Maine Forest Industry Debates Continuing Biomass Economy

 

According to a report this week by the Bangor Daily News, Bangor, Me., USA, over the past eight months, the state has lost 1,000 direct jobs and an equal number in associated businesses, such as logging, because of the shutdown of three pulp and paper facilities, four pellet mills, and two biomass electric facilities. As Senator Angus King described it recently, Maine is in the midst of an "economic hurricane."

Now, as a result of the warmest winter on record, the lowest fossil fuel prices in six years, and a glut of natural gas, another hit to Maine’s forest products industry is right around the corner. This will potentially eliminate $300 million in annual economic investment and create a multimillion-dollar waste wood disposal problem for which no one has a solution.

These are the primary concerns as state lawmakers consider legislation to aid Maine’s six remaining grid-scale biomass electricity plants owned by ReEnergy Holdings and Covanta Holding Corp. and the plant workers, loggers, sawmills, pellet mills, and truckers who depend on them.

According to the newspaper article, the Professional Logging Contractors, or PLC, of Maine is troubled by the BDN Editorial Board’s decision to oppose the legislation, LD 1676, pointing to an editorial April 6 that focused on "opposition arguments and half-truths while ignoring, in our opinion, the strong arguments in favor." The logging industry of today is complex and evolving, and "those within the industry like us and our members are far more qualified to judge what’s best for it, and that is why we are fighting so hard for this legislation," PLC says.

While debate over this legislation certainly is healthy, a number of misconceptions are preventing an honest argument. Here is the attempt to correct them:

• Much has been made of the argument that biomass plants have failed despite billions in subsidies, but what opponents of the current legislation do not say is that Maine paper mills were significant beneficiaries of this long-expired program for their own biomass facilities. One of the largest recipients was the Rumford mill, which now opposes this legislation, with more than $500 million in contract payments. Furthermore, it’s important to note that any support for these facilities was federally mandated, the contracts expired in 1999 and the current owners of the biomass facilities were not the beneficiaries of any of these programs.
• Some opponents say the legislation asks Maine to invest in biomass while the biomass producers are not investing. In fact, Covanta and ReEnergy have made major investments in their facilities and are seeing no return. ReEnergy reopened its Ashland facility in 2014. Both companies also have produced documents that spell out their plans to invest further. Their direct spending alone will exceed $100 million per year. It is doubtful that any electric generator other than biomass has this type of impact on the state.

Under this legislation Maine’s biomass generators would commit to meaningful future investments and would be subject to stringent accountability measures. If a generator fails to meet its investment commitments, the contract rate would be proportionately reduced. This would be a performance-based contract with ongoing monitoring and reporting. If the facility shuts down, it would stop receiving any payments.

• Opponents of the legislation continue to attack the efficiency and emissions of biomass power plants. The truth is that these biomass power plants reduce reliance on fossil fuels, reduce greenhouse gas emissions compared with other base load sources and have been cited as offering climate change mitigation benefits in the U.S. Environmental Protection Agency’s Clean Power Plan.

ReEnergy and Covanta have stated in recent weeks that they wish to pursue projects that would allow their facilities to become more efficient cogeneration facilities, capturing electrical and thermal energy from biomass. These standalone biomass facilities represent an economic development tool for the creation of behind-the-meter industrial parks in rural Maine.

The revenue from biomass — low-value tree tops, limbs, chips and sawdust — is part of the business plan of virtually every Maine logger and sawmill, and as operational costs have increased, they have come to depend on it. Take it away and many will shed jobs or close, and Maine also will be left with the challenge of how to dispose of more than 2.5 million tons of "waste wood" once consumed by biomass plants.

Legislators could provide biomass plants with a lifeline — power-purchase contracts at a price at which they can afford to continue operating to buy time for market conditions to improve. The bigger picture here is that this would provide a lifeline to rural Maine with a return on investment of 45 to 1.

Approval of this bill could avert a crisis at a small fraction of the cost of letting it happen, the article points out..