As the year 2010 nears its end, operators of mixed C&D recycling facilities are still in the process of discerning how plugged in to the energy markets their operations will be in the future.
To what extent wood recyclers are currently involved in the energy market can vary regionally. (See “Feel the Burn,” the cover story of the Sept.-Oct. 2010 edition of Construction & Demolition Recycling.)
Beyond the market created by boilers currently accepting wood fuel are additional technologies and end markets. Some of these may end up being part of America’s energy future, while others may prove untenable as long-term energy strategies.
THE OUTLET AND THE PUMP
At the C&D Recycling Forum, held in Baltimore Oct. 3-5, 2010, a session titled “The Energy Market: How Great is the Potential?” presented an overview on some of the recent developments tying C&D operations to energy production.
Bob Brickner of Gershman, Brickner & Bratton Inc. (GBB), Fairfax, Va., gathered information from several sources to look at both the current and potential future status of scrap wood and mixed C&D materials as an energy feedstock.
Renewable energy sources are a growing part of the energy story, but at 7 percent in 2008 (compared to 37 percent for petroleum, 24 percent for natural gas and 23 percent for coal), renewable sources remain the smallest slice of the pie.
As of 2008, biomass energy was the largest sub-sector of the renewable market, providing 52 percent of renewable energy. (This compares to 34 percent for hydroelectric, 7 percent for wind, 5 percent for geothermal and just 1 percent for solar.)
In his presentation, Brickner noted that demand for energy can likely be counted on as a constant. “In theory, there is plenty of potential demand,” said Brickner. “The issues may be actual quantity [of supply] available, the term of availability, pricing and the location, to name a few—plus competition [for the material.]”
Many C&D recyclers have become familiar with how to turn wood scrap into a prepared fuel feedstock for industrial boilers that generate electrical power. While renewable electrical energy sources are important long-term, North America’s abundant coal and natural gas supplies provide an abundant domestic source of electrical power.
Perhaps more intriguing on the energy side is the prospect of using biomass in the transportation energy sector.
In terms of political and popular support, alternative energy in this sector is likely to attract positive attention. Some support comes from those who believe the era of “peak oil” has arrived and that petroleum will only be more scarce and more expensive from here on out.
Additional support comes from those who see “energy independence” as important no matter how much oil remains in the ground.
TRIAL AND TESTING
In terms of demand for biomass-into-vehicle fuel moving from the theoretical to the real, a recent round of U.S. Department of Energy (DOE) funding may provide some insight.
An analysis by Brickner into DOE funding—much of it tied to the American Reinvestment and Recovery Act (ARRA), or the Stimulus Plan—turned up 19 “bio-refinery” projects that have received more than $560 million in DOE funding. The projects identified by Brickner as those that would or could use scrap wood or mixed C&D residues as a feedstock include:
• An $81 million DOE grant will help fund a projected $300 million Bluefire Ethanol plant in Mississippi. The plant will use woody waste, mill residues and sorted municipal solid waste (MSW) as feedstock.
• A $50 million grant toward a $140 million Enerkem facility in Pontotoc, Miss., will use woody biomass in a gasification and catalytic process.
• A $50 million DOE grant will go toward a $100 million facility in Vero Beach, Fla., designed to accept wood, vegetative residues and C&D material in a gasification and fermentation process.
• In Commerce City, Colo., a $23 million DOE grant will go toward a Clearfuels Technology project to turn woody biomass into diesel fuel and jet fuel.
• Wood into “green gasoline” is the goal of a Gas Technology Institute project in Des Plaines, Ill., that has received $5 million in DOE grants.
| Global Positioning |
| FOEX Indexes Ltd., Helsinki, and Wood Resources International LLC (WRI), Bothell, Wash., have announced a partnership that will help them launch a Global Wood Chip Price Indices service. According to the two companies, “More than 80 million tons of wood chips, valued at almost $10 billion, are traded annually in the open market worldwide, and the shipment volumes are increasing.” In their news release announcing the service, FOEX (www.foex.fi) and WRI (www.woodprices.com) state, “The vast majority of traded wood chips are currently utilized for pulp production, but the volumes used to generate energy are growing. The key participants in this trade, including forest companies, energy producers, trading houses and financial institutions, have requested that FOEX consider including wood chip prices in the company’s portfolio of well-established pulp, paper and pellet indices.” The new chip indices “will be based on a large number of actual trades, and the data will be collected from both sellers and buyers of wood chips. Initially, the price indices will be published separately for pulp and energy end uses,” say the companies. “The combined efforts of FOEX and WRI, and the PIX-index system, will ensure that the indices, whose launch is planned for early 2011, will be statistically reliable and thus well suited for numerous market participants,” say the two companies. Those who would like to participate in the index formation process or to know more about it are encouraged to contact either the FOEX representative in bio-indices, Matti Sihvonen at matti.sihvonen@foex.fi or Håkan Ekström, the president of WRI, at hekstrom@wriltd.com. |
In a study conducted in 2005, the DOE made a projection of biofuel sources in the United States, matching feedstocks with their potential market share. That DOE projection has forest resources making up 27 percent of the biofuels market and the “other” sector (which includes sources drawn from the MSW or waste stream) making up another 8 percent.
There are no guarantees that the materials flowing into C&D recycling facilities will someday be cost-effectively refined into transportation fuel. Likewise, there are no guarantees that the multi-million-dollar DOE grants will help make this goal a reality.
But when considering the economic advantage enjoyed by those who can produce the fuel that keeps American cars and trucks running, it’s a nice scenario for C&D recyclers to daydream about.
VALUE ADDED?
For recyclers, the many questions swirling around the energy market connection include whether this market ultimately increases the value of clean wood or creates a value for materials currently considered residuals.
It may be a positive sign that scrap wood was among the last of the secondary commodities to lose value after economic conditions started deteriorating in the second half of 2008.
Throughout most of 2009, even as construction and manufacturing activity slid downward, many C&D recyclers found themselves in a sellers’ market when it came to their scrap wood.
Likewise, 2010 has seen biomass energy demand remain constant, according to figures collected by the United States Energy Information Administration (EIA), Washington, D.C.
In the first seven months of 2010, more than 32,000 megawatt hours (MW-h) of electricity were generated with biomass energy in the United States. That compares to less than 31,000 MW-h in the first seven months of 2010.
In 2010, half of this demand has come from what the EIA classifies as the Industrial Sector and less than 6 percent has come from larger electric utility companies. That seems to indicate that, as Brickner noted in his presentation, growth in demand could, in theory, be substantial as utilities seek to diversify their energy sources.
In 2010, the use of biomass energy (measured by MW-h) has grown significantly in several states in different regions of the country, including Washington (37.2 percent); Maine (19.8 percent); Michigan (14.9 percent); North Carolina (14.6 percent); and Georgia (13.4 percent).
The market for forest products, including wood chips, is far from new or novel, with papermakers having relied on wood chips since the late 19th century.
The increased interest by the energy sector in the product, however, could be creating a wider market at the right time for mixed C&D recyclers. That market is becoming not just regional or national, but global.
In Europe, wood pellets are a preferred alternative energy option for many, even as a source of home heat. And in China, the importation of wood chips and logs reached an all-time high in the second quarter of 2010, according to Wood Resources International LLC (WRI), Bothell, Wash.
WRI is working in cooperation with FOEX Indexes Ltd., Helsinki, on a new set of Global Wood Chip Price Indices (See the sidebar “Global Positioning” on page 30.).
Time will tell if the creation of a new index for wood chips ties into numerous new end market options that could be opening up for mixed C&D recyclers.
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