Will US programme increase the supply of woody biomass?

The Biomass Crop Assistance Program (BCAP), a new federal program in the US that is intended to increase the usage of renewable energy by covering some of the costs related to the collection of woody biomass and agricultural residues, has been in effect for a few months and has created much interest, as well as confusion, within the forest industry, reports the North American Wood Fibre Review/Wood Resources International LLC
As of 15 December, it had not yet been determined how much funding the program could have for 2010. So far, US$517 million has been allocated for the period 1 January through 31 March 31 2010.

There have been loud protests from both North American and European forest industry organisations who are concerned that the BCAP program will unfairly favour US energy companies and that sawdust and wood chip costs will go up as the result of the programme.

With the first payments from the government having been distributed in mid December, it is still too early to conclude how much the biomass energy subsidy will impact prices for wood chips, shavings, sawdust and hog fuel in the coming months.

The BCAP programme is available for producers/sellers of biomass for a period of two years, and both the seller and the conversion facility have to apply to participate in the programme. As of 15 December 2009, 306 conversion facilities had qualified.

At this point, it seems unlikely that the BCAP program will have anything near the impact that the black liquor tax credit has had (an estimated 8-9 billion dollars was transferred to the US pulp industry).

It may very well be that in the end, the BCAP program will not add as much biomass to the market as was intended. In fact, most of the biomass supply that will enter the market in the coming years would likely have been available even without the subsidy. The only difference is that biomass consumer may benefit from lower fiber costs and suppliers will increase their profits from the sales of forest and agricultural residues.