25 Mar 2010, 3:04pm
Latest Forest News
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Biomass subsidies threaten Oregon wood plants’ supplies

By Amy Hsuan, The Oregonian, March 21, 2010, [here]

At Flakeboard’s Albany and Eugene plants, 188 workers make particleboard from the same sawdust and scrap that could one day be a major part of the nation’s energy supply.

Over the coming years, billions of dollars in federal subsidies aim to turn the leftovers of forests, including those in Oregon, into rich sources of renewable power.

But they could also put companies such as Flakeboard, the nation’s largest particleboard manufacturer based in South Carolina, out of business if their suppliers opt to sell into more lucrative energy markets.

“There’s already a lot of competition,” said David Leding, a Flakeboard plant manager in Albany. “And now all of a sudden, we have to compete with our federal government.”

As Congress moves to kickstart the biomass market — the burning of waste wood to generate electricity — its incentives and subsidies stand to make winners and losers out of players within the same industry. So far, its attempts have not been entirely successful, leading to unintended consequences.

A now-expired tax credit for paper mills to use black liquor, a waste product of the pulping process, helped to send at least one Oregon manufacturer that didn’t qualify for the tax break into bankruptcy, claiming it could no longer compete on price. Another tax credit, reinstated last week, to boost the production of biodiesel caused an uproar among soap and cosmetic makers because it threatened their supply of animal fat.

Particleboard and wood products manufacturers fear the same, as the federal government seeks to open new fiber supplies to feed boilers with woody waste, considered carbon-neutral because the carbon emitted in burning the fiber will be offset by the carbon pulled from the atmosphere by growing trees. But it raises a fundamental question asked by many in the wood products industry.

“What is the future of wood?’” said Tom Julia, president of the Composite Panel Association, which represent 40 makers of particleboard, medium-density fiberboard and hardboard. “Do we use it to build things or burn it? We are on the cusp of a major public policy direction on the future use of wood, and we’ve got to get it right.” … [more]

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