Week of June 6, 2005
  Snapshot from the Field

Biomass Bonanza

by ADAM BRUNS, Site Selection Managing Editor

The United States has famously declined to observe the Kyoto Protocol, the international treaty of industrialized nations to reduce air pollution emissions to 1990 levels, which took effect in February 2005. But that doesn't mean U.S. companies can't make money from other nations' allegiance to the treaty.
Loading ships with its wood chips is the primary reason Green Energy Resources wants to expand its operations into up to 10 U.S. East Coast ports by 2008.

      Immediate case in point: New York City-based Green Energy Resources (GER), a wood biomass processor and exporter founded by forest products veteran Joseph Murray in 1997 as New York International Log & Lumber Co. On June 6, based on existing and envisioned contracts with renewable energy clients in Europe, Murray announced plans to expand the company's operations into at least 10 east coast ports over the next three years, as well as move its headquarters to one of those cities.
     "The company will select ports depending upon those willing to build the appropriate loading facilities in the shortest period of time," CEO Murray said, getting straight to the point. "Baltimore and Philadelphia offer the most logical opportunities and are also being considered as our new headquarters when we relocate from the New York area."
     The immediate export contract, which Murray says is likely to create well over 100 new jobs, is a US$2-billion dollar, 40 million-ton, 10-year contract for wood biomass delivery to unnamed European clients. In addition, Murray says two pending contracts in Italy - one for 200,000 tons annually for two years, the other for 43,000 tons monthly for 10 years - could be worth more than $100 million. The company is also in merger discussions with an Italian company, ICL of Cremona.
     European countries are leading the way in renewable energy mandates. Recently,German lawmakers committed to doubling the country's renewable energy power generation from 6 percent to 12 percent within five years, and quadrupling it by 2020.
      Murray's company is looking eastward too, but still with the number "10" in mind. In April 2005, GER began negotiations with Chinese government ministers on the construction of 10 ships to move 250 million tons of wood biomass for co-firing from the U.S. to Chinese ports over ... you guessed it ... 10 years. According to GER, "the agreement in negotiation includes Green Energy purchasing the ten woodchip-carrying ships valued at $350 million that would be built and manufactured in China. Green Energy would provide future shipping leaseback options to the Chinese government."

Chips in Ships
     A clue to where those 10 U.S. ports might be can be found by looking at the company's investor statements and employment openings.
     In addition to renewable energy sales positions in France and Germany, GER is advertising 14 procurement positions along the Eastern seaboard that it says can pay up to $250,000 a year: six in Florida, two in North Carolina and six in the Mid-Atlantic region (Philadelphia, Baltimore and Washington, D.C.).
     Meanwhile, in its January 2005 investor update, GER said, "The port of Baltimore remains the most immediate target for development for exports in the upcoming year." Murray has said GER "will work with local and state economic development agencies to determine the best incentives, grants, and tax breaks available for the large-scale exports and potential employment opportunities anticipated."
     GER says it supplies only environmentally certified wood, using sources such as waste wood from storm damage, maintenance wood, and wood otherwise destined for landfills. It operates under the UTCS (urban tree certification system), "a certification system of socially responsible and environmentally friendly government approved forestry and non-forest industry recycling practices including chain of custody documentation (a tracking system from origin to end user)." In additino GER has developed international standards of conformity for fuel grade wood chips.
     GER's company history explains that "The emergence of a green energy demand in Europe comes at a time when waste wood is at an all time high in the United States. The European Unions' Energy Council projects wood fired power plants will consume annually between 50 -110 million tons of wood."

Meanwhile, Back in the States ...
     If it sounds like an uphill battle for GER, Murray is well-prepared in such undertakings. In 1994, he established Forest For Tomorrow Inc, a company engaged in exportation of hardwood logs, marketing, and waste wood utilization. According to GER's Web site, that company "was an instrumental catalyst in the development of log-exports with Quebec Canada under NAFTA. The trade in southern New England and Mid Atlantic states now delivers over 1 billion board feet of timber to Quebec annually."
     In addition, Murray's valid battle-testing includes stints as a lobbyist in Annapolis, Md., and senior executive aide in the New York State Senate and Assembly.
     Kyoto or no Kyoto, the U.S. is still a ripe opportunity for GER. While the company (and everyone else) awaits the long-stalled passage of a new federal energy bill that it hopes will boost demand for renewable energy sources, it's proactively targeting the coal power industry, as well as states that have already mandated some degree of alternative energy source for electrical power.
     "The U.S. will be the most significant market in the world for trading emissions when the Federal government passes its long delayed Energy Bills anticipated for this year," said the company in January. With Kyoto peer pressure and power plant emissions lawsuits pending in several states as background, GER forecasts an annual North American delivery capacity of about 10 million tons of various wood fiber fuels within seven years.
     Currently, the company operates four port facilities and two woodchip carriers, which as of early this year had a capacity of 1.5 million tons annually. On average, a shipload is equivalent to 2,000 tractor-trailer loads (the company employs CSX railcars as well). GER's capacity goal is 5 million tons in five years.
     In 2004, its first year of doing business under its new name, GER recorded a $500,000 profit. It anticipates "100-percent growth and improved profits" in 2005.

©2005 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.