NATURAL CAPITAL INITIATIVE AT MANOMET

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possibly REC’s) over a sufficiently long period of time to satisfy the debt service for the facility. It is worth noting that only one new biomass power plant has been built in the region since the advent of REC’s (Schiller) and that RECs are considered to be an important feature in its financial picture. After the Power Purchase Agreement, the second largest cost variable involved in the finances of a biomass power plant is fuel supply and pricing. For example, the Ryegate plant in Vermont and Schiller plant in New Hampshire spend between 60% and 70% of their operating costs on fuel purchases and generally, costs in excess of $30–$35 per ton are considered the maximums if biomass power is to remain competitive with other fossil fuel capacity.8 Given the relative importance of fuel purchases on operating costs, BCAP payments could play a significant role in incentivizing power plants over other non-energy biomass uses in Massachusetts if a continued high level of subsidy to suppliers of biomass to qualifying electric generation facilities lowers fuel supply costs for the power sector. However, given current Congressional review of the BCAP program and the USDA rulemaking process, it is considered unlikely that current levels of subsidies will continue. Regarding relative incentives for the construction and location of biomass power plants in Massachusetts versus other New England states, it does not appear that there are significant subsidies or incentives in existing public policy that make Massachusetts more or less likely to attract new biomass power plant proposals. While Massachusetts does have a strong market for REC’s due to their well-established and aggressive RPS program, this does not provide any particular incentive for building qualifying plants in Massa- chusetts versus surrounding states. Furthermore, Massachusetts is not unique in having a number of current biomass power plant proposals. Vermont currently has 5 to 8 proposals in varying stages of discussion; New Hampshire has two major projects that have come and gone over the past few years; etc.9 To further illustrate the scale and scope of biomass power plant proposals across the region, over the past ten years, there have been 243 biomass power plant proposals in the ISO New England region, with only one new plant constructed Schiller Power Plant, NH). Overall, federal and state policies and incentives are responsible for the trend within the biomass industry to propose large-scale electric generation facilities in Massachusetts and elsewhere in the country. 8 $30–$35 per ton for wood purchase is the breaking point as reported in interviews with the Ryegate and Schiller power plants and is also consistent with independent research conducted by the Biomass Energy Resource Center. 9 Recent Vermont biomass power plant proposals include: 20–25 MW plant in Ludlow, 20–30 MW plant in Rutland, two 20–30MW combined pellet mill/biomass plants in Pownal and Fair Haven, 20– 30MW plant in North Springfield. Recent New Hampshire biomass power plant proposals include: 70MW power plant in Berlin, 50–70 MW power plant (in combination with a celluslosic ethanol plant) in Groveton. MANOMET CENTER FOR CONSERVATION SCIENCES 18 References Commission of European Communities. (2005). Biomass Action Plan Communication from the Commission . Retrieved from http://eur-lex. europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!DocNumbe r&lg=en&type_doc=COMfinal&an_doc=2005&nu_doc=628 Commission of European Communities. (2006). Communication from the Commission to the Council and the European Parliament on an EU Forest Action Plan. Brussels. EU. (2006). The EU Forest Action Plan. European Commission on Agriculture and Rural Development 2007–2011. Energy Information Administration. (2008). Federal Financial Interventions and Subsidies in Energy Markets 2007. Environmental Law Institute. (2009). Estimating US Government Subsidies to Energy Sources: 2002–2008 Environment Northeast. (2008). Summary of Massachusetts 2008 Energy Bill, An Act Relative to Green Communities, Senate Bill No. 2768, June 25, 2008 European Parliament and Council. (2009). Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC. Retrieved from http://eur-ex.europa.eu/smartapi/cgi/sga_doc?smartapi !celexplus!prod!CELEXnumdoc&lg=EN&numdoc=32009L0028 EPA. 2009. 40 CFR 86, 87, 89 et. al. October 30, 2009. EPA. 2009. Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Rules and Regulations EPA. 2010. Air Emissions. Retrieved 2010 from EPA: http://www. epa.gov/cleanenergy/energy-and-you/affect/air-emissions.html Green Communities Act. (2008). Chapter 169 of the Acts of 2008, An Act Relative to Green Communities. IEA Bioenergy. (2009). Bioenergy—a Sustainable and Reliable Energy Source. Energy Research Centre of the Netherlands, E4Tech, Chalmers University of Technology, and the Copernicus Institute of the University of Utrecht. IEA Bioenergy. (NA). IEA Bioenergy Strategic Plan 1998–2002. IEA Bioenergy. (1995). Progress and Achievements 1992–1994. Retrieved from IEA Bioenergy: www.ieabioenergy.com/DownLoad. aspx?DocId=1027 IEA Bioenergy. (2010). What is IEA Bioenergy? Retrieved 2010, from IEA Bioenergy: www.ieabioenergy.com/IEABionergy.aspx International Energy Agency. (2010). Energy Security. Retrieved 2010, from IEA: www.iea.org/subjectqueries/keyresult.asp?KEYWORD_ ID=4103 International Energy Agency. (2007). Good Practice Guidelines: Bioenergy Project Development & Biomass Supply. Paris: International Energy Agency. IPCC. (2007). Contribution of Working Group III to the Fourth Assessment Report. Intergovernmental Panel on Climate Change. IPCC. (2000). Land Use, Land Use Change and Forestry. Intergovernmental Panel on Climate Change. ISO New England, Inc. (2010). SMD Monthly, Daily LMP NATURAL CAPITAL INITIATIVE BIOMASS SUSTAINABILITY AND CARBON POLICY STUDY

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