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Economic Analysis of Tailoring Rule Quantifies Potential Impacts on Renewable Energy Jobs, Investment

Last week, Forisk completed a study titled “Economic and Regional Impact Analysis of the Treatment of Biomass Energy Under the EPA Greenhouse Gas Tailoring Rule.”  Commissioned by the National Alliance of Forest Owners (NAFO), the research identified 130 publicly-known and announced wood bioenergy projects in the continental U.S. put “at-risk” by the Tailoring Rule.  These projects represent:

  • 5,384 MW of renewable electricity generation;
  • 11,844 to 26,380 green energy jobs;
  • $18.0 billion in capital investment; and
  • 53.4 million green tons of wood biomass per year.

The research relies on an inherently conservative approach and transparent assumptions.  As such, our team found the attention and critiques amusing and off-base.  For example:

  • The Environmental Defense Fund (EDF) asserts, using data from Forisk :), that the production of wood bioenergy continues to increase despite the Tailoring Rule (see EDF post).  However, EDF’s release disregards the timing and heart of Forisk’s bioenergy market analysis, which assesses the viability of new wood bioenergy capacity on a project-by-project basis.  Most projects cited by EDF were announced prior to the new Tailoring Rule.  And “announced” projects differ from “operating” projects; only 53% of the projects included in EDF’s analysis pass Forisk’s screening for viability (see NAFO post).
  • National Resources Defense Council (NRDC) critiques include concerns about the 53.4 million tons of wood cited in the Forisk study, asserting that this volume of wood must come at the expense of other uses or harvesting new forests (see NRDC post).  It ain’t so NRDC.  We completed research this year commissioned by the American Forest & Paper Association that identified, conservatively, ~50 million tons of “readily available” wood biomass in the U.S. for energy purposes. The sources of this biomass?  Unused forest residuals from current forest operations, unused wood from other land uses, and cleaned wood from municipal solid waste (see details and the complete study).

At the end of the day, initiating, building and operating wood bioenergy projects takes time and resources.  Many announced projects will fail.  The assumption that all announced projects will come online and concerns about available forest resources are the issues which motivated the development of Forisk’s bioenergy project screening methodology.  In practice, projections of bioenergy expansion divorced from the reality of what it takes to actually develop renewable energy capacity provide a disservice to those tasked with making policy and investment decisions.

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