The Biomass Crop Assistance Program (BCAP): Some Implications for theForest Industry

The Commodity Credit Corporation (CCC) of the Department of Agriculture has proposed regulations to implement the new Biomass Crop Assistance Program (BCAP). Authorized in the Food, Conservation, and Energy Act of 2008, BCAP is designed to ensure that a sufficiently large base of new nonfood, nonfeed biomass crops is established in anticipation of future demand for renewable energyconsumption. BCAP “is intended to assist agricultural and forest land owners and operators with the establishment and production of eligible crops including wood biomass in selected project areas forconversion to bioenergy, and the collection, harvest, storage, and transportation of eligible material for use in a biomass conversion facility” (U.S. Department of Agriculture 2010, 6266). The program isproposed for a limited period of time. This paper examines some of BCAP’s implications for wood flows and for the various components of the forest industry, particularly wood growers and mill operators.

A federal initiative to establish new biomass energy sources, the Biomass Crop Assistance Program (BCAP), is coming to fruition, but its provisions may have unintended consequences for wood growers and processors. In “The Biomass Crop Assistance Program (BCAP): Some Implications for the ForestIndustry,” RFF Senior Fellow and Director of the Forest Economics and Policy Program Roger Sedjo examines these impacts.

BCAP subsidizes two groups of activities: the collection, harvest, storage, and transport of biomass to energy conversion facilities for up to four years; and the establishment of energy biomass crops in select geographic regions.

A central goal of the program is to encourage the utilization of wood wastes, including wood slash remaining in the forest that would otherwise remain unused. Another objective is to avoid diverting biomass resources to energy uses if they have other current market uses and values. However, some "waste" sources (pulp logs, for example) may already be in use in existing products. Unless a regulatory wall is placed between industrial and energy uses, this would result in a shift in use toward energy, drive up overall wood market prices, and possibly drive segments of the wood processing industry offshore. In contrast, wood growers could benefit from higher prices.

Sedjo points out, however, that a longer run move to renewable energy would likely increase wood prices even without a subsidy. Further, the development of low-cost systems for collecting low-value wood waste would provide useful additional supplies of biomass for energy. Ultimately, higher wood prices should stimulate new forest management oriented toward energy crop production.