Biomass prices up in 3rd quarter 2010

Sept. 20,
2010, Seattle, WA – Prices for woody biomass, whether sawmill
byproducts, forest residues, or urban wood waste, were higher in the third
quarter of 2010 than in the previous quarter in most regions throughout the
United States. The U.S. Northwest saw the biggest increase; forest biomass
prices (delivered) were up 19% from the second quarter of 2010, according to
the North American Wood Fiber Review (NAWFR).

Over the
past few years, there has been an expansion of the biomass-consuming sector in
the U.S. Northwest of both stand-alone facilities and energy plants associated
with pulp mills and sawmills. This development has resulted in a decline in
open-market volumes of sawmill biomass (bark and wood fibre residues), and
there is starting to be an increased need to source additional volumes of
higher-cost forest biomass and even urban recycled wood from the larger
metropolitan areas in Oregon and Washington.

As a
result of low prices for fossil fuels, there has not yet been a dramatic increase
in the consumption of biomass in the U.S. Northwest, and prices for both mill
and forest biomass were actually lower in the third quarter of 2010 as compared
to the same quarter in 2008 and 2009. This may very well change over the next
two years if the plans for six new biomass energy facilities in western
Washington materialize.

California,
which is home to the largest concentration of stand-alone biomass plants in
North America, was one of the few states in which Biomass Crop Assistance
Program (BCAP) money seemed to function as intended earlier this year, namely
to bring out additional volumes of forest residues. With the absence of BCAP
incentives, average woody biomass prices in the third quarter returned to the
pre-BCAP levels of 2009.

In the
U.S. Northeast, the third quarter found biomass plants receiving lower income
because of relatively low demand for power in the region. This factor and the
plentiful inventories left over from the second quarter likely resulted in the
lower prices for feedstock. Forest biomass prices have trended downward since
early 2009 and are currently 22% below those of the first quarter of 2009,
reports the NAWFR.

Demand
for woody biomass in the U.S. South has slowly increased over the past few
years as more energy plants have decided to add green energy to their portfolio
of alternative energy sources. As a result, biomass prices have trended upward
over the past four years and were almost 50% higher in the third quarter this
year as compared to early 2007. This trend is likely to continue because of the
expected expansion of biomass plants in the region.