U.S. investment market for woody biomass looks strong for 2012 as demand for wood pellets rises; regulatory changes expected to enhance picture

Audrey Dixon

Audrey Dixon

LOS ANGELES , February 1, 2012 () –

An abundant U.S. wood supply and rising demand for sustainable power have created an investment market for woody biomass that offers “tremendous promise” for 2012, said a top official with Leaf Clean Energy Co., Biomass Magazine reported Feb. 1.

From 2000 to 2010, wood pellets stood out as the fastest-growing home heating fuel, according to census data, said Leaf Clean Energy director Peter O'Keefe.

Biomass offers a secure solution in the face of current power supply and base load, O'Keefe said during a webinar held by the American Council on Renewable Energy (ACORE), reported Biomass Power & Thermal Magazine.

Recent issues in the U.S. and elsewhere over nuclear energy have refocused attention on biomass. European power companies rushing to meet looming mandates for renewable energy are turning to wood pellets.

Leaf Clean Energy, initiated in 2007, is already invested in two biomass energy facilities, one in Georgia and one in Florida, and O'Keefe said the company was looking for more, Biomass Magazine reported.

O’Keefe also noted what he sees as a "stranded opportunity" in the biomass industry--wastewater treatment and residual utilization. He said there were more than 16,000 wastewater treatment plants in the U.S., generating 7 million tons of residual matter. However, most of the power plants located next to those wastewater facilities are very old and "absolutely in need of innovative solutions for dealing with wastewater (and wastewater residuals) for the next century,” he said.

Development of biomass projects makes sense even when the credit market makes financing difficult, said Michael Zimmer of Thomson Hine LLP. New biomass power deals and development in California, Connecticut, Illinois and Texas provide examples of successful projects, he added.

John May, managing director at Stern Brothers and Co., admitted the financial market hinders closing deals in traditional biomass projects. However, May said his company was working on what he called five or six “very financeable” pellet deals in the South.

Upcoming changes that will affect the biomass industry in 2012 include EPA regulatory changes on greenhouse gas emissions, Boiler Maximum Achievable Control Technology (MACT) rules and the possibility of a national carbon market in California, Biomass Magazine reported.

A new farm bill this year may also boost demand and growth for energy crops, Zimmer said, noting that about 10 U.S. states constitute almost 70% of the country's market potential for biomass.

The primary source of this article is Biomass Power & Thermal Magazine, Grand Forks, North Dakota, on Feb. 1, 2012.

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