Division of Legislative Services > Legislative Record > 2009
Special Subcommittees of the House and Senate Committees on Commerce and Labor Studying the Use of Forest Products as a Renewable Energy Resource
September 23, 2009
Commerce and Labor Studying the Use of Forest Products as a Renewable Energy Resource was held in The initial joint meeting of the Special Subcommittees of the House and Senate Committees on Richmond. The Special Subcommittees appointed Senator A. Donald McEachin and Delegate Benjamin L. Cline as co-chairmen.
Senate Bill 913
The adoption of Senate Bill 1416 and House Bill 3068 of the 2007 Session created the Virginia Electric Utility Regulation Act and established the voluntary renewable portfolio standard (RPS), which provided an incentive for any investor-owned electric utility that has a reasonable expectation of achieving stated percentages of its generation derived from renewable energy sources including sunlight, wind, falling water, and biomass as well as waste, municipal solid waste, wave motion, tides, and geothermal power.
RPS goals are set at 4% of base year sales for 2010 through 2015, 7% of base year sales for 2016 through 2021, 12% of base year sales for 2022 through 2024, and 15% of base year sales for 2025.
Currently, only Dominion and American Electric Power Company (AEP) are eligible to participate in the RPS program. Each eligible utility may submit a plan showing that it has a reasonable expectation of meeting the RPS percentage goals to receive the 0.5% Performance Incentive.
The current language of § 56-585.2 F of the Code of Virginia limits investor-owned utilities participating in an RPS program to the use of no more than 1.5 million tons of forest products, such as wood chips, bark, sawdust, and trees each year, more than was used at wood-fueled generating facilities prior to 2007, towards meeting the section's RPS goals. The 1.5 million ton cap is an industrywide total and will be allocated among utilities participating in the RPS program, based on the proportion of each utility’s share of total electric energy sold in the base year.
of Senate Bill 913
Senator Stuart challenged the reliability of assumptions used to determine the need for a cap and the tonnage amount of the cap. These assumptions included (i) the amount of unavailable hardwood that could not be harvested, (ii) the conversion factor between cubic feet and pounds, (iii) a fixed amount of forest resources, and (iv) the predicted rise in the cost of wood products for paper production. He also contended that the current legislation restricts the market of the most abundant and readily available renewable resource in Virginia.
The purpose of Senate Bill 913 is to promote fair competition between forest products consumers, end the protection of the paper manufacturing community at the expense of wood fiber providers, and promote a fair market by removing artificial restraints on the use of wood products. The presentation concluded with a list of supporters of Senate Bill 913, which included the Virginia Forest Products Association, the Virginia Loggers Association, the Virginia Farm Bureau Federation, and the Virginia Alternative and Renewable Energy Association.
Next followed the testimony of 10 individuals representing businesses and associations related to the production and supply of forest products. Bill Garden of Potomac Supply, a 300-employee sawmill and lumber producer, explained the effects of the recession on sawmills generally and the need for expanded markets. Currently, Potomac Supply ships chips out of state because the demand and the market price for them in Virginia are so low. Mr. Garden stated that one million tons of green sawdust would generate only 80 megawatts of power. Mr. Garden termed the current legislation as a “blunt instrument” and stated that the State Corporation Commission (SCC) would be a better determiner of any dispute about the appropriate amount of biomass to be used toward meeting RPS goals.
Clark Diehl of Arbortech, Dickie Dost of Chips, Inc, Nelson Flippo of Flippo Lumber, Kenny Gibson of Gibson Logging, Bob Norman, an independent forester, Andrew Smith of the Farm Bureau, Jim Mooney of the Virginia Loggers Association, and August Wallmeyer of International Biofuels gave similar testimony. Each proponent of Senate Bill 913 expounded briefly on the state of the economy and a need for expanded forest product markets. Several spoke to the importance of long-term management of forest land and resources that must be preserved, and many pointed to the SCC as the proper arbiter of any forest products use dispute. Randy Bush of the Virginia Forest Products Association provided a handout to the members that explained the basics of Senate Bill 913 and the 1.5 million ton cap and detailed the benefits of Senate Bill 913 for small businesses involved in forest products production, the benefits to Virginia’s 350,000 plus forest landowners, the promotion of sustainable forest resources, and the benefits to the Commonwealth’s renewable energy goals.
of Senate Bill 913
Mr. Scarboro concluded with remarks that the growth and demand of Virginia’s forests are closely balanced and that the current RPS plan allows utilities to gain an extra profit for all renewable energy resources in use before January 1, 2007, and an additional profit on the use of up to 1.5 million tons of biomass without limiting the total amount of biomass that the utilities can use.
Use of Forest Products to Generate Electricity
Lisa C. Moerner,
Dir. of Environmental Policy, Dominion Resources
Ms. Moerner’s report detailed the use of wood chips at the 83 megawatt Pittsylvania power station, the largest biomass station in the eastern United States. Seventy percent of the fuel used by the Pittsylvania power station originates within a 90-mile delivery radius of the station. The six megawatt Altavista power station is fueled by sawdust purchased from local furniture companies.
When evaluating a proposed site for a biomass power station, Dominion reviews the regional “wood basket” and any competing interests. Several of the typical biomass fuels used by Dominion are not limited by the Virginia RPS cap and include slash and logging residues, pre-commercial thinnings, and opportunity fuels such as pallets. Fuels used by Dominion that are affected by the RPS cap include green wood chips, sawdust, and mill residues.
External Affairs Mgr., Appalachian Power Company
Impact of Renewable Biomass Energy Generation
Robert S. Bloxom, Secretary of Agriculture and Forestry
The 2007 EISA limits the amount of forest biomass from naturally regenerated forest land, and relies primarily on forest biomass from planted stands to meet the fuel standard and qualify for renewable fuel credits. Under EISA, the source of tree biomass delivered to an energy facility would be tracked by a required chain-of-custody system identifying the type of landowner and verifying trees from plantations or natural stands. In addition, federal lands are excluded from such opportunities. In contrast, the 2008 Farm Bill definition of forest biomass does not restrict natural or plantation forest land leaving the available biomass open to most private forest land. Secretary Bloxom presented maps comparing the amount of biomass in the United States and Virginia according to both EISA and the Farm Bill. The full report is expected to be delivered to members in December 2009.
Co-chairman Cline requested staff to track any related developments in the federal Waxman-Markey bill.
The Special Subcommittees intend to hold a joint meeting in December following the publication of the Department of Forestry report. The meeting date will be posted on the General Assembly calendar as soon as information is available.
Division of Legislative Services > Legislative Record > 2009