte forestry team from both state and private sector sources within a region. These logs are sourced and delivered on a preplanned basis, several months in advance. Logs are systematically stacked for open-air drying to the required moisture contents specific to each customer&rsquo;s boiler requirements. The key to ensuring good quality wood chips at the correct moisture content at each hub is management of stock rotation and replenishment, as well as ensuring suitable air flow through the stacks, which are covered during the winter months. Each supply hub has its own specific characteristics, and seasonal variations in log moisture need to be anticipated and controlled with great care. This can only be achieved through experience and by having a strong partnership with supply contractors. All wood chips are produced strictly in accordance with quality specifications set out in I.S. CEN/TS 14961:2005. Moisture content samples are gathered in preapproved aluminium sampling trays for testing by the oven-dry method using preapproved and calibrated moisture testing devices. Particle size is controlled during the chipping process by the provision of the correct size screens on the chipper feed. Regular testing is undertaken to assess the percentage of fines. The wood chip delivery vehicle fleet is comprised of a range of vehicles, from large walking floor trailers (carrying 20- to 24-metric-ton loads) to smaller tipping vehicles with side blowers (8- to 16-metric-ton loads) depending on a specific client&rsquo;s fuel handling and on-site storage infrastructure.&nbsp; The biomass loads that are delivered are checked for compliance with moisture content, particle size and percentage criteria. Each client is then invoiced per gigajoule of energy delivered. Author: Des O&rsquo;Toole Business Development Manager, Biomass Coillte Des.otoole@coillte.ie +353-1-8628491<a title="Call: +353-1-8628491" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" href="#"><img title="Call: +353-1-8628491" alt="" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" src="data:image/png;base64,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" /></a>

SECURE SUPPLY: Coillte has a biomass processing hub in Drumkeen, County Donegal, Ireland. Pictured is the level of log storage required to ensure sufficient volumes of dry chip are available year-round to supply the local heat market.


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Figure 1: Irelandâ€™s progress in obtaining thermal energy from renewable energy sources (RES-H) during the period 1990 to 2013 

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CHIP SHAPE: Biomass wood chips are produced at Coillteâ€™s biomass processing hub in Cahersiveen, County Kerry, in Ireland.   

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Ireland's forestry sector, a major economic driver in the country, is poised for growth along with the bioenergy industry.

Delivering Renewable Energy From Irish Forests

For well over 100 years, relatively dry forests on national forest lands in Idaho and Montana have undergone pronounced change. Ponderosa pine (Pinus ponderosa var scopulorum Engelm) and western larch (Larix occidentalis), dependent on frequent, low- to moderate-intensity surface fire, have been replaced gradually by more shade-tolerant tree species such as grand fir (Abies grandis) and western hemlock (Tsuga heterophylla). Physiologic stresses triggered by one set of species preempting another have created forest conditions favored by insects and disease. Widespread outbreaks have impaired forest health, leaving 2.3 million hectares of national forest land in Idaho and Montana in need of forest restoration, according to the USDA. Managing invasive insects and disease requires prevention and suppression, but a one-size-fits-all strategy is misguided. Instead, what may have potential is an option tailored to individual forest types and site conditions, whereby a single action is used to achieve multiple objectives: specifically, active forest management to improve ecosystem functionality, lower fire risks, and generate woody biomass for innovative purposes. Active forest management is a silvicultural approach used to reduce stand densities, increase tree diameters and improve forests&rsquo; resistance to drought and fire. Particularly useful in dry forests such as those of the Inland Northwest, active forest management can help reestablish forest composition, old forest structures and critical habitat. In so doing, large amounts of woody biomass are often created but underutilized. Organized to address this issue was the Bioenergy Alliance Network of the Rockies, which is funded with a USDA National Institute of Food and Agriculture grant. &nbsp;Launched in 2013, BANR is one of seven coordinated agricultural projects funded by the U.S. Department of Agriculture, National Institute of Food and Agriculture. The NIFA Bioeconomy-Bioenergy-Bioproduct Program sponsors research and development on national energy security, and encourages private investment in the emerging bioeconomy sectors of biofuels, biopower and other biobased products. NIFA pursues its vision through partnerships with federal agencies, private industry and academia. BANR is a multidisciplinary research consortium represented by the U.S. Forest Service, the renewable fuels industry, and land-grant universities in the Inland Northwest region. Its objectives are to investigate the social, economic, and environmental implications of using woody biomass to produce renewable biofuels and other biobased products, and provide the scientific underpinnings necessary to support a regional bioenergy industry. Because down and dead woody biomass is vital to most biotic processes in forest ecosystems, the scientific community is divided on using it to produce bioenergy. Only in recent decades have the ecologic contributions of woody biomass to wildlife habitat, nutrient cycling and carbon storage become better understood. Biomass supplies are plentiful, but concerns are that a thriving bioenergy market could result in overuse detrimental to soil nutrients and site productivity, especially in the arid, Inland Northwest where biomass reduction occurs endemically. Proponents claim that using woody biomass as a bioenergy feedstock will reduce dependence on fossil fuels, the effects of climate change and wildfire. Skeptics dismiss the notion as unreliable and outdated. Social opposition to biomass utilization has complicated forest management in the western U.S., where federal landownership is high. However, use of the material to produce thermal energy at relatively small scales has gained popularity among educational institutions. In 1993, the University of Idaho converted its heating system from natural gas to steam. Wood chips and hog fuel sourced within a 30-mile radius of the Moscow, Idaho, campus are used to feed a biomass-fired boiler that heats more than 60 campus buildings, saving the university $1.5 million per year compared to natural gas. However, as scale increases, so do costs, especially those involving transportation. An operation in Wisconsin that converted from coal to woody biomass in 2008 recently closed due to a combination of decreased value of renewable energy and increasing transportation costs. Biomass sources in the Inland Northwest are often located far from facilities that convert wood into energy. Increased bioenergy demand could dilute transportation cost per unit volume; if not, change is unexpected. This does not mean woody biomass cannot be produced cost-effectively by forest operations. The U.S. Forest Service identified 5.7 million hectares of national forest land in 12 western states as capable of &ldquo;paying for themselves.&rdquo; Over two-thirds of these lands are in California, Idaho and Montana, and more than 50 percent of the woody biomass harvested would come from trees equal to or greater than 7 inches in diameter at chest height. In 2012, the Mountain Pine Beetle Response Project on the Black Hills National Forest in western South Dakota and northeastern Wyoming began demonstrating woody biomass can be harvested at or above its break-even price across large landscapes. Utilizing active forest management techniques, 50,000 hectares will be thinned to reduce stand densities and improve forests&rsquo; resilience to insect infestations, primarily the mountain pine beetle (Dendroctonus ponderosae) linked to forest mortality on 9.3 million hectares of national forest land since 2000.1 Supporting the PBR Project are several million dollars provided by state and county governments and nongovernmental organizations. Many scientists agree bioenergy derived from woody biomass can be produced sustainably without risking our existing energy system. Improvements in manufacturing technologies could further strengthen woody biomass&rsquo;s market competitiveness, helping it establish a niche among other forms of raw material used for renewable energy. However, biomass supplies, typically disaggregated an uncertain, must be guaranteed if businesses are to invest. Forest restoration projects on national forest lands in Idaho and Montana are capable of yielding enormous volumes of woody biomass, but it is unclear in a climate of shrinking federal budgets whether the financial and human resources needed to undertake such projects will be available. Any new form of energy production system that lacks the elaborate networks of its predecessor will operate initially at a disadvantage.2 Before the new system can become competitive, disadvantages must be overcome and duplicate infrastructure created. Successful development of bioenergy from woody biomass will not be an exception as 20 years or longer will be required to recover capital costs alone.3 According to the U.S. DOE, 2 percent of energy consumed in 2010 supplied by wood and wood-derived fuels will have risen to 9 percent by 2030, more than quadrupling wood fuels usage. On the other hand, the U.S. EIA estimates the country has recoverable reserves of at least 36 billion barrels of petroleum, 338 trillion cubic feet of natural gas, and enough coal to last for centuries. Given the current ready availability and price of fossil fuels, large-scale expansion of bioenergy from woody biomass is infeasible economically. If forest restoration projects in the Inland Northwest region were to become major suppliers of woody biomass for bioenergy, government subsidies in the form of tax credits, loan guarantees or other types of financial aid will be essential. Otherwise, the cost to harvest, collect, and transport the material could make its recovery from forest operations more expensive than the resulting bioenergy benefit. Authors: David Jackson PhD, University of Idaho College of Natural Resources djackson@uidaho.edu Patrick Impero Wilson PhD, University of Idaho College of Natural Resources pwilson@uidaho.edu

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If forest restoration projects in the Inland Northwest region were to become major suppliers of woody biomass for bioenergy, government subsidies in the form of tax credits, loan guarantees or other types of financial aid will be essential.

Woody Biomass, Forest Operations in the Inland Northwest  

The recent decision by the U.S. Supreme Court to stay the implementation of the U.S. EPA&rsquo;s Clean Power Plan caught nearly everyone off guard.&nbsp; The decision was unprecedented, in that it was the first time that the high court overruled a decision of a lower court to stay a regulation. The legal challenge to the CPP was brought by 27 states, the coal industry and a number of utilities. Eighteen states submitted briefs in support of the CPP, and five chose to remain on the sidelines.&nbsp; The one-page ruling is not a decision on the constitutionality of the plan, but on the authority of the EPA to go forward with its implementation, before a decision of the case by the lower court. The lower court decision is expected in June. That decision&mdash;whether supporting or striking the CPP&mdash;will undoubtedly be appealed by the losing side. Once the lower court and the appeals courts make their rulings, the case will most probably find its way back to the Supreme Court for a final decision on the merits.&nbsp; In this case, it is unlikely that justice will be swift, as it may well take several years before a final ruling is issued by the high court. Why SCOTUS chose to take the unprecedented action it did is a matter of speculation. It is logical to assume that the majority felt the challenge to the regulation has a fair chance of ultimately succeeding, however, and that implementation of the CPP by EPA in advance of a final legal decision would cause irreparable harm to the plaintiff coal companies, utilities and states.&nbsp; In this instance, the harm is that if the EPA is permitted to go forward with implementation, it would be nearly impossible to undo the action.&nbsp; According to Federal Energy Regulatory Commission Commissioner Tony Clark,&nbsp; &ldquo;&hellip;the court was trying to avoid a situation like the one it faced with the mercury rule&mdash;by the time the court ruled, the rule had been in effect for years.&rdquo; SCOTUS&rsquo; decision to scrap the near-term implementation of the CPP strikes at the heart of the President Obama&rsquo;s efforts to make climate activism a significant part of his legacy. It does not, however, serve as a death knell for clean energy alternatives. According to a ClimateWire poll, 20 states are pressing on with discussions about how to meet carbon emissions limits for power plans, 18 have stopped planning and nine are weighing whether to stop or slow down planning. &nbsp;For the biomass industry, it may offer an opportunity otherwise lost, had the EPA been allowed to go forward with its implementation efforts.&nbsp; Despite the economic, environmental, and societal benefits that would accompany increased deployment of sustainable biomass technologies, neither state nor federal decision makers have accorded our technologies the respect and attention they deserve. The decision to stay the CPP as written affords the biomass industry&mdash;both heat and power&mdash;additional time to demonstrate to state and federal decision makers, as well as key stakeholders, the value proposition of supporting the deployment of sustainable biomass resources.&nbsp;&nbsp; The states and the federal government must come to understand that diversity of technologies is the preferred path to a cleaner environment. Diversity is key to a healthy ecosystem. Too great a reliance on solar and wind limits the opportunities that come with the support of multiple technological approaches to a healthy environment and economy.&nbsp; Biomass offers benefits not otherwise available from reliance upon solar and wind.&nbsp; Sustainable biomass provides opportunities for sustained rural economic development, reduces the occurrence and severity of forest fires, lends itself equally to distributed generation, and does not suffer from the problem of intermittency and the need for expensive storage technologies.&nbsp; Well-managed forests are carbon beneficial.&nbsp; Although the burning of coal is the biggest culprit when it comes to carbon emissions, the fact is that coal will continued to be burned here and abroad for some time to come. When cofired with sustainable biomass, it emits less carbon than if it were burned alone.&nbsp; As Shakespeare wrote, &ldquo;The problem is not in our stars, but in ourselves.&rdquo;&nbsp; If biomass is to garner the support it deserves in state energy plans, then it is up to the industry&mdash;both heat and power&mdash;to use the time afforded by the recent SCOTUS decision to double, triple and quadruple its efforts to engage local decision makers and key stakeholders in a dialogue that lays out the path to an expanded market for sustainable biomass.&nbsp; Author: Joel Stronberg Consultant, renewable energy and climate change thejbsgroup78@gmail.com 703.485.7301<a title="Call: 703.485.7301" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" href="#"><img title="Call: 703.485.7301" alt="" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" src="data:image/png;base64,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" /></a>

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For the biomass industry, a stay of the Clean Power Plan may offer an opportunity otherwise lost, had the EPA been allowed to go forward with its implementation efforts.  

Stay of Clean Power Plan:  Opportunity for Biomass Industry? 

Stemming back several years, the Economic Development Authority in southwest Georgia&rsquo;s Randolph County has striven to identify the economic strengths of the area and industries that could take advantage of them. Given the county&rsquo;s rich history of farming and timber harvesting, these activities have been the focus of the EDA&rsquo;s efforts. Armed with a good understanding of the large timber basket and an excellent undeveloped site, the EDA has been working to attract companies engaged in producing wood fuel pellets and liquid transportation fuels. The benefits to the community could be significant, in both added tax base and additional employment. Total direct investment has potential to reach $400 million to $500 million, and the manufacturing facilities would each employ 60 to 80 people. However, the greatest benefit to the region would be logging crews reaching into the hundreds, with thousands of direct and indirect jobs created. Added to all of this is expansion of the business community, supporting both the manufacturing operations and expanded population. Opportunity here is great. And perhaps the most pressing question&mdash;how much excess growth is available of the region&rsquo;s most abundant natural resource (trees), is available&mdash;has already been answered, via a study completed by the Georgia Forestry Commission. Gauging Resources In 2012, The Georgia Forestry Commission completed a study, the results of which were very encouraging, showing the annual timberland growth over removal is 4.7 million tons.&nbsp; From a landowner perspective, this means that timber prices are down. However, from the emerging biomass-to-energy industry perspective, it represents a very large raw material base that can be used to produce wood fuel pellets and liquid transportation fuels such as gasoline and diesel. The EDA has an undeveloped site that appears ideal for both a pellet mill and a renewable fuels facility. The property is located just north of Cuthbert on the east side of U.S. Highway 27 where the railroad crosses the highway. The site and area infrastructure (railroad, highways, wastewater treatment plant, and high-pressure natural gas pipeline) can meet or be modified as needed to support any large-scale manufacturing operation that utilizes trees and other biomass as raw material.&nbsp; Based on the very positive results of the Forestry Commission study and the availability of an excellent undeveloped industrial site, the EDA has been working to engage the interest of companies in the biomass conversion business.&nbsp; Community leadership has been working to understand what is needed to manage the impacted community infrastructure required to support these types of companies.&nbsp; A number of preliminary engineering studies have been done to assess the cost of providing natural gas, water for fire suppression, additional land, and roadway expansion to handle the large number of logging trucks that would deliver raw material daily.&nbsp; Because of this work, it&rsquo;s now possible to show the companies that not only are infrastructure and raw material available, but that the community is proactive and supportive of industrial growth in the area. The Georgia Forestry Commission study, &ldquo;Forest Resource Analysis for Cuthbert, Georgia,&rdquo; substantiated the viability of providing wood as a raw material on a large scale. As aforementioned, it showed that excess of timber growth over removals is estimated at 4.7 million tons annually. This excess is large enough to support the raw material needs of both a pellet mill and a renewable fuels refinery, still leaving in excess of 2 million tons available annually. There is a good supply of softwood and hardwood within an economic radius of 60 miles for harvesting and delivering to the manufacturing site. Of the 4.7 million tons, 3.1 million is softwood and 1.6 million is hardwood. It is also significant that over 95 percent of the timberland is privately owned, which ensures numerous timber purchasing sources. It was noted in the study that there is a good balance in age class for the pine, which would provide a balanced harvest profile in the future. Almost all of the pine growth is located on pine plantations, which is particularly important because European market demand for wood fuel pellets requires sourcing of wood from timberland meeting certain criteria, including tree plantations. Site and Infrastructure The EDA currently owns 240 acres on five tracts of land on the east side of U.S. Highway 27 and south of the railroad track and right-of-way.&nbsp; This property was used many years ago as a wood yard. It has a driveway access onto U.S. Highway 27 with a median cut allowing for both north and south travel. U.S. Highway 82 is located three miles south of the property. Timber harvesting will occur from all directions, and having these two highways available greatly facilitates truck deliveries. The site also has a well, a serviceable building and level terrain. Fortunately, the land surrounding the property is undeveloped timberland, and should the need arise, additional land may be available. The Genesse and Wyoming Railroad owns the track and right-of-way serving the site, and has an extensive track and rail switching capabilities on the west side of U.S. Highway 27.&nbsp; This is certainly one of the most valuable infrastructure advantages available, especially to facilities that ship large tonnages of products. The railroad has the ability to ship material anywhere, but is especially competitive in moving product to the Gulf Coast. This will become very important once the port at Port St. Joe, Florida, is reopened, providing a viable export point for wood fuel pellets serving the European market. Southern Gas Co. has a high-pressure natural gas main line that runs through Randolph County from north to south and is three miles from the manufacturing site. Natural gas would be needed by either a pellet mill or renewable fuels refinery. The demand will vary significantly, but a 4 inch pipeline from the high-pressure main to the site would be adequate. The city of Cuthbert, which receives its gas from Southern Gas, has a gas and water department that provides operation and maintenance services for the city&rsquo;s gas distribution system. Discussions with the mayor have indicated that they could serve a similar role for the pipeline that will serve the site. Preliminary engineering work has been done to develop a scope of work necessary to route a 4 inch pipeline from the high-pressure main line to the manufacturing site.&nbsp; A sufficient supply of water for an extensive fire suppression system will be the most important and most expensive part of meeting the water demand at the manufacturing site.&nbsp; Fire suppression will be needed for the timber receiving and processing areas and the processing equipment areas. Because of the large area involved, a fire would require a large instantaneous flow of water. The city of Cuthbert&rsquo;s current water distribution system can serve an important part of meeting this demand and a number of options have been evaluated. At this point, the scope of demand is not developed well enough to do an engineering evaluation. However, there is a design basis to build on since an engineering analysis was done to assess firewater needs if only a pellet mill was being built. Focusing On Pellets Georgia has greatly benefited from the European market demand for wood fuel pellets.&nbsp; Currently, there are a number of pellet mills operating and being built to meet this demand.&nbsp; The success of the pellet mill business is not only dependent upon a large, readily available raw material supply, but the cost of moving the product from point of manufacture to customer. To be competitive with other U.S. companies selling wood fuel pellets into the European market, the cost of the rail shipment to a port is an important factor.&nbsp; While the supply of raw material is more than adequate, the distance from Randolph County to an operating port is long. Currently, Savannah is viewed as the most viable port for exporting pellets from Randolph County to Europe. This has been a sticking point in moving forward with building a pellet mill to date. However, the potential exists for the reopening of the port at Port St. Joe, Florida, which is 100 miles closer to Randolph County than Savannah.&nbsp; With this change, the logistics costs of serving Europe could be competitive with an export point on the east coast of Georgia. Two notable project risks are the cost of the products sold and strength of market demand.&nbsp; As discussed, rail shipment costs to the port are a major factor in siting a pellet mill.&nbsp; Unfortunately, the location of Randolph County is unfavorable in this regard, but it is expected that opening Port St. Joe will mitigate this cost concern. The other market risk is European companies&rsquo; demand for pellets as a renewable energy source to replace fossil fuels such as coal.&nbsp; The European Union passed a renewable fuel initiative that calls for 20 percent of the energy used to be from renewable fuel sources by 2020. The U.S. is well-positioned to meet this demand, especially the Southeast, but a negative impact of changing the legislation for fuel mix in Europe could mitigate pellet demand.&nbsp; Risks are a part of any project, however, and they must be identified early on and monitored to ensure success.&nbsp; In the case of Randolph County and its potential to host a pellet mill or biofuel plant, much of that has already been done. Author: D.F. Wallis Chamber Board Member Randolph County Economic Development Authority 855-782-6312<a title="Call: 855-782-6312" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" href="#"><img title="Call: 855-782-6312" alt="" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" src="data:image/png;base64,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" /></a> rcchamber@hotmail.com

A view from across Phillip's Pond, a privately owned, 150-acre lake near Cuthbert, Georgia, shows a robust forestry plantation. 

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Georgia's Randolph County has much to offer a pellet mill or renewable fuel plant developer.

Assessing Advantage in Randolph County

According to United Nations trade data, in 2015, 4.5 million tons of wood pellets were exported from the U.S., while Canada exported 1.6 million tons. In the same year, the U.S. exported nearly 73 million tons of coal, while Canada exported over 30 million. Collectively, coal exports from North America outstrip pellet exports by a factor of 17. While not surprising, this disparity helps shed some light on the inherent differences and challenges the wood pellet industry faces as it works to mature and drive the kind of trade efficiencies commonly enjoyed by larger commodities, such as coal, into its own marketplace. By the simplest of definitions, a commodity is a fungible good. Put even more simply, one unit of a given commodity can be exchanged for another unit of the same commodity. This concept underpins and supports the movement of commodities of all types around the world, including corn, wheat, wood pulp, coal, oil, natural gas, cotton and a multitude of other goods vital to the global economy. Buyers requiring these commodities can be assured that when they need them, ample supply will be available, provided they are willing to pay the market price. And producers, whether they be growers, miners or manufacturers, can invest capital and deploy resources with confidence that their materials and goods will find a waiting market. Whether or not wood pellets have achieved commodity status is a matter of ongoing debate, as are the characteristics that analysts point to when making that determination. Additionally, industry experts differ on the necessity of the marketplace practices commonly associated with larger commodities, including brokerage houses and traders, or financial instruments like futures contracts. &ldquo;When people are talk about the commoditization of wood pellets, their intent is clearly to make the market more liquid so that pellets may be traded more freely,&rdquo; says Gordon Murray, executive director of the Wood Pellet Association of Canada. &ldquo;I think that is the ultimate objective.&rdquo; This liquidity, from Murray&rsquo;s perspective, is hampered by the existence of varying grades of wood pellets commonly manufactured. &ldquo;For something to be a commodity, you need to be able to substitute one batch for another, and they should be indistinguishable, provided they meet some basic requirements,&rdquo; he says. Murray points to industrial and residential wood pellets, and even the varying grades and classes within those two categories. For Todd Bush, a partner at CM Biomass, a pellet trading firm, this distinction is too simplistic. &ldquo;Wood pellets are fungible,&rdquo; he says. &ldquo;They are fungible just like oil is. There are different grades of oil that are traded. In fact, there are even different grades of light, crude oil traded.&nbsp; Some refineries might not be able to take one subgrade of light sweet crude, but they may be able to take another.&rdquo; Bush says commodities of all types have this kind of quality stratification inherent in their product class. &ldquo;No commodity market is purely and completely 100 percent fungible,&rdquo; he says. &ldquo;That doesn&rsquo;t mean you can&rsquo;t exchange one unit for another with discounts driven by certain parameters.&rdquo; The Argument for Commodity Status The seasonality of pellet markets have always challenged the industry, certainly for producers playing in the residential heat market, the sector that gave rise to the industry in the first place. In the heating market, consumers only need pellets during the fall and winter months, and as a result, buying activity peaks in the months leading up to the heating season, plateaus during the season&mdash;unless there is an unexpected and prolonged cold snap&mdash;and in the months immediately following, it shuts down altogether. On-again, off-again markets bring with them on-again, off-again cash flow realities that challenge producers. Without steady cash flows, producers struggle to run plants efficiently, staff their operations and secure financing for plant improvements and expansion. Further, for the industry to meet demand once the heating market does ramp up, they must find a way to sustain operations for year-round production. Commodity traders, Bush says, go a long way in eliminating these challenges. &ldquo;You can&rsquo;t have the handful of consumers out there buying up all of the summer product and storing it until they need it,&rdquo; he says. &ldquo;They can&rsquo;t afford that kind of storage.&rdquo; Instead, traders like CM Biomass become a proxy of sorts, buying volumes from producers when others won&rsquo;t, and then reselling those volumes when retailers and distributors need them. Whether or not those traders make a profit hinges on their ability to earn enough of a mark-up to cover their storage, capital and overhead costs. Therefore, generating a profit is not a guarantee. Traders, unlike brokers, actually take physical and financial possession of the products they trade, whereas brokers serve only as intermediaries. This distinction requires traders to have a very strong cash position, and significantly increases their overall risk. Traders introduce year-round demand into the market when, if end user demand were the only demand in the marketplace, it simply wouldn&rsquo;t exist. This liquidity serves both buyers and sellers in that it enables producers to more efficiently build supply, and allows buyers to more accurately predict available supplies. In most cases, liquidity contributes to more stable, predictable commodity prices. Difference and Challenges There are aspects of the wood pellet market that contribute to making true commodity status elusive. Many inside the industry point to the ongoing struggle to unify and harmonize the sustainability requirements to which pellet producers must comply as the largest impediment to greater marketplace efficiency. In nearly all instances, the buyers of industrial-grade wood pellets are doing so as a means of complying with a renewable energy or low-carbon mandate, and the regulators and citizens they report to want assurances that users of the funds being used to subsidize use of pellets are accomplishing sustainability goals. The result is a patchwork of certification schemes that have fragmented the global market into a number of much smaller markets, and created a situation in which a shipload of pellets cannot be traded freely between buyers. &ldquo;There are such varying requirements globally, even in Europe, and until there is some consensus there, this will continue to be a barrier for the efficient trading of wood pellets,&rdquo; says Murray.&nbsp; &ldquo;This is what the Sustainable Biomass Partnership was set up for, but so far the European regulators have been slow to come on board.&rdquo; The Sustainable Biomass Partnership, formed by seven large heat and power utilities in Europe, was established in an effort to drive out the inefficiencies that multiple and disparate country-specific sustainability requirements introduce into the market. European utilities that are planning on, or already engaged in the cofiring of wood pellets, recognized that multiple sustainability programs would introduce added expenses for producers, as well as limit available supplies, ultimately leading to constrained supply, supply interruptions and highly variable prices. The SBP was developed to mitigate each of these, while also providing utilities a means of demonstrating that the widespread replacement of coal inputs with wood pellets delivered the environmental benefits for which it was intended.&nbsp; In a recent Biomass Magazine webinar about the SBP and process by which producers become SBP certified, Simon Armstrong, technical director at the SBP said, &ldquo;Another objective of the SBP is to make wood pellets more fungible to ease the trade of pellets between market players, particularly when the ultimate end user is not known.&rdquo;&nbsp; The success of the SBP and the promises of increased marketplace efficiencies all hinges on the regulatory bodies in pellet countries recognizing SBP certification and aligning their requirements with the program. If this is accomplished, producers and traders will be able to more freely capture opportunities in the spot market. &nbsp;Also during the webinar, Armstrong reported progress on recognition of the SBP program in key pellet-buying markets in Europe. In early 2015, Denmark recognized the SBP in their energy agreement, and later in the year, the United Kingdom found that SBP approved pellets complied with U.K. legislation. &nbsp;For other major pellet destinations in Europe, there is work left to do. &ldquo;We are working with the Belgian regulators to make sure the SBP meets their requirements and are now piloting SBP with the Belgians to give them confidence in the program,&rdquo; Armstrong said, continuing by touching on progress with the Dutch government, a market producers throughout the world are eager to see reemerge, including Murray. &ldquo;The Netherlands is just a mess right now,&rdquo; Murray says. &ldquo;The previous subsidy system and the contracts associated with that expired over about a three-year period and for now, cofiring in the Netherlands is all but dead. I don&rsquo;t think there was even one pellet cofired in the past two years.&rdquo; Most analysts agree that once the Dutch can agree on the sustainability requirements, they&rsquo;ll generate 3.5 million tons of new demand. That said, producers will have to engage in an altogether new certification program to sell into this market, and more stratification will occur within the supply chain. Conversely, if the Dutch and the Belgians both agree to recognize the SBP certification process, pellets that are SBP certified can then move freely between each of those countries, increasing overall market liquidity. While Bush shares Murray&rsquo;s and the industry&rsquo;s concerns about the number of certification schemes out there, he differs with their conclusions, and suggests that while they do introduce challenges, and that measures should be taken to harmonize them when possible, the number of programs is less problematic than the overall volumes and number of buyers looking for pellets certified inside of each of these programs. &ldquo;I still say that underlying all of these challenges is the volume,&rdquo; Bush says. &ldquo;If the market were 10 times larger, you&rsquo;d have 10 times more volume in each category. But right now, it is still a fragmented market, mostly because there are so many specifications and certifications out there that each end user requires. It&rsquo;s really just a volume issue; a volume of trades issue, not volume in tonnage.&rdquo; For now, the vast majority of pellets made by Murray&rsquo;s producers never even enter the spot market. Murray tells Biomass Magazine that it&rsquo;s probable 90 percent of the volume that Canada exports is sold under long-term contracts. Pellet volumes produced in the American Southeast are also largely sold to customers under long-term contracts, and while the value of the U.S. dollar and two consecutive warm winters in Europe has all but eliminated opportunities for U.S. producers within the sport market, those looking to move some discretionary volume are hungry for greater liquidity.&nbsp; While opinions on the way to get there vary, all participants in the wood pellet market, in any market, want the same thing: options. Options offer all parties leverage. More buyers and the freedom to sell product to those buyers, unencumbered by varying sustainability requirements, gives producers options. In the same way, a healthy marketplace with adequate, uniform supply allows buyers to distribute their inbound purchases across many different suppliers, and hedge against price fluctuations or supply interruptions caused by an unforeseen production outage at a single manufacturer, or weather interruptions. For the world&rsquo;s biggest commodities, these conditions are taken for granted. A buyer suddenly in need of a 25,000 tons of corn would have no trouble securing it, and without question, would entertain offers from innumerable sellers. In some ways, this is a function of the size of the global market, but pellets must also answer questions different than those of corn customers. For this reason, there are additional layers of complexity introduced to the equation. The work to streamline these challenges is well underway, but for now, producers find themselves managing a fragmented market, and traders like Bush work to smooth out the rough edges. For Bush, the end game is clear. &ldquo;Our perfect pellet,&rdquo; he adds, &ldquo;is one that we can buy and then sell into any market.&rdquo; Author: Tim Portz Executive Editor, Biomass Magazine tportz@bbiinternational.com 701-738-4969<a title="Call: 701-738-4969" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" href="#"><img title="Call: 701-738-4969" alt="" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" src="data:image/png;base64,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" /></a>

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As the global wood pellet market grows, so does the need for marketplace efficiencies enjoyed by the world's largest commodities. 

The Upside of Commodity Status

From April 6-8, scores of state, federal, academic and industry representatives will gather at the U.S. DOE&rsquo;s Brookhaven National Lab for the Pellet Stove Design Challenge. This competition seeks to identify and spread affordable strategies for making pellet stoves cleaner and more efficient. But, the competition also serves as a high-level gathering of experts to talk about the future of pellet stoves. The future of residential pellet heating is in flux, not only because of rock bottom oil and gas prices, but also because more affordable heat pumps and other technologies are entering the market. However, we think the residential pellet stove market can withstand this downturn and come out even stronger.&nbsp; Here&rsquo;s why: First, an increasing number of incentives and change out programs are giving larger rebates for pellet stoves than for wood stoves.&nbsp; This trend will create baseline sales to stabilize the industry.&nbsp; It&rsquo;s becoming common knowledge that a pellet stove tested at 2.5 grams per hour will burn far cleaner during its lifetime than a wood stove tested at 2.5 grams per hour. Second, pellet stoves are often used to heat just the core of a house. They offer homeowners substantial savings over an oil or propane boiler designed to heat the whole house.&nbsp; Third, the price point of many pellet stoves is within reach of millions of Americans.&nbsp; One of the bestselling pellet stoves is a Virginia-made Englander stove that costs $1,200 and is occasionally marked down to under $1,000.&nbsp; It&rsquo;s below average in efficiency, but for the price, it would take a decade for a higher-efficiency, $4,000 stove to achieve the same savings. Fourth, more families are buying pellet stoves not based solely on cost savings, but because of the growing trend toward renewable technology and the notion that supporting multinational oil and gas companies is not beneficial for the planet, and it simply feels good to cut the cord with them. Heat local. Eat local. Keep the profits and jobs local. These four factors will help the pellet stove industry weather low gas and oil prices, but stronger and long-term growth of the residential pellet stove industry will take more deliberate action on the part of the industry.&nbsp; It will require stove manufacturers and their trade associations to be more assertive, transparent and consumer friendly.&nbsp; The industry has already taken the crucial step of establishing a pellet certification program that helps consumers identify consistently good quality pellets, and increasingly more pellet producers are signing up. Many stove manufacturers still have a long way to go in improving the efficiency of their technologies. The legacy of pellet stoves being exempted from U.S. EPA standards through high air-to-fuel ratios left a stain on the industry. Moreover, the average pellet stove today has an efficiency of about 70 percent, and some are still in the 50 percent range. We need to see more stoves with efficiencies in the high 70s to build a renewable energy sector that can hold its own with heat pumps, solar thermal and geothermal. The biggest environmental advantage of pellet stoves is that they can be consistently far cleaner than wood stoves in the hands of consumers.&nbsp; Each gram of particulate matter in a neighborhood&rsquo;s air is important, and pellet stove manufacturers should start meeting the 2020 EPA standard of 2 grams per hour as soon as possible. Regulators should start devising incentives to be under 1 gram per hour. All stove manufacturers should play by the same rules, disclosing actual efficiency and Btu output numbers to consumers. Some companies still grossly exaggerate efficiency and Btu output data, which may result in consumers purchasing a substandard product on the basis of false promises. And companies could be legally liable for misleading consumers through false promises, as has happened with some automobile and other appliances manufacturers. Stove quality and durability are paramount. Too many consumers have had stoves break down and experienced trouble getting professional and affordable repairs.&nbsp; Some brands like Harman have excellent reputations for durability, but the tradeoff is higher cost. Buying a brand that has an experienced dealer and service capacity nearby is very important for pellet stoves because they need repairs and professional annual cleanings, somewhat like cars.&nbsp; However, unlike cars, many pellet stove brands don&rsquo;t have the service network to support these maintenance needs, and this can result in a loss of consumer confidence. All of these issues will be on the table at the Pellet Stove Design Challenge to be held at Brookhaven National Lab in April. We hope state and federal regulators attending will walk away with increased confidence in this sector and recognize the potential of pellet stoves to affordably reduce fossil fuels in millions of U.S. households.&nbsp; The solar juggernaut is building steam every year, and technologies like pellet stoves and boilers that have huge promise could get pushed to the sidelines. It&rsquo;s up to us to ensure that doesn&rsquo;t happen. When oil and gas prices rise again, pellet stoves have potential to become a more mainstream technology in the U.S., just as they are in Europe. Author: John Ackerly President, Alliance for Green Heat jackerly@forgreenheat.org 301-204-9562<a title="Call: 301-204-9562" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" href="#"><img title="Call: 301-204-9562" alt="" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" src="data:image/png;base64,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" /></a>

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The future of residential pellet heating is in flux, not only because of rock bottom oil and gas prices, but also because more affordable heat pumps and other technologies are entering the market.

April 2016

Business Briefs

Business Briefs

Columns

Biomass Power's Momentum in Maine

A Delicate Balance

Leveling the Playing Field For US Advanced Biofuel Producers

Future Remains Bright for Biogas Energy

Stay of Clean Power Plan: Opportunity for Biomass Industry?

Roadmap For Pellet Stoves During Cheap Oil, Gas

Featured

Staving Off a Sunset

Importing to Meet California Demand

Growing The Local Home Base

The Upside of Commodity Status

Contributions

Delivering Renewable Energy From Irish Forests

Woody Biomass, Forest Operations in the Inland Northwest

Assessing Advantage in Randolph County

April 2016.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Business Briefs

Columns

Biomass Power's Momentum in Maine

A Delicate Balance

Leveling the Playing Field For US Advanced Biofuel Producers

Future Remains Bright for Biogas Energy

Stay of Clean Power Plan: Opportunity for Biomass Industry?

Roadmap For Pellet Stoves During Cheap Oil, Gas

Featured

Staving Off a Sunset

Importing to Meet California Demand

Growing The Local Home Base

The Upside of Commodity Status

Contributions

Delivering Renewable Energy From Irish Forests

Woody Biomass, Forest Operations in the Inland Northwest

Assessing Advantage in Randolph County

April 2016