BCAP Impact Still Unclear

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The Biomass Crop Assistance Program (BCAP), a new U.S. federal program intended to increase the use of renewable energy by covering some of the costs related to the collection of woody biomass and agricultural residues, has been in effect for a few months and has created much interest, as well as confusion, within the forest industry, according to a report by Wood Resources International (WRI), Seattle, Wash., USA.

The exact amount of funding the program will have this year has not yet been determined. So far, $517 million has been allocated for the period January 1 through March 3, according to WRI. Other questions include whether or not the program will be extended after two years, which biomass categories (e.g. black liquor) will be eligible, and how wood fiber costs for pulp mills and composite board mills may be impacted.

There have been loud protests from both North American and European forest industry organizations who are concerned that the BCAP program will unfairly favor U.S. energy companies and that sawdust and wood chip costs will go up as the result of the program, the report explains. The first payments from the government were distributed in mid-December, and it is still too early to conclude how much the biomass energy subsidy will impact prices for wood chips, shavings, sawdust,and hog fuel in the coming months.

WRI says that in the end, it may very well be that the BCAP program will not add as much biomass to the market as was intended. In fact, most of the biomass supply that will enter the market in the coming years would likely have been available even without the subsidy. The only difference is that biomass consumer may benefit from lower fiber costs and suppliers will increase their profits from the sales of forest and agricultural residues.