Back to the Future?

Burning America’s forests is not a sustainable energy solution

David B. Struhs

Can a 21st century economy be powered by an 18th century fuel? Can we really find our energy future in the woods? When something sounds too good to be true, it usually is.

Trees are neither the environmental nor economical energy solution that some are suggesting, and legislating it and subsidizing it will not make it so. Indeed, such intervention by government does more than just distort the market; it creates false hopes and risks knocking sustainable forest resources out of balance.

Ironically, the modern economy we enjoy today can, in part, be traced back to a historic concern about running out of trees. A growing population and shrinking forests in Europe initially prompted the substitution of coal for wood. Extracting that coal required breakthrough technologies, such as steam engines. A cycle of innovation was unleashed, and the Industrial Revolution was underway. Consumption of fossil fuels has been on the rise ever since.

Fast forward 225 years and we now find ourselves facing twin problems. One is the concern over the environmental effects of increasing atmospheric concentrations of carbon dioxide from consuming fossil fuels. The other is unprecedented accelerating global demand for fossil fuels leading to shorter supplies.

These two challenges inspire a naïve optimism that somehow we can move forward by looking back to the woods that, more than two centuries ago, appeared vulnerable and unsustainable as a source of energy. How has the world changed?

There are many more people: fewer than a billion in the 18th century, and more than six billion today.

There is less land dedicated to growing trees, and that global trend is expected to continue. In the United States alone, where forest cover is relatively stable, a projected three percent of forest area, 23 million acres, is projected to be converted to other land uses by 2050, according to the U.S. Forest Service.

There is much more energy being consumed. Global average per capita energy demand has quadrupled in the last century, and more than a billion people in countries such as China and India are now poised to pursue the benefits and opportunities that come from increased energy consumption.

What has not changed is the comparatively small amount of energy found in wood, pound-for-pound, compared to other, denser energy sources. If wood is a superior energy source, then why has the pathway to economic development in every corner of the globe witnessed the migration away from wood and toward other energy sources? No laws of man can effectively trump these laws of nature and economics.

Why then is so much hope pinned on trees? Because “renewable” is confused with “unlimited.” And because there is short term money to be made, thanks to taxpayer-funded largesse.

Forests, as integral parts of Earth’s natural carbon cycle, have the capacity to regenerate. That is why the carbon dioxide emissions from burning wood, unlike fossil fuels, have a neutral effect on the atmosphere. Maintaining forests allows us to sustain this carbon neutrality and to never run out of wood. But “not running out” is not the same as “unlimited supply.” Unfortunately, wood’s renewability and carbon neutrality are such appealing attributes, policy makers overlook the fact that wood is not energy dense and its supply is finite.

States are now forcing the utilization of wood as a solid fuel for electricity generation through “renewable portfolio standards” and Congress is flirting with a similar intervention to reshape market demand. The federal government is also trying to drive the conversion of wood into liquid fuels with a “renewable fuel standard.”

Renewable portfolio standards for electricity create an unnatural, straight-line demand curve, regardless of costs or other environmental consequences. Subsidies, by definition, are designed to drive choices that would not otherwise be self-sustaining. Renewable portfolio standards, which are a type of subsidy, therefore work at cross-purposes with cap-and-trade regulatory programs which seek to deliver emission reductions at the lowest possible economic cost.

The environmental cost may be even greater. As state mandates reveal themselves in electricity markets, tree harvesting in the U.S. Southeast is projected to increase 60 percent or more over current levels. We know this phenomenon is real and not imagined. Similar mandates in Europe are already pulling America’s wood into European boilers.

At the federal level, Congress is dictating not only how much ethanol must be blended into gasoline, but how much of it – 44% (16 billion gallons) – must come from woody plants. To prime this pump, taxpayers will be forced to pay an extra dollar for every one of those gallons just to convince forest owners to sell their wood to ethanol refiners rather than traditional forest product manufacturers.

Recently, a more sophisticated understanding of the tradeoffs of converting food crops into fuel has begun to emerge in public policy discussions. Grain crops are certainly renewable; we plant them every year. But their renewability alone does not assure their ecological and economic sustainability. When one considers the difference between annual crops and 30- year forest harvest rotations, it becomes even more critical to get it right since the effects are longer lived for trees. Nearly 25 percent of global warming is already attributed to deforestation outside of North America. We do not need to become part of that problem.

One recent study at North Carolina State University estimates that if every available tree in that state was distilled into ethanol, it would be enough fuel to operate every car in the state – for eight months. It will take considerably longer to grow more trees. How long can this last, and with what economic and environmental consequence?

Today’s desire to tap the forest carbon cycle for “green” energy beyond what already occurs today cannot ignore the reality that most of North America’s forests are already sustainably managed. Suggestions that currently “underutilized” wood will meet new demand misses the point that it is generally not collected and burned for a reason. Its existence alone does not make it environmentally accessible or economically available to where it is needed. What are not underutilized however, are the wildlife, recreation, clean water supplies, and communities that America’s forests support.

Beyond the grave concerns about the ecological consequences of reduced forest stocks, there is also the unintended consequence that quickly increasing the consumption of trees for fuel will create a near term spike in carbon dioxide emissions to the atmosphere. Forest fuels are less energy dense than fossil fuels, so performing the same amount of work with wood, with no improvements in energy efficiency, can increase net carbon dioxide emissions.

The intersection of our energy and environmental interests is more obvious and more compelling than ever before. President Obama has recognized this by joining the management of these issues together in the new White House organization, under the politically savvy and determined Carol Browner. Her charge of finding the right combination of solutions to these twin problems will be hard enough. Not allowing markets to work will make it impossible.

More intelligent logistics for moving both materials and electricity are already advancing our environmental and energy interests. Private investment in wind power, nuclear generation, and the infrastructure for tapping the plentiful and relatively low-carbon energy of liquefied natural gas has grown. Lower cost photovoltaics, and innovations such as growing algae for conversion to diesel fuel hold promise. Over the longer term, we will witness the arrival of technologies that are only imagined today, and probably some that are not.

This “all of the above” approach is prudent policy given the urgency of the challenge. But this does not make less tricky Ms. Browner’s task of informing subsidy-seeking interests ensconced in Washington that the most environmentally and economically sustainable solutions are best revealed by allowing today’s limited capital to find and follow the best path unencumbered by political preference and wishful thinking.

Accelerating the search for sustainability requires eschewing subsidies.

No where is this truth more apparent than in America’s forests: where wood resources are finite, demand and supply create a long term balance, the ecological benefits are so essential, and management choices are long lasting.

America needs to pursue multiple paths in search of a sustainable climate and energy future. But the path that returns us to the woods and is paved with subsidies is a dead end. Real markets may sometimes be bumpy and unpredictable, but they will ensure we arrive at a truly sustainable destination.

David B. Struhs is the former Chief of Staff at the White House Council on Environmental Quality, Massachusetts Environmental Commissioner, and Florida Environmental Secretary. He is currently Vice President of Environmental Affairs and Sustainability at International Paper, and serves on the Corporate Advisory Board to the Wharton School of Business’ Initiative for Global Environmental Leadership at the University of Pennsylvania.


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Save the Date: IGEL's 4th Annual Conference-Workshop on Valuing Water: Business Challenges & Opportunities for Innovation

Fourth Annual Conference-Workshop

Save the Date

March 22, 2011
World Water Day
8th Floor Colloquium
Jon M. Huntsman Hall
The Wharton School, University of Pennsylvania
3730 Walnut Street, Philadelphia

Topic: Valuing Water: Business Challenges & Opportunities for Innovation