Natural Resources: Federal Agencies Are Engaged in Various	 
Efforts to Promote the Utilization of Woody Biomass, but	 
Significant Obstacles to Its Use Remain (13-MAY-05, GAO-05-373). 
                                                                 
In an effort to reduce the risk of wildland fires, many federal  
land managers--including the Forest Service and the Bureau of	 
Land Management (BLM)--are placing greater emphasis on thinning  
forests and rangelands to help reduce the buildup of potentially 
hazardous fuels. These thinning efforts generate considerable	 
quantities of woody material, including many smaller trees,	 
limbs, and brush--referred to as woody biomass--that currently	 
have little or no commercial value. GAO was asked to determine	 
(1) which federal agencies are involved in efforts to promote the
use of woody biomass, and actions they are undertaking; (2) how  
these agencies are coordinating their activities; and (3) what	 
agencies see as obstacles to increasing the use of woody biomass,
and the extent to which they are addressing these obstacles.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-373 					        
    ACCNO:   A24058						        
  TITLE:     Natural Resources: Federal Agencies Are Engaged in       
Various Efforts to Promote the Utilization of Woody Biomass, but 
Significant Obstacles to Its Use Remain 			 
     DATE:   05/13/2005 
  SUBJECT:   Energy						 
	     Forest management					 
	     Forest products					 
	     Interagency relations				 
	     Land management					 
	     Research and development				 
	     Research programs					 
	     Strategic planning 				 
	     Intergovernmental relations			 
	     Policy evaluation					 
	     National Fire Plan 				 

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GAO-05-373

United States Government Accountability Office

  GAO	Report to the Chairman, Committee on Resources, House of Representatives

May 2005

NATURAL RESOURCES

 Federal Agencies Are Engaged in Various Efforts to Promote the Utilization of
           Woody Biomass, but Significant Obstacles to Its Use Remain

                                       a

GAO-05-373

[IMG]

May 2005

NATURAL RESOURCES

Federal Agencies Are Engaged in Various Efforts to Promote the Utilization of
Woody Biomass, but Significant Obstacles to Its Use Remain

                                 What GAO Found

Most woody biomass utilization activities are implemented by the
Departments of Agriculture (USDA), Energy (DOE), and the Interior, and
include awarding grants to businesses, schools, Indian tribes, and others;
conducting research; and providing education. Most of USDA's woody biomass
utilization activities are undertaken by the Forest Service and include
grants for woody biomass utilization, research into the use of woody
biomass in wood products, and education on potential uses for woody
biomass. DOE's woody biomass activities focus on research into using the
material for renewable energy, while Interior's efforts consist primarily
of education and outreach. Other agencies also provide technical
assistance or fund research activities.

Federal agencies coordinate their woody biomass activities through formal
and informal mechanisms. Although the agencies have established two
interagency groups to coordinate their activities, most officials we spoke
with emphasized informal communication-through e-mails, participation in
conferences, and other means-as the primary vehicle for interagency
coordination. To coordinate activities within their agencies, DOE and
Interior have formal mechanisms-DOE coordinates its activities through its
Office of Energy Efficiency and Renewable Energy, while Interior and BLM
have appointed officials to oversee, and have issued guidance on, their
woody biomass activities. In contrast, while the Forest Service recently
issued a woody biomass policy, it has not assigned responsibility for
overseeing and coordinating its various woody biomass activities,
potentially leading to fragmented efforts and diluting the impact of these
activities.

The obstacles to using woody biomass cited most often by agency officials
were the difficulty of using woody biomass cost-effectively and the lack
of a reliable supply of the material; agency activities generally are
targeted toward addressing these obstacles. Some officials told us their
agencies are limited in their ability to address these obstacles and that
incentives-such as subsidies and tax credits-beyond the agencies'
authority are needed. However, others disagreed with this approach for a
variety of reasons.

Examples of Uses for Woody Biomass

Source: Forest Service.

Sign made from wood-plastic composite. Power generator that uses woody
biomass for fuel.

                 United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
Most Woody Biomass Utilization Activities Are Implemented by the

Departments of Agriculture, Energy, and the Interior, and Include Grants,
Research, and Education

Woody Biomass Coordination Efforts among and within Federal Agencies
Include Both Formal and Informal Mechanisms, but Unlike DOE and Interior,
the Forest Service Has Not Assigned Responsibility for Overseeing Woody
Biomass Activities

Most Officials Cited Economic Obstacles to Woody Biomass Utilization, and
While Agencies Generally Targeted These Obstacles, Some Officials Believe
Additional Steps beyond the Agencies' Authority Are Needed

Conclusions
Recommendation for Executive Action
Agency Comments and Our Evaluation

1 2 5

11

30

36 44 45 45

Appendixes

      Appendix I: Objectives, Scope, and Methodology 46 Appendix II: Comments
from the Department of Agriculture 50 Appendix III: GAO Contacts and Staff
                                                           Acknowledgments 51

Figures Figure 1:

Figure 2: Figure 3:

Figure 4: Figure 5:

Figure 6:

Figure 7:

Figure 8:

Figure 9:

Before and After Photos of Thinning Project, Lassen
National Forest, California 5
Chip Truck Being Emptied, California Power Plant 7
Wood Chips Being Conveyed to a Boiler, California Power
Plant 8
The BioMax 15 Power Generator 14
Automated Wood Chip Conveyor, Darby School District
Project, Darby, Montana 17
Signs Produced from Woody Biomass Mixed with
Plastic 21
Kiosk Built from Roundwood and Small-Diameter
Wood 22
Interior of Darby Community Library Built from
Roundwood, Darby, Montana 23
Slash Bundler Processing Small-Diameter Trees 24

Contents

Abbreviations

BIA Bureau of Indian Affairs
BLM Bureau of Land Management
CSREES Cooperative State Research, Education,

and Extension Service DOE Department of Energy EAP Economic Action
Programs EERE Office of Energy Efficiency and Renewable Energy EPA
Environmental Protection Agency FEMP Federal Energy Management Program FWS
Fish and Wildlife Service NPS National Park Service NREL National
Renewable Energy Laboratory TMU Technology Marketing Unit USDA U.S.
Department of Agriculture

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

A

United States Government Accountability Office Washington, D.C. 20548

May 13, 2005

The Honorable Richard Pombo Chairman Committee on Resources House of
Representatives

Dear Mr. Chairman:

Much attention has been paid in recent years to the state of our nation's
forests. Dense, dry forest conditions have fueled extensive wildland fires
and have raised the specter of severe fires in the future. In an effort to
reduce the risk of fire, federal land management agencies-including the
Forest Service in the Department of Agriculture (USDA) and the Bureau of
Land Management (BLM) in the Department of the Interior-are placing
greater emphasis on thinning forests and rangelands to help reduce the
buildup of potentially hazardous fuels.

These thinning efforts will generate considerable quantities of woody
material, including some larger trees that are commercially valuable
timber and many smaller trees, limbs, and brush that generally have little
or no commercial value today. This low commercial value material is often
referred to as woody biomass.1 Unlike commercial timber, this material
typically has been piled and burned, left in the forest, or deposited in
landfills because there is often little or no demand for it.

Some industries make use of this woody biomass, however-for example, by
burning it to generate electricity or turning it into products such as
road signs or animal bedding. Using woody biomass in these or other ways
can have several beneficial side effects, including stimulating local
economies and potentially facilitating fuel reduction efforts by creating
a demand for thinned material. However, the cost of harvesting and
transporting the material, combined with the relatively low value of the
products produced, has meant that woody biomass has not been widely
utilized.

1Although biomass can be considered any sort of organic material-including
trees, grasses, agricultural crops, and animal wastes-the term woody
biomass in this report refers to small-diameter trees and other
traditionally noncommercial material cut as part of thinning, harvesting,
or other activities on forests or rangelands. The term "woody" is used to
distinguish this material from agricultural biomass such as corn stalks or
sugar cane residue.

In this context, you asked us to determine (1) which federal agencies are
involved in efforts to promote the use of woody biomass, and the actions
they are undertaking; (2) how these federal agencies are coordinating
their activities related to woody biomass; and (3) what these agencies see
as the primary obstacles to increasing the use of woody biomass, and the
extent to which they are addressing these obstacles.

In conducting our review, we used a structured interview guide to collect
information from headquarters and field officials from the Departments of
Agriculture, Energy, and the Interior, and the Environmental Protection
Agency. In total, we interviewed 44 officials using this guide. We also
met with officials from nonfederal organizations, including state
governments, Indian tribes, academia, environmental organizations, and
others. We reviewed agency policies, regulations, strategic plans, and
other documents; federal and nonfederal studies regarding technological,
economic, and other issues related to woody biomass utilization; and
pertinent laws and other documents. We also toured the Forest Service's
Forest Products Laboratory in Madison, Wisconsin; a woody biomassheated
community center in Nederland, Colorado; and a wood-fired power plant in
Burney, California. Appendix I provides further details on the scope and
methodology of our review. We conducted our work between June 2004 and
March 2005 in accordance with generally accepted government auditing
standards.

Results in Brief	Most woody biomass utilization activities within the
federal government are being undertaken by USDA, the Department of Energy
(DOE), and the Department of the Interior, and include awarding grants to
businesses, schools, Indian tribes, and others; conducting research; and
providing education and outreach. Some of these activities involve
multiagency efforts-for example, the three departments signed an agreement
in 2003 to support the utilization of woody biomass, and USDA and DOE
jointly award grants for biomass research and development. Each department
also carries out its own activities. Most of USDA's woody biomass
utilization activities are undertaken by the Forest Service and include
grants for woody biomass utilization, research into wood products by the
Forest Products Laboratory, and outreach and technical assistance
conducted by agency field staff. Most of DOE's woody biomass utilization
activities focus on research into the use of woody biomass for renewable
energy. DOE also is engaged in programs that assist federal agencies and
tribal governments in switching to renewable energy, including woody
biomass. Interior's woody biomass efforts generally consist of education
and outreach, as well

as some grant programs; within Interior, BLM is expanding its efforts to
conduct education and outreach and recently established a woody biomass
utilization strategy that will provide a framework for future activities
related to woody biomass. Other federal agencies, including the
Environmental Protection Agency and the National Science Foundation,
implement some activities indirectly related to woody biomass utilization.

Federal agency efforts to coordinate their woody biomass utilization
activities, both among and within agencies, occur through both formal and
informal mechanisms. Although the departments have established the
interagency Woody Biomass Utilization Group to coordinate their
activities, most agency officials we spoke with emphasized informal
communication-such as telephone discussions, e-mails, participation in
conferences, and other means-rather than this group as the primary vehicle
for interagency coordination. To coordinate activities within their
agencies, both DOE and Interior have formal mechanisms-DOE coordinates its
activities through its Office of Energy Efficiency and Renewable Energy,
while both Interior and BLM have appointed officials to oversee, and have
issued guidance on, their woody biomass activities. In contrast, while the
Forest Service issued a woody biomass policy in January 2005, the agency
has not assigned a specific individual or office with responsibility for
implementing this policy. As a result, the agency risks diluting the
impact of its activities because different units within the Forest Service
may be emphasizing different priorities-and indeed, some officials we
interviewed told us that the Forest Service's lack of a coordinated
approach has resulted in poor coordination between headquarters and field
units. Without assigning responsibility for overseeing the implementation
of its new policy, the Forest Service cannot ensure that its multiple
activities each contribute to its overall objectives. Therefore, to
capitalize more fully on the Forest Service's potential to promote greater
woody biomass utilization, we are recommending that the Secretary of
Agriculture direct the Chief of the Forest Service to assign
responsibility for overseeing and coordinating the agency's woody biomass
utilization activities to a specific official or office within the agency.

Agency officials cited two principal obstacles to increasing the use of
woody biomass: the inherent difficulty in using woody biomass
costeffectively and the lack of a reliable supply of the material.
Although agency activities are generally targeted toward these obstacles
and others identified by agency officials, some officials told us that
additional steps beyond the agencies' authority to implement are needed.
Most importantly, officials with whom we spoke cited the relatively high
costs of converting

woody biomass into marketable products as a primary challenge to
increasing the utilization of woody biomass-in other words, using woody
biomass is often not cost-effective given the price that can be obtained
for the products produced. For example, a Forest Service researcher
estimated the cost of producing electricity from woody biomass at about
7.5 cents per kilowatt hour but noted that this electricity could be sold
for only about 5.3 cents per kilowatt hour in the wholesale market. The
costs cited most frequently were those for harvesting and transporting the
material. Additional costs can be involved as well, such as exit fees
charged by electrical utilities to customers seeking to disconnect from
the electrical grid and rely on their own woody biomass-generated
electricity. The other major obstacle agencies cited was the lack of a
reliable long-term supply of woody biomass from federal lands, which
inhibits potential investment in woody biomass utilization projects
because investors are reluctant to commit to projects without assurances
of a steady supply of raw material. The agency activities we identified
are generally targeted at overcoming the obstacles identified-for example,
working to reduce woody biomass processing costs by conducting research
into less expensive ways to convert woody biomass into wood products or
energy.

Some agency officials believe that their agencies are limited in their
ability to fully address these obstacles, and that additional steps beyond
the agencies' authorities will be required to increase woody biomass
utilization. Such steps include subsidies or tax credits to offset the
costs involved in using woody biomass and federal or state policies
requiring the use of renewable energy sources, including woody biomass, in
generating electricity. Other officials disagreed with this view, stating
that neither subsidies nor tax credits were appropriate mechanisms for
promoting the use of woody biomass and that such incentives could have
adverse, unintended consequences on the ecological health of the national
forests. In responding to a draft of this report, USDA concurred with our
findings and recommendation, while DOE officials stated that they had no
comments. We requested, but did not receive, comments from Interior.
USDA's comments appear in appendix II.

Background	The Forest Service and Interior manage about 700 million acres
of federal land between them, much of which is considered to be at high
risk of fire. Federal researchers estimate that from 90 million to 200
million acres of federal lands in the contiguous United States are at an
elevated risk of fire because of abnormally dense accumulations of
vegetation, and that these conditions also exist on many nonfederal
lands.2 Addressing this fire risk has become a priority for the federal
government, which in recent years has significantly increased funding for
fuels reduction. Fuels reduction is generally done through prescribed
burning, in which fires are deliberately lit in order to burn excess
vegetation, and mechanical treatments, in which mechanical equipment is
used to cut vegetation. Figure 1 shows before and after photos of a site
that was thinned to reduce the risk of fire.

Figure 1: Before and After Photos of Thinning Project, Lassen National
Forest, California

Source: Forest Service.

2For more information about the risks and effects of wildland fire, see
GAO, Wildland Fires: Forest Service and BLM Need Better Information and a
Systematic Approach for Assessing the Risks of Environmental Effects,
GAO-04-705 (Washington, D.C.: June 24, 2004).

Although prescribed burning is generally less expensive than mechanical
treatment, prescribed fire may not always be the most appropriate method
for accomplishing land management objectives-and in many locations it is
not an option, either because of concerns about smoke pollution or because
vegetation is so dense that agency officials fear that a prescribed fire
could escape and burn out of control. In such situations, mechanical
treatments are required, generating large amounts of wood-particularly
small-diameter trees, limbs, brush, and other material that serve as fuel
for wildland fires.3

Woody biomass can be put to many uses. Small logs can be peeled and used
as fence posts, or can be joined together with specialized hardware to
construct pole-frame buildings. Trees also can be milled into structural
lumber. Using computer-operated equipment, some mills can manufacture
lumber from logs as small as 4 inches in diameter. Other wood products
such as furniture, flooring, and paneling can be produced. Woody biomass
also can be chipped for use in paper pulp production and other uses-for
example, a New Mexico company combines juniper chips with plastic to
create a composite material used to make road signs.

Woody biomass also can be converted into other products, including liquid
fuels such as ethanol and other products such as adhesives. Finally, woody
biomass can be chipped or ground for energy production-for example, to
fire power plants, or produce steam or hot water heat for manufacturing
processes or buildings. Figure 2 shows a trailer full of wood chips being
emptied into a container at a California power plant fueled by woody
biomass; figure 3 shows chips ready to be fed into a boiler.

3Fuel reduction efforts are not the only source of this material. Woody
biomass can result from a variety of activities related to improving or
maintaining forest and rangeland health, as well as forest management
activities such as timber harvests. Further, according to Forest Service
officials and others, millions of acres of pine trees in the southeastern
United States face a depressed market because of the closure of pulp
mills. These trees thus constitute another potential source of woody
biomass.

           Figure 2: Chip Truck Being Emptied, California Power Plant

                                  Source: GAO.

    Figure 3: Wood Chips Being Conveyed to a Boiler, California Power Plant

Source: GAO.

Citing biomass's potential to serve as a source of electricity, fuel,
chemicals, and other materials, the President and the Congress have
encouraged federal activities regarding biomass utilization-but until
recently, woody biomass received relatively little emphasis. A list of
major congressional direction follows:

The Biomass Research and Development Act of 20004

o 	directed the Secretaries of Agriculture and Energy to coordinate their
research and development efforts, leading to the production of biobased
industrial products;5

4Pub. L. No. 106-224, Title III, 114 Stat. 428, as amended (2000).

5The act defined biobased industrial products to include fuels, chemicals,
building materials, electric power, or heat produced from biomass, but did
not specify the type of biomass- agricultural, woody, or other-to be used.

o 	created the interagency Biomass Research and Development Board,
supported by a Biomass Research and Development Technical Advisory
Committee;6

o 	directed the Secretaries of Agriculture and Energy to implement a
"Biomass Research and Development Initiative" under which the agencies
would provide grants, contracts, and financial assistance for research on
biobased industrial products; and

o 	authorized an appropriation of $49 million for each of fiscal years
2000 through 2005 to carry out the act's provisions.

The Farm Security and Rural Investment Act of 20027

o 	established a federal procurement preference for biobased products
requiring federal agencies purchasing items costing more than $10,000 to
give preference to biobased products;8

o 	directed the Secretary of Agriculture to award grants for developing
and constructing biorefineries (equipment and processes that convert
biomass into fuels and chemicals and that may produce electricity);

6These groups replaced interagency groups created by Executive Order
13134, "Developing and Promoting Biobased Products and Bioenergy." See 64
Fed. Reg. 44639 (Aug. 16, 1999). Executive Order 13134 directed the
establishment of the Interagency Council on Biobased Products and
Bioenergy, as well as an Advisory Committee on Biobased Products and
Bioenergy, to provide information and advice for consideration by the
council.

7Pub. L. No. 107-171, Title IX, 116 Stat. 475 (2002).

8Specifically, the statute requires the Secretary of Agriculture to
develop a list of items that are or can be produced with biobased products
and whose procurement by federal agencies will carry out the statute's
objectives. Federal agencies then must generally give preference to such
items composed of the highest percentage of biobased products practicable,
consistent with maintaining a satisfactory level of competition.
Procurement preference is to be given to biobased products for items
costing more than $10,000 or "where the quantity of such items or of
functionally equivalent items purchased or acquired in the course of the
preceding fiscal year was $10,000 or more."

o 	directed the Secretary of Agriculture to provide grants, loans, and
loan guarantees to farmers, ranchers, and rural small businesses to
purchase renewable energy systems and make energy efficiency improvements,
and to make available from the Commodity Credit Corporation $23 million
for these activities for each of fiscal years 2003 through 2007;9 and

o 	directed the Secretary of Agriculture to make available from the
Commodity Credit Corporation $5 million in fiscal year 2002 and $14
million for each of fiscal years 2003 through 2007 to carry out the
provisions of the Biomass Research and Development Act of 2000, and
extended through fiscal year 2007 the Biomass Research and Development
Act's authorization of $49 million each fiscal year.

The Healthy Forests Restoration Act of 200310

o 	authorized appropriations of $5 million for each of fiscal years 2004
through 2008 for each of two grant programs-a Forest Service program
focusing on community-based enterprises and small businesses using
biomass, and a USDA program providing grants to offset the costs of
purchasing biomass by facilities that use it for wood-based products or
other commercial purposes; and

o 	increased the authorization contained in the Biomass Research and
Development Act of 2000 from $49 million to $54 million for each of fiscal
years 2002 through 2007.

The American Jobs Creation Act of 2004 contained tax incentives promoting
the use of woody biomass to generate electricity.11

9The Commodity Credit Corporation is a government-owned corporation within
USDA. 10Pub. L. No. 108-148, Title II, 117 Stat. 1901 (2003). 11Pub. L.
No. 108-357, S: 710, 118 Stat. 1552 (2004).

Utilization of woody biomass also is emphasized in the federal
government's National Fire Plan, a strategy for planning and implementing
agency activities related to wildland fire management. For example, a
National Fire Plan strategy document cites biomass utilization as one of
its guiding principles, recommending that the agencies "employ all
appropriate means to stimulate industries that will utilize
small-diameter, woody material resulting from hazardous fuel reduction
activities."12 Federal agencies also are carrying out research concerning
the utilization of small diameter wood products as part of the Healthy
Forests Initiative, the administration's initiative for wildland fire
prevention.

Most Woody Biomass Utilization Activities Are Implemented by the
Departments of Agriculture, Energy, and the Interior, and Include Grants,
Research, and Education

Most of the federal government's woody biomass utilization efforts are
being undertaken by USDA, DOE, and Interior. Some activities are performed
jointly. For example, USDA, DOE, and Interior signed a Memorandum of
Understanding to promote the utilization of woody biomass, and USDA and
DOE conduct a joint biomass grant program. Each department also conducts
its own woody biomass activities, which generally involve grants for
small-scale woody biomass projects, research on woody biomass uses, and
education, outreach, and technical assistance aimed at woody biomass
users.

Some Woody Biomass Activities Are Performed Jointly by Multiple Agencies

USDA, DOE and Interior have undertaken a number of joint efforts related
to woody biomass. In June 2003, the three departments signed a Memorandum
of Understanding on Policy Principles for Woody Biomass Utilization for
Restoration and Fuel Treatments on Forests, Woodlands, and Rangelands. The
purpose of the memorandum is "to demonstrate a

12Departments of Agriculture and the Interior and the Western Governors'
Association, A Collaborative Approach for Reducing Wildland Fire Risks to
Communities and the Environment: A 10-Year Comprehensive Strategy
(Washington, D.C.; August 2001). Note that the National Fire Plan is not a
single document. Rather, it is composed of several strategic documents
that set forth a priority to reduce wildland fire risks to communities.
The various documents that make up the National Fire Plan include (1) a
September 2000 report from the Secretaries of Agriculture and the Interior
to the President in response to the wildland fires of 2000, (2)
congressional direction accompanying substantial new appropriations in
fiscal year 2001, and (3) several approved and draft strategies to
implement all or parts of the plan.

commitment to develop and apply consistent and complementary policies and
procedures across three federal departments to encourage utilization of
woody biomass." The departments also sponsored a 3-day conference on woody
biomass in January 2004. To discuss woody biomass developments and to
coordinate their efforts, the departments established an interagency Woody
Biomass Utilization Group, which meets quarterly.

Another interdepartmental collaboration effort is the Joint Biomass
Research and Development Initiative, a joint USDA and DOE grant program
authorized under the Biomass Research and Development Act of 2000. The
program provides funds for research on biobased products. In fiscal year
2004, the two departments awarded $25 million to 22 projects, and cost
sharing by private sector partners raised the value of the projects to
nearly $38 million. While the program generally promotes all forms of
biomass rather than targeting woody biomass, in 2004 the grant
solicitation included woody biomass as an area of emphasis and, according
to a USDA official, 10 projects emphasizing or incorporating woody biomass
were funded that year, for a total of about $7.7 million. For example, the
Hayfork Biomass Utilization and Value Added Model for Rural Development
project in California received about $503,000 to support the design and
early implementation phases of a biomass utilization facility, including a
log sort yard, small log processor, and wood-fired electrical generation
plant. Another California project, the Small-Scale, Biomass-Fired Gas
Turbine Plants Suitable for Distributed and Mobile Power Generation,
received about $242,000 to evaluate the economic benefits of using
forestry residues for generating power in small-scale power plants. USDA
and DOE also have collaborated on an assessment of biomass availability,
including woody biomass, and have prepared a report summarizing their
findings.13

13Oak Ridge National Laboratory, Biomass as Feedstock for a Bioenergy and
Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual
Supply (Oak Ridge, Tennessee; April 2005).

In another interagency effort, BLM worked with DOE's National Renewable
Energy Laboratory (NREL) to identify and evaluate renewable energy
resources-including biomass-on public lands, resulting in a February 2003
report titled "Assessing the Potential for Renewable Energy on Public
Lands." More recently, USDA and Interior entered into a cooperative
agreement with the National Association of Conservation Districts in 2004
to promote woody biomass utilization.14 Activities to be performed by the
association under the agreement include organizing national and regional
workshops on woody biomass utilization and developing outreach materials
to stimulate investment in small wood industries and bioenergy.

USDA, DOE, and Interior also participate in joint activities at the field
level. NREL and the Forest Service have collaborated in developing and
demonstrating small power generators that use woody biomass for fuel.
These generators, known as BioMax units, are being demonstrated at several
sites, including a high school in Walden, Colorado, and a furnituremaking
business at the Zuni Pueblo in New Mexico. Figure 4 shows the BioMax 15
power generator.

14The National Association of Conservation Districts is a nonprofit
organization that represents the nation's 3,000 conservation
districts-local units of government established under state law to carry
out natural resource management programs at the local level.

Figure 4: The BioMax 15 Power Generator

Source: Forest Service.

The Forest Service also collaborates with Interior in awarding and funding
grants under the Fuels Utilization and Marketing program, a jointly funded
grant program targeting woody biomass utilization efforts in the Pacific
Northwest. Another collaborative effort at the field level involves a
Forest Service rural community assistance coordinator specialist in the
Southwest Region and includes officials from BLM and the state of New
Mexico, as well as environmental group and utility company
representatives. In addition to studying woody biomass availability and
conducting market assessments, this biomass working group is proposing
policy changes favorable to woody biomass. It also has studied barriers to
biomass use and provided input on project designs so that projects are
less likely to be challenged.

The agencies also are collaborating with state and local governments to
promote the use of woody biomass. The Forest Service, NREL, and BLM
entered into a Memorandum of Understanding with Jefferson County,
Colorado, in 2004 to study the feasibility of developing an electricity
generating facility using woody biomass from forest thinning projects
intended to reduce the risk of wildland fire. In addition to the agencies
and Jefferson County, the agreement included the Colorado State Forest
Service and a local energy utility. In its January 2005 feasibility study,
the partnership reported that about 166,000 tons of biomass would be
available each year from forest thinnings and new construction waste. With
this development, the local energy utility announced that it would
consider converting a boiler at one of its plants to burn biomass to
generate steam heat for downtown Denver buildings.

Another example of federal agencies working with local governments
involves a power plant in Canon City, Colorado, that uses coal and wood
chips to fire its boilers. The power plant announced in January 2005 that
it plans to sell renewable energy certificates to help recover costs
associated with introducing the renewable fuel source.15 The wood chips
used in the power plant are produced by forest-thinning operations
conducted by BLM, the Forest Service, and state and local governments,
while the environmental and market analysis for the project was co-funded
by DOE.

Yet another example of local cooperation involves a January 2005
"declaration of cooperation" signed in central Oregon by officials from
the Forest Service, BLM, state and tribal government, the timber industry,
and environmental groups. The groups have agreed to work together to
stabilize the supply of woody biomass as a way of helping create a market
for the material.

15Renewable energy certificates represent the environmental attributes of
renewable energy generation and can be sold separately from the underlying
commodity electricity. Because the certificates are sold separately from
electricity, they can be purchased from locations anywhere, enabling
organizations to purchase renewable energy even if their local utility or
power marketer does not offer a renewable energy product. Customers do not
need to switch from their current electricity supplier to purchase
certificates, and they can buy certificates based on any fixed amount of
electricity.

USDA's Efforts Related to Woody Biomass Utilization Are Concentrated in
the Forest Service, with Some Efforts Under Way in Other USDA Agencies

Most of USDA's woody biomass utilization activities are undertaken by the
Forest Service, with other USDA services playing a smaller role. USDA's
activities involve grants, research and development, and education,
outreach, and technical assistance.

Grants	USDA implements several grant programs related to woody biomass.
The Forest Service provides grants through its Economic Action Programs
(EAP), created to help rural communities and businesses dependent on
natural resources become sustainable and self-sufficient. In 2003,
according to Forest Service officials, the Forest Service funded 73
projects related to woody biomass utilization; grants ranged from $5,000
to $225,000, for a total of about $3.5 million.16 A Forest Service
official told us that similar levels of effort existed in 2001 and 2002,
but that the level of effort in 2004 declined because of reduced funding
levels. The Forest Service currently is preparing a report summarizing the
activities carried out under EAP grants nationwide.

Forest Service officials told us that EAP grant funds are distributed
among Forest Service regional and national units, which in turn allocate
the funds according to regional or national priorities, respectively. For
example, the Northern and Intermountain Regions decided to use their
regional EAP allocations not only to fund Economic Recovery-a Forest
Service program providing financial and technical assistance to improve
the economic, environmental, and social conditions of rural
communities-but also to fund two regional woody biomass grant programs,
one focusing on using small-diameter wood to create specialty products
such as flooring, paneling, and wood-plastic composites and the other
focusing on biomass utilization for energy production.17 This second
program, known as the Fuels for Schools program, provides grant funds to
help public schools retrofit their fuel and gas heating systems to woody
biomass heating

16Forest Service officials noted that the data do not include grants made
by the Forest Service's Southern Region or Northeast Area Office because
these units did not provide information on their EAP grant programs.

17The Northern and Intermountain Regions administer national forests and
grasslands in all of Idaho, Montana, Nevada, North Dakota, and Utah, and
in parts of South Dakota, Washington, and Wyoming.

systems that reduce heating costs. The Darby School District in Montana,
for example, provides heat to three schools with wood burning boilers;
this conversion reduced its fuel bill by about 43 percent during the first
year of operation. The project requires about 500 tons of woody biomass
per year, the byproduct of about 50 acres' worth of fuel reduction
treatments, according to project officials. As of December 2004, according
to Forest Service officials, three Fuels for Schools projects (including
the Darby School District) had been completed, and about 20 schools had
completed engineering analyses and were preparing to apply for grant
funds. Figure 5 shows the automated wood chip conveyor installed to
provide fuel to the boiler as part of the Darby School District project.

Figure 5: Automated Wood Chip Conveyor, Darby School District Project,
Darby, Montana

Source: Forest Service.

The Forest Service has created an additional grant program in response to
a provision in the Consolidated Appropriations Act for Fiscal Year 2005,18
authorizing up to $5 million for grants to create incentives for increased
use of biomass from national forest lands. A congressional committee
report accompanying the act directed the Forest Service "to develop this
program with the clear intent to make grants that will result in increased
commercial use of biomass products, and which will thereby result in
reduced overall hazardous fuels program costs." Specific Forest Service
goals for the grant program are to (1) help reduce management costs by
increasing the value of biomass and other forest products generated by
hazardous fuel treatments, (2) create incentives and reduce the business
risk for increased use of biomass from national forest lands, and (3)
institute projects that target and help remove economic and market
barriers to using small-diameter trees and woody biomass. Grants will be
awarded for up to 3 years in amounts from $50,000 to $250,000, and will
require a 20 percent match on the part of grantees; applications are due
May 16, 2005, with awards to be announced by June 1, 2005.

Two other USDA agencies---the Cooperative State Research, Education, and
Extension Service (CSREES) and USDA Rural Development-maintain grant
programs that potentially include woody biomass utilization activities.19
CSREES oversees the Biobased Products and Bioenergy Production Research
grant program, under which a total of $5.4 million is available to support
research into the use of agricultural materials- including woody
biomass-for fuels or products. CSREES also provides grants to states for
research under the McIntyre-Stennis Act of 1962, which was enacted to
promote forestry research by state colleges and universities. Projects can
fall into one of eight areas listed in the act, one of which is the
utilization of wood and other forest products. However, this grant program
does not emphasize wood products over the other areas, and a CSREES
official told us that most funded projects address issues other than woody
biomass.

18Pub. L. No. 108-447.

19CSREES's mission is to advance knowledge for agriculture, the
environment, human health and well-being, and communities by supporting
research, education, and extension programs. CSREES does not perform
actual research, education, and extension, but rather helps fund it at the
state and local level and provides program leadership in these areas. USDA
Rural Development assists rural individuals, communities, and businesses
in obtaining financial and technical assistance to address their needs.

USDA Rural Development oversees grant and loan programs targeting
renewable energy, potentially providing support to woody biomass
utilization activities. Within Rural Development, the Rural
Business-Cooperative Service oversees the renewable energy grant program
authorized by the Farm Security and Rural Investment Act of 2002,
emphasizing renewable energy systems and energy efficiency among rural
small businesses, farmers, and ranchers. In September 2004, $22.8 million
was awarded to a total of 167 recipients; however, most grants were
directed toward projects using wind power or agricultural biomass rather
than woody biomass. Also within Rural Development, the Rural Utilities
Service maintains a loan program for renewable energy projects. A Rural
Utilities Service official told us that none of the $119 million loaned
under this program since fiscal year 2000 has gone toward woody biomass,
although the program would welcome such projects.

Research and Development	Forest Service researchers are conducting
research into a variety of woody biomass issues. Researchers have
conducted assessments of the woody biomass potentially available through
land management projects-for example, in 2003, Forest Service researchers
prepared an assessment of the land suitable for mechanical treatment in
the western states and the woody biomass that could potentially be
produced.20 Researchers also have developed models of the costs and
revenues associated with thinning projects, such as the Fuel Treatment
Evaluator. In using this model, users can input the specific area to be
treated (by state or county), the desired end condition of the area to be
treated, and so forth. Users also can enter prices for forest
products-sawtimber, small-diameter biomass, and the like. The tool then
estimates the amount of material in each of various size classes that
would have to be removed to achieve the desired end condition, the project
cost, and the likely revenues from the project. Researchers also are
studying the economics of woody biomass use in other ways; one researcher,
for example, is beginning an assessment of the economic, environmental,
and energy-related impacts of using woody biomass for power generation.

The Forest Service also conducts extensive research into uses for woody
biomass, primarily at its Forest Products Laboratory. The laboratory's
strategic plan includes the goal of developing new and improved
technologies to use low-value, underutilized forest resources, including

20USDA Forest Service, A Strategic Assessment of Forest Biomass and Fuel
Reduction Treatments in Western States (April 2003).

thinnings and small-diameter timber, and the laboratory Director told us
the laboratory has changed its research approach over the past several
years to focus more on the issue of small-diameter trees. Woody
biomassrelated research at the laboratory includes research into a variety
of potential uses for the material, including wood-plastic composites;
structures made from small-diameter roundwood; improved paper pulping
processes that can accommodate small-diameter trees; water filtration
systems using woody biomass fibers; flooring, paneling, and laminated wood
beams made from small-diameter trees; and others. For example, one
scientist we met with told us that the laboratory is using woody biomass
to make water filters that can remove heavy metals, oils, phosphates, and
pesticides from water. The laboratory is currently testing the use of
these filters to remove heavy metal contaminants from mining site runoff.
Another scientist we met with described his efforts to develop techniques
for using sound waves to test the strength of small-diameter timber in
order to assess its suitability for particular applications. Still other
officials are working on less expensive ways of converting woody biomass
to liquid fuels; researchers at the laboratory told us they are working on
new ways of separating wood into its constituent components-lignin,
hemicellulose, and cellulose-in order to improve the conversion process.

Education, Outreach, and The Forest Service conducts extensive education,
outreach, and technical

Technical Assistance	assistance activities through a variety of
staff-small-diameter utilization specialists, rural development program
managers, regional EAP coordinators, and others. Much of this activity is
conducted by the Technology Marketing Unit (TMU) at the Forest Products
Laboratory,21 which provides technical assistance and expertise in wood
products utilization and marketing. TMU has produced an extensive array of
publications conveying information about specific aspects of smalldiameter
wood utilization and marketing-for example, publications on biomass for
small-scale heat and power, structural grading of logs from small-diameter
trees, and the economic feasibility of making wood products from
small-diameter trees-and issues a bimonthly newsletter titled Forest
Products Conservation & Recycling Review.

TMU staff also provide direct technical assistance to individuals or
companies seeking information or assistance. One such user in New

21Although TMU is located at the Forest Products Laboratory, it is funded
by the Forest Service's State and Private Forestry branch-in contrast to
other activities at the laboratory, which are funded by the Forest
Service's Research and Development branch.

Mexico was interested in finding a use for local woody biomass. TMU staff
worked with the individual to develop a wood-plastic composite using
juniper fibers that could be made into road signs; the composite signs,
unlike wooden signs, are not chewed on by animals-and are thus favored by
the Forest Service because they do not have to be replaced as frequently.
The individual now operates a 15-employee sign-making business utilizing
low-value woody biomass. Figure 6 shows signs made from woody biomass
mixed with plastic.

Figure 6: Signs Produced from Woody Biomass Mixed with Plastic

Source: Forest Service.

Similarly, TMU has worked with businesses in Montana to find uses for
roundwood, including roundwood buildings and bridges. Roundwood structures
developed with TMU assistance include wood kiosks displayed at the 2002
Winter Olympics in Utah; a roundwood community pavilion in Westcliffe,
Colorado; and the Darby Community Library in Darby, Montana. In addition,
a 165-foot suspension bridge designed with TMU assistance and being built
primarily with 6-inch diameter lodgepole pine is currently under
construction in Lolo, Montana. Figure 7 shows a roundwood kiosk made from
small-diameter wood; figure 8 shows the interior of the library in Darby,
Montana, which was constructed from roundwood.

          Figure 7: Kiosk Built from Roundwood and Small-Diameter Wood

                            Source: Forest Service.

Figure 8: Interior of Darby Community Library Built from Roundwood, Darby,
Montana

Source: Forest Service.

The Forest Service also has partnerships with state and regional entities
that provide a link between scientific and institutional knowledge and
local users. One such group, the Colorado Wood Utilization and Marketing
Assistance Center, housed at Colorado State University, provides small
grants in Colorado and assists communities in identifying technologies
that will utilize forest thinnings to heat buildings and generate
electricity. Another such partnership is through the Forest Service's Wood
Education and Resource Center in West Virginia, which assists constituents
in addressing economic, environmental, technological, and social
challenges through training, technology transfer, and applied research.
Yet another partnership with state and regional entities involves the
Forest Service and the Greater Flagstaff Partnership in Arizona, an
alliance of 27 environmental and governmental organizations that
researches and demonstrates approaches to forest ecosystem restoration in
the ponderosa pine forests surrounding Flagstaff, Arizona.

Staff in Forest Service field offices also provide education, outreach,
and technical assistance. Each region has an EAP coordinator, and
coordinators we spoke with provided numerous examples of their involvement
in woody biomass. For example, one EAP coordinator organized a "Sawmill
Improvement Short Course" designed to provide information to small sawmill
owners regarding how to better handle and use small-diameter material, how
to find small-diameter markets, and so forth. EAP coordinators also have
conducted demonstrations of equipment for handling woody biomass
cost-effectively, including several demonstrations of a "slash bundler"
that can bundle and compress woody biomass for more efficient
transportation.22 Figure 9 shows the slash bundler in operation.

Figure 9: Slash Bundler Processing Small-Diameter Trees

                            Source: Forest Service.

22A Forest Service official told us that the slash bundler was the result
of a research effort led by the Forest Service's Research and Development
branch.

Other field staff also provide technical assistance; for example, the
Fremont-Winema National Forest in Oregon employs a Forest Products and
Economic Development Specialist, who told us he provides general
information about new technologies and economic issues to entities looking
to engage in woody biomass-related activities; provides assistance in
assessing the woody biomass harvesting, processing, and utilization
infrastructure; and works with potential grant applicants to help them
develop appropriate projects with defined goals and outcomes, which are
more likely to be funded. An EAP official told us that the assistance
provided to small groups or businesses is critical to getting them
established and making them competitive for other assistance, such as USDA
Rural Development grants; the official stated that many small businesses
lack the expertise to prepare a competitive business plan or to adequately
estimate future costs and revenues.

Until November 2004, the Forest Service employed a small-diameter
utilization specialist who served as a national resource to provide
education and technical assistance. This specialist told us he conducted
frequent presentations to both agency and nonagency audiences on using
woody biomass and worked as a liaison between parties interested in using
woody biomass and agency officials or private companies that can assist
them. He also maintained a small-diameter utilization Web site. However,
in November 2004 he transferred out of the position, and the position has
not yet been refilled.

DOE Is Primarily Engaged in Biomass Research and Development Activities

Grants

Although DOE maintains some grant programs and provides technical
assistance to assist federal, state, and tribal agencies in switching to
renewable energy, most of its activities focus on research and
development. Following a recent reorganization, most of DOE's woody
biomass activities are overseen by its Office of the Biomass Program,
although some activities also are conducted within the Federal Energy
Management Program and the Tribal Energy Program.

DOE maintains several grant programs that emphasize renewable energy,
potentially including woody biomass. DOE's Golden Field Office in Colorado
administers the National Biomass State and Regional Partnership, which
provides grants for biomass-related activities through five regional
partners: the Coalition of Northeastern Governors Policy Research Center,
the Council of Great Lakes Governors, the Southern States Energy Board,
the Western Governors' Association, and DOE's Western Regional Office. DOE
provides funds to each regional partner; the

partners, in turn, provide grants to states. Although the overall DOE
partnership does not emphasize woody biomass over other types of biomass,
the Western Governors' Association is directing its DOE funds toward
projects involving woody biomass, according to an official with the
association.

Another DOE grant program that potentially involves woody biomass is the
State Energy Program, which provides grants to states to design and carry
out their own renewable energy and energy efficiency programs. States
manage the funds and are required to match 20 percent of the DOE grants.
In 2004, about $44 million was directed in grants to the states, and
another $16 million was directed to special state projects. While the
grant program does not emphasize woody biomass over other energy sources,
woody biomass projects may be included among those funded, depending on
state priorities.

The Tribal Energy Program promotes tribal energy sufficiency, economic
development, and employment on tribal lands through renewable energy and
energy efficiency technologies. Over the past 2 years, DOE has funded a
total of 45 tribal energy projects, for a total of $8.4 million; the
projects are primarily for energy and electricity, with some specifically
targeting the utilization of woody biomass. A DOE-funded study involving
the Yavapai-Apache Reservation in Arizona, for example, will examine the
feasibility of a proposed power generation facility using woody biomass,
while another study involving the Red Lake Band of the Chippewa Indians in
Minnesota will examine the use of woody biomass for producing power,
fuels, and products.

Research and Development	DOE's woody biomass research and development
activities are managed by its Office of the Biomass Program, which has
overall responsibility for managing DOE's research activities relating to
the use of biomass for fuels, chemicals, and power. Many woody biomass
research and development activities within DOE are carried out by the
National Bioenergy Center, a "virtual center" intended to unify DOE's
efforts to advance technology for producing fuels, chemicals, materials,
and power from biomass. These activities generally encompass research into
the conversion of biomass, including woody biomass, to liquid fuels,
power, chemicals, or heat. In addition, a new biomass laboratory-the
Biomass Surface Characterization Laboratory-was dedicated at NREL in
January 2005. An NREL official told us that DOE does not have an effort
specific to woody biomass, though its activities can be applied to the
material. DOE also supports research into woody biomass through
partnerships with industry and academia. Program

management activities for these partnerships are conducted by DOE
headquarters, and project management through DOE field offices.

Education, Outreach, and In addition to its research activities, the
National Bioenergy Center

Technical Assistance	provides information and guidance to industry,
stakeholder groups, and users through presentations and lectures,
according to DOE officials. Information also is made available through the
DOE Web site. DOE also provides outreach and technical assistance through
its State and Regional Partnership, Federal Energy Management Program
(FEMP), and Tribal Energy Program. FEMP provides assistance to federal
agencies seeking to implement renewable energy and energy efficiency
projects, including assistance in designing renewable energy systems and
obtaining privatesector financing. Among these efforts is a program
focused on using biomass and alternative methane fuels in energy projects
at federal facilities, and although the program does not focus
specifically on woody biomass, a FEMP official told us that military and
civilian agencies (including the Forest Service) across the country are
increasingly contemplating projects in which woody biomass would be used
to heat and power federal installations. In addition to grants, the Tribal
Energy Program also provides technical assistance to tribes, including
strategic planning and energy options analysis.

Interior's Woody Biomass Activities Include Education, Outreach, and Grant
Programs

Interior's activities include limited grant programs and education and
outreach; department agencies do not conduct research and development into
woody biomass utilization issues. Interior also works with its land
management agencies to develop policy and direction regarding woody
biomass activities. Interior now requires that the agencies' land
management service contracts include an option allowing contractors to
remove woody biomass generated through the contracts where ecologically
appropriate, and has directed the agencies to develop contract mechanisms
to include biomass removal in timber sale contracts.

Many of Interior's woody biomass activities are implemented by BLM, which
recently established a woody biomass utilization strategy that will
provide a framework for future agency activities and allow it to expand
its biomass utilization efforts. The strategy, made final in July 2004,
includes overall goals related to increasing the utilization of biomass
from treatments on BLM lands, and individual action items within three
substrategies: developing tools, building expertise within BLM and
building networks with other agencies and organizations, and increasing
the percentage of acres treated from which harvested biomass is

subsequently used. Individual action items include developing contract
specifications for appraising biomass and guidelines for estimating
biomass volume; training BLM staff in the use of biomass guidance and
tools; facilitating technology transfer with key partners such as
governments, tribes, and contractors; and increasing funding available for
biomass projects. BLM also is contemplating a small-scale preferred
procurement initiative for woody biomass products, similar to the
preferred procurement program for biobased products established in the
Farm Security and Rural Investment Act of 2002.

In addition to BLM, three other Interior agencies-the Bureau of Indian
Affairs (BIA), the Fish and Wildlife Service (FWS), and National Park
Service (NPS)-conduct activities related to woody biomass. An official
from the U.S. Geological Survey told us that her agency does not conduct
activities to promote woody biomass utilization.

Grants	Interior generally does not have grant programs specifically
targeted toward woody biomass. However, BIA has provided a limited number
of grants to Indian tribes, including a 2004 grant to the Confederated
Tribes of the Warm Springs Reservation in Oregon to conduct a feasibility
study for updating and expanding a woody biomass-fueled power plant.

Education, Outreach, and Interior agencies conduct education, outreach,
and technical assistance,

Technical Assistance	but not to the same degree as the Forest Service. The
primary BLM official responsible for woody biomass activities told us that
BLM does not have staff at field locations assigned to identify community
resources and to build community capacity, as does the Forest Service.
According to this official, BLM's community outreach is conducted
primarily through its land use and management planning activities, which
include interaction with environmentalists, community leaders, and others.
This official said that BLM is making a concerted effort to promote woody
biomass utilization, has hired new forest management staff, and is
studying the possibility of engaging in outreach activities through
proposed demonstration projects called "incubators," which would serve as
examples of successful woody biomass utilization. Funding has not yet been
appropriated for these projects, according to this official. Interior also
will use the National Association of Conservation Districts, with whom it
signed a cooperative agreement, to conduct outreach activities related to
woody biomass.

BIA provides technical assistance to tribes seeking to implement renewable
energy projects; specifically, the agency works with tribes to determine
appropriate management activities and offers technical

assistance in marketing forest products. Tribal projects include a
proposal by the Northern Cheyenne Tribe in Montana to use woody biomass to
provide steam and electricity for a manufacturing plant and a study by the
Confederated Tribes of the Warm Springs Reservation of the feasibility of
producing energy from forest thinning projects. BIA also sponsored a
renewable energy conference, including an emphasis on woody biomass, in
September 2004. Interior's primary woody biomass official told us that
tribal officials are very interested in biomass.

Although FWS and NPS conduct relatively few woody biomass utilization
activities, according to agency officials, in some cases the agencies will
work to find a woody biomass user nearby if a market exists for the
material. After a 2004 thinning project in Denali National Park, for
example, NPS used some cut trees in cabin restoration projects and for
firewood for backcountry cabins; however, the bulk of the biomass
generated was provided to a nearby coal mine, which wanted material for
use in a reclamation project at the mine site. NPS officials told us that
their agency did not charge the mine for the material, but that the
arrangement saved NPS several hundred thousand dollars in transportation
and disposal fees because the material would otherwise have been sent to a
landfill. The officials stated that finding a market for this material
"represented a lot of time and effort on the part of local Park Service
planners." Both FWS and NPS officials told us that the agencies' woody
biomass activities are limited because the agencies produce only modest
amounts of the material; most FWS and NPS fuel reduction activities use
fire rather than mechanical thinning. Further, according to agency
officials, in those instances where woody biomass is generated, the
agencies often use the material for their own purposes-for example, using
chipped biomass to stabilize soils during restoration projects.

Several Other Federal Agencies Implement or Participate in Woody Biomass
Activities

Aside from USDA, DOE, and Interior, several other federal agencies also
are engaged in woody biomass activities through their advisory or research
activities. The Environmental Protection Agency (EPA) provides technical
assistance through its Combined Heat and Power Partnership to power plants
that generate combined heat and power from various sources, including
woody biomass and other sources of renewable energy. An EPA official told
us that the partnership is fuel neutral, meaning that it does not promote
the use of one fuel over another when producing combined heat and power.
EPA also has a Green Power Partnership Program to assist federal agencies
and companies in procuring power for their facilities from renewable
sources.

Three other agencies also have limited involvement in biomass activities
through their membership on the Biomass Research and Development Board,
created by the Biomass Research and Development Act of 2000. The board,
which is intended to focus on all biomass issues, not solely woody
biomass, is responsible for coordinating federal activities for the
purpose of promoting the use of biobased industrial products. The board
consists of membership from USDA, DOE, Interior, and EPA, as well as the
National Science Foundation, the Office of the Federal Environmental
Executive, and the Office of Science and Technology Policy (both within
the Executive Office of the President). Officials we spoke with from the
National Science Foundation, Office of Science and Technology Policy, and
the Office of the Federal Environmental Executive told us that their
involvement in issues specifically related to woody biomass is minimal.

We also contacted officials from the Departments of Commerce and
Transportation. Officials from both told us their departments do not
conduct woody biomass utilization activities.

Woody Biomass Coordination Efforts among and within Federal Agencies
Include Both Formal and Informal Mechanisms, but Unlike DOE and Interior,
the Forest Service Has Not Assigned Responsibility for Overseeing Woody
Biomass Activities

Federal agency efforts to coordinate their woody biomass utilization
activities, both among and within agencies, occurred through both formal
and informal mechanisms. Formal coordination between agencies occurs
through both the Woody Biomass Utilization Group and the Biomass Research
and Development Board, although most agency officials we spoke with
emphasized informal communication-through telephone discussions, e-mails,
participation in conferences, and other means-rather than these groups as
the primary vehicle for interagency coordination. To coordinate internal
activities, both DOE and Interior have formal mechanisms-DOE coordinates
its activities through the Office of Energy Efficiency and Renewable
Energy (EERE), while both Interior and BLM have appointed officials to
lead their woody biomass efforts; further, Interior's woody biomass policy
and BLM's woody biomass strategy guide these organizations' efforts. In
contrast, the Forest Service-the USDA agency with the most woody biomass
activities-has not assigned responsibility for coordinating its woody
biomass activities, potentially leading to fragmentation of effort and
diluting the impact of these activities.

Coordination among Agencies Includes Formal Groups, but Officials Often
Cited Informal Coordination Efforts as More Common

Two groups serve as formal vehicles for coordinating federal agency
activities related to woody biomass utilization. The Woody Biomass
Utilization Group, open to all national, regional, and field-level staff
across numerous agencies, is a multiagency group that meets quarterly on
woody biomass utilization issues. According to the group's draft charter
(which has not been made final), the group's objectives are to (1)
implement the policy principles of the June 2003 Memorandum of
Understanding between USDA, DOE, and Interior; (2) coordinate, plan, and
encourage woody biomass utilization; (3) serve as technical and policy
advisers on woody biomass utilization; and (4) function as an information
clearing house to help identify relevant woody biomass utilization
technologies, foster joint demonstrations and pilot projects, identify
research and development needs, and highlight successful woody biomass
projects. The draft charter calls for a chair position to be rotated on an
annual basis, generally between USDA, DOE, and Interior.

The other formal group is the Biomass Research and Development Board,
which is responsible for coordinating federal activities to promote the
use of biobased industrial products. The board consists of membership from
USDA, DOE, and Interior, as well as EPA, the National Science Foundation,
the Office of the Federal Environmental Executive, and Office of Science
and Technology Policy, and is co-chaired by USDA' s Under Secretary for
Natural Resources and Environment and DOE's Assistant Secretary for Energy
Efficiency and Renewable Energy. The board is supported by the Biomass
Research and Development Technical Advisory Committee, which includes
representatives of nonfederal groups such as industry, academia, trade
associations, and the like.

When discussing coordination among agencies, however, agency officials
more frequently cited using informal mechanisms for coordination than the
formal groups described above. For example, two officials we spoke with in
the Forest Service's Northwest Region told us that although they were
aware of the interagency Woody Biomass Utilization Group, they were not
aware of any of the group's activities-or even whether the group has a
charter. Several officials told us that informal communication among
networks of individuals was essential to coordination among agencies; one
Forest Service field official told us that, in contrast to formal groups,
the more common method for coordinating among agencies is frequent,
informal communication through e-mail, telephone calls, and discussions at
regional or local conferences or workshops. Another Forest Service field
official emphasized that his informal network of officials-both within and
outside the agency and with whom he converses by telephone and e-mail

regularly-helps him keep abreast of woody biomass developments by
providing reports, documents, and other information. Similarly, a
headquarters official in another agency described a network of
individuals-both within and outside of the agency-with whom he remains in
frequent e-mail and telephone contact. These individuals exchange
information regarding projects, policies, potential impacts of
legislation, success stories, and the like. In each case, the officials
stated that they relied much more upon informal means of coordination than
on formal interagency groups.

Officials also described other forms of coordination. Two officials
described a regional grant application review team that included Forest
Service, BLM, BIA, and FWS staff that jointly reviewed applications for
fuels treatment grants. Although the main emphasis of the grants was not
woody biomass, there was discussion within the review team about biomass
issues that ensue from fuels treatment projects. Another program that
involves interagency coordination is the joint review of applications by
USDA and DOE for renewable energy projects authorized by the Biomass
Research and Development Act of 2000. In addition, two officials told us
that the Forest Service was trying to organize a multiagency team to
collaborate on woody biomass efforts within the agency's Northwest Region.
Other officials mentioned state-level interagency working groups focusing
on fire and fuels reduction issues and consisting of representatives from
the Forest Service, Interior agencies, and nonfederal entities. These
groups are primarily concerned with fire suppression capacity, fuel
reduction treatments, and community wildland fire planning efforts, not
with woody biomass. However, according to these officials, the woody
biomass issue is interwoven with these other issues and is often
discussed. Further, the networks established by these interagency groups
facilitate communication on a variety of issues, including woody biomass,
among the states and agencies involved.

While DOE and Interior Have Formal Mechanisms for Coordinating Internal
Activities, the Forest Service Does Not

DOE's woody biomass utilization activities are coordinated through EERE.
Within this office, the Office of the Biomass Program directs biomass
research at DOE national laboratories and contract research organizations,
while a small number of woody biomass activities are undertaken within two
other programs, the Federal Energy Management Program and the Tribal
Energy Program.

Interior has appointed a single official to oversee its woody biomass
activities and is operating under a woody biomass policy in the form of an

April 2004 memorandum from the Assistant Secretary for Policy, Management
and Budget. This memorandum directs all Interior bureaus and offices to
implement the policy principles of the June 2003 Memorandum of
Understanding between USDA, DOE, and Interior. According to the official
responsible for overseeing Interior's woody biomass efforts, this memo
serves as departmental policy until a departmental manual can be updated.
Interior also has appointed a Renewable Energy Ombudsman to coordinate all
of the department's renewable energy activities, including woody biomass.
Similarly, BLM has appointed a single official to oversee woody biomass
efforts, and, as noted, has developed a woody biomass utilization strategy
to guide its activities, including overall goals related to increasing the
utilization of biomass from treatments on BLM lands.

In contrast, although the Forest Service developed a woody biomass policy
in January 2005, unlike DOE and Interior, it has not assigned a specific
individual or office with responsibility for overseeing its woody biomass
activities. The agency does have an internal group-the Woody Biomass
Utilization Team-that meets to discuss woody biomass issues, but this
group does not have responsibility for implementing the policy. And
according to some Forest Service officials we spoke with, agency woody
biomass activities have been opportunistic, arising from local awareness
of and interest in the issue rather than from a national strategy for
approaching the issue. One Forest Service headquarters official told us
that the agency's woody biomass activities have been "a grassroots effort
on the part of those who have a real burning passion for improving
utilization." However, according to this official, individuals who do not
share that passion have not been involved in woody biomass because there
has been no central requirement or strategy for addressing the woody
biomass issue. Another headquarters official told us that the extent to
which woody biomass has been addressed has depended on the knowledge,
interest, and availability of the local forest staff and the presence of
local markets for woody biomass. Several field officials we spoke with
share this view; one field official told us that there is a great deal of
interest in woody biomass technology on the part of field staff, but not
much coordination and no formal strategy, while another noted that woody
biomass activities are "largely dependent on local risk taking." Yet
another field official told us that there is no coordinated approach
within the Forest Service to woody biomass; instead, determining what
activities to undertake is left up to the forests and ranger districts,
and depends on local leadership.

The Forest Service does have an individual, located within the agency's
State and Private Forestry branch, who generally serves as the agency's
primary point of contact for woody biomass utilization. However, two
officials noted that this individual serves primarily as a consultant,
with no influence over budgets or activities. They also stated that,
because this official works within the State and Private Forestry branch,
he has no influence over agency activities regarding public lands and no
influence over the Forest Service's National Forest System or Research and
Development branches, with their associated land bases or budgets. One
headquarters official within the agency stated that without stronger
central authority or a stronger woody biomass policy, the Forest Service
will find it difficult to effect change because while the agency's primary
woody biomass official can discuss technology, innovation, supply, and
other issues, he lacks the authority to influence land management
practices.

Two officials attributed the Forest Service's lack of a coordinated woody
biomass effort to the agency's decentralized culture, with autonomy at the
ranger district, national forest, and regional level. One official told us
that this culture serves the agency well for some purposes but works
against the agency when it tries to promote an idea or issue-such as woody
biomass utilization-that has not been widely emphasized. Another official
noted that each region in the Forest Service has considerable autonomy in
developing its own policies, setting its own priorities, and establishing
its own procedures, and that, while there is often value in having ideas
originate from the field, a more formalized structure is often more
effective at accomplishing overall agency objectives. According to this
official, the woody biomass issue has reached the stage where a
formalized, coordinated national strategy is appropriate.

One official told us that the Forest Service's emphasis on fuel reduction
planning and implementation efforts under the National Fire Plan had
focused the agency's attention away from woody biomass. The 10-year
comprehensive strategy for implementing the National Fire Plan contains
four overall goals: (1) improving fire prevention and suppression, (2)
reducing hazardous fuels, (3) restoring fire-adapted ecosystems, and (4)
promoting community assistance, which includes woody biomass utilization.
This official told us that the Forest Service's emphasis on goals 1 and 2
has reduced its ability to focus on the other goals, and "now that the
biomass is starting to pile up," it is time for the Forest Service to
begin focusing on woody biomass. The Western Governors' Association issued
a report in November 2004 concurring with this view, stating "Goal 4 must
be given the same emphasis Goals 1 and 2 have received in order for its
action items-and the 10-Year Strategy as a whole-to be accomplished."23

Without an individual or office with responsibility for overseeing woody
biomass activities within the agency, the Forest Service risks diluting
the effects of its activities because individual units within the agency
may undertake woody biomass activities that are not consistent with the
activities of other units-or they may choose to undertake no woody biomass
activities at all. Further, given the magnitude of the woody biomass issue
and the finite funds available to the agency, it is important that the
Forest Service ensure that activities on which it places a high priority
are undertaken so that it can maximize its accomplishments within its
budget.

23Western Governors' Association Forest Health Advisory Committee, Report
to the Western Governors on the Implementation of the 10-Year
Comprehensive Strategy (Denver, November 2004).

Most Officials Cited Economic Obstacles to Woody Biomass Utilization, and
While Agencies Generally Targeted These Obstacles, Some Officials Believe
Additional Steps beyond the Agencies' Authority Are Needed

Agency officials cited two principal obstacles to increasing the use of
woody biomass: the difficulty in using woody biomass cost-effectively-
particularly the obstacles posed by the high cost of harvesting and
transporting woody biomass-and the lack of a reliable supply of the
material. Agency activities-grants, education and outreach, and research
and development-are generally targeted toward the obstacles identified by
agency officials. Many officials, however, told us that their agencies are
limited in their ability to fully address these obstacles and that
additional steps-such as subsidies and tax credits-beyond the agencies'
authority to implement are needed. But agency officials generally did not
specify the level of subsidies or tax credits they believe would be
necessary, and not all agree that such additional steps are appropriate.

Most Officials Noted the Most officials we spoke with cited the difficulty
in using woody biomass Difficulty in Using Woody cost-effectively-that is,
in using the material to create products that Biomass Cost-Effectively,
generate more revenue than is required for their creation. Other obstacles

cited include the lack of a reliable supply of woody biomass; internaland
Many Also Cited the agency barriers to effectively promoting woody
biomass, including the lack Lack of a Reliable Woody of agency commitment
to the issue; and the lack of a local infrastructure to Biomass Supply
harvest, transport, and process woody biomass.

Most Officials Cited Economic Factors, Particularly the High Cost of
Harvesting and Transporting Woody Biomass Relative to Its Value, as
Primary Obstacles to Increasing Woody Biomass Utilization

The obstacle most commonly cited by officials we spoke with (30 of 44
officials) is the difficulty of using woody biomass cost-effectively.
Officials told us that the products that can be created from woody
biomass- whether wood products, liquid fuels, or energy-often do not
generate sufficient income to overcome the costs of acquiring and
processing the raw material. For example, a Forest Service researcher in
California estimated that the cost of generating electricity from woody
biomass was about 7.5 cents per kilowatt hour, including costs to harvest,
transport, and process the material, as well as operations, maintenance,
and capital amortization costs. However, the same researcher noted that at
the time of his study, the wholesale price paid for power in California
was 5.3 cents per kilowatt hour-meaning that, without receiving additional
income for their electricity, producers of woody biomass-generated
electricity would lose about 2.2 cents for each kilowatt hour generated if
they sold their electricity on the wholesale power market.24

One factor contributing to the difficulty in using woody biomass
costeffectively, according to 23 officials, is the cost incurred in
harvesting and transporting woody biomass. For example, one Forest Service
official pointed out that while a single 18-inch-diameter tree of a given
height contains the same volume as 20 4-inch-diameter trees of the same
height, it is much more expensive to harvest 20 trees than 1. Two
officials told us that when the end use for woody biomass calls for
chipped or ground material-for example, for use in power plants-it is
often more efficient to chip the material in the forest and haul the chips
to the plant rather than hauling the unprocessed woody biomass. However,
these officials noted that the vehicles typically used to haul chips-known
as chip vans-cannot navigate many forest roads, which were designed for
logging trucks. Because hauling material in smaller vehicles is more
costly, this adds to the difficulty in using the material
cost-effectively. Officials pointed out that small installations located
close to woody biomass sources will have lower transportation costs,
enhancing their ability to use the material costeffectively. Schools and
other buildings located in communities near forests are thus particularly
well-positioned for woody biomass use, according to officials-especially
if these buildings are heated with natural gas or fuel oil, because once
buildings convert their heating infrastructure to accept woody biomass,
they can be heated at a lower cost by using

24Officials pointed out that some power plants, particularly in
California, are able to burn woody biomass cost-effectively. However,
these officials stated that this is in part due to economic incentives
offered by the state.

woody biomass than by using natural gas or fuel oil. However, officials
also noted that such installations consume relatively small amounts of
woody biomass.

Five officials primarily involved in research and development noted the
costs involved in converting woody biomass to liquid fuels such as
ethanol. For example, the chemical makeup of wood makes it more difficult
and expensive to convert into ethanol than other substances such as corn,
according to officials.25 Thus, although ethanol represents a potentially
large opportunity for utilizing woody biomass (because of the demand for
transportation fuels), the availability of cheaper raw materials such as
corn presents an obstacle to its use.

Other Obstacles Cited Include Of the 44 officials we spoke with, 22 told
us that even if cost-effective the Lack of a Reliable Supply of means of
using woody biomass were found, the lack of a reliable supply of

Woody Biomass from Federal Lands and Internal Barriers to Effective
Promotion of Woody Biomass

woody biomass from federal lands presents an obstacle because business
owners or investors will not establish businesses without assurances of a
dependable supply of material. Officials identified several factors
contributing to the lack of a reliable supply, including the lack of
widely available long-term contracts for forest products, environmental
opposition to federal projects, and the shortage of agency staff to
conduct activities. Regarding long-term contracts, projects that use
stewardship contracting authority may include contracts of up to 10
years-potentially stabilizing the long-term supply of woody
biomass-whereas projects conducted outside of this authority must use
contracts of a shorter duration.26 Agency officials cited one stewardship
project-the White Mountain project in Arizona, which has a 10-year
duration and is expected to treat 50,000 to 250,000 acres-as an example of
the benefits of stewardship contracting in stabilizing supply. An official
told us that two manufacturers are negotiating with the contractor to
establish manufacturing plants using woody biomass removed as part of the
project. According to this official, without the assurance of supply
offered by a

25Officials told us that corn is higher in starches, which can be
converted into sugar and then fermented into ethanol. In contrast, wood
contains lower amounts of starch and also contains lignin, which cannot be
converted into ethanol.

26Stewardship contracting involves the use of any of several contracting
authorities first authorized in 1998, including the ability to enter into
contracts of up to 10 years in length. For a description of the agencies'
use of stewardship contracting authority, see GAO,

Federal Land Management: Additional Guidance on Community Involvement
Could Enhance Effectiveness of Stewardship Contracting, GAO-04-652
(Washington, D.C.: June 14, 2004).

long-term contract, these manufacturers would not have shown interest.
However, another official pointed out that Forest Service stewardship
contracts must be approved at the regional level, making their use more
cumbersome than other contract types.

Adding further to the uncertainty of supply, 10 officials told us that
environmental opposition poses an obstacle-for example, in the form of
appeals and litigation that delay planned projects. Finally, according to
five officials, staffing constraints make accomplishing projects in a
timely manner difficult even without external opposition; two Forest
Service officials told us that even if long-term contracts were available
and environmental opposition were not a factor, the lack of staff still
hampers the agency's ability to implement projects.

Six officials cited internal agency barriers that hamper agency
effectiveness in promoting woody biomass utilization. Prior to the Forest
Service's January policy statement on woody biomass, one Forest Service
official told us that the lack of a strong policy stating that using woody
biomass is preferable to piling and burning it hampered the agency because
no incentive existed for "field staff to think creatively about how to
move [woody biomass] to potential users." This official told us that even
if the Forest Service received no payment for the material, putting it to
use was better than piling and burning it-which also brings no revenue-and
this preference should be embedded in policy. Two Forest Service officials
also noted that the agency's mechanisms for designing and implementing
projects were still geared toward larger, merchantable timber to the
detriment of woody biomass. One official stated that "the Forest Service
needs to improve its capabilities to design treatments, contracts, and
agreements that will encourage utilization of smaller diameter material,"
while another official echoed this view by stating that "timber operations
[in contrast to woody biomass] account for the bulk of institutional
knowledge about material removal." Finally, several officials stated that
federal agencies have not been effective in communicating the potential
benefits of fuel reduction. According to the officials, fuel reduction
would reduce fire suppression and rehabilitation costs, avoid damage to
watersheds, avoid smoke pollution, and the like. Officials told us that
communicating these benefits could reduce opposition to fuel reduction
projects, which was cited as a factor in the uncertainty of woody biomass
supply.

Other officials cited the lack of agency commitment to the issue. For
example, a BIA official told us that BIA has not provided the resources
and

structure required for promoting and developing woody biomass utilization
projects. Six officials told us that more funds should be devoted to
researching new or less expensive ways to use woody biomass in order to
overcome economic obstacles to its use. And two Forest Service officials
cited that agency's lack of a woody biomass policy as an obstacle to
effective agency promotion of woody biomass utilization.

A variety of other obstacles were noted as well. One official told us that
some large facilities such as prisons could use woody biomass to generate
their own electricity for less than the cost of electricity sold by
electrical utilities. However, such facilities generally would need to
have electricity available from the grid in the event that their own
generators were unavailable-and, according to this official, utilities can
charge rates for this electricity (known as standby power) that are equal
to the rates charged for electricity that is actually delivered. In other
words, for every hour the utility is prepared to deliver electricity to
the facility, the utility charges a fixed portion of the rate that would
have been charged had the electricity actually been delivered-100 percent
of the rate in some cases, according to this official. As a result,
installations would pay not only the costs of generating their own
electricity but also the standby power rates charged by the utility-costs
that, when combined, may exceed the cost of simply purchasing electricity
from the utility. Withdrawing from the electricity grid entirely can be
problematic as well; this official stated that utilities can charge
fees-known as exit fees-for doing so.

Another obstacle cited by officials is the lack of a local infrastructure
for harvesting, transporting, and processing woody biomass, including
loggers, mills, and appropriate equipment for treating small-diameter
material. Three Forest Service officials we spoke with told us that in
some cases the decline in federal logging has left areas without any
infrastructure at all, while in other cases the infrastructure that is
left is equipped to handle large trees rather than woody biomass.
According to officials, contractors need equipment designed for handling
woody biomass rather than larger trees in order to cost-effectively
harvest and transport the material. However, contractors may not have the
capital to purchase this new equipment, and may be unable to obtain loans
without assurances of a long-term supply of woody biomass.

Agency Efforts Are Generally Targeted toward the Obstacles Identified, but
Officials Cited the Need for Additional Actions Such As Subsidies and Tax
Credits

Agency Activities Are Generally Targeted at Overcoming the Challenges
Identified

Some Officials Stated That Additional Actions beyond the Agencies'
Authorities, Such As Subsidies and Tax Credits, Are Needed to Stimulate
the Market for Woody Biomass

The agency activities we identified were generally targeted toward the
obstacles agency officials cited. Agencies provided grants, engaged in
outreach, and conducted research aimed at overcoming economic obstacles to
woody biomass use, and conducted activities to address other obstacles as
well. However, several officials believe that additional steps beyond the
agencies' authorities are needed to fully address the woody biomass issue.

Agency activities related to woody biomass were generally aimed at
overcoming the obstacles agency officials identified, including many aimed
at overcoming economic obstacles. For example, staff at the Forest
Service's TMU have worked with potential users of woody biomass to develop
products whose value is sufficient to overcome the costs involved in
harvesting and transporting the material; EAP coordinators have worked
with potential woody biomass users to overcome economic obstacles; and
Forest Products Laboratory researchers are working with NREL to increase
the yield of ethanol from woody biomass, making wood-to-ethanol conversion
more cost-effective.

Some agency activities also are targeted at providing more certainty of
supply. A Forest Service official in New Mexico has been meeting with
environmental groups to try to obtain consensus on the need for
forestthinning activities. Obtaining consensus can reduce the likelihood
of environmental opposition, making Forest Service projects easier to
accomplish and allowing a steadier supply of biomass. Although not all
groups will support the projects, according to this official, obtaining
agreement from major groups can blunt opposition from other groups. Other
officials are working on models to predict the amount of woody biomass
potentially available, giving users a better sense of the supply of raw
materials.

Despite ongoing agency activities, 14 officials told us that additional
steps-such as subsidies or tax credits-that are beyond the agencies'
authorities are necessary to develop a market for woody biomass. According
to several officials, the obstacles to using woody biomass costeffectively
are simply too great to overcome by using the tools-grants, outreach and
education, and so forth-at the agencies' disposal. One official stated
that "in many areas the economic return from smallerdiameter trees is less
than production costs. Without some form of market intervention, such as
tax incentives or other forms of subsidy, there is little short-term
opportunity to increase utilization of such material." Three

officials stated that subsidies have the potential to reduce the per-acre
cost of thinning, because if there is a market for woody biomass,
contractors will be willing to harvest the material for a lower fee,
knowing that they can recoup some of their costs by selling the material.
According to these officials, subsidies thereby create an important
benefit-reduced fire risk through hazardous fuels reduction-if they
promote additional thinning activities by stimulating the woody biomass
market.

Officials told us that tax incentives, subsidies, and low-interest loans
may serve to stimulate infrastructure for harvesting, processing, and
transporting woody biomass, and that such assistance should target not
only larger plants and facilities but smaller operators as well.
Harvesters and loggers, for example, could use the assistance to purchase
the expensive equipment and machinery required to treat woody biomass and
thus help to build the required infrastructure.

It is not only federal officials who hold this view. In testimony before
the Congress, the owner of a sawmill that uses woody biomass to generate
electricity for the mill stated that woody biomass-to-energy does not work
as a stand-alone enterprise. According to this individual, "The cost
structure associated with removing woody biomass from the forest, hauling
the material to a facility and converting the fiber into a product
suitable for electricity production is prohibitive without massive
subsidization."

Others see a need for state requirements that utilities procure or
generate a portion of their electricity by using renewable resources,
known as renewable portfolio standards.27 Forest Service officials in the
Southwest Region are encouraging states in the region to enact renewable
portfolio standards that include a woody biomass component. These
officials are urging states to go beyond simply requiring electricity from
renewable resources and require, or provide favorable treatment of,
electricity generated from woody biomass produced as part of forest
restoration projects. The official primarily responsible for this effort
stated that "using this biomass source will help lower costs and allow
restoration activities to occur on many more thousands of acres than
present budgets allow."

27According to the Database of State Incentives for Renewable Energy, a
DOE-funded project, 19 states and the District of Columbia had renewable
portfolio standards as of February 2005.

Agency officials generally did not specify the level of subsidies or tax
credits they thought necessary, and not all officials believe that these
additional steps are efficient or appropriate. One official told us that,
although he supports these activities, the creation of tax incentives and
subsidies would create enormous administrative and monitoring
requirements. Another official stated that although federal policy changes
such as increased subsidies could address obstacles to woody biomass
utilization, he does not believe they should be made. Rather, he believes
that research and development efforts, combined with market forces, will
eventually result in "equilibrium"-in other words, in woody biomass
utilization finding its appropriate level. If cost-effective uses of woody
biomass can be found, its utilization will increase. Yet another official
stated that while production tax credits or subsidies may be successful in
getting businesses or industries started, he does not believe they are
sustainable over the long term. In addition, he is reluctant to create
creditor subsidy-dependent businesses that would be at the mercy of the
annual appropriations cycle. Instead, market-driven solutions are more
appropriate-for example, providing information to exploit the existing
market, or developing requirements or incentives (such as renewable
portfolio standards) that create a market on their own.

Further, not all agree with the assumption that the market for woody
biomass should be expanded. One agency official told us he is concerned
that developing a market for woody biomass may result in overuse of
mechanical treatment (rather than prescribed burning) as the market begins
to drive the preferred treatment. In other words, given a choice between
mechanical thinning and prescribed burning, a forest manager might choose
mechanical thinning not because it was the most appropriate tool for the
project at hand but to satisfy the demand for woody biomass. This official
stated that "if we do that, we are not being good stewards of the land."

Environmental group representatives also have urged caution in taking any
steps that expand the market for woody biomass. Representatives of one
national environmental group told us that relying on woody biomass as a
renewable energy source will lead to overthinning, as demand for woody
biomass exceeds the supply that is generated through responsible thinning.
They also questioned the incentive to create or reconstruct roads in the
forests to facilitate inexpensive transportation of woody biomass because
they believe doing so introduces unwanted side effects-increased erosion
and sedimentation, increased access to areas of the forest that previously
had no roads, and increased maintenance and enforcement costs for the

federal agencies. Finally, the representatives questioned the true energy
gain of using woody biomass-that is, whether the energy involved in
harvesting, transporting, and processing woody biomass exceeds the energy
contained in the biomass-stating that "it doesn't make economic sense to
burn expensive gasoline to get cheap biomass." However, they stated that
the benefits gained by using the biomass rather than piling it in
landfills or leaving it in the forest where in some locations it would
continue to pose a significant fire risk may justify any net energy loss.

Conclusions	The amount of woody biomass resulting from increased thinning
activities could be substantial, adding urgency to the search for ways to
use the material cost-effectively rather than simply disposing of it. The
use of woody biomass, however, will become commonplace only when users-
whether small forest businesses or large utilities-can gain an economic
advantage by putting it to use. Federal agencies are targeting their
activities toward overcoming this and other obstacles-for example, by
providing technical assistance and grant funds to businesses facing
economic challenges in using woody biomass. But some agency officials
believe that these efforts alone will not be sufficient to stimulate a
market that can accommodate the vast quantities of material expected.

While additional key steps may be necessary at the federal and state
levels, we believe the agencies will continue to play an important role in
stimulating woody biomass use. However, while both DOE and Interior have
designated individuals or offices for coordinating woody biomass
activities, no individual or office within the Forest Service has been
similarly designated. Without an individual or office with responsibility
for overseeing and coordinating woody biomass activities within the
agency, the Forest Service can neither ensure its multiple activities
contribute to the agency's overall objectives nor assess the effectiveness
of individual activities. Further, by taking a piecemeal approach to the
issue, the agency risks diluting the impact of its activities because
different agency units may be emphasizing different priorities. Some local
variation may be appropriate-to account for regional differences in
infrastructure, for example, or in forest type. Nevertheless, a
coordinated approach is essential if the Forest Service is to capitalize
fully on its potential to increase woody biomass utilization.

Recommendation for 	To improve the Forest Service's effectiveness in
promoting woody biomass utilization, we recommend that the Secretary of
Agriculture direct the

Executive Action	Chief of the Forest Service to assign responsibility for
overseeing and coordinating the agency's woody biomass utilization
activities to a specific official or office within the agency.

Agency Comments and 	We provided a draft of this report to the Secretaries
of Agriculture, Energy, and the Interior for review and comment. USDA
concurred with our

Our Evaluation	findings and recommendation, and the department's comment
letter is presented in appendix II. DOE officials stated they had no
comments on the report, while Interior did not provide comments.

As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the report date. At that time, we will send copies to the Secretary of
Agriculture, Secretary of Energy, Secretary of the Interior, Chief of the
Forest Service, Director of BLM, and other interested parties. We also
will make copies available to others upon request. In addition, this
report will be available at no charge on GAO's Web site at
http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-3841. Key contributors to this report are listed in
appendix III.

Sincerely yours,

Robin M. Nazzaro Director, Natural Resources and Environment

Appendix I

                       Objectives, Scope, and Methodology

The objectives of our review were to determine (1) which federal agencies
are involved in efforts to promote the use of woody biomass, and the
actions they are undertaking; (2) how these federal agencies coordinate
their activities related to woody biomass; and (3) what these agencies see
as the primary obstacles to increasing the use of woody biomass and the
extent to which they are addressing these obstacles. To get a better
understanding of woody biomass issues, we initially met with officials at
the Forest Service and Office of the Chief Economist within the Department
of Agriculture (USDA), the Department of Energy's (DOE) Office of Energy
Efficiency and Renewable Energy, the Department of the Interior, the
Bureau of Indian Affairs, the Bureau of Land Management (BLM), the Fish
and Wildlife Service, and the National Park Service. We also met with
representatives from nonfederal organizations, including the Western
Governors' Association, Colorado State University, the state of New
Mexico, the state of California, the Santa Ana Pueblo, the Wilderness
Society, the Nature Conservancy, Public Service Company of New Mexico, and
others. We also visited the Forest Service's Forest Products Laboratory in
Madison, Wisconsin; a woody biomass-heated community center in Nederland,
Colorado; and a wood-fired power plant in Burney, California.

We subsequently developed a structured interview guide to collect
information on woody biomass utilization activities, coordination efforts,
and challenges to utilizing woody biomass. Because the practical
difficulties of developing and administering a structured interview guide
may introduce errors-resulting from how a particular question is
interpreted, for example, or from differences in the sources of
information available to respondents in answering a question-we included
steps in the development and administration of the structured interview
guide for the purpose of minimizing such errors. We pretested the
instrument at two locations by telephone and modified it to reflect
questions and comments received during the pretests.

To determine whom to interview, we began with agency headquarters
officials who had been identified by the agencies as points of contact for
woody biomass activities. As part of these interviews, we asked for the
names of additional officials-regardless of location or agency
affiliation- who could provide additional information on, or insights
into, woody biomass issues. We continued this expert referral technique
until the references we received became repetitive. In all, we used our
structured interview guide to interview a nonprobability sample of 44
officials in

Appendix I
Objectives, Scope, and Methodology

various agencies and geographic locations.1 Our sample included officials
at various levels within the agencies, including agency headquarters;
Forest Service regional, national forest, and ranger district offices;
Forest Service research facilities, including regional research stations
and the Forest Products Laboratory; a BLM district office; DOE national
laboratories; and others. Our structured interviews were conducted with
officials from the following departments and agencies:

USDA

o  Cooperative State Research, Education, and Extension Service.

o 	Forest Service (including the National Forest System, Research and
Development, and State and Private Forestry branches).

o  Natural Resources Conservation Service. DOE

o  Golden Field Office.

o  National Energy Technology Laboratory.

o  National Renewable Energy Laboratory.

o 	Office of Energy Efficiency and Renewable Energy (including the Federal
Energy Management Program, the Office of the Biomass Program, the
FreedomCAR and Vehicle Technologies Program, and the Tribal Energy
Program).

Interior

o  Department of the Interior.

o  Bureau of Indian Affairs.

o  Bureau of Land Management.

1Results from nonprobability samples cannot be used to make inferences
about a population, because in a nonprobability sample, some elements of
the population being studied have no chance or an unknown chance of being
selected as part of the sample.

                                   Appendix I
                       Objectives, Scope, and Methodology

o  Fish and Wildlife Service.

o  National Park Service.

o  U.S. Geological Survey. Other agencies

o  Environmental Protection Agency.

o  National Science Foundation.

o 	Office of Federal Environmental Executive, Executive Office of the
President.

o 	Office of Science and Technology Policy, Executive Office of the
President.

We also contacted officials from the Departments of Commerce and
Transportation, who told us their departments have no activities related
to woody biomass utilization.

Federal Agency Woody Biomass Utilization Activities

To collect information on federal agency woody biomass utilization
activities, we used our structured interview guide to ask officials to
identify individuals or organizations responsible for biomass utilization
activities within their agencies and to identify other federal agencies
involved in such activities. We also asked them to provide information
about the activities their agencies had under way as well as policies,
strategic plans, and goals related to woody biomass. We also reviewed
agency policies, strategic plans, and other documents; federal and
nonfederal studies regarding technological, economic, and other issues
related to woody biomass utilization; and pertinent laws and other
documents. To corroborate the information we gathered through interviews,
we compared interviewees' responses with other information we reviewed.
Because the documentary evidence we reviewed generally agreed with the
information provided by key agency officials involved in woody biomass
efforts, we believe the data are sufficiently reliable to be used in
providing descriptive information on federal agency woody biomass
utilization activities.

                                   Appendix I
                       Objectives, Scope, and Methodology

Federal Agency Coordination of Woody Biomass Activities

To determine how agencies coordinate their woody biomass activities, we
asked officials to provide information on individuals or organizations
responsible for coordinating activities within their agencies and those
responsible for coordinating activities involving other agencies, as well
as on the types of formal and informal activities they undertook. We also
reviewed agency documentation regarding coordination issues, including
draft and final coordinating team charters and notes from coordinating
team meetings. We then compared the information provided by agency
officials with this documentation. Because the documentary evidence we
reviewed generally agreed with the information provided by key agency
officials involved in woody biomass efforts, we believe the data are
sufficiently reliable to be used in providing descriptive information on
agency woody biomass coordination efforts.

Obstacles to Increasing the Use of Woody Biomass

To obtain information on obstacles that federal agencies face in their
efforts to increase the use of woody biomass, we asked agency officials to
identify and provide their opinions on the major obstacles to increasing
the use of woody biomass, describe agency efforts that target the
obstacles they identified, and discuss additional steps they believe are
necessary to address these obstacles. Because we asked only for opinions
about obstacles to woody biomass utilization and additional steps needed
to overcome them, we made no attempt to corroborate these responses. To
corroborate responses regarding agency efforts to target the obstacles
identified, we compared interviewees' responses with the documentary
evidence we gathered regarding the agencies' woody biomass utilization
activities. Because the documentary evidence we reviewed generally
supported the information provided by interviewees, we believe the data
are sufficiently reliable to be used in providing information about the
extent to which the agencies are addressing these obstacles.

We performed our work from June 2004 through March 2005 in accordance with
generally accepted government auditing standards.

Appendix II

Comments from the Department of Agriculture

Appendix III

                     GAO Contacts and Staff Acknowledgments

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David P. Bixler, (202) 512-7201

Staff In addition to those named above, James Espinoza, Steve Gaty,
Richard Acknowledgments Johnson, and Judy Pagano made key contributions to
this report.

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