How Do Wood Bioenergy Projects Affect Local Stumpage Prices?

30 09 2012

Foresters and timberland owners in Texas could care less about wood bioenergy projects in Florida or Georgia.  Why?  Because wood bioenergy markets impact timberland investments and the forest products industry at the local level.  The uncertainty of new project announcements requires project-by-project assessments and assumptions to estimate the potential impacts of bioenergy projects on stumpage prices in local timber markets. In the September issue of Wood Bioenergy US (WBUS), Brooks Mendell and Amanda Lang explore two bioenergy-related variables as they affect stumpage price projections: project risk and feedstock volumes by type.

An analysis of six scenarios of announced and operating biomass projects in Alabama/Mississippi revealed that assumptions regarding project viability affect stumpage prices to a greater degree than assumptions regarding feedstock mix.

The results are specific to Alabama/Mississippi, in which only 32% of currently announced and operating projects pass viability screening. A systematic, repeatable approach to screen bioenergy project risk provides a transparent and flexible process for testing different assumptions. Modeling feedstock mix requires assumptions related to the percent of pulpwood versus logging residues versus other forestry volumes and urban wood wastes.   Overall for the Alabama/Mississippi case, assumptions related to project risk and viability had 6.7 to 7.2 times more impact on forecasted stumpage prices than did assumptions related to feedstock types.

National update: as of September 25 2012, WBUS counts 452 announced and operating wood bioenergy projects in the US with total, potential wood use of 124.8 million tons per year by 2022.  Based on Forisk analysis, 298 projects representing potential wood use of 77.0 million tons per year pass basic viability screening.  To download the free WBUS summary, click here.

Forisk announces the recent publication of its book “Wood for Bioenergy: Forests as a Resource for Biomass and Biofuels” by Brooks Mendell and Amanda Lang.  This book was published by the Forest History Society with support from the Plum Creek Foundation, U.S. Forest Service Research, Forest Investment Associates, National Alliance of Forest Owners, Potlatch Corporation, Price Biostock, the Westervelt Company, and the Lynn W. Day Endowment for Forest History Publications.  For more information and to purchase, click here.

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