a

GAO

United States Government Accountability Office

Report to the Chairman, Committee on 

Resources, House of Representatives

March 2006 NATURAL 

RESOURCES

Woody Biomass Users’ 

Experiences Offer 

Insights for 

Government Efforts 

Aimed at Promoting 

Its Use

GAO-06-336
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2006

NATURAL RESOURCES 

Woody Biomass Users’ Experiences Offer 

Insights for Government Efforts Aimed at 

Promoting Its Use 

Highlights of GAO-06-336, a report to the 

Chairman, Committee on Resources, 

House of Representatives

The federal government is placing

greater emphasis on thinning 

vegetation on public lands to 

reduce the risk of wildland fire. To

help defray the cost of thinning 

efforts, it also is seeking to 

stimulate a market for the resulting

material, including the smaller 

trees, limbs, and brush—referred to

as woody biomass—that 

traditionally have had little or no 

commercial value. As GAO has

reported in the past, the increased 

use of woody biomass faces

obstacles, including the high cost 

of harvesting and transporting it 

and an unpredictable supply in 

some locations. Nevertheless, 

some entities, such as schools and 

businesses, are utilizing the 

material, potentially offering

insights for broadening its use. 

GAO agreed to (1) identify key

factors facilitating the use of 

woody biomass among selected

users, (2) identify challenges these 

users have faced in using woody 

biomass, and (3) discuss any 

insights that these findings may 

offer for promoting greater use of

woody biomass. 

In responding to a draft of this 

report, the Departments of

Agriculture, Energy, and the 

Interior all generally agreed with 

GAO’s findings. 

Financial incentives and benefits associated with using woody biomass were 

the primary factors facilitating its use among the 13 users GAO reviewed. 

Four users received financial assistance (such as state or federal grants) to 

begin their use of woody biomass, three received ongoing financial support 

related to its use, and several reported energy cost savings over fossil fuels. 

Using woody biomass also was attractive to some users because it was 

available, affordable, and environmentally beneficial. 

Several users GAO reviewed, however, cited challenges in using woody 

biomass, such as difficulty obtaining a sufficient supply of the material. For 

example, two power plants reported running at about 60 percent of capacity

because they could not obtain enough material. Some users also reported 

that they had difficulty obtaining woody biomass from federal lands, instead 

relying on woody biomass from private lands or on alternatives such as 

sawmill residues. Some users also cited increased equipment and 

maintenance costs associated with using the material. 

The experiences of the 13 users offer several important insights for the 

federal government to consider as it attempts to promote greater use of 

woody biomass. First, if not appropriately designed, efforts to encourage its 

use may simply stimulate the use of sawmill residues or other alternative 

wood materials, which some users stated are cheaper or easier to use than 

woody biomass. Second, the lack of a local logging and milling 

infrastructure to collect and process forest materials may limit the 

availability of woody biomass; thus, government activities may be more 

effective in stimulating its use if they take into account the extent of 

infrastructure in place. Similarly, government activities such as awarding 

grants or supplying woody biomass may stimulate its use more effectively if 

they are tailored to the scale and nature of the targeted users. However,

agencies must remain alert to potential unintended ecological consequences 

of their efforts. 

Examples of Woody Biomass Users GAO Reviewed

Source: GAO.

Pulp and paper mill. Wood-fired heating facility at rural school.

www.gao.gov/cgi-bin/getrpt?GAO-06-336.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Robin M. 

Nazzaro at (202) 512-3841 or 

nazzaror@gao.gov. 
Page i GAO-06-336 Key Factors in Woody Biomass Utilization

Contents

Letter 1

Results in Brief 2

Background 5

Financial Incentives and Benefits, Access to an Affordable Supply, 

and Environmental Benefits Facilitated the Use of Woody 

Biomass among Users We Reviewed 8

Challenges Faced by Woody Biomass Users Included Inadequate 

Supply and Costs Associated with Handling and Using the 

Material 14

Current Users’ Experiences Offer Insights for Government Efforts to 

Expand the Use of Woody Biomass 19

Concluding Observations 24

Agency Comments and Our Evaluation 25

Appendixes

Appendix I: Characteristics of Woody Biomass Users Included in Our 

Review 26

Appendix II: Objectives, Scope, and Methodology 27

Appendix III: Comments from the Department of Agriculture 32

Appendix IV: Comments from the Department of the Interior 33

GAO Comments 38

Appendix V: GAO Contact and Staff Acknowledgments 40

Table Table 1: Characteristics of Woody Biomass Users Included in Our 

Review 26

Figures Figure 1: Small-Diameter Logs and Slash Generated from a 

Montana Fuels Reduction Project 6

Figure 2: Wood Fuel Storage Facility at a Montana School 

District 10

Figure 3: Equipment and Process for Using Wood Fuel at One 

Location 16

Figure 4: Maintenance Crew Member Clearing Wood Blockage in 

Conveyor Equipment 17

Figure 5: Locations of Woody Biomass Users We Reviewed 29
Contents

Page ii GAO-06-336 Key Factors in Woody Biomass Utilization

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Page 1 GAO-06-336 Key Factors in Woody Biomass Utilization

United States Government Accountability Office

Washington, D.C. 20548

A

March 22, 2006 Letr

The Honorable Richard Pombo

Chairman

Committee on Resources

House of Representatives

Dear Mr. Chairman:

In recent years, extensive wildland fires have drawn attention to the 

abnormally dense vegetation in many of our nation’s forests. The federal 

government has responded by placing greater emphasis on reducing the 

danger of such fires by thinning forests and rangelands to help reduce the 

buildup of potentially hazardous fuels. These thinning efforts are expected 

to generate large amounts of woody material, including many small trees, 

limbs, and brush—often referred to as woody biomass—that traditionally 

have had little commercial value.1

Widespread thinning efforts will be costly to the federal government. To 

help defray these costs, and to enhance rural employment and economic 

development, the government is promoting a market for woody biomass. 

However, as we have reported in the past,2

 the increased use of woody 

biomass faces several obstacles. Officials in federal agencies seeking to 

promote its use—including the Departments of Agriculture, Energy, and 

the Interior—told us that woody biomass use is hampered by the high costs 

of removing and transporting it from forests and the difficulty in obtaining 

a reliable supply in some areas. Nevertheless, a number of businesses and 

government entities are using woody biomass for various purposes, 

including heating schools and hospitals, making lumber and other 

products, and generating electricity.

1

Although biomass can be considered any sort of organic material—including trees, grasses, 

agricultural crops, and animal wastes—the term woody biomass in this report refers to 

small-diameter trees and other traditionally noncommercial material cut as part of thinning, 

harvesting, or other activities on forests or rangelands. For the purposes of this report, we 

distinguish woody biomass from other wood residues such as sawmill residues or urban 

wood waste.

2

See GAO, Natural Resources: Federal Agencies Are Engaged in Various Efforts to 

Promote the Utilization of Woody Biomass, but Significant Obstacles to Its Use Remain, 

GAO-05-373 (Washington, D.C.: May 13, 2005). 
Page 2 GAO-06-336 Key Factors in Woody Biomass Utilization

In this context, and in response to our previous report describing agency 

activities to promote woody biomass, you asked us to review current users 

of woody biomass to determine whether their experiences offer any 

insights for expanding its use. Specifically, we agreed to (1) identify key 

factors facilitating the use of woody biomass among selected users, (2) 

identify challenges these users have faced in using woody biomass, and (3) 

discuss any insights that our findings may offer for promoting greater use 

of woody biomass.

To conduct our review, we used a structured interview guide to collect 

information from 13 users of woody biomass, including power plants, pulp 

and paper mills, and school and hospital facilities in various locations 

around the United States. Appendix I contains information about each of 

the 13 users in our review. We first identified users by interviewing federal 

and nonfederal officials knowledgeable about the use of woody biomass 

and by reviewing pertinent documents such as federal agency studies of 

woody biomass utilization. Users in our review were then selected from a 

range of industries and geographic regions. The information we collected 

about these 13 entities should not be generalized to other woody biomass 

users because of variations in the characteristics of different users. 

Appendix II provides further details on the scope and methodology of our 

review. We conducted our work from May 2005 through January 2006 in 

accordance with generally accepted government auditing standards.

Results in Brief The primary factors facilitating woody biomass use among users we 

reviewed were financial incentives or benefits associated with its use, 

either in the form of financial assistance for using the material or in energy 

cost savings. Other factors included the availability of an affordable supply 

of woody biomass and users’ interest in environmental benefits associated 

with its use. Four of the 13 users in our review received financial assistance 

to begin using woody biomass, including state and federal grants and taxexempt bonds. Three users also were given ongoing support as a result of 

their use of woody biomass, including grant funds for expanding their 

wood storage facilities and payments for producing renewable energy. 

Moreover, six users reported energy cost savings from using woody 

biomass in place of fossil fuels such as natural gas. For example, two small 

school districts individually reported about $50,000 and $60,000 in annual 

fuel cost savings, while two large pulp and paper mills reported several 

million dollars in such savings. Several of the 13 users also cited the 

availability of an affordable supply of the material as important in their use 

of woody biomass—particularly in cases where it was already being 
Page 3 GAO-06-336 Key Factors in Woody Biomass Utilization

removed as a byproduct of other activities, such as commercial logging or 

private land clearing. Finally, three users told us that their use of woody 

biomass was due in part to anticipated environmental benefits associated 

with using the material, including improved forest health and reduced 

emissions. 

Using woody biomass, however, was not without challenges for the users 

we reviewed. Users cited insufficient supply, increased equipment and 

maintenance costs, and other factors that limited their use of woody 

biomass or made it more difficult or expensive to use. In contrast to users 

citing an available supply of woody biomass, seven users reported they 

found it difficult or impossible to obtain a sufficient supply of the material. 

For example, two power plants reported running at about 60 percent of 

their capacity because they could not obtain enough material to operate at 

full capacity. Five users told us they had difficulty obtaining woody 

biomass from federal lands, which was of particular concern to users 

located in areas where federal lands constitute a substantial portion of the 

landscape. Such users relied more on woody biomass from private lands or 

on alternative wood materials such as sawmill residues (including sawdust, 

chips, bark, and similar materials) or urban wood waste (made up of tree 

trimmings, construction debris, and the like). Several users also told us 

that, despite the financial advantages of using woody biomass in place of 

oil or natural gas, they had incurred costs in using woody biomass that they 

would not have incurred had they burned these other fuels. Users cited 

costs for additional wood-handling equipment, such as storage bins and 

conveyors, and added operation and maintenance costs, including costs 

arising from problems in storing and handling woody material.

Our findings offer several insights for promoting greater use of woody 

biomass, specifically: (1) attempts to encourage the use of woody biomass 

may serve to stimulate the use of alternative wood materials such as 

sawmill residues instead, (2) government activities may be more effective 

in stimulating woody biomass use if they take into account the extent of 

logging and milling infrastructure, and (3) efforts to encourage woody 

biomass use may need to be tailored to the scale and nature of individual 

recipients’ use. 

• If not appropriately designed, attempts to encourage the use of woody 

biomass may simply stimulate the use of mill residues or other 

alternative wood materials, which some users told us are cheaper or 

easier to use than woody biomass. For example, in 2003, the Forest 

Service provided a grant to fund a Montana school’s conversion to a 
Page 4 GAO-06-336 Key Factors in Woody Biomass Utilization

wood heating system in order to stimulate the use of woody biomass in 

the area. However, at the time of our review, the school was using less 

expensive wood residues from a nearby log-home builder rather than 

woody biomass. Further, in using woody biomass, users in our review 

often used the tops and limbs from trees harvested for merchantable 

timber or other uses rather than the small-diameter trees that contribute 

to the problem of overstocked forests. As the federal government seeks 

to stimulate the market for materials that result from forest-thinning 

activities, it should consider the potential impacts of its actions to 

ensure that they promote greater use of small-diameter trees and not 

simply increase the use of other wood materials. 

• Government activities may be more effective in stimulating woody 

biomass use if they take into account the extent to which a logging and 

milling infrastructure is in place in potential users’ locations. The 

availability of a reasonably low-cost supply of woody biomass depends 

in part on the presence of a local logging and milling infrastructure to 

collect and process forest materials, even though this infrastructure also 

generates alternatives to woody biomass. Without a milling 

infrastructure, there may be little demand for forest materials, and 

without a logging infrastructure, there may be no way to obtain the 

materials. Indeed, officials at one power plant operating at a reduced 

capacity because of a shortage of wood for the plant told us that the 

shortage was due to the lack of a local logging infrastructure—in other 

words, there simply were not enough loggers to carry out needed forest 

projects, and it was not cost-effective for the plant to obtain material 

from more distant sources. In general, the type and amount of effort 

needed to increase the use of woody biomass may vary among locations, 

depending on the extent to which a logging and processing 

infrastructure is already in place. The presence of such an 

infrastructure, however, may also increase the availability of mill 

residues—potentially complicating efforts to promote woody biomass 

use by offering cheaper or more readily available alternative materials. 

• Similarly, government activities may be more effective in stimulating 

woody biomass use if their efforts are tailored to the scale and nature of 

the users being targeted. Most of the large wood users we reviewed, 

such as pulp and paper mills or power plants, were primarily concerned 

about supply, and thus might benefit most from federal efforts to 

provide a predictable and stable supply of woody biomass. In fact, one 

company currently plans to build a woody biomass power plant in 

eastern Arizona largely in response to a nearby federal thinning project 
Page 5 GAO-06-336 Key Factors in Woody Biomass Utilization

that is expected to last 10 years and generate a stable, long-term supply 

of the material. In contrast, small users we reviewed did not express 

concerns about the availability of supply, in part because their 

consumption was relatively small; however, several relied on external 

financing for their up-front costs to convert to woody biomass use. Such 

users might benefit most from financial assistance such as grants or 

loan guarantees to fund initial conversion efforts, and indeed, federal 

agencies are providing grants intended to promote the use of woody 

biomass, including a Forest Service grant program specifically intended 

to help defray federal thinning costs by stimulating woody biomass use. 

However, agencies must remain alert to potential unintended 

consequences of their efforts to stimulate the use of woody biomass. As 

we noted in our prior report, some officials expressed concern that 

developing a market for woody biomass could result in adverse 

ecological consequences such as unnecessary forest thinning to meet 

demand for the material. Further, while agency grants to woody biomass 

users may provide the users with benefits such as fuel cost savings, 

these grants may not in all cases defray agency thinning costs. 

In responding to a draft of this report, the Departments of Agriculture, 

Energy, and the Interior all generally agreed with our findings.

Background Woody biomass—small-diameter trees, branches, and the like—is 

generated as a result of timber-related activities in forests or rangelands. 

Small-diameter trees may be removed to reduce the risk of wildland fire or 

to improve forest health, while treetops, branches, and limbs, collectively 

known as “slash,” are often the byproduct of traditional logging activities or 

thinning projects. Slash is generally removed from trees on site, before the 

logs are hauled for processing. It may be scattered on the ground and left to 

decay or to burn in a subsequent prescribed fire, or piled and either burned 

or hauled away for use or disposal. Figure 1 depicts woody biomass in the 

form of small-diameter logs and slash. 
Page 6 GAO-06-336 Key Factors in Woody Biomass Utilization

Figure 1: Small-Diameter Logs and Slash Generated from a Montana Fuels Reduction Project 

Woody biomass, both small-diameter logs and slash, can be put to various 

uses. Small-diameter logs can be sawed into structural lumber, particularly 

as some sawmills have retooled to process these logs in addition to, or 

instead of, larger logs. Other users of whole small-diameter logs include 

some log-home builders and post and pole makers. After bark, branches, 

and leaves are removed, logs can be chipped and processed to make pulp, 

the raw material from which paper, cardboard, and other products are 

made. Chipped wood also is used by manufacturers of oriented strand 

board and other such engineered wood products. Both small-diameter logs 

and slash also can be chipped or ground and used for fuel, either in raw 

form or after being dried and made into fuel pellets. Various entities, 

including power plants, schools, pulp and paper mills, and others, burn 

woody biomass in boilers to turn water into steam, which is used to make 

electricity, heat or cool buildings, or provide heat for industrial processes.

Federal, state, and local governments, as well as private organizations, are 

working to expand the use of woody biomass. Recent federal legislation, 

including the Biomass Research and Development Act of 2000,3

 Healthy 

Forests Restoration Act of 2003,4 Consolidated Appropriations Act for 

Source: GAO.

3

Pub. L. No. 106-224, Title III, 114 Stat. 428 (2000), as amended.

4

Pub. L. No. 108-148, Title II, 117 Stat. 1901 (2003).
Page 7 GAO-06-336 Key Factors in Woody Biomass Utilization

Fiscal Year 2005,5 and Energy Policy Act of 2005,6 contains provisions for 

woody biomass research and financial assistance. For example, the 

Consolidated Appropriations Act for Fiscal Year 2005 made up to $5 million 

in appropriations available for grants to create incentives for increased use 

of woody biomass from national forest lands; in response, the Forest 

Service awarded $4.4 million in such grants in fiscal year 2005. State and 

local governments also are encouraging the use of woody biomass through 

grants, research, and technical assistance. For example, the Bitter Root 

Resource Conservation and Development Council, a nonprofit organization 

sponsored by state government entities and three counties in Montana,7

 is 

helping to coordinate a federally funded effort—known as the Fuels for 

Schools program—to install wood-fired heating systems in rural school 

buildings. Other states, such as Idaho, Nevada, and North Dakota, also are 

participating in the Fuels for Schools program.

Private corporations also are researching new ways of using woody 

biomass and wood waste, often in partnership with government and 

universities. For example, one corporation has partnered with the 

University of Georgia, and has developed and plans to license biorefinery 

technology for making chemicals, agricultural fertilizer, and transportation 

fuels such as ethanol from woody biomass. Another private company has 

developed technology that it hopes will significantly increase the ethanol 

yield from any type of biomass, including woody biomass.

5

Pub. L. No. 108-447, 118 Stat. 3076 (2004).

6

Pub. L. No. 109-58, § 210, 119 Stat. 658 (2005).

7

Resource Conservation and Development Councils are part of the Resource Conservation 

and Development Program, managed by the Department of Agriculture’s Natural Resources 

Conservation Service. The program is intended to encourage and improve the capability of 

state and local units of government and local nonprofit organizations in rural areas to plan, 

develop, and carry out programs for resource conservation and development. 
Page 8 GAO-06-336 Key Factors in Woody Biomass Utilization

Financial Incentives 

and Benefits, Access to 

an Affordable Supply, 

and Environmental 

Benefits Facilitated the 

Use of Woody Biomass 

among Users We 

Reviewed

The users in our review cited several factors contributing to their use of 

woody biomass, primarily financial incentives and benefits but also other 

factors such as an affordable supply of woody biomass and environmental 

considerations. Financial incentives encouraging the use of woody biomass 

included financial assistance, while financial benefits included energy cost 

savings from using woody biomass in place of other fuels. In addition, some 

users had access to a readily available and affordable supply of woody 

biomass, particularly in areas where material was being removed as part of 

commercial activities such as logging. Other users told us that their use of 

woody biomass was due in part to environmental or other perceived 

benefits. 

Financial Incentives and 

Benefits Encouraged the 

Use of Woody Biomass by 

Several Users

Financial incentives for, and benefits from, using woody biomass were the 

primary factors for its use among several users we reviewed. Four of the 13 

users in our review told us that initial financial assistance in the form of 

grants or bonds allowed them to begin using woody biomass. Three public 

entities—a state college in Nebraska, a state hospital in Georgia, and a rural 

school district in Montana—received financial grants covering the initial 

cost of the equipment that they needed to begin using woody biomass. In 

the case of the state college, a state grant of about $1 million in 1989 

covered the cost of installing two wood-fired boilers used to heat about 1 

million square feet of campus building space, as well as an expansion to the 

college’s central heating plant to house the new boilers and the requisite 

wood storage and handling system.8

 The college received a subsequent 

grant of about $100,000 in 2003 to help defray the costs of installing a 

chiller powered by woody biomass, which supplies cool air to campus 

buildings. The state hospital in Georgia received about $2.5 million in state 

funds during the early 1980s to pay for the purchase and installation of 

wood-handling equipment, and the Montana school district received about 

$900,000 in federal funds in 2003 for the same purpose.9

 The fourth user—a 

wood-fired power plant in California—received financial assistance in the 

form of tax-exempt state bonds to finance a portion of the plant’s 

construction, part of a statewide effort to promote the use of biomass 

8

Dollars are unadjusted for inflation.

9

Another user in our review that chips woody biomass into raw material for pulp and paper 

plants has obtained a federal grant to build a sawmill capable of processing small-diameter 

logs into lumber. However, this sawmill was not yet in operation at the time of our review.
Page 9 GAO-06-336 Key Factors in Woody Biomass Utilization

power plants and thereby reduce air pollution created by burning the 

material in the open.

Three users in our review also received additional financial assistance, 

including subsidies and other payments that helped them continue their 

use of woody biomass. 

• The California wood-fired power plant received about $10 per megawatt 

hour from the state government during 2003 and 2004, according to a 

plant official.10 This subsidy, which also was provided to other biomassfueled electricity producers in the state, was paid for by a “public goods” 

surcharge on consumers’ utility bills. The plant also benefited from an 

artificially high price received for electricity during its first 10 years of 

operation, a result of California’s implementation of the federal Public 

Utility Regulatory Policies Act of 1978.11 The act—a response to the 

unstable energy climate of the late 1970s—required utilities to purchase 

electricity from certain facilities producing electricity from renewable 

sources, including woody biomass, at prices established by state 

regulators.12 However, the initial prices established by California—

based on expectations of sharply rising oil and natural gas prices—

proved to substantially exceed market prices in some years, benefiting 

this power plant by increasing its profit margin.

• The Montana school district also continues to receive financial 

assistance through its participation in the Fuels for Schools program. 

For example, the Bitter Root Resource Conservation and Development 

Council paid for the installation of a 1,000-ton wood fuel storage facility 

at the school district, capable of storing over a year’s supply of fuel. The 

council also financed the up-front purchase of a year’s supply of fuel for 

the district, which the district repays as it uses the fuel. This ongoing 

assistance helped the district obtain wood fuel for about $24 per ton 

during the 2005-2006 school year, in contrast to the $36 per ton it paid 

10A megawatt is a unit of power equal to 1 million watts, or enough electricity to power 

about 750 homes at any given time.

11Pub. L. No. 95-617, 92 Stat. 3117 (1978).

12States set rates, pursuant to general regulations issued by the Federal Energy Regulatory 

Commission, based on the buyer’s “avoided cost.” Avoided costs are the energy and facilities 

costs that would have been incurred by the purchasing utility if that utility had to provide its 

own generating capacity. According to the commission, while it provides general avoided 

cost regulations, states set rates that often are above market rates.
Page 10 GAO-06-336 Key Factors in Woody Biomass Utilization

for woody biomass in the previous year. Moreover, when some of the 

school district’s wood fuel supply decayed more rapidly than expected, 

the council also arranged for the Forest Service to provide higher-quality 

woody biomass from a nearby fuels reduction project at a price of $10 

per ton. Figure 2 shows the 1,000-ton wood fuel storage facility.

Figure 2: Wood Fuel Storage Facility at a Montana School District

• One Colorado power plant that generated electricity by firing woody 

biomass with coal received ongoing financial benefits for using woody 

biomass by selling renewable energy certificates. Renewable energy 

certificates (sometimes referred to as “green tags”) represent the 

environmental benefits of renewable energy generation—that is, the 

benefits of displacing electricity generated from nonrenewable sources, 

such as fossil fuels, from the regional or national electric grid. The 

certificates are sold separately from the electricity with which they are 

associated. Certificates can be purchased by utilities seeking to meet 

state requirements for renewable energy generation or by other entities 

seeking to support the use of renewable energy sources, and their sale 

can serve as an additional source of revenue to power plants using such 

sources. The Colorado power plant in our review generated about 730 

Source: GAO.
Page 11 GAO-06-336 Key Factors in Woody Biomass Utilization

megawatt hours of electricity through its use of woody biomass,13 and 

sold the associated renewable energy certificates to the Forest Service 

for $23 per megawatt hour, or about $17,000 in total. The Forest Service 

purchased the certificates in order to promote woody biomass use and 

to offset the power plant’s costs for using woody biomass.

Energy cost savings also were a major incentive for using woody biomass 

among six of the users we reviewed. Of the four users that produce central 

heat with wood, two users—small rural school districts in Pennsylvania 

and Montana—told us that they individually had saved about $50,000 and 

$60,000 in annual fuel costs by using wood instead of natural gas or fuel oil. 

Officials at one of these districts told us that these savings represented the 

equivalent of one teacher’s annual salary, stating “we could either burn fuel 

oil and watch that money go up the chimney, or burn wood and put the 

money toward education.” Likewise, the state college in Nebraska, which 

uses woody biomass to heat and cool about 1 million square feet of space in 

several campus buildings, typically saves about $120,000 to $150,000 

annually, while the Georgia state hospital reported saving at least $150,000 

in 1999, the last year for which information was available. Similarly, the two 

pulp and paper mills we reviewed each reported saving several million 

dollars annually by using wood rather than natural gas or fuel oil to 

generate steam heat for their processes; officials at one mill stated that the 

mill’s operating costs would increase significantly without the savings 

generated by burning wood, making it difficult for the mill to remain 

competitive. Each of these users told us that they planned to continue their 

use of woody biomass because they anticipated continuing high fossil fuel 

prices.

An Affordable Supply 

Facilitated the Use of 

Woody Biomass

An affordable supply of woody biomass facilitated its use, especially in 

areas where commercial activities such as logging or land clearing 

generated woody biomass as a byproduct. For example, the Nebraska state 

college was able to purchase woody biomass for an affordable price 

because logging activities in the area made slash readily available. Logging 

companies harvested timber in the vicinity of the college, hauling the logs 

to sawmills and leaving their slash; the college paid only the cost to collect, 

13The 730 megawatt hours represent a small fraction of the plant’s output, nearly all of which 

is generated by burning coal. However, the plant determined—and a third-party certifying 

body agreed—that 730 megawatt hours could be directly attributed to burning woody 

biomass.
Page 12 GAO-06-336 Key Factors in Woody Biomass Utilization

chip, and transport the slash to the college for burning. One official told us 

that without the area’s logging activity, the affordable supply of woody 

biomass used by the college would be severely jeopardized and the college 

would have to pay much higher prices to heat and cool its campus.

Two Pennsylvania users in our review also obtained an affordable supply of 

woody biomass generated through commercial activities. Officials of a 

rural school district told us that nearby lands are being cleared for 

development, and that a portion of the wood generated from land clearing 

is chipped by contractors for purchase by the school. Similarly, a 

Pennsylvania power plant uses wood from a combination of sources, 

including woody biomass from land-clearing operations that are, on 

average, more than 130 miles from the plant, according to a plant official.14

This official told us that the developers clearing the land are required to 

dispose of the cleared material but are not allowed to burn or bury it, so 

they often are willing to partially subsidize removal and transportation 

costs in order to have an outlet for the material. 

Forest management activities also contribute to the availability of an 

affordable supply of woody biomass. For example, small-diameter trees 

have been available to a large pulp and paper mill in Mississippi in part 

because of thinning activities by area landowners. In this area, as in much 

of the southeastern United States, forests are largely privately owned, and 

much of the forests are plantations meant for production. Small-diameter 

trees are periodically thinned from these forests to promote the growth of 

other trees, and traditionally have been sold for use in making pulp and 

paper. Officials at the Mississippi pulp and paper mill told us that these 

trees are a relatively inexpensive source of material compared with the 

cost of the material in other parts of the country because the structure of 

southeastern forests—with level terrain and extensive road access—

reduces harvesting and hauling costs, in contrast to other parts of the 

country where steep terrain and limited road access may result in high 

harvesting and hauling costs.

14Other sources of material used by the plant, according to this official, include slash from 

conventional logging, chips from sustainably managed forestry operations, sawmill waste, 

and urban wood waste.
Page 13 GAO-06-336 Key Factors in Woody Biomass Utilization

Environmental Benefits and 

Other Factors Played a Role 

in the Use of Woody 

Biomass

Three users cited potential environmental benefits, such as improved 

forest health and air quality, as prompting their use of woody biomass; 

other users told us about additional factors that increased their use of 

woody biomass. Two users—the Montana school district and the coal-fired 

power plant in Colorado—started using woody biomass in part because of 

concerns about forest health and the need to reduce hazardous fuels in 

forest land; they also hoped that by providing a market for woody biomass, 

they could help stimulate thinning efforts. The Montana school district was 

the first of a series of Fuels for Schools projects intended to stimulate 

demand for woody biomass generated from forest fuels reduction, and the 

Colorado power plant began using woody biomass in an effort to 

contribute to the health of the forest by using material from nearby fuels 

reduction projects.

Air-quality concerns spurred the use of woody biomass at a Vermont power 

plant in our review. According to plant officials, the utilities that funded it 

were concerned about air quality and as a result chose to build a plant fired 

by wood instead of coal because wood emits lower amounts of pollutants. 

Other users cited the air-quality benefits of burning woody biomass under 

the controlled conditions of a boiler rather than burning it in the open air 

(whether through slash pile burning, prescribed burning, or wildland fire) 

because doing so generates significantly fewer emissions.

Finally, other factors and business arrangements specific to individual 

users encouraged the use of woody biomass, either by insulating users 

from the effects of changes in the price and availability of woody biomass 

or by enabling users to profitably add woody biomass use to their business. 

For example, an official at one wood-fired power plant told us that the 

plant has been able to operate because the plant’s owners—a group of 

utilities—have the financial capacity, as well as a long-term outlook, to 

withstand short-term fluctuations in its profitability. Without this 

ownership, according to officials, the plant might have shut down during 

periods of decreased revenues resulting from variations in the price or 

availability of woody biomass. Another user, which chips wood for use as 

fuel in a nearby power plant, has an arrangement with the power plant 

under which the plant purchases the user’s product at a price slightly 

higher than the cost the user incurred in obtaining and processing woody 

biomass, as long as the user’s product is competitively priced and meets 

fuel-quality standards. The arrangement guarantees the user a long-term 

market for its product at a price that allows it to cover its costs. Three 

users whose operations include chipping woody biomass and other 

activities, such as commercial logging or sawmilling, told us that having 
Page 14 GAO-06-336 Key Factors in Woody Biomass Utilization

these other operations within the same business is important because costs 

for equipment and personnel can be shared between the woody biomass 

chipping operation and the other activities.

Other users helped offset the cost of obtaining and using woody biomass by 

selling byproducts resulting from their use of the material. For example, 

one pulp and paper mill in our review sold turpentine and other byproducts 

that were produced during the production of pulp and paper, while another 

user—a wood-fired power plant—sold steam extracted from its turbine to a 

nearby food-canning factory. Other byproducts sold by users in our review 

included ash used as a fertilizer, bark for landscaping material, and sawdust 

used by particle board plants.

Challenges Faced by 

Woody Biomass Users 

Included Inadequate 

Supply and Costs 

Associated with 

Handling and Using the 

Material

Users in our review experienced factors that limited their use of woody 

biomass or made it more difficult or expensive to use, including insufficient 

supply and increased costs related to equipment and maintenance. Two 

users were unable to obtain a sufficient supply of woody biomass, and 

several more told us they had difficulty obtaining the material from federal 

lands. Several users also told us that, despite the economic advantages of 

using woody biomass in place of oil or natural gas, they had incurred costs 

that they would not have incurred had they burned oil or natural gas—

including additional equipment for handling woody biomass and added 

operation and maintenance costs, such as costs arising from problems in 

storing and handling woody material. 

Woody Biomass Was Not 

Always Sufficiently 

Available

Seven users in our review told us they had difficulty obtaining a sufficient 

supply of woody biomass, either because of constraints on the supply of 

the material or because of insufficient availability of loggers to collect it. 

Two users, both power plants, reported to us that they were operating at 

about 60 percent of their capacity because they were unable to obtain 

sufficient woody biomass or other fuel for their plants. Officials at both 

plants, each of which burned mostly woody biomass but also 

supplemented the material with mill residues and urban wood waste, told 

us that their shortages of wood were due at least in part to a shortage of 

nearby logging contractors. According to plant officials, the lack of logging 

contractors meant that nearby landowners were unable to carry out all of 

the projects they wished to undertake, resulting in what one plant official 

termed a “backlog of standing timber.” While officials at one plant 

attributed the plant’s shortage entirely to the insufficient availability of 
Page 15 GAO-06-336 Key Factors in Woody Biomass Utilization

logging contractors, an official at the other plant stated that the lack of 

woody biomass from federal lands—particularly Forest Service lands—

also was a significant problem. One plant reported taking a financial loss in 

each of the past 3 years, the result of operating below capacity.

The lack of supply from federal lands was a commonly expressed concern 

among the woody biomass users on the West Coast and in the Rocky 

Mountain region, with five of the seven users we reviewed in these regions 

(including one of the power plants running at about 60 percent capacity) 

telling us they had difficulty obtaining supply from federal lands. One such 

user ceased operations for several months because of an interruption in its 

supply of woody biomass from federal lands. Users with problems 

obtaining supply from federal lands generally expressed concern about the 

Forest Service’s ability to conduct projects generating woody biomass; in 

fact, two users expressed skepticism that the large amounts of woody 

biomass expected to result from widespread thinning activities will ever 

materialize. One official stated, “We keep hearing about this coming ‘wall of 

wood,’ but we haven’t seen any of it yet,” adding that emphasizing uses for 

woody biomass without an adequate supply “is putting the cart before the 

horse.”15 Of the remaining six users in our review, one obtained about 5 

percent of its woody biomass from federal lands while the other five used 

no federal woody biomass at the time of our review. In such cases, users 

obtained woody biomass from state or private lands, or relied on 

alternative wood materials such as sawmill residues or urban wood waste. 

15In commenting on a draft of this report, officials from both the Department of the Interior 

and the Forest Service stated that their agencies are seeking to increase the availability of 

woody biomass from federal lands. Interior officials commented that the department has 

established a contract clause, to insert in all solicitations and contracts through which 

biomass is expected to be generated, allowing the use of all material so long as it is 

ecologically appropriate and in accordance with the law. Interior stated that this clause 

could increase the availability and affordability of woody biomass from Interior lands. 

Forest Service officials told us that their agency is seeking new opportunities for providing a 

reliable and consistent supply of woody biomass, including working with Interior to 

streamline processes for developing stewardship contracts and agreements. Stewardship 

contracting involves the use of any of several contracting authorities on the part of the 

Forest Service and Interior’s Bureau of Land Management, including the ability to exchange 

goods for services and to enter into contracts of up to 10 years. Stewardship contracting 

authority expires in 2013. Other Interior agencies, including the Fish and Wildlife Service, 

have related authorities; see, e.g., 50 C.F.R. § 29.5.
Page 16 GAO-06-336 Key Factors in Woody Biomass Utilization

Users Choosing Woody 

Biomass over Oil or Natural 

Gas Made Additional 

Investments in Equipment 

and Incurred Additional 

Operations and 

Maintenance Costs

Several users in our review told us they incurred costs to purchase and 

install the equipment necessary to use woody biomass beyond the costs 

that would have been required for using fuel oil or natural gas. These costs 

included scales for weighing incoming material; truck tippers to assist in 

unloading material; wood-storage buildings or concrete pads for storing 

wood; chippers to chip the material to the proper size; and conveyors and 

other mechanisms for transporting the material to the boiler. Some users 

needed other equipment as well; an official at one location told us a frontend loader was dispatched every 45 minutes to push wood chips to a 

loading area, where a mechanical conveyor could pick the chips up. Figure 

3 is a schematic of the equipment and process used by one user in our 

review.

Figure 3: Equipment and Process for Using Wood Fuel at One Location 

The cost of this equipment varied considerably among users, in part as a 

result of the differences in the amount of wood consumed. For example, a 

school district burning about 850 tons of wood fuel per year reported 

spending about $385,000 for the necessary equipment, including the boiler, 

while a pulp and paper mill burning about 216,000 tons per year in its 

boiler—about 250 times the school district’s annual consumption—

reported investing $15 million in equipment necessary to use the material. 

Not all users reported additional substantial expenditures on equipment, 

however; one power plant burning wood mixed with coal told us that the 

only additional equipment it needed was a ramp for a front-end loader, 

which was constructed at minimal cost.

Source: GAO analysis of Georgia Forestry Commission information. 

Tipper to unload trucks Unloading hopper Wood screener 

and rechipper

Wood fuel storage Wood-fired boiler plant
Page 17 GAO-06-336 Key Factors in Woody Biomass Utilization

Wood utilization also tended to increase operation and maintenance 

requirements for users. One power plant official told us that wood is more 

expensive to handle than coal, citing handling costs of $4.50 per ton for 

wood compared with $1.50 per ton for coal.16 Wood also can create 

problems; for example, if wood chips are not properly sized, they can 

create blockages in machinery that require prompt action. During our visit 

to one facility, wood chips jammed on a conveyor belt, dumping wood 

chips over the side of the conveyor and requiring a maintenance crew 

member to manually clear the blockage. Figure 4 shows the crew member 

attempting to clear the blockage.

Figure 4: Maintenance Crew Member Clearing Wood Blockage in Conveyor 

Equipment 

After one facility converted from natural gas and fuel oil to wood, it 

reported that the number of personnel needed to maintain its central 

heating plant nearly doubled, from about 8 or 9 to about 14 to 16. At 

16It should be noted that this plant used substantially more coal than wood, and, as a result, 

the lower handling cost for coal might be attributable in part to economies of scale.

Source: GAO.
Page 18 GAO-06-336 Key Factors in Woody Biomass Utilization

another facility—the power plant mixing woody biomass with coal—an 

official told us that a wood blockage in the feed mechanism led to a fire in 

one of the plant’s coal-storage units, requiring the plant to temporarily 

reduce its output of electricity and leading the plant to pay $9,000 to have 

its remaining stock of wood rechipped. Two users also reported 

spontaneous combustion in their wood storage piles that resulted from 

decaying wood. 

Other issues specific to individual users also decreased woody biomass use 

or increased costs for using the material. For example, an official with one 

user, which chips small-diameter trees and sells the resulting chips to pulp 

and paper mills, told us that the pulp and paper mills prefer sawmill 

residues to chipped trees and will purchase his product only when 

sufficient sawmill residues are unavailable. This official told us that 

demand for his product has been so low in some years that he has operated 

his chip processor for only 6 months during the year. Another user, the 

Vermont wood-fired power plant, is required by the state to obtain 75 

percent of its raw material by rail, in order to minimize truck traffic in a 

populated area. According to plant officials, shipping the material by rail is 

more expensive than shipping by truck and creates fuel supply problems 

because the railroad serving the plant is unreliable and inefficient and 

experiences regular derailments. This same power plant is required by the 

state to restrict its purchases of woody biomass to material coming from 

forest projects that meet state-approved environmental standards. To 

ensure that it meets this requirement, the power plant employs four fulltime foresters—an investment the plant would not have to make if it did 

not use woody biomass. Another power plant was required to obtain a new 

emissions permit in order to begin burning wood in its coal-fired system. 

An official at a third power plant told us that “woody biomass is expensive 

to harvest, process, transport, and handle—and it has only half the [energy] 

of coal”;17 he summed up his concerns by stating, “Biomass energy is not 

the most efficient way to make electricity.” However, he added that using 

woody biomass to make electricity provides benefits to society by 

consuming material that would otherwise be burned in the open or 

deposited in landfills.

17According to the Forest Service’s Forest Products Laboratory, the typical heating value of 

wood ranges from about one-quarter to one-half that of bituminous coal, depending on the 

moisture content of the wood. However, some power plants use lower grades of coal that 

can have heating values comparable to that of oven-dried wood.
Page 19 GAO-06-336 Key Factors in Woody Biomass Utilization

Current Users’ 

Experiences Offer 

Insights for 

Government Efforts to 

Expand the Use of 

Woody Biomass

Our findings offer several insights for promoting greater use of woody 

biomass. First, rather than helping to defray the costs of forest thinning, 

attempts to encourage the use of woody biomass may instead stimulate the 

use of other wood materials such as mill residues or commercial logging 

slash. Second, government activities may be more effective in stimulating 

woody biomass use if they take into account the extent to which a logging 

and milling infrastructure to collect and process forest materials is in place. 

And finally, the type of efforts employed to encourage woody biomass use 

may need to be tailored to the scale and nature of individual recipients’ use.

It should be noted, however, that drawing long-term conclusions from the 

experiences of users in our review must be done with care because our 

review represents only a snapshot in time and a small number of woody 

biomass users. Changes in market conditions could have substantial effects 

on the options available to users and the materials they choose to consume, 

and the effects of changes in the market are complex and difficult to 

predict. For example, the price of fossil fuels such as natural gas plays a 

role in determining the cost-effectiveness of woody biomass use; if the 

price of natural gas were to rise, increased energy cost savings through 

woody biomass use might persuade more entities to convert to the material 

despite the up-front costs of conversion. On the other hand, if the cost of 

diesel fuel were to rise along with that of natural gas, the cost of harvesting 

and transporting woody biomass would increase because the machinery 

used to perform these tasks generally runs on diesel fuel—diminishing the 

advantages to be gained by using woody biomass.

Market Forces May Lead 

Wood Users to Forgo SmallDiameter Trees in Favor of 

Alternatives

One goal of the federal government’s efforts to stimulate woody biomass 

use is to defray the cost to the government of thinning millions of acres of 

land at risk of wildland fire by creating a market for the resulting materials. 

Because a substantial component of these materials consists of smalldiameter trees, it is important that government efforts include a focus on 

finding uses specifically for these trees. Without such a focus, efforts to 

stimulate woody biomass use may simply increase the use of mill residues 

or other wood materials—which several users told us were preferable to 

woody biomass for a variety of reasons—or slash from commercial logging 

operations. 

Indeed, an indirect attempt to stimulate woody biomass use by one 

Montana user in our review led to the increased use of available mill 

residues instead. The Forest Service provided grant funds to finance the 
Page 20 GAO-06-336 Key Factors in Woody Biomass Utilization

Montana school district’s 2003 conversion to a wood heating system in 

order to stimulate the use of woody biomass in the area; the agency 

required as a condition of the grant that at least 50 percent of the district’s 

fuel consist of woody biomass during the initial 2 years of the system’s 

operation. Officials told us that the district complied with the requirement 

for those 2 years, but for the 2005-2006 school year, the district chose to use 

less expensive wood residues from a nearby log-home builder rather than 

woody biomass. The cost of these residues was $24 per ton, in contrast to 

the $36 per ton the district paid for woody biomass the previous year. A 

district official said that the district was willing to use woody biomass in 

the future if it could be obtained more cheaply than alternative materials.18

The district was not alone among users in our review in its use of mill 

residues and other wood materials; eight users in our review used such 

materials in addition to, or instead of, woody biomass. Officials at one of 

these users—a pulp and paper mill—told us that they began their operation 

by using mill residues, switching to woody biomass only when competition 

for mill residues began driving up the price. Emphasizing users’ preference 

for mill residues, a Forest Service official in Montana told us that his 

national forest sometimes has difficulty finding a market for woody 

biomass resulting from forest projects because the numerous log-home 

builders operating in the area offer a cheaper and more accessible source 

of wood in the form of mill residues.

This is not to say that the use of mill residues is entirely to the detriment of 

woody biomass. The use of mill residues can play an indirect role in 

facilitating woody biomass utilization by providing a market for the 

byproducts of industries using woody biomass directly, such as sawdust or 

other residues from small-log sawmills. The existence of a market for these 

byproducts can enhance the profitability of woody biomass users and, 

consequently, improve their ability to continue using woody biomass costeffectively. In addition, the availability of both mill residues and woody 

biomass provides diversity of supply for users, allowing them to continue 

operations even if one source of supply is interrupted or becomes 

prohibitively expensive. Nevertheless, these indirect effects, even where 

present, may be insufficient to substantially influence the use of woody 

biomass. 

18Subsequent to our review of the school district’s operations, the district obtained about 

550 tons of woody biomass (about 75 percent of its annual consumption) from a nearby 

thinning project at a price of $10 per ton. This price represents only a fraction of the 

material’s processing and handling costs, most of which were borne by the Forest Service.
Page 21 GAO-06-336 Key Factors in Woody Biomass Utilization

Mill residues aside, even those users that consumed material we define as 

woody biomass, particularly those that used wood for fuel, often used the 

tops and limbs from trees harvested for merchantable timber or other uses 

rather than the small-diameter trees that contribute to the problem of 

overstocked forests. One woody biomass user in our review reported using 

only the slash from commercial logging rather than small-diameter trees, 

while another user reported that 80 percent of the woody biomass it used 

consisted of logging slash and 20 percent consisted of thinned smalldiameter trees. Two users reported using residues from land-clearing 

operations conducted as part of commercial land development. Logging 

slash can be cheaper to obtain than small-diameter trees when it has been 

already removed from the forest by commercial logging projects; such 

projects often leave slash piles at roadside “landings,” where trees are 

delimbed before being loaded onto log trucks. Unless woody biomass users 

specifically need small-diameter logs—for use in sawing lumber, for 

example—they may find it cheaper to collect slash piled in roadside areas 

than to enter the forest to cut and remove small-diameter trees. And while 

consuming logging slash may have environmental benefits—by, for 

example, decreasing smoke emissions by reducing the amount of slash 

burned in the open—it does not necessarily contribute to the government’s 

goal of stimulating forest thinning or reducing thinning costs. Further, 

users’ reliance on material whose cost of removal was subsidized by 

commercial activities suggests that, even if the government succeeds in 

stimulating a market for the woody biomass, it still may need to bear a 

substantial portion of thinning costs in order to make the material 

economically attractive for users. 

The experience of the Montana school district also illustrates the 

unintended market consequences that may result from indirect attempts to 

stimulate woody biomass use. The school district is located in an area 

where several industries, including pulp and paper, plywood, and others, 

purchase commercially produced mill residues for their operations. By 

purchasing mill residues, the school district began competing for the same 

raw materials desired by these other industries. The impact on the market 

is likely to be small, as the school district uses only a small fraction of the 

wood used by these other industries. Nevertheless, in addition to spurring 

woody biomass use from forest-thinning operations, as originally 

envisioned by Forest Service officials, these grant funds also introduced 

more competition into an existing market for mill residues.
Page 22 GAO-06-336 Key Factors in Woody Biomass Utilization

The Effectiveness of Efforts 

to Encourage Woody 

Biomass Use May Depend 

on the Presence of Other 

Wood-Related Industries

Government activities may be more effective in stimulating woody biomass 

use if they take into account the extent to which a logging and milling 

infrastructure is in place in potential users’ locations. The availability of an 

affordable supply of woody biomass depends to a significant degree on the 

presence of a local logging and milling infrastructure to collect and process 

forest materials. Without a milling infrastructure, there may be little 

demand for forest materials, and without a logging infrastructure, there 

may be no way to obtain the materials. Indeed, officials at one power plant 

operating at less than full capacity because of a shortage of wood for the 

plant told us that the shortage was due to the lack of a local logging 

infrastructure—in other words, there simply weren’t enough loggers to 

carry out the forest projects that nearby landowners wanted to undertake. 

The user said it was not cost-effective to obtain the material from more 

distant sources because of transportation costs.

Similarly, an official with the Nebraska state college in our review told us 

that the lack of a local logging infrastructure could potentially jeopardize 

the college’s woody biomass use in the future. The college relied on logging 

slash from commercial loggers working nearby, but this official told us that 

the loggers were based in another state and the timber they were 

harvesting was hauled to sawmills over 100 miles away. The official said the 

loggers would prefer to work closer to the sawmills in order to reduce 

transportation costs, but could not find closer logging opportunities. 

According to the official, if more timber-harvesting projects were offered 

closer to the sawmills, these loggers would immediately move their 

operations—eliminating the nearby source of woody biomass available to 

the college. 

In contrast, users located near a milling and logging infrastructure are 

likely to have more readily available sources of woody biomass. One 

Montana official told us that woody biomass in the form of logging slash is 

plentiful in the Missoula area, which is home to numerous milling and 

logging activities, and that about 90 percent of this slash is burned because 

it has no market. The presence of a logging and processing infrastructure, 

however, may increase the availability of mill residues, potentially 

complicating efforts to promote woody biomass use by offering more 

attractive alternative materials.
Page 23 GAO-06-336 Key Factors in Woody Biomass Utilization

Efforts to Encourage Woody 

Biomass Use May Be More 

Effective If They Are 

Tailored to the Scale and 

Nature of Recipients’ Use

Government activities may be more effective in stimulating woody biomass 

use if their efforts are tailored to the scale and nature of the users being 

targeted. Most of the large wood users we reviewed, such as pulp and paper 

mills or wood-fired power plants, were primarily concerned about supply, 

and thus might benefit most from federal efforts to provide a predictable 

and stable supply of woody biomass. Such stability might come, for 

example, from long-term contracts signed under stewardship contracting 

authority, which allows contracts of up to 10 years.19 In fact, one company 

currently plans to build a $23 million woody biomass power plant in 

eastern Arizona, largely in response to the White Mountain stewardship 

project in the area, a thinning project expected to treat 50,000 to 250,000 

acres over 10 years. Although the company is relying in part on $16 million 

in loan guarantees furnished by the Department of Agriculture, the 

assurance of supply offered by this long-term project was a key factor in 

the company’s decision to build the power plant. Furthermore, a 

Department of Agriculture official told us that the assurance of supply also 

was critical to the department’s decision to provide the loan guarantee. 

Similarly, in November 2005, officials of a South Carolina utility told us that 

the utility was planning to burn woody biomass resulting from thinning 

efforts in a nearby national forest, and was intending to purchase about 

75,000 tons annually to burn along with coal in a coal-fired power plant. 

Although the utility did not yet have an agreement in place to purchase the 

woody biomass, the officials told us that the utility anticipated investing 

$4.4 million in wood-handling equipment and realizing substantial annual 

fuel and emissions cost savings.20 The national forest expects to conduct 

several long-term thinning projects, and officials told us that the utility 

would not have considered making this investment in woody biomass use 

without this likelihood of a stable, long-term supply.

In contrast, small users we reviewed did not express concerns about the 

availability of supply, in part because their consumption was relatively 

small. However, three of these users relied on external financing for their 

up-front costs to convert to woody biomass use. Such users—particularly 

small, rural school districts or other public facilities that may face 

19For a description of agency use of stewardship contracting authority, see GAO, Federal 

Land Management: Additional Guidance on Community Involvement Could Enhance 

Effectiveness of Stewardship Contracting, GAO-04-652 (Washington, D.C.: June 14, 2004). 

20Utility officials told us they estimate saving about $1.4 million annually, but noted that this 

figure could vary significantly depending on prices for coal and wood and on the amount of 

wood used.
Page 24 GAO-06-336 Key Factors in Woody Biomass Utilization

difficulties raising the capital to pay needed conversion costs—might 

benefit most from financial assistance such as grants or loan guarantees to 

fund their initial conversion efforts. And as we noted in our previous report 

on woody biomass,21 several federal agencies provide grants for woody 

biomass use—particularly the Forest Service, which is, among other 

efforts, providing grants of between $50,000 and $250,000 to increase the 

utilization of woody biomass from or near national forest lands.

However, federal agencies must take care that their efforts to assist users 

are appropriately aligned with the agencies’ own interests, and that their 

efforts do not create unintended consequences. For example, while 

individual grant recipients might reap substantial benefits from their ability 

to use woody biomass—through fuel cost savings, for example, as 

demonstrated by several users in our review—benefits to the government, 

such as reduced thinning costs, are uncertain. Without such benefits, 

agency grants may simply increase agency outlays but not produce 

comparable savings in thinning costs. The agencies also risk adverse 

ecological consequences if their efforts to develop markets for woody 

biomass result in these markets inappropriately influencing land 

management decisions. As noted in our prior report on woody biomass, 

agency and nonagency officials cautioned that efforts to supply woody 

biomass in response to market demand rather than ecological necessity 

might result in inappropriate or excessive thinning.

Concluding 

Observations

The variety of factors influencing woody biomass use among users in our 

review—including regulatory, geographic, market-based, and other 

factors—suggests that the federal government may be able to take many 

different approaches as it seeks to stimulate additional use of the material. 

However, because these approaches have different costs, and likely will 

provide different returns in terms of defraying thinning expenses, it will be 

important to identify what kinds of mechanisms and what types of resource 

investments are most cost-effective in different circumstances. This will be 

a difficult task, given the variation in different users’ needs and available 

resources, differences in regional markets and forest types, and the 

multitude of available alternatives to woody biomass. Nevertheless, if 

federal agencies are to maximize the long-term impact of the millions of 

dollars being spent to stimulate woody biomass use, they will need to 

21GAO-05-373.
Page 25 GAO-06-336 Key Factors in Woody Biomass Utilization

design approaches that take these elements into account rather than using 

boilerplate solutions. 

Agency Comments and 

Our Evaluation

We provided a draft of this report to the Secretaries of Agriculture, Energy, 

and the Interior for review and comment. The departments generally 

agreed with our findings and provided technical comments that were 

incorporated into this report, as appropriate. Comments from the 

Departments of Agriculture and the Interior are reprinted in appendixes III 

and IV, respectively. The Department of Energy provided comments via email.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretaries of 

Agriculture, Energy, and the Interior; Chief of the Forest Service; Director 

of BLM; and other interested parties. We also will make copies available to 

others upon request. In addition, this report will be available at no charge 

on GAO’s Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me 

at (202) 512-3841 or at nazzaror@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are listed in appendix V.

Sincerely yours,

Robin M. Nazzaro

Director, Natural Resources and Environment
Page 26 GAO-06-336 Key Factors in Woody Biomass Utilization

Appendix I

Characteristics of Woody Biomass Users Apendxies

Included in Our Review ApendxiI

Table 1 provides information on the type and amount of wood fuel 

consumption reported by each woody biomass user in our review. This 

information is based on the amount of wood used in the last full year for 

which complete data were available.

Table 1: Characteristics of Woody Biomass Users Included in Our Reviewa

Source: GAO analysis of users’ data.

a

Figures were derived from information provided by users in our review.

b

One bone-dry ton represents 1 ton of wood at 0 percent moisture content; green wood generally 

contains about 50 percent moisture. This column represents all types of wood used, including 

alternative materials such as mill residues, during the most recent year for which complete information 

was available.

c

Figures presented in this column include residues generated by commercial land clearing activities as 

well as logging slash generated by commercial logging operations.

d

This power plant mixed woody biomass with coal on a trial basis to determine its feasibility. The 

amount of woody biomass the plant burned represents a small fraction of the plant’s annual 

consumption of coal.

e

The state hospital in Georgia has historically used woody biomass, but had not done so during the 

most recent year for which complete information was available.

Woody biomass user Primary use

Wood used per 

year (bone dry 

tons)b

Woody biomass 

as a percentage 

of all wood used

Logging slash 

as a percentage 

of woody 

biomass usedc

Percent of woody 

biomass obtained 

from federal lands

Contractor, MI Wood fuel 110,000 100 93 5

Contractor, MT Wood fuel 75,000 67 80 10

Contractor, OR Chips for pulp 60,000 100 Not provided 45

Power plant, CA Electricity generation 126,000 67 Not provided 49

Power plant, CO Electricity generation 760d 100 0 100

Power plant, PA Electricity generation 140,000 74 100 0

Power plant, VT Electricity generation 180,000 75 100 0

Pulp and paper mill, MS Pulp and paper; process 

steam

1,600,000 50 Not provided 0

Pulp and paper mill, MT Pulp and paper; process 

steam

966,000 30 30 less than 5

Rural school district, MT Building heat 490 67 40 100

Rural school district, PA Building heat 850 100 100 0

State college, NE Building heat 6,000 100 100 0

State hospital, GA Building heat 9,000 0e N/A N/A

Total 3,274,100
Page 27 GAO-06-336 Key Factors in Woody Biomass Utilization

Appendix II

Objectives, Scope, and Methodology ApendxiI

The objectives of our review were to (1) identify key factors facilitating the 

use of woody biomass among selected users, (2) identify challenges these 

users have faced in using woody biomass, and (3) discuss the insights our 

findings offer for promoting greater use of woody biomass. To meet these 

objectives, we reviewed the operations of 13 public and private 

organizations throughout the United States that use woody biomass to 

make a variety of products. 

Because no comprehensive list of woody biomass users exists, we asked 

knowledgeable federal and nonfederal officials to identify woody biomass 

users. As part of these interviews, we asked for names of additional 

officials—regardless of location or agency affiliation—who could provide 

additional information about, or insights into, woody biomass users. 

Federal officials we met with included various officials from the 

Department of Agriculture’s Forest Service, Department of Energy, and 

Department of the Interior. We also contacted nonfederal officials, 

including representatives of the Appalachian Hardwood Center, Biomass 

Energy Resource Center, Bitter Root Resource Conservation and 

Development Council, Center for Biological Diversity, Montana Community 

Development Corporation, National Association of Conservation Districts, 

Natural Resources Defense Council, Society of American Foresters, 

Southern Alliance for the Utilization of Biomass Resources, USA Biomass 

Power Producers Alliance, and Wilderness Society. We asked these federal 

and nonfederal officials to identify woody biomass users across the United 

States. We continued this expert referral technique until the references we 

received for woody biomass users became repetitive. We also reviewed 

documents that identified possible woody biomass users and provided 

background information about woody biomass use. 

From the several hundred entities that were reported to us as using woody 

biomass, we selected for further review a nonprobability sample of 14 

woody biomass users from different industries and geographic locations.1

These users produced a range of different products from woody biomass, 

such as building heat, electricity, pulp, paper, and wood fuel, and were 

located in various geographic locations around the country. Of these users, 

13 participated in our review; the remaining user, a sawmill using small1

Results from nonprobability samples cannot be used to make inferences about a 

population, because in a nonprobability sample, some elements of the population being 

studied have no chance or an unknown chance of being selected as part of the sample.
Appendix II

Objectives, Scope, and Methodology

Page 28 GAO-06-336 Key Factors in Woody Biomass Utilization

diameter logs to make lumber, did not respond to our request to 

participate. The woody biomass users we reviewed included

• a state college in Nebraska, 

• a state hospital in Georgia, 

• two rural school districts in Montana and Pennsylvania, 

• two pulp and paper mills in Mississippi and Montana,

• three logging and wood products operations in Michigan, Montana, and 

Oregon, and 

• four electric power producers in California, Colorado, Vermont, and 

Pennsylvania. 

The general locations of the users we reviewed are shown in figure 5.
Appendix II

Objectives, Scope, and Methodology

Page 29 GAO-06-336 Key Factors in Woody Biomass Utilization

Figure 5: Locations of Woody Biomass Users We Reviewed 

We then developed a structured interview guide to review the operations of 

the 13 woody biomass users and to obtain general information about their 

operations. Because the practical difficulties of developing and 

administering a structured interview guide may introduce errors—resulting 

from how a particular question is interpreted, for example, or from 

differences in the sources of information available to respondents in 

answering a question—we included steps in the development and 

administration of the guide for the purpose of minimizing such errors. We 

Source: GAO.

Woody biomass user
Appendix II

Objectives, Scope, and Methodology

Page 30 GAO-06-336 Key Factors in Woody Biomass Utilization

pretested the guide at one location and conducted a second pretest by 

telephone. We also provided a draft version of the guide to federal officials 

knowledgeable about woody biomass in order to obtain their comments on 

the draft. Based on these steps, we modified the structured interview guide 

to reflect questions and comments we received. 

Factors Facilitating the Use 

of Woody Biomass among 

Selected Users

To collect information about the factors that facilitate woody biomass use, 

we used our structured interview guide to obtain information about the 13 

users in our review, including the types and amount of woody biomass 

used, when their woody biomass use began, and the type of materials that 

woody biomass use replaced. We also asked users about economic factors 

that facilitated their use of woody biomass, such as the cost and availability 

of their supply. During discussions, we also gathered users’ opinions about 

factors that might increase their use of woody biomass. To corroborate the 

information we gathered through interviews, we compared interviewees’ 

responses with other information we reviewed, when available, such as 

contracts, third-party evaluations of user activities, financial analyses, and 

the like. Because the documentary evidence we reviewed generally agreed 

with the information provided by woody biomass users, we believe the data 

are sufficiently reliable to be used in providing descriptive information on 

the factors facilitating woody biomass use by users in our review. 

Challenges Faced by 

Selected Users of Woody 

Biomass

We also used our structured interview guide to ask the 13 users about 

challenges they faced or other factors that might diminish their use of 

woody biomass. For example, we asked users about the affordability of 

their supply of woody biomass and the farthest distance from which they 

can affordably obtain it, and gathered users’ opinions about factors that 

might diminish their use of woody biomass. To corroborate the information 

we gathered through interviews, we compared interviewees’ responses 

with other information we obtained, when available—again including 

documentation such as contracts, third-party evaluations of user activities, 

financial analyses, and the like. Because the documentary evidence we 

reviewed generally agreed with the information provided by woody 

biomass users, we believe the data are sufficiently reliable to be used in 

providing descriptive information on challenges associated with the use of 

woody biomass by users in our review. 
Appendix II

Objectives, Scope, and Methodology

Page 31 GAO-06-336 Key Factors in Woody Biomass Utilization

Insights Offered by Our 

Findings 

To describe the insights offered by our findings, we relied principally on the 

information gathered during our discussions with woody biomass users. In 

addition, we used information gathered from interviewing potential and 

current users as well as agency officials and others knowledgeable about 

woody biomass use, including information gathered during our prior 

review of woody biomass. Our intent was to highlight issues that we 

observed in our review of current woody biomass users and that we believe 

should be considered by those seeking to develop a market for woody 

biomass.

We performed our work from May 2005 through January 2006 in 

accordance with generally accepted government auditing standards.
Page 32 GAO-06-336 Key Factors in Woody Biomass Utilization

Appendix III

Comments from the Department of 

Agriculture ApendxiI
Page 33 GAO-06-336 Key Factors in Woody Biomass Utilization

Appendix IV

Comments from the Department of the 

Interior ApendxiIV

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

See comment 1.
Appendix IV

Comments from the Department of the 

Interior

Page 34 GAO-06-336 Key Factors in Woody Biomass Utilization

See comment 2.

See comment 3.

See comment 2.
Appendix IV

Comments from the Department of the 

Interior

Page 35 GAO-06-336 Key Factors in Woody Biomass Utilization

See comment 4.

See comment 5.
Appendix IV

Comments from the Department of the 

Interior

Page 36 GAO-06-336 Key Factors in Woody Biomass Utilization

See comment 6.

See comment 7.

See comment 8.
Appendix IV

Comments from the Department of the 

Interior

Page 37 GAO-06-336 Key Factors in Woody Biomass Utilization
Appendix IV

Comments from the Department of the 

Interior

Page 38 GAO-06-336 Key Factors in Woody Biomass Utilization

The following are GAO’s comments on the Department of the Interior’s 

letter dated March 1, 2006.

GAO Comments 1. We agree that the multiple benefits listed by the department may indeed 

flow from the increased use of woody biomass. However, the objectives 

of our review were to evaluate the experiences of individual users, not 

to identify the general benefits of using woody biomass. In instances in 

which users cited certain benefits facilitating or resulting from their use 

of woody biomass, we included such benefits in our report.

2. We have modified our draft to include reference to the department’s 

contracting clause.

3. We understand that projects focusing on after-treatment stand 

conditions may generate a variety of materials, including commercial 

sawtimber and lower-value materials, and that the commercial 

component of these materials can help offset project costs. However, 

while it is not possible to separate the two issues entirely, the focus of 

our report—embodied in our definition of woody biomass—is on smalldiameter trees and other traditionally noncommercial material.

4. The focus of our report goes beyond heat and electricity production, 

and includes two users manufacturing pulp and paper from woody 

biomass and three contractors processing woody biomass for other 

users. Nevertheless, we recognize that users in other industries—or 

even other users in the same industries we examined—may offer 

additional insights into expanding the use of woody biomass.

5. Large-scale operations or widespread penetration of small wood 

industries might, as the department suggests, create competition for 

the materials and increase the value of small-diameter trees. However, 

while such a scenario may come about in the long term, our intent was 

to provide insights and information applicable to the current situation. 

Similarly, the scope of our report generally is limited to the experiences 

of individual users in our review, not to broader efforts such as the 

northern California woody biomass thinning program.

6. We do not necessarily look at mill residues as a negative influence on 

using woody biomass—in fact, we acknowledge that the use of mill 

residues and other sources of wood can benefit woody biomass 

utilization in several ways. However, we do believe that it can serve as a 
Appendix IV

Comments from the Department of the 

Interior

Page 39 GAO-06-336 Key Factors in Woody Biomass Utilization

complicating factor in the government’s efforts to stimulate the use of 

small-diameter trees specifically.

7. We have modified our draft to reflect the current expiration date of 

2013 for Forest Service and Bureau of Land Management stewardship 

contracting authority, as well as to note the related authorities available 

to other Interior agencies.

8. While the department’s suggestions regarding stewardship contracting 

and market and tax incentives are beyond the scope of our review, the 

agencies or the Congress may wish to consider these options as they 

evaluate the success of contracting and grant programs.
Page 40 GAO-06-336 Key Factors in Woody Biomass Utilization

Appendix V

GAO Contact and Staff Acknowledgments ApendxiV

GAO Contact Robin M. Nazzaro, (202) 512-3841 or nazzaror@gao.gov

Staff 

Acknowledgments

In addition to the contact named above, David P. Bixler, Assistant Director; 

Lee Carroll; Steve Gaty; Tim Guinane; Richard Johnson; Amanda Miller; 

Alison O’Neill; and Judy Pagano made key contributions to this report.

(360587)
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