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North Carolina Court of Appeals Rules that Trees Are Renewable

One of two states in the South with renewable electricity portfolio standards (REPS), North Carolina is now on a path to create 12.5% of its electricity from renewables by 2021. Investor-owned utilities must meet the following schedule for conversion to renewable: 3% by 2012, 6% by 2015, 10% by 2018 and 12.5% by 2021. Municipal utilities and electricity cooperatives must meet a 10% by 2018. Because both wind and solar are limited in the state (see Suzanne Hearn’s post, Energy Sources: Context Is All), much of this power will need to be produced from biomass.

In order to meet these standards, Duke Energy, an investor-owned utility,  began test burning wood with coal (cofiring) in two of its coal plants—the Buck and the Lee Steam Stations. Because they decided to continue these test burns as they evaluated co-firing applications and assessed plans for meeting the REPS over time, the company went to the North Carolina Utilities Commission (NCUC) to request that its Buck and Lee Steam Stations be designated as renewable energy facilities. At these facilities, Duke expressed its intention to use a range of “wood biomass fuel resources,” including wood water materials like logging residues, sawdust, pre-commercial  thinnings and “primary forest harvest materials like wood chips from whole trees.”

During the hearing before the NCUC, the Environmental Defense Fund (EDF), the Southern Environmental Law Center (SELC) and the North Carolina Sustainable Energy Association (NCSEA) intervened in the case, arguing that this last item, “wood chips from  whole trees,” did not qualify as renewable (for more details about the arguments in this case, again see Hearn’s Energy Sources: Context Is All).

In the end, the NCUC determined that whole trees do fall under the definition of renewable sources as outlined in the NC REPS law, and they granted Duke’s Buck and Lee Steam Stations as renewable energy facility status. Following this decision, however, the EDF and the NCSEA appealed. The Court of Appeals heard their case on June 9 and issued its decision on August 2. The court unanimously upheld the NCUC decision and agreed that whole trees are biomass resources for the purpose of meeting the NC standards. This decision will become final on August 22.

Is the controversy of biomass over in North Carolina? Perhaps. Before trees are finally deemed renewable, the EDF, SELC and NCSEA will have 15 days after the August 22 date to appeal to the North Carolina Supreme Court. Since the decision was unanimous, however, the Supreme Court is not required to hear the case, though it may do so at its own discretion (something the Court rarely does).

Once this 15-day period has expired on September 6, if no appeal has been filed, Duke will be able to use whole tree chips to help them meet their renewable energy targets.

Duke is only one of the many utilities navigating the waters of new renewable standards right now. And its Buck and Lee Steam Stations are just two of the many biomas power plants that will be in this same position during what we call the bridge years. These are the years between now and when loggers will have adopted the equipment and processes necessary for delivering lower cost logging slash to bioenergy facilities in adequate volumes on a regular basis. (See Boosting Biomass Utilization Rates for more information.)

For now, biomass power plants will source whole tree chips when a sufficient supply of lower cost wood waste material is not available. As the logger adoption rate increases, the use of whole trees for energy production will diminish. Until the time when biomass utilization is fully sufficient to meet the demand, however, the Court of Appeals ruling helps ensure they can meet the state standards.

Full disclosure: Forest2Market served as an expert witness in the hearing before the NCUC. Click for more information on our bioenergy practice.