Sunday, May 22, 2011

How Manomet got it Backwards: Challenging the “debt-then-dividend” axiom

How Manomet got it Backwards:
Challenging the “debt-then-dividend” axiom
with a reply by Forest Guild director Bob Perschel

By Dr. William Strauss,
President, FutureMetrics
May, 2011

Dr. William Strauss

This short paper challenges the assumption that there is always a carbon debt incurred first before there is a carbon dividend to be accrued later when using woody biomass for energy (we call that logic their debt-then-dividend assumption).

The Manomet authors have that assumption so deeply ingrained into their logic that it is presented as axiomatic.  In complex systems theory one of the points of study is the concept that “selection is information”.  By presenting the debt-then-dividend assumption as an axiom, the Manomet authors have limited the scope of their view of the world and thereby have removed information from the system.  Their model allows no conclusion other than those that accrue from their debt-then-dividend framework. 

The paper begins with some of the already published criticisms of the Manomet study.  This brief paper however primarily focuses on the self-evident (axiomatic) presupposition of the study’s authors’ assumptions regarding carbon sequestration and release.


A Reply by Robert Perschel
Forest Guild, Eastern Forests Director

Robert Perschel

With any research it is important to be clear about the question that is being asked of the research.   In Dr. William StrauRss’ recent critique of the Manomet study –“How Manomet got it Backwards” - he gets the answers right, but not to the question posed to the Manomet study team and the one relevant to policy makers who decide on how to pass out incentives for renewable energy.

Dr Strauss appears to be answering the following question:

Can our forests, when sustainably managed and operated as a system, produce energy and not contribute to the buildup of atmospheric carbon?   His answer is affirmative and the data in the Manomet study confirms that answer to be true over certain time periods.  However, that is not the question that a good policy maker should be asking.

Policy makers have a limited pool of money available to incentivize renewable energy and lower, stabilize or minimize the build up of atmospheric carbon.  It is their job to choose among various alternatives and invest those limited dollars to the greatest effect.  These particular policy makers don’t just want to know what is good- they want to know what they can make better by investing in it.  So the fact that forest systems have operated or will operate to produce energy in ways that minimize atmospheric carbon is immaterial to their legislative responsibility.  The question they are asking is:  If we invest dollars in this sector what will be the rate of return in minimizing carbon as compared to other alternatives?  If the rate of return is negative over some relevant time period they would likely not invest.  In addition, if the rate of return for biomass is less than for other forms of renewable energy they also would likely not invest in biomass.  So essentially Massachusetts DOER asked the Manomet team to analyze the return on potential investment.

In order to do this analysis you need to make assumptions about the business as usual scenario.  Obviously, if a practice was going to happen anyway – or already happened - then using your limited dollars doesn’t buy you anything.  You need to know what will happen differently if you do invest.  Therefore, the Manomet study looked at what would happen if funding was used to increase the harvest of biomass and how atmospheric carbon levels would change and flux as a result of that investment.

The study found that initially there was more carbon in the atmosphere from an investment that increased the harvest but over time that investment would pay off in the form of less carbon in the atmosphere.  This type of analytical approach is scientifically sound and valid to the particular question being asked.  The conclusions regarding policies that might be formed from the debt and payback time periods  was beyond the scope of the Manomet report and are now being actively debated. 

So, in summary, we agree with Dr. Strauss’ assessment of forest systems’ long term ability to mitigate atmospheric carbon.  It indicates that an appropriate investment in forest conservation and sustainable forestry is good general forest policy. However, his assessment does not provide the information needed for the kinds of investment decisions challenging policy makers with a limited pool of money to mitigate carbon.  The Manomet approach does provide a framework for this analysis and is now being replicated elsewhere to provide the region- specific numbers necessary to make good policy.

Strauss as keynote speaker at conference in Austria
Check out:
 Reply by Dr. Strauss:

The discussion over what policy makers should know and understand is important.  I certainly do not want to confuse anyone.  But the foundation for the discussion has to be built upon a factual understanding of the reality of what wood-to-energy means.  There are folks at every point on the continuum in this mix.  At one end of the spectrum are advocates for never cutting a tree for any reason and regaining a land of old growth forests.  At the other end are folks that would ignore the ecological and environmental disaster that would accrue from cutting and taking all of the trees for short term gain.  I hope that a reasoned discussion can lead to a reasoned understanding of how to best manage the use this renewable and sustainable energy resource.

One thing is certain; there is a secular shift in world demand for paper for printed media.  If you talk to people in the printed media business, there is great uncertainty.  The data backs that up.  Paper demand for newspapers, magazines, catalogues, books is declining at an increasing rate.  If the forest products industry is to adapt to the inevitable decline in demand for pulpwood, it will have to find other markets.  There is an opportunity here to save this valuable industry and help contribute to our energy independence and mitigate GHG emissions from fossil fuels.

Working forests that provide an annuity to their owners remain forests.  Idle forests, particularly in urbanized states like MA, get cleared for urban development and disappear forever.  That is another dynamic that seems to be missing from the study.

I am troubled by one sentence in the comment that Bob makes: "Therefore, the Manomet study looked at what would happen if funding was used to increase the harvest of biomass...”  If one starts with the premise that wood-to-energy requires an increase in the harvest then of course the balance of growth to harvest changes and there will be net increase in carbon emissions (but only by the incremental increase over the long term equilibrium growth rate NOT by the entire harvest).  The central thesis of my paper, supported by the entire last section of the paper showing data for Maine, is that many large working forest systems have been in growth to harvest equilibrium for a long time.  Given that equilibrium (or growth to harvest greater than one as Maine exhibits) there is no carbon debt.  The whole idea of my paper is that if harvest is about the same every year in the past and in the future, there is no debt.  All this concern about increased carbon emissions is in error if those conditions are met.  The premise that harvest has to increase due to some “funding” may be correct for MA which, as the paper points out, has a much more limited forest products industry.  But wise policy should not approve any funding that would allow unsustainable practices. 

Some might say that this is a slippery slope.  Once we go down the wood-to-energy path, we will cut down all of the woods. One can look to Austria to see a model of a country with a strong policy for wood-to-energy that has been in place for decades where the forests are not only not shrinking but are getting healthier because of regular thinning due to the demand for so-called low grade wood for energy (see my article in Pellet Mill Magazine that discusses the Upper Austrian leadership in this area ). 

The policy battle here should not be whether or not wood-to-energy is a good idea, but should be how to make sure that our working forest resources are managed for health and maximum sustainable energy yield forever while preserving an ecological foundation for habitat and human visitors.

There is a lot of good work in the Manomet study specific to MA.  But continuously lurking in the shadows is the assumption that every bit of wood that is harvested and converted to energy is depleting the net stock of wood in the forest system (at least until those trees regrow over decades).  That assumption flies in the face of facts.  In Maine at least the net stock of wood is getting larger every year in spite of 16 million tons per year every year for the last 30 years being harvested from across almost 18 million acres of forested land. 

So my paper I think is not only right but is an important bit of information to help our policy makers make good policy.

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