BIOMASS FUEL AND LOG SUPPLY AVAILABILITY AND COST .

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BIOMASS FUEL AND LOG SUPPLY AVAILABILITYAND COST ASSESSMENT FOR A BIOMASS POWERFACILITY AND SAWMILL COLLOCATED ATLOYALTON, CALIFORNIAPrepared for:Prepared by:February 4, 2021Final ReportREDACTED VERSION

ACKNOWLEDGMENTSTSS Consultants wishes to thank individuals and organizations for their significant efforts insupport of this investigation. These include, but are not limited to: Amy Berry, Chief Executive Officer, Tahoe Fund John B. Jones, Jr., Board Member, Tahoe Fund Jim Boyd, Board Member, Tahoe Fund Jim Turner, Chief Operations Officer, Sierra Valley Enterprises Jon Shinn, Forest Products Manufacturing Consultant Steve Frisch, President, Sierra Business CouncilUSFS Vegetation Management, Contracting and Biomass Utilization Staff:o Larry Swan, Regional Officeo Tim Howard, Regional Officeo Dan Smith, Eldorado National Foresto Brian Garrett, Lake Tahoe Basin Management Unito Victor Lyon, Lake Tahoe Basin Management Unito David Fournier, Tahoe National Foresto Annabelle Monti, Humboldt-Toiyabe National Foresto Will Brendecke, Plumas National Forest Coreen Francis, State Forester, California and Nevada, Bureau of Land ManagementMike Vollmer, Forester, Nevada Division of ForestrySteve Brink, Vice President, California Forestry AssociationBob Rynearson, Forester, W.M. Beaty and AssociationsMike Mitsel, Forester, Sierra Pacific IndustriesDan Porter, The Nature ConservancyCraig Thomas, The Fire Restoration GroupNiel Fischer, Forest Manager, Collins Pine CompanyNic Enstice, Sierra Nevada ConservancyScott Stawiarski, American Forest Resource CouncilChantz Joyce, American Forest FoundationThe TSS Consultants team includes: Tad Mason, ForesterCamila Banales-Sequel, GIS AnalystBiomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants2

TABLE OF CONTENTSACKNOWLEDGMENTS . 2INTRODUCTION . 6STUDY OBJECTIVES . 6RESOURCE SUPPLY AREA . 7Vegetation Cover . 8Conifer . 11Utah Juniper. 11FOREST RESOURCE SUPPLY . 12Forestland Ownership . 12High Hazard Zone . 16Timber Harvest Residuals . 18Sawlogs. 20Lake Tahoe Basin Management Unit . 21Forest Fuels Reduction . 22Sawmill Residuals . 24Seasonal Availability . 25Summary of Forest Feedstock Availability . 26URBAN WOOD AND TREE TRIMMINGS . 27State and Local Policy . 27Urban Wood Waste . 27Tree Trimming Material . 28Summary of Urban Wood Waste and Tree Trimming Feedstock Availability . 29BIOMASS FEEDSTOCK COMPETITION ANALYSIS . 29Enterprises Currently Sourcing Biomass Feedstock from the RSA . 30Honey Lake Power . 30Sierra Pacific Industries Quincy . 30Rio Bravo Rocklin . 30Compost Facilities . 30Biomass Fuel Supply Availability . 32FUTURE FEEDSTOCK SUPPLY SOURCES AND RISKS. 33Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants3

Additional Sources . 33Sawmill Residuals Outside the RSA . 33Urban Wood Waste Policy . 33Risks . 33Potential Competition . 33Seasonal Availability of Forest Fuel and Sawlogs . 34CONCLUSIONS . 34Sawmill Residuals . 34Optimized Fuel Blend. 35List of TablesTable 1. Vegetation Cover Acreage by State Within the RSA. 10Table 2. Conifer and Juniper Acreage by Ownership . 14Table 3. Private Forest Ownership . 16Table 4. 2014 to 2018 Private Timber Harvest by County Within the RSA . 18Table 5. 2014 to 2018 Public Timber Harvest by County Within the RSA . 19Table 6. 2014 to 2018 Private and Public Timber Harvest by County Within the RSA . 19Table 7. Delivered Log Prices Within the Northern Sierra Nevada Region . 21Table 8. 2014-2020 Fuels Reduction Treatment Acres by National Forest . 23Table 9. Sawmill Residuals Produced Within the RSA . 24Table 10. Current Sawmill Residuals Delivered Pricing. 25Table 11. Seasonal Availability of Forest Resources . 26Table 12. Forest Feedstock Supply Potentially and Practically Available . 26Table 13. Urban Wood Produced Annually Within the RSA . 28Table 14. Tree Trimming Material Produced Annually Within the RSA . 29Table 15. Urban Wood Waste and Tree Trimming Feedstock Supply Availability . 29Table 16. Facilities Currently Sourcing Biomass Material from the RSA . 31Table 17. Biomass Fuel Supply Availability Within the RSA . 32List of FiguresFigure 1.Figure 2.Figure 3.Figure 4.Figure 5.Figure 6.Figure 7.Resource Supply Area . 8Vegetation Cover . 9Vegetation Cover Acreage Within the RSA by Percent of Total. 11Land Ownership Within the RSA . 13Private Forestland Ownership Within the RSA . 15High Hazard Zone Land Within the RSA . 17Facilities Currently Sourcing Biomass Feedstocks from the RSA . 32Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants4

List of AppendicesAppendix A.Appendix B.Appendix C.Appendix D.Forest Biomass Transportation Incentive ProgramLTBMU Current Vegetation Management ProjectsShared Stewardship AgreementUSFS Region 5 Acres Treated to Reduce Wildfire Risk – 2019 and 2020Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants5

INTRODUCTIONThe Lake Tahoe Basin is blessed with verdant stands of true fir and pine. In order to maintainthe ecological integrity of these stands, forest thinning and dead tree removal are required. Inrecent years, timber harvest contractors have found limited markets for logs and forest slash.Unfortunately this has been exacerbated by the recent Chapter 7 filing of American RenewablePower, former owners of the biomass power facility at Loyalton. The recent acquisition of theplant by CTL Forest Management offers up a potential opportunity to re-structure the businessmodel at Loyalton and provide a ready home for both biomass and logs from the Lake Tahoeregion.CTL has created Sierra Valley Enterprises (SVE) as the corporate entity managing the Loyaltonsite. Before SVE and their strategic partners can seek out capital funding to refurbish the powerplant and consider siting a small sawmill (collocated at Loyalton), a resource supply availabilityassessment is needed. The private financial markets are very risk averse and require investmentgrade resource supply assessments in order to understand short-term and long-term biomass fueland log supply risk.The Tahoe Fund Strategic Plan includes project priorities that support forest health, includingwood waste utilization projects. The Tahoe Fund has asked TSS to conduct an assessment offorest biomass and log supply availability and cost within economic transport distance of theLoyalton site.Note that this report has all sensitive and proprietary data removed so that it can be distributed toa wider audience.STUDY OBJECTIVESSummarized below are the tasks that TSS implemented in support of this forest resource supplyassessment.Task 1.1Conduct a biomass fuel and log market assessment to determine current supplyavailability and pricing trends meeting SVE biomass fuel specifications andTahoe Fund log specifications. TSS recommends that the Resource Supply Area(RSA) radius be set at 75 miles (see Figure 1) in order to source biomass and logsupply from a cost-effective transport distance (approximately 5 hours maximumround trip transport). TSS assumes a targeted annual biomass fuel usage of130,000 bone dry tons (BDT)1 per year and lumber production of approximately21 million board feet (MMBF, log scale) per year.Bone dry ton represents 2,000 pounds of dry wood fiber.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants6

Task 2.Review current forest management activities within the RSA to forecast theamount of biomass and log supply considered potentially and practicallyavailable. Conduct geographic information system (GIS) analysis to confirmcurrent forest ownership. Interview forest managers to confirm current and futureplans including their professional opinions regarding biomass fuel and log supplyavailability. Emphasis will be on publicly managed forests, as they make up themajority of commercial forests located within the RSA. Utilize the stateDepartment of Tax and Fee Administration database to confirm historiccommercial timber harvest levels within the RSA.Task 3.Conduct an urban wood waste supply analysis focused on metropolitan centers(e.g., Reno/Sparks and Carson City) to assess potentially and practically availablewood waste supply. The SVE power plant has the capacity (per current powerpurchase agreement) to utilize up to 20% non-forest biomass as fuel.Task 4.Develop a competition analysis focused on current market demand and pricing forbiomass fuel and logs within the RSA.Task 5.Identify future biomass and log supply sources and risks. Providerecommendations regarding biomass fuel and log supply chain logistics requiredto sustain a biomass power plant and sawmill operation collocated at Loyalton.Task 6.Utilizing findings from tasks 1 through 5, prepare a biomass fuel and log supplyavailability and cost assessment report.RESOURCE SUPPLY AREAThe Resource Supply Area is defined as that region from which economic and sustainable woodyfeedstocks can be sourced on a long-term basis. Interviews with Sierra Valley Enterprises staff2confirmed that the RSA should be configured at a 75-mile radius. Figure 1 is a map of the RSA.Note that drivetime zones (30, 60, 90 and 120 minute) are highlighted. A two-hour one-waytransport is considered the economic range when transporting logs or biomass fuel.2Jim Turner, Chief Operations Officer and John Pickett, Chief Financial Officer, Sierra Valley Enterprises.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants7

Figure 1. Resource Supply AreaVegetation CoverAs noted earlier, the RSA encompasses all lands within a 75-mile radius of Loyalton. Thisincludes portions of the north Sierra Nevada Range and the Reno-Sparks metropolitan area. Thenorthern Sierra Nevada Range includes a significant acreage of forestland which in turn supportsforest products manufacturing and biomass power sectors. Using geographic information systemdata provided by Cal Fire and the Nevada Heritage database, TSS conducted an analysis ofvegetation cover. Figure 2 is a map highlighting vegetation cover by type within the RSA.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants8

Figure 2. Vegetation CoverBiomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants9

Outlined in Table 1 is a summary of vegetation cover acreage by type.Table 1. Vegetation Cover Acreage by State Within the RSAVegetation erbaceousJuniperShrubUrbanWaterWetlandTotal 2,129256,453614,63290,86611,309,780Percent ofTotal3%2%40%1%4%9%5%28%2%5%1%100%Note that the RSA includes approximately 11,309,780 acres total of which the most significantcover type is conifer forest at 4,568,799 acres. Almost all (96%) the conifer dominated acres arelocated within California. Both sawlogs and forest biomass are currently being sourced from thisconifer dominated acreage. Figure 3 graphically represents vegetation cover within the RSA.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants10

Figure 3. Vegetation Cover Acreage Within the RSA by Percent of TotalVEGETATION COVERWetland, 1%Water, 5%Agriculture, 3%Barren/Other,2%Urban, 2%Shrub, 28%Conifer, 40%Juniper, 5%Herbaceous, Desert, 1%Hardwood,4%ConiferThe most dominant commercial tree species within the RSA is ponderosa pine. When milled,ponderosa pine lumber has a yellow hue and is commonly referred to as yellow pine. Otherconifer species within the RSA include true fir, Doug fir, incense cedar and western white pine.Utah JuniperWithin the rangelands of the RSA, the Utah juniper tree (UJ) has dominated significant acreagedue primarily to successful fire suppression efforts. Now considered an invasive weed species,land managers seek to eradicate UJ in order to restore rangelands and improve habitat.Unfortunately, UJ is more of a shrub species (unlike western juniper) and is not economical tocollect, process, transport and utilize as fuel.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants11

FOREST RESOURCE SUPPLYThis analysis focused on four types of forest resources currently available within the RSA. Timber harvest residuals (limbs, tops)SawlogsForest fuels reduction residuals (small stems)Sawmill residuals (sawdust, bark, shavings)Forestland OwnershipForest resource supply availability is very dependent upon forest resource management activitieswithin the RSA. Each forestland ownership has specific goals and objectives. Public landmanagement agencies such as the USDA Forest Service (USFS), Bureau of Land Management(BLM) and the U.S. Fish and Wildlife Service (USF&WS) are mandated by public policy tomanage for a variety of attributes including recreation, wildlife habitat, ecosystem services andresource outputs (e.g., sawtimber, water). Forest resource outputs such as sawlogs and recoveryof forest thinning material and timber harvest residuals as forest biomass fuel are not a priority.Private forest ownership including commercial ownership (e.g., Sierra Pacific Industries) andsmall non-industrial ownership (typically family owned) make up most private forestlandownership within the RSA. Industrial ownership is usually focused on active forest managementand production of marketable commodities such as sawlogs. Non-industrial forest owners aretypically families that are managing for a variety of resources, including production of sawlogsas a long-term revenue source.TSS was able to secure GIS shape files from the Bureau of Land Management Surface Data andCal Fire to conduct the land ownership analysis. Figure 4 incorporates this data to highlight landownership within the RSA.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants12

Figure 4. Land Ownership Within the RSABiomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants13

Table 2 summarizes conifer forest and juniper dominated rangeland ownership within the RSA.Table 2. Conifer and Juniper Acreage by OwnershipOwnershipBLMTribal LandsLocal GovernmentMilitaryOtherPrivateStateState Park & Wildlife RefugesUS Fish and Wildlife ServiceUSFSTotal AcresNevadaCaliforniaConiferJuniperTotalConifer Juniper Total43,6461,12944,7753,079 292,825 295,90463663623749,578 8171,376,032 32,364 175,309 95359916,552332,916,9236042,917,527 121,440 17,984 139,4244,392,2782,7044,394,982 176,520 536,701 713,222Table 2 confirms that conifer forest cover acreage within the RSA is predominantly concentratedon USFS managed lands with 3,038,363 acres (67%) and private ownership at 1,407,579 acres(31%). Figure 5 highlights the location of private forest ownership within the RSA.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants14

Figure 5. Private Forestland Ownership Within the RSABiomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants15

Table 3 provides ownership data for the private forest ownership (Cal Fire and Nevada Divisionof Forestry data sets) within the RSA. Non-industrial forest owners are the dominant privateforest ownership at 620,743 acres (43%) with Sierra Pacific Industries a close second at 578,122acres (40%) and W M Beaty a distant third at 80,878 acres (6%).Table 3. Private Forest OwnershipOwnerAmerican River ConservancyCHY CompanyCollins PineCrane MillsSierra Pacific IndustriesSiller Brothers IncW M Beaty & AssociatesCalifornia Non-Industrial PrivateNevada Private Forest*AcresPercent of Total16,7311%21,6362%29,1402%221 l Acres1,434,908100%*Nevada database does not distinguish between industrial and non-industrial forestlandownership.High Hazard ZoneA key provision of the recent BioRAM II power purchase agreements (PPA) is monthly fuelrequirements tied to procurement of sustainable forest sourced biomass (80%) and fuel fromHigh Hazard Zones (60%) as designated by CAL FIRE. Assuming annual fuel usage of 130,000BDT3 and monthly fuel usage of 10,833 BDT, at least 80% (8,666 BDT) would need to besourced from sustainable forestry operations4 and 60% (6,500 BDT) of the 10,833 BDT wouldneed to be sourced from HHZ. The balance (20%) of monthly fuel usage is 2,167 BDT whichcan be made up of more cost effective urban wood and tree trimmings from theReno/Sparks/Carson City area.TSS was able to secure recently updated HHZ figures and shape files from Cal Fire to conductthis analysis. Figure 6 highlights HHZ location within the RSA. Note that practically all of theland dominated by conifer vegetation cover within the RSA is considered HHZ.3Annual fuel usage figure provided by Jim Turner, COO, Sierra Valley Enterprises.Sustainable forestry operations include unevenage management (no clear cuts).Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants416

Figure 6. High Hazard Zone Land Within the RSABiomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants17

Timber Harvest ResidualsTimber harvest residuals in the form of limbs, tops and sub-merchantable stems are generated ona regular basis as a byproduct of commercial timber harvest activities. Once collected andprocessed, these residuals are an excellent fuel (low moisture, high heating value). Discussionswith area foresters confirmed that very little timber harvest residual volume is recovered (postharvest) for value added utilization. Much of the residual is left on the landing (adjacent toroads) as the preferred timber harvest technique is whole tree yarding with trees processed atroadside landings using delimbers.5 The delimbing process generates piles of limbs, tops andsub-merchantable trees. Currently, these residuals are either piled and burned onsite or scatteredonsite. Note that the window for pile burning can be narrow and the liability of pile firesescaping containment can be significant. It is so significant that Sierra Pacific foresters nolonger pile and burn timber harvest residuals, opting instead to scatter limbs and tops across theharvest area.As a byproduct of commercial timber harvests, the availability of timber harvest residuals risesand falls with timber harvests within the RSA. TSS reviewed California Department of Tax andFee Administration (CDTFA) records to confirm timber harvest trends for the last five years(that data is available), 2014 through 2018. Note that CDTFA records track commercial timberharvest by county and ownership type (private and public). Discussions with Nevada Division ofForestry staff6 confirmed that very little commercial timber harvests occur within Nevada.Table 4 provides historic private timber harvest sawlog volumes from the eight Californiacounties located within the RSA. Note that harvest estimates are presented in thousand boardfeet7 measure (MBF).Table 4. 2014 to 2018 Private Timber Harvest by County Within the RSA20142015201620172018County (MBF/Yr) (MBF/Yr) (MBF/Yr) (MBF/Yr) (MBF/Yr)Butte34,10660,55943,20160,68354,650El s 251,662430,979263,420302,895303,146Five-Year 37515,877310,4205Commercial scale equipment designed to remove limbs and tops as well as cut stems to preferred lengths fortransport to the sawmill.6Mike Vollmer, Forester, Nevada Division of Forestry.7Thousand board feet (MBF) is a common unit of measure used in the timber industry to express relative volume ofsawtimber. One board foot measure is approximately equal to a board that measures 12” by 12” and 1” thick.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants18

Table 5 provides historic public (primarily USFS) timber harvest sawlog volumes from the eightCalifornia counties located within the RSA.Table 5. 2014 to 2018 Public Timber Harvest by County Within the RSA20142015201620172018County(MBF/Yr) (MBF/Yr) (MBF/Yr) (MBF/Yr) (MBF/Yr)Butte8,69306108026,270El 370Five-Year ,53485,858A comparison of Tables 4 and 5 confirm that timber harvest activity on public lands isapproximately 28% of timber harvest on private lands. As noted earlier (see Forest Ownershipsection), public land management agencies such as the USFS (predominant public landmanagement entity within the RSA) are mandated by public policy to manage for a variety ofattributes including recreation, wildlife habitat, ecosystem services and resource outputs.Resource outputs such as sawlogs and recovery of forest thinnings and timber harvest residualsas forest feedstocks are not a priority.Table 6 combines both private and public timber harvest sawlog volumes from the eightCalifornia counties located within the RSA.Table 6. 2014 to 2018 Private and Public Timber Harvest by County Within the RSA20142015201620172018County (MBF/Yr) (MBF/Yr) (MBF/Yr) (MBF/Yr) (MBF/Yr)Butte42,79960,55943,81161,48560,920El otals 342,309467,760364,143411,664395,516Five-Year 79219,411396,278Some counties have historically produced more sawtimber than others with two counties (Plumasand El Dorado) producing about 48% of the harvest volume between 2014 and 2018.Biomass Fuel and Log Supply Availability and Cost AssessmentTSS Consultants19

Adjusting the timber harvest figures in Table 6 to account for the fact that portions of countieslisted are located outside the RSA, TSS estimates that the five-year average timber harvestwithin the RSA is approximately 233,605 MBF/year. Based upon TSS’ experience working withlogging and chipping contractors in the West, the recovery factor for biomass feedstockprocessed from timber harvest residuals is approximately 0.9 BDT/MBF of woody biomass(treetops and limbs) that could be generated from each MBF of timber harvested.Using the 0.9 BDT per MBF recovery factor and the 233,605 MBF/year (five-year average)harvest estimate, there are 210,245 BDT/year of timber harvest residuals potentially availablewithin the RSA. Not all timber harvest residuals are recoverable, as topography and roadsystems will impact economic collection and transport. TSS conducted a GIS analysis of thetopography within the RSA and found that approximately 59% of the landscape is located onslope gradient of 35% or less. Most forest biomass collection activities occur on slopes of 35%or less. Using this metric, TSS found that approximately 59% of forestland is on topography androad systems that will accommodate economical collection and transport (using chip van trailers)of forest biomass. Using the 59% figure results in a practically available timber harvest residualestimate of 124,044 BDT/year.Interviews with local contractors that manage timber harvest residual collection and processingoperations confirmed that costs range from 32 to 35/BDT FOB8 truck at the landing.Transportation costs vary by transport distance. Note that transportation cost offsets are offeredby programs such as My Sierra Woods.9 See Appendix A for additional information on theForest Biomass Transportation Incentive program managed by My Sierra Woods. In addition,some USFS timber sale contracts mandate that the timber purchaser remove timber harvestresiduals. This mandate provides an incentive for the timber sales purchaser to underwrite thecost to deliver forest biomass to power plants, thus discounting the deliver price.SawlogsDiscussions with SVE staff10 confirmed that the preferred business model for the Loyalton site isthe collocation of a sawmill facility. This optimizes the utilization of both logs and forestbiomass produced by CTL Forest Management (an affiliate of SVE). In addition, the symbioticrelationship between sawmill and biomass power plant is significant. The sawmill createsresiduals (sawdust, sawdust, chips) that can be utilized as fuel for the power plant. The

purchase agreement) to utilize up to 20% non-forest biomass as fuel. Task 4. Develop a competition analysis focused on current market demand and pricing for biomass fuel and logs within the RSA. Task 5. Identify future biomass and log supply sources and risks. Provide recommendations regarding biomass fuel

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