Getting green for going green

Apr 6, 2010 -Danny Barrett Jr.- The Associated Press

Renewable energy was already a household practice for International Paper when the company signed up last year to be a bioconversion facility so its suppliers could reap benefits of a new federal program aimed at using nonfood crops as biofuel.

"On average, 70 percent of our mill system is powered by biomass fuel," said Amy Sawyer, IP senior communications manager.

Bark chipped from its timber supply and black liquor extracted from raw pulpwood is commonplace at the mill on Mississippi 3 - and in the paper industry in general. If the power generated by the wood chips could be placed on the power grid, some say, the possibilities are tantalizing.

"There's probably enough to run surplus supply to everyone in Redwood," Warren County Extension Agent John Coccaro said.

Expansion of biofuel usage forms the heart of a federal initiative being reworked to determine who gets to keep the green for going green - larger suppliers or the landowners who cultivate the trees.

Comments from the public are being sought through Friday concerning the future of the Biomass Crop Assistance Program formed out of the 2008 Farm Bill to help owners of agricultural and forest lands to collect, harvest, store and take materials from plants and trees, such as bark chips, to support biofuel expansion.

A directive issued by President Barack Obama in May 2009 to speed up investment and production of biofuels emphasized financial incentives to do so, with the USDA's Farm Services Agency designated as the place to sign up.

In June, middleman suppliers began receiving payments to collect, harvest, store and bring materials to bioconversion facilities. Those subsidies matched dollar-for-dollar what suppliers were paid by 483 such facilities - timber mills, electric power producers and sugar plants, to name a few - for delivery, up to $45 per dry ton.

FSA halted the payments Feb. 8. The president's budget request for fiscal year 2011 showed the program's cost growing to $742 million, more than 10 times the Farm Bill's estimate of $70 million over five years.

"It was very simple to administer, then it stopped," Warren County FSA office director Rob Riggin said of the program's opening months, a trial run of sorts for what might become a leaner program.

Several signed up, Riggin said, mostly logging companies and other entities who take forest material to processors.

"We made a little bit of money on it," said Judy McCool of Johnny McCool Logging Company Inc., operator of McCool Woodyard.

Payments of up to 75 percent of timber owners' costs of establishing renewable crops and up to 15 years of support checks for continued production figure to continue regardless of FSA's final decision on program specifics.

To become eligible, lands must be in a specific project area designated by USDA's Commodity Credit Corporation.However, three options are on the table for the matching payments for what the proposal calls "eligible material owners."

One keeps the matching formula the same but limits payments to biomass delivered for conversion to heat or power above a historical baseline set by the USDA. A second offers a "tiered structure," which would pay conversion facilities such as IP at the maximum rate of $45 per dry ton if they convert material to "advanced biofuels," a broadly defined concept of fuel including forms derived from wood.

Those converting it to heat or power would be paid at some rate below that, depending on comments on options tailored to policy objectives such as reducing carbon emissions and expanding biomass feedstock.

A third would make the payments to spur renewable energy to a wider range of places, such as schools, military facilities and government buildings.

Skeptics of the incentive plan's effectiveness generally tie it to the federal government's renewed role in directing the course of alternative energy.

"Basically, we don't think that government should pick winners and losers in the marketplace," said Carlton Carroll, a spokesman for the American Forest & Paper Association in Washington, D.C.

He said the organization "opposes mandates and incentives that seek to direct the flow of biomass to specific uses because they inevitably distort markets."

Many private landowners who sell timber to operators who bring it to processors haven't heard of the program, said Eddie Henry, a 35-year IP employee who harvests timber on about 50 acres in northeast Warren County.

"Whoever supplied a BCAP facility is the one who got the money," Henry said, adding small-scale timberland owners' lone benefit would be to charge higher prices on the ground to known program participants.

"Most of the landowners didn't ever know about it," he said.

Pine pulpwood prices in Mississippi rose 31 percent to settle at $11.86 during the fourth quarter of 2009 as a wet winter coupled with high national and global demand, according to industry watcher Forest2Market. Hardwood prices also rose for the quarter for the same reasons, reaching $9.50 per ton from $5.79.

"If the Biomass Crop Assistance Program plays out as it is currently structured, small log CNS may feel pressure from pulpwood pricing," said the service's timber market outlook for the Southern U.S. Stumpage prices are already up due to BCAP, the report said.

Bill Tomlinson, president of Vicksburg-based natural resource management firm Wildlife Technical Services Inc., indicated a wider net should be cast if the federal government continues to drive the future of biomass-related energy.

"What (BCAP) ended up being is that the only people who qualified are people who have a vested interest in it," Tomlinson said. "It comes back down to capability. I hope that the program is successful enough."

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Information from: Vicksburg Post, http://www.vicksburgpost.com