North Carolina: A Bioenergy Case Study

State and Federal policies on renewable energy will, to a great extent, drive demand for wood-to-energy biomass feedstocks. Across the United States, 29 states and the District of Columbia have adopted renewable portfolio standards (RPS) mandating that a certain percent of the states energy come from renewable sources by a certain date.

In the South, only North Carolina and Texas have adopted RPS. One of the questions that comes with RPS is how the increased demand created by these policies will affect local timber markets and underlying forest resources.

In 2010, Southern Research Station (SRS) research economist Karen Abt and North Carolina State University cooperators used the North Carolina RPS as a case study to simulate the impacts of increased demand for woody biomass as a result of renewable energy policies.

Many studies on wood supply for bioenergy have assumed that timber and mill residues would make up most of the feedstocks; in the South, residues are already widely used as energy sources by the industries that produce them, significantly reducing the amount actually available for other facilities. The focus on residues has minimized concerns about the impacts of wood-based energy on other forest industries using pulpwood (generally defined as trees not large enough or of good enough quality for sawtimber).

North Carolinas RPS requires that a certain amount of a utilitys energy sales come from renewable resources. As renewable standards go, North Carolinas is both complicated and relatively modest; after 2020, 12.5 percent of of a utilitys 2020 retail sales must come from a combination of renewable resources and energy-saving measures. Even at this level, the policy could affect the forest industries that play a major part in the states economy.

For their study, Abt and her colleagues estimated how much of renewable demand would probably be met by woody biomass, and modeled the effects of the already enacted RPS on wood prices and traditional forest industry in the state.

The researchers found that residues alone would not be enough to fulfill the RPS demand even in the first year of the requirement, and that prices for pulpwood would start to increase in 2012 as bioenergy demands increase. Increased demand for pulpwood reduces the amount of timber allowed to grow to sawtimber size, which in turn raises sawtimber prices.

“Increase in demand would mean higher incomes for landowners,”  said Abt. “But it could also have adverse effects on traditional forest industry and drive up the prices for those products.”

Abt and her cooperators caution that their analysis is limited by lack of data and forecasts related to biomass demand and supply responses. “We also assumed in this analysis that North Carolina will allow the use of pulpwood for bioenergy,” says Abt. “Indeed, our analysis suggests that the use of pulpwood is essential for the state to reach its RPS goals.”

Read more about the research.

Subscribe to our newsletter!

Receive weekly updates