Challenges and Opportunities for the Northeastern Forest Bioindustry

cies in the range of 28% (electric energy generated/total energy available in the wood fuel used) (Timmons et al. 2007a). This low level of efficiency suggests a natural fit for colocating industrial operations requiring heat with biomass-fired electricity generating facilities. Bioenergy facilities have a long history in the Region. Wood residues from integrated sawmill operations have been used for decades to generate combined heat and power for mill operations. The oil crisis in the 1970s spawned many wood-to-energy initiatives including Burlington Electric Department’s McNeil Generating Station, which has been in operation since 1984 (Irving 2002). Vermont’s “Fuels for Schools” program, which started in the 1980s and now serves 20% of Vermont public school students, is responsible for heating 32 schools with wood chip systems (McElroy 2007). The above technologies may be new to specific geographic areas and applications and as such, they represent an important near-term source of potential demand for forest biomass. One projection for Southern New England estimated that Connecticut, Massachusetts, and Rhode Island would generate a total renewable energy demand of 6.9 giga-watt-hours in 2015 (Timmons et al. 2007a) as a result of public policies requiring renewable power generation. Grace and Corey (2002) estimate that 29% of this energy will be generated by biomass-fired electricity generating plants. With current technology, this level of additional biomassfired electricity would require approximately 2.6 million green tons of wood chips annually. Mount Wachusett Community College in Gardner, Massachusetts, recently installed a wood-chip fired hot-water heating system for the 450,000 ft of building space on its campus. The system delivers 8 million BTU/hour, saving the campus $276,000/yr compared to its original electric heating system (Mount Wachusett Community College 2008). Maine’s recently announced “Wood-to-Energy” initiative envisions a school heating program similar to Vermont’s, along with several pilot wood pellet projects. The Northeast bioindustry also includes near-to-market products and technologies related to biofuels and bioproducts. Technologies that convert wood to biofuels such as cellulosic ethanol, as well as a growing list of other bioproducts, are in varying stages of development and commercialization. Currently, the majority of ethanol is derived from corn feedstock, which is grown and processed largely outside of the Northeast. Given its abundant forest cover, however, the Northeast has great potential to supply forest-derived biomass for ethanol production, with additional supplies likely from perennial crops (Timmons et al. 2007b) and, to a lesser degree, annual crops. Biorefineries like the one planned for Old Town, Maine (see side bar) are envisioned to be able to convert forest biomass into ethanol and a range of additional value-added products, with a goal of maximizing the profit potential of the end-product mix. Nace (2007) gives an idea of what the product stream from such a biorefinery might include. Using cellulosic biomass as an input feedstock, a biorefinery may produce biodiesel derived from levulinic acid (a high-BTU char product) and other commodity acids, and value-added chemicals that could be used as feedstock for the polymer, plastics, pharmaceuticals, and chemicals industries. All of these technologies and products are being developed with the expectation that forest biomass will be at least one component of the feedstock. The Resource. The seven-state Northeastern Region is endowed with abundant forest resources. Within the Region, however, the distribution of species and biomass is uneven, with southern portions tending toward scattered hardwood stands in fragmented parcels set amid rapidly urbanizing communities. In contrast, much of northern Maine is dominated by softwood species within an undeveloped landscape of what were once large industrial ownerships that are now rapidly fragmenting. Throughout the Region, forest acreage, stand volumes, and growth have been increasing since historic lows in the mid1800s. Currently, the Region boasts an average accessible forestland cover of 70.6%, ranging from a low of 52.8% in Rhode Island, to a high of 88.4% in Maine (US Forest Service 2008). Based on 2001–2005 inventories, total accessible forestland area totals 49.9 million acres. Given many differences in development, population, and timber supply across the Region, it is expected that development of a bioindustry is likely to come from the northern forest region composed of 21 million acres of forestland from upstate New York to Maine (Short 2008). Given the rapid pace of technological development in the area of forest-based bioproducts, little is known about the relative values and future market potential for the Region’s tree species. The most recent US Forest Service Forest Inventory Analysis data show that growth exceeds removals for Case Study Red Shield Environmental acquired Georgia-Pacific’s pulp and paper manufacturing facility in 2006. The company’s profitability depends on the use of fiber for the dual production of pulp and ethanol in an integrated facility. In 2008 the University of Maine and Red Shield Environmental, Inc., received a $30 million US Department of Transportation grant to develop a pilot biorefinery for ethanol production (2 million gallons/yr) colocated at a pulp mill in Old Town, Maine (Bangor Daily News 2008). According to Arnold (2007), wood cost for ethanol production alone is not viable. He postulates that, at current market prices, cellulosic ethanol cannot be produced economically with wood biomass priced at $30/green ton delivered. However, there are opportunities for existing facilities to integrate ethanol production into combined operations. Such integration allows for revenue to be generated while bioproduct development is in the pilot stage. Acquiring the Old Town site was critical for Red Shield because it is one of just three pulp mills in the world with a suitable combination of two side-by-side digesters. Also on-site were extensive manufacturing and warehouse space, water, utilities, cost-effective steam and power, and wastewater treatment. In addition, Red Shield’s 16 mW turbine is integrated into ISO-NE markets so that excess electrical capacity can be sold to the grid. For ethanol production, Red Shield may need an additional 4,500 ft of building space, but very little extra permitting. Indeed, having environmental and regulatory permits in-place for air and water, and divesting the firm’s liability from a nearby landfill, saved significant expenses and time in meeting regulatory constraints (Arnold 2007). In aggregate, these factors reduced capital investment needs by roughly 50%, and cut in half their anticipated start-up time of 3 to 4 years. 126 Journal of Forestry • April/May 2009 the growing stock of hardwoods on timberlands. Most recent data indicate annual growth of hardwood growing stock in the seven states is 877 million cubic feet, with only 500 million cubic feet in annual removals. New York has the largest net hardwood growth of about 229 million cubic feet annually. The softwood resource condition is less certain. Recent softwood harvest rates in Maine and New Hampshire contribute to a net reduction in overall softwood growing stock levels for the Region. This trend may have changed, however, with the recent housing slow-down and divestitures of large industrial timberland holdings in Maine and elsewhere. Data for the remaining five states show that, for softwood growing stock, growth exceeds removals by a ratio of nearly 2:1. For Connecticut, Massachusetts, New York, Rhode Island, and Vermont, combined annual growth of the softwood growing stock was reported at 197 million cubic feet, with only 104 million cubic feet of removals. Forests in the Northeast are largely under private ownership, although the last decade has witnessed significant changes in ownership class, land use, and parcel fragmentation. In remote northern areas of the Region, large industrial ownerships have been sold off to a host of financial groups like TIMOs and REITs (Hagan et al. 2005). In more populated areas to the South, development pressures have lead to the steady conversion of forests and farmlands for residential and commercial use (Stein et al. 2005). In both cases, fragmentation of large tracts into smaller parcels is a dominant process across the landscape. The heavy representation of nonindustrial private forest ownership suggests a highly decentralized resource that can readily respond to market signals such as higher prices. Moreover, widespread distribution of the resource limits the need to transport raw material over large distances, favoring the emergence of an industry based on local processing and supply systems. In addition, landowners are generally familiar with timber growing and harvesting practices, with a host of institutions and regulations in place to foster a competitive market for timber while protecting lands for the continued production of both commodities and ecosystem services. Finally, the Region has some of the highest levels of third-party environmental certification in the country. For example, Maine leads the nation with nearly 7 million certified acres, including 500,000 acres of public land, 6 million acres of large-parcel private lands, and 350,000 acres of smaller private lands (Maine Forest