Southern Forests Producing Energy-Efficient Fuel

U.S. South could play significant role in reducing global greenhouse gasses
October 16, 2007; Charlotte, NC

As U.S. policy officials look for ways to reduce the nation’s dependency on foreign oil and Europe strives to reduce greenhouse gas emissions, Southern forests are emerging as a renewable and clean energy alternative, according to experts in the forest products industry.

Pine trees in Alabama, Georgia, Mississippi and other states throughout the South are increasingly being viewed as a major alternative energy source, said Scott Twillmann, senior analyst for Charlotte, N.C.- based Forest2Market. Also, the forest products industry is well-suited to become a major supplier to the growing ethanol market as advancements in technology are made and the United States looks for a substitute for petroleum.

Meanwhile, oil and natural gas prices continue to rise. And more people are becoming aware of the environmental consequences of greenhouse gases, sparking a move by individual states and private companies to voluntarily reduce carbon emissions.

Combined with the effort to reduce our country’s reliance on foreign oil, these forces are indicators that the Southern forest products industry is in for a dramatic change, Twillmann said.

“A perfect storm is developing for the future of wood fuels,” Twillmann said. “The world’s quest for cleaner and renewable energy is going to have a substantial impact on Southern forest markets.”

Already, European utilities are looking to the southern United States as a major source of renewable energy. Wood fuels are carbon neutral, whereas other fossil fuels, such as coal, add carbon dioxide to the atmosphere.

Most European countries ratified the Kyoto protocol, which mandates a reduction of greenhouse gases emitted into the atmosphere. The United States has not ratified Kyoto. 

These European utilities use wood pellets to create electricity for commercial and residential power markets. The pellets are a byproduct of other milling operations, and they are primarily made with woodchips and sawdust.

Also, cellulosic ethanol could hold the key to weaning the United States off of its addiction to foreign oil. The technology for large-scale production is still being developed, but experts say cellulosic ethanol can yield more energy than ethanol derived from grain or corn, and the feedstock is abundant enough to meet the country’s long-term energy needs.

“This type of bio-fuel is very promising,” Twillmann said. “It’s renewable, clean and sustainable. And it could create a huge demand for forest products as it is developed into an economically viable alternative to gasoline.”

Cellulosic ethanol can be made from logging waste such as tree limbs, leaves and bark, as well as a multitude of other organic materials including algae and orange peels. It’s environmentally friendly, and it does not compete with food production like corn ethanol.

“As the United States devotes more funding to research and development, bio-fuel could find itself at gas stations throughout the country,” Twillmann said.

Timberland owners in the Southern United States are also finding themselves in the emerging carbon emissions trading market, which companies are turning to in order to offset the amount of harmful emissions they pump into the air.

Forests are carbon sinks that absorb carbon dioxide from the atmosphere through the natural process of photosynthesis. Companies have developed a method to measure the amount of carbon that is absorbed and then purchase the “carbon credits” on the Chicago Climate Exchange.

The companies can use credits to offset their greenhouse gas emissions, which allow them to adhere to voluntary, as well as government-imposed, emissions standards.

“Carbon trading holds the promise of a new revenue source for timber owners,” Twillmann said. “I expect it to become more profitable for the timberland owner as the market for carbon credits matures.”

The emerging markets of cellulosic ethanol production and carbon credits trading are promising money-makers for the Southern forest products industry, which employs almost 375,000 people in 11 states.

Forest2Market has developed sophisticated analytical tools to accurately report and forecast timber prices throughout the South.