Professional Logging Contractors of Maine urges support of bill to save Maine biomass industry

AUGUSTA – The Professional Logging Contractors (PLC) of Maine is urging the LePage administration and legislative leaders to support a bill designed to save the Maine biomass electric industry by providing an opportunity for biomass power producers to compete for short-term energy contracts.

A public hearing on LD 1676, “An Act To Establish a Process for Procurement of Renewable Resources,” will be held Monday, March 28 at 2:30 p.m. in Room 211 of the Cross Building in Augusta.

The bill comes as the industry is teetering on the brink of collapse in the face of record-low wholesale electricity prices and the loss of a renewable energy credit market in Massachusetts and the potential loss of a renewable energy credit market in Connecticut. Covanta idled its two Maine biomass plants this month and some of ReEnergy Holdings’ four Maine plants are imperiled if conditions do not improve.

“This bill is the last, best chance we have this legislative session to preserve this important industry,” PLC Executive Director Dana Doran, said. “Doing nothing means we may lose the biomass industry entirely, with consequences not only for hundreds of workers and their communities, but for the environment, forests, and the future energy security of Maine.”

The recent and rapid decline in the price of natural gas has cut deeply into demand for biomass, and Maine loggers saw the market tighten significantly in the second half of 2015. In addition, the loss of renewable energy incentives in Massachusetts and the potential loss of incentives in Connecticut could lead to the elimination of markets for Maine biomass altogether as soon as 2018.

The bill is designed to preserve the industry by providing stable, short-term revenue for Maine biomass plants to buy time for other steps that can lead to its long-term health.

The bill directs the Maine Public Utilities Commission to secure contracts for new or existing renewable energy resources with the highest likelihood of providing in-state economic benefits such as permanent direct jobs, payments to municipalities, payments for fuel and resource access, in-state purchases of goods and services, construction-related jobs and purchases, greenhouse gas benefits, fuel diversity benefits, grid reliability benefits and investment that may improve the long-term economic viability of the State; all criteria that favor biomass in Maine.

Few in the industry doubt that fossil fuel prices – which are currently at historic lows – will rise again for the foreseeable future and that demand for biomass will eventually rebound.

Biomass, which is a carbon-neutral energy source when forests are managed sustainably, is also a key piece of energy policies in Europe and elsewhere designed to reduce the use of fossil fuel; trees naturally recycle carbon that is already in the atmosphere as they grow and later die or are burned, while fossil fuels introduce new carbon that would otherwise remain trapped underground.

The PLC has repeatedly called for swift action to sustain Maine’s biomass electricity industry in the wake of the news of biomass plant shutdowns and potential shutdowns.

ReEnergy’s plants in Ashland and Fort Fairfield are currently struggling in northern Maine, a region already hammered by the loss of multiple pulp and paper mills over the past year. The state also was hit by the shutdown of Covanta’s two Maine biomass plants this month, in West Enfield and Jonesboro.

ReEnergy also operates plants in Livermore Falls and Stratton, and has stated the combination of low fossil fuel prices and uncertain renewable energy credit markets in Connecticut are threatening those plants as well.

The loss of the biomass market would be a huge blow to the logging industry in Maine, which has sold woody biomass waste from logging operations to the plants for years. The shutdown of the two Covanta plants is already having a direct effect on a large percentage of Maine loggers who are struggling with paper mill closures in 2015 and early 2016 that have already placed strains on the industry by limiting markets for wood fiber.

Following the news of the Covanta plant shutdowns, the PLC conducted an informal poll of its members in the affected region, finding most had begun layoffs and were already seeing their business contract due to the loss of biomass revenue.

The PLC has estimated the total loss of the biomass industry in Maine would cost 400 direct jobs at the biomass plants and at least another 900 indirect jobs, primarily in regions of the state that cannot afford more job losses. Total economic losses to the state of Maine from the losses could be as high as $300 million per year.

“Biomass is a perfect example of an area where common sense needs to be applied to policy to consider the true cost of our energy, not just the price per kilowatt-hour,” Doran said. “Marginally cheaper electricity is of comparatively little value when weighed against the value of jobs, economic strength, healthy forests, and a viable source of energy that keeps 100% of the financial proceeds circulating in Maine.”

Loss of the state biomass market would lead to an environmental issue of uncertain proportions as wood waste from sawmills, logging, and other operations piles up and must be disposed of in landfills. The added costs of disposal combined with the loss of revenue from the sale of biomass is expected to cripple many sawmills and logging operations.

In recent years, biomass has been responsible for 25 percent of Maine’s overall power supply and represented 60 percent of the state’s renewable energy portfolio. Wood has accounted for almost one-third of New England’s entire renewable supply, with Maine supplying a significant amount to the region, according to the Biomass Power Association.

Biomass electricity is generated by utilizing wood fuel from a variety of sources, including woody debris and low-grade fiber from forest thinning operations. Fuel gathered in this way provides both a market for low-grade fiber and a sustainable source of carbon-neutral energy. In states with renewable energy portfolio requirements, woody biomass is very valuable to buyers seeking a percentage of their power from renewable sources.

Unlike renewable energy sources such as wind and solar, biomass has the advantage of being independent of weather, as the fuel can be stored and utilized when needed. This reliability accounts in part for its growing popularity in Europe and other areas seeking a larger percentage of their power from renewable sources.

State policies that encourage greater use of biomass in Maine and neighboring states will support local jobs, ensure greater energy security, and reduce fossil fuel emissions. The economic value of a strong Maine biomass industry and the direct and indirect jobs, payroll, and tax revenue it generates will more than offset the current higher cost per kilowatt-hour of such energy, while preserving the industry for the day when fossil fuel prices inevitably rise again.

Maine’s loggers are a vital part of the state’s forest products sector, which is worth an estimated $8 billion annually.

The PLC of Maine was formed in 1995 to give independent logging contractors and sole proprietors a voice in a rapidly changing forest industry. A Board of Directors made up entirely of loggers makes the PLC the only logging organization in Maine run by loggers for loggers. The mission of the PLC is to promote logging as a profession, advocate for logging professionals, cultivate responsible forest management, and sustain a strong forest products industry. PLC members are responsible for 75 percent of the timber that is harvested from Maine’s forests annually.

Learn more about the PLC at www.maineloggers.com.