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BIOMASS CROP ASSISTANCE
PROGRAM
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A Primer
In an effort to encourage the building of a
sustainable biomass market, the 2008 Farm Bill created the Biomass Crop Assistance Program (BCAP).
BCAP has two provisions, one that establishes project areas and payments to encourage landowners to
grow biomass (the Project Areas Program) and one that provides matching payments to eligible
material owners for the sale and delivery of biomass to bioenergy plants. The latter
program is called the CHST (Collection, Harvest, Storage and Transportation) Matching Payment
Program. In May, President Obama signed a Presidential Directive that led Tom Vilsak, the Secretary
of Agriculture, to expedite the CHST program.
More...
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BIOENERGY COMPANIES AND
BCAP
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Action Required
While bioenergy companies are not eligible
for payments under BCAP, the benefits of the program for the biopower and biofuels producers are
significant.
The most significant risk bioenergy companies face is that of a steady, affordable and
sustainable feedstock supply. In most cases, landowners biomass is not currently being
collected; it is left in the woods as a nutrient base and to prevent erosion. Most
loggers lack the equipment to collect and deliver biomass and the means to purchase
the necessary equipment. Because they will be eligible for matching payments if they deliver
to a qualified biomass conversion facility (BCF), landowners, loggers, and other operators will
choose qualified BCFs over other wood consuming facilities. And because BCFs will be preferred
partners, securing a steady supply of biomass will be easier.
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BIOMASS SUPPLIERS AND
BCAP
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While
the County FSA Offices will not begin making payments to biomass suppliers until 2010, a few
practical steps can be taken by landowners, loggers and other operators in the interim.
Our recommendations:
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Sign
up to receive all announcements that have to do with the BCAP program at the FSA's website. To
register, go to
www.fsa.usda.gov.
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Get
to know the County FSA Office and its staff.
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Reconsider
your timber sales contracts.
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WOOD
FIBER SUPPLY AGREEMENTS
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Will Bioenergy Have an Effect?
Globally,
securing a steady and affordable supply of feedstock has become critical path for the wood
bioenergy industry. As plant completion dates draw nearer, many energy producers are in discussions
with wood suppliers as part of the process of understanding their supply sheds (what forestry
professionals call wood basins), identifying suppliers and determining the characteristics of
mutually beneficial supply agreements.
One
of the largest gaps between energy producers and wood suppliers can be found in their differing
perspectives on the length of supply agreements.
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EUROPEAN
DEMAND FOR WOOD FIBER
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Recently,
the Wall Street Journal's Russell Gold reported that the wood pellet industry in the United States
is being driven largely by European utility companies. European Union member countries are required
to produce 20 percent of their electricity from renewable sources by 2020. Because of this
standard, the European Union imported nearly $100 million wood pellets and other wood fuels in
1Q2009, which Gold points out is 62 percent higher than 1Q2008.
Wood pellets are in high demand because they are ideal for co-firing with coal. The pellets
are dry enough that they can be re-pulverized and then burned at much the same rate that pulverized
coal burns. In addition, pellets meet phyto-sanitary requirements for export and they are easily
shipped.
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FOREST2MARKET
NEWS
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Look
for Pete's article in the Fall 2009 issue of
Engineered Wood Journal,
The Effect of the Wood-to-Electricity Industry on Wood Fiber Markets. The article looks at
state and federal renewable electricity standards and their effects on the supply chain.
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