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Potential Biomass Demand Impact on Forest Markets and Resources

Potential Biomass Demand Impact on Forest Markets and Resources. Bob Abt NC State University bob_abt@ncsu.edu. Context . Forest resource modeler focused on regional outlooks for the medium run 5-20 years. Usually take current inventory, growth, and removals as a starting point –

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Potential Biomass Demand Impact on Forest Markets and Resources

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  1. Potential Biomass Demand Impact on Forest Markets and Resources Bob Abt NC State University bob_abt@ncsu.edu SAF 3/3/09

  2. Context • Forest resource modeler focused on regional outlooks for the medium run 5-20 years. • Usually take current inventory, growth, and removals as a starting point – • Then look at the impact of various demand scenarios SAF 3/3/09

  3. SAF 3/3/09 AF&PA 1/14/09 3

  4. SAF 3/3/09 4

  5. Bioenergy Approach • The challenge of projecting emerging bio-energy markets • A few unknowns: which technologies, using which feedstocks, at what scale, where, and when? SAF 3/3/09

  6. Key Factors Examined Demand for wood as an energy source Potential (policy driven) Observed (“announcements” are observed many actual plants are potential) What would a woody biomass supply curve look like? How important are logging residuals? Determines timing and size of impact on roundwood markets SAF 3/3/09

  7. Outline • Policy Driven Scale • Implied by NC RPS • Implied by national RFS “regionalized” • Relative to Logging Residuals • The Relationship between Residuals and Roundwood Feedstock Supply • Announced Capacity Regional Case Study • Role of Residuals • Impact on Economic / Physical Sustainability • Impact on Traditional Forest Based Industry SAF 3/3/09

  8. NC RPS Impact SAF 3/3/09

  9. NC RPS Impact SAF 3/3/09

  10. Potential Impact of RFSChristopher Galik - Duke SAF 3/3/09

  11. Biomass Supply Curves SAF 3/3/09

  12. Gulf Coast Biomass Impact Demand (2008) from F&W Forestry 3 new plants 15 proposed or under consideration Emphasis on pine Potential demand of 5.75 mill green tons annually SAF 3/3/09

  13. Gulf Coast Biomass Impact Demand Scenario .5%/yr demand increase for current products Over 10 yr period (2007 – 2016) increase demand by .575 mill tons/yr 100% pine Reduce demand by available logging residuals (45%,35%,25%,15% recovery) SAF 3/3/09 AF&PA 1/14/09

  14. Where is the wood now – where will it be in 20 years SAF 3/3/09

  15. Gulf Coast PPW Removals AF&PA 1/14/09 SAF 3/3/09

  16. Demand Increase SAF 3/3/09

  17. Price/Harvest/Inventory Impact No Roundwood Biomass Demand Max Roundwood Biomass Demand SAF 3/3/09

  18. Higher Prices and Lower Inventory Reduce Harvest SAF 3/3/09

  19. What if biomass demand is not price responsive? SAF 3/3/09

  20. Caveats “Worst Case Scenario” for traditional wood-users or “Best Case” if you are a timberland owner Everything being considered adds to demand Biomass demand perfectly inelastic (no short run substitutes) No silvicultural response, energy crops, or non-wood substitution SAF 3/3/09

  21. Caveats On the other hand: Power companies already negotiating long term supply agreements New projects announced monthly Current roundwood prices are very attractive These runs don’t include timberland loss (1.5%/yr) Plantation plantings are down significantly SAF 3/3/09

  22. Market-Sustainability Residuals could be important but current demand will quickly exceed residual availability Inelastic timber supply means that there will likely be a higher price than harvest response Energy and biofuel firms are looking at roundwood first Resulting higher wood prices may make other renewable energy sources look better and reduce “realized” biomass demand Timing - this is the transition period – recession for traditional forest product industries – boom for bio-energy – makes roundwood use more attractive SAF 3/3/09

  23. Policy Expansive policies focused on demand and technology Restrictive policies focused on supply (e.g. certification, natural stands, residuals) Not a good combination, will likely lead to unanticipated policy “leakage” Incentives and outcomes will result from interaction of energy, forest, agriculture, environmental, and carbon policy SAF 3/3/09

  24. QUESTIONS SAF 3/3/09

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