United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Forests and 

Forest Health, Committee on Resources, 

House of Representatives 

NATURAL RESOURCES

Woody Biomass Users’ 

Experiences Provide 

Insights for Ongoing 

Government Efforts to 

Promote Its Use 

Statement of Robin M. Nazzaro, Director 

Natural Resources and Environment 

For Release on Delivery

Expected at 1:00 p.m. EDT

Thursday, April 27, 2006

 

GAO-06-694T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 27 2006

NATURAL RESOURCES 

Woody Biomass Users’ Experiences 

Provide Insights for Ongoing Government 

Efforts to Promote Its Use 

Highlights of GAO-06-694T, a testimony 

before the Subcommittee on Forests and 

Forest Health, 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. 

This testimony is based on GAO’s 

report Natural Resources: Woody 

Biomass Users’ Experiences Offer 

Insights for Government Efforts 

Aimed at Promoting Its Use (GAO06-336). 

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, such as excessive thinning to meet demand for woody 

biomass. 

Examples of Woody Biomass Users GAO Reviewed

www.gao.gov/cgi-bin/getrpt?GAO-06-694T.

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. 
Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss factors influencing woody 

biomass use among several users we reviewed, as well as potential 

insights these users’ experiences may offer as the federal government 

seeks to increase woody biomass use. As you know, the federal 

government has responded to our nation’s increasing wildland fire threat 

by placing greater emphasis on 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

 increasing the use of the 

material faces several obstacles. Officials in federal agencies promoting 

woody biomass use—including the Departments of Agriculture, Energy, 

and the Interior—told us that its use is hampered by the high costs of 

harvesting and transporting it and the difficulty in obtaining a reliable 

supply in some areas. Nevertheless, some businesses and government 

entities are using woody biomass for various purposes, including heating 

buildings, making lumber, and generating electricity. 

My testimony today summarizes the findings of our report being released 

today that discusses factors facilitating woody biomass use among 

selected users, the challenges these users faced in using the material, and 

the insights these users’ experiences may have for the federal government

as it seeks to promote greater use of woody biomass.3

 This report is based 

 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 testimony 

refers to small-diameter trees and other traditionally noncommercial material cut as part of 

thinning, harvesting, or other activities in forests or on rangelands. For the purposes of this

testimony, 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). 

3

GAO, Natural Resources: Woody Biomass Users’ Experiences Offer Insights for 

Government Efforts Aimed at Promoting Its Use, GAO-06-336 (Washington, D.C.: Mar. 22,

2006). 

Page 1 GAO-06-694T 
on information we collected 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, as well as on our prior study of 

woody biomass. 

The primary factors facilitating woody biomass use among users we 

reviewed were financial incentives and benefits associated with its use, 

while 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 had received federal or 

state financial assistance to begin using woody biomass, while 3 users 

received ongoing support as a result of their use of the material. Other 

factors included energy cost savings from using woody biomass in place of

fossil fuels such as natural gas; the availability of an affordable supply of 

the material (particularly in cases where it was already being removed as a 

byproduct of other activities); and anticipated environmental benefits 

associated with using the material, such as promoting forest health and 

reducing air pollution. 

Summary 

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. Several users 

reported they found it difficult or impossible to obtain a sufficient supply 

of the material, particularly from federal lands. 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 

increased equipment, operation, and maintenance costs in using woody 

biomass that they would not have incurred had they burned the other 

fuels. 

Our findings offer several insights for the federal government as it seeks to 

promote greater use of woody biomass. First, if not appropriately 

designed, efforts to encourage its use may instead stimulate the use of 

sawmill residues or other alternative wood materials, which some users 

told us 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 

Page 2 GAO-06-694T 
account the extent of existing infrastructure. And finally, 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, such as 

excessive thinning to meet demand for woody biomass. 

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

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

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. 

Background 

Woody biomass can be put to various uses. Among other uses, smalldiameter logs can be sawed into structural lumber or can be chipped and 

processed to make pulp, the raw material from which paper, cardboard, 

and other products are made. Woody biomass also can be used for fuel. 

Various entities, including power plants, schools, pulp and paper mills, and 

others, burn woody biomass in boilers to turn water into steam, which can 

be used to make electricity, heat 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 

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.4

In response, the Forest Service awarded $4.4 million in such grants in 

fiscal year 2005. State and local governments also are encouraging the 

material’s use through grants, research, and technical assistance, while 

private corporations are researching new ways to use woody biomass, 

often in partnership with government and universities. 

 4

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

Page 3 GAO-06-694T 
The users in our review cited several factors contributing to their use of 

woody biomass. The primary factors they cited were financial incentives

and benefits associated with its use, while other factors included having 

access to an affordable supply of woody biomass and environmental 

considerations. 

Financial Incentives 

and Benefits, Access 

to an Affordable 

Supply, and 

Environmental 

Benefits Facilitated 

the Use of Woody 

Biomass among Users 

We Reviewed 

Financial Incentives and 

Benefits Encouraged 

Woody Biomass Use by 

Several Users 

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

primary factors for its use among several users we reviewed. 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. The state college received a state grant of about $1 million in 

1989, the Georgia hospital received about $2.5 million in state funds in the 

early 1980s, and the Montana school district received about $900,000 in 

federal funds in 2003 for the same purpose.5

 A fourth user—a wood-fired 

power plant in California—received financial assistance in the form of taxexempt state bonds to finance a portion of the plant’s construction. 

Three users in our review also received additional financial assistance, 

including subsidies and other payments that helped them continue their 

use of woody biomass. For example, the California power plant 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 1978.6

 Under the act, state 

regulators established rates for electricity from certain facilities producing 

it from renewable sources, including woody biomass. However, the initial 

prices set by California substantially exceeded market prices in some 

 5

Dollars are unadjusted for inflation. 

6

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

Page 4 GAO-06-694T 
years, benefiting this user by increasing its profit margin.7

 The Montana 

school district also received ongoing financial assistance from a nearby

nonprofit organization. The nonprofit organization paid for the installation 

of a 1,000-ton wood fuel storage facility (capable of storing over a year’s 

supply of fuel) and financed the purchase of a year’s supply of fuel for the 

district, which the district repays as it uses the fuel. The third user, a 

Colorado power plant generating electricity by firing woody biomass with 

coal, realized ongoing financial benefits by selling renewable energy 

certificates associated with the electricity it generated from woody 

biomass.8

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

among six users we reviewed. Two users—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. Similarly, the state college in Nebraska 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. And 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. 

An Affordable Supply 

Facilitated the Use of 

Woody Biomass 

An affordable supply of woody biomass also 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 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, chip, and transport the slash to the college for burning.

Similarly, a Pennsylvania power plant obtains a portion of its wood fuel 

 7

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

Commission, based on the buyer’s “avoided cost”—this is, the energy and facilities costs 

that would have been incurred by the purchasing utility if it 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. 

8

Renewable energy certificates 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 electric grid. The certificates are sold separately from 

the electricity with which they are associated, and their sale can serve as an additional 

source of revenue to power plants using such sources. 

Page 5 GAO-06-694T 
from land-clearing operations in which, according to a plant official, the

developers clearing the land are required to dispose of the cleared material

but are not allowed to burn or bury it. The plant official told us developers 

often are willing to partially subsidize removal and transportation costs in 

order to have an outlet for it. 

Thinning activities by area landowners also contributed to an affordable 

supply for a large pulp and paper mill in Mississippi. In this area, as in 

much of the southeastern United States, small-diameter trees are 

periodically thinned from forests to promote the growth of other trees, 

and traditionally have been sold for use in making pulp and paper. Further, 

according to mill officials, the level terrain and extensive road access 

typical of southeastern forests keep harvesting and hauling costs 

affordable—particularly in contrast to other parts of the country where 

steep terrain and limited road access may result in high harvesting and 

hauling costs. 

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 coalfired 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 hoped that by providing a market for woody 

biomass, they could help stimulate thinning efforts. Another user, a 

Vermont power plant, began using woody biomass because of air-quality 

concerns. 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 factors and business arrangements specific to individual users also 

made using woody biomass advantageous. For example, one user, which 

chips woody biomass for use as fuel in a nearby power plant, has an 

arrangement 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 product is competitively priced and meets 

fuel-quality standards. Three users whose operations include chipping of 

woody biomass and other activities, such as commercial logging or 

sawmilling, also told us that having the operations within the same 

business is important because equipment and personnel costs can be 

shared between the chipping operation and the other activities. And some 

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

Page 6 GAO-06-694T 
selling byproducts resulting from its use. One pulp and paper mill in our 

review sold turpentine and other byproducts from the production of pulp

and paper, while 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 and sawdust used by particle 

board plants. 

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

woody biomass or made it more difficult or expensive to use. These 

factors included an insufficient supply of the material and increased costs 

related to equipment and maintenance. 

Challenges Faced by 

Woody Biomass Users 

Included Inadequate 

Supply and Costs 

Associated with 

Handling and Using 

the 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, echoing a concern raised by federal officials in

our previous report. Two 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 told us that their shortages of wood were due at least in part 

to a shortage of nearby logging contractors, which prevented nearby 

landowners from carrying out all of the projects they wished to undertake.

While officials at one plant attributed the plant’s shortage entirely to the 

lack of sufficient 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. 

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

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

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

telling us they had difficulty obtaining supply 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.” In response 

Page 7 GAO-06-694T 
to these concerns, officials from both the Department of the Interior and 

the Forest Service told us that their agencies are seeking to increase the 

availability of woody biomass from federal lands. 

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. The cost of 

this equipment varied considerably among users, from about $385,000 for a 

school district to $15 million for a pulp and paper mill. Wood utilization 

also increased operation and maintenance costs for some users, in some 

cases because of problems associated with handling wood. 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 clear the blockage manually. At 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 a coal-storage unit, requiring the plant to

temporarily reduce its output of electricity and pay $9,000 to rechip its 

remaining wood. 

Other issues specific to individual users also decreased woody biomass 

use or increased costs for using the material. For example, 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. Another power plant was required to 

obtain a new emissions permit in order to begin burning wood in its coalfired system. 

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. 

Users Choosing Woody 

Biomass over Oil or 

Natural Gas Made 

Additional Investments in 

Equipment and Incurred 

Additional Operations and 

Maintenance Costs 

Current Users’ 

Experiences Offer 

Insights for 

Government Efforts 

to Expand the Use of 

Woody Biomass 

Page 8 GAO-06-694T 
Unless efforts to stimulate woody biomass utilization are focused on 

small-diameter trees and other material contributing to the risk of 

wildland fire, such efforts may simply increase the use of alternative wood 

materials (such as mill residues) or slash from commercial logging 

operations. In fact, several users told us that they prefer such materials 

because they are cheaper or easier to use than woody biomass. 

Market Forces May Lead 

Wood Users to Forgo 

Small-Diameter Trees in 

Favor of Alternatives 

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 

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

order to stimulate the use of woody biomass in the area. As a condition of

the grant, the agency required 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.9

It should be noted that the use of mill residues is not entirely to the 

detriment of woody biomass. Using mill residues can facilitate woody 

biomass utilization by providing a market for the byproducts (such as 

sawdust) of industries using woody biomass directly; this, in turn, can 

enhance these users’ profitability and thereby improve their ability to 

continue using the material cost-effectively. In addition, the availability of

both mill residues and woody biomass provides diversity of supply, 

allowing users 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. 

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

woody biomass often used the tops and limbs from trees harvested for 

merchantable timber or other uses rather than small-diameter trees 

contributing to the problem of overstocked forests. Logging slash can be

cheaper to obtain than small-diameter trees when it has been removed 

from the forest by commercial logging projects—which often leave slash 

piles at roadside “landings,” where trees are delimbed before being loaded

onto trucks. Unless woody biomass users specifically need small-diameter 

 9

The district has since obtained about 550 tons of woody biomass (about 75 percent of its

annual consumption) from a nearby thinning project. 

Page 9 GAO-06-694T 
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. 

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 them. For example, 

an official with the Nebraska college in our review told us that the lack of

a local logging infrastructure could jeopardize the college’s future woody 

biomass use. The college relied on 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. According to the official, if more timber-harvesting projects were 

offered closer to the sawmills, these loggers would move their operations 

in order to reduce transportation costs—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 such an infrastructure, however, may 

increase the availability of mill residues or other materials, potentially 

complicating efforts to promote woody biomass use by offering more 

attractive alternatives. 

Page 10 GAO-06-694T 
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 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.10 In fact, one company currently plans to build a $23 million woody 

biomass power plant in eastern Arizona, largely in response to a nearby

stewardship project that is expected to treat 50,000 to 250,000 acres over 

10 years. Similarly, officials of a South Carolina utility told us that the 

utility was planning to invest several million dollars in equipment that 

would allow a coal-fired power plant to burn woody biomass from 

thinning efforts in a nearby national forest. In both cases, the assurance of

a long-term supply of woody biomass was a key factor in the companies’

willingness to invest in these efforts. 

Efforts to Encourage 

Woody Biomass Use May 

Be More Effective If They 

Are Tailored to the Scale 

and Nature of Recipients’ 

Use 

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 

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, several federal agencies, particularly the Forest 

Service, provide grants for woody biomass use. 

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

are appropriately aligned with the agencies’ own interests and do not 

create unintended consequences. For example, while individual grant 

recipients might benefit from using woody biomass—through fuel cost 

savings, for example—benefits to the government, such as reduced 

thinning costs, are uncertain. Without such benefits, agency grants may 

simply increase 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 

 10Stewardship contracting involves the use of any of several contracting authorities on the 

part of the Forest Service and Interior’s Bureau of Land Management. 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). 

Page 11 GAO-06-694T 
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. 

Drawing long-term conclusions from the experiences of users in our 

review must be done with care because (1) our review represents only a 

snapshot in time and a small number of woody biomass users and (2) 

changes in market conditions could have substantial effects on the options 

available to users and the materials they choose to consume. Even so, 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. 

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 are most cost-effective in

different circumstances. In doing so, it also will be important for the 

agencies to take into account 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. 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 design 

approaches that take these elements into account rather than using 

boilerplate solutions. 

Mr. Chairman, this concludes my prepared statement. I would be pleased

to answer any questions that you or other Members of the Subcommittee 

may have at this time. 

For further information about this testimony, please contact me at (202) 

512-3841 or nazzaror@gao.gov. David P. Bixler, Lee Carroll, Steve Gaty, 

and Richard Johnson made key contributions to this statement. 

Concluding 

Observations 

GAO Contact and 

Staff 

Acknowledgments 

Page 12 GAO-06-694T (360703) 
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