Sunday, January 10, 2010

Law of Unintended Consequences: Biomass Version

Just like all "pork".....

It sounded like a good idea: Provide a little government money to convert wood shavings and plant waste into renewable energy.

But as laudable as that goal sounds, it could end up causing more economic damage than good -- driving up the price of raw timber, undermining an industry that has long used sawdust and wood shavings to make affordable cabinetry, and highlighting the many challenges involved in decreasing the nation's dependence on oil by using organic materials to create biofuels.

In a matter of months, the Biomass Crop Assistance Program -- a small provision tucked into the 2008 farm bill -- has mushroomed into a half-a-billion dollar subsidy that is funneling taxpayer dollars to sawmills and lumber wholesalers, encouraging them to sell their waste to be converted into high-tech biofuels. In doing so, it is shutting off the supply of cheap timber byproducts to the nation's composite wood manufacturers, who make panels for home entertainment centers and kitchen cabinets.

The federal government can provide up to $45 a ton in matching payments to businesses that collect, harvest, store and transport biomass waste to an authorized energy facility. That means sawdust or wood shavings may be twice as valuable if a lumber mill sells them to a biomass energy company instead of to a traditional buyer.

This is bad news for the composite panel industry, which turns these materials into particleboard and medium-density fiberboard, and outranks the U.S. biomass industry in terms of employees and economic impact, with 21,000 employees and annual sales of $7.9 billion, according to 2006 U.S. Census data.

The biomass subsidy program could "wipe us out," said T.J. Rosengarth, the CEO of Flakeboard, the largest composite panel producer in North America. "You can say, 'I've made more alternative energy,' but at what expense?"

The Unintended Ripples from the Biomass Subsidy Program" in today's Washington Post, via Government Fiasco blog

MP: That's why it's called a "law."


At 1/10/2010 1:54 PM, Anonymous Anonymous said...

Don't forget the mandates for ethanol creating food shortages. Or, the ban on DDT killing hundreds of millions of third world children. Never let a leftist anywhere near real power.

At 1/10/2010 2:16 PM, Anonymous Ralph Short said...

Leftists don't care, they want control. The more control they have, the more things get screwed up, and then they want more control to correct what they screwed up, which then results in more screw ups, etc., etc.

The typical leftists, aka democrats, are resolved to reintroduce the concept of five year plans which is what the Soviet Union and other commie states have done. That is why they will be blaming their failures to create jobs, increase GDP, improve the overall Economy, have a successful foreign policy, you name it, on believers in capitalism and freedom lovers for the next 5 years or more.

The marxist, Obama, still blames all of the current problems on the Republicans notwithstanding he has been in office for a year and the demoncrats controlled congress since 2006.

The only difference between them and the typical commie state is they do the blame game for 5 years or more because they have to be reelected. Well, at least for now, we have elections.

At 1/10/2010 5:50 PM, Blogger KO said...

I don't even know why anyone can say "It sounded like a good idea.."

Well I guess journalists love this kind of crap. So maybe it sounded good to her.

It's just astonishing that you have such recent disasters like ethanol and cash for clunkers, and people still think the government can hand out money and not screw things up.

At leas with ethanol we ended up with a bunch of taxpayer subsidized moonshine plants. So we'll all have a cheaper way to numb the pain of all the tax increases we're starting to see.

At 1/10/2010 6:44 PM, Anonymous Ralph Short said...

The new one is Obama's plan for 2.3 billion dollars to create "green jobs". Another catastrophe that will not be reported.

How many windmills, civilian trials for foreign terrorists, bailouts for corrupt businesses and city and state governments will it take to get the electorate outraged to reject these losers once and for all.

At 1/11/2010 4:25 AM, Blogger KO said...

Interesting stuff coming from our friend Hugo in Venezuela. Looks like he's threatening businesses who raise prices after he devalued the currency. Somehow he expects that prices can stay the same in spite of the devaluation of the bolivar.

One interesting quote that could have been written about the US:

"Venezuelans, especially the poorest of them, will pay for the devaluation of the bolivar from their pockets," said Luis Ignacio Planas of the Copei opposition party. "The government is acting like a pickpocket, sticking its hands in the pockets of Venezuelans, taking their money to continue financing and paying for an irresponsible economic policy."

At 1/11/2010 7:41 AM, Anonymous geoih said...

Multiply this a million times and you'll understand why the economy is in the toilet and government intervention has absolutely nothing to do with recovery.

At 1/11/2010 8:05 PM, Blogger Craig Howard said...

Oh, and let's never forget the black liquor subsidy. That unintended consequence of "green" energy promotion started a trade war with Canada.

At 1/12/2010 10:57 AM, Anonymous Anonymous said...

Guys, before you go blaming "leftists" and "greenies" for these policy failures, please look again at who was pushing for the programs in the first place: farm-state senators and representatives, of BOTH parties. Greenness was an excuse: farm support, and the pursuit of distorted notions of energy security, were the real motivations. Surely at least Mark Perry appreciates that.

-- Subsidy Eye


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