B.C.’s biomass energy sector believes it has a unique opportunity in the aftermath of the mountain pine beetle infestation that has ravaged 18 million hectares of provincial forests, but it needs a little help from Victoria.
Gordon Murray, the executive director of the Wood Pellet Association of Canada, which makes fuel for biomass power, says he can sense the industry’s opportunities stalling out because of delays in policy-making related to forest industry fibre supplies.
And it isn’t just pellet producers who have a stake in the outcome. B.C.’s biomass electricity producers are also looking for ways to get better access to fuel.
Pellet producers have been lobbying Forest Minister Steve Thomson’s forestry fibre working group for changes they argue would give them secure access to waste wood that would otherwise be burned as slash.
The committee has held regular meetings since last fall, Murray said, and is overdue to deliver recommendations for Thomson to make decisions on. Murray was expecting that to happen by March 31.
Ministry spokeswoman Vivian Thomas said Thomson has received the report and decisions are pending.
“We’re utterly frustrated,” Murray said. “From our perspective, if there’s wood around a pellet plant or pulp mill that needs it, then it shouldn’t be burned.”
The biggest change they have asked for, Murray said, is a special, cheaper stumpage rate for residuals — limbs, tree tops and other unusable stems — which would make it affordable to haul it out of the bush, compared with having to pay saw-log stumpage rates, which encourages companies to leave the wood behind.
Murray added that pellet producers would also like to see the province restrict loggers from burning slash in areas near pellet plants, which would help give his industry’s operations more bargaining power with the major licensees in negotiating agreements between themselves.
As it is, Murray said pellet producers have little leverage with the major lumber companies that hold tenures for timber.
Wood pellet producers have turned leftovers from B.C.’s forest industry into a $300-million-per-year export business by grinding waste wood up into pellets to be used as fuel for increasingly ravenous biomass demand in Korea and even Europe.
Pellet production is a low-margin business based on processing low-grade material, he said.
Government movement on issuing supplemental forest licenses to secondary producers, such as pellet plants, would also help.
Murray added that any growth in his sector will have to come from getting more secure access to logging waste.
The whole forest industry is bracing for a significant reduction in timber harvests following the salvage of pine-beetle-damaged timber. Murray said cleaning up wood waste from the reduced harvest is their bid to help maximize what B.C. gets out of the harvest.
However, lumber producers have their own economics to balance off in the equation, said Doug Routledge, vice-president of the Council of Forest Industries, the industry group that represents their interests.
“We’re collectively, both, interested” in finding ways to tweak business practices or government policies to free up the flows of that residual wood, he said.
Primary lumber producers have an interest in facilitating sales of the residual wood, because it gives them another revenue source. In areas with competitive markets for the material, such as Williams Lake and Prince George where pellet plants and pulp mills vie for it, the wood is used rather than burned.A stumpage change could have unintended consequences, Routledge said. The industry has to be wary of how those changes would be perceived as subsidies in Canadian trade, and not just under the Canada-U.S. softwood lumber agreement.
However, Routledge said that banning slash burning might have the opposite effect. Licensees burn the material when they have no other use for it, but have to reduce forest-fire risks. Pushing them to higher-cost options for disposing of it risks making harvesting uneconomical.
Routledge said he expects to see recommendations that Thomson can take quick action on, including measures that all parties have reached consensus.
The results are of interest to B.C.’s biomass power sector. To date, biomass energy producers have built or are developing 877 megawatts worth of electricity-generating capacity to make power by burning waste wood.
“We do have tremendous up-side opportunity in wood waste biomass in B.C. but yes, access to fibre is a problem,” said Paul Kariya, executive director of Clean Energy B.C., which represents private power producers.