Economics of Burning Biomass

After you pay for the logging and chipping to strip out the biomass, there is very little revenue left to cover capital and operating costs, while the environmental deficit mounts.

Analysis by Michael Major

The May 14th Globe & Mail article “Western Compa­nies Devise Ambitious Energy Plan” celebrates the announcement of a forest biomass-to-electrical-energy conversion initiative. But there is nothing green, climate neutral, or appropriate for BC in this development. The announcement assumes future pine forests have nothing better to do with their banked 10,000 year accumulation of biomass than provide it to subsidize electricity for the illumination of Las Vegas.

It would be better on all accounts if these once and future public forests could retain their biomass and beetle damaged structural complexity to allow development of a diverse complex beetle-resilient forest mosaic over the next 80 years. Stripping-off the forest for its biomass is worse than clearcut and burn logging which at least leaves much of the nutrient and biomass residue available for natural for­est processes.  

And what about the economics? Just estimating some numbers — recovering forest biomass (logging, on-site chipping and trucking) is going to cost about $35 per cubic metre (m3) with much of that spent on fossil fuels. It will cost a lot more if the Crown expects the logger to pay stumpage, build roads, plant trees and steward the de­veloping forest. But let’s assume government is willing to subsidize biomass recovery to the tune of $5,000 per hec­tare by constructing the roads, undertaking silviculture and abandoning its financial stumpage interest.  

It takes about 1.5 m3 of wood (assume pine) to produce a metric tonne of hogged fuel (20% moisture) which if properly chipped has an energy value of about 15 GJ (giga joules). In other words, stripping our interior forest of bio­mass will produce fuel for process heat at the rate of about 10 GJ /m3 of wood. Assuming 200 m3 recoverable woody biomass per hectare in beetle damaged forests, the recover­able biomass fuel value per typical hectare would be about 2000 GJ.  

Without including subsidies for stumpage, roads and silviculture, our cost of biomass logging, chipping and transport will be about $7000 for 200 m3 which will pro­duce 2000 GJ of process heat. Generously assuming a 35% conversion efficiency from biomass fuel to electrical energy (convert biomass to fuel, convert fuel to heat, convert heat to mechanical energy, convert mechanical to electrical energy) our 2000 GJ of fuel will convert to about 700 GJ of marketable electricity. Inclusive of logging subsidies, the cost of biomass fuel for electrical energy will be about $10 per GJ of electricity. 

The construction and operation of the biomass generating plant will involve very significant capital and operating costs. The capacity to recoup capital and operating costs from electricity sales is severely limited by prices available in the marketplace. BC Hydro currently sells large scale industrial electricity in BC for $14 per GJ. Unless BC Hydro is intent on conveying a subsidy to the biomass generating plant, the available headroom for recouping capital and operating costs is $4 per GJ of electricity. It seems unlikely that the combined capital and operating costs of a biomass electricity plant can be recouped within the price headroom for large scale industrial electricity demand. 

Estimating again, it seems likely that a central plant capable of converting 250,000 m3 of forest biomass into fuel could be constructed for $100 million dollars to annually produce 2.5 million GJ of process heat which potentially could be converted into 875,000 GJ of grid-wheelable electricity. If all the energy produced was sold as domestic industrial electricity, it would gross $12.25 million annually. Delivered costs of biomass for fuel at $35 per m3 would total $8.75 million. Very little revenue would be left from electricity sales for capital and operating costs. It makes sense to replace industrial use of natural gas with biomass derived process heat. But without tremendous financial subsidy, it does not make environmental or economic sense to use forest biomass for producing electricity. 

Considering the air quality consequences, the loss of biomass and nutrients to our forests, the rapid production of greenhouse gasses and the likelihood that massive public subsidy will be necessary to make this idea even look profitable, I suggest that our province may not want to invest or risk our environment and commonwealth in this project. 

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[From WS May/June 2007]

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