Natural Resources: Federal Agencies Are Engaged in Various Efforts to Promote the Utilization of Woody Biomass, but Significant Obstacles to Its Use Remain
Published: 2005-05-13T00:00:00

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 (BLM)--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 actions they are undertaking; (2) how these agencies are coordinating their activities; and (3) what agencies see as obstacles to increasing the use of woody biomass, and the extent to which they are addressing these obstacles.
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. To coordinate activities within their agencies, DOE and Interior have formal mechanisms--DOE coordinates its activities through its Office of Energy Efficiency and Renewable Energy, while Interior and BLM have appointed officials to oversee, and have issued guidance on, their woody biomass activities. In contrast, while the Forest Service recently issued a woody biomass policy, it has not assigned responsibility for overseeing and coordinating its various woody biomass activities, potentially leading to fragmented efforts and diluting the impact of these 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.

section_title: Letter
paragraphs: Much attention has been paid in recent years to the state of our nation’s  forests. Dense, dry forest conditions have fueled extensive wildland fires  and have raised the specter of severe fires in the future. In an effort to  reduce the risk of fire, 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—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 or 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.
In this context, you asked us 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 federal agencies are coordinating their  activities related to woody biomass; and (3) what these agencies see as the  primary obstacles to increasing the use of woody biomass, and the extent  to which they are addressing these obstacles.
In conducting our review, we used a structured interview guide to collect  information from headquarters and field officials from the Departments of  Agriculture, Energy, and the Interior, and the Environmental Protection  Agency. In total, we interviewed 44 officials using this guide. We also met  with officials from nonfederal organizations, including state governments,  Indian tribes, academia, environmental organizations, and others. We  reviewed agency policies, regulations, strategic plans, and other  documents; federal and nonfederal studies regarding technological,  economic, and other issues related to woody biomass utilization; and  pertinent laws and other documents. We also toured the Forest Service’s  Forest Products Laboratory in Madison, Wisconsin; a woody biomass- heated community center in Nederland, Colorado; and a wood-fired power  plant in Burney, California. Appendix I provides further details on the  scope and methodology of our review. We conducted our work between  June 2004 and March 2005 in accordance with generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: The Forest Service and Interior manage about 700 million acres of federal  land between them, 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. Figure 1 shows before and  after photos of a site that was thinned to reduce the risk of fire.
Although prescribed burning is generally less expensive 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, either because of concerns about smoke pollution or  because vegetation is so dense that agency officials fear that 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 put to many uses. 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. Using computer-operated equipment, some mills can manufacture  lumber from logs as small as 4 inches in diameter. Other wood products  such as furniture, flooring, and paneling can be produced. Woody biomass  also can be chipped for use in paper pulp production and other uses—for  example, a New Mexico company combines juniper chips with plastic to  create a composite material used to make road signs.
Woody biomass also can be converted into other products, including liquid  fuels such as ethanol and other products such as adhesives. Finally, woody  biomass can be chipped or ground for energy production—for example, to  fire power plants, or produce steam or hot water heat for manufacturing  processes or buildings. Figure 2 shows a trailer full of wood chips being  emptied into a container at a California power plant fueled by woody  biomass; figure 3 shows chips ready to be fed into a boiler.
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. A list of major  congressional direction follows: The Biomass Research and Development Act of 2000   directed the Secretaries of Agriculture and Energy to coordinate their  research and development efforts, leading to the production of biobased  industrial products;   created the interagency Biomass Research and Development Board,  supported by a Biomass Research and Development Technical Advisory  Committee; directed the Secretaries of Agriculture and Energy to implement a  “Biomass Research and Development Initiative” under which the  agencies would provide grants, contracts, and financial assistance for  research on biobased industrial products; and  authorized an appropriation of $49 million for each of fiscal years 2000  through 2005 to carry out the act’s provisions.
The Farm Security and Rural Investment Act of 2002   established a federal procurement preference for biobased products  requiring federal agencies purchasing items costing more than $10,000  to give preference to biobased products;   directed the Secretary of Agriculture to award grants for developing and  constructing biorefineries (equipment and processes that convert  biomass into fuels and chemicals and that may produce electricity);   directed the Secretary of Agriculture to provide grants, loans, and loan  guarantees to farmers, ranchers, and rural small businesses to purchase  renewable energy systems and make energy efficiency improvements,  and to make available from the Commodity Credit Corporation $23  million for these activities for each of fiscal years 2003 through 2007;  and  directed the Secretary of Agriculture to make available from the  Commodity Credit Corporation $5 million in fiscal year 2002 and $14  million for each of fiscal years 2003 through 2007 to carry out the  provisions of the Biomass Research and Development Act of 2000, and  extended through fiscal year 2007 the Biomass Research and  Development Act’s authorization of $49 million each fiscal year.
The Healthy Forests Restoration Act of 2003 authorized appropriations of $5 million for each of fiscal years 2004  through 2008 for each of two grant programs—a Forest Service program  focusing on community-based enterprises and small businesses using  biomass, and a USDA program providing grants to offset the costs of  purchasing biomass by facilities that use it for wood-based products or  other commercial purposes; and  increased the authorization contained in the Biomass Research and  Development Act of 2000 from $49 million to $54 million for each of  fiscal years 2002 through 2007.
The American Jobs Creation Act of 2004 contained tax incentives  promoting the use of woody biomass to generate electricity.
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. Some activities are  performed jointly. For example, USDA, DOE, and Interior signed a  Memorandum of Understanding to promote the utilization of woody  biomass, and USDA and DOE conduct a joint biomass grant program. Each  department also conducts its own woody biomass 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 Policy Principles for Woody Biomass  Utilization for Restoration and Fuel Treatments on Forests, Woodlands,  and Rangelands. The purpose of the memorandum is “to demonstrate a  commitment to develop and apply consistent and complementary policies  and procedures across three federal departments to encourage utilization  of woody biomass.” The departments also sponsored a 3-day conference on  woody biomass in January 2004. To discuss woody biomass developments  and to coordinate their efforts, the departments established an interagency  Woody Biomass Utilization Group, which meets quarterly.
Another interdepartmental collaboration effort is the Joint Biomass  Research and Development Initiative, a joint USDA and DOE grant  program authorized under the Biomass Research and Development Act of  2000. The program provides funds for research on biobased products. In  fiscal year 2004, the two departments awarded $25 million to 22 projects,  and cost sharing by private sector partners raised the value of the projects  to nearly $38 million. While the program generally promotes all forms of  biomass rather than targeting woody biomass, in 2004 the grant solicitation  included woody biomass as an area of emphasis and, according to a USDA  official, 10 projects emphasizing or incorporating woody biomass were  funded that year, for a total of about $7.7 million. For example, the Hayfork  Biomass Utilization and Value Added Model for Rural Development project  in California received about $503,000 to support the design and early  implementation phases of a biomass utilization facility, including a log sort  yard, small log processor, and wood-fired electrical generation plant.  Another California project, the Small-Scale, Biomass-Fired Gas Turbine  Plants Suitable for Distributed and Mobile Power Generation, received  about $242,000 to evaluate the economic benefits of using forestry residues  for generating power in small-scale power plants. USDA and DOE also have  collaborated on an assessment of biomass availability, including woody  biomass, and have prepared a report summarizing their findings.
In another interagency effort, BLM worked with DOE’s National Renewable  Energy Laboratory (NREL) to identify and evaluate renewable energy  resources—including biomass—on public lands, resulting in a February  2003 report titled “Assessing the Potential for Renewable Energy on Public  Lands.” More recently, USDA and Interior entered into a cooperative  agreement with the National Association of Conservation Districts in 2004  to promote woody biomass utilization. Activities to be performed by the  association under the agreement include organizing national and regional  workshops on woody biomass utilization and developing outreach  materials to stimulate investment in small wood industries and bioenergy.
USDA, DOE, and Interior also participate in joint activities at the field level.  NREL and the Forest Service have collaborated in developing and  demonstrating small power generators that use woody biomass for fuel.  These generators, known as BioMax units, are being demonstrated at  several sites, including a high school in Walden, Colorado, and a furniture- making business at the Zuni Pueblo in New Mexico. Figure 4 shows the  BioMax 15 power generator.
The Forest Service also collaborates with Interior in awarding and funding  grants under the Fuels Utilization and Marketing program, a jointly funded  grant program targeting woody biomass utilization efforts in the Pacific  Northwest. Another collaborative effort at the field level involves a Forest  Service rural community assistance coordinator specialist in the Southwest  Region and includes officials from BLM and the state of New Mexico, as  well as environmental group and utility company representatives. In  addition to studying woody biomass availability and conducting market  assessments, this biomass working group is proposing policy changes  favorable to woody biomass. It also has studied barriers to biomass use and  provided input on project designs so that projects are less likely to be  challenged.
The agencies also are collaborating with state and local governments to  promote the use of woody biomass. The Forest Service, NREL, and BLM  entered into a Memorandum of Understanding with Jefferson County,  Colorado, in 2004 to study the feasibility of developing an electricity  generating facility using woody biomass from forest thinning projects  intended to reduce the risk of wildland fire. In addition to the agencies and  Jefferson County, the agreement included the Colorado State Forest  Service and a local energy utility. In its January 2005 feasibility study, the  partnership reported that about 166,000 tons of biomass would be available  each year from forest thinnings and new construction waste. With this  development, the local energy utility announced that it would consider  converting a boiler at one of its plants to burn biomass to generate steam  heat for downtown Denver buildings.
Another example of federal agencies working with local governments  involves a power plant in Canon City, Colorado, that uses coal and wood  chips to fire its boilers. The power plant announced in January 2005 that it  plans to sell renewable energy certificates to help recover costs associated  with introducing the renewable fuel source. The wood chips used in the  power plant are produced by forest-thinning operations conducted by BLM,  the Forest Service, and state and local governments, while the  environmental and market analysis for the project was co-funded by DOE.
Yet another example of local cooperation involves a January 2005  “declaration of cooperation” signed in central Oregon by officials from the  Forest Service, BLM, state and tribal government, the timber industry, and  environmental groups. The groups have agreed to work together to  stabilize the supply of woody biomass as a way of helping create a market  for the material.
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, with other USDA services playing a smaller role. USDA’s  activities involve grants, research and development, and education,  outreach, and technical assistance.
subsections: section_title: Grants
paragraphs: USDA implements several grant programs related to woody biomass. The  Forest Service provides grants through its Economic Action Programs  (EAP), created to help rural communities and businesses dependent on  natural resources become sustainable and self-sufficient. In 2003,  according to Forest Service officials, the Forest Service funded 73 projects  related to woody biomass utilization; grants ranged from $5,000 to  $225,000, for a total of about $3.5 million. A Forest Service official told us  that similar levels of effort existed in 2001 and 2002, but that the level of  effort in 2004 declined because of reduced funding levels. The Forest  Service currently is preparing a report summarizing the activities carried  out under EAP grants nationwide.
Forest Service officials told us that EAP grant funds are distributed among  Forest Service regional and national units, which in turn allocate the funds  according to regional or national priorities, respectively. For example, the  Northern and Intermountain Regions decided to use their regional EAP  allocations not only to fund Economic Recovery—a Forest Service  program providing financial and technical assistance to improve the  economic, environmental, and social conditions of rural communities—but  also to fund two regional woody biomass grant programs, one focusing on  using small-diameter wood to create specialty products such as flooring,  paneling, and wood-plastic composites and the other focusing on biomass  utilization for energy production. This second program, known as the  Fuels for Schools program, provides grant funds to help public schools  retrofit their fuel and gas heating systems to woody biomass heating  systems that reduce heating costs. The Darby School District in Montana,  for example, provides heat to three schools with wood burning boilers; this  conversion reduced its fuel bill by about 43 percent during the first year of  operation. The project requires about 500 tons of woody biomass per year,  the byproduct of about 50 acres’ worth of fuel reduction treatments,  according to project officials. As of December 2004, according to Forest  Service officials, three Fuels for Schools projects (including the Darby  School District) had been completed, and about 20 schools had completed  engineering analyses and were preparing to apply for grant funds. Figure 5  shows the automated wood chip conveyor installed to provide fuel to the  boiler as part of the Darby School District project.
The Forest Service has created an additional grant program in response to  a provision in the Consolidated Appropriations Act for Fiscal Year 2005,  authorizing up to $5 million for grants to create incentives for increased use  of biomass from national forest lands. A congressional committee report  accompanying the act directed the Forest Service “to develop this program  with the clear intent to make grants that will result in increased  commercial use of biomass products, and which will thereby result in  reduced overall hazardous fuels program costs.” Specific Forest Service  goals for the grant program are to (1) help reduce management costs by  increasing the value of biomass and other forest products generated by  hazardous fuel treatments, (2) create incentives and reduce the business  risk for increased use of biomass from national forest lands, and (3)  institute projects that target and help remove economic and market  barriers to using small-diameter trees and woody biomass. Grants will be  awarded for up to 3 years in amounts from $50,000 to $250,000, and will  require a 20 percent match on the part of grantees; applications are due  May 16, 2005, with awards to be announced by June 1, 2005.
Two other USDA agencies---the Cooperative State Research, Education,  and Extension Service (CSREES) and USDA Rural Development—maintain  grant programs that potentially include woody biomass utilization  activities. CSREES oversees the Biobased Products and Bioenergy  Production Research grant program, under which a total of $5.4 million is  available to support research into the use of agricultural materials— including woody biomass—for fuels or products. CSREES also provides  grants to states for research under the McIntyre-Stennis Act of 1962, which  was enacted to promote forestry research by state colleges and  universities. Projects can fall into one of eight areas listed in the act, one of  which is the utilization of wood and other forest products. However, this  grant program does not emphasize wood products over the other areas,  and a CSREES official told us that most funded projects address issues  other than woody biomass.
USDA Rural Development oversees grant and loan programs targeting  renewable energy, potentially providing support to woody biomass  utilization activities. Within Rural Development, the Rural Business- Cooperative Service oversees the renewable energy grant program  authorized by the Farm Security and Rural Investment Act of 2002,  emphasizing renewable energy systems and energy efficiency among rural  small businesses, farmers, and ranchers. In September 2004, $22.8 million  was awarded to a total of 167 recipients; however, most grants were  directed toward projects using wind power or agricultural biomass rather  than woody biomass. Also within Rural Development, the Rural Utilities  Service maintains a loan program for renewable energy projects. A Rural  Utilities Service official told us that none of the $119 million loaned under  this program since fiscal year 2000 has gone toward woody biomass,  although the program would welcome such projects.
section_title: Research and Development
paragraphs: 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—for  example, in 2003, Forest Service researchers prepared an assessment of the  land suitable for mechanical treatment in the western states and the woody  biomass that could potentially be produced. Researchers also have  developed models of the costs and revenues associated with thinning  projects, such as the Fuel Treatment Evaluator. In using this model, users  can input the specific area to be treated (by state or county), the desired  end condition of the area to be treated, and so forth. Users also can enter  prices for forest products—sawtimber, small-diameter biomass, and the  like. The tool then estimates the amount of material in each of various size  classes that would have to be removed to achieve the desired end  condition, the project cost, and the likely revenues from the project.  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 into uses for woody  biomass, primarily at its Forest Products Laboratory. The laboratory’s  strategic plan includes the goal of developing new and improved  technologies to use low-value, underutilized forest resources, including  thinnings and small-diameter timber, and the laboratory Director told us  the laboratory has changed its research approach over the past several  years to focus more on the issue of small-diameter trees. Woody biomass- related research at the laboratory includes research into a variety of  potential uses for the material, including wood-plastic composites;  structures made from small-diameter roundwood; improved paper pulping  processes that can accommodate small-diameter trees; water filtration  systems using woody biomass fibers; flooring, paneling, and laminated  wood beams made from small-diameter trees; and others. For example, one  scientist we met with told us that the laboratory is using woody biomass to  make water filters that can remove heavy metals, oils, phosphates, and  pesticides from water. The laboratory is currently testing the use of these  filters to remove heavy metal contaminants from mining site runoff.  Another scientist we met with described his efforts to develop techniques  for using sound waves to test the strength of small-diameter timber in order  to assess its suitability for particular applications. Still other officials are  working on less expensive ways of converting woody biomass to liquid  fuels; researchers at the laboratory told us they are working on new ways  of separating wood into its constituent components—lignin, hemicellulose,  and cellulose—in order to improve the conversion process.
section_title: Education, Outreach, and Technical Assistance
paragraphs: The Forest Service conducts extensive education, outreach, and technical  assistance activities through a variety of staff—small-diameter utilization  specialists, rural development program managers, regional EAP  coordinators, and others. Much of this activity is conducted by the  Technology Marketing Unit (TMU) at the Forest Products Laboratory,  which provides technical assistance and expertise in wood products  utilization and marketing. TMU has produced an extensive array of  publications conveying information about specific aspects of small- diameter wood utilization and marketing—for example, publications on  biomass for small-scale heat and power, structural grading of logs from  small-diameter trees, and the economic feasibility of making wood  products from small-diameter trees—and issues a bimonthly newsletter  titled Forest Products Conservation & Recycling Review.
TMU staff also provide direct technical assistance to individuals or  companies seeking information or assistance. One such user in New  Mexico was interested in finding a use for local woody biomass. TMU staff  worked with the individual to develop a wood-plastic composite using  juniper fibers that could be made into road signs; the composite signs,  unlike wooden signs, are not chewed on by animals—and are thus favored  by the Forest Service because they do not have to be replaced as  frequently. The individual now operates a 15-employee sign-making  business utilizing low-value woody biomass. Figure 6 shows signs made  from woody biomass mixed with plastic.
Similarly, TMU has worked with businesses in Montana to find uses for  roundwood, including roundwood buildings and bridges. Roundwood  structures developed with TMU assistance include wood kiosks displayed  at the 2002 Winter Olympics in Utah; a roundwood community pavilion in  Westcliffe, Colorado; and the Darby Community Library in Darby, Montana.  In addition, a 165-foot suspension bridge designed with TMU assistance  and being built primarily with 6-inch diameter lodgepole pine is currently  under construction in Lolo, Montana. Figure 7 shows a roundwood kiosk  made from small-diameter wood; figure 8 shows the interior of the library  in Darby, Montana, which was constructed from roundwood.
The Forest Service also has partnerships with state and regional entities  that provide a link between scientific and institutional knowledge and local  users. One such group, the Colorado Wood Utilization and Marketing  Assistance Center, housed at Colorado State University, provides small  grants in Colorado and assists communities in identifying technologies that  will utilize forest thinnings to heat buildings and generate electricity.  Another such partnership is through the Forest Service’s Wood Education  and Resource Center in West Virginia, which assists constituents in  addressing economic, environmental, technological, and social challenges  through training, technology transfer, and applied research. Yet another  partnership with state and regional entities involves the Forest Service and  the Greater Flagstaff Partnership in Arizona, an alliance of 27  environmental and governmental organizations that researches and  demonstrates approaches to forest ecosystem restoration in the ponderosa  pine forests surrounding Flagstaff, Arizona.
Staff in Forest Service field offices also provide education, outreach, and  technical assistance. Each region has an EAP coordinator, and  coordinators we spoke with provided numerous examples of their  involvement in woody biomass. For example, one EAP 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, how to find small-diameter markets, and so  forth. EAP coordinators also have conducted demonstrations of equipment  for handling woody biomass cost-effectively, including several  demonstrations of a “slash bundler” that can bundle and compress woody  biomass for more efficient transportation. Figure 9 shows the slash  bundler in operation.
Other field staff also provide technical assistance; for example, the  Fremont-Winema National Forest in Oregon employs a Forest Products  and Economic Development Specialist, who told us he provides general  information about new technologies and economic issues to entities  looking to engage in woody biomass-related activities; provides assistance  in assessing the woody biomass harvesting, processing, and utilization  infrastructure; and works with potential grant applicants to help them  develop appropriate projects with defined goals and outcomes, which are  more likely to be funded. An EAP official told us that the assistance  provided to small groups or businesses is critical to getting them  established and making them competitive for other assistance, such as  USDA Rural Development grants; the official stated that many small  businesses lack the expertise to prepare a competitive business plan or to  adequately estimate future costs and revenues.
Until November 2004, the Forest Service employed a small-diameter  utilization specialist who served as a national resource to provide  education and technical assistance. This specialist told us he conducted  frequent presentations to both agency and nonagency audiences on using  woody biomass and worked as a liaison between parties interested in using  woody biomass and agency officials or private companies that can assist  them. He also maintained a small-diameter utilization Web site. However, in  November 2004 he transferred out of the position, and the position has not  yet been refilled.
section_title: DOE Is Primarily Engaged in Biomass Research and Development Activities
paragraphs: Although DOE maintains some grant programs and provides technical  assistance to assist federal, state, and tribal agencies in switching to  renewable energy, most of its activities focus on research and  development. Following a recent reorganization, most of DOE’s woody  biomass activities are overseen by its Office of the Biomass Program,  although some activities also are conducted within the Federal Energy  Management Program and the Tribal Energy Program.
subsections: section_title: Grants
paragraphs: DOE maintains several grant programs that emphasize renewable energy,  potentially including woody biomass. DOE’s Golden Field Office in  Colorado administers the National Biomass State and Regional  Partnership, which provides grants for biomass-related activities through  five regional partners:  the Coalition of Northeastern Governors Policy  Research Center, the Council of Great Lakes Governors, the Southern  States Energy Board, the Western Governors’ Association, and DOE’s  Western Regional Office. DOE provides funds to each regional partner; the  partners, in turn, provide grants to states. Although the overall DOE  partnership does not emphasize woody biomass over other types of  biomass, the Western Governors’ Association is directing its DOE funds  toward projects involving woody biomass, according to an official with the  association.
Another DOE grant program that potentially involves woody biomass is the  State Energy Program, which provides grants to states to design and carry  out their own renewable energy and energy efficiency programs. States  manage the funds and are required to match 20 percent of the DOE grants.  In 2004, about $44 million was directed in grants to the states, and another  $16 million was directed to special state projects. While the grant program  does not emphasize woody biomass over other energy sources, woody  biomass projects may be included among those funded, depending on state  priorities.
The Tribal Energy Program promotes tribal energy sufficiency, economic  development, and employment on tribal lands through renewable energy  and energy efficiency technologies. Over the past 2 years, DOE has funded  a total of 45 tribal energy projects, for a total of $8.4 million; the projects  are primarily for energy and electricity, with some specifically targeting the  utilization of woody biomass. A DOE-funded study involving the Yavapai- Apache Reservation in Arizona, for example, will examine the feasibility of  a proposed power generation facility using woody biomass, while another  study involving the Red Lake Band of the Chippewa Indians in Minnesota  will examine the use of woody biomass for producing power, fuels, and  products.
section_title: Research and Development
paragraphs: DOE’s woody biomass research and development activities are managed by  its Office of the Biomass Program, which has overall responsibility for  managing DOE’s research activities relating to the use of biomass for fuels,  chemicals, and power. Many woody biomass research and development  activities within DOE are carried out by the National Bioenergy Center, a  “virtual center” intended to unify DOE’s efforts to advance technology for  producing fuels, chemicals, materials, and power from biomass. These  activities generally encompass research into the conversion of biomass,  including woody biomass, to liquid fuels, power, chemicals, or heat. In  addition, a new biomass laboratory—the Biomass Surface Characterization  Laboratory—was dedicated at NREL in January 2005. An NREL official told  us that DOE does not have an effort specific to woody biomass, though its  activities can be applied to the material. DOE also supports research into  woody biomass through partnerships with industry and academia. Program  management activities for these partnerships are conducted by DOE  headquarters, and project management through DOE field offices.
section_title: Education, Outreach, and Technical Assistance
paragraphs: In addition to its research activities, the National Bioenergy Center  provides information and guidance to industry, stakeholder groups, and  users through presentations and lectures, according to DOE officials.  Information also is made available through the DOE Web site. 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, including  assistance in designing renewable energy systems and obtaining private- sector financing. Among these efforts is a program focused on using  biomass and alternative methane fuels in energy projects at federal  facilities, and although the program does not focus specifically on woody  biomass, a FEMP official told us that military and civilian agencies  (including the Forest Service) across the country are increasingly  contemplating projects in which woody biomass would be used to heat and  power federal installations. In addition to grants, the Tribal Energy  Program also provides technical assistance to tribes, including strategic  planning and energy options analysis.
section_title: Interior’s Woody Biomass Activities Include Education, Outreach, and Grant Programs
paragraphs: Interior’s activities include limited grant programs and education and  outreach; department agencies do not conduct research and development  into woody biomass utilization issues. Interior also works with its land  management agencies to develop policy and direction regarding woody  biomass activities. Interior now requires that the agencies’ land  management service contracts include an option allowing contractors to  remove woody biomass generated through the contracts where  ecologically appropriate, and has directed the agencies to develop contract  mechanisms to include biomass removal in timber sale contracts.
Many of Interior’s woody biomass activities are implemented by BLM,  which recently established a woody biomass utilization strategy that will  provide a framework for future agency activities and allow it to expand its  biomass utilization efforts. The strategy, made final in July 2004, includes  overall goals related to increasing the utilization of biomass from  treatments on BLM lands, and individual action items within three  substrategies:  developing tools, building expertise within BLM and  building networks with other agencies and organizations, and increasing  the percentage of acres treated from which harvested biomass is  subsequently used. Individual action items include developing contract  specifications for appraising biomass and guidelines for estimating  biomass volume; training BLM staff in the use of biomass guidance and  tools; facilitating technology transfer with key partners such as  governments, tribes, and contractors; and increasing funding available for  biomass projects. BLM also is contemplating a small-scale preferred  procurement initiative for woody biomass products, similar to the  preferred procurement program for biobased products established in the  Farm Security and Rural Investment Act of 2002.
In addition to BLM, three other Interior agencies—the Bureau of Indian  Affairs (BIA), the Fish and Wildlife Service (FWS), and National Park  Service (NPS)—conduct activities related to woody biomass. An official  from the U.S. Geological Survey told us that her agency does not conduct  activities to promote woody biomass utilization.
subsections: section_title: Grants
paragraphs: Interior generally does not have grant programs specifically targeted  toward woody biomass. However, BIA has provided a limited number of  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: Education, Outreach, and Technical Assistance
paragraphs: Interior agencies conduct education, outreach, and technical assistance,  but not to the same degree as the Forest Service. The primary BLM official  responsible for woody biomass activities told us that BLM does not have  staff at field locations assigned to identify community resources and to  build community capacity, as does the Forest Service. According to this  official, BLM’s community outreach is conducted primarily through its land  use and management planning activities, which include interaction with  environmentalists, community leaders, and others. This official said that  BLM is making a concerted effort to promote woody biomass utilization,  has hired new forest management staff, and is studying the possibility of  engaging in outreach activities through proposed demonstration projects  called “incubators,” which would serve as examples of successful woody  biomass utilization. Funding has not yet been appropriated for these  projects, according to this official. Interior also will use the National  Association of Conservation Districts, with whom it signed a cooperative  agreement, to conduct outreach activities related to woody biomass.
BIA provides technical assistance to tribes seeking to implement  renewable energy projects; specifically, the agency works with tribes to  determine appropriate management activities and offers technical  assistance in marketing forest products. Tribal projects include a proposal  by the Northern Cheyenne Tribe in Montana to use woody biomass to  provide steam and electricity for a manufacturing plant and a study by the  Confederated Tribes of the Warm Springs Reservation of the feasibility of  producing energy from forest thinning projects. BIA also sponsored a  renewable energy conference, including an emphasis on woody biomass, in  September 2004. Interior’s primary woody biomass official told us that  tribal officials are very interested in biomass.
Although FWS and NPS conduct relatively few woody biomass utilization  activities, according to agency officials, in some cases the agencies will  work to find a woody biomass user nearby if a market exists for the  material. After a 2004 thinning project in Denali National Park, for example,  NPS used some cut trees in cabin restoration projects and for firewood for  backcountry cabins; however, the bulk of the biomass generated was  provided to a nearby coal mine, which wanted material for use in a  reclamation project at the mine site. NPS officials told us that their agency  did not charge the mine for the material, but that the arrangement saved  NPS several hundred thousand dollars in transportation and disposal fees  because the material would otherwise have been sent to a landfill. The  officials stated that finding a market for this material “represented a lot of  time and effort on the part of local Park Service planners.” Both FWS and  NPS officials told us that the agencies’ woody biomass activities are limited  because the agencies produce only modest amounts of the material; most  FWS and NPS fuel reduction activities use fire rather than mechanical  thinning. Further, according to agency officials, in those instances where  woody biomass is generated, the agencies often use the material for their  own purposes—for example, using chipped biomass to stabilize soils  during restoration projects.
section_title: Several Other Federal Agencies Implement or Participate in Woody Biomass Activities
paragraphs: Aside from USDA, DOE, and Interior, several other federal agencies also  are engaged in woody biomass activities through their advisory or research  activities. The Environmental Protection Agency (EPA) 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 and other sources of renewable energy. An EPA  official told us that the partnership is fuel neutral, meaning that it does not  promote the use of one fuel over another when producing combined heat  and power. EPA also has a Green Power Partnership Program to assist  federal agencies and companies in procuring power for their facilities from  renewable sources.
Three other agencies also have limited involvement in biomass activities  through their membership on the Biomass Research and Development  Board, created by the Biomass Research and Development Act of 2000. The  board, which is intended to focus on all biomass issues, not solely woody  biomass, is responsible for coordinating federal activities for the purpose  of promoting the use of biobased industrial products. The board consists of  membership from USDA, DOE, Interior, and EPA, as well as the National  Science Foundation, the Office of the Federal Environmental Executive,  and the Office of Science and Technology Policy (both within the Executive  Office of the President). Officials we spoke with from the National Science  Foundation, Office of Science and Technology Policy, and the Office of the  Federal Environmental Executive told us that their involvement in issues  specifically related to woody biomass is minimal.
We also contacted officials from the Departments of Commerce and  Transportation. Officials from both told us their departments do not  conduct woody biomass utilization activities.
section_title: Woody Biomass Coordination Efforts among and within Federal Agencies Include Both Formal and Informal Mechanisms, but Unlike DOE and Interior, the Forest Service Has Not Assigned Responsibility for Overseeing Woody Biomass Activities
paragraphs: Federal agency efforts to coordinate their woody biomass utilization  activities, both among and within agencies, occurred through both formal  and informal mechanisms. Formal coordination between agencies occurs  through both the Woody Biomass Utilization Group and the Biomass  Research and Development Board, although most agency officials we  spoke with emphasized informal communication—through telephone  discussions, e-mails, participation in conferences, and other means—rather  than these groups as the primary vehicle for interagency coordination. To  coordinate internal activities, both DOE and Interior have formal  mechanisms—DOE coordinates its activities through the Office of Energy  Efficiency and Renewable Energy (EERE), while both Interior and BLM  have appointed officials to lead their woody biomass efforts; further,  Interior’s woody biomass policy and BLM’s woody biomass strategy guide  these organizations’ efforts. In contrast, the Forest Service—the USDA  agency with the most woody biomass activities—has not assigned  responsibility for coordinating its woody biomass activities, potentially  leading to fragmentation of effort and diluting the impact of these  activities.
subsections: section_title: Coordination among Agencies Includes Formal Groups, but Officials Often Cited Informal Coordination Efforts as More Common
paragraphs: Two groups serve as formal vehicles for coordinating federal agency  activities related to woody biomass utilization. The Woody Biomass  Utilization Group, open to all national, regional, and field-level staff across  numerous agencies, is a multiagency group that meets quarterly on woody  biomass utilization issues. According to the group’s draft charter (which  has not been made final), the group’s objectives are to (1) implement the  policy principles of the June 2003 Memorandum of Understanding between  USDA, DOE, and Interior; (2) coordinate, plan, and encourage woody  biomass utilization; (3) serve as technical and policy advisers on woody  biomass utilization; and (4) function as an information clearing house to  help identify relevant woody biomass utilization technologies, foster joint  demonstrations and pilot projects, identify research and development  needs, and highlight successful woody biomass projects. The draft charter  calls for a chair position to be rotated on an annual basis, generally  between USDA, DOE, and Interior.
The other formal group is the Biomass Research and Development Board,  which is responsible for coordinating federal activities to promote the use  of biobased industrial products. The board consists of membership from  USDA, DOE, and Interior, as well as EPA, the National Science Foundation,  the Office of the Federal Environmental Executive, and Office of Science  and Technology Policy, and is co-chaired by USDA’ s Under Secretary for  Natural Resources and Environment and DOE’s Assistant Secretary for  Energy Efficiency and Renewable Energy. The board is supported by the  Biomass Research and Development Technical Advisory Committee, which  includes representatives of nonfederal groups such as industry, academia,  trade associations, and the like.
When discussing coordination among agencies, however, agency officials  more frequently cited using informal mechanisms for coordination than the  formal groups described above. For example, two officials we spoke with  in the Forest Service’s Northwest Region told us that although they were  aware of the interagency Woody Biomass Utilization Group, they were not  aware of any of the group’s activities—or even whether the group has a  charter. Several officials told us that informal communication among  networks of individuals was essential to coordination among agencies; one  Forest Service field official told us that, in contrast to formal groups, the  more common method for coordinating among agencies is frequent,  informal communication through e-mail, telephone calls, and discussions  at regional or local conferences or workshops. Another Forest Service field  official emphasized that his informal network of officials—both within and  outside the agency and with whom he converses by telephone and e-mail  regularly—helps him keep abreast of woody biomass developments by  providing reports, documents, and other information. Similarly, a  headquarters official in another agency described a network of  individuals—both within and outside of the agency—with whom he  remains in frequent e-mail and telephone contact. These individuals  exchange information regarding projects, policies, potential impacts of  legislation, success stories, and the like. In each case, the officials stated  that they relied much more upon informal means of coordination than on  formal interagency groups.
Officials also described other forms of coordination. Two officials  described a regional grant application review team that included Forest  Service, BLM, BIA, and FWS staff that jointly reviewed applications for  fuels treatment grants. Although the main emphasis of the grants was not  woody biomass, there was discussion within the review team about  biomass issues that ensue from fuels treatment projects. Another program  that involves interagency coordination is the joint review of applications by  USDA and DOE for renewable energy projects authorized by the Biomass  Research and Development Act of 2000. In addition, two officials told us  that the Forest Service was trying to organize a multiagency team to  collaborate on woody biomass efforts within the agency’s Northwest  Region. Other officials mentioned state-level interagency working groups  focusing on fire and fuels reduction issues and consisting of  representatives from the Forest Service, Interior agencies, and nonfederal  entities. These groups are primarily concerned with fire suppression  capacity, fuel reduction treatments, and community wildland fire planning   efforts, not with woody biomass. However, according to these officials, the  woody biomass issue is interwoven with these other issues and is often  discussed. Further, the networks established by these interagency groups  facilitate communication on a variety of issues, including woody biomass,  among the states and agencies involved.
section_title: While DOE and Interior Have Formal Mechanisms for Coordinating Internal Activities, the Forest Service Does Not
paragraphs: DOE’s woody biomass utilization activities are coordinated through EERE.  Within this office, the Office of the Biomass Program directs biomass  research at DOE national laboratories and contract research organizations,  while a small number of woody biomass activities are undertaken within  two other programs, the Federal Energy Management Program and the  Tribal Energy Program.
Interior has appointed a single official to oversee its woody biomass  activities and is operating under a woody biomass policy in the form of an  April 2004 memorandum from the Assistant Secretary for Policy,  Management and Budget. This memorandum directs all Interior bureaus  and offices to implement the policy principles of the June 2003  Memorandum of Understanding between USDA, DOE, and Interior.  According to the official responsible for overseeing Interior’s woody  biomass efforts, this memo serves as departmental policy until a  departmental manual can be updated. Interior also has appointed a  Renewable Energy Ombudsman to coordinate all of the department’s  renewable energy activities, including woody biomass. Similarly, BLM has  appointed a single official to oversee woody biomass efforts, and, as noted,  has developed a woody biomass utilization strategy to guide its activities,  including overall goals related to increasing the utilization of biomass from  treatments on BLM lands.
In contrast, although the Forest Service developed a woody biomass policy  in January 2005, unlike DOE and Interior, it has not assigned a specific  individual or office with responsibility for overseeing its woody biomass  activities. The agency does have an internal group—the Woody Biomass  Utilization Team—that meets to discuss woody biomass issues, but this  group does not have responsibility for implementing the policy. And  according to some Forest Service officials we spoke with, agency woody  biomass activities have been opportunistic, arising from local awareness of  and interest in the issue rather than from a national strategy for  approaching the issue. One Forest Service headquarters official told us that  the agency’s woody biomass activities have been “a grassroots effort on the  part of those who have a real burning passion for improving utilization.”   However, according to this official, individuals who do not share that  passion have not been involved in woody biomass because there has been  no central requirement or strategy for addressing the woody biomass issue.  Another headquarters official told us that the extent to which woody  biomass has been addressed has depended on the knowledge, interest, and  availability of the local forest staff and the presence of local markets for  woody biomass. Several field officials we spoke with share this view; one  field official told us that there is a great deal of interest in woody biomass  technology on the part of field staff, but not much coordination and no  formal strategy, while another noted that woody biomass activities are  “largely dependent on local risk taking.” Yet another field official told us  that there is no coordinated approach within the Forest Service to woody  biomass; instead, determining what activities to undertake is left up to the  forests and ranger districts, and depends on local leadership.
The Forest Service does have an individual, located within the agency’s  State and Private Forestry branch, who generally serves as the agency’s  primary point of contact for woody biomass utilization. However, two  officials noted that this individual serves primarily as a consultant, with no  influence over budgets or activities. They also stated that, because this  official works within the State and Private Forestry branch, he has no  influence over agency activities regarding public lands and no influence  over the Forest Service’s National Forest System or Research and  Development branches, with their associated land bases or budgets. One  headquarters official within the agency stated that without stronger central  authority or a stronger woody biomass policy, the Forest Service will find it  difficult to effect change because while the agency’s primary woody  biomass official can discuss technology, innovation, supply, and other  issues, he lacks the authority to influence land management practices.
Two officials attributed the Forest Service’s lack of a coordinated woody  biomass effort to the agency’s decentralized culture, with autonomy at the  ranger district, national forest, and regional level. One official told us that  this culture serves the agency well for some purposes but works against the  agency when it tries to promote an idea or issue—such as woody biomass  utilization—that has not been widely emphasized. Another official noted  that each region in the Forest Service has considerable autonomy in  developing its own policies, setting its own priorities, and establishing its  own procedures, and that, while there is often value in having ideas  originate from the field, a more formalized structure is often more effective  at accomplishing overall agency objectives. According to this official, the  woody biomass issue has reached the stage where a formalized,  coordinated national strategy is appropriate.
One official told us that the Forest Service’s emphasis on fuel reduction  planning and implementation efforts under the National Fire Plan had  focused the agency’s attention away from woody biomass. The 10-year  comprehensive strategy for implementing the National Fire Plan contains  four overall goals:  (1) improving fire prevention and suppression, (2)  reducing hazardous fuels, (3) restoring fire-adapted ecosystems, and (4)  promoting community assistance, which includes woody biomass  utilization. This official told us that the Forest Service’s emphasis on goals  1 and 2 has reduced its ability to focus on the other goals, and “now that the  biomass is starting to pile up,” it is time for the Forest Service to begin  focusing on woody biomass. The Western Governors’ Association issued a  report in November 2004 concurring with this view, stating “Goal 4 must be  given the same emphasis Goals 1 and 2 have received in order for its action  items—and the 10-Year Strategy as a whole—to be accomplished.”
Without an individual or office with responsibility for overseeing woody  biomass activities within the agency, the Forest Service risks diluting the  effects of its activities because individual units within the agency may  undertake woody biomass activities that are not consistent with the  activities of other units—or they may choose to undertake no woody  biomass activities at all. Further, given the magnitude of the woody  biomass issue and the finite funds available to the agency, it is important  that the Forest Service ensure that activities on which it places a high  priority are undertaken so that it can maximize its accomplishments within  its budget.
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— particularly the obstacles posed by the high cost of harvesting and  transporting woody biomass—and the lack of a reliable supply of the  material. Agency activities—grants, education and outreach, and research  and development—are generally targeted toward the obstacles identified  by agency officials. Many officials, however, told us that their agencies are  limited in their ability to fully address these obstacles and that additional  steps—such as subsidies and tax credits—beyond the agencies’ authority  to implement are needed. But agency officials generally did not specify the  level of subsidies or tax credits they believe would be necessary, and not all  agree that such additional steps are appropriate.
subsections: section_title: Most Officials Noted the Difficulty in Using Woody Biomass Cost-Effectively, and Many Also Cited the Lack of a Reliable Woody Biomass Supply
paragraphs: Most officials we spoke with cited the difficulty in using woody biomass  cost-effectively—that is, in using the material to create products that  generate more revenue than is required for their creation. Other obstacles  cited include the lack of a reliable supply of woody biomass; internal  agency barriers to effectively promoting woody biomass, including the lack  of agency commitment to the issue; and the lack of a local infrastructure to  harvest, transport, and process woody biomass.
subsections: section_title: Most Officials Cited Economic Factors, Particularly the High Cost of Harvesting and Transporting Woody Biomass Relative to Its Value, as Primary Obstacles to Increasing Woody Biomass Utilization
paragraphs: The obstacle most commonly cited by officials we spoke with (30 of 44  officials) is the difficulty of using woody biomass cost-effectively. Officials  told us that 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. For example, a Forest Service researcher in California  estimated that the cost of generating electricity from woody biomass was  about 7.5 cents per kilowatt hour, including costs to harvest, transport, and  process the material, as well as operations, maintenance, and capital  amortization costs. However, the same researcher noted that at the time of  his study, the wholesale price paid for power in California was 5.3 cents per  kilowatt hour—meaning that, without receiving additional income for their  electricity, producers of woody biomass-generated electricity would lose  about 2.2 cents for each kilowatt hour generated if they sold their  electricity on the wholesale power market.
One factor contributing to the difficulty in using woody biomass cost- effectively, according to 23 officials, is the cost incurred in harvesting and  transporting woody biomass. For example, one Forest Service official  pointed out that while a single 18-inch-diameter tree of a given height  contains the same volume as 20 4-inch-diameter trees of the same height, it  is much more expensive to harvest 20 trees than 1. Two officials told us that  when the end use for woody biomass calls for chipped or ground  material—for example, for use in power plants—it is often more efficient  to chip the material in the forest and haul the chips to the plant rather than  hauling the unprocessed woody biomass. However, these officials noted  that the vehicles typically used to haul chips—known as chip vans—cannot  navigate many forest roads, which were designed for logging trucks.  Because hauling material in smaller vehicles is more costly, this adds to the  difficulty in using the material cost-effectively. Officials pointed out that  small installations located close to woody biomass sources will have lower  transportation costs, enhancing their ability to use the material cost- effectively. Schools and other buildings located in communities near  forests are thus particularly well-positioned for woody biomass use,  according to officials—especially if these buildings are heated with natural  gas or fuel oil, because once buildings convert their heating infrastructure  to accept woody biomass, they can be heated at a lower cost by using  woody biomass than by using natural gas or fuel oil. However, officials also  noted that such installations consume relatively small amounts of woody  biomass.
Five officials primarily involved in research and development noted the  costs involved in converting woody biomass to liquid fuels such as ethanol.  For example, the chemical makeup of wood makes it more difficult and  expensive to convert into ethanol than other substances such as corn,  according to officials. Thus, although ethanol represents a potentially  large opportunity for utilizing woody biomass (because of the demand for  transportation fuels), the availability of cheaper raw materials such as corn  presents an obstacle to its use.
section_title: Other Obstacles Cited Include the Lack of a Reliable Supply of Woody Biomass from Federal Lands and Internal Barriers to Effective Promotion of Woody Biomass
paragraphs: Of the 44 officials we spoke with, 22 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  opposition to federal projects, and the shortage of agency staff to conduct  activities. Regarding long-term contracts, projects that use stewardship  contracting authority may include contracts of up to 10 years—potentially  stabilizing the long-term supply of woody biomass—whereas projects  conducted outside of this authority must use contracts of a shorter  duration. Agency officials cited one stewardship project—the White  Mountain project in Arizona, which has a 10-year duration and is expected  to treat 50,000 to 250,000 acres—as an example of the benefits of  stewardship contracting in stabilizing supply. An official told us that two  manufacturers are negotiating with the contractor to establish  manufacturing plants using woody biomass removed as part of the project.  According to this official, without the assurance of supply offered by a  long-term contract, these manufacturers would not have shown interest.  However, another official pointed out that Forest Service stewardship  contracts must be approved at the regional level, making their use more  cumbersome than other contract types.
Adding further to the uncertainty of supply, 10 officials told us that  environmental opposition poses an obstacle—for example, in the form of  appeals and litigation that delay planned projects. Finally, according to five  officials, staffing constraints make accomplishing projects in a timely  manner difficult even without external opposition; two Forest Service  officials told us that even if long-term contracts were available and  environmental opposition were not a factor, the lack of staff still hampers  the agency’s ability to implement projects.
Six officials cited internal agency barriers that hamper agency  effectiveness in promoting woody biomass utilization. Prior to the Forest  Service’s January policy statement on woody biomass, one Forest Service  official told us that the lack of a strong policy stating that using woody  biomass is preferable to piling and burning it hampered the agency because  no incentive existed for “field staff to think creatively about how to move   to potential users.” This official told us that even if the  Forest Service received no payment for the material, putting it to use was  better than piling and burning it—which also brings no revenue—and this  preference should be embedded in policy. Two Forest Service officials also  noted that the agency’s mechanisms for designing and implementing  projects were still geared toward larger, merchantable timber to the  detriment of woody biomass. One official stated that “the Forest Service  needs to improve its capabilities to design treatments, contracts, and  agreements that will encourage utilization of smaller diameter material,”  while another official echoed this view by stating that “timber operations   account for the bulk of institutional  knowledge about material removal.” Finally, several officials stated that  federal agencies have not been effective in communicating the potential  benefits of fuel reduction. According to the officials, fuel reduction would  reduce fire suppression and rehabilitation costs, avoid damage to  watersheds, avoid smoke pollution, and the like. Officials told us that  communicating these benefits could reduce opposition to fuel reduction  projects, which was cited as a factor in the uncertainty of woody biomass  supply.
Other officials cited the lack of agency commitment to the issue. For  example, a BIA official told us that BIA has not provided the resources and  structure required for promoting and developing woody biomass utilization  projects. Six officials told us that more funds should be devoted to  researching new or less expensive ways to use woody biomass in order to  overcome economic obstacles to its use. And two Forest Service officials  cited that agency’s lack of a woody biomass policy as an obstacle to  effective agency promotion of woody biomass utilization.
A variety of other obstacles were noted as well. One official told us that  some large facilities such as prisons could use woody biomass to generate  their own electricity for less than the cost of electricity sold by electrical  utilities. However, such facilities generally would need to have electricity  available from the grid in the event that their own generators were  unavailable—and, according to this official, utilities can charge rates for  this electricity (known as standby power) that are equal to the rates  charged for electricity that is actually delivered. In other words, for every  hour the utility is prepared to deliver electricity to the facility, the utility  charges a fixed portion of the rate that would have been charged had the  electricity actually been delivered—100 percent of the rate in some cases,  according to this official. As a result, installations would pay not only the  costs of generating their own electricity but also the standby power rates  charged by the utility—costs that, when combined, may exceed the cost of  simply purchasing electricity from the utility. Withdrawing from the  electricity grid entirely can be problematic as well; this official stated that  utilities can charge fees—known as exit fees—for doing so.
Another obstacle cited by officials is the lack of a local infrastructure for  harvesting, transporting, and processing woody biomass, including loggers,  mills, and appropriate equipment for treating small-diameter material.   Three Forest Service officials we spoke with told us that in some cases the  decline in federal logging has left areas without any infrastructure at all,  while in other cases the infrastructure that is left is equipped to handle  large trees rather than woody biomass. According to officials, contractors  need equipment designed for handling woody biomass rather than larger  trees in order to cost-effectively harvest and transport the material.  However, contractors may not have the capital to purchase this new  equipment, and may be unable to obtain loans without assurances of a  long-term supply of woody biomass.
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: The agency activities we identified were generally targeted toward the  obstacles agency officials cited. Agencies provided grants, engaged in  outreach, and conducted research aimed at overcoming economic  obstacles to woody biomass use, and conducted activities to address other  obstacles as well. However, several officials believe that additional steps  beyond the agencies’ authorities are needed to fully address the woody  biomass issue.
subsections: section_title: Agency Activities Are Generally Targeted at Overcoming the Challenges Identified
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, staff at the Forest  Service’s TMU have worked with potential users of woody biomass to  develop products whose value is sufficient to overcome the costs involved  in harvesting and transporting the material; EAP coordinators have worked  with potential woody biomass users to overcome economic obstacles; and  Forest Products Laboratory researchers are working with NREL to  increase the yield of ethanol from woody biomass, making wood-to-ethanol  conversion more cost-effective.
Some agency activities also are targeted at providing more certainty of  supply. A Forest Service official in New Mexico has been meeting with  environmental groups to try to obtain consensus on the need for forest- thinning activities. Obtaining consensus can reduce the likelihood of  environmental opposition, making Forest Service projects easier to  accomplish and allowing a steadier supply of biomass. Although not all  groups will support the projects, according to this official, obtaining  agreement from major groups can blunt opposition from other groups.  Other officials are working on models to predict the amount of woody  biomass potentially available, giving users a better sense of the supply of  raw materials.
section_title: Some Officials Stated That Additional Actions beyond the Agencies’ Authorities, Such As Subsidies and Tax Credits, Are Needed to Stimulate the Market for Woody Biomass
paragraphs: Despite ongoing agency activities, 14 officials told us that additional  steps—such as subsidies or tax credits—that are beyond the agencies’  authorities are necessary to develop a market for woody biomass.  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—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.” Three  officials stated that subsidies have the potential to reduce the per-acre cost  of thinning, because if there is a market for woody biomass, contractors  will be willing to harvest the material for a lower fee, knowing that they can  recoup some of their costs by selling the material. According to these  officials, subsidies thereby create an important benefit—reduced fire risk  through hazardous fuels reduction—if they promote additional thinning  activities by stimulating the woody biomass market.
Officials told us that tax incentives, subsidies, and low-interest loans may  serve to stimulate infrastructure for harvesting, processing, and  transporting woody biomass, and that such assistance should target not  only larger plants and facilities but smaller operators as well. Harvesters  and loggers, for example, could use the assistance to purchase the  expensive equipment and machinery required to treat woody biomass and  thus help to build the required infrastructure.
It is not only federal officials who hold this view. In testimony before the  Congress, the owner of a sawmill that uses woody biomass to generate  electricity for the mill stated that woody biomass-to-energy does not work  as a stand-alone enterprise. According to this individual, “The cost  structure associated with removing woody biomass from the forest,  hauling the material to a facility and converting the fiber into a product  suitable for electricity production is prohibitive without massive  subsidization.”
Others see a need for state requirements that utilities procure or generate a  portion of their electricity by using renewable resources, known as  renewable portfolio standards. Forest Service officials in the Southwest  Region are encouraging states in the region to enact renewable portfolio  standards that include a woody biomass component. These officials are  urging states to go beyond simply requiring electricity from renewable  resources and require, or provide favorable treatment of, electricity  generated from woody biomass produced as part of forest restoration  projects. The official primarily responsible for this effort stated that “using  this biomass source will help lower costs and allow restoration activities to  occur on many more thousands of acres than present budgets allow.”
Agency officials generally did not specify the level of subsidies or tax  credits they thought necessary, and not all officials believe that these  additional steps are efficient or appropriate. One official told us that,  although he supports these activities, the creation of tax incentives and  subsidies would create enormous administrative and monitoring  requirements. Another official stated that although federal policy changes  such as increased subsidies could address obstacles to woody biomass  utilization, he does not believe they should be made. Rather, he believes  that research and development efforts, combined with market forces, will  eventually result in “equilibrium”—in other words, in woody biomass  utilization finding its appropriate level. If cost-effective uses of woody  biomass can be found, its utilization will increase. Yet another official  stated that while production tax credits or subsidies may be successful in  getting businesses or industries started, he does not believe they are  sustainable over the long term. In addition, he is reluctant to create credit-  or subsidy-dependent businesses that would be at the mercy of the annual  appropriations cycle. Instead, market-driven solutions are more  appropriate—for example, providing information to exploit the existing  market, or developing requirements or incentives (such as renewable  portfolio standards) that create a market on their own.
Further, not all agree with the assumption that the market for woody  biomass should be expanded. One agency official told us he is concerned  that developing a market for woody biomass may result in overuse of  mechanical treatment (rather than prescribed burning) as the market  begins to drive the preferred treatment. In other words, given a choice  between mechanical thinning and prescribed burning, a forest manager  might choose mechanical thinning not because it was the most appropriate  tool for the project at hand but to satisfy the demand for woody biomass.  This official stated that “if we do that, we are not being good stewards of  the land.”
Environmental group representatives also have urged caution in taking any  steps that expand the market for woody biomass. Representatives of one  national environmental group told us that relying on woody biomass as a  renewable energy source will lead to overthinning, as demand for woody  biomass exceeds the supply that is generated through responsible thinning.  They also questioned the incentive to create or reconstruct roads in the  forests to facilitate inexpensive transportation of woody biomass because  they believe doing so introduces unwanted side effects—increased erosion  and sedimentation, increased access to areas of the forest that previously  had no roads, and increased maintenance and enforcement costs for the  federal agencies. Finally, the representatives questioned the true energy  gain of using woody biomass—that is, whether the energy involved in  harvesting, transporting, and processing woody biomass exceeds the  energy contained in the biomass—stating that “it doesn’t make economic  sense to burn expensive gasoline to get cheap biomass.” However, they  stated that the benefits gained by using the biomass rather than piling it in  landfills or leaving it in the forest where in some locations it would  continue to pose a significant fire risk may justify any net energy loss.
section_title: Conclusions
paragraphs: The amount of woody biomass resulting from increased thinning activities  could be substantial, adding urgency to the search for ways to use the  material cost-effectively rather than simply disposing of it. The use of  woody biomass, however, will become commonplace only when users— whether small forest businesses or large utilities—can gain an economic  advantage by putting it to use. Federal agencies are targeting their activities  toward overcoming this and other obstacles—for example, by providing  technical assistance and grant funds to businesses facing economic  challenges in using woody biomass. 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.
While additional key steps may be necessary at the federal and state levels,  we believe the agencies will continue to play an important role in  stimulating woody biomass use. However, while both DOE and Interior  have designated individuals or offices for coordinating woody biomass  activities, no individual or office within the Forest Service has been  similarly designated. Without an individual or office with responsibility for  overseeing and coordinating woody biomass activities within the agency,  the Forest Service can neither ensure its multiple activities contribute to  the agency’s overall objectives nor assess the effectiveness of individual  activities. Further, by taking a piecemeal approach to the issue, the agency  risks diluting the impact of its activities because different agency units may  be emphasizing different priorities. Some local variation may be  appropriate—to account for regional differences in infrastructure, for  example, or in forest type. Nevertheless, a coordinated approach is  essential if the Forest Service is to capitalize fully on its potential to  increase woody biomass utilization.
section_title: Recommendation for Executive Action
paragraphs: To improve the Forest Service’s effectiveness in promoting woody biomass  utilization, we recommend that the Secretary of Agriculture direct the  Chief of the Forest Service to assign responsibility for overseeing and  coordinating the agency’s woody biomass utilization activities to a specific  official or office within the agency.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Secretaries of Agriculture, Energy,  and the Interior for review and comment. USDA concurred with our  findings and recommendation, and the department’s comment letter is  presented in appendix II. DOE officials stated they had no comments on  the report, while Interior did not provide comments.
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 Secretary of  Agriculture, Secretary of Energy, Secretary of 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. Key contributors to this report are listed in appendix III.
section_title: Objectives, Scope, and Methodology
paragraphs: The objectives of our review were 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 federal agencies coordinate  their activities related to woody biomass; and (3) what these agencies see  as the primary obstacles to increasing the use of woody biomass and the  extent to which they are addressing these obstacles. To get a better  understanding of woody biomass issues, we initially met with officials at  the Forest Service and Office of the Chief Economist within the  Department of Agriculture (USDA), the Department of Energy’s (DOE)  Office of Energy Efficiency and Renewable Energy, the Department of the  Interior, the Bureau of Indian Affairs, the Bureau of Land Management  (BLM), the Fish and Wildlife Service, and the National Park Service. We  also met with representatives from nonfederal organizations, including the  Western Governors’ Association, Colorado State University, the state of  New Mexico, the state of California, the Santa Ana Pueblo, the Wilderness  Society, the Nature Conservancy, Public Service Company of New Mexico,  and others. We also visited the Forest Service’s Forest Products Laboratory  in Madison, Wisconsin; a woody biomass-heated community center in  Nederland, Colorado; and a wood-fired power plant in Burney, California.
We subsequently developed a structured interview guide to collect  information on woody biomass utilization activities, coordination efforts,  and challenges to utilizing woody biomass. 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 structured interview guide for the  purpose of minimizing such errors. We pretested the instrument at two  locations by telephone and modified it to reflect questions and comments  received during the pretests.
To determine whom to interview, we began with agency headquarters  officials who had been identified by the agencies as points of contact for  woody biomass activities. As part of these interviews, we asked for the  names of additional officials—regardless of location or agency affiliation— who could provide additional information on, or insights into, woody  biomass issues. We continued this expert referral technique until the  references we received became repetitive. In all, we used our structured  interview guide to interview a nonprobability sample of 44 officials in various agencies and geographic locations. Our sample included officials  at various levels within the agencies, including agency headquarters; Forest  Service regional, national forest, and ranger district offices; Forest Service  research facilities, including regional research stations and the Forest  Products Laboratory; a BLM district office; DOE national laboratories; and  others. Our structured interviews were conducted with officials from the  following departments and agencies:  Cooperative State Research, Education, and Extension Service.
Forest Service (including the National Forest System, Research and  Development, and State and Private Forestry branches).
Natural Resources Conservation Service.
Golden Field Office.
National Energy Technology Laboratory.
National Renewable Energy Laboratory.
Office of Energy Efficiency and Renewable Energy (including the  Federal Energy Management Program, the Office of the Biomass  Program, the FreedomCAR and Vehicle Technologies Program, and the  Tribal Energy Program).
Department of the Interior.
Bureau of Indian Affairs.
Bureau of Land Management.
Fish and Wildlife Service.
National Park Service.
U.S. Geological Survey.
Environmental Protection Agency.
National Science Foundation.
Office of Federal Environmental Executive, Executive Office of the  President.
Office of Science and Technology Policy, Executive Office of the  President.
We also contacted officials from the Departments of Commerce and  Transportation, who told us their departments have no activities related to  woody biomass utilization.
subsections: section_title: Federal Agency Woody Biomass Utilization Activities
paragraphs: To collect information on federal agency woody biomass utilization  activities, we used our structured interview guide to ask officials to identify  individuals or organizations responsible for biomass utilization activities  within their agencies and to identify other federal agencies involved in such  activities. We also asked them to provide information about the activities  their agencies had under way as well as policies, strategic plans, and goals  related to woody biomass. We also reviewed agency policies, strategic  plans, and other documents; federal and nonfederal studies regarding  technological, economic, and other issues related to woody biomass  utilization; and pertinent laws and other documents. To corroborate the  information we gathered through interviews, we compared interviewees’  responses with other information we reviewed. Because the documentary  evidence we reviewed generally agreed with the information provided by  key agency officials involved in woody biomass efforts, we believe the data  are sufficiently reliable to be used in providing descriptive information on  federal agency woody biomass utilization activities.
section_title: Federal Agency Coordination of Woody Biomass Activities
paragraphs: To determine how agencies coordinate their woody biomass activities, we  asked officials to provide information on individuals or organizations  responsible for coordinating activities within their agencies and those  responsible for coordinating activities involving other agencies, as well as  on the types of formal and informal activities they undertook. We also  reviewed agency documentation regarding coordination issues, including  draft and final coordinating team charters and notes from coordinating  team meetings. We then compared the information provided by agency  officials with this documentation. Because the documentary evidence we  reviewed generally agreed with the information provided by key agency  officials involved in woody biomass efforts, we believe the data are  sufficiently reliable to be used in providing descriptive information on  agency woody biomass coordination efforts.
section_title: Obstacles to Increasing the Use of Woody Biomass
paragraphs: To obtain information on obstacles that federal agencies face in their  efforts to increase the use of woody biomass, we asked agency officials to  identify and  provide their opinions on the major obstacles to increasing the  use of woody biomass, describe agency efforts that target the obstacles  they identified, and discuss additional steps they believe are necessary to  address these obstacles. Because we asked only for opinions about  obstacles to woody biomass utilization and additional steps needed to  overcome them, we made no attempt to corroborate these responses. To  corroborate responses regarding agency efforts to target the obstacles  identified, we compared interviewees’ responses with the documentary  evidence we gathered regarding the agencies’ woody biomass utilization  activities. Because the documentary evidence we reviewed generally  supported the information provided by interviewees, we believe the data  are sufficiently reliable to be used in providing information about the  extent to which the agencies are addressing these obstacles.
We performed our work from June 2004 through March 2005 in accordance  with generally accepted government auditing standards.
section_title: Comments from the Department of Agriculture
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, James Espinoza, Steve Gaty, Richard  Johnson, and Judy Pagano made key contributions to this report.