Can U.S. and U.K. Forest Bioenergy Subsidies Have Adverse Climate Consequences?

By Stefan Koester and William Moomaw·August 15
Fletcher School, Tufts University

The Issue:

The UN Framework Convention in Climate Change aims to limit climate change by reducing carbon dioxide emissions and removing carbon dioxide through its absorption by forests and soils. A policy to promote this goal has been favorable treatment of renewable energy to replace fossil fuels. But there are important differences in achieving this goal across various renewable energy sources. Almost half of the renewable energy consumed in the United States comes from biomass (plant material) that releases heat and carbon dioxide when burned. While energy derived from burning trees and other plants may be slowly renewable through regrowth, the use of forest biomass releases high carbon dioxide emissions and other air pollutants, unlike wind and solar that are instantly renewable, resources that emit no carbon dioxide while producing electricity. As with other sources of renewable energy, there are major economic subsidies provided for forest biomass by the United States and United Kingdom governments to overcome the unprofitable market for forest bioenergy.
Energy derived from burning trees and other plants may be slowly renewable through regrowth, but the use of forest biomass releases high carbon dioxide emissions and other air pollutants.

The Facts:

  • Biomass — an energy source that involves burning organic materials and releases carbon into the atmosphere — makes up almost 46 percent of U.S. renewable energy sources (see chart). Renewable energy sources made up about 10 percent of U.S. energy consumption in 2016. This amount has been steadily increasing over the last decade as the costs of wind and solar have been decreasing, and states and companies have been using more renewable energy. Within the category of biomass, about 22 percent are liquid biofuels, such as ethanol, used for transportation. Another 19 percent is wood biomass, which can come from whole logs, trimmings, and forest residue and is primarily used to generate electricity. About 5 percent is biomass waste, which can be organic leftovers from industrial or household production. (In addition to direct combustion, biomass waste can generate energy by conversion to a methane-rich gas.)
  • In addition to production for domestic energy generation, the United States exports a large share of its forest or wood biomass production. Current U.S. biomass production capacity stands at 12.7 million tons per year (MT/y) with a large concentration of production in the southern United States. An additional 1.64 MT/y in annual production is either planned or under construction, according to the Energy Information Administration. The largest share of forest biomass produced currently goes to export markets: In the first four months of 2017, the U.S. exported 1.64 million tons of biomass pellets, primarily to the United Kingdom and the European Union, compared to the 512,000 tons that were produced for domestic sale.
  • Forest bioenergy is uneconomical and is heavily subsidized in the United States, as well as in the United Kingdom and European Union. Biomass is expensive when compared to other forms of alternative energy. Data from the 2016 Lazard Levelized Cost of Energy study shows that the unsubsidized cost of biomass is greater than wind or utility-scale solar energy. The United Kingdom is phasing out coal for electric power generation by 2025 and replacing it with wood pellets that they are claiming to be carbon neutral — mostly imported from the United States. In 2014, the massive Drax power station in the United Kingdom was selling power at £80 per MWh, two-and-a-half times more expensive than coal, and was able to claim £340 million in government subsidies for being “carbon neutral”, representing over three-quarters of the company’s overall profit. Subsidies for biomass in the United Kingdom are having economic and environmental impacts in the United States, primarily in the Southeastern U.S., from which much of the wood biomass pellets are produced, processed and shipped. The United Kingdom imported close to 6 MMT in 2016 alone, with estimates that demand will increase as the country deepens its reliance on forest bioenergy for electricity. In the United States, state and federal governments provided almost $1 billion in subsidies between 2009 and 2013 in the form of loan guarantees, grants, and payments to various forest bioenergy programs and projects. In addition, forest bioenergy is eligible for the same U.S. federal production tax credit as zero carbon renewables such as wind and solar.
  • There is a continuing debate, however, over the environmental merits of wood biomass energy within the scientific and policy community. Whether or not forest biomass is considered carbon neutral depends on the details and the carbon accounting rules used: the specific forms of biomass (whether it is sourced from organic waste materials or from trees that are expressly grown for the process, for instance); the carbon footprint of production, harvesting and export processes; whether forest land is preserved or other agricultural products are displaced leading to more clearing of forests. Industry supporters argue that biomass is a renewable resource that keeps forests productive and protects them from development. Moreover, the biomass industry claims that wood biomass is carbon neutral because the “organic waste would otherwise be dumped in landfills, openly burned, or left as fodder for forest fires.” However, scientific studies find that forest harvesting releases carbon dioxide into the atmosphere from soils, and from the fossil fuels used in removing and processing fuel wood. In addition, they point out, it takes decades to centuries for forests to regenerate, and reabsorb the amount of carbon released from the combustion of forest bioenergy. Because sustainably managed forests are harvested on a shorter time frame than this, there is always more carbon dioxide in the atmosphere than if the forest had not been harvested in the first place. According to the 2014 IPCC Fifth Assessment Report (pg.877), “the combustion of biomass generates gross Green House Gas emissions roughly equivalent to the combustion of fossil fuels.”
  • A section within the recent House Omnibus spending bill decides this debate on the carbon neutral merits of wood biomass legislatively by requiring agencies to “support the key role that forests in the United States can play in addressing the energy needs of the United States… and reflect the carbon-neutrality of forest bioenergy and recognize biomass as a renewable energy source” (see pages 901-902). Specifically, this section directs the Administrator of the EPA and the Secretaries of the Departments of Energy and of Agriculture to ensure that the full carbon-neutral benefits of forest bioenergy are recognized. In addition, the measure would provide $15 million for states to encourage the biomass energy’s use, as a recent E&E News article details. The purpose of the legislation is to provide an incentive to bolster non-competitive forest products industries by growing the market for wood biomass as a renewable energy resource.

What this Means:

Subsidies can be defended on grounds of economic efficiency if they correct a market failure, and pollution is a classic market failure since the parties engaging in the economic exchange do not bear the full social cost of pollution. To the extent that subsidies for renewable energy sources displace other energy sources that have greater adverse impacts on the environment, these economic justifications apply. But emissions from the bioenergy sector occur throughout the entire production process, from logging to burning, yet these emissions are not being properly accounted for when claims are made of the low carbon intensity of this source of energy. Whether the use of biomass generates environmental benefits depends on the specifics of the biomass product used, and carbon accounting rules must accurately account for what the atmosphere experiences in terms of emissions. In recent years, the heavy subsidization and increased use of corn-based ethanol has been questioned by both fiscal conservatives concerned with government picking technology winners, and environmentalists concerned with emissions and land-use change. Forest bioenergy has not received the same level of scrutiny, yet is similar to corn-based biofuels in the way that it is treated as a carbon-neutral resource and the subsidies it requires to be economically feasible. Forest bioenergy is more costly than other zero emission renewable energy sources such as wind and solar, and paying subsidies to add carbon dioxide and particulates and other pollution to the atmosphere undermines efforts to address climate change and meet air quality standards. Forests also provide flood control, clean water, clean air, temperature moderation, soil preservation, biological diversity, recreation and future scientific and medical discoveries. A monetization of these benefits may be the most effective means for preserving them in the face of a number of challenges, including the use of forest bioenergy.


Climate Change / Energy Policy
Written by The EconoFact Network. To contact with any questions or comments, please email


In the spirit of fomenting constructive policy debate, we will post comments that provide relevant new information or reach another conclusion based on a different analysis of the facts.

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