Biomass in the US losing out to the low natural gas price

A drop in demand for woody biomass in the US in Q2 of this year has been reported by the North American Wood Fiber Review, with the growth in biomass fueled electricity generation being hampered by the continued fall in natural gas prices.

The drop in demand has seen woody biomass prices fall in the major biomass consuming regions in the south, northeast and west of the country – a drop of 2-10 per cent compared to the first three months of this year.

During 2011, natural gas prices fell approximately 45 per cent and the lower prices have reduced the urgency for investing in woody biomass projects.

Despite plunging natural gas prices, plans for more facilities utilizing woody biomass continued during 2011 and 2012 in both Canada and the US, with some projects nearing completion and others in start-up mode.

However, wood fiber demand for all planned biomass projects in the US dropped in the first half of 2012, as compared to early 2011.

Most of the decrease in wood usage the past year has been in the use of wood for the generation of electricity for the domestic market, while the pellet industry has continued to expand its capacity to serve the growing demand in Europe.

As of the spring, the US had around 450 announced and operating woody bioenergy projects, including wood pellets, liquid fuel, electricity generation and combined heat and power.

The projected wood fibre use for all planned biomass projects is estimated to reach over 30m dry tons of fibre annually by 2020, according to Forisk.

Wood Resources International LLC, a consulting firm for the forest industry, believes that interest from commercial and residential energy consumers in switching to more green energy, which is perceived to be more expensive, is likely to remain lukewarm as long as demand for energy is low and natural gas prices are at their lowest levels in over ten years.

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