Don’t Get Burned on Biomass Mandates

Designing policies that effectively promote wind or solar energy is relatively straightforward, even if getting them implemented is not. The same cannot be said for policies that promote another renewable energy resource, biomass, for two key reasons.

First, unlike wind or sunlight, which can only generate some form of power or heat, biomass has multiple end uses: power, heat, chemicals, soil enrichment, clothing, food, feed, construction. Policymakers need to be careful that they don’t subsidize bioenergy at the expense of using plants or acreage for more socially and environmentally valuable uses. Second, unlike sunlight and wind (perhaps excepting the avian mortality issue for wind), biomass use can have significant environmental impacts. Consider the deforestation of parts of Africa and Asia that has resulted from the widespread use of wood for cooking. Or the pollution generated from manufacturing cellophane, despite the fact that this thin film plastic’s very name is derived from its primary raw material, cellulose. Given these difficulties, why should we encourage the use of biofuels? Here are three reasons. First, sunlight and wind are intermittent energy sources. Their output needs to be stored. Various kinds of storage are, or soon will be, available—hydrogen, flywheels, compressed air, batteries of various types. Storage has a high cost and/or environmental impacts. Biomass comes with its own built-in storage. That offers certain advantages. Second, the use of biomass for non food and feed purposes addresses one of the most important and contentious domestic and international issues-the plight of farmers and rural areas. Agriculture continues to comprise a significant part of the world’s economies, especially those of poorer nations. There may not be sufficient biomass to provide 100 percent or even 50 percent of our primary energy needs. But even if plants were to satisfy only 30 percent, the quantity of feedstock involved, and the potential for creating tens of thousands of farmer-owned manufacturing facilities in rural areas, serving domestic markets, could change the face of world agriculture and dampen international trade tensions. Third, the Kyoto protocol puts agriculture front and center. Plants absorb carbon dioxide and sequester it. The Kyoto protocol, which went into effect only this February, for the first time in almost 150 years makes a legal distinction between living carbon(e.g. plants) and dead carbon(e.g. fossilized plants or fossil fuels). The implementation of that protocol will raise the value and importance of agriculture as a vehicle for reducing greenhouse gas emissions. Living organisms can also be used to extract the carbon dioxide from greenhouse gas emitting facilities like coal fired power plants and convert the carbon into useable products. It makes sense to encourage the expanded use of biomass. But policies must be crafted and implemented in a considered manner. A recent report from the Institute for Local Self-Reliance, Minnesota’s Biomass Mandate: An Assessment, reveals what happens when that doesn’t occur (see link following this RE Insider). In 1994, in a hotly contested legislative session over the request by Minnesota’s largest utility(Xcel Energy), a compromise was reached. The utility was given the right to install a limited number of storage casks for radioactive nuclear power plant spent fuel, in return for which it was obligated to buy 550 MW of renewable electricity; 125 MW of which had to be generated from biomass. Legislators fashioned the law to make clear that the mandate was intended to foster new feedstocks (i.e. grasses, fast growing trees) and new processes (for collection or for processing). Regrettably, but in retrospect, not surprisingly, within a year of passage, the initiative began to unravel. Lobbyists for individual businesses persuaded legislators to change the definition of biomass to allow their clients to participate. Over the next few years the legislation was changed many times, each time chipping away at its original intent. Today the Minnesota biomass mandate has been transformed into a waste-to-energy program that will cost electricity customers over $1 billion more than they would have paid if the electricity had been generated from wind. The low point in the initiative occurred when legislators decided to not only allow, but to virtually insist on awarding a contract under the mandate to incinerate hundreds of thousands of tons of turkey manure. At the time, this dry manure had a thriving market as a nitrogen rich fertilizer. The company will receive over $100 million in subsidies over the life of the contract. Meanwhile a number of farmers will probably shift back to using nitrogen fertilizers derived from natural gas. When it comes to poultry manure, other states like Maryland and Oklahoma designed a better policy. They offered a per ton subsidy rather than a per kWh subsidy. The money could be used to transport the manure from a part of the state that is environmentally overloaded to another area that can use the fertilizer. It could also be used to help finance an incinerator, but since the cost of incineration would be much higher, it is doubtful it would occur. When it comes to designing biomass policies, the federal government is a serial offender. In past and proposed energy bills, it has single-mindedly focused on generating electricity from biomass. In 1992, the federal government allowed an incentive for biomass-generated energy only if the biomass was grown “exclusively” for energy purposes. But as farmers know, that is not the way the agricultural world works. To my knowledge, no biomass facility ever qualified for that federal incentive. The federal government later extended the 1992 incentive, but only to encourage poultry manure incineration. The current energy bill would extend tax exempt financing to municipal garbage incinerators. There is no federal incentive for recycling or for composting. The conversion of biomass into industrial chemicals like plastics earns no incentive. Only the production of kilowatt hours is rewarded. Such a single-minded incentive may work to encourage wind or solar energy, but it ignores the complexity of biomass. About the author… David Morris is Vice President of the Minneapolis based Institute for Local Self-Reliance. He is the author of five books, the most recent of which is Seeing the Light: Regaining Control of Our Electricity System. As a member of the Congressionally-created Biomass R&D Technical Advisory Committee, he advises USDA and USDOE. His 2004 report, A Better Way, offers a transportation strategy based on a combination of electricity and biofuels.
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