Factors Affecting Supply

The South is endowed with rich forest resources and favorable physiographic conditions for biomass production. Though the availability of forest biomass is promising, its actual supply will be affected by an array of factors including the availability of forest resources, recovery limitations imposed by accessibility and  environmental concerns, and economic considerations. Forest resources, accessibility, and environmental concerns are discussed elsewhere in this encyclopedia.

Economic factors affecting the supply of forest biomass include production costs, prices of biomass and its substitutes, competing uses of forest resources, and policy, among others. First, technologies for forest production, biomass harvest and transport, and energy conversion will dictate the production costs of forest biomass and bioenergy. Thus, research and development will have an important role to play in forest biomass and bioenergy development. The costs will also vary with scale of operation, biomass spatial density, terrain conditions, average stem diamater, and transport distance, among other things. The most cost-effective production of biomass for energy occurs when it is produced simultaneously with other higher valued forest products (sawlogs, pulping chips).

Second, there also must be a demand for (buyers of) forest biomass in local markets, which interacts with the supply to determine the market price. Though there are some local buyers in limited locations currently, large buyers have not emerged region-wide. Potential buyers include independent developers, utility companies, biorefineries, larger-scale users of biomass for space heating and chilling, and the producers of other bio-based products in the future.

Third, prices of other types of energy such as fossil fuels will have an influence on the supply of forest biomass. Increases in the price of oil or natural gas will favor bioenergy. Forest bioenergy will also face competition with other renewable energy sources such as agricultural crops and crop residues, solar, wind, and hyro energy, among others. 

Fourth, competing or complementary uses of forest resources for pulpwood, timber, and ecological services will also interact with the supply of forest biomass for energy. Recent adjustments in the forest products industry, particularly in the pulp and paper sector may present an opportunity for using small-diameter trees for bioenergy. Yet, forest bioenergy is unlikely to compete with lumber and wood products industry demand for large-diameter trees, because of the low relative value of energy feedstocks. Production of forest biomass for energy, for example, thinning over-stocked stands, may enhance the production of high quality logs and reduce fire risk whereas there is some concern about the potential loss of soil productivity resulting from excessive removals of biomass. Demand for ecological services such as biodiversity may have a negative or positive impact on the supply of biomass from forests (Schaberg and others 2005).

Finally, policies pertaining to energy, forest management and utilization, environmental protection, and land use, as well as assistance and incentive programs to forest landowners and bioenergy producers and consumers will also affect the supply of forest biomass. Some of these policies include carbon emission taxes, the renewable portfolio standard, etc. These factors combined will determine the profitability of producing forest biomass and bioenergy, a key determinant for developing and sustaining a forest biomass and bioenergy industry.