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Will BCAP increase U.S. biomass supply?

Jan. 11, 2010, Seattle, WA – In an effort to increase renewable energy, the U.S. government implemented the Biomass Crop Assistance Program, which will subsidize the collection of biomass in 2010 and 2011. More than $500 million has been allocated for the first three months of 2010. However, there is uncertainty about how much additional biomass will enter the market as a result of the program.


January 11, 2010
By Hakan Ekstrom | Wood Resources International

Jan. 11, 2010, Seattle, WA – The Biomass Crop Assistance Program (BCAP), a U.S. federal
program that is intended to increase the use of renewable energy by covering
some of the costs related to the collection of woody biomass and agricultural residues,
has been in effect for a few months and has created interest and confusion
within the forest industry, reports the North American Wood Fiber Review.

As of December 15th, it had not yet been determined how much funding the program
might have for 2010. So far, $517 million has been allocated for the period of January
1 through March 31, 2010. Other questions include: whether the program will be extended
after two years, which biomass categories will be eligible (e.g., black liquor),
and how wood fibre costs for pulp mills and composite board mills may be affected.

There have been loud protests from both North American and European forest industry organizations,
which are concerned that the BCAP program will unfairly favour U.S. energy companies
and that sawdust and wood chip costs will increase as a result of the program. With
the first payments from the government distributed in mid-December 2009, it is
still too early to conclude how much the biomass energy subsidy will affect
prices for wood chips, shavings, sawdust, and hog fuel.

The
BCAP program is available for producers and sellers of biomass for a period of
two years. Both the seller and the conversion facility must apply to participate in the program.
As of December 15, 2009, 306 conversion facilities had qualified. The majority
of the registered facilities are located in the U.S. south (37%) and on the west
coast (27%).

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It may very well be that the BCAP program will not add as much biomass to the
market as was intended. In fact, most of the biomass supply that will enter the
market in the coming years would likely have been available without the
subsidy. The only difference is that biomass consumers may benefit from lower
fibre costs, and suppliers will increase their profits from the sales of forest
and agricultural residues.


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