When most people think renewable energy, they think wind and solar. More recently, as the spike in gasoline prices has made driving a costly endeavor, alternative transportation fuels such as switchgrass and corn ethanol have received heightened attention both from the media and from policy-makers. Now, a group in the White Mountains of Arizona is working to add woody biomass to the list of major sources for alternative energy. The White Mountain Stewardship Contract of the Apache-Sitgreaves National Forest is designed around the goal of building a small-scale woody biomass industry based on the hazardous fuel reduction and treatment programs that have expanded in the Forest since the devastating 486,000 acre Rodeo-Chedeski Fire of 2002.
The White Mountain Stewardship Contract is the largest of its kind, covering fuel reduction and treatment of up to 15,000 acres per year for the next ten years. The contract was awarded to Future Forest, LLC, a partnership between W.B. Contracting, a wood contracting business, and Forest Energy Corporation which manufactures wood pellets for heating wood stoves. Another local business, a 3 mega watt bioenergy plant in Eager, Arizona is purchasing 50,000 tons of limbs, tree tops, and small trees from Future Forest every year. Another 20 mega watt power plant is being constructed in the area to produce green power credits for Arizona power companies. The plant is expected to buy 170,000 green tons of biomass annually.
Bioenergy businesses are not the only enterprises that are popping up to take advantage of the contract. A custom log home business, a post & pole operation, a chemical wood hardening company, and a small-diameter sawmill have all emerged to take advantage of the woody materials that Future Forest can provide.
So what is different and new about this contract? The ten year guarantee of raw material provided by the Forest Service is a completely new way of doing business, and that long-term commitment has been the economic stimulus. It allowed many of the companies to get loans to buy equipment. Rob Davis, owner of the Forest Energy Corporation, explains it this way, “Nobody in finance is comfortable with wood industries, especially in the West. The stewardship contract has helped give them a level of comfort. The contract showed the government commitment to making the material available, and environmental groups have lined up behind the contract, meaning that that there was less likelihood for hold-ups.”
Western communities and public land managers have been struggling for years to develop markets for the small diameter material that results from fuel reduction activities. The lack of markets for small diameter timber and chips has been the largest obstacle to ramping up restoration and fuel reduction efforts. The White Mountain leaders think they have found a model that works – clusters of small businesses scaled to fit with the forest health and community protection needs of the local forest. Curtis Rogers, general manager of the Forest Energy pellet plant, says that bioenergy producers always have to keep scale in mind. “The Forest Service decides how much biomass is coming out of the forest, and they make that decision based on forest restoration and community protection needs. We are here to provide a market for that material. We recognize that this has to be done with sustainability in mind – what is good for the forest. Wood pellets from the White Mountain forests could heat all of the hospitals in Arizona, but they could not cool all of the homes in Phoenix.”
Todd Schulke of the Center for Biological Diversity has a long history of contentious relations with the Forest Service, but now he is a strong supporter of the contract and the businesses that have emerged as a result of it. He says that early on in the contracting process the Forest Service recognized the concerns of conservation organizations in the region. To build wide support for the contract, project leaders decided that large diameter trees would not be logged, and smaller, local businesses would be given preference to utilize the material. Schulke says that the decision to keep large timber companies out of the region was important in garnering his organization’s support. “In the past the timber companies have driven the agenda for forest management, but we felt comfortable that in this case that the needs of the land were driving the contract rather than what the land could produce.”
Other organizations have also expressed support for the contract on the grounds that it is centered on building a community-based forest economy. Sue Sitko of The Nature Conservancy says, “We agreed that the region needed a diverse economy based on wood products. We also agreed that the program should support local businesses focused on using the small diameter materials coming out of the forest. Once we had that foundation in place, we were able to bring some very diverse groups together to draw up the specifics of the contract.”
Stewardship contracting is unique in that local economic development is one of its primary goals, and that drives the bidding process. The stewardship contracting procedure allows the forest administrators to take factors other than bid price into consideration when awarding the contract. Issues such as the number of local jobs that would be created, how the material would be utilized, and the use of local subcontractors were important aspects of the decision. These factors allowed Future Forest to outbid big timber industry for the contract.
Fuel Treatments in the Wildland-Urban Interface
The Walker Brothers of W.B. Contracting, Dwayne, Dale, and Ricky, are logging contractors who handle the in-woods operations. “We are thinners, not loggers. Being a thinner is more politically correct,” jokes Dwayne Walker. The brothers are eighteen year veterans of the logging business - rare survivors in the western wood products industry. One of the challenges public lands managers face is finding experienced and skilled contractors to handle thinning operations in an era when the number of mills and other processing facilities has been rapidly shrinking and has completely disappeared in some areas. With the decline in conventional logging, loggers have moved to other parts of the country or into other industries. The Walker Brothers have held on.
“When the logging business started drying up we moved to Ruidoso and started working on the small diameter, thinning type jobs. After that we worked for a while on Ted Turner’s ranch, and then came back here and worked on the White Mountain Apache Reservation for a few contracts. Then the White Mountain Stewardship contract came along and we have started expanding,” says Walker.
brothers are guaranteed 5000 acres per year of work from the contract. That means that even if there are hold-ups in the environmental assessment process and the full acreage is not available, they will still get paid for 5000 acres. If the money is appropriated for more work, they can treat up to 15,000 acres per year under the terms of the contract.
“Bigger is better,” says Dwayne Walker. “When you put more material for a longer term on the table, everything starts coming together, and people start cooperating. When you go bigger, the contractor is going to figure out how to thin, process, transport, and market the material for the highest value.”
The thinning and fuel reduction work is being prioritized in the wildland-urban interface in and around the national forest. As of May 2006, 10,000 acres had been treated. The goal is to completely treat 150,000 acres in the interface over the 10 years of the contract. Ed Collins, a District Ranger for the Apache Sitgreaves, leads a tour of one of the areas being thinned by the Walker
brothers – a wooded area around a Forest Service road that would constitute the only escape route for a community sitting next to the national forest if a large wildfire blocked the main highway leading out of town. The area is considered a “dog-hair thicket” of ponderosa pine. Dense stands of small trees form an almost impenetrable wall, and the canopy overhead is completely closed. These are ideal conditions for a catastrophic crown fire. Collins says that the basal area (cross section area of all trees in a stand) is up to 300 square feet/acre. He would like to get it down to about 60 square feet/acre to reduce the chances of a crown fire.
Just beyond the logging equipment sits a number of homes among the trees. Children’s playsets rest among the ponderosa pines. Mountain bikers and ATV riders move slowly past the thinning operations watching the powerful machines at work. “The communities around the Forest were the first in the nation to complete Community Wildfire Protection Plans. We have used those plans to prioritize where we are working,” says Collins. A skidder is rapidly moving small trees to a landing where a debarker and chipper removes limbs and bark, chews up the wood, and sprays wood chips into a specially designed semi-trailer “chip van” for hauling the chips out of the forest. “We are trying to squeeze as much value as we can out of this material,” says Collins. “We are working with the contractors to reduce their costs, allowing them to do as much processing in the woods as possible to make sure that they are not hauling material that does not have value.” He points to the chip vans lined up to be loaded. “That means we have had to make some adjustments. Our roads have to be straighter and smoother for these vehicles to be capable of maneuvering in the forest. We also have to burn residue piles in the forest rather than haul them away. This is not how we would have done it in the past, but if this project is going to be self-sustaining, we all have to work together.”
Prior to the stewardship contract, treatment costs were $800 and $900 per acre. Now, the cost is $350 to $550 per acre depending on the prescription. That is the lowest treatment cost of any national forest in the Southwest. Dwayne Walker says that the long term contract allows the company to average the costs of their equipment over a longer period. This combined with the growing markets for the biomass allows them to reduce the cost to the Forest Service for the restoration treatments. The project leaders are hoping that as more companies come into the market to utilize the biomass, and as consumers begin turning to biofuels for heat and power, the costs for thinning and fuel treatments will drop even further. Collins says that they hope to get treatment costs down to $100 to $200 per acre by the end of the contract.
Generating Heat and Power from Biomass
John Zerbe, an energy specialist with the Forest Products Laboratory in Madison, Wisconsin, believes that the US could feasibly get 10 percent of its energy needs from wood (up from 3.1 percent at present). He says that there are a number of technologies becoming available that will make bioenergy and bioheating more economical in the next few years. Co-firing of biomass in coal-based power plants has enormous potential. In addition, stand alone 25 kW biopower generators can efficiently supply power for schools or hospitals in rural areas with ready access to woody feedstock. He believes that a combination of technologies and wood supply systems, adapted to local situations could offset fossil fuel use and contribute to forest health. Project leaders in the White Mountains think they have created just such a local system.
Most of the biomass produced from the White Mountain stewardship contract ends up as wood pellets for bioheating. Forest Energy, one of the partners on the stewardship contract, received 150,000 tons of green biomass for their wood pellet plant in 2005, and with that they produced over 70,000 tons of wood pellets for heating. Since the start of the contract, Forest Energy has increased their manufacturing capacity by 40% at their Show Low, Arizona plant and has doubled their supply contract with Home Depot. This past winter when natural gas prices spiked, sales of wood pellet stoves took off. Forest Energy could not keep up with demand and retailers such as Home Depot more than doubled the retail price for pellets and placed restrictions on the number of bags that could be purchased at one time. “Customers knew the days that our trucks were making deliveries to the stores, and they would start lining up in the morning,” says Rob Davis, president of Forest Energy.
Wood pellet stoves are becoming more popular for household heating as natural gas prices are expected to remain high for the foreseeable future. In addition, low emission, pellet stoves are exempt from air quality restrictions that often prohibit the use of other wood burning stoves under certain conditions. According to the Pellet Fuels Institute, sales of pellet stoves in the US increased by 74% in 2005 compared to 2004. In Canada, sales increased by 98% over the same period.
Pellet manufactures like Forest Energy would like to see more industrial and institutional heating customers make the switch. The company is already supplying pellets for new boilers in town offices for Eager and Springerville, Arizona, and the Apache-Sitgreaves Supervisors office is now heated with pellet fuel. Rob Davis says that it makes sense for institutions such as schools and hospitals to construct their heating systems around pellet fuel when they are in close proximity to a National Forest. “It sets an example that community leaders value forest health, diverse local economies, and more efficient use of energy.”
Elaine Zieroth, Forest Supervisor for the Apache-Sitgreaves is optimistic about these developing markets for biomass from thinning and fuel reduction treatments. “Right now we are on a bioenergy wave. This can be seen with the development of state renewable standards across the country. If this trend continues, fuel treatment programs will become even more cost effective. Right now we are paying contractors to grind up material and turn it into heat and electricity. Soon, they will be paying us.”
Zieroth’s view is optimistic, but there is data to support her view. A recent baseline economic study of the stewardship contract by the Economic Development Research Program at the University of Arizona showed that there are 13 firms in the region purchasing forest products from the stewardship activities. These businesses are purchasing chips, roundwood, and sawtimber. They employ 450 full-time employees, of which over half live in the communities in and around the national forest. The rest live primarily in Phoenix. The study also found that these businesses had substantial local expenditures of around $12 million annually.
If these businesses continue to grow and demand for their products continues to increase at their present rate Dwayne Walker has no doubts that the costs for forest restoration will come down. “We are always looking for higher value uses for this small wood and new ones are developing everyday.”
Right now, the pellet plant covers most of the costs for the fuel treatments, and this could make the project vulnerable to a drop in natural gas prices and a loss of demand for pellet fuel. However, Rob Davis, owner of Forest Energy does not believe that the pellet industry is as tied to natural gas prices as it was in the past. “Switching to renewable energy is a long-term trend. The major jump in natural gas prices has people looking for alternatives and they are ready to make the switch. Once people make it, they like the predictability and stability in price.”
Making It Work Elsewhere
Elaine Zieroth, Forest Supervisor for the Apache-Sitgreaves, led the effort to convince Forest Service administrators to appropriate the funds for the contract. However, she credits the leadership within the communities around the Forest. “Before the Rodeo-Chedeski fire almost all of our forest management activities were tied up in litigation. Rob Davis of Forest Energy and some of the community leaders met with conservation groups and State and federal agency staff to figure out what needed to be done. They formed a natural resources working group that began to meet regularly to develop some common ground on natural resource issues in the area. So, the seeds were in place before the Rodeo-Chedeski fire. After the fire, the trust and collaboration built up by the natural resources working group paid off. The working group began to push many of their ideas forward, and those ideas eventually led to the stewardship contract.”
While collaboration and trust are necessary, money also comes in handy. The Forest Service administrators had to be convinced to allocate money ten years out. That took some leadership on the part of Zieroth to convince them. She says that one of the biggest challenges to setting up a project like White Mountain is internal. It is a different way of doing business. “The stewardship contract is not a timber sale; it is a service contract that involves trees. A lot of people had a hard time wrapping their heads around that.”
Project leaders say that the White Mountain experience can be replicated in other places, but it cannot be done overnight. Bringing people together, building trust between individuals and organizations takes time. A wide range of people have to understand the problem and what you are trying to accomplish before you start. Todd Schulke says, “There is a lot of disagreement, but we also found that we did agree on some things, especially the need to get those small trees out of the forest. If we just work on the things on which we agree, we can get a lot done.”
In other areas like the Pacific Northwest where larger, more valuable trees are necessarily part of the fuels reduction equation, the problem becomes much more complicated. And, agreement and common ground are much tougher to find. Zieroth says that a contract of this size might only work where the small diameter trees are the problem.
Another lesson that has been gleaned from the White Mountain
experience is that once you lose all of the small-scale timber industry, it is tough to bring it back because you lose expertise, experience, and equipment. If you do not have the people that can do the work and build the businesses, the path is much more difficult. Sue Sitko of The Nature Conservance says that the White Mountains
are lucky to have skilled and conscientious business leaders. “We have people who have hung on – I give them the greatest credit. They are really champions for the forest and are building their businesses around what they think is right for the forest.”