Florida's economy could benefit from biomass for electricity, UF researcher says

August 11, 2010

GAINESVILLE, Fla. — Consumers know that buying locally produced food stimulates the local economy, and a University of Florida researcher says the same idea applies when power plants use locally produced wood as fuel.

With state legislators contemplating a move to require that Florida’s electrical utilities use a specific percentage of renewable fuels, the result could be billions for the state’s economy and increased sales of its forest products, said Alan Hodges, an extension economist with UF’s Institute of Food and Agricultural Sciences.

Hodges is presenting the findings today at the state’s 2010 Farm to Fuel Summit in Orlando.

“The basic idea is, when you use woody biomass you’re substituting a locally produced resource for an imported resource, which is coal and natural gas, primarily,” Hodges said. “By getting fuel supplies from within the state, that’s money remaining here and it can stimulate further economic activity in the state.”

Woody biomass is a catchall term for inedible products from trees, shrubs and other plants. These materials are chipped and dried, then burned to run generators. Other types of biomass include organic municipal waste and methane gas produced in landfills.

In Florida, 23 power plants now use biomass fuels, Hodges said. Biomass accounts for about 1 percent of the electricity generated in the state; estimates suggest biomass could provide much more.

One proposal from the Florida Public Service Commission would require generating 20 percent of the state’s electricity from woody biomass and other renewable fuels in 2021.

Just how much woody biomass Florida can produce is a matter of some debate, Hodges said. But the primary sources would probably be material that now goes unused, including yard waste, timber harvest residues and tree-trimming leftovers.

Hodges believes the state could produce an additional 40 million tons of woody biomass for electricity each year. That would provide about 11 percent of the state’s electricity needs in the year 2025, according to U.S. Department of Energy estimates.

The extra 40 million tons would increase the state’s gross domestic product anywhere from $850 million to $2.2 billion above 2007 levels, depending on how much money was invested to expand industry capacity to produce and use woody biomass.

Under this scenario, the state’s forest products industry would have to ramp up its output anywhere from 35 to 70 percent, resulting in additional revenues of $1.5 billion to $2.8 billion.

Employment demand in the forestry sector would increase by about 73 percent, and payments to employees would increase by $1.6 billion.

“It’s definitely a good thing for the timber industry,” Hodges said.

Another variable: Federal subsidies have been available for electric utilities that use biomass fuel, which reimburse power plants up to $45 per dry ton for biomass purchases. The subsidies could increase the state’s gross domestic product by $3.5 billion.

The only major negative economic impacts in this scenario, Hodges said, would be a short-term price increase of up to 18 percent for Florida’s forest commodities, which would result in a modest decrease in manufactured wood products.

Hodges’ estimates were developed as part of an economic impact analysis conducted by UF and Florida Division of Forestry experts. The analysis, ordered by the governor and state legislature, was submitted in March.

The Florida estimates are relevant to other Southeastern states, Hodges said, with the exception of Alabama, which produces coal.