Winter Timber Sale

What is 'biomass' and what is it used for in Wisconsin?

Often burned for heating and electricity, it helps heat 8 schools across the state

A wood chip gathering station at a N.H. utility.

As the demand for lower-quality wood for use in paper manufacturing has been affected by changes in paper markets (like the drop in the use of newsprint), there has been increased attention paid to “biomass”. So forest owners might ask, what qualifies as “biomass” and who uses it?

The main uses for biomass are the production of energy in the form of electricity or heat, and some ancillary uses in landscaping. Biomass is used heavily in both home heating and generation of electricity, according to Sabina Dhungana, forest products specialist with the Wisconsin DNR. For home heating use it can come in the form of wood chunks, firewood, toasted wood and wood pellets.

In addition to home use, biomass is used broadly for landscaping. It also can be used to fuel the generation of electricity. And eight schools in seven Wisconsin cities use biomass for heating (they are located in Barron, Rice Lake, Rib Lake, Park Falls, North Park Falls, Holcombe and Hayward).

The state of Vermont is a leader in using wood biomass to heat schools through its Vermont Fuels For Schools program, which is a collaboration of the Vermont Superintendents Association and the Biomass Energy Research Center. Schools can apply for grants to install biomass heating systems. The systems are then used to replace more costly heating systems based on oil or electricity. The program, which has been in place since 2001, is used as a source of heat for 30 percent of Vermont schools.

The Wisconsin schools being heated using biomass converted in the 1980s when support was available from the Institutional Conservation Program, a federally funded program, according to a 2008 study looking at the potential to use biomass for heating more Wisconsin schools. At the time of the study, the biomass-heated schools showed tens of thousands of dollars in fuel savings.

However, since then natural gas prices have dropped almost 40 percent, which shrunk the potential savings. Vermont schools, though, continue to show savings from their previous oil-based systems. (The cited study was carried out by P Squared Group and Focus on Energy, a Wisconsin-based energy conservation non-profit).

Federal tax credits for biomass generated energy have been curtailed as Congress deliberates on an “extender” bill regarding a variety of credits that have expired.

IRS credits that affect the timber business include a $300 credit for purchase of wood used for home heating, and a credit for electrical power generation from biomass fuels of 2.5 cents per kilowatt hour for closed loop biomass, and 1.2 cents per kwh for open loop biomass. (Closed loop is based on fuel specifically grown for power generation. Open loop allows the use of residues from biomass grown for other purposes --- i.e. wood residue.)

The House of Representatives has passed a bill extending the current credits. The Senate is considering proposals, including ending some credits and making others permanent.

Meanwhile, Wisconsin has almost no state tax credits or incentives that have a practical impact on biomass use. However, the sale of biomass fuel for home heating is exempt from sales tax. Similarly businesses are exempt from sales tax on their purchase of wood residue used as a fuel in their business.

Wisconsin also has a requirement of at least 10 percent renewables used by utilities in power generation, but this is generally met with solar and wind power.

Some other states have more robust biomass tax credit programs, but these can sometimes be quite volatile based on politics. New Hampshire’s biomass program (which had specific biomass requirements on utilities) has faced political wrangling in the last two years as the state’s legislature extended the requirement only to have it then vetoed by Gov. Chris Sununu, a Republican. The legislature overturned Sununu’s veto, but implementation has been held up by legal disputes at the Federal Energy Regulatory Commission, and at the NH Public Utilities Commission. During the dispute several of New Hampshire’s biomass generating facilities have experienced shutdowns.

Other state users of biomass include paper mills, saw mills, window manufacturers and Ashley Furniture Industries Inc., which defines itself as the largest manufacturer of home furnishings in the world, and is headquartered in western Wisconsin.

One of the state’s large utility companies -- Xcel Energy -- also shows up on the DNR’s list of more than 50 users of biomass. The list of state biomass producers is long and geographically widespread. It includes more than 100 businesses spread across 45 of the state’s 72 counties (including some of the state’s counties with the highest poverty rates).

The list includes companies in the business of manufacturing landscape products (like mulch and wood chips) as well as wood energy companies like wood pellet makers and makers of pallets and wood mats. Another auxiliary use for biomass products is for animal bedding.

Biomass generally makes most economic sense in circumstances where wood waste is easily available. These tend to be installations where wood waste is a byproduct of higher value of use of other wood (like paper making, or furniture manufacturing).

The high volume of waste wood and its related water content influence the affordability of biomass. If it requires transportation over some distance, that necessarily increases the cost to users, according to a 2017 paper in the academic journal Applied Energy by Assistant Professor Shuva Gautam of University of Wisconsin Stevens Point. Lower moisture tends to reduce weight and also transportation cost to a biomass user. This makes auxiliary use as a fuel more attractive at facilities where wood manufacturing or processing is the main function.

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