Controlling the Variables There are plenty of renewable energy projects on the books; some of them even make sense. renewable energy option in a country that will soon need all available options. It’s home grown, building our communities and filling our wallets. For the right entrepreneur with the right idea, opportunities abound. Still, from time to time a dose of reality helps keep us humble, forces us to do our homework, and helps sepa- rate bad ideas from golden opportunities. Just such a dose was ap- D plied to delegates at the Ca- nadian Renewable Fuels As- sociation’s Growing Beyond Oil Summit held in Vancouver last Decem- ber. Don Roberts of CIBC World Markets addressed bioenergy from an investor’s perspective, and the view was enlightening. Don’s basic message was simple – people are reluctant to invest in something with a lot of unknowns. While biomass has a lot of positives right now, certainty isn’t among them. Key variables include the price of fossil fuels, the price of carbon, the cost of feedstock, public policy, and conversion technologies. “At present, all five of these variables are in a state of flux, and investors hate uncertainty,” is how Don summed it up for a suddenly quiet audience. Existing and proposed forestry biomass projects have no control over the price of fossil fuels or the value put on carbon, but they can certainly consider the other three when crafting their business models to be as attractive as possible to investors, part- ners, or possible employees. For instance, most forest biomass businesses currently rely on solid biomass conversion technolo- 4 CanadianBIOMASS on’t get me wrong – I love forest biomass. It’s a great Canadian asset that is currently underutilized. It’s a gies – either wood pellets or direct-fired biomass combustion. Both routes use proven, relatively simple technology. There will be movement on the biofuel and bio- refinery front, especially among pulp and paper players, but that approach is best left to those with deeper pock- ets, larger asset ledgers, or subsidies. Feedstock cost and availability is also some- thing that those in for- est biomass have a better handle on than others looking at the sector. We have the skills, the rela- tionships, and the com- plementary businesses to help get biomass where it needs to be at reasonable costs. The key is to make the right products from the right fibre in the right place. Even public policy is in our hands to the extent we wish it to be. Maintain sustain- able operations and prove it, develop pro- fessional public communications efforts, and do a little skilled lobbying work, and public policy will go your way more often than not. As a bonus, we bypass both the food vs. fuel and indirect land-use change issues plaguing agricultural biomass. Simi- larly, create viable domestic markets to help diversify the revenue stream from your pel- lets, and investors will breathe easier. So before you visit your banker with the next best biomass project, carefully con- sider Don’s five variables and do your best to minimize the uncertainty surrounding each. In the meantime, read our new col- umn on project funding on page 13. • Scott Jamieson, Editor [email protected] BIOMASS CANADIAN Volume 8 Editor/Group Publisher - Scott Jamieson (519) 429-3966 ext 244 [email protected] Associate Editor - Heather Hager (519) 429-3966 ext 261 [email protected] Contributors - Colleen Cross, Reg Renner, Mark Ryan, Evelyne Thiffault, Bill Tice Market Production Manager Josée Crevier (514) 457-2211 ext 21 [email protected] National Sales Managers Tim Tolton - [email protected] 514-237-6614 Guy Fortin - [email protected] 90 Morgan Rd, Unit 14 Baie d’Urfé, Que H9X 3A8 Ph: (514) 457-2211 Fax: (514) 457-2558 Western Sales Manager Tim Shaddick - [email protected] 1660 West 75th Ave Vancouver, B.C. V6P 6G2 Ph: (604) 264-1158 Fax: (604) 264-1367 Production Artist - Kelli Kramer Canadian Biomass is published six times a year: February, April, June, August, October, and December. Published and printed by Annex Publishing & Printing Inc. Printed in Canada ISSN 0318-4277 Circulation e-mail: [email protected] Tel: (514) 457-2211 Fax: (514) 457-2558 Mail: 90 Morgan Rd, Unit 14 Baie d’Urfé, Que H9X 3A8 Subscription Rates: Canada - 1 Yr $48; 2 Yr $85; 3 Yr $115 Single Copy - $6.00 (Canadian prices do not include applicable taxes) USA – 1 Yr $44 US; 2 Yr $75 US Foreign – 1 Yr $75 US From time to time, we at Canadian Biomass make our subscription list available to reputable companies and organizations whose products and services we believe may be of interest to you. If you do not want your name to be made available, contact our circulation department in any of the four ways listed above. No part of the editorial content of this publica- tion may be reprinted without the publisher’s written permission ©2010 Annex Publishing & Printing Inc. All rights reserved. Opinions expressed in this magazine are not necessarily those of the editor or publisher. No liability is assumed for errors or omissions. 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Canadian Biomass January/February 2010: Page 4
