The Emerging Role of Woody Biomass for Heat Energy

Overview of the Energy Markets Maine Heating Market Biomass as an Alternative Maine’s Advantage

U.S. Energy Consumption by source Coal Crude Oil Natural Gas Nuclear Hydro Non-hydro Renewables Wood

Saudi Arabia 26% Iraq 11% Kuwait 10% Iran 9% UAE 8% Venezuela 6% Russia 5% Mexico 3% Libya 3% China 3% Nigeria 2% U.S. 2% U.S.26% Japan 7% China 6% Germany 4% Russia 3% S. Korea 3% France 3% Italy 3% Mexico 3% Brazil 3% Canada 3% India 3% HAVE OIL USE OIL GLOBAL OIL STATS Updated August 2002 Source: International Energy Annual 1999 (EIA), Tables 1.2 and 8.1.

Even in a tough economy China’s GDP continues to grow, driving their thirst for oil. Do you like to think that China can determine if you are in business or not??

Maine Quick Facts (EIA) The Port of Portland receives crude oil shipments, which it then sends via pipeline to refineries in Quebec and Ontario. Four-fifths of Maine’s households -- the highest share in the Nation -- use fuel oil for heating. Maine generates a larger share of its electricity from non- hydroelectric renewable resources than any other State. Maine is the only New England State in which industry is the leading energy-consuming sector.

Maine Oil Use Residential oil use 400 million gallons/year Nearly $1.6 billion last year $1.2 billion left our economy Every $1 increase = $400 million expenditure Commercial oil use 100 million gallons/year

Maine Commercial/Industrial Oil Use 100 million gallons/year – More recent construction and/or remodeled buildings are predominantly using #2 fuel oil Expensive yet easy to use as a thermal energy source – The majority of Industrial Manufacturing facilities utilize #6 fuel oil Inexpensive yet dirty and progressively squeezed by both community and legislative momentum Question: What will oil do over the next 1 to 5 years??

West Texas Intermediate Price History

What Next? Hope the economy continues to falter so that fossil fuel prices stay down? Wait for someone else to solve it for you? Buy Bahamas shorts and celebrate that Old Orchard will be the new Miami? Evaluate alternative energy, conservation, efficiency, etc… to both reduce consumption and hedge against future price escalations?

Biomass Organic materials of biogenic origin, recently contained in living tissues – Fossil fuels by contrast consist of organic materials that have been trapped in geologic formations for millennia Biomass energy sources include – Raw materials like wood chips, crops and wastes (agricultural and municipal) – Processed biofuels like pellets and liquid fuels (ethanol, methanol, biodiesel)

Woody Biomass Thermal Energy Can Achieve Immediate Impacts for Our Climate and Energy Challenges Energy independence – Separation from global political/economical influence – Village effect: Locally grown, produced, distributed, and consumed fuel Capital invested for biomass thermal heating stays in the regional economy Biomass thermal energy poses a significant marketing opportunity for our logging sector Biomass thermal applications are reliable and simple to implement, with wide employment and community benefits Biomass thermal heating is very efficient – one of the lowest CO₂ abatement cost options available today

Greenhouse Gas Emissions Greenhouse gas (GHG) emissions, most commonly consisting of carbon dioxide, methane and NOx, are the root cause of global warming These molecules absorb infrared solar radiation reflected off the earth’s surface and convert it into heat energy that is released back into the atmosphere Global surface temperature increased 1.33 °F during the last century; climate models predict an additional rise of 1.1 °F during the twenty-first century Expected to cause sea level rise, desertification, increased instances of extreme weather events, species extinction, and shifts in agricultural yields

However… From a life cycle perspective the use of wood pellets can provide between 72% to 82% reduction in GHG emissions for fossil fuel heating customers in the Northeast

Carbon Neutrality Clarifications The biomass lifecycle is not entirely “carbon neutral” – Harvesting, transportation, and some phases of processing are powered by fossil fuels – Greenhouse Gas (GHG) emissions of methane and NOx from biomass combustion, while only representing a small fraction of total emissions, cannot be sequestered like carbon dioxide through photosynthesis If biomass feedstocks are not managed sustainably, future growth will not sequester all carbon dioxide emissions from end use combustion – In response however, sustainable forest management and harvesting practices have been well defined by Forest Stewardship Council and Sustainable Forestry Initiative guidelines

Global Wood Density

Maine Large natural resource of forests with a historic knowledge of logging and forest management Pulp and paper industries are being challenged by off-shore operations and many are moving to recycled feedstock. – Driving reductions in overall demand for pulp wood across New England – New entrants into logging are lessening due to uncertain future of sustained employment

Maine Cont’d 80% of homes and a large amount of industry is using oil as their primary thermal energy source. Global oil demand and associated price are moving upward today and into the foreseeable future Biomass should be a leading heating solution for Maine

Renewable/Sustainable Energy = Energy Independence + US Economic Growth + Homeland Security FACT: Fossil fuels are a finite resource FACT: economics are the current and historic industry driver FACT: in the near future, the Green House Gas (GHG) impact of fossil fuel use will be monetized by government policy