Should public policy aggressively promote the burning of plant matter to generate electricity? That question is at the center of a growing national debate.
Last August, President Clinton issued Executive Order 13134. It established a formal goal: to triple the quantity of plant matter used for nonfood and nonfeed purposes. Much of this will be used to generate electricity. A Department of Energy draft document proposes an even more ambitious goal: a 10-fold increase by 2020 and a 20- to 30-fold expansion by 2050.
While the federal government establishes formidable goals for the use of bioelectricity, the environmental community is engaged in a vigorous debate about what role, if any, the burning of plant matter should have in a sustainable economy.
A Unique Renewable
Why has a controversy arisen regarding bioenergy? Because plant matter is inherently different from other kinds of renewable resources such as wind and sunlight.
As a result of these differences, policymakers fashioning a biomass policy must confront several questions that don’t arise when fashioning policies for other renewable fuels. Two key ones are: 1) what forms of plant matter should be subsidized? and 2) what types of end products should be subsidized?
What Kinds of Plant Matter Should We Burn?
Everyone agrees there should be no subsidies for the burning of standing forests. But agreement ends there. The term “biomass” itself is a source of disagreement.
The Clinton White House and Department of Energy want to offer handsome incentives to the burning of virtually any biological material. They define biomass as “any organic matter which is available on a renewable basis, including agricultural crops and agricultural wastes, and residues, wood and wood wastes and residues, animal wastes, municipal wastes and aquatic plants.”
In November 1999, the Administration supported Congress in modifying the Energy Policy Act of 1992 to add poultry manure as a type of biomass eligible for the 1.7 cent per kWh federal tax credit. But Congress rejected the Administration’s request to expand the definition of eligible biomass to include urban and rural wastes.
Some states have introduced Renewable Portfolio Standards that require electricity suppliers to provide an increasing amount of power fueled by renewable resources. Biomass is typically included as a renewable resource, but states differ as to what is defined as “biomass.” In a handful of states, such as California and Maine, municipal solid waste is eligible. In others (Texas, Nevada, and Illinois among them) it is not. New Jersey allows only “sustainable biomass” while Massachusetts allows only “low emission, advanced biomass,” but neither have clarified these terms.
The Center for Resource Solutions, a nonprofit organization based in California, has established a voluntary certification program called “green-e” for electricity suppliers who want to charge a premium for “green” electricity. Regional advisory boards determine which kinds of biomass are eligible. In the Mid-Atlantic and New England regions, municipal solid waste is excluded. In California it is included. Wood wastes burned for electricity must be clean and untreated in the Mid-Atlantic and New England, but not in California.
A concern over air emissions and ash disposal and their impact on the environment drives the dispute over what types of biomass are acceptable for incineration. The national Green Power Board, which advises the Center for Resource Solutions, has debated tough emission standards for biomass plants and the development of a standard for sustainable fuel use.
What End Products to Subsidize?
Another facet of the biomass controversy may be more fundamental. Should we provide tax incentives for only one kind of product made from plant matter and if so, on what basis?
As a result of public policies and rising energy prices, the burning of plant matter for energy recovery doubled from 1975 to 1985. By 1985 fuelwood consumption exceeded the amount used for making construction materials or paper. Rising landfill fees and increasingly stringent environmental regulations, as well as high utility buyback prices, spurred an even more dramatic increase in urban solid wastes (mainly wood waste, leaf clippings and paper) burned for energy recovery, from just over 2 million tons in 1980 to about 40 million tons in 1996. Today about 160 million tons of plant matter are burned to generate about 2 percent of America’s energy. Wood accounts for about 90 percent of that. Much of that 90 percent consists of saw dust, wood residues, and lignin left over from the papermaking process. This is burned by pulp and paper companies to generate 60 percent of their internal heat and power needs. About 10 million tons of wood are consumed by independent power producers. About 35 million tons is consumed in residential wood stoves and fireplaces. In the 1990s, the expansion of the use of plant matter to generate heat and electricity has stalled. Once again the amount of plant matter used for making pulp and lumber exceeds the amount used to generate energy, and the gap is rapidly widening. |
by David Morris & Jessica Nelson The Energy Policy Act of 1992 did not take this into account when it offered substantial tax incentives for electricity generated from “closed-loop” biomass, defined as “any organic material from a plant which is planted exclusively for purposes of being used at a qualified renewable energy facility to generate In the last few years entrepreneurs have learned to make a commercial product out of what was previously a waste. In Minnesota, poultry manure was considered a waste 10 years ago. Turkey growers had to pay to have it hauled away. But farmers learned this dry manure is easy to store and transport (unlike liquid hog manure) and that it can not only provide nutrients to the soil but can also provide organic matter that retains moisture and increases microbial activity. Today, selling and applying manure has developed into a healthy local industry. Applicators pay turkey growers for their manure and sell it to conventional and organic farmers alike. When Minnesota legislators recently decided to expand the state’s definition of biomass to include poultry manure, qualifying it for electricity subsidies, they chose to favor incineration over other uses. Manure applicators argued, to no avail, against the legislation, which would give subsidies of 3-4 cents per kilowatt-hour to electricity generated from poultry manure. The manure applicators argued that if the state wanted to subsidize manure disposal, it should do so on a per ton basis, not a per kilowatt-hour basis, as the legislature proposed. That way, if there is an area that has excess manure, the subsidy can be used to cover the costs of transporting the manure to areas that can use it. By anointing only a single end product, the state was skewing the market away from recycling the manure for its nutrient value and favoring the incineration of the manure for its energy value. The manure applicators lost their battle in Minnesota this spring, and in Congress last fall. Today if you recycle poultry manure you receive no federal benefits. If you burn it to generate electricity you receive $10-20 per ton. This is true for other products as well. A rapidly expanding industry is converting increasing amounts of agricultural residues (mainly wheat straw) into construction products. More than half a million tons are used in this fashion today and this could triple in the next two years. This is being done with no subsidies. If the straw were pelletized and burned in a residential fireplace it also would receive no incentives. But if it is burned to generate electricity, it would receive a subsidy equal to more than $10 per ton. Wood waste is another example of a raw material which has multiple end uses, but which in the past has been offered subsidies for only one. In the early 1980s California required its electric utilities to offer a long term contract to purchase biomass-generated electricity at a very high price (about 10 cents per kWh). From 1980 to 1990, 44 bioelectricity plants came on line in California, increasing 13-fold the amount of wood burned for electric generation, from 374,000 tons to 4.8 million tons. At the peak of California’s high-priced standard contract offer for biomass-generated electricity, one company, California Biomass, Inc., supplied 25,000 tons of waste wood per year to incineration plants. Because of the high price of electricity, incinerators could pay suppliers $36-38 per dry ton of wood waste. With the end of those contracts in the early and mid 1990s, incineration plants have had to get their fuel free to be able to compete. California Biomass identified a more profitable market: compost. Business is booming. Dave Hardy, owner of California Biomass, says the company now produces over 100,000 tons of compost per year from green waste. Four years ago, 80 percent of the company’s revenue came from incineration plants. Now, 70 percent of its production is compost; only 7 percent is fuel for incineration plants. Another supplier operating in California, Apollo Wood Recovery, faced a similar crisis with the downturn in waste wood prices from electricity producers. Apollo now sells urban wood waste to a different market: medium density fiberboard (MDF). Apollo currently handles 6,000 tons of urban waste wood per month; in 1995, it handled only 500 tons. Should Electricity Be Favored? One could argue that using plant matter to generate electricity is more environmentally beneficial than using it for another purpose and that is why subsidies should be offered only for that end product. A biomass power plant displaces coal. A biomass particleboard displaces waste wood. Several studies have concluded that the environmental costs of coal are greater than 1-1.5 cents per kWh. Although it might be preferable to internalize these costs into the cost of the coal itself by imposing a $50 per ton tax on carbon emissions, that may not be politically feasible. Offering an incentive of 1.7 cents per kWh for biomass is. Interestingly, a comparatively benign and low-cost way to generate electricity from biomass is to co-fire it in proportions of 3-5 percent in existing coal plants. The Union for Concerned Scientists, for example, has concluded that this is likely to have greater emission benefits than new wind projects because the latter typically displace natural gas rather than coal. But biomass co-firing with coal does not qualify for the federal renewable energy tax incentive. The Congress rejected an Administration proposal to include it. In Minnesota the legislature also rejected a proposal to make co-firing eligible for state incentives for biomass-generated electricity. Federal and state efforts to aggressively expand industrial and fuel markets for plant matter are to be applauded. But to maximize the benefit to the farmers and rural communities as well as the environment, we need to be more sophisticated in how the incentives are applied.
The goal of public policy, most agree, should be to extract the maximum amount of useful work from an acre of land in a way that maximizes income to the cultivator and the surrounding community while also maximizing the environmental benefit to the society as a whole.
electricity.” The purpose was to encourage energy crops, but farmers rarely if ever plant a crop for only one end market. As a result no biomass project has yet qualified for the EPAct tax incentive.
The federal government’s ambitious goal regarding the expansion of bioenergy and biochemicals is being applied across the board. Because electricity is such a large market, a significant majority of the subsidies will go to convert plant matter to electricity. To generate 10 percent of our electricity from plant matter would require about 300 million tons of plant matter. In comparison, to displace 10 percent of our motor fuels would require about 130 million tons. To displace 10 percent of the organic chemical market would require roughly 12 million tons of plant matter. Thus an across-the-board application of the federal goals would disproportionately focus on the generation of electricity from plant matter.
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