Resources for the Future Models EISA Impacts on Timber Market

In a recently released issue brief, Resources for the Future presents a new economic analysis projecting the effect on timber markets of the renewable fuel mandates in the Energy Independence and Security Act of 2007 (EISA). The model compares a base case scenario against one in which EISA-mandated increases in cellulosic biofuels are met entirely with woody biomass.

The major findings include:

• The mandated increases in cellulosic biofuels will raise wood prices by 15 percent in 2015 and 20 percent in the early 2020s over the base scenario.
• There will be a 60 percent increase in the consumption in raw wood by 2022. This number would be even higher, but the corresponding price increases will cause consumption of wood for non-cellulosic uses to fall.
• Under the baseline scenario, the United States will move from being a $250 million net exporter of wood in 2010 to being a $1.2 billion net importer by 2050. But when cellulosic biofuel mandates are factored in, the model projects net imports to balloon to $4 billion by 2050. Domestic and global wood demand will be met with a corresponding increase in offshore wood production.

The report’s authors believe forests in the United States could most likely sustain this large of a change in harvest size. However, the scale of the increase, as well as Congressional limitations that prevent significant amounts of land from being used, could lead to both supply shortages and forest sustainability problems down the road.