Impacts of Renewable Energy Demand. National Conference of State Legislatures

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1 Impacts of Renewable Energy Demand National Conference of State Legislatures December 9, 2008

2 Forest Resources Map from US Forest Service - Forest Inventory & Analysis 2006 The forests of the U.S. are abundant and offer affordable, high quality, renewable resources.

3 Accomplishments of the Forest US Forest Service Photo Archive The forest s abundance built these United States.

4 Forest Resource Management The U.S. has learned to manage timber and non-timber values alike. We are a world leader in conservation, stewardship, and traditional forest products manufacturing. Clean Water Forest Stewardship 1 Wood Products Paper Products Wildlife 1 1 US Forest Service Photo Archive

5 U.S. Landownership & Industrial Roundwood Output The U.S. has produced 25% of the world s industrial forest products annually for the last 40 years - twice as much as the second largest producer. The percentage of private forest ownership in the U.S. is four times the world average and represents 4% of the globe s forest area. Million Acres U.S. Forest Land Area Ownership 1 0 Pacific Coast Public Private Rocky Mountain North South U.S. Production of Industrial Wood Products 1 Lumber 32% Panels 15% Other 3% Pulp & Paper 50% 1 Society of American Foresters The State of America s Forests 2007

6 International Paper Locations IP s domestic pulp & paper operations and box plants in the U.S.

7 Million Dry Tons Bioenergy Sustainability of the U.S. Southern Forest Clearly the additional demand for wood is not realistic, and would place demands on the nation s forests that are unsustainable. 181 Projected Projected Effect Effect of of Federal Federal Renewable Renewable Portfolio Portfolio Standard Standard 1.5 Projected Projected Federal Federal Mandate Mandate for for Cellulosic Cellulosic Ethanol Ethanol Potential Potential Existing Existing Supply Supply - RISI in reference to RPS & RFS 53 Consistent with Billion Ton Study Potential Potential Future Future Supply Supply Forest Removals 2007 Biomass Export Biomass Electric Transport Fuel Forest Residues Urban Residues Farm Residues Energy Crops Farm Residues Supply Gap Derived from SFRA, USFS Billion Ton Study, NREL TP , Industry Announcements

8 Bioenergy Economic Conflict in Cost of Supply High quality fiber and cost effective fiber fuel is already consumed by the free market $100 Sawlogs $ / Dry Ton $80 $60 $40 $20 Fiber Fuel $39 Current Market Cost 1 Pulpwood $63 Current Market Cost 1 $96 Current Market Cost 1 $0 High Probability of Use as a Feedstock Low 1 Forest 2 Market 2nd Quarter 2008 Benchmarks. 2 Derived from EIA Biomass for Electric Generation by Zia Haq 2002 escalated to 2008$ using PPI Industrial Consumers

9 Bioenergy Economic Conflict in Cost of Supply High quality fiber and cost effective fiber fuel is already consumed by the free market Currently unutilized Logging Residue will have a higher cost and lower quality Energy interests will combine logging residue with pulpwood and fiber fuel $100 Sawlogs $ / Dry Ton $80 $60 $40 $20 Fiber Fuel $39 Current Market Cost 1 Pulpwood $63 Current Market Cost 1 Logging Residue $75 Projected Market Cost 2 $96 Current Market Cost 1 $0 High Probability of Use as a Feedstock Low 1 Forest 2 Market 2nd Quarter 2008 Benchmarks. 2 Derived from EIA Biomass for Electric Generation by Zia Haq 2002 escalated to 2008$ using PPI Industrial Consumers

10 Bioenergy Economic Impacts Confederation of European Paper Industries (CEPI) study found that Pulp & Paper directly created: four times the economic value of bioenergy six times the employment of bioenergy 1 Confederation of European Paper Industries.

11 Bioenergy Economic Impacts In consideration of the total downstream impacts CEPI also found that Pulp & Paper industry contributed: eight times the total economic value of bioenergy thirteen times the total employment of bioenergy 1 Confederation of European Paper Industries.

12 Conclusions Consideration must be given to the environmental and economic impacts of renewable energy policy We do not recommend mandates and subsidies they pose substantial risks to the forest and the forest product industry If mandates and subsidies are enacted, they should not disadvantage the existing forest products industry To ensure forest sustainability, renewable energy policy must balance demand for biomass with the capability of the resource

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14 Bioenergy Wind US DOE National Renewable Energy Lab

15 Bioenergy Solar US DOE National Renewable Energy Lab