May 10, 2007

Nacogdoches Daily Sentinel
No incentives? No biomass plant

Tony Callendrello has the technology. He has the capability to make the state's first biomass electric plant. Sacul, Texas, will be home to that plant. Better than what was proposed before. Better jobs. Stronger economy. Cleaner power — but only if Callendrello and other Nacogdoches officials can fight off complaints from Temple-Inland and get lawmakers to see that biomass is good for the entire state.

Callendrello, the chief operating officer of Baycorp Holdings Ltd. told Nacogdoches Economic Development Corporation board members Thursday that his company is "on the 2-yard line," — just shy of starting construction.

Nacogdoches Power LLP has obtained the necessary permits, ordered the appropriate equipment and started the process of seeking financing.

But earlier this week the $300 million project hit a legislative snag — a fly in the ointment, as Callendrello put it.

Callendrello said, all along, that the construction of the plant was contingent on legislation filed by state Rep. Wayne Christian of Center, which would make the power generated from a clean, renewable energy plant a desirable commodity — in other words, the state would require Texas' energy portfolio to include power produced by renewable energy sources other than the existing windmill generation systems.

According to Callendrello, that bill would encourage more biomass plants in East Texas, as well as other geothermal and hydroelectric plants in other areas of the state.

Christian's bill passed the House on a vote of 141 to 0, which Callendrello said was remarkable, but the bill was moving more slowly through the Senate.

Because he said the ailing East Texas timber industry depended on biomass, Christian saw an opportunity to get similar language from his biomass bill into a statewide energy bill amendment.

But the amendment completely halted progress on both bills.

The Texas Association of Manufacturers and Temple-Inland both spoke out against the bill, saying the state government should not subsidize private "for-profit" biomass projects, while endangering existing forest products manufacturing jobs.

Callendrello said it is good public policy for the government to invest in renewable resources, and there are 23 states that provide some sort of incentive for renewable energy.

One of the complaints offered by the Texas Association of Manufacturers is that making manufacturers pay for more expensive renewable energy would increase the cost of manufacturing and could hurt job growth. But Callendrello said the legislation allows for manufacturing operations to opt-out, so that higher energy prices are not a concern.

And aside from the opt-out clause, Callendrello said, biomass power will actually save Texas electric customers money — as much as $126 million over the next eight years, because new biomass plants can replace older, inefficient gas-powered electric plants.

The second item of contention, which drew opposition from Temple-Inland and other forestry product producers, is the accusation that biomass plants are going to steal fuel supply and drive up the cost of timber.

"They are saying that because we will receive a payment, we are, somehow, at an advantage over them," Callendrello said. "And if you were just to hear that, it seems to make sense. But when you really look at it — it doesn't."

According to Callendrello, the biomass plant will use wood product residue — not logs.

"Almost every bit of it is left in the forest or ends up in landfills or is open-burned on the side of roadways," he said. "That is the material we will take and use."

If it works out and the legislation goes through, Callendrello said he will begin work immediately on the first of a new generation of biomass energy production mills. But several more will follow, including a possible second local site already being studied by Baycorp.

"But they won't happen without that bill," he said.

NEDCO Chairman Stan Sisco said it is a complex topic which NEDCO has been working on for a long time.

While NEDCO never wants to create a situation that pits industry against industry, Sisco said, the board has to do what they think is best for Nacogdoches County and for East Texas.

"Tony is one of the smartest people I've ever been around," Sisco said. "And I have a lot of confidence in the information he puts on the table."

Judy McDonald, NEDCO president, said Wayne Christian "has worked his tail off" to get the legislation passed, Nacogdoches officials need to try to help convince lawmakers that biomass incentives will be good for the entire state.

The power plant will create jobs — both in construction and later in running the plant, McDonald said. And it will provide for long-term timber contracts, help clean up the environment by reducing greenhouse emissions, and decrease Texas' dependence on fossil fuels.

"... a lack of good understanding," she said. "That's why this has not already happened. But it's going to happen because we've got to make it happen. We have to have this."