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Bioenergy May be a Remedy for Ailing Wood Products Industry http://www.marketwatch.com/news/story/RISIs-International-Woodfiber-Report-Predicts/story.aspx?guid=%7BE4934685-2AB7-4E22-9F59-C8F5D9E763C0%7D

With the current economic crisis and housing market collapse, concerns have risen from the timber industry about the decrease in demand for wood fiber and lumber. According to the International Woodfiber Report (IWR) released on October 23, the demand for North American virgin woodfiber could decline by more than 20 million green tons by 2009. So far this year, the IWR estimates that pulp and paper mill closures represent the loss of 7.7 million tons/year of pulpwood demand in North America, and curtailments in oriented strand board (OSB) mills could lead to the decline of nearly 9.5 million green tons for this year.

According to Chris Lyddan, executive editor of the IWR, "With the housing market virtually dead in the water, and pulp and paper markets teetering under the weight of the general financial crisis, pulpwood demand could see unprecedented declines in most US and Canadian markets." In addition to the wood fiber market, the lumber industry is also having difficulties due to the recent economic downturn. With the steep decline in the housing market, there are large numbers of homes in foreclosure, on the market, or left vacant. This has resulted in fewer homes being under construction leading to a decline in demand lumber used for building components such as housing frames and cabinets. Even if housing construction rebounds in the next year, it is expected that building plans will be scaled back. "We are going to be building smaller houses”, said George Barrett, editor of Hardwood Review magazine. “We are going to see a lot more 2,000 square-foot homes rather than 5,000 square foot.”

According to the Western Wood Production Association, lumber demand is expected to decline by 15 percent this year and another 3 percent next year. The amount of lumber used for housing construction is expected to total 11.8 billion board feet which is less than half the amount of 23.3 billion board feet used two years ago. Combining decreased production with lumber prices declining to near 30-year lows, many sawmills and lumber companies have been hurt with some forced to shut down. Private landowners that manage timberland who are dependent on the lumber industry have also been affected. In total, the lumber industry has seen a 13 percent loss in employment in the last three years for the more than 100,000 workers. There is also concern that a downturn in the timber industry leading to wood mill closures could lead to declining forest health in some regions.

According to Steve Ellis, forest supervisor for Whitman National Forest in Oregon, it will be difficult to keep forests healthy without wood mills present to thin out overgrown forests. He warns that without wood mills present, forests may go unmanaged for an extended period of time leading to overgrowth. This could result in beetle infestations leaving large amounts of dead trees which are more susceptible to spawning destructive wildfires. Although wildfires are a natural occurrence, with more people living alongside forested areas there must be costly fire suppression treatments and firefighting activities if there is not proper forest management. One industry with the potential to grow despite the decline in the economy and the housing market is the bioenergy market. The Wood Biomass Market Report released on October 16 states that even though existing mills are willing to pay more to preserve their wood supplier, biomass projects are expected to contribute new demand for woody biomass.

According to William Perrett, editor of the Wood Biomass Market report, "Recent and upcoming project starts in the energy, pellet, and biofuels sectors will add an estimated 37 million tons per year to existing wood fiber demand in North America, and that number could easily jump to 50 million tons in short order." In British Columbia in Canada, the wood pellet industry is expected to grow which according to Pat Bell, Minister of Forestry, will help the struggling forest industry. The growth is expected to come not just from domestic demand, but also from overseas where coal fired plants are switching to wood pellets.

The province of Newfoundland and Labrador in Canada has announced that it will subsidize up to 25 percent of the cost of wood pellet stoves and furnaces. This has been done partly to provide new business opportunities to sawmills which will be able to utilize their wood waste. Wood pellets utilized in this province currently must be imported from elsewhere, but the first pellet facility is expected to open shortly. This program is part of a $14 million Forest Industry Diversification Initiative announced in May 2008. With increasing amounts of attention given to the urgency of climate change and constant concerns over the volatility of traditional fossil fuel energy markets, bioenergy production has the potential for providing an essential market for the forest products industry despite the current economic situation.

Sources:
http://www.marketwatch.com/news/story/RISIs-International-Woodfiber-Report-Predicts/story.aspx?guid=%7BE4934685-2AB7-4E22-9F59-C8F5D9E763C0%7D

http://web.charleston.net/news/2008/oct/28/few_trees_fall_forest59417/

http://www.cftktv.com/node/811536

http://sev.prnewswire.com/paper-forest-products-containers/20081016/NETH08916102008-1.html

http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1224903308117110.xml&coll=7

http://www.marketwatch.com/news/story/us-financial-crisis-delay-recovery/story.aspx?guid=%7B323BF266-93C2-489B-81BF-295FFCFA16D0%7D&dist=hppr

http://www.thetelegram.com/index.cfm?sid=187183&sc=79




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