Once hailed as a renewable alternative to oil, energy from trees faces a dismal future.
Low oil and gas prices are threatening plants that make energy from wood chips and similar biomass. From California to New York, companies are on the verge of shutting down facilities that can’t compete with historically low gas prices — and the decline is prompting critics to say they’ve known all along that the biomass craze couldn’t last.
The latest potential casualty is in northern New York, where ReEnergy Holdings LLC has said it may close a 22-megawatt cogeneration plant by the end of summer if it can’t secure a customer for the power generated. The company is looking for potential government customers, and Sen. Chuck Schumer (D-N.Y.) has promised to help.
In California, once home to 66 biomass plants, about 30 remain in business, dashing the hopes of orchard growers looking for places to sell downed trees and branches.
"When oil is less than $30 a barrel, it’s going to be extremely difficult to compete in that arena," said Ralph Cavalieri, director of the Agricultural Research Center at Washington State University, which has explored biofuel for airplanes. Investors in biofuel typically are looking for returns between 10 and 20 percent but haven’t seen rates much better than the single digits, he said.
That’s too bad, Cavalieri said, because biomass — a range of materials from algae to grass to wood chips — can play a useful role in the United States’ long-term energy plans. Demand for energy in the years ahead outpaces what the nation can provide in fossil fuels, and prices for gas and oil won’t be low forever, he said.
In New York, ReEnergy burns forest residue at its 24-year-old plant in Lyonsdale, a town on the edge of the Adirondack Park, creating enough electricity for about 21,000 homes. The company has two other plants in the region, including a 60-megawatt plant that provides electricity to Fort Drum, a large Army base, where the company said it has the biggest renewable energy contract in the history of the Army.
Its plant at Fort Drum is losing money, too, the company has said, and executives are looking for additional customers there, as well.
"Energy generators everywhere are struggling due to record-low wholesale electricity prices. Our Lyonsdale facility is not financially viable due to electricity prices," said a company spokeswoman, Sarah Boggess.
ReEnergy is pinning its hopes on a proposed clean energy standard in New York, which it said could provide a long-term solution allowing for "sufficiently priced" renewable energy credits, Boggess said. In the meantime, she said, the company hopes for an energy sales agreement or short-term funding.
That’s where Schumer comes in.
Schumer has asked the New York State Public Service Commission to help devise a plan to keep the plant open, possibly by allowing it to sell more renewable energy credits to the New York State Energy Research and Development Authority. He hasn’t heard back on the request, Schumer said yesterday.
Biomass plants are especially plentiful in California, Oregon and Washington, as well as in Florida, Minnesota and Maine, according to the Biomass Power Association, a trade group with 41 member companies. The BPA touts biomass for reducing methane that would otherwise be released by decomposing forest material, as well as for lowering carbon emissions, although the carbon-related benefit is a point of contention among scientists.
California’s biomass industry has shrunk dramatically due to the loss of government subsidies, the California Energy Commission reported. At the industry’s height in the state in the early 1990s, 66 plants generated more than 800 megawatts of power; generation has fallen to 640 MW as the number of plants has plummeted by more than half, the commission said.
The Biomass Power Association is rooting for natural gas prices to climb again, if the biomass industry is to rebound. Other help could come from the federal government, perhaps in the form of alternative energy production tax credits, said Carrie Annand, a BPA spokeswoman. If the Obama administration’s Clean Power Plan survives court challenges, states could embrace biomass as a way to reduce emissions, she said.
Finally, states could either require or encourage the purchase of energy from biomass facilities, Annand said.
Environmental groups have soured on biomass. Harvesting forest products and burning them for energy isn’t any cleaner for the atmosphere than fossil fuels and harms the forests’ delicate ecosystem, said Sami Yassa, a senior scientist at the Natural Resources Defense Council.
Scientists discount their once-held belief that biomass is a zero-carbon fuel, pointing out that replacing trees and letting them grow big enough to sequester carbon takes decades, Yassa said. Biomass from switch grass is a better alternative, he said, because it can be harvested and grown again on a short cycle.
"They’re not a non-polluting industry," Yassa said.
The new face of biomass may not be in energy at all, Washington State University’s Cavalieri said. If companies can find a mix of other high-value uses — oil from algae is already used in moisturizing cream to reduce wrinkles, for instance — the industry may thrive yet, he said.
"That way you’re not in a head-to-head competition," Cavalieri said.