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Modeling Bioenergy in the U.S. Forest Service’s RPA Assessment Designing U.S. Forest Assessment System to analyze agricultural and forest feedstock markets,

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Presentation on theme: "Modeling Bioenergy in the U.S. Forest Service’s RPA Assessment Designing U.S. Forest Assessment System to analyze agricultural and forest feedstock markets,"— Presentation transcript:

1 Modeling Bioenergy in the U.S. Forest Service’s RPA Assessment Designing U.S. Forest Assessment System to analyze agricultural and forest feedstock markets, including small-diameter and fire salvage wood, and impacts of biorefinery development Peter J. Ince USDA Forest Service Forest Products Laboratory Madison, Wisconsin USA Forestry and Agriculture Greenhouse Gas Modeling Forum March 5-8, 2007 – Shepherdstown, West Virginia

2 Modeling Bioenergy in the U.S. Forest Service’s RPA Assessment Topics:  Background – “RPA Assessment”  New global modeling approach (USFPM/GFPM)  Modeling future development of wood bioenergy  Assessing biofuel and bioenergy implications Forestry and Agriculture Greenhouse Gas Modeling Forum March 5-8, 2007 – Shepherdstown, West Virginia

3 RPA Assessment Background: The Renewable Resources Planning Act (RPA) mandates periodic assessments of the U.S. forest resource situation (every 5 years), including long- range analysis of supply, demand and price trends. The U.S. forest assessment system is a set of bio- economic models that provide 50-year projections. 2000 RPA Timber Assessment (Haynes et al.)

4 RPA Assessment Background: From the late 1970s to 2005, the RPA assessment system consisted of North American forest sector models (TAMM- NAPAP-ATLAS). Global trade was exogenous. The U.S. forest assessment system for the 2010 RPA will include a global forest products model (GFPM) as the new solver of market supply, demand and price equilibria.

5 Why a global model? Economic globalization has had big impacts on the forest sector since the early 1990s. Growth in wood fiber demand has shifted to Asia, and U.S. timber harvest has declined. (The WTO... ) (A forest product bulk carrier)

6 Since 1990 U.S. producers lost domestic market share for all wood products, especially labor-intensive products, with rising imports... In view of economic globalization, the Forest Service is adopting a global forest product market modeling approach for the 2010 RPA. Sources: Shipments : Dept Commerce, Bureau Census, ASM; Imports & Exports : FAS; Paper & Board: AF&PA

7  New global modeling approach (USFPM/GFPM)

8 Global market model: Global Forest Products Model (GFPM) Dynamic Equilibrium Model All Major Forest Products and All Countries Production, Consumption and Trade Based on PELPS (Price- Endogenous Linear Programming System)

9 Within GFPM (global model) we are developing USFPM – U.S. Forest Product Module... USFPM

10 To create USFPM we are adding sub-regions and more product detail for the United States (one of numerous countries within GFPM), creating USFPM within GFPM, or “USFPM/GFPM”... USFPM/GFPM

11 Current GFPM USFPM/GFPM Demand USA USA World (export) World (export) Supply/Production USA U.S. North U.S. South U.S. West World (import) World (import) USFPM/GFPM expands the regional structure of USA (currently a single region in GFPM), by expanding supply and production into three U.S. sub-regions:

12 Current GFPM USFPM in GFPM Fuelwood & Charcoal (N.A.) Sawlogs & Pulpwood Hardwood Sawtimber (one commodity) Softwood Sawtimber Hardwood Non-Sawtimber Softwood Non-Sawtimber Other Forest Biomass (branches, cull, whole-tree chips, etc.) Agricultural SRWC Residues Other Indust. Roundwood (N.A.) Other Fiber Pulp Non-Wood Fiber Pulp Wastepaper Recovered Paper USFPM/GFPM expands U.S. timber and fiber supply to include both hardwood and softwood sawtimber and non- sawtimber, other forest biomass, ag. SRWC, and residues:

13 Current GFPM USFPM/GFPM Sawnwood Hardwood Lumber Softwood Lumber Veneer/Plywood Particleboard Oriented Strand Board (OSB) Industrial Particleboard Fiberboard Mechanical Wood Pulp Chem./Semichem Pulp Newsprint Printing & Writing Paper Other Paper & Board (N.A) Biofuel (Cellulosic Ethanol) Fuelwood USFPM/GFPM expands the U.S. product structure of GFPM, by differentiating hardwood and softwood lumber, and OSB and particleboard, and adding biofuel to the product mix:

14 USFPM/GFPM* will be part of the larger U.S. Forest Assessment System (USF A S) for the 2010 RPA Forest Assessment. USF A S has three major domains, (1) Forest Use Domain (which includes forest products sector, and USFPM/GFPM model) (2) Forest Dynamics Domain (plot-based forest transition and harvest model) (3) Forest Ecosystem Services Domain (models of carbon, water, wildlife and ecosystem conditions linked to plot transitions)

15 Global Economy Trade United States Economy Forest Use Domain Land Uses Wood Products Markets Resource Management Forest Dynamics Domain Forest area Forest conditions Forest Ecosystem Services Domain Carbon Wildlife Water Climate USF A S

16 The Forest Dynamics Domain of USF A S will model transitions across the entire spectrum of U.S. forest inventory plots (FIA database of all forests and plantations). Transitions will include tree growth, shifts in species mix, and forest management actions such as harvests in responds to timber price and demand (derived from domestic and global markets).

17 i= 1, N m= 1,M t=1, T, d Stochastic Transition Model Summarize all realizations for plot i T=t+d Plot=i; Label=L i Predicted Label Random draw donor plot / store label Calculate inventory variables / store results Harvest Forecast Price Forecast Climate Forecast USFPM\GFPM Census Data & Woods and Poole IPCC, climate analysis Expansion Factor Forecast Land Use Change Models Forest Transition Model – based on all FIA forest plots (D. Wear et al.): Forecast inventory T + d {all plots} {time steps} {imputations} Novel Plot Data Base Historical Plot Data Base * For example, USFPM/GFPM will contribute to projected timber harvest and prices by solving for the market equilibrium between the USF A S forest transition model and the global and regional forest product markets.

18 As in past RPA assessments agricultural short-rotation woody crops such as hybrid poplars, and wood from fire salvage or fuel thinning programs may be introduced also in USFPM/GFPM via cost-based supply functions that can provide new supply sources if competitive with existing supply sources.

19  Modeling future development of wood bioenergy

20 The goal is cellulosic ethanol at $1.07/gallon by 2012, with feedstock at $30/dry ton. The DOE R&D goal for cellulosic ethanol is to compete with corn ethanol (at break-even costs of around $1.10/gallon)... Source: Dr. Stanley Bull, NREL, “Non-Carbon-Emitting Technologies for the Future”, May 8, 2006

21 $ per Dry Ton on the stump $40 $0 $80 $120 -- Peter Ruschmeier, 2006 PIMA Conference Large trees (>10”) are too valuable for use as biofuel feedstock. Only smaller trees (6-8” pulpwood) could be affordable as feedstock.

22 Source: Regional averages of softwood roundwood prices from International Woodfiber Report However, in the past year delivered pulpwood prices have moved further away from the DOE feedstock goal ($30 per dry ton) as prices in the West increased with a shortage of sawmill residue chips due to housing and lumber downturn. In the South, delivered pulpwood prices are double the $30 per dry ton feedstock goal, and pulpwood prices are substantially higher in the West.

23 In USFPM/GFPM the growth and development of wood products is determined by their cost competitiveness and profitability In USFPM/GFPM, biofuels and bioenergy uses will compete for wood raw materials (such as pulpwood) versus other conventional wood products, like pulp & paper or OSB (oriented strand-board)

24 Wood receipts at U.S. OSB/panel mills and wood pulp mills* OSB and wood pulp have been projected to be lead competitors for “pulpwood” – but may face future competition from wood biofuels... *Total receipts, softwood & hardwood; roundwood & residues for pulp, and roundwood for OSB. Projected Historical 2005 RPA Timber Assessment Update

25 = Range of net returns given product price range since mid-90s January ‘07 prices: Pulp @ $750/ton OSB @ $180/MSF Ethanol @ $2.00/gal Costs approximated from following sources: NLK (kraft pulp), Spelter-FPL (OSB), NREL (ethanol), Timber Mart-South (feedstock) At current costs and prices, producing cellulosic fuel ethanol from pulpwood is unprofitable. Wood pulp and OSB offer higher & less risky profit margins. Relative costs & profit margins in U.S. South...

26 In USFPM/GFPM, we can introduce future cost assumptions for wood biofuels such as cellulosic ethanol Source: Dr. Stanley Bull, NREL, “Non-Carbon-Emitting Technologies for the Future”, May 8, 2006

27 = Range of net returns given product price range since mid-90s Median prices: Pulp @ $700/ton OSB @ $240/MSF Ethanol @ $2.50/gal Costs approximated from following sources: NLK (kraft pulp), Spelter-FPL (OSB), NREL (ethanol), Timber Mart-South (feedstock) At future costs and median prices, producing cellulosic fuel ethanol from pulpwood may become profitable and competitive with wood pulp and OSB. Relative costs & profit margins in U.S. South...

28 In this case, biorefining diverts hemicelluloses from black liquor combustion to biofuel and chemical feedstock. Mean = 44.3% PulpingExtraction Separation Fermentation & Distillation Wood Sugars Fuel Ethanol Acetic Acid Hemicellulose (fraction of wood) Also, co-production of fuel ethanol and acetic acid via hemicellulose extraction at a kraft pulp mill may be an economically feasible approach to forest biorefining according to preliminary FPL studies... FPL estimates of returns with variable ethanol prices

29 And, gasification of spent pulping liquors (black liquor) and wood residues with reforming to biofuels and chemicals is another potential approach to forest biorefining, with high estimated rates of return on investment. 1 Again, mill by- products (black liquor and wood residues in this case) might be economically diverted from direct combustion to biofuel, even though direct conversion of pulpwood may not be economical. 1 Reference: Larson, E.D. et al. 2006. A Cost-Benefit Assessment of Gasification-Based Biorefining in the Kraft Pulp and Paper Industry. FINAL REPORT under contract DE-FC26-04NT42260 with the U.S. Department of Energy. 164 p. Gasifier technology under development by Chemrec

30 The most economical approaches to producing wood-based biofuels (e.g. cellulosic ethanol) are at present based on biorefining of readily available or existing byproduct feedstocks at pulp and paper mills (i.e. hemicelluloses, black liquor and wood residues). Pulpwood is less likely to be used directly as a feedstock unless substantial gains are achieved in cellulosic ethanol production efficiency. However, all available options should be assessed in the context of dynamic and competitive markets.

31  Assessing biofuel and bioenergy implications

32 USFPM/GFPM will assess the following: Competitive outlook for wood biofuels and bioenergy in the context of all competing wood uses and global wood markets; expected U.S. market implications; future development of wood biofuels and feedstocks USF A S, the broader U.S. forest assessment system, will assess the following (via forest transition model): Forest resource implications (timber inventory, forest ecology) of biofuel/bioenergy development Forest sector carbon sequestration and other implications of bioenergy and biofuels

33 Questions?


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