Value of Wood to Competing Users: Energy Versus Product Uses in the Inland Empire

A study was conducted to examine the value of wood fiber for various energy and manufacturing uses in northeastern Washington, northern Idaho, and the major timber producing regions of Montana. The results indicate that wood generally has a higher value when it is used to manufacture a product than when it is used as an energy source. Wood used to generate electricity or as a substitute fuel for coal has estimated value ranges below virtually all product uses. When used by industry as a substitute for fuel oil or natural gas, wood had the highest value of the energy uses evaluated. However, the estimated value range for wood used in place of these two fossil fuels is large, due primarily to the variability in capital costs of wood systems. Given that capital costs were near the low end of the range for wood systems, the value of wood as a substitute for fuel oil or natural gas appears to be competitive with many product uses. Historically, prices for wood used for fuel in the Inland Empire have been below its potential value as a substitute for natural gas or fuel oil. This is because surpluses of mill residue currently exist in the region. Mill residue is the primary source of industrial fuel wood. A very modest increase in demand for mill residue could utilize virtually the entire surplus. A small decrease in the volume of timber processed by sawmills in the region would also eliminate the surplus. Elimination of the surplus would lead to greatly increased direct competition among use s of wood fiber residue and could lead to significantly higher prices for bark and fine residue available at sawmills and plywood plants.

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