Developing Domestic Demand

California seems to almost always be ahead of the curve compared with other states across the nation. A simple Google search displays headlines declaring “California ‘Ahead of the Biodiesel Curve,’” “California is Ahead of the Curve on Climate Change” and “California Remains Ahead of the Curve with Workplace Trends.”

The country’s most populous state and third-largest in land area even made history in 1973 when the city of Berkeley implemented the nation’s first curbside recycling program.

If this trend has legitimacy to it, then construction and demolition (C&D) wood markets in the United States could be in trouble.

Chris Trott, managing partner of CT Bioenergy Consulting, Twain Harte, California, explains domestic demand on the West Coast for C&D wood is diminishing while supply is piling up. “There’s a glut of material,” Trott says, adding, “It’s backing up like a toilet.”

He notes that demand for C&D wood for use as a boiler fuel has weakened the most, as strong markets mainly exist for clean C&D wood. The state’s Department of Transportation uses clean C&D wood chips as mulch along highways, as one example, Trott says.

“If it’s super clean C&D wood, then there’s one particle board plant left in California that is operating that will take really clean material and use it for raw material for their particle board plant,” Trott offers as another example.

He points to a few reasons why the market for C&D wood is “not as good as it has been” on the West Coast. In the last year alone, seven biomass energy plants have shut down in California. The closures, Trott says, are a result of an abundance of available cheap wind and solar power that California utilities companies are increasingly signing contracts with. “The prices for renewable energy are just too low for bioenergy plants to make a profit,” Trott says.

While biomass energy plants process fuel through stringent specifications and transport it to power plants, wind and solar plants essentially “get free fuel,” he says.

As more utility companies sign long-term contracts for wind and power, bioenergy plants are finding it difficult to get new power purchase agreements (PPAs). The original PPAs bioenergy plants had with utility companies have reached their 25-30 year expiration.

“Bioenergy plants are designed to run steady 24/7 and maybe that’s not what the utilities are looking for,” Trott suggests.

He estimates the seven shuttered power plants collectively used 1.5 million tons of wood annually, putting a lot of material back into the market. “I wouldn’t be surprised if in the L.A. basin there is quite a bit of C&D wood going into landfills right now,” Trott says.

According to Trott, there are two large biomass power plants still operating in California: one in Bakersfield and another in the desert near Palm Springs.
 

Regulatory factors

The regulatory environment is another factor dampening the market for C&D wood for use as a boiler fuel, Trott says. The U.S. Environmental Protection Agency’s (EPA’s) Boiler MACT (Maximum Achievable Control Technology) sets guidelines that limit air pollutant emissions from industrial, commercial and institutional boilers and process heaters; and commercial and industrial solid waste incineration (CISWI) units.

Trott describes, “Some companies are backing completely away from using C&D wood just to avoid coming under regulation under those MACT rules.”

Regulations absolutely affect material flow, says Michael Buckley, regional director of asset management for ReEnergy Holdings LLC, Latham, New York.

ReEnergy processes C&D wood at its C&D recycling facilities for the company’s fuel facilities in the Northeast. The company has both a renewable energy sector and waste services sector (See the cover story, “Vertical integration” on page 16 to learn more about ReEnergy’s operations). ReEnergy’s eight biomass facilities generate 1.8 million net megawatt hours; and its C&D recycling facilities in Maine, Massachusetts and New Hampshire can process 1 million tons of material per year and processed 700,000 tons in 2014.

Buckley, who has been procuring wood for ReEnergy since 2013, says, “Each state where there are outlets or consumers of C&D recovered wood fuel has its own specifications in terms of cleanliness and other analytics. It’s individual to the state, and we have to work through our regulatory bodies and make sure we meet the standards that are put forth.”

On the West Coast, Trott says if The Golden State doesn’t revise its regulations, then even more biomass facilities will close. “If California doesn’t change its public policy and say, ‘Hey, we really need these bioenergy plants,’ then I just see problems in the future,” he says.
 

Talk the talk

One state that has a strong C&D wood market, Minnesota, also keeps its regulators on its toes. Jason Haus, CEO and co-owner of Dem-Con Cos., Shakopee, Minnesota, has been the voice for C&D wood in Minnesota by pushing markets, questioning regulations and showing firsthand how the material can cater to end markets.

Dem-Con, in business for close to 50 years, operates a C&D material recovery facility (MRF), a single-stream MRF, a shingle processing yard, a wood processing facility and a landfill. The company recovers wood in large amounts, Haus notes.

Haus suggests that working with regulators can lead to progress. “We have to continually talk to regulators so they’re informed about the process and know how clean the wood can be,” he says.

In 2012, the EPA introduced the Non-Hazardous Secondary Materials Rule (NHSM). Haus says this rulemaking process related to regulations on C&D wood fuel would put some C&D recyclers at risk, including his own company. The rule’s intent is to clarify whether materials accepted by a facility are a solid waste. He says with this rule, operators need to ensure their end markets aren’t stripped away.

Dem-Con has worked with the EPA on the use of clean wood material in biomass plants. The company has participated in data collection and analysis, which Haus says proves that wood separated from C&D MRFs with proper oversight and training can produce clean, high-quality materials.
 

Finding more end markets

Haus says demand for C&D wood is growing in the Midwest. However, he recognizes that wood markets in the U.S. are regional. Some areas in the country have strong demand for C&D wood, while other regions are facing challenges, he says.

Haus says he would like to see C&D wood demand increase across the nation, “and take what’s being done here in Minnesota and the Midwest and use it in other parts of the country to show that wood can be done positively.”

Haus explains, “We’re fortunate in Minnesota to have a strong wood market. I wish we had the same type of thing all across the country so they had similar stories but other parts of the country are challenging.”

In the Southeast, Patti Hamilton, vice president of marketing and communications for Sun Recycling, Davie, Florida, says, “Supply is good. Construction is up, which of course means supply of material into our facilities is up.”

All sources interviewed agree biomass plants are the No. 1 end market available for C&D wood today. In the Northeast, Buckley says four customers use ReEnergy’s C&D wood as fuel for power. Hamilton and Haus also sell material for animal bedding while Haus considers landscape mulch the lowest grade.

Buckley says the industry must find more end markets for C&D wood.

Haus concurs. “Parts of the country don’t have as strong of a market to get rid of their wood and other parts are challenged to create revenue from wood sales,” he says.

Trott sees a potential end market in composting facilities. To help eliminate odors in these types of facilities, operators have funneled exhausted air through composting bags and then through chipped wood of different sizes. The wood takes the odor away, Trott says.

He adds, “People are catching on to this and changing operations to use biofilters.” However, Trott admits there isn’t “a huge market” for biofilters in composting facilities as the wood chips need changed just every six months or so.

“C&D processors are going to need to work on developing the markets further,” Trott says.

The author is associate editor of Construction & Demolition Recycling and can be reached at mworkman@gie.net.