Natural Resources: Federal Agencies Are Engaged in Numerous Woody Biomass Utilization Activities, but Significant Obstacles May Impede Their Efforts
Published: 2005-05-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In an effort to reduce the risk of wildland fires, many federal land managers--including the Forest Service and the Bureau of Land Management--are placing greater emphasis on thinning forests and rangelands to help reduce the buildup of potentially hazardous fuels. These thinning efforts generate considerable quantities of woody material, including many smaller trees, limbs, and brush--referred to as woody biomass--that currently have little or no commercial value. GAO was asked to determine (1) which federal agencies are involved in efforts to promote the use of woody biomass, and the actions they are undertaking; (2) how these agencies coordinate their activities; and (3) what the agencies see as obstacles to increasing the use of woody biomass, and the extent to which they are addressing the obstacles. This testimony is based on GAO's report 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), being released today.
section_title: What GAO Found
paragraphs: Most woody biomass utilization activities are implemented by the Departments of Agriculture (USDA), Energy (DOE), and the Interior and include awarding grants to businesses, schools, Indian tribes, and others; conducting research; and providing education. Most of USDA's woody biomass utilization activities are undertaken by the Forest Service and include grants for woody biomass utilization, research into the use of woody biomass in wood products, and education on potential uses for woody biomass. DOE's woody biomass activities focus on research into using the material for renewable energy, while Interior's efforts consist primarily of education and outreach. Other agencies also provide technical assistance or fund research activities. Federal agencies coordinate their woody biomass activities through formal and informal mechanisms. Although the agencies have established two interagency groups to coordinate their activities, most officials we spoke with emphasized informal communication--through e-mails, participation in conferences, and other means--as the primary vehicle for interagency coordination. Internally, DOE coordinates its woody biomass activities through its Office of Energy Efficiency and Renewable Energy, while Interior and the Forest Service--the USDA agency with the most woody biomass activities--have appointed officials to oversee, and have issued guidance on, their woody biomass activities. The obstacles to using woody biomass cited most often by agency officials were the difficulty of using woody biomass cost-effectively and the lack of a reliable supply of the material; agency activities generally are targeted toward addressing these obstacles. Some officials told us their agencies are limited in their ability to address these obstacles and that incentives--such as subsidies and tax credits--beyond the agencies' authority are needed. However, others disagreed with this approach for a variety of reasons, including the concern that expanding the market for woody biomass could lead to adverse ecological consequences if the demand for woody biomass leads to excessive thinning.

section_title: Letter
paragraphs: I am pleased to be here today to discuss federal agency efforts to increase  the utilization of woody biomass. As you know, federal land management  agencies—including the Forest Service in the Department of Agriculture  (USDA) and the Bureau of Land Management (BLM) in the Department of  the Interior—continue to focus on the threat that wildland fire poses to  our nation’s communities and ecosystems. In addressing this threat,  agencies are placing greater emphasis on thinning forests and rangelands  to help reduce the buildup of potentially hazardous fuels. These thinning  efforts will generate considerable quantities of woody material, including  some larger trees that are commercially valuable timber and many smaller  trees, limbs, and brush that generally have little or no commercial value  today. This low commercial value material is often referred to as woody  biomass.
Unlike commercial timber, this material typically has been piled and  burned, left in the forest, or deposited in landfills because there is often  little or no demand for it. Some industries make use of this woody  biomass, however—for example, by burning it to generate electricity or  turning it into products such as road signs or animal bedding. Using woody  biomass in these and other ways can have several beneficial side effects,  including stimulating local economies and potentially facilitating fuel  reduction efforts by creating a demand for thinned material. However, the  cost of harvesting and transporting the material, combined with the  relatively low value of the products produced, has meant that woody  biomass has not been widely utilized.
My testimony today summarizes the findings of our report being released  today that discusses federal agency activities to promote woody biomass  utilization, agency efforts to coordinate their activities, and the primary  obstacles that agencies believe are standing in the way of increased woody  biomass utilization. This report is based on our interviews of officials  from a wide range of federal and nonfederal organizations, including the  Departments of Agriculture, Commerce, Energy, the Interior, and  Transportation, as well as various agencies within these departments;  state governments; Indian tribes; environmental organizations; academia;  and others. We also reviewed agency documents, federal and nonfederal  studies of woody biomass utilization issues, and pertinent laws and other  documents.
subsections: section_title: Background
paragraphs: The Forest Service and Interior collectively manage about 700 million  acres of federal land, much of which is considered to be at high risk of fire.  Federal researchers estimate that from 90 million to 200 million acres of  federal lands in the contiguous United States are at an elevated risk of fire  because of abnormally dense accumulations of vegetation, and that these  conditions also exist on many nonfederal lands. Addressing this fire risk  has become a priority for the federal government, which in recent years  has significantly increased funding for fuels reduction. Fuels reduction is  generally done through prescribed burning, in which fires are deliberately  lit in order to burn excess vegetation, and mechanical treatments, in which  mechanical equipment is used to cut vegetation.
Although prescribed burning is generally less expensive on a per-acre  basis than mechanical treatment, prescribed fire may not always be the  most appropriate method for accomplishing land management  objectives—and in many locations it is not an option, because of concerns  about smoke pollution, for example, or because vegetation is so dense that  agency officials fear a prescribed fire could escape and burn out of  control. In such situations, mechanical treatments are required, generating  large amounts of wood—particularly small-diameter trees, limbs, brush,  and other material that serve as fuel for wildland fires.
Woody biomass can be used in many ways. Small logs can be peeled and  used as fence posts, or can be joined together with specialized hardware  to construct pole-frame buildings. Trees also can be milled into structural  lumber or made into other wood products, such as furniture, flooring, and  paneling. Woody biomass also can be chipped for use in paper pulp  production and for other uses—for example, a New Mexico company  combines juniper chips with plastic to create a composite material used to  make road signs—and can be converted into other products such as  ethanol and adhesives. Finally, woody biomass can be chipped or ground  for energy production in power plants and other applications.
Citing biomass’s potential to serve as a source of electricity, fuel,  chemicals, and other materials, the President and the Congress have  encouraged federal activities regarding biomass utilization—but until  recently, woody biomass received relatively little emphasis. Major  congressional direction includes the Biomass Research and Development  Act of 2000, the Farm Security and Rural Investment Act of 2002, the  Healthy Forests Restoration Act of 2003, and the American Jobs Creation  Act of 2004. Utilization of woody biomass also is emphasized in the federal  government’s National Fire Plan, a strategy for planning and implementing  agency activities related to wildland fire management. For example, a  National Fire Plan strategy document cites biomass utilization as one of its  guiding principles, recommending that the agencies “employ all  appropriate means to stimulate industries that will utilize small-diameter  woody material resulting from hazardous fuel reduction activities.”  Federal agencies also are carrying out research concerning the utilization  of small-diameter wood products as part of the Healthy Forests Initiative,  the administration’s initiative for wildland fire prevention.
section_title: Most Woody Biomass Utilization Activities Are Implemented by the Departments of Agriculture, Energy, and the Interior and Include Grants, Research, and Education
paragraphs: Most of the federal government’s woody biomass utilization efforts are  being undertaken by USDA, DOE, and Interior. While some activities are  performed jointly, each department also conducts its own activities, which  generally involve grants for small-scale woody biomass projects; research  on woody biomass uses; and education, outreach, and technical assistance  aimed at woody biomass users.
subsections: section_title: Some Woody Biomass Activities Are Performed Jointly by Multiple Agencies
paragraphs: USDA, DOE, and Interior have undertaken a number of joint efforts  related to woody biomass. In June 2003, the three departments signed a  memorandum of understanding on woody biomass utilization, and the  departments sponsored a 3-day conference on woody biomass in January  2004. The departments also have established an interagency Woody  Biomass Utilization Group, which meets quarterly to discuss relevant  developments and to coordinate departmental efforts.
Another interdepartmental collaboration effort is the Joint Biomass  Research and Development Initiative, a grant program conducted by  USDA and DOE and authorized under the Biomass Research and  Development Act of 2000. The program provides funds for research on  biobased products. DOE also has collaborated with both USDA and BLM  on assessment of biomass availability, while USDA and Interior have  entered into a cooperative agreement with the National Association of  Conservation Districts to promote woody biomass utilization.
USDA, DOE, and Interior also participate in joint activities at the field  level. For example, DOE’s National Renewable Energy Laboratory (NREL)  and the Forest Service have collaborated in developing and demonstrating  small power generators that use woody biomass for fuel. The Forest  Service also collaborates with Interior in funding and awarding grants  under the Fuels Utilization and Marketing program, which targets woody  biomass utilization efforts in the Pacific Northwest. The agencies also  collaborate with state and local governments to promote the use of woody  biomass—for example, the Forest Service, NREL, and BLM entered into a  memorandum of understanding with Jefferson County, Colorado, to study  the feasibility of developing an electricity-generating facility that would  use woody biomass.
section_title: USDA’s Efforts Related to Woody Biomass Utilization Are Concentrated in the Forest Service, with Some Efforts Under Way in Other USDA Agencies
paragraphs: Most of USDA’s woody biomass utilization activities are undertaken by the  Forest Service and involve grants, research and development, and  education, outreach, and technical assistance. The Forest Service provides  grants through its Economic Action Programs, created to help rural  communities and businesses dependent on natural resources become  sustainable and self-sufficient. The Forest Service also has created a grant  program in response to a provision in the Consolidated Appropriations Act  for Fiscal Year 2005, which authorized up to $5 million for grants to create  incentives for increased use of biomass from national forest lands. Two  other USDA agencies—the Cooperative State Research, Education and  Extension Service (CSREES) and USDA Rural Development—maintain  programs that could include woody biomass utilization activities. CSREES  oversees the Biobased Products and Bioenergy Production Research grant  program and the McIntyre-Stennis grant program, which provides grants  to states for research into forestry issues under the McIntyre-Stennis Act  of 1962. Within USDA Rural Development, the Rural Business-Cooperative  Service oversees a grant program emphasizing renewable energy systems  and energy efficiency among rural small businesses, farmers, and  ranchers, and the Rural Utilities Service maintains a loan program for  renewable energy projects.
Forest Service researchers are conducting research into a variety of  woody biomass issues. Researchers have conducted assessments of the  woody biomass potentially available through land management projects  and have developed models of the costs and revenues associated with  thinning projects. Researchers also are studying the economics of woody  biomass use in other ways; one researcher, for example, is beginning an  assessment of the economic, environmental, and energy-related impacts of  using woody biomass for power generation. The Forest Service also  conducts extensive research, primarily at its Forest Products Laboratory,  into uses for woody biomass, including wood-plastic composites and  water filtration systems that use woody biomass fibers, as well as less  expensive ways of converting woody biomass to liquid fuels.
In addition, the Forest Service conducts extensive education, outreach,  and technical assistance activities. Much of this activity is conducted by  the Technology Marketing Unit (TMU) at the Forest Products Laboratory,  which provides woody biomass users with technical assistance and  expertise in wood products utilization and marketing. Forest Service field  office staff also provide education, outreach, and technical assistance, and  each Forest Service region has an Economic Action Program coordinator  who has involvement in woody biomass issues. For example, one such  coordinator organized a “Sawmill Improvement Short Course” designed to  provide information to small-sawmill owners regarding how to better  handle and use small-diameter material. The Forest Service also has  partnerships with state and regional entities that provide a link between  scientific and institutional knowledge and local users.
section_title: DOE Is Engaged Primarily in Biomass Research and Development Activities
paragraphs: Most of DOE’s woody biomass activities are overseen by its Office of the  Biomass Program and focus primarily on research and development,  although the department does have some grant and technical assistance  activities. DOE’s research and development activities generally address  the conversion of biomass, including woody biomass, to liquid fuels,  power, chemicals, or heat. Much of this work is carried out by NREL,  where DOE recently opened the Biomass Surface Characterization  Laboratory. DOE also supports research into woody biomass through  partnerships with industry and academia. Program management activities  for these partnerships are conducted by DOE headquarters, with project  management provided by DOE field offices.
In addition to its research activities, DOE provides information and  guidance to industry, stakeholder groups, and users through presentations,  lectures, and DOE’s Web site, according to DOE officials. DOE also  provides outreach and technical assistance through its State and Regional  Partnership, Federal Energy Management Program (FEMP), and Tribal  Energy Program. FEMP provides assistance to federal agencies seeking to  implement renewable energy and energy efficiency projects, while the  Tribal Energy Program provides technical assistance to tribes, including  strategic planning and energy options analysis.
DOE’s grant programs include (1) the National Biomass State and Regional  Partnership, which provides grants to states for biomass-related activities  through five regional partners; and (2) the State Energy Program, which  provides grants to states to design and carry out their own renewable  energy and energy efficiency programs. In addition, DOE’s Tribal Energy  Program provides funds to promote energy sufficiency, economic  development, and employment on tribal lands through renewable energy  and energy efficiency technologies.
section_title: Interior’s Woody Biomass Activities Include Education, Outreach, and Some Grant Programs
paragraphs: Interior’s activities include providing education and outreach and  conducting grant programs, but they do not include research into woody  biomass utilization issues. Four Interior agencies—BLM, the Bureau of  Indian Affairs (BIA), Fish and Wildlife Service (FWS), and National Park  Service (NPS)—conduct activities related to woody biomass. These  agencies conduct education, outreach, and technical assistance, but not to  the same degree as the Forest Service. For example, BIA provides  technical assistance to tribes seeking to implement renewable energy  projects, and while FWS and NPS conduct relatively few woody biomass  utilization activities, in some cases the agencies will work to find a woody  biomass user nearby if a market exists for the material. Interior plans to  expand its outreach efforts by using the National Association of  Conservation Districts, with which it signed a cooperative agreement, to  conduct outreach activities related to woody biomass. And while Interior’s  grant programs generally do not target woody biomass, BIA has provided  some grants to Indian tribes, including a 2004 grant to the Confederated  Tribes of the Warm Springs Reservation in Oregon to conduct a feasibility  study for updating and expanding a woody biomass-fueled power plant.
section_title: Several Other Federal Agencies Participate in Woody Biomass Activities
paragraphs: Several other federal agencies are engaged in limited woody biomass  activities through their advisory or research activities. The Environmental  Protection Agency provides technical assistance, through its Combined  Heat and Power Partnership, to power plants that generate combined heat  and power from various sources, including woody biomass. Three other  agencies—the National Science Foundation, Office of Science and  Technology Development, and Office of the Federal Environmental  Executive—also are involved in woody biomass activities through their  membership on the Biomass Research and Development Board, which is  responsible for coordinating federal activities for the purpose of  promoting the use of biobased industrial products.
section_title: Woody Biomass Coordination Efforts among and within Federal Agencies Include Both Formal and Informal Mechanisms, and the Forest Service, DOE, and Interior Have Assigned Responsibility for Overseeing Woody Biomass Activities
paragraphs: Two groups serve as formal vehicles for coordinating federal agency  activities related to woody biomass utilization. One, the Woody Biomass  Utilization Group, is a multiagency group that meets quarterly on woody  biomass utilization issues and is open to all national, regional, and field- level staff across numerous agencies. The other, the Biomass Research  and Development Board, is responsible for coordinating federal activities  to promote the use of biobased industrial products. The board consists of  representatives from USDA, DOE, and Interior, as well as EPA, the  National Science Foundation, Office of the Federal Environmental  Executive, and Office of Science and Technology Policy. When discussing  coordination among agencies, however, agency officials more frequently  cited using informal mechanisms for coordination—through telephone  discussions, e-mails, participation in conferences, and other means— rather than the formal groups described above. Several officials told us  that informal communication among networks of individuals was essential  to coordination among agencies. Officials also described other forms of  coordination, including joint review teams for interagency grant programs  and multiagency working groups examining woody biomass at the regional  or state level.
The Forest Service—the USDA agency with the most woody biomass  activities—developed a woody biomass policy in January 2005, and, in  March 2005, in response to a recommendation in our draft report, the  agency assigned responsibility for overseeing and coordinating its woody  biomass activities to an official within the Forest Service’s Forest  Management branch. In addition, the agency has created the Biomass  Utilization Steering Committee, consisting of the staff directors of various  Forest Service branches, to provide direction and support for agency  biomass utilization.
DOE coordinates its woody biomass utilization activities through its Office  of Energy Efficiency and Renewable Energy. Within this office, the Office  of the Biomass Program directs biomass research at DOE national  laboratories and contract research organizations, while the Federal Energy  Management Program and the Tribal Energy Program conduct a small  number of other woody biomass activities.
Interior has appointed a single official to oversee its woody biomass  activities and is operating under a woody biomass policy adopting the  principles of the June 2003 memorandum of understanding among USDA,  DOE, and Interior. Interior also has appointed a Renewable Energy  Ombudsman to coordinate all of the department’s renewable energy  activities, including those related to woody biomass, and has worked with  its land management agencies to develop woody biomass policies allowing  service and timber contractors to remove woody biomass where  ecologically appropriate. Similarly, BLM has appointed a single official to  oversee woody biomass efforts and has developed a woody biomass  utilization strategy to guide its activities that contains overall goals related  to increasing the utilization of biomass from treatments on BLM lands.
section_title: Most Officials Cited Economic Obstacles to Woody Biomass Utilization, and While Agencies Generally Targeted These Obstacles, Some Officials Believe Additional Steps beyond the Agencies’ Authority Are Needed
paragraphs: Agency officials cited two principal obstacles to increasing the use of  woody biomass: the difficulty in using woody biomass cost-effectively and  the lack of a reliable supply of the material. Agency activities are generally  targeted toward the obstacles identified by agency officials, but some  officials told us that their agencies are limited in their ability to fully  address these obstacles and that additional steps beyond the agencies’  authority to implement are needed. However, not all agree that such steps  are appropriate.
subsections: section_title: Most Officials Noted the Difficulty Involved in Using Woody Biomass Cost-Effectively, and Many Also Cited the Lack of a Reliable Woody Biomass Supply
paragraphs: The obstacle most commonly cited by officials we spoke with is the  difficulty of using woody biomass cost-effectively. Officials told us the  products that can be created from woody biomass—whether wood  products, liquid fuels, or energy—often do not generate sufficient income  to overcome the costs of acquiring and processing the raw material. One  factor contributing to the difficulty in using woody biomass cost- effectively is the cost incurred in harvesting and transporting woody  biomass.
Numerous officials told us that even if cost-effective means of using  woody biomass were found, the lack of a reliable supply of woody  biomass from federal lands presents an obstacle because business owners  or investors will not establish businesses without assurances of a  dependable supply of material. Officials identified several factors  contributing to the lack of a reliable supply, including the lack of widely  available long-term contracts for forest products, environmental groups’  opposition to federal projects, and the shortage of agency staff to conduct  activities. A few officials cited internal barriers that hamper agency  effectiveness in promoting woody biomass utilization, including limited  agency expertise related to woody biomass and limited agency  commitment to the issue. A variety of other obstacles were noted as well,  including the lack of a local infrastructure for handling woody biomass,  consisting of loggers, mills, and equipment capable of treating small- diameter material.
section_title: Agency Efforts Are Generally Targeted toward the Obstacles Identified, but Officials Cited the Need for Additional Actions Such as Subsidies and Tax Credits
paragraphs: Agency activities related to woody biomass were generally aimed at  overcoming the obstacles agency officials identified, including many  aimed at overcoming economic obstacles. For example, Forest Service  staff have worked with potential users of woody biomass to develop  products whose value is sufficient to overcome the costs of harvesting and  transporting the material; Economic Action Program coordinators have  worked with potential woody biomass users to overcome economic  obstacles; and Forest Products Laboratory researchers are working with  NREL to make wood-to-ethanol conversion more cost-effective.
Despite ongoing agency activities, however, numerous officials believe  that additional steps beyond the agencies’ authority are need to fully  address obstacles to woody biomass utilization. Among these steps are  subsidies and tax credits, which officials told us are necessary to develop  a market for woody biomass but which are beyond the agencies’ authority.  According to several officials, the obstacles to using woody biomass cost- effectively are simply too great to overcome by using the tools—grants,  outreach and education, and so forth—currently at the agencies’ disposal.  One official stated that “in many areas, the economic return from smaller- diameter trees is less than production costs. Without some form of market  intervention, such as tax incentives or other forms of subsidy, there is little  short-term opportunity to increase utilization of such material.” Some  officials stated that subsidies have the potential to create an important  benefit—reduced fire risk through hazardous fuels reduction—if they  promote additional thinning activities by stimulating the woody biomass  market. Rather than incentives or subsidies, some officials noted the  potential for increased use of woody biomass through state  requirements—known as renewable portfolio standards—that utilities  procure or generate a portion of their electricity by using renewable  resources, which could include woody biomass.
But not all officials believe these additional steps are efficient or  appropriate. One official told us that, although he supports these activities,  tax incentives and subsidies would create enormous administrative and  monitoring requirements. Another official stated that although increased  subsidies could address obstacles to woody biomass utilization, he does  not believe they should be implemented, preferring instead to allow  research and development efforts and market forces to establish the  extent of woody biomass utilization. Further, not all agree that the market  for woody biomass should be expanded. One agency official told us he is  concerned that developing a market for woody biomass could result in  overuse of mechanical treatment (rather than prescribed burning) as the  market begins to drive the preferred treatment, and representatives of one  national environmental group told us that relying on woody biomass as a  renewable energy source will lead to overthinning, as demand exceeds the  supply that is generated through responsible thinning.
section_title: Conclusions
paragraphs: The amount of woody biomass resulting from increased thinning activities  could be substantial, adding importance to the search for ways to use the  material cost-effectively rather than simply disposing of it. However, the  use of woody biomass will become commonplace only when doing so  becomes economically advantageous for users—whether small forest  businesses or large utilities. Federal agencies are targeting their activities  toward overcoming economic and other obstacles, but some agency  officials believe that these efforts alone will not be sufficient to stimulate a  market that can accommodate the vast quantities of material expected— and that additional action may be necessary at the federal and state levels.  Nevertheless, we believe the agencies will continue to play an important  role in stimulating woody biomass use. The Forest Service took a  significant step recently by designating an agency lead for woody biomass  activities, responding to a need we had identified in our draft report and  enhancing the agency’s ability to ensure that its multiple activities  contribute to its overall objectives. Given the magnitude of the woody  biomass issue and the finite nature of agency budgets, it is essential that  federal agencies appropriately coordinate their woody biomass  activities—both within and across agencies—to maximize their potential  for addressing the issue.
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.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For further information about this testimony, please contact me at (202)  512-3841 or at nazzaror@gao.gov. David P. Bixler, James Espinoza, Steve  Gaty, Richard Johnson, and Judy Pagano made key contributions to this  statement.
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