While the general public’s understanding of wood bioenergy remains incomplete, recent reporting on the issue fails to meaningfully inform readers on the status of woody biomass supplies and the actual development of wood bioenergy markets in the U.S. In fact, several articles suffered from three common errors we observe in major media coverage:
- Failure to provide context.
- Improperly assigning “causal” relationships.
- Errors of fact.
For example, Roger Harrabin of the BBC, in a March 5, 2013 article “Biofuels: MPs to Consider Subsidies for Power Stations” about potential subsidies for using wood at power stations in the UK, reported that power producer Drax plans to convert approximately half of the boilers at its coal-fired power station in Yorkshire to wood pellets. Harrabin notes that this would “burn more wood than the entire output from the UK’s timber industry.” And how much wood would that be?
This took four minutes to track down and summarize using the online “ForesSTAT” database from the United Nations. The UK produced one-half of one percent of the world’s industrial timber in 2011. The U.S. timber industry is 32 times bigger. EU timber production is over 38 times bigger. This failure to provide context for UK’s timber industry is like reporting on hamburger sales in India or breweries built by BYU graduates. While these could prove interesting, the numbers may prove trivial.
A more recent May 28, 2013 report by Mr. Harrabin, “Renewable Energy: Burning US Trees in UK Power Stations”, further addresses the growing trade of wood pellets from the U.S. to the UK. While the story gives ink to all sides, it lacks the context to illuminate the scale or likelihood of operational impacts on U.S. forests from UK pellet demand. In fact, bioenergy is a relatively small business in the U.S. and will remain that way for the foreseeable future. Readily available research and studies conducted by private firms and conservation groups, while sometimes diverging on potential implications, generally align with the facts on the current state of affairs. One study is “Biomass Supply and Carbon Accounting for Southeastern Forests” conducted for the National Wildlife Federation and the Southern Environmental Law Center (with whom Mr. Harrabin produced an interview). The study incorporates academic and private studies, and provides necessary context relative to potential policy outcomes.
In “Limits to Growth: Wood Pellet Production in the U.S.”, Forisk addresses the issue by quantifying how the actual growth of bioenergy relative to available resources in the U.S. can be understood. In “Three Realities of Wood Bioenergy and Forest Owners”, Forisk specifies areas of direct relevance to timberland owners and legislators that forest analysts understand well and can address with authority and data: bioenergy project failure rates, forest landowner behaviors that increase long-term supplies, and wood supplier adaptability. New wood markets do not create a frenzy of forest harvesting. Forest owners and wood suppliers adapt through improved forest management, incremental growth of logging operations and utilization of previously underutilized wood raw materials.
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On Tuesday May 28, 2013, the Wall Street Journal published a front page story related to wood bioenergy markets that managed to score the trifecta and feature all three common errors appearing in media reports related to wood and timber industries. Posted online on May 27th, the article, “Europe’s Green-Fuel Search Turns to American’s Forests” by Justin Scheck and Ianthe Jeanne Dugan contains factual errors, fails to provide context or measures of scale, and improperly implies causal relationships. Ugh. A few examples include:
- The article does not scale UK demand to the U.S. forest industry. During normal economic conditions, the U.S. forest industry consumes ~500 million tons of wood per year. Currently, the U.S. is exporting on the order of 2 million tons of pellets per year.
- “….Europe doesn’t have enough forest to chop for fuel…” Not true. Europe has 25% of the world’s forests. While the article notes that “many restrictions apply” to Europe’s forests, it does not question the quality, usefulness or soundness of these restrictions. The bottom line is that Europe may actually have enough wood, but chooses not to use it.
- “Many of the pellet-making plants springing up in the U.S….are near pine plantations established long ago partly to serve the now-slumping wood-pulp market.” The reference to the “slumping” pulp market is factually incorrect and easily knowable. This is a critical miss because the U.S. pulp and paper mills dominate the market for the low valued wood raw materials of interest to wood pellet producers.
The Wall Street Journal also dwells on the topic of swamp logging in North Carolina. Few people would look to swamp logging as inherently desirable or preferable for a host of reasons. However, it represents between 1% and 4% of related forestry activities, and the article skirts the primary economic drivers and realities for U.S. forest management. Regardless wood pellet demand in the UK, forest owners in the U.S. will not overhaul their long-term forest management strategies or harvest practices for pellet markets. The economics don’t make sense. The U.S. remains a “sawtimber” market where landowners grow trees for lumber production.
In forestry, a natural tension exists between the unfettered exercise of private property rights and the biodiversity preferences of third-party conservation groups. This “tension” is important. Market incentives help ensure that private forests remain productive and forested, while spotlights on best management practices that protect soil integrity, water quality and wildlife habitat support long-term forest health. This tension, like a tug of war, puts someone in the mud once in a while. Sometimes a landowner cuts trees you might not cut, and sometimes states or groups seek a rule that restricts private property owners in an unreasonable way. That is part of the back-and-forth.
Wood bioenergy in the U.S. faces limits to growth. No one will be vacuuming U.S. forests to feed UK power plants. The economics, logistics and sustainability of such strategies fail on multiple levels. This is why markets in other regions such as South America, Russia and Canada continue to scale up capacity. The facts, context and market relationships highlight a stuttered, evolving wood bioenergy market in the U.S. that continues to feel its way forward as part of the large, established wood-using forest industry.
Forisk will cover wood bioenergy market analysis during “Timber Market Analysis” on August 12th in Atlanta, a one-day course for anyone who wants a step-by-step process to understand, track, and analyze the price, demand, supply, and competitive dynamics of timber markets and wood baskets. For more information, click here.
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