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The Real Threat to Forest Sustainability in the US South

The Real Threat to Forest Sustainability in the US South
There was a time, not long ago, when the largest threat to forests in the United States was widely believed to come from the forest products industry. Vilified by environmental groups and the media alike, the forest products industry was at worst responsible for razing forests and endangering vulnerable species. In multi-party efforts to ensure the continued sustainability of US forests, the forest products industry, at best, has been merely tolerated.

Now, however, there is a new “bad” guy in town—the wood bioenergy industry. Recent reports suggest (though hardly prove) that wood bioenergy—particularly the US-South-to-EU pellet trade—is “wrecking some of the finest forests in the US.[1]” Most of the claims proffered in these reports lack both substance and evidence and defy both forest science and logic.

Deconstructing the Arguments

One of the suppositions behind these reports is that the wood bioenergy market is enormous and that it will therefore strain forest resources in the South. Figure 1 shows the actual size and longevity of the forest products industry in the US, as well as the potential size of the industrial pellet and wood-based liquid fuels industries.

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Another way to look at this issue is to compare consumption volumes. Figure 2 shows the actual volume of wood consumed by the forest products industry (450 million green tons) annually, as well as the potential consumption for the industries of the size indicated in Figure 1.

Potential_Wood_Consumption_-_All_Major_Sources.jpg

It is important, however, to distinguish between these consumption numbers and what is likely to come to fruition. To date, liquid biofuels have yet to be demonstrated on a commercial scale, and an increasing number of companies working in the field have exited (Rentech, for instance). Two dedicated biomass power plants built in the last several years are on shaky ground primarily because of the abundance of low-cost natural gas. One (Nacogdoches) runs only in the summer, and the other (Aspen) may be on the brink of foreclosure, not having made its loan payments to US Bank since February 2012. Many of the rest of the plans for biomass power plants have been mothballed, at least for the time being.

The only other consumer—EU biomass power stations—are unlikely to use anywhere near the 86 million green tons of wood that some are suggesting will be required.

We think the realistic consumption level is much closer to the size of the Oriented Strand Board (OSB) industry in the US, a 20-30 million ton market (Figure 3). At this range, demand from the pellet industry will represent just 4-6 percent of current demand.

Figure_3.jpg

To translate this back to the market size graph (Figure 1), the true size of the pellet export market when compared to the forest products industry in the US looks much more like Figure 4: $200 billion for the US forest products industry and $3 billion for the export pellet industry. In other words, we’re spending a tremendous amount of money and energy debating the addition of an industry that is 1.5 percent the size of the current market.

Figure_4.jpg

Given the relative scope and scale of the export pellet market, the risk of any catastrophic impacts on US forests or on the benefits they impart is small. When we stick to the facts about the size of the market and avoid being intentionally vague or using scare tactics, it’s easy to see that wood bioenergy poses little real threat to US forests.

Other claims made by those opposed to wood bioenergy are equally suspect. Here’s why:

  • “US forests are not sustainable.”  With few exceptions, growth-to-removals ratios in the Southern US are positive (i.e., annual growth exceeds annual harvest removals). Compliance with state best management practices for harvesting averages 92 percent across the South.
  • “It takes too long to repay the carbon debt.” As opposed to the only realistic alternative, coal? Coal never repays its carbon debt.
  • “Supply is not sufficient to go around.” In actuality, the industry should consider a marketing campaign exclusively for the EU: “Meet your 20x20 with our 30x90.” In the South, we currently have a recession-induced excess inventory: 30 million tons of pulpwood and 90 million tons of sawtimber. Again, with few exceptions, supply is sufficient to meet current industry and new entrant demand.

The Real Threat: ENGOs

If none of these assertions about the size and nature of the wood bioenergy industry are true, what is the real threat here, the thing we should really be worried about? Earlier, I pointed out that, at best, the industry is barely tolerated when it comes to discussions of forest health and sustainability. There are worse things than barely being tolerated though. A growing number of forces want the forest products industry to just go away, and they have the resources to relentlessly pursue that end. The Ninth Circuit Court’s decision to re-classify forest roads as point sources of pollution is a good example. In this case, the Northwest Environmental Defense Center (NEDC) has vowed not to give up its fight to have forest roads re-classified, despite the Supreme Court’s recent ruling that gives deference to EPA’s longstanding “Silvicultural Rule,” under which discharges of stormwater are classified as non-point sources and therefore are not subject to the permitting process.

The NEDC and other eNGOs continue to characterize industry participants as the destroyers of forests, clean water and threatened species. They truly believe that the destruction of the industry is the only thing that can save forests.

Right now, the bioenergy movement is the best vehicle eNGOs have for stopping harvest activity. The new wood bioenergy participants have softer views on sustainability, after all, so collaborating with environmental groups may seem to them like a good idea. After years of dealing with eNGOs, however, we should know better. These groups have adopted a divide-and-conquer strategy, and if they are successful in dividing the industry, then the implications beyond bioenergy are immense. The forest products industry may have slipped to Public Enemy #2 in the eyes of environmentalists during the fight over wood-based bioenergy, but make no mistake: once wood bioenergy is dead, these  groups will turn their attention (strengthened by the win) back to the pulp/paper and solid wood industries. In the meantime, they will enlist the support of the traditional forest products industry to fight the battle over bioenergy.

An Industry Divided by Attempts to Limit Demand

While it would seem to make sense that the old “bad” guy and the new one would be on the same side, that hasn’t quite happened in this case. The main reason is that the new “bad” guy has a competitive advantage: demand-side subsidies from the UK and EU. It’s the issue of subsidies that has the traditional forest products industry warming to eNGO arguments.

Whether you think subsidies—either on the supply or the demand side—are good or bad, governments will act, and—for good or bad—little can be done from a practical perspective to stop them. For forests and markets, demand (even subsidized demand) is a good thing. While sources of demand come and go (just look at the market for uncoated freesheet, for instance, or even the hardwood market), the market always adjusts, and supply and demand always rebalance.

Demand itself brings intrinsic and measurable value to the forest and to the supply chain. Higher demand will increase supply, and the growth of more trees will benefit everyone. Healthy demand leads to a healthy supply chain and healthy forests. Any act that limits demand does the opposite . . . think cows, corn and shopping malls instead of trees. If the collective industry (and I mean all wood consumers here) is doing anything to limit demand, then it’s clear we’ve lost sight of the larger picture.

As long as eNGOs succeed in dividing the industry, the result will be a weakened supply chain, one that cannot lead—but can only react—to the conversation. A divided industry is one that siphons value out of the supply chain.

Wouldn’t it be better if the forest products industry were not merely tolerated but recognized, even celebrated, for its role in creating healthy forests? After all, a healthy industry promotes – and indeed makes possible – a healthy forest and all the benefits that result, such as economic stimulus to rural communities, clean air, clean water, carbon storage, biodiversity, wildlife habitats and recreation.

The entire industry—individuals and companies and the organizations that represent them, from tree growers to the pulp/paper, lumber/solid wood and bioenergy industries—should take on this common cause and change the conversation, for only the industry can manage and drive this message.

If the industry sticks together and speaks with one voice, it could actually lead the conversation in a direction that will stimulate the industry and drive value to the supply chain.


[1] Harrabin, Roger. “Renewable Energy: Burning US Trees in UK Power Stations.” BBC News. 27 May 2013.


Comments

Gene Kodama

08-02-2013

Pete,

Thank you for another great article on our forest industry.  It is well supported by the facts and well said.

Gene Kodama

SC State Forester


Comments

Wayne Bell

08-05-2013

You are right on point!


Comments

Don Reimer

08-19-2013

Pete,

Very well written and great points made.

Now we need a solid paper about why we need a range of ages in a healthy forest - and not just old-growth trees.

Well done, sir.


Comments

Don Deckbar

08-20-2013

Pete:

Excellent points and well said. We need to stick together in this. You can’t argue with good data.

Good job

Don


Comments

Michael Weatherford

08-28-2013

I was with you up until you blamed ENGO’s as being a greater threat to southern forests than forest industry. Although some of these organizations are wrong-headed in their approach, it appears to me that their objective is to protect forests. I think your real point is that ENGO’s are a threat to southern forest industry.  Seems to me that suburban sprawl and fragmentation of timberlands (significantly at the hands of TIMO’s and REITS) are a far greater threat.