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Biomass Industry 2012 Review: A Mixed Bag

The U.S. biomass industry suffered a frustrating year in 2012, with EPA regulatory uncertainty the dominant theme. The Presidential Election heavily influenced the pace of EPA regulation and the time of writing the long-awaited Boiler MACT (Maximum Achievable Control Technology) Rule and its companion the Non-Hazardous Secondary Material (NHSM) Rule, which are still incomplete, while the EPA's Greenhouse Gas Tailoring Rule may not be completed until 2014.

Yet the most important factor impacting biomass in 2012 was not Washington, D.C. but natural gas prices. As a result of an abundance of natural gas from shale gas fracking, several coal plants – which may otherwise have been potential candidates for biomass co-firing or conversions – were closed, often to be replaced with combined-cycle gas turbine power plants.

USA’s Largest Biomass Plant Operational

A number of major biomass projects made significant headway in 2012. Southern Company’s 100 MW Nacogdoches plant in Texas began commercial operations in mid-July, making it the USA’s largest dedicated biomass facility.

The $500 million plant supplies all of its power to Austin Energy in a $2.3 billion, 20-year PPA. The entire facility utilizes just one boiler, making it the largest biomass bubbling fluidized bed boiler unit in the world. The plant, however, has not run since September, unable to compete with cheaper natural gas-fired power plants.

In December, Cate Street Capital took delivery of a steam turbine for its $275 million, 75-MW Burgess BioPower plant in Berlin, New Hampshire. The plant, which will supply power to the New Hampshire Public Service under a 20-year PPA, is expected to become operational by the end of 2013. Meanwhile, the 100-MW Gainesville Renewable Energy Center in Deerhaven, Florida is expected to be commissioned in Fall 2013.

Massachussets Out on a Limb

In May the Massachusetts Department of Energy Resources released a set of strict standards that require all qualifying biomass plants to generate power at 50 percent efficiency to qualify for one-half Renewable Energy Credit (REC) per MWh, and 60 percent for one full REC. These new standards are up from the previous 25 percent efficiency requirements. Plants will also be required to analyze lifecycle emissions to demonstrate at least 50 percent reductions over 20 years.

This will have the effect of disqualifying large-scale combustion from biomass without CHP and some fear this decision will influence the EPA decision regarding biomass Boiler MACT regulations. But Massachusetts continues to be the only state that is opposed to the sufficiency standard, said Bob Cleaves, President of the Biomass Power Association.

“Not only have no other states followed Massachusetts lead, but in some cases – Washington state in particular – there has been a 180° turn and legislatively declared biomass to be carbon neutral. Massachusetts is an outlier.”

Strong European Demand for US Feedstock

The biomass supply industry continued to see positive developments emanate out of Europe, which is investing heavily in biomass pellet production facilities to secure fibre for a boom in coal-to-biomass conversions.  In December, British power generator Drax - which is converting 50 percent of its six-unit, 4 GW coal plant to biomass  - expects to begin construction of two pelletization plants in Louisiana and Mississippi, as well as storage and loading facilities at the Port of Greater Baton Rouge, during the first half of 2013.

The manufacturing facilities, Amite BioEnergy in Mississippi and Morehouse BioEnergy in Louisiana, are expected to start full operations in 2014 with a combined capacity to produce 900,000 tonnes/year of biomass pellets using fiber from sustainably managed forests. The Greater Baton Rouge facility, due to be operational in 2014, will be able to store approximately 80,000 tonnes of pellets.

European Biomass Plant Goes Off with a Bang

Driven by the European Union’s Renewables Directive, several coal plants have converted to biomass. Worringly, however, a number of fires beset these facilities in 2012. In February a fire occurred in a fuel storage area at RWE’s 742 MW Tilbury plant – the world’s largest biomass power station - barely two months after commissioning, causing extensive damage to two of the three units.

In August, GDF Suez’s 590 MW Gelderland coal-to-biomass power station in Belgium also saw a major fire, while Danish utility Dong Energy closed biomass operations at its 810MW Avedore plant in Copenhagen following a fire in the conveyor system.

Mixed Year for Biofuels, Too

It was also a mixed year for biofuels. An October report by the Energy Information Administration said that bioethanol accounted for some 10% of US gasoline consumption last year, up from 1% in 2001, but the year started badly when the federal tax credit for ethanol expired on 1 January, ending a 30-year era in which the federal government provided more than $20 billion in subsidies for usage.

A drought hit corn starch ethanol production and records showed investment in the biofuels had shrunk to their lowest level in nearly a decade. In September, the EPA increased the target volume for biomass-based diesel for 2013 under the Renewable Fuel Standard from 1 billion gallons to 1.28 billion gallons a year, which was later challenged by the American Petroleum Institute in the U.S. Court of Appealsfor being “overzealous” and likely to raise diesel prices to unacceptable levels.

Advanced biofuels, however, enjoyed greater support, in particular from the U.S. military. The U.S. Navy pledged to use non-fossil fuel sources for 50 percent of its liquid fuel requirement by 2020 and signed a Memorandum of Understanding with the U.S. Department of Agriculture and Department of Energy to develop cost-competitive advanced biofuels.

In August, Congress allocated $170 million to support the development of military biofuels, voted to extend key tax credits for advanced biofuel producers, and granted algae producers tax credit parity with other feedstock pathways. 

Lead image: Paper bags via Shutterstock

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