NY - The Hunt For Urban Wood And Its Electrifying Possibilities

A New York-based green energy fuel supplier is betting big that the practice of burning urban wood wastes to generate electricity will continue to grow in popularity in the United States

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The Hunt For Urban Wood And Its Electrifying Possibilities

Posted on July 30th, 2008
By Nathanial Gronewold

Climatewire: NEW YORK A New York-based green energy fuel supplier is betting big that the practice of burning urban wood wastes to generate electricity will continue to grow in popularity in the United States, and that the Northeasts major metropolitan areas can provide the fuel it profits from for a long time.

And in announcing its latest moves yesterday, the firm is also counting on the coming Regional Greenhouse Gas Initiative (RGGI) and a pending federal carbon dioxide cap-and-trade program to further enhance the popularity and profitability of city wood scrap.

Green Energy Resources, a firm specializing in collecting and processing the wood discarded by cities and transforming it into a source of power, announced a significant expansion of its operations yesterday. To its existing infrastructure, the firm said it will add three new rivers and seaports to haul its product from the metropolitan reaches of Philadelphia and New York City to power plants in Virginia, Maine and beyond.

The three new ports two in New Jersey and one in Long Island will be set up to load the unusual cargo onto barges. From these new ports, tugs would then tow the material to some of Green Energy Resources own power generation facilities and to customers that it already supplies via truck or rail freight. One of the New Jersey ports will also be able to handle deep-water vessels, allowing the firm to expand its overseas export market.

Unlike traditional wood chips gathered from forestry operations or furniture manufacturing, Green Energy Resources makes a profit by collecting material overlooked by many in the wood biomass industry: construction and demolition waste, used shipping pallets, tossed out fencing and even branches and trees knocked down by storms.

Because urban wood waste is typically much drier than forestry wood chips, it produces more heat and energy. Thus, its a fuel source thats growing in popularity with alternative energy suppliers, says Joseph Murray, chief executive of Green Energy Resources.

Placing the new ports on the outskirts of New York and Philadelphia is important because the locations are a major sourcing area as far as accessing the major urban wood waste streams in that general region, said Murray in an interview.

We can go up the Hudson, down the Erie, the entire East Coast. We can do the Chesapeake or the James River down in Virginia. So these are the main access points, he said.

A limited supply, but easy to find and ship

Urban wood waste is a relatively small portion of the whole biomass industry, with potential supplies largely dwarfed by what could be made available from paper and lumber mills, forestry operations and agriculture. A recent estimate by Oak Ridge National Laboratory puts the total potential supply of city wood waste in the United States at 36.8 million dry tons per year, whereas about 474.2 million dry tons could potentially be gotten from other biomass sources.

There is also little room for urban wastes share in the biomass picture to grow, experts say.

It seems unlikely that the available wood waste will increase substantially in the next two decades, even as population increases, due to efforts to reduce waste production at the source and increased recycling, wrote biomass researcher Marie Walsh in an assessment by Oak Ridge National Laboratory.

But the logistical challenges plaguing other biomass products are less of a problem for urban wood waste collectors. Municipal services already gather construction waste, felled trees and other scrap and collect it, usually in municipal landfills. Companies like Green Energy Resources can simply intervene at these collection points to sort out the material they need and send it on to processing, where its ground up into wood chips like other biomass.

The most abundant sources of urban wood waste are also found on the coastlines, giving this renewable energy segment a big advantage in shipping costs. Indeed, Murray said his firm is enhancing its barge shipping operations largely because of todays higher fuel costs, which are cutting deeply into his margins when he relies on the roads and rails.

I dont need to tell you that the price of fuel has had a major impact on transporting either by rail or by truck, and so doing it by barge and tug is significantly cheaper, said Murray. The savings come to about one-fourth the cost of going by truck and about one-third going by rail, he said.

An industry on the alert for windfall profits

Expanded ocean capabilities and the ports location also make the company available to respond to cleanup efforts, should another hurricane hit part of the East Coast or the Gulf of Mexico region.

And while Green Energy Resources is profitable in its own right, thanks to the growing popularity of renewable energy, it has also benefited from the United States voluntary carbon offset market. The company says it is the only firm in the United States eligible to receive renewable energy credits as a supplier of fuel. Typically, only power generators receive the credits. Credits generated by the companys operations are certified by the Voluntary Carbon Standard certification scheme, Murray said.

Taking advantage of the popular voluntary carbon market means that Green Energy Resources can generate sufficient capital to finance much of its expansion plans itself. This is a big advantage at a time when many on Wall Street are reluctant to invest in anything as the financial turmoil in the wake of the subprime mortgage market collapse rolls on. Industry figures show that investment in renewable energy fell sharply in the first quarter of 2008, but have lately shown signs of recovery back to the robust levels enjoyed in 2007.

Usually margins on this kind of a bulk commodity work on 10 percent or less, Murray explained. But capitalizing on just the existing voluntary carbon market allows us to potentially open up to margins of 50 percent, so this allows us working capital, he said.

Murray and his firm are now betting that the Northeasts RGGI system will give an added boost to profit margins and future expansion plans. The first system-wide auctions for RGGI allowances are scheduled to begin in late September, and Green Energy Resources says it will qualify as a supplier of offset credits under RGGI rules.

Thats why weve selected the New York metropolitan area and the sourcing of this particular wood, said Murray. It is this particular wood that qualifies for the carbon credits. Traditional wood thats amassed from the forestry industry sources does not.

Murray and his team admit that that is not the case for wood waste sourced from Philadelphia, since Pennsylvania is listed as only an observer to RGGI and not a full participant. But that wont prevent the firm from generating voluntary offset credits from Pennsylvanias material, and the firm is hopeful that RGGI rules will change next year to make Philadelphias wood scrap eligible for offset credits under that compulsory system.

In the long term, the company is betting that Congress will finally pass a federal carbon emissions trading program to cover the whole country in 2009. Green Energy Resources experiences in the voluntary carbon market and the coming RGGI regional compliance scheme should place it in a good position if lawmakers allow for a substantial role for offset credits from wood waste power generation.

Our major plans have to do with accessing and continuing to acquire and source urban wood waste streams, and putting ourselves logistically in the best position to supply facilities throughout the East Coast, said Murray.

Additional Information

Web Site: http://www.earthportal.org/news/?p=146

Category: Forestry>Wood Utilization

Region: New York

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