Long-term biomass price increases predicted

Mar. 23, 2010,
Westford, MA – In the first of an ongoing series of quarterly forecasts, Forest
Economic Advisors (FEA) finds that production of wood-based energy will resume
its upward trajectory in 2010 and continue to grow through 2024. With rising
demand for new sources of bioenergy from wood pellets, biomass electricity, and
biofuels, consumers are left wondering where the fuel supply will come from,
and at what price. FEA predicts continued growth, not only from these emerging
sectors, but also from traditional forest products companies. The added demand
for biomass supplies will force increased extraction of logging residues and
intensified use of roundwood in the years to come. While prices will ease in
the short term, all biomass grades will experience price increases after 2012
as a result.

FEA’s first Wood Biomass Forecast also finds
that rising housing starts and an improving economy will boost residue
production over the next several years, returning almost 90% of the supply that
was lost from 2005 to 2009 by the end of 2012. After accounting for increases
in biomass demand related to production from the traditional forest products
industry, namely pulp and non-structural panels, FEA estimates that mill
residue supplies available for bioenergy will grow by 5.4 million oven-dry tons
from 2009 to 2012. Wood pellet production will continue to increase at a rapid
pace, driven by domestic and export demand, and biomass electricity generation
will also grow. Biofuel production will be a key consumer of wood biomass over
the long-term, though not until conversion technologies are proven and tested
on a commercial scale.