Panel makers fret over U.S. bioenergy policy
August 15, 2011 | 12:07 pm CDT

Tom Julia, presdient of the Composite Panel Assn., discusses his group's two
biggest issues: bio-fuel subsidies and formaldehyde emission rules.

BONITA SPRINGS, FL – Members of the Composite Panel Assn. gathered for the group’s 50th anniversary convention potentially facing the most critical issue since the group’s formation as the National Particleboard Assn. in 1960.

In recent months the Biomass Crop Assistance Program (BCAP) has come to be viewed as a serious threat to panel producers’ procurement of wood fiber required to make their products. Any substantial crimp on fiber supply would impact the availability and pricing of particleboard and MDF for manufacturers of cabinets, furniture and other wood products.

BCAP and its potential to wreak further havoc on an industry already weakened by the economic recession, dominated many of the presentations and discussions of the CPA meeting. CPA President Tom Julia said it was the first issue in his nearly 20 years with the association to rival formaldehyde emission regulations as its top concern.

Law of ‘unintended consequences’
BCAP is a federal rule initiated by the 2008 Farm Bill. It was created to spur investment in using untapped biomass materials, including crop residuals, as renewable energy sources for bio-fuel production.

On Feb. 3, the USDA Farm Service Agency finally issued its proposed BCAP rule, expanding it to include non-food crops for renewable energy and bio-fuel production. The expansion included wood chips and planer shavings – materials used in the manufacture of particleboard and MDF.

Under the program, sources of eligible materials would be paid a subsidy of up to $45 a ton to be transported to an approved biomass conversion plant. The USDA Farm Service Agency has a budget to dole out up to $500 million in subsidies per quarter.

On May 5, President Barak Obama issued a presidential directive to accelerate the use of bio-fuels as a “green” alternative to coal and other pollution-generating energy sources.

CPA representatives said they support the intent of the rule to subsidize new material sources, particularly crop waste, to give farmers and others financial incentive to collect and transport them to a bio-fuel conversion facility. But lumping existing materials such as wood chips, that already have a cash value in the market, on the eligible materials list is one of the “unintended consequences” of the rule.

In February, Julia stated that the subsidy was approximately double the current market value for wood fibers used by CPA member mills. He said it does not make sense for the federal government to make it more profitable to burn wood fiber than to have it used to create composite panels.

Darrell Keeling, vice president of composite manufacturing for Roseburg, was part of a panel of board producers that addressed BCAP. He said, “We support the intent of BCAP to expand the biomass supply” but not to include wood fiber materials sought by panel mills. Keeling added that approximately two-thirds of BCAP subsidies went to current sources instead of new sources as intended by the law.

While it would take time for new bio-fuel plants to come on stream, TJ Rosengarth of Flakeboard, moderator of the producer panel, said a major concern is that some of the 1,200 coal-fired plants in the United States be modified to also burn biomass. He estimated that substituting 5 percent of coal plants material source with wood would be equivalent to the wood fiber needs to annually operate nine particleboard/MDF mills.

Panel producer’s concerns were shared by furniture manufacturing representatives participating in a separate panel. In particular, representatives of Sauder Woodworking and Bush Ind. indicated that if BCAP restricted the supply and inflated the price of panels, they would be forced to look at alternative materials to make their products.

Biomass Power Assn. CEO weighs in
Bob Cleaves, president and CEO of the Biomass Power Assn., spoke to entire delegate of CPA members. He noted that bio-fuel currently produces less than 1 percent of the nation’s total power supply.

“’Why is the government messing with my market?” is what I’m sure you are all thinking… The government is taking unprecedented steps on energy supply that will have profound impact on the forest products industry.”

Cleaves noted that most of the existing plants were built in the 1980s and early 1990s, but new plants will gradually be built. “As long as natural gas prices stay low, biomass will grow slow.”

BCAP reform a CPA priority
While Cleaves suggested that “BCAP is not difficult to fix” the CPA is gearing up for a battle on Capitol Hill.
The importance of BCAP was underscored by the CPA’s request to its producer and supplier members to vote in favor of a one-time special assessment that would add up to 20% to their annual membership dues to fund lobbying efforts aimed at BCAP reform, as well as continue its push for Congress to adopt California’s formaldehyde emissions standard as a federal law.

Specifically, CPA will concentrate its lobbying efforts for Congress to amend the BCAP definition of materials eligible for subsidies not to include existing sources such as wood chips.

Read blog: Will Subsidizing Bioenergy Be 'Jobs Killer?'

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