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BC Bugwood Envirochem Services Inc. mechanisms for reducing investor risk that would allow small and medium-scale projects to move ahead quickly are potential tools to achieve industrial development. Some possible economic instruments or mechanisms are outlined below. i. Providing loan guarantees, grants, long-term or low-interest financing, or public- private partnerships could reduce the business risks associated with investing in new technologies related to bugwood and biomass in general. ii. Concentrating on small-scale systems will increase the number of installations and potential investors compared to large-scale centralized systems. In addition, once the bugwood resource is used up, smaller facilities will also find it easier to relocate and/or source alternative feedstocks. It is anticipated that most small- scale plants, having repaid their initial investment, will be able to justify higher feedstock costs and maybe use alternate biomass sources such as hog fuel, non-stem wood, sawmill waste, or even wood from energy crop plantations. iii. Subsidizing the cost of the bugwood feedstock (e.g. $X per m3 based on the volume of bugwood harvested) would improve the financial viability of the technologies. The subsidy could also be used to favour or target specific technologies or applications. Instead of subsidies, the cost of co-harvesting bugwood can be counterbalanced by decreased bid prices for merchantable wood. iv. Providing a premium or set purchasing tariff for the biomass (renewable) energy and/or products produced would help the technologies commercialize. 3. Encourage the Harvesting, Removal and Utilization of the Bugwood Biomass. Efforts should be made to favour the removal and utilization of the bugwood, subject to silviculture considerations. The bugwood should not be left in the forest where it may create a potential fire hazard with the attendant management and environmental costs, nor should it be burned in slash or wood-waste burners that have no energy recovery and higher environmental impacts. Some options to encourage bugwood removal and utilization are discussed below. As the co-harvesting of bugwood that cannot be used in sawmill or pulp mill operations increases overall delivered feedstock costs for these mills, it is likely that the bidding cost for merchantable wood cut licenses in areas affected by the pine beetle has to decrease in order to allow the co-harvest of bugwood. It may be possible for large-scale harvesting operations to accommodate a certain percentage of co-harvested bugwood, but large amounts of wood that has no value for their operations will certainly jeopardize profitability in the BC forestry sector unless costs can be saved elsewhere. The specific combination of options chosen therefore depends on a variety of considerations, including the portion of bugwood in the cut block, the harvesting costs, and transport costs: i. Forest companies could co-harvest the NRL bugwood with merchantable wood. In-forest, staging area, or mill site separation of bugwood would follow the harvesting of merchantable wood. The silviculture and infrastructure costs (roads, camps, reforestation etc.) could be absorbed by (or assigned to) the merchantable portion of the wood harvested, thus reducing the “overhead” costs for the bugwood. ii. Harvest obligations could be tied to cutting rights to require bugwood cut blocks to be co-harvested with higher value (less bugwood) cut blocks. This would encourage logging of the lower value bugwood areas in order to access the higher value fibre. iii. Staged harvesting of merchantable wood and then bugwood could reduce overhead costs attributable to bugwood: if harvesting of cutblocks with predominantly merchantable wood precedes the harvest of bugwood by another cutting crew, the costs for road and camp construction to recover the bugwood could be reduced. Although this option is generally seen as more costly and has Page 96PDF Image | IDENTIFYING ENVIRONMENTALLY PREFERABLE USES FOR BIOMASS
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