{"id":1103,"date":"2019-05-09T13:47:27","date_gmt":"2019-05-09T11:47:27","guid":{"rendered":"http:\/\/forest-analytics.com\/?p=1103"},"modified":"2019-05-15T14:20:20","modified_gmt":"2019-05-15T12:20:20","slug":"prices-hamper-hybrid-poplar-investments","status":"publish","type":"post","link":"https:\/\/forest-analytics.com\/index.php\/2019\/05\/09\/prices-hamper-hybrid-poplar-investments\/","title":{"rendered":"Development of hybrid poplar plantations hampered by biomass prices"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>\u0141\u00f3d\u017a, POLAND &#8211; MAY 08, 2019 &#8211; a<\/strong><strong> new publication from Forest Business Analytics has shown that current market pricing for forest biomass produces negative financial returns from hybrid poplar biomass plantation investments in the western U.S. <em>Our results show that without a significant material increase in the biomass price, improvements in plantation yields or strong policy support, the future development of hybrid poplar feedstock production system for the alternative jet fuels market in the western U.S. is in question<\/em> &#8211; explains Dr. Rafa\u0142 Chudy, the lead author of the study. <\/strong><\/p>\n<hr \/>\n<h1 class=\"section-title u-h3 u-margin-l-top u-margin-xs-bottom\" style=\"text-align: left;\">Highlights<\/h1>\n<ul>\n<li class=\"section-title u-h3 u-margin-l-top u-margin-xs-bottom\">Current pricing for biomass in western U.S. produces negative financial returns.<\/li>\n<li class=\"section-title u-h3 u-margin-l-top u-margin-xs-bottom\">Biomass investments are unlikely to attract private-sector capital.<\/li>\n<li class=\"section-title u-h3 u-margin-l-top u-margin-xs-bottom\">Returns are most sensitive to assumptions related to prices, yields, and land costs.<\/li>\n<li class=\"section-title u-h3 u-margin-l-top u-margin-xs-bottom\">Increase in price or dramatic improvement in yields may change the present situation.<\/li>\n<\/ul>\n<h1 style=\"text-align: left;\">Background<\/h1>\n<p>Promising growing conditions and favourable renewable energy policies\u00a0make the western U.S. a potentially suitable region for dedicated woody\u00a0biomass\u00a0(DWB)\u00a0plantations\u00a0for\u00a0energy generation. To support the\u00a0regional development\u00a0of\u00a0biomass and\u00a0biofuels\u00a0markets, the\u00a0USDA\u00a0awarded an AFRI\u00a0grant\u00a0to the Advanced\u00a0HardwoodBiofuels (AHB) Northwest project. As part of the AHB project,\u00a0GreenWood Resources (\u201cGWR\u201d) &#8211; a globally diversified timberland\u00a0investment\u00a0management company with over 20 years of specialized experience in high-yield, intensive plantation management &#8211; installed and managed\u00a0hybrid\u00a0poplar DWB\u00a0plantations\u00a0at four demonstration sites: Clarksburg, CA; Hayden, ID; Jefferson, OR; and Pilchuck, WA. GWR developed a\u00a0discounted cash flow\u00a0(\u201cDCF\u201d) investment\u00a0model\u00a0based on the AHB project results and plantation management experience across this range of growing and\u00a0market conditions. The model estimates financial returns and tests the sensitivity of returns to changes in key variables. These results inform directions for future research and challenges for commercial production of DWB.<\/p>\n<p style=\"text-align: justify;\"><img data-attachment-id=\"1105\" data-permalink=\"https:\/\/forest-analytics.com\/index.php\/2019\/05\/09\/prices-hamper-hybrid-poplar-investments\/map\/\" data-orig-file=\"https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?fit=3300%2C2550&amp;ssl=1\" data-orig-size=\"3300,2550\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"map\" data-image-description=\"\" data-medium-file=\"https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?fit=300%2C232&amp;ssl=1\" data-large-file=\"https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?fit=1024%2C791&amp;ssl=1\" loading=\"lazy\" class=\"wp-image-1105 size-full\" src=\"https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?resize=3300%2C2550\" alt=\"Map with hybrid poplar plantations included in the study\" width=\"3300\" height=\"2550\" srcset=\"https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?w=3300&amp;ssl=1 3300w, https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?resize=300%2C232&amp;ssl=1 300w, https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?resize=768%2C593&amp;ssl=1 768w, https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?resize=1024%2C791&amp;ssl=1 1024w, https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?w=2000&amp;ssl=1 2000w, https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/map.jpg?w=3000&amp;ssl=1 3000w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" data-recalc-dims=\"1\" \/><em style=\"color: #808080; font-size: 14px;\"><strong>AFRI AHB study sites and fuel distribution network. Fuel depots are linked to both land-based and river-\/ocean-based transportation networks. Source: Chudy et al. (2019)<\/strong><\/em><\/p>\n<p style=\"text-align: justify;\"><strong>&gt;&gt;READ MORE:\u00a0<a href=\"http:\/\/forest-analytics.com\/index.php\/2018\/10\/25\/special-issue-forest-investments-finance\/\" target=\"_blank\" rel=\"noopener noreferrer\">Special Issue on Timberland Investments, Supply Chain and Market Dynamics<\/a><\/strong><\/p>\n<h1 style=\"text-align: left;\">Results<\/h1>\n<p>Results indicate that current\u00a0market pricing\u00a0for\u00a0forest biomass\u00a0in the western U.S. &#8211; approximately USD 46\/BDMT &#8211; produces negative financial returns from DWB plantation investment on all four sites. To produce positive returns at all four sites requires\u00a0biomass\u00a0assumptions that are\u00a0well\u00a0above the current market (USD 121\/BDMT). With this\u00a0price\u00a0assumption, plantation\u00a0investment returns\u00a0average 8.62% in real, inflation-adjusted terms across all sites, but this biomass price level may make conversion into\u00a0transportation\u00a0fuels\u00a0uneconomic under current fuel prices and policies. Financial returns to DWB investments are most sensitive to changes in price,\u00a0yield, and land costs. Given current\u00a0economic conditions\u00a0and plantation technology, the development of a large-scale DWB plantation base in the western U.S. is unlikely to attract\u00a0private sector\u00a0capital\u00a0without some combination of a material increase in the biomass price, strong policy support, or a dramatic improvement in plantation yields.<\/p>\n<p style=\"text-align: justify;\"><strong>Source: Chudy RP, Busby GM, Binkley CS, Stanton BJ. 2019. Biomass and Bioenergy. <a href=\"https:\/\/authors.elsevier.com\/a\/1Yr8J3QkGxsH34\" target=\"_blank\" rel=\"noopener noreferrer\">The economics of dedicated poplar biomass plantations in the western U.S.<\/a> Biomass and Bioenergy 124:114\u2013124. <span style=\"color: #008000;\"><span style=\"text-decoration: underline;\">Free access for 50 days<\/span>. <\/span><\/strong><em><strong>Main photo: Hybrid poplar plantation. Photo credit: Rafa\u0142 Chudy<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u0141\u00f3d\u017a, POLAND &#8211; MAY 08, 2019 &#8211; a new publication from Forest Business Analytics has shown that current market pricing for forest biomass produces negative financial returns from hybrid poplar biomass plantation investments in the western U.S. Our results show that without a significant material increase in the biomass price, improvements in plantation yields or [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1106,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false},"categories":[45,86,48,80,53],"tags":[167,166,169,171,172,168,170],"jetpack_featured_media_url":"https:\/\/i2.wp.com\/forest-analytics.com\/wp-content\/uploads\/2019\/04\/DSC05779.jpg?fit=4912%2C3264&ssl=1","jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v15.0 - 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