For wood users and timberland investors in the United States, global and national analyses, while useful, can mislead when thinking through the relevance of wood bioenergy in specific local markets. Wood bioenergy, as a “point source” of wood demand for forest owners and as a “competitor” for common raw material sources, can clearly move prices locally. That said, sector level awareness reminds us what drives returns on capital in the industry.
Recent reporting and Forisk analysis reinforce the limits of renewable energy and the wood bioenergy sector as a source of growth. “Wood Electricity: Overhyped and Underappreciated” noted how wood bioenergy accounts for a small portion of wood use in the United States. Pulpwood and logging residue use from all viable bioenergy applications, including wood pellets, will continue to account for single-digit percentages of total wood use in the US over the next ten years. In February, the Q1 2015 Forisk Research Quarterly reported:
The percentage of total US electricity generation coming from wood sources remained at 1% or less. The percentage of renewable electricity generated from wood decreased from 11% in 2004 to less that 8% in 2013.
In short, wood bioenergy, while contributing, continues to lose “market share” in the US renewable energy “portfolio.”
Globally, the story is much the same. On March 14th in The Wall Street Journal, Matt Ridley, author of The Rational Optimist and a member of the British House of Lords, addressed this issue with a broader view of the energy sector. He wrote about the continued and inevitable dominance of fossil fuels and the relative irrelevance of renewable energy sources for global energy production (“Fossil Fuels Will Save the World (Really)”, WSJ, 3/14/15). Looking forward, little evidence exists for fundamental shifts in the energy sector to renewables and overwhelming evidence presents itself for stronger commitments and dependencies to fossil fuels. Oil prices collapsed. Natural gas production swelled. Extraction technologies advanced. And, critically, shale gas production “has yet to go global.” There’s a lot of gas out there, folks.
Meanwhile, Ridley sums up the problems of renewable energy sources such as solar and wind and wood thusly: “…they take up too much space and produce too little energy.” (Sounds like my space heater in college.)