Thursday, September 2, 2010

Investing in Tropical Trees as Renewable Energy

Typical Hardwood Pellets
Some people worry about making an investment in tropical trees, because they can’t predict what economic conditions might be like in 10 year’s time. Fear of another recession or economic slow-down with a consequent possible decline in lumber, building material, pulp or furniture sales has them worried. What they don’t understand is that tropical trees can be a recession-proof investment, because there are so many uses for them. They aren’t thinking about the fact that tropical trees are an excellent source of renewable energy. Power plants need to produce electricity and homes need to be heated in North America and Europe, regardless of economic conditions. Many governments around the world are legislating that power plants use renewable energy sources, at least for a percentage of their fuel requirements. Answering that call are wood pellets, which are almost carbon neutral, cost less than other fuels per heat unit produced, and are a complete renewable energy product. So let’s ignore the fact that demand for tropical hardwoods has consistently exceeded supply since the 1940’s; let us instead focus on tropical trees as a source of renewable energy. To do so we need to know some numbers.

40 lb Wood Pellet Bag
Fast growing tropical trees can reach maturity in just 10 years time, with each harvest immediately followed by replanting. A typical hectare (2.47 acres) of plantation wood at harvest can yield around 500 cubic meters (211,888 board feet) of wood. Depending on the species this can translate into anywhere from 347 to 600 metric tons (382 to 662 US tons) of woody biomass. However, that is only a lumber calculation, as production of wood pellets allows one to use additional biomass such as branches, bark, roots and stumps, easily adding another 25% to the above numbers. The next issue is calorific or BTU value, in other words how much heat does a kilogram of wood produce. There is a great difference between wood types. What is important to note is that the hardwoods growing in a typical tropical tree plantation like Amazonia Reforestation can have high calorific values. For example, Acacia mangium has a calorific value of 4,900 kCal/KG (8,800 BTU/lb), while Eucalyptus pellita has a calorific value of 4,800 kCal/KG (8,640 BTU/lb). That makes these woods not only useful as potential firewood sources, but of great value for the manufacture of wood pellets. Bottom line, managed plantations can produce significant quantities of valuable calorific biomass for renewable energy purposes.

While North American utility companies are often slow to take up alternative energies, European power plants have been implementing wood pellet use as a renewable energy fuel for some time now. In North America wood pellets have seen their greatest use for home, condominium and warehouse heating, with owners installing special wood pellet burning stoves and heaters to get away from the high cost and environmental problems associated with natural gas, LP gas, coal or heating oil. This may be about to change, as North American governments are starting to mandate the use of a percentage of renewable energy sources in power and heat generation plants. In part, this is to get away from the high cost and environmental problems associated with dependence on non-renewable fuels like oil, natural gas and coal. Wood pellets stand out, because they do not require agricultural crops to be turned into bio-diesel or ethanol, at the expense of human food production. Pressure from consumers and governments to convert to renewable energies like wood pellets, geo-thermal, solar and wind sources is likely to grow in the coming years, further increasing the demand for hardwood products. This makes now the perfect time to purchase some tropical trees, as a green investment today will pay off handsomely in the near future.


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