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Panel Group Fights BCAP Listings
Composite Panel Assn. celebrated its 50th anniversary during its annual meeting in Bonita Springs, Fla. May 2-4, and one of the most discussed issues was the industry’s wood fiber resource, especially in relation to the emergence of the new generation wood bioenergy industry and the U.S Dept. of Agriculture’s Biomass Crop Assistance Program (BCAP), in which the government makes matching payments to owners of biomass raw materials delivered to qualified biomass conversion facilities.
CPA is leading an effort to get USDA to exclude from its BCAP eligible materials list those residues already traditionally used in the composite panel industry, and says BCAP is basically a government subsidy to the wood bioenergy industry and is harming the composite panel industry.
CPA’s Environmental and Public Affairs Committee featured a panel discussion on BCAP and the Future of Wood Fiber, including participants T.J. Rosengarth, VP & COO, Flakeboard; Darrell Keeling, VP-Composite Manufacturing, Roseburg Forest Products; Wade Mosby, Senior VP, The Collins Companies; and Brock Landry, senior partner, Venable LLP.
Citing statistics from Forisk, they reported that “announced” biomass projects in the Southeast would consume 47 million green tons annually, while projects actually “expected” to commence would consume 19 million green tons yearly, which is as much wood as is consumed by 38 particleboard/MDF mills or 10 new paper mills.
They reviewed the evolvement of BCAP from the 2008 Farm Bill and managed by USDA. When it became apparent that BCAP was providing matching payments for biomass materials traditionally used for composite board plants, CPA began lobbying for changes in the eligible materials list. As a result, the program has been temporarily stopped, is undergoing revision, and key changes have been made to the new draft rule in industry’s favor, but the “language is still too vague to fully protect us,” according to the committee.
A pubic comment period ended on April 9, but a final ruling won’t be ready until late this year.
To this point, the federal government has paid out $185 million in matching payments, nearly all for wood biomass, but 65% of that has been for diverted wood, not expanded sources, which is at the heart of the CPA discontent.
The membership luncheon featured Bob Cleaves, President of the Biomass Power Assn., which includes nearly 50 members and 80 biomass power plants throughout 20 states, mostly longstanding independent power producers (IPPs). BPA encompasses various biomass materials, though mostly woody biomass.
Cleaves said the federal government is “taking unprecedented steps in the energy sector that will have profound affects in the forest products industry.” And he noted that “biomass is at the heart of the nation’s energy policy, not solar, not wind.”
Cleaves pointed to ongoing legislative efforts for a renewable energy standard, though he said such legislation may not happen until next year or the year after.
He expects the biomass industry to continue to grow gradually through smaller scale projects, though currently “there seems to be a blind ambition to build these plants.”
As for BCAP, Cleaves said, “BCAP is one big gift. We were happy to take the gift,” though he expressed concern that “existing” biomass to electricity does not enjoy a level playing field with other users of biomass such as biofuels (ethanol), and that new facilities seem to gain favor for incentives over existing facilities.
Zilkha Biomass Buys Dixie Pellets Assets
Texas-based Zilkha Biomass Energy has purchased the assets of Dixie Pellets in Selma, Ala. for $6.25 million, following approval of the sale by a U.S. Bankruptcy Court judge. Dixie Pellets, once considered the world’s largest pellet plant, had declared bankruptcy in September 2009. The assets include 25 acres and a pellet production plant.
Zilkha Biomass Energy is a renewable energy project developer utilizing a proprietary power generation system to produce electricity and industrial process heat through a patented pressurized combustor, which generates hot, high-pressure gases that in turn pass through a cyclonic separator into a gas turbine.
The company is operating a power generation plant in Jaffrey, NH and is building its first pellet plant in Texas. According to Zilkha CEO Jack Holmes, the company is still deciding what to do with the Dixie Pellets assets and is in conversations with private and public officials about developing long-term biomass supply contracts.
No final decision has been made, and Zilkha may keep parts of the Selma plant in place, Holmes adds. “We really like the state of Alabama, but the key is developing long-term biomass supplies,” he says.
The Dixie Pellets plant was majority-owned by a unit of Harbert Power Fund III, an affiliate of Harbert Management Corp. in Birmingham, Ala.
Other assets reportedly sold included 10 barges to BKM Holding LLC.
The plant, built adjacent the Alabama River, was designed to produce 520,000 metric tons per year of wood pellets, primarily for markets in Europe. The cost to build the facility was reported as $75 million.
The plant started up in January 2008. Harbert had purchased it in spring 2007. The original owner was New Gas Concepts.
ZeaChem Confirms Ethanol Biorefining
ZeaChem Inc., a developer of biorefineries for the conversion of renewable biomass into sustainable fuels and chemicals, announced the successful production of ethanol at a capacity that can be scaled to commercial production. ZeaChem’s results have been confirmed by third party vendors. The company will now demonstrate the integration of its biorefining processes at its 250,000 gallon per year biorefinery in Boardman, Ore.
Using off-the-shelf catalysts and standard equipment in an innovative way, ZeaChem produced ethanol from ethyl acetate through a process called hydrogenation—a common industrial practice that is readily scaled to commercial levels.
“Through the successful production of ethanol, we’ve completed ZeaChem’s C2 carbon chain suite of products, which includes acetic acid, ethyl acetate, and ethanol,” says Jim Imbler, President and CEO of ZeaChem. “The next step is to integrate these known processes to achieve the ultimate target of commercial production of economical and sustainable biofuels and bio-based chemicals.”
Ethanol is primarily used as a fuel additive blended with gasoline. The annual market for ethanol is $26.2 billion globally and $13.6 billion in the U.S., according to Zeachem.
Having completed testing of its C2 carbon chain suite of products, ZeaChem has begun fermentation work on a new suite of products—the C3 platform—using the same processes and equipment. The product platform includes propionic acid, propanol and propylene.
On June 2, the company broke ground on its 250,000 gallon-per-year biorefinery in Boardman, the core technology of which will begin to come online in 2010. The integrated facility is being partially funded by a $25 million grant from the U.S. Dept. of Energy (DOE) through the American Recovery and Reinvestment Act of 2009. The company will use the grant to build the chemical fractionation on the front end and the hydrogenation process on the back end for making cellulosic ethanol. The facility will begin to produce cellulosic ethanol in 2011.
The Oregon Employment Dept. calculates that the construction and operation of ZeaChem’s Boardman biorefinery will create 292 direct and indirect jobs in Oregon.
ZeaChem has a contract with GreenWood Resources (GWR), a Portland-based timberland investment manager, to obtain sustainable hybrid poplar tree feedstock from the nearby farms held under GreenWood Tree Farm Fund, LP. ZeaChem will also process trials of herbaceous crops, agricultural residuals and other renewable biomass resources.
Florida PSC Approves 100 MW Cogen Plant
Florida Public Service Commission recently approved the city of Gainesville’s proposal to build a 100 MW wood-burning power plant, reversing course from February when the commission appeared poised to deny the project.
The proposal features a 30-year contract between Gainesville Regional Utilities (GRU) and American Renewables to establish the Gainesville Renewable Energy Center. The plant would be built, owned and operated by Boston-based American Renewables and fueled by woody residuals from a variety of sources within a 75 mile radius of Gainesville.
A big concern voiced by the PSC in February was the plant’s viability. American Renewables officials claim the project is viable even without subsidies, and plan to begin construction on the $400-$500 million facility in December if the plant’s design is approved by the Florida Dept. of Environmental Protection and other state agencies. Project officials say the plant should be operational by 2013.
Int’l WoodFuels Starts New Virginia Facility
Biomass conversion project developer International WoodFuels is now operating its first fuel pellet manufacturing plant, this one in Virginia, while the company continues the permitting process for a new pellet plant in Burnham, Maine, near International WoodFuels’ Portland headquarters.
The Virginia pellet plant started up in April in Louisa County on the site of a former chip mill and sawmill operation. International WoodFuels acquired the property in 2009, upgraded the chipping facility and added new pellet production machinery.
Novozymes, Lignol Sign Agreement
Novozymes reports it has signed a research and development agreement to make biofuel from wood chips and other forestry residues with Lignol Energy Corp. The goal of the partnership is to develop a process for making biofuel from forestry waste at a production cost less than $2 per gallon, making it economically competitive with current gasoline and corn ethanol market prices.
“Novozymes’ goal is to enable commercial production of cellulosic biofuel from a wide range of feedstocks,” says Claus Crone Fuglsang, Senior Director of BioEnergy R&D in Novozymes. “Our enzymes have the unique ability to turn wood residues and plant waste into fuel for our cars. Lignol is an industry frontrunner and our work together over the past couple of years has reinforced a shared vision to produce energy and value from wood waste.”
This past February, Novozymes released an enzyme that enables commercial production of biofuel from plant waste. The enzyme converts cellulose in biomass into sugars that can then be fermented into ethanol. Lignol has developed a pre-treatment technology that prepares the wood prior to the introduction of the enzymes. The two will use Lignol’s pilot plant in Burnaby, BC, Canada for the research and development of this cellulosic technology.
Lignol President and CEO Ross MacLachlan adds, “The progress we have achieved to date with enzymes from Novozymes is extremely promising and a successful outcome of this collaboration should position us to produce cellulosic ethanol from woody biomass profitably and without the need for long-term government subsidies.”
Maine Mill Cited For Safety Violations
U.S. Dept. of Labor’s Occupational Safety and Health Administration (OSHA) has cited Geneva Wood Fuels LLC for six alleged serious violations of workplace safety standards following an August 2009 explosion at a wood pellet manufacturing plant in Strong, Maine.
An OSHA inspection found that the plant’s employees were exposed to potential dust explosions and fires stemming from deficiencies in the construction, design or location of the plant’s wood pellet processing system, the use of an unapproved spark-producing shop vacuum, and not training employees on specific work procedures to protect themselves from the explosive properties of wood dust.
The agency also found unapproved lifting devices, missing safety signs and missing guardrails. All told, the six serious citations are accompanied by $27,000 in proposed fines.
Great American Pellets Breaks Ground
A Carbon County company plans to convert an abandoned Palmerton (Pa.) water bottling facility into a premium hardwood pellets plant for fueling residential pellet stoves. Great American Pellet company officials announced the project at a ground breaking with state and local officials.
The Dept. of Community and Economic Development contributed $1.1 million to the $7 million project: $770,000 in loans, $220,000 in alternative energy grants, and $80,850 in job training assistance and job creation tax credits.
The startup company chose Palmerton for its location in an area of the country that lacks similar manufacturers, and because the industrial area the factory will be located in is far from residential neighborhoods, says President Jeff Nichols.
The factory was designed for energy efficiency by EcoTherm, Inc., which specializes in the design of wood pellet plants. It will use dust captured during the manufacturing process to fuel the pellet dryer. The factory is expected to open in the fourth quarter of this year.
Westervelt Focuses On Renewable Energy
The Westervelt Company is partnering with Alabama Power to add renewable biomass-based energy to the company’s mix of fuel sources. Its new business, Westervelt Renewable Energy, will provide Alabama Power with 7 MW of generating capacity, using wood byproducts from its Sustainable Forestry Initiative Chain of Custody Certified lumber facility in Moundville, Ala. and from other sources.
RED Purchases Honey Lake Plant
Recycled Energy Development (RED), a Chicago-based waste energy recovery project developer, has acquired the 30 MW Honey Lake biomass power plant in Wendel, Calif. RED hopes to increase the plant’s efficiency and clean energy output.
Built in 1989, the Honey Lake plant leverages nearby geothermal energy to help generate electricity from a biomass feedstock of forest thinnings, logging residue, mill wastes and other waste wood. One of the area’s largest private employers, the facility sells its electricity under long-term contract to Pacific Gas & Electric.
RED will evaluate installing a waste heat recovery system that could significantly increase the plant’s output of renewable energy. Potential project enhancements could also reduce California CO2 emissions by 44,000 metric tons per year. That is the equivalent of taking more than 8,000 cars off the road, according to the company.
This acquisition is part of RED’s strategic partnership with Denham Capital Management to develop and manage a portfolio of clean energy projects.
Bonds Allocation Goes To GreenHunter
GreenHunter Energy, Inc. announced that the California Debt Limit Allocation Committee (CDLAC) awarded an allocation of $29.9 million of tax-exempt Recovery Zone Facility Bonds to be issued by the California Enterprise Development Authority for and on behalf of the company’s wholly-owned subsidiary, GreenHunter Mesquite Lake, LLC, to be used for the construction, refurbishment, installation, equipping and expansion of an existing 18.5 MW biomass power generation facility near El Centro, Calif. GreenHunter acquired the dormant biomass facility in May 2007 for $7.5 million.
The company announced late last year the execution of a new 20-year power sales agreement for 100% of the net output of the GreenHunter Mesquite Lake biomass-fired power plant with the Imperial Irrigation District. The power sales agreement provides for the purchase of up to 27 MW of net electrical output over the 20-year period on a take-and-pay basis for a fixed price that escalates annually.
Verenium Receives More DOE Support
Verenium Corp., a developer of cellulosic ethanol and high-performance specialty enzymes, reports it has been awarded an additional $4.9 million from the U.S. Dept. of Energy (DOE) to fund ongoing activities at its demonstration-scale facility in Jennings, La. This cooperative agreement is an extension of the grant previously awarded to the company in July 2008 under a DOE program.
The company plans to use the additional funds to support ongoing cellulosic technology and process optimization at its Jennings demonstration facility.
Rollcast Taps Zachry To Build Power Plant
Rollcast Energy selected Zachry Industrial, Inc. to engineer, procure and construct its 53.5 MW Piedmont Green Power project in Barnesville, Ga. Project completion is expected in 2012,.
Zachry and Rollcast will work as a collaborative force, generating more than 300 jobs during construction and 27 full-time positions.
Riverstone Invests In Intrinergy Venture
Riverstone Holdings LLC’s most recent renewable and alternative energy fund has reportedly made a strategic investment in Intrinergy, a leading biomass renewable energy company. The company said it is planning to use the proceeds from Riverstone, which were not disclosed, to fuel its growth strategy in the U.S. and in Western Europe.
John Keppler, CEO of Intrinergy, predicts the demand for biomass from utilities and consumers committed to clean energy and carbon reduction will soon outstrip biomass resources available in Europe.
Riverstone’s investment will enable Intrinergy to acquire and develop low-cost wood pellet operations and other fiber processing assets, principally in the Southeastern U.S.
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