There’s a professor at the University of Maine who’s fond of reminding the forest products industry that oil is just wood (and other formerly living material) that has been processed for a few million years. We’re now reaching the point where technologies are being developed that can take this process from millions of years to hours or minutes, allowing wood to be used for an entirely new range of products – fuel, plastic, pharmaceuticals and more.
In 2007, Congress passed the Energy Independence and Security Act that, among other things, set up a program that is supposed to support the development of new technologies to make fuel from wood and other biomass sources. Unfortunately, as Congress can sometimes do, it passed a law that doesn’t work, and is holding back the development of new markets for wood.
The law, and the EPA rules for the Renewable Fuel Standard (RFS) that implement it, restrict what qualifies as “renewable biomass” – wood that can be used to make RFS qualified fuel. They are some tough restrictions that work against the forest industry:
- Wood can be from a plantation established prior to 2007. In Maine, 98% of our timberland is naturally regenerated. We don’t have many plantations; this is the case across the Northeast and for much of the rest of the country. Even in places with plantations, using a “planted before December 2007” standard means that in the future, you won’t have qualifying wood from plantations as no new plantations can use this standard. That might be the case for a little while in the future, but some of these technologies are looking at investments that rival that of a new paper mill – who invests hundreds of millions of dollars knowing that you won’t have wood in the future?
- Slash – defined as “the residue, including treetops, branches and bark left on the ground after logging…” – can be used as a qualifying feedstock. Generation of slash requires markets for roundwood – someone needs to harvest the stem to generate the slash. In Maine, we’ve lost five pulp mills in the last four years. It’s not clear we will have the roundwood markets needed to generate the slash in sufficient volumes to support a facility.
- Qualifying wood can come from “precommercial thinnings,” whose definition in the standard is confusing and open to interpretation, introducing further uncertainty for investors looking for a reliable, cost-effective feedstock.
- In short, you can’t harvest wood specifically for this market unless it from a plantation established before December 2007. We don’t have that in Maine or most of the Northeast or Mid-West. Even worse, the use of sawmill residuals is restricted to plantations from before December 2007, so the problem described limits what mill residuals can be utilized. With mills in parts of the country struggling to find markets for their chips and bark, this makes no sense.