United States Department of Agriculture

Oregon’s Biomass Producer 

Tax Credit—Impacts 

of Land Ownership 

on Woody Bioenergy Use 

David L. Nicholls, Robert L. Deal, and Andrew Warren

Forest 

Service

Pacific Northwest 

Research Station

Research Paper

PNW-RP-615

March

2020
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Authors

David L. Nicholls is a research forest products technologist, U.S. Department of 

Agriculture, Forest Service, Pacific Northwest Research Station, 901 C Halibut 

Point Road, Sitka, AK 99835; Robert L. Deal is a research forester, U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station, 620 SW 

Main Street, Suite 502, Portland OR 97205; Andrew Warren was an energy policy 

analyst, Oregon Department of Energy, 625 Marion Street NE, Salem, OR 97301. 

Currently, Warren is a small business programs manager, Oregon Department of 

Transportation, 355 Capitol Street NE, Salem, OR 97301.

Cover: photos by David L. Nicholls.
Abstract

Nicholls, David L.; Deal, Robert L.; Warren, Andrew. 2020. Oregon’s biomass 

producer tax credit—impacts of land ownership on woody bioenergy use. 

Res. Pap. PNW-RP-615. Portland, OR: U.S. Department of Agriculture, Forest 

Service, Pacific Northwest Research Station. 27 p.

From 2007 through 2017, Oregon implemented an incentive program for biomass 

collection and production. This research evaluates renewable biomass production 

and deliveries during a 3-year period (2012 to 2014) in which this tax credit was 

in place. We evaluated total delivered tons, average payments per load, delivered 

location, and average transportation distance of woody biomass. We found that 

total delivered tons of biomass decreased each year between 2012 and 2014, as did 

the number of users participating in the tax credit program. The average delivered 

tons, by participant, was more than double in 2014 its level in earlier years, suggesting that fewer, larger entities were participating. We also evaluated differences in 

biomass delivery, based on receipts, transportation distances, and tons delivered, for 

each land ownership class. There were statistically significant differences between 

private and public land ownership for 2012 and 2013 but not for 2014, which 

included fewer applicants. 

Our study showed that effective biomass utilization policies need to provide 

sufficient economic incentives to encourage adoption by both participants and 

biomass energy producers, and, to be effective, to consider the complete supply 

chain and type of energy produced. Future economic conditions in Oregon will 

most likely include rapid changes in renewable energy technologies and fluctuations in fossil fuel prices, and any truly effective renewable energy policies must be 

sufficiently nimble to account for these and other uncertainties. 

Keywords: Biomass, torrefaction, forest restoration, tax credit, renewable 

energy policy.
Contents

1 Introduction

1 Ecosystem Services and Bioenergy 

2 Oregon’s East-Side Forests and Forest Products Capacity

3 The Oregon Biomass Producer or Collector Tax Credit

4 Methods

5 Results 

5 Biomass Produced Over All Years (2012–2014)

8 Delivery of Biomass by Year

9 Effect of Land Ownership on Biomass Delivery

10 Discussion

10 Key Trends in Oregon Biomass Utilization

14 Policy Implications for Bioenergy Development

15 Renewable Energy Policies—From Local to Global Scales

15 Federal and State Renewable Energy Policy in the United States

16 Multiple Policy Instruments and Renewable Energy Types

17 Woody Biomass Policies in the United States

18 Policy Implications—Ecosystem Services, Biodiversity, and Social Values

19 Oregon Context

21 Conclusion and Policy Implications

22 Acknowledgment

22 Metric Equivalents

22 Literature Cited
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Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

Introduction

Ecosystem Services and Bioenergy 

Ecosystem services are the benefits that people obtain from ecosystems (MEA 

2005); the importance and value of ecosystem services are being recognized from 

local to global scales (Costanza et al. 1997, Daily 1997, Farley and Costanza, 2010, 

Kroeger and Casey 2007, LaRocco and Deal 2011). The Millennium Ecosystem 

Assessment (MEA 2005) recognized four categories of ecosystem service: provisioning, regulating, supporting, and cultural services. Provisioning services include 

food, freshwater, timber, and fiber for human use. Regulating services help to 

maintain a world in which it is possible for people to live, providing benefits such as 

flood and disease control, water purification, climate stabilization, and crop pollination. Supporting services include nutrient cycling, soil formation, and primary 

production from our ecosystems. Cultural services include recreational, spiritual, 

aesthetic, and cultural values. Ecosystem services can also include secondary 

benefits such as reducing the risk of wildfires, increasing carbon sequestration 

from forests, and use of biomass as an alternative to burning fossil fuels for energy 

(Mitchell et al. 2009, Oliver and Deal 2007, Schroder et al. 2016, UNFCCC 2007). 

Thus, the four categories of ecosystem services together provide a diverse array of 

services and benefits to society.

Forests and forest management also play an important role in sequestering 

carbon and reducing greenhouse gas (GHG) emissions. Forests can sequester large 

amounts of carbon in several ways—as standing forest (carbon sinks), in wood 

products, and in avoided emissions when wood is used as a substitute for products 

such as steel, concrete, and brick that require fossil fuels to produce (Oliver and 

Deal 2007). Thinning forests to reduce fuel loads may reduce the severity of wildfires as well as maintain and enhance carbon sequestration (Kashian et al. 2006). 

Fuel treatments can also be useful for maintaining air quality, water quantity, 

and wildlife habitat, and should be considered based on their benefits to multiple 

ecosystem services, not just carbon sequestration. Fuel treatments can be particularly useful to enhance carbon storage in forests with low-severity, high-frequency 

fire regimes and fire return intervals on the order of years to decades (Hurteau and 

North 2009, Mitchell et al. 2009), especially forests that have experienced biomass 

accumulation resulting from fire suppression (Brown et al. 2004). In these ecosystems, fuel treatments can effectively reduce subsequent wildfire severity and carbon 

emissions, assuming that biomass would be burned in a power plant for energy 

production rather than burned onsite in the forest. Accounting for energy use and 

assessing alternative energy sources other than coal and other fossil fuels could play 

an important role in reducing the effects of climate change. 
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GENERAL TECHNICAL REPORT PNW-RP-615

These ecosystem services could play an integral role in increased biomass use 

in Oregon, especially if they become more highly valued in the marketplace. Key 

services include climate change mitigation through reduced fossil fuel (coal) use; 

reduced wildfire risk owing to hazardous fuel reduction; air quality improvements 

if bioenergy is generated in place of fossil energy (including coal); and potential 

water quality improvements (especially after a wildfire occurrence) (Brown et al. 

2004, Deal et al. 2012, Dupraw 2014, Mitchell et al. 2009). In Oregon, hazardous 

fuel removals near communities could provide an array of ecosystem services, 

including those mentioned above, as well as enhanced employment opportunities. 

However, to realize their full benefit, one requirement is a long-term biomass supply that is tailored to wood energy systems already in place. Successful ecosystem 

service management will need to address entire landscapes, encouraging landowners to work cooperatively toward landscape-level goals (Irland 1994). This is 

likely to be especially relevant in Oregon, given its diverse forest types, significant 

wildfire potential, and dynamic energy needs.

Oregon’s East-Side Forests and Forest Products Capacity

Decades of reduced management activity and aggressive fire suppression have 

contributed to higher tree density as well as increased insect and disease mortality in the forests of eastern Oregon. These conditions have increased both the risk 

and extent of catastrophic wildfire (Ager et al. 2012). Concurrently, forest products 

manufacturing in the region has declined substantially. This decline has significantly diminished market outlets and options to utilize biomass from forest restoration activities on federal lands, creating an undesirable cycle. 

To reduce wildfire risk, the state of Oregon and the U.S. Forest Service have 

increased their focus on collaboration for longer term stewardship contracts. The 

lack of viable markets for this low-value woody biomass is directly related to the 

high treatment costs associated with biomass removals, which exceed the market 

value of woody biomass from alternative sources. However, if economic hurdles 

can be overcome—through stewardship contracting and other vehicles—biomass 

removals in eastern Oregon could benefit not only facilities such as torrefied wood 

producers but also local sawmills, harvesting operations, and regional employment.

Residues from wood products manufacturing represent a potential major source 

of biomass and are generally much less expensive than woody residues from forest 

harvesting activities. More than 45 wood products facilities are located in eastern 

Oregon (an area defined as being east of the crest of the Cascade Mountains) (Swan 

et al. 2012). In the Blue Mountains of eastern Oregon, sawmills account for 11 of 

19 active wood products manufacturing facilities (Gale et al. 2012). Wood products 
3

Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

residues could become an important aspect of biomass utilization in eastern Oregon 

because they are sometimes considered a waste product, available at lower prices 

than forest harvesting residues or fire-hazard thinnings. However, wood products 

residues are often used onsite to heat lumber drying kilns, and in some cases, 

sawmills could use some or all of their residues for this purpose. 

The Oregon Biomass Producer or Collector Tax Credit

The Oregon Biomass Producer or Collector (BPC) tax credit was enacted in 

2007 to provide incentives for the production, collection, and transportation of 

biomass used for energy production in the state (Austin 2011). This program was 

introduced as a portion of a larger biofuels package by then Oregon Governor Ted 

Kulongoski, with the intent to grow the biofuel market in Oregon. The tax credit 

was authorized through tax year 2017 and had wide latitude regarding the types 

of biomass accepted, with each source of biomass having a different rate schedule 

(table 1). Under the program, eligible biomass could be used to produce electricity from anaerobic digestion, pellets, or torrefaction as well as various types of 

biofuels (solid, liquid, or gaseous states). However, some types of biomass were 

ineligible, including firewood or charcoal, demolition debris, urban wood waste, or 

yard debris.

Several studies have examined how the Oregon BPC program affected the 

supply and delivered price of Oregon-sourced biomass. White et al. (2013b) 

compared actual delivered prices of woody biomass sourced in Oregon in 2011 

to forecasted prices without the Oregon BPC and found that actual prices were 

lower by $10.68 per bone-dry ton (BDT). The same study found that the Oregon 

Table 1—Tax credits for various biomass fuels under the Oregon biomass tax 

credit program

Biomass type Credit Units

Dollars

Oil seed crops 0.05 Pound

Grain crops 0.90 Bushel

Virgin oil or alcohol 0.10 Gallon

Used cooking oil or waste grease 0.10 Gallon

Wastewater biosolids 10 Wet ton

Woody biomass: 10 Green ton

Vegetative biomass from agricultural crops 10 Green ton

Animal manure or rendering offal 5 Wet ton

Yard debris and municipal food waste 5 Wet ton

Source: Nielsen-Pincus et al. 2011.
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GENERAL TECHNICAL REPORT PNW-RP-615

BPC was responsible for between 58,240 and 136,500 BDT of additional woody 

biomass being delivered to bioenergy facilities. Similar results for the impact of 

the Oregon BPC during 2010 were reported in Nielsen-Pincus et. al. (2011).

White et al. (2013b) summarized data for 2010 and 2011 Oregon BPC for seven 

types of biomass. Here, woody biomass tax credits accounted for more than 85 

percent of dollars received in 2010, with the remaining six biomass types accounting for about 15 percent of the total. In 2011, this amount was 70 percent for woody 

biomass with the remaining six biomass types accounting for about 30 percent of 

the total. In addition to in-state markets, eastern Oregon logs and wood fiber are 

shipped out of state to 23 destinations, mostly in California and Washington (Swan 

et al. 2012). 

Our current study is intended to provide a context for biomass utilization, 

renewable energy use, and ecosystem services in Oregon. We do so by evaluating 

woody biomass supply and delivered fuel costs as influenced by the Oregon BPC 

during 2012, 2013, and 2014. We consider how land ownership in Oregon is related 

to the volume of woody biomass delivered, total payments received, and transportation distance. We also provide an analysis of the influence of land ownership on biomass deliveries in Oregon, extending previous work that considered broader based 

benefits (Nielsen-Pincus and Moseley 2009, Nielsen-Pincus et al. 2011, White et al. 

2013b). We consider these factors in a broad policy context that addresses relevant 

renewable energy themes among Oregon, the United States, and international 

energy users. Our study is timely in that Oregon’s original tax credit program came 

to a close in 2017, so this research can help inform any future policies. Numerous 

stakeholders may benefit from this research, including Oregon’s wood products 

industry, environmental and conservation groups, federal and state land managers, 

and those interested in innovative new uses of biomass including torrefaction. 

Methods

We used Oregon BPC data from 2012, 2013, and 2014 to analyze biomass volumes 

delivered, total receipts, transportation distance, and delivered price of biomass, 

identifying trends occurring over time. All data were tabulated by the Oregon 

Department of Energy and were based on individual participant records for a given 

year. We considered each of these factors for three classes of forest land ownership: 

private, national forest, and “various” owners. We conducted analysis of variance 

(ANOVA) tests between land ownership classes for each of these factors, for all 3 

years. When significant differences were indicated, we then conducted Bonferroni 

post-hoc pairwise comparison tests to determine pairwise differences in means, by 

ownership class. Finally, we summarized aggregate data for all tax credit participants over the full 3-year period for tons delivered, total receipts, dollars per ton, 

and transportation distance.
5

Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

In Oregon, forest landowners include the National Forest System (12.5 million 

ac), private landowners (including industrial and nonindustrial) (10.2 million ac), 

and the Department of the Interior’s Bureau of Land Management (2.4 million ac) 

(ODF 2006). Some applicants using the Oregon BPC were biomass collectors, who 

purchase and receive woody biomass at their facility from harvesters before delivering the material to a biofuel producer. The Oregon tax credit program required 

applicants to have ownership of biomass material at some point in the supply chain, 

but not to own land. Therefore, it is possible that some applicants were third-party 

processors who then sold biomass to end users. 

For the purposes of this research, most of the various applicants were those who 

received woody debris but were not directly involved in sourcing biomass. Various 

applicants could have received biomass from private, state, federal, or other lands, 

among other entities. For our data, most of the various entries were from a single 

enterprise. Because the Oregon reporting system collected data on large amounts of 

biomass from diverse locations but with different contracting officers and systems, 

there was a need to modify the state’s system for the purposes of our research. 

We did this by creating a separate category of “various” when it became clear that 

biomass could not be neatly characterized as originating from private, state, or 

federal lands. 

Results 

Biomass Produced Over All Years (2012–2014)

During 2012, 2013, and 2014, 264 participants delivered biomass as part of the 

tax credit program (figs. 1 through 4). However, some of these participants were 

involved in more than a single year; therefore, the number of unique participants was 

less than 264. Most participants (138 out of 264) delivered less than 1,000 tons per 

year, while nearly 74 percent of participants (195 out of 264) delivered up to 3,000 

tons per year (fig. 1). A few larger firms (13) each delivered more than 10,000 tons of 

biomass, resulting in greater total tonnage than from all other participants combined. 

Total receipts followed closely the patterns for delivered tons of biomass, with most 

participants (58 percent) receiving less than $15,000 per year (fig. 2). However, 14 

larger firms (5 percent) had annual receipts of greater than $150,000 per year. 

Transportation distances ranged from less than 40 to more than 400 mi, with 

40 to 79 mi being the most represented category (32 percent) (fig. 3). It is assumed 

that all biomass was transported by truck, although this was not specified by 

respondents. Biomass prices were most often in the range of $35 to $45 per green 

ton, encompassing 53 percent of respondents (fig. 4). However, there is clearly a 

“sweet spot” of less than 200 mi of transportation that also was sold for $30 to $45 

per green ton.
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GENERAL TECHNICAL REPORT PNW-RP-615

Figure 1—Total weight of biomass transported for participants in the Oregon biomass tax credit program for all deliveries from 2012 

to 2014. 

Figure 2—Total receipts for participants in the Oregon biomass tax credit program for all deliveries from 2012 to 2014.
7

Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

Figure 3—Transportation distances for participants in the Oregon biomass tax credit program for all deliveries from 2012 to 2014.

Figure 4—Biomass prices for participants in the Oregon tax credit program for all deliveries from 

2012 to 2014.
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GENERAL TECHNICAL REPORT PNW-RP-615

Delivery of Biomass by Year

We found that average woody biomass deliveries during 2012, 2013, and 2014 were 

24.6, 20.7, and 29.0 green tons per load, respectively. However, the average value 

per load for 2012, 2013, and 2014 was $384.50, $451.10, and $512.32, respectively. 

In 2012, a total of 151 users participated in the tax credit (in 2013, this dropped to 

76 users, and in 2014 was only 20 users). In 2012, the average participant delivered 

1,232 BDT of biomass (in 2013, this average was 1,342 BDT, and in 2014 was 2,919 

BDT) (table 2). Therefore, over this 3-year period, there were fewer participants 

delivering larger amounts of biomass. This is especially true for Forest Service 

lands (fig. 5), where average biomass deliveries increased to more than 6,000 green 

tons in 2014.

Table 2—Summary statistics for 2012, 2013, and 2014 Oregon biomass tax credit data

Delivered 

tons

Average 

tons 

per load

Average 

moisture 

content

Bone-dry 

tons

U.S. dollars 

per bone-dry 

ton

Average 

revenue

Average 

revenue

Percent, dry basis Dollars

per load

Dollars per ton 

per load

2012:

Average 2,010 25 60 1,232 37 385 16

Minimum 3 3 42 2 5 0

Maximum 41,646 36 90 23,468 45 1,109 31

Standard deviation 4,820 9 11 2,855 8 340 38

Number 151 151 151 151 94 148

2013:

Average 2,047 21 63 1,342 33 451 22

Minimum 2 2 42 1 13

Maximum 30,835 33 91 23,356 65 1,325 40

Standard deviation 4,410 11 11 3,178 10 311 27

Number 76 76 76 76 75 76

2014:

Average 4,690 29 61 2,919 31

Minimum 30 20 47 25 8

Maximum 17,924 54 82 11,551 45

Standard deviation 4,906 7 11 3,212 10

Number 20 20 20 20 19
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Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

Effect of Land Ownership on Biomass Delivery

As noted above, the Oregon tax credit data we used reflected three ownership 

classes: private, Forest Service, and “various,” with the latter consisting largely 

of a single user. We conducted ANOVA comparisons for land classes based 

on total biomass volume, total receipts, and transportation distance. We found 

statistically significant differences based on land ownership class, for 2012 and 

2013 (tables 3 and 4).

For 2012, there were statistically different results between land ownership categories for each response variable. Private landowners were characterized by having the greatest number of tons delivered, highest dollar amounts per BDT, highest 

total receipts, and shortest transportation distance (table 3). Private landowners had 

significantly different means from both other land ownerships for both total receipts 

(private landowners greatest) and transportation distance (private landowners 

least). Note that very few “various” landowners reported transportation distances 

(with 6 reporting out of 33 landowners). For 2013, dollars per BDT was the only 

response variable showing significant differences between land ownership classes. 

Here, private landowners (average of $36.33 per BDT) were significantly different 

than “various” landowners (average of $27.83 per BDT). There were no statistically 

significant differences between land ownership classes for tons delivered, total 

receipts, or transportation distance (table 4). For 2014, there were no significant 

Figure 5—Average biomass deliveries, by land ownership, for participants in the Oregon biomass tax 

credit program from 2012 to 2014. 
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GENERAL TECHNICAL REPORT PNW-RP-615

differences between land ownership classes for any of the response variables (tons 

delivered, dollars per BDT, total receipts, or transportation distance). However, the 

total number of participants in the tax program was considerably lower than for 

previous years (typically about 20) (table 5).

Discussion

Key Trends in Oregon Biomass Utilization

The Oregon BPC displayed mixed results in terms of stimulating biomass delivery 

and utilization, and its long-term effects are not yet known. During 2012–2014, 

participation declined, as did the volume of woody biomass delivered. This was in 

part due to a new accounting procedure implemented during this period that based 

payments on oven-dry rather than green weight, effectively reducing the tax credit 

in some cases by close to 50 percent. By 2014, only four participants delivered more 

Table 3—Land ownership effects for select biomass parameters in the Oregon 

tax credit program in 2012

Land ownership class Number Averagea

Tons delivered (2012):

Private 56 3,625a

U.S. Forest Service 72 1,273b

Various 33 1,176ab

p-value = 0.016

Dollars per bone-dry ton (2012):

Private 50 39a

U.S. Forest Service 33 36ab

Various 16 32b

p-value = 0.0121

Total receipts in dollars (2012):

Private 56 66,493a

U.S. Forest Service 72 9,717b

Various 33 6,020b

p-value = 0.00068

Transportation distance in miles (2012):

Private 56 75a

U.S. Forest Service 72 153b

Various 6 138b

p-value = 1.06 x 10-9

a

 Means sharing a common letter are not significantly different at the 0.05 confidence level using Bonferonni’s 

pairwise comparison test.
11

Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

than 5,000 tons of biomass, and the total number of participants was 20 (fig. 6), as 

compared to 2012, in which eight participants delivered more than 5,000 tons of 

biomass from a total of 145 participants. Thus, there appeared to be fewer larger 

participants after the tax credit was effectively reduced. A second impact of the tax 

credit change was a greater variability in biomass prices received. Although the 

maximum prices received were consistent for all 3 years, it is clear that the dispersion of prices was considerably greater in 2014 than in previous years (fig. 7). Thus, 

any policies leading to greater stability in biomass prices or number of participants 

could be considered if the program is extended beyond 2017.

Land ownership also played an important role in these trends. Woody biomass 

delivered from private landowners showed significantly different results from 

biomass sourced from the Forest Service in many categories, including total volume 

delivered, payments received, and transportation distances. In 2012, this difference 

Table 4—Land ownership effects for select biomass parameters in the Oregon 

tax credit program in 2013

Land ownership class Number Averagea

Tons delivered (2013):

Private 28 2,026

U.S. Forest Service 22 3,190

Various 27 1,112

p-value = 0.258552

Dollars per bone-dry ton (2013):

Private 27 36a

U.S. Forest Service 22 35ab

Various 27 28b

p-value = 0.004253

Total receipts in dollars (2013):

Private 28 43,915

U.S. Forest Service 22 85,319

Various 27 36,570

p-value = 0.423849

Transportation distance in miles (2013):

Private 28 59a

U.S. Forest Service 22 197b

Various 0 —

p-value = 6.11 x 10-6

a

 Means sharing a common letter are not significantly different at the 0.05 confidence level using Bonferonni’s 

pairwise comparison test.
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GENERAL TECHNICAL REPORT PNW-RP-615

was most pronounced with statistically significant differences in all categories 

(table 3). In particular, transportation distances tended to be shorter from private 

lands, where most shipments were less than about 130 mi (fig. 8). For federal lands, 

distances appeared evenly distributed for distances of up to about 280 mi, with 

some shipments of more than 400 mi (fig. 8). These results suggest that Oregon 

policies to stabilize key parameters such as biomass price, net realized tax benefit, 

and the number of participants will help create greater predictability of biomass 

utilization. Consistent biomass supplies are a critical element in developing supply 

chains and infrastructure needed to support fledgling biomass energy industries.

Table 5—Land ownership effects for selected biomass parameters in the Oregon 

tax credit program in 2014

Land ownership class Number Averagea

Tons delivered (2014):

Private 10 3,508

U.S. Forest Service 8 6,201

Various 2 4,551

p-value = 0.536788

Dollars per bone-dry ton (2014):

Private 9 32

U.S. Forest Service 8 29

Various 2 35

p-value = 0.760902

Total receipts in dollars (2014):

Private 9 48,168

U.S. Forest Service 8 130,865

Various 2 106,081

p-value = 0.317548

Transportation distance in miles (2014):

Private 10 73

U.S. Forest Service 8 106

Various 1 30

p-value = 0.336335

a

 Means sharing a common letter are not significantly different at the 0.05 confidence level using Bonferonni’s 

pairwise comparison test.
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Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

Figure 6—Total weight of biomass transported, by year, for participants in the Oregon biomass tax 

credit program from 2012 to 2014. 

Figure 7—Biomass price, by year, for participants in the Oregon biomass tax credit program from 

2012 to 2014. 
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GENERAL TECHNICAL REPORT PNW-RP-615

Policy Implications for Bioenergy Development

Policies to enhance biomass development can be broadly classified into at least 

five broad categories: tax incentives (including sales tax credits, production tax 

credits, and property tax credits); cost sharing (including grants and rebates); rules 

and regulations; financing assistance, and technical assistance (Becker et al. 2011). 

Fire risk mitigation policies could include harvest cost subsidies (e.g., reduced 

stumpage values), and transportation cost subsidies (e.g., reductions in diesel fuel 

taxes). Other incentives could be structured to help log and processing sites become 

established near harvest sites, or to encourage renewable energy production (e.g., 

production tax credits when producing energy from biomass) (Becker et al. 2009). 

Fuel quality considerations, including moisture content and the presence of bark 

or foliage, will influence factors such as heat value for power generation as well as 

suitability for processes such as torrefaction. Therefore the continuation of a tax 

incentive for biomass utilization could be expanded in scope to consider these and 

other specific factors. This is important because Oregon’s tax incentive discussed in 

this report—although broad-based—could be considered to have been too general 

to have lasting impacts on biomass use. As wood energy infrastructure develops for 

applications such as small-scale thermal, cofiring, aviation fuels, biochar, and torrefied wood, Oregon’s tax policy could remain current with these applications and 

Figure 8—Transportation distance versus land ownership class for participants in the Oregon biomass 

tax credit program from 2012 to 2014.
15

Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

markets. Further, emerging wood-based industries (such as cross-laminated timber, 

which is used to build high-rise structures out of wood) could have a bearing on 

amounts of mill residues generated, and associated bioenergy opportunities. 

Renewable Energy Policies—From Local to Global Scales

A number of nations in Europe have led the way in renewable portfolio standards 

and related policy incentives, some of which have been in effect since the 1990s. 

Marques et al. (2010) used a fixed-effects panel model to consider factors driving 

renewable energy adoption in European Union (EU) nations and also by non-EU 

members, finding that policies were beneficial overall for promoting renewable 

energy. Menegaki (2011) also used a panel data framework to evaluate the economic 

growth of EU nations accruing from renewable energy use. Using a random effects 

model with GHG emissions, employment, and energy consumption as explanatory variables, Menegaki (2011) found short-term relationships between renewable 

energy use, GHG emissions, and employment. Zhao et al. (2013) also employed 

a large-panel data approach (covering 122 countries over 30 years), finding a 

direct link between renewable electric policies and renewable electricity generation. However, they also found that an increasing number of polices over time can 

actually lead to diminishing returns in policy effectiveness. Kilinc-Ata (2016) 

considered both EU nations and U.S. states in an econometric approach to renewable energy policies. Using panel regression tests, he considered the effect of feed-in 

tariffs, quotas, tenders, and tax incentives in promoting renewable energy growth. 

Feed-in tariffs and tax incentives were found to stimulate electrical generation 

from renewables, while quotas were less effective. Polzin et al. (2015), in a study 

of about 30 countries, also found that feed-in tariffs were effective—especially for 

less mature renewable energy technologies (while emissions trading was generally 

more effective for mature technologies). Other studies (Sarzynski et al. (2012) found 

that, within a suite of renewable energy policies, the ones providing short-term cash 

incentives—e.g., rebates, grants, and tax incentives—tend to promote more rapid 

and extensive deployment of renewable energy.

Federal and State Renewable Energy Policy in the United States

Since the early 2000s, state governments have taken the lead in developing renewable energy policies in the United States. Several options have been explored, 

including a mandatory green power option, which requires electricity suppliers to 

allow customers to purchase green power from a specified provider (Delmas and 

Montes-Sancho 2011). In cap-and-trade policies (also referred to as GHG emission 

trading), limits are placed on total carbon emissions rather than specifying generation technologies. Although feed-in-tariffs (also known as standard offer contracts) 
16

GENERAL TECHNICAL REPORT PNW-RP-615

have proven effective, they can be complex. For example, Couture and Gagnon 

(2010) evaluated seven different configurations and design options for feed-in 

tariffs. Finally, a leading green energy policy implemented by some U.S. states is 

the renewable portfolio standard (RPS), which will be the focus of the remainder 

of this discussion.

A renewable portfolio standard has the primary goal of increasing the proportion of renewable electricity generation. An RPS requires “electric utilities 

and other retail electric providers to supply a specified minimum percentage (or 

absolute amount) of customer demand with eligible sources of renewable electricity” (USEPA 2018). Such RPSs had been adopted in at least 30 states by mid-2013 

(Galik et al. 2015), with an additional 8 states having adopted less binding “renewable portfolio goals.” Many states have established target years of 2025 by which 

renewable energy goals will be met. 

Although RPSs have proven successful in most states, they have produced 

mixed results. Carley (2009) found that states with an RPS typically increased 

renewable generation; however, RPSs were not significant predictors of the total 

renewable energy generation by a given state. Conversely, Yin and Powers (2010) 

found that RPSs did have a positive influence on renewable power development. 

Menz and Vachon (2006) concluded that RPSs had a positive effect on renewable 

power—particularly wind energy. Eastin (2014) also reviewed the effectiveness of 

RPSs in the United States primarily from an air quality perspective. Carly (2011) 

found that RPSs were most effective when neighboring states also had RPSs, resulting in a geographic diffusion of renewable energy. 

Multiple Policy Instruments and Renewable Energy Types

According to the database of state incentives for renewables and efficiency (DSIRE, 

http://www.dsireusa.org/), it is not at all uncommon for states to adopt multiple 

renewable energy policy instruments (Cheng and Yi 2017), and policy effectiveness 

has been found to vary by energy source (e.g., biomass vs. wind vs. solar). Only 

two policy measures were found to be effective for all types of renewable energy—

investment incentives and feed-in tariffs. In related work, Bird et al. (2011) studied 

the effectiveness of multiple renewable policies on reaching RPS targets. They 

found that RPSs combined with cap and trade programs could lead to short-term 

benefits greater than either measure alone. However, the electricity prices resulting from combinations of policies produced varying results. Shirmali and Kniefel 

(2011) evaluated all 50 U.S. states over a 16-year time series. They found that, when 

considering pairs of renewable energy technologies, a given policy incentive could 

affect wind or biomass energy resources differently than geothermal or solar energy.
17

Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

In a related study, Basher et al. (2015) considered panel data models to evaluate 

renewable energy policy effectiveness for 19 countries over a period of 22 years. A 

typical assumption in time series studies is that the dependent variable (in this case 

the contribution of renewable energy) will be stationary about some mean. However, this work found strong evidence (17 of 19 countries) that the renewable energy 

share was not stationary. Polzin et al. (2015) considered the influence of renewable 

energy policy incentives when evaluating both actual market conditions and technological maturity. They found that market-based instruments (e.g., GHG emissions 

trading) are appropriate for mature technologies. Prasad and Munch (2012) pointed 

out the importance of policy instruments such as carbon taxes in reducing GHG 

emissions, because proximate measures such as clean electricity targets do not 

necessarily reduce carbon emissions. 

Shrimali and Kniefel (2011) considered broad policy measures for numerous 

renewable technologies, including wind, biomass, geothermal, and solar. They 

found that penetration of all technologies can benefit from “clean energy funds” and 

“green power options.” However, for a specific type of technology, voluntary portfolio standards were more effective. Shrimali et al. (2015) considered the relation 

between federal and state energy policies, finding that the national production tax 

credit for renewable energy production did enhance state-level policies. However, 

regulatory uncertainty surrounding federal tax credits can also create uncertainty in 

state renewable energy deployment. Carly (2011) also considered the effect of a carbon price on reducing carbon dioxide (CO2 ) emissions, finding that a price of $50 

per ton can generate significant carbon savings but that a carbon price combined 

with an RPS can be most effective. These findings demonstrate the importance 

of considering several factors when adopting state-level policies, among them the 

types of renewable energy incentivized, the maturity of technologies, and whether 

similar federal policies may already be in place. This is important, especially in 

states like Oregon that have abundant hydropower, wind, and biomass resources.

Woody Biomass Policies in the United States

Biomass utilization can be directly related to the use of other renewable energy 

technologies, and policies to enhance these technologies are intertwined. State 

woody biomass policies can be broadly grouped into financial incentives (including 

tax incentives, subsidies, and grants) and nonfinancial incentives (including rules 

and regulations, education, and consultation) (Guo et al. 2012). 

In the Southeastern United States, Galik et al. (2015) considered multistate 

RPSs, finding that effective regional policies can result in greater levels of forest 

carbon sequestration. They also identified states such as North Carolina, New 
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GENERAL TECHNICAL REPORT PNW-RP-615

Mexico, and New Hampshire that have separate “carve-outs” within their RPSs for 

biomass energy. These provisions often combined bioenergy with other renewables 

such as manure (methane gas), hydroelectric, and geothermal energy. Becker et al. 

(2011) evaluated biomass utilization state policies, identifying 370 policies (as of 

2010). They considered policy effectiveness at different points of the supply chain, 

including harvesting, transportation, and manufacturing. The greatest number of 

policies was directed toward manufacturers and processors of biobased products 

(82 policies). White et al. (2013a) considered a national perspective of woody 

biomass in the United States and provided economic models for the use of shortrotation-woody biomass crops, harvest residues, and hazardous fuel removals. 

Renewable energy policies must be evaluated over time to gain a true sense 

of their effectiveness. When considering a time-series approach, a common characteristic is often to assume that electricity generation will be stationary about a 

mean. However, Basher et al. (2015) found strong evidence to suggest that this is 

not always a valid assumption (in 17 out of 19 policies they studied). Delmas and 

Montes-Sancho (2011) found that the choice of independent variable (e.g., renewable 

energy generation vs. renewable energy capacity) can greatly influence findings. 

And, because most RPSs specify that a certain percentage of energy generation 

will be renewable, it is possible that carbon emissions could actually increase over 

time even if the renewable energy share is also increasing. Thus, state policymakers must carefully choose one or more policy instruments and evaluate conditions 

under which they would be most effective, considering unintended consequences 

and potential limitations.

These studies and others demonstrate the difficulty in making direct comparisons of RPS success. One challenge in making state-to-state comparisons is that 

specific policies can differ broadly in their construction, the way goals are specified, and their effectiveness over time. Although RPSs in most states specify only 

renewable electricity generation, some states also allow thermal generation, energy 

efficiency, and in some cases, nonrenewable generation to be credited. Further, 

RPSs may become inefficient under certain circumstances because they do not 

reward nonrenewable energy sources that have lower carbon emissions (e.g., natural 

gas when it is used to replace coal for power generation) (Eastin 2014). 

Policy Implications—Ecosystem Services, Biodiversity, 

and Social Values

Woody biomass from hazardous fuel treatments could provide a number of 

important ecosystem services, including fire risk reductions (Shroder et al. 2016), 

improved forest resiliency, wildlife habitat, and recreational use (Foley et al 2014, 
19

Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

Gaines et al. 2010, Smith et al. 2011). In the potential utilization of forest residues 

for energy, the benefits from displacing fossil fuels occur instantaneously; using 

forest residues for energy is preferable to burning them onsite or letting them decay 

onsite, as both would have greater CO2 emissions (Miner et al. 2014). Forest harvest 

regimes on large landscapes are linked to the degree of biological diversity, disturbance patterns, and land use change—all of which can influence production and 

availability of woody biomass (Spies and Johnson 2007). 

Conserving biological diversity can pose challenges for land managers, and 

effective adaptive strategies for dealing with climate change require a socioecological systems perspective. These include manipulation of stand and landscape structure to increase resilience, as well as engaging in multiownership land use planning 

(Spies et al. 2010). Policies promoting bioenergy can be used to enhance energy 

security, rural economic development, and climate change mitigation (Soderberg 

and Eckerberg 2013). However, large-scale use of bioenergy can spur conflicting 

views regarding socioeconomic benefits, especially in rural areas. At the forefront 

is the issue of conserving biodiversity in areas where intensive forest management 

is practiced. 

In the Pacific Northwest, and primarily in Oregon, there are more than 30 

formally organized forest collaborative groups (USDA FS 2017) that are working 

with the forest industry, conservation groups, and economic development councils 

to actively manage regional forests. One of their key efforts is to find markets for 

small-diameter trees harvested in the thinning of forests to reduce wildfire risk and 

improve forest health. The Forest Service has implemented a national Collaborative 

Forest Landscape Restoration Program (CFLRP) to increase the pace and scale of 

restoration in the region (Dupraw 2014), and there are four large CFLRP projects in 

Oregon and Washington that are funded for 10 years. These CFLRP projects create 

a large supply of small-diameter trees that are currently piled and burned onsite 

or underutilized. Coordination of restoration projects with a dependable supply of 

biomass would both encourage an increase in the scale of restoration projects in the 

region and help reduce the uncertainty of supply for large electrical power plants 

that will have huge demands for biomass.

Oregon Context

This research is relevant to renewable energy development in Oregon in several 

respects. Oregon has established an RPS goal to produce 50 percent of the state’s 

electricity from renewable resources by 2040 (ODE 2017). Wind power accounted 

for 11.3 percent of the electricity generated in Oregon in 2015 (AWEA 2016). It is 

therefore likely to far outshine bioenergy in the near term. 
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GENERAL TECHNICAL REPORT PNW-RP-615

State policies must consider all the renewable energy technologies in their 

portfolio to be effective, especially because combinations of renewable feedstocks 

can behave differently under different sets of policies. Oregon’s current RPS (as in 

many other states) includes renewable electricity only. However, states are increasingly broadening the list of eligible energy products for their RPSs, including 

thermal generation (Heeter and Bird 2013). Because Oregon has far greater biomass 

use in thermal energy systems (than is used to generate electricity), inclusion of a 

thermal energy component could bode well for Oregon’s renewable energy future. 

White et al. (2013a) indicated that, if the biomass tax credit addressed in this paper 

were replaced with incentives for capital expenditures, construction of up to 10 

small-scale thermal energy facilities per year would be feasible. Continued policy 

measures such as the RPS will help Oregon enter a new phase of wood energy 

utilization. Past research has shown that the benefits of biomass use are tangible—

an estimated $850,000 in economic activity for each 10,000 BDT of forest biomass 

delivered (Nielson-Pincus et al. 2011). Effective policy measures can be customized 

to benefit various points in the biomass supply chain, including harvest, transportation, production, and use (Becker et al. 2011). 

Overall, Oregon woody biomass utilization policies rate highly, including 

an overall rank in the top five U.S. states (Guo et al. 2012). However, decreasing 

participation in the Oregon biomass tax credit program could necessitate new innovations to remain viable. As a practical consideration, policy changes in Oregon 

must be verifiable and be administered efficiently, minimizing transaction costs for 

participants and administrators. In this context, a small number of well-designed 

policies adopted simultaneously could be more effective than numerous policies 

phased in gradually (Zhao et al. 2013). As of 2009, Oregon had 13 regulations 

related to biomass utilization (Becker et al. 2011) and 12 biomass policy instruments, which included four tax incentives and three regulations (Guo et al. 2012). 

Oregon policymakers could streamline these initiatives to become more effective 

at increasing bioenergy use in an environment of uncertain policies. Other policy 

considerations in Oregon could include renewing the tax credit to include both 

biomass energy generators and consumers, including biomass thermal energy, and 

increasing biomass eligibility to include urban-derived residues.

A strong and vibrant biomass industry will support Oregon’s wood products 

manufacturers as well as contribute many other ecosystem services and community benefits. Secondary benefits accruing from ecosystem services could include 

reducing the risk of wildfires, increasing carbon sequestration by forests, or the 

use of wood byproducts and biomass as an alternative to burning fossil fuels for 
21

Oregon’s Biomass Producer Tax Credit—Impacts of Land Ownership on Woody Bioenergy Use 

energy. There is strong interest among bioenergy stakeholders in Oregon (Stidham 

and Simon-Brown 2011); however, future challenges include access to long-term 

consistent biomass supplies as well as access to forest products (including biomass) 

from federal lands. Oregon’s experience with biomass utilization and renewable 

energy generation could have broad implications across the Western United States 

where coal-fired power plants are considering cofiring coal and biomass, transitioning away from coal altogether, or considering other bridge strategies to reduce fossil 

fuel consumption while increasing renewable energy use. 

Conclusion and Policy Implications

Biomass will play an important role in the renewable energy future of Oregon as 

its RPS stipulates that 50 percent of the state’s electricity generation come from 

renewable resources by 2040. Given Oregon’s extensive forest resources and strong 

economic base from wood products, part of this energy mix could include biomass. 

Bioenergy policies can be designed to create meaningful incentives for sustained 

effectiveness. For example, tax credits can reflect the true economic value of green 

vs. dry biomass to encourage participation. Efficient use of biomass is especially 

important in light of reduced timber harvests, as well as the increased fire frequency 

and acres burned over the past few decades. Policies can also be focused on enhancing biomass use from both west-side (wet) and east-side (dry) forest ecosystems.

Oregon’s electrical generation picture is rapidly changing, with a large coal 

power plant scheduled for retirement and an energy void that must be filled. 

Although wind energy has experienced rapid growth and is likely to meet some of 

this demand, other contributors such as solar power, biomass energy, and energy 

efficiency could also play key roles. Employment benefits from biomass processing, 

transportation, and utilization could be substantial, and should be weighed against 

those of other technologies (such as wind, solar, and geothermal) when designing 

policies that enhance Oregon’s economic growth as well as its resource utilization. 

Perhaps the key finding from our current study is that effective biomass utilization 

policies must take a long-term view and provide sufficient economic incentives to 

encourage use. In the case of biomass, successful incentives would also consider 

the complete supply chain and type of energy product, serving as many participants 

as possible. Future economic conditions in Oregon will be difficult to predict, but 

key among them could be rapid changes in renewable energy technologies, rapid 

fluctuations in fossil fuel prices, and rapid changes in macroeconomic conditions 

that could lead to recessions (Marques et al. 2010). Truly effective renewable energy 

policies must be nimble enough to account for these and other uncertainties. 
22

GENERAL TECHNICAL REPORT PNW-RP-615

Acknowledgment

This study was conducted with funding from the U.S. Department of Agriculture, 

Forest Service, Pacific Northwest Research Station to the Oregon Department of 

Energy under Cost-Reimbursement Agreement No. 2014-JV-11261935-107. 

Metric Equivalents

When you know: Multiply by: To find:

Miles (mi) 1.609 Kilometers

Acres (ac) .405 Hectares

Tons (ton) .907 Tonnes or 

megagrams

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