Feedstock Production

Cost of Delivered Feedstocks

The cost of biomass feedstock is an important component of the overall production cost of forest bioenergy. Therefore, it may be worthwhile to estimate the production cost of forest biomass alone and compare it with that of other types of feedstocks though the cost competitiveness of forest bioenergy will be determined by its overall production cost. Gan and Smith (2006) estimated and compared the amortized costs of delivered biomass with the price of delivered coal on a per unit energy basis. Based on the information on biomass yield and production costs derived from the Oak Ridge Energy Crop County Level Database (Graham and others 1997), they estimated the biomass production costs for short rotation woody crops (SRWC), specifically poplar plantations, to be about $52/dry ton ($10.80/MWh, the cost estimates in this section were based on the energy contained in the feedstock, not the final energy product), while the national average price of delivered coal was $5.32/MWh in 2005. The cost estimates were based on the assumption of a biomass yield of 5 dry tons/ac/yr and a land rent of $50/ac/yr.

Cost of Logging Residues

Logging residues, harvested using the integrated harvesting system that combines timber harvest with residue procurement, appear more economically competitive than SRWC. Based on the procurement costs reported by Puttock (1995) and after making adjustments to better reflect biomass transporting, processing, and handling costs, Gan and Smith (2006) estimated the production cost of logging residues in the United States. The average cost of delivered logging residues was estimated at $28/dry ton ($5.80/MWh ) using the marginal cost method and $33/dry ton ($6.80/MWh) using the full cost method, respectively. The marginal cost method counts only additional costs from the conventional logging operation as the biomass production cost. The full cost method, on the other hand, allocates the total production cost across biomass and conventional wood products. Their estimates are similar to those reported in Europe, $29-39/dry ton ($6-8/MWh) (Asikainen and others, 2002).

Costs for procuring biomass from fuel treatment thinnings were estimated for two different treatments (USDA Forest Service 2005). Using the cut and skid treatment, the cost was $30-40/dry ton ($6.20-8.30/MWh). It increased slightly to $34-48/dry ton ($7.00-9.9/MWh) when the cut/skid/chip method was adopted.

These cost estimates do not account for the benefits or cost savings related to forest management health that traditionally accrue to landowners and forest industries and even to society. These benefits include:

• Forest bioenergy production will promote thinning of overstocked forest stands. Such operations will allow us to produce high-quality timber and/or reduce wildfire risk. Providing better opportunities to manage for higher-value products will encourage landowners to retain land in forests.
• Many hardwood and mixed pine-hardwood stands are badly degraded due to poor past logging practices. A biomass market will allow landowners to at least see these low-value materials pay their way out of the woods so that the stands can be improved to produce high-value products.
• Removal of logging residues will reduce site preparation costs (Gan and Smith 2006) and enhance the survival and growth of seedlings.