Outcompeted by wind and solar

Compare the cost curves experienced by the three major (non-hydro) renewable energy technologies since 2010:

Source: TMP/Pivot Point Investor Brief: ‘Biomass Investment Analysis’, 2022

The unit cost of wind power has declined steadily for over a decade.  The declining cost profile of solar power is even more dramatic.  Biomass shows no such downward trend.  Worse, there’s been no innovation – no cost savings, no pollution reductions – in production line technologies in the last decade.  Ongoing raw material costs – all those trucks bringing slash to the site of production -- put biomass at a permanent disadvantage vis-à-vis wind and solar.     

It would be extremely unwise for Washington to invest in an industry with such declining fortunes.  We don’t need more ‘stranded assets’ in the state.

Carbon neutral’ claims rejected

Biomass got a foothold in Europe and East Asia ‘renewable energy’ programs because emissions from biomass burning aren’t counted by utilities.  (See What’s Big Biomass? for more background.)  But the European Academy of Sciences (EASAC) rejected this rationale for treating biomass as renewable energy:

The labeling of woody bioenergy as ‘renewable’ is based on the assumption that the carbon in the biomass and its associated emissions when burned can be treated as zero, on the grounds that forest will regrow and re-absorb the carbon in the biomass harvested. Yet, as EASAC has repeatedly pointed out, this concept of carbon neutrality ignores the time lag between emissions and reabsorption of the original carbon which multiple studies show can be very long- from decades to centuries. 

Similarly, in announcing its reduction of subsidies for biomass power, the Republic of Korea’s Ministry of Trade, Industry and Energy noted that “Criticisms regarding forest degradation and carbon emissions associated with biomass power generation persist.”  

See also this recent study debunking the ‘low carbon’ claims of bioenergy.  

NAAQS – pellet facilities using up the available ‘airspace’

National Ambient Air Quality Standards are used to limit total pollution loads for a given region.  Due to the existence of other industries in the Longview/Kalama area, Cowlitz County is close to ‘non-attainment’ of NAAQS standards.  If the Drax plant were to be built, citizens are very concerned about further deterioration in air quality, exceeding the existing pollution limits set by NAAQS.

This matters not only for air pollution; it also matters for new business creation.   When pollution limits are exceeded, it becomes difficult for other, less-polluting industries to get a start in Cowlitz County.  In the future, Drax could could take up the remaining ‘clean air space’ in southwest Washington.

Competing with existing businesses for woody biomass

Without UK government subsidies, Drax would be a money-losing enterprise.  PNWRE also depends on subsidies.  It received $200,000 from the Washington State Department of Commerce and $300,000 from USDA for feasibility study work. 

A half-million dollars in support before even breaking ground!  For a foreign corporation with no permanent employees in Grays Harbor County!  Is that fair to the existing forest-product businesses in the state?

But it’s not just monetary subsidies.  Washington has a mature forest products sector, which means there’s tight cycling of materials in the timber economy.  Wastes from sawmills are incorporated into pressboard or oriented strand board production; mill wastes are also sold into animal bedding (equestrian) markets and as raw materials for small-scale pellet stoves.   If PNWRE and Drax proposals go forward that creates huge new demand pressures at the lower-value end of the market.  It could make raw material prices go up for wood-manufacturing businesses in the PNW. 

Very poor record of job creation – and no upskilling

For our forest products sector to thrive, every opportunity should be taken to move up the 'skills ladder'.   There are great opportunities in the northwest for production of cross-laminated timber; finished lumber; and specialty packaging.  

Pellet production is at the bottom of the skills ladder.   Pellet production creates fewer jobs 'per million board feet harvested' than other market segments.   Pellet production is outcompeted even at the bottom end of the market -- those businesses that utilize chips and 'after-market' materials – for example, chipboard and oriented strand board manufacturers. and manufacture of structurally insulated panels.  All of these are better at job creation than pellet production. 

Models of the ‘circular economy’ for wood products consistently puts biomass burning at the lowest rung – the worst use – in job creation, climate-change mitigation, and economic benefit.  See this peer-reviewed article for more.

Export-oriented, so does nothing for US energy security

Both PNWRE and Drax made it clear that they wanted to build in Washington because of the access it would provide to deep-water ports on the west coast with better proximity to Asia.  Neither company has any plans to market their pellets to US utilities.  They want to sell pellets to utilities in Asia that will ‘co-fire’ the wood pellets with coal in existing power plants.  That’s good for the Asian utilities that want to prolong the useable life of their coal-based infrastructure; but it doesn’t do anything for US energy security.  Washington would be treated like a resource colony – our PNW forests being used to prop up fossil fuel infrastructure abroad.  Bad economics, bad for the climate, bad for our forests.

Asian utilities now less likely to buy American exports

When Drax and PNWRE put forward their construction proposals, the US dollar was trading at 110 Japanese yen.  The dollar has surged in value since then, so that today the yen trades at more than 150 to the dollar.  The strengthening dollar, and therefore the increased cost of US wood pellets, was a major reason why large biomass plants in Japan have begun to shut down, causing major losses for these utilities.  

If US wood pellets are barely cost-competitive in the Asian markets today, what happens when subsidies are reduced in those countries?  What happens if countervailing tariffs are slapped on US wood pellet exports by our Asian trading partners?   

All trend-lines for the industry are negative.   Let’s invest in promising new technologies and job-creating technological innovation.  Burning wood isn’t a new technology, and certainly isn’t innovative.