United States
Environmental Protection
Agency
Montana Office
301 South Park
FOB Drawer 10096
Helena, Montana 59601
EPA 908/1-30-001
May 1980
Economic Alternatives
to Tepee Burners for
Disposal of Wood Residue
in Montana
-------
EPA Report Number 908/1-80-001
May 15, 1980
ECONOMIC ALTERNATIVES TO TEPEE BURNERS
FOR THE DISPOSAL OF WOOD RESIDUE IN
MONTANA
by
Michael 8. Harrington, Ph.D.
Patricia 0. Tierney
Demetrios J. Moschandreas, Ph.D.
GEOMET, Incorporated
Gaithersburg, Maryland 20760
Contract Number 68-01-4144, Task 6
Michael Davenport, Project Officer
Air Ouality Bureau
Department of Health and Environmental Sciences
State of Montana
and
U.S. Environmental Protection Aaency
Helena, Montana
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This report has been reviewed by the U. S. Environmental Protection
Agency, and approved for publication. Approval does not signify that the
contents necessarily reflect the views and policies of the U. S. Environ-
mental Protection Agency, nor does mention of trade names or commercial
products constitute endorsement or recommendation for use.
This report is issued by the Environmental Protection Agency to report
technical data of interest to a limited number of readers. Copies are
available free of charge - as supplies permit - from the Montana Office,
Environmental Protection Agency, Region VIII, FOB Drawer 10096, 301 S. Park,
Helena, Montana 59601, or may be obtained, for a nominal cost, from the
National Technical Information Service, 5285 Port Royal Road, Springfield,
Virginia 22151.
Publication No. EPA-908/1-80-001
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Table of Contents
Section Page
1.0 EXECUTIVE SUMMARY 1-1
2.0 THE AIR POLLUTION ASSOCIATED WITH TEPEE BURNERS IN 2-1
MONTANA
2.1 Operational Problems of Tepee 8urners 2-2
2.2 Maintenance Problems of Tepee Burners 2-6
3.0 TRENOS IN THE WOOD PRODUCTS INDUSTRY IN MONTANA 3-1
3.1 Recent Employment and Production Trends in Montana
Timber Production 3-1
3.2 The Geography of Lumber Production 3-4
3.3 Public Versus Private Lands as Timber Sources 3-4
3.4 Trends in the Size and Number of Sawmills 3-9
3.5 Residue Produced by the Wood Products Industry 3-12
3.6 Trends in Production by Size of Mill 3-15
4.0 THE ROLE OF THE TEPEE BURNER IN SMALL SAWMILL OPERATIONS 4-1
4.1 A Profile of Mills Employing Tepee Burners 4-1
4.2 Economic Problems Facing Tepee Burner Mills 4-5
4.3 Opportunities for Marketing Wood Residue 4-9
4.4 Practical Problems Facing Tepee Surner Mills that
Desire to Market Wood Residue 4-12
5.0 STEPS THAT WILL ENCOURAGE A SHIFT AWAY FROM 3URNING WOOD
RESIDUE IN TEPEE BURNERS IN MONTANA 5-1
5.1 Solutions that Assist Mills in Meeting Initial
Capital Costs 5-2
5.2 Solutions that Encourage Initial Operating
Profitability 5-7
5.3 Incentives that Focus on the Transportation Aspects
of Wood Residue Marketing 5-9
5.4 Some Criteria for Choosing the Best Incentive Mix
to Solve the Tepee 8urner Problem in Montana 5-10
Addendix A
Appendix 3
Appendix C
Appendix D
Appendix E
-lii-
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List of Tables
Table Page
3-1 Montana Lumber Employment and Output 3-3
3-2 Roundwood Products Harvested from Montana Timberlands
by County in 1976 3-5
3-3 Number of Montana Sawmills by Size of Production,
Selected Years 1956-76 3-10
3-4 Source of Saw Logs Used by Montana Mills in 1976 by
Size of Mill (millions of board feet, Scribner) 3-11
3-5 Estimated Volume of Wood Residue Generated in Montana
Sawmills and Plywood Plants Comparing 1969 with 1976 3-16
3-6 Percentage of Montana Lumber Output by Size of Mill
for Selected Years Between 1956 and 1976 3-17
3-7 Montana Lumber Production by Size of Mill in 1976 3-13
4-1 Nunber of Tepee 8urners in Each Air Quality Control
Region and County in Montana 4-2
4-2 Mill Residue from Montana Sawmills and Plywood Plants
in 1976 (bone dry units) 4-6
4-3 Lumber Production and Capacity by Size of Mill in
Montana, 1976 4-8
4-4 Representative Capital Costs for a Sawmill Entering
the Hog Fuel Market (prices in spring 1980) 4-13
4-5 Railroad Shipping Rates Based on Various Origins
to Schilling, Montana 4-16
-IV-
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List of Figures
Fi qure Page
2-1 Typical Tepee Burner 2-2
3-1 Tepee Burner Mills in Relation to Growth in Employment
by County 1970-77 3-3
3-2 Roundwood Products Harvested from Montana Timberlands
by Type of Land Ownership, 1962-76 3-5
4-1 Air Quality Control Regions and Montana Counties by
Rate of Growth 4-4
-v-
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SECTION 1.0
EXECUTIVE SUWARY
During the spring of 1980, there were still over 30 tepee burners
operating within the State of Montana. These burners are used by sawmills to
dispose of some or all of the wood residue produced during normal operations.
Though these burners are useful to sawmills still employing them, the burners
present two problems. First, they are expensive to operate and consistently
violate Montana's air quality rules, a defect that cannot be remedied by
equipment modification or improved operation or maintenance. Second, burning
wood residue is an extremely wasteful method for disposing of an increasingly
valuable natural resource, one steadily increasing in demand for fuel and other
purposes.
This study was conducted to determine the problems facing mi lis
employing tepee burners that might prevent them from shifting away from the
burning of wood residues towards marketing them, and to determine steps that
the State of Montana and/or the U.S. Government might take to encourage this
shift without levying an undue hardship on these mills or the forest products
industry.
1-1
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The demand for wood residues in Montana and elsewhere is expected to
increase steadily in the irmiediate future, particularly if the expected
recession in the U.S. is not severe. One pulp plant now being expanded in the
Missoula area alone is expected to purchase as much as 90 percent of the wood
residue produced in the State beginning in the fall of 1980. Other markets for
wood residue may expand as well. This means the chances of marketing residue
from a wood-burning sawmill are good, provided that certain practical problems
can be solved.
The major problem facing tepee burner mills, particularly smaller
ones, is financing the capital equipment necessary to make wood residue market-
able. In a typical mill, this means the purchase and installation of equipment
for grinding residue into a form suitable for sale as boiler fuel, and the
storage facilities necessary for convenient and economical truck pickup for
transport to markets. This capital investment is not enormous, ranging from
$50,000 to $150 , 000 depending on the size of the mill, the type of equipment
purchased, the installation problems to be solved and related considerations.
But such an outlay could be prohibitively expensive at today's bank lending
rates, particularly for sawmills that are operating on comparatively thin
financial margins.
A secondary problem is transporting the wood residue to markets. In
Montana, truck and rail transport are the only significant modes available.
1-2
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Truck transport at current hog fuel prices is expected to be economically
feasible for mills situated within 100 miles of a major buyer of wood residue.
Mills located further away from buyers may have to rely on a combination of
truck and rail transport, an arrangement that complicates the cost picture, but
one that may still prove economically feasible if both buyer and seller share
in the increased transportation costs.
Several existing methods for solving the first problem exist. The
U.S. Small Business Administration (SBA) offers low interest loans in two of
its programs that can assist small mills to make the necessary capital expendi-
tures at feasible return rates. Furthermore, it might be possible for the
State of Montana to initiate a low interest loan program tailored to the small
sawmill's needs, using revenues from the Coal Severance Tax.
If additional startup assistance appears necessary, the State might
also consider a short term tax rebate program aimed at sawmills that phase out
their burners and begin selling their wood residues, or an accelerated
depreciation schedule for mills purchasing the necessary capital equipment, or
combinations thereof. These incentive programs, together with the rising
demand for wood residue in Montana, indicate that it should be possible to
phase out the tepee burners in a way that eliminates the air pollution problem
while improving the economic position of mills now using them.
1-3
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This report was submitted in fulfillment of Contract Number 68-
01-4144, Task 6, by GEOMET, Incorporated under the sponsorship of the U.S.
Environmental Protection Agency. This report covers the period November 1,
1979 to May 15, 1980, and work was completed as of f*ay 15, 1980.
1-4
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SECTION 2.0
THE AIR POLLUTION ASSOCIATED WITH TEPEE BURNERS IN MONTANA
During the past 10 years, the Air Quality Bureau has received more
complaints about the emissions from tepee burners than from any other source.
The complaints have concerned both wood smoke and settled particulate. A
typical tepee burner is shown in Figure 2.1.
During 1979, the Air Quality Bureau inspected all tepee burners
operating at Montana lumber mills and found over 70 percent to be in violation
of the State's air quality rules. The tepee burners were typically found to
exceed opacity limitations, to be poorly maintained, and to be operated under
poor incineration conditions.
Wood smoke from tepee burners can cause air quality problems for miles
downwind. In mountain valleys, where most tepee burners are located, the smoke
can build up to excessive levels, especially during inversion periods. Most
mountain valleys frequently have inversions in the early morning hours, during
the same time period that tepee burners are starting up and emitting large
amounts of smoke. Even a tepee burner that is operating completely in
compliance with the Montana air quality rules can cause smoke problems for the
residents of the area. The causes of smoke emissions are discussed in section
2.1; section 2.2 describes the difficulties to be overcome in running a clean-
burning tepee burner.
2-1
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THERMOCOUPLE
SCREEN
SAWDUST CYCLONE
FROM SAWMILL
HOGFUEL CONVEYOR
FROM SAWMILL
PYROMETER AND
CHART RECORDER
OVER FIRE
AIR INLET
/WEL *W_E
OVER FIRE
AIR INLET
FAN BLOWER
FORCED DRAFT UNDERFIRE AIR SYSTEM
CONES
Figure 2-1. Typical Tepee Burner
2-2
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Settled particulate from tepee burners consists of small pieces of
partially burned wood residue ranging up to 0.25 inch in diameter. These small
particulates generally fall out of the air within 1 mile of the source, causing
an unsightly mess when they land on cars, patios, window sills, sidewalks, and
so forth. The associated carbon is almost impossible to clean off when it
comes in contact with car seats, carpets, or clothing. In general, settled
particulates from tepee burners can be a severe nuisance and result in property
damage for those persons living immediately downwind. The causes of settled
particulate emissions are discussed in sections 2.1 and 2.2.
Tepee burner emissions also represent a fire hazard; burning particu-
lates emitted from tepee burners have been responsible for numerous fires both
on and off sawmill property. At night, glowing embers from the burners can be
observed traveling hundreds of yards downwind.
2.1 Operational Problems of Tepee Burners
The major factor in operating a tepee burner with minimum smoke and
particulate emissions is maintaining the exit gas temperature between 600 and
900°F. At temperatures below this range, the tepee burner will not be hot
enough to allow complete combustion, thus it will emit smoke. At temperatures
above this range, the resultant excessive exit gas velocities will pull small
oieces of wood residue out of the tepee burner before they are completely
burned, causing particulates to settle. At temperatures above 900°F, the
burner's structural members, shell plates, screens, and temperature-sensing
devices can be damaged.
2-3
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For a tepee burner to reach and maintain an efficient operating
temperature, it must be properly sized to the amount of fuel it has to burn.
Most tepee burners in Montana were designed and constructed before the mills
were able to sell any wood residue. However, most mills currently sell chips
and, in some cases, shavings and sawdust; consequently, their burners are
oversized. It is very difficult to maintain an efficient operating temperature
in an oversized tepee burner.
The type of wood that a sawmill is cutting can definitely affect a
tepee burner's operation. Some woods, such as fir and larch, burn very well,
whereas others, such as spruce, are very difficult to burn. Some sawmills
cannot burn spruce without creating excessive amounts of smoke.
The weather can have a dramatic effect on the operation of a tepee
burner. During the warmer months, rain can cool the shell, causing the exit
gas temperature to drop and the tepee burner to smoke. During the winter, the
ambient temperature makes it much more difficult to bring the tepee burner up
to an efficient operating temperature. During extremely cold weather, it is
almost impossible for a burner to operate without smoking. Snow and ice
attached to the log bark generally end up in the tepee burner, which retards
the fire and lowers the exit gas temperature. High winds can cool the burner
shell and cause smoke; wind can also pull partially burned material out of the
tepee burner, causing settled particulate problems.
During the morning startup period, tepee burners emit large amounts
of smoke until the exit gas temperature reaches 600 to 900°F. For seme tepee
2-4
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burners, the startup period lasts approximately 1 hour. However, for most
tepee burners, the startup period requires 2 hours or more. The Montana air
quality rule regulating tepee burners exempts smoke emissions for the 1st hour
of operation. However, during the 1st hour, a tepee burner can emit enough
smoke to cause significant air quality problems.
One of the most important aspects of maintaining an efficient exit gas
temperature is to maintain a steady flow of fuel into the tepee burner.
However, during coffee breaks, lunch hour, shift change, and breakdowns in the
mill (which occur frequently), the flow of fuel is stooped or severely
retarded. This can cause the fire to die down, the exit gas temperature to
drop, and the tepee burner to smoke.
Some sawmills that operate two shifts per day operate only part of the
mill during the second shift; during the second shift, less fuel is sent to the
tepee burner, making it difficult to maintain an efficient exit gas
temperature.
At night and on weekends, the wood residue left in the tepee burner
usually smolders until it goes out. Often the small smoldering fuel pile
creates large amounts of smoke; it is virtually impossible to keep the exit gas
temperature at an efficient level until all the fuel is consumed.
2-5
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The type of wood residue fed into a tepee burner makes a significant
difference in operation. Slabs, chips, and shavings burn very well, whereas
sawdust and bark are much more difficult to burn. Many sawmill s currently chi p
all their slabs and then sell the chips and shavings. This leaves only the
bark and sawdust, the most difficult types of residue to burn in a tepee
burner. Most sawmills now use the more efficient narrow-kerfed saws. To avoid
overheating, the thin saw blades are continually sprayed with water.
Unfortunately, this creates a wet sawdust that is very difficult to burn.
Some sawmills use their tepee burners to dispose of mill yard cleanup
materials. Usually this material, which is cleaned off the ground with a
front-end loader, often contains dirt and rocks that retard the fire and plug
the grates. Scmetimes the cleanup material also includes items such as used
oil filters and tires, which cause smoke problems.
To operate a tepee burner correctly, the sawmill manager must
designate a person on each shift as burner operator. The burner operator must
monitor the tepee burner's emissions and exit gas temperature and make any
necessary draft adjustments. Unfortunately, most burner operators also have
many other duties that keep them from operating the tepee burner properly.
Furthermore, most burner operators are given little or no training in how to
operate the tepee burner with a minimum of emissions.
2-6
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2.2 Maintenance Problems of Tepee Burners
For a tepee burner to operate correctly, all of its physical
parameters must be maintained. The shell plates must be tight and free of
holes and the access doors must fit tightly to prevent entry of excess air that
can reduce the exit gas temperature and cause smoke problems. The access doors
often are damaged by the heavy equipment that is normally used to clean out the
burner on weekends. The shell plates, screens, overfire air ducts, and access
doors are all subject to warping and burning through if the exit gas tempera-
ture becomes too high. The shell plates and access doors also can be damaged
if burning wood residue piles up against than. If the overfire air vents are
warped even slightly, they can become inoperable, making it impossible to
regulate and maintain an efficient exit gas temperature.
The thermocouple at the top of the burner also can be damaged by high
temperatures. If the thermocouple is not operable, it is difficult to deter-
mine whether an efficient exit gas temperature is being maintained.
The underfire air grates or pots must be cleaned at least weekly;
otherwise they can become plugged with ash and clinkers. Without sufficient
and evenly distributed underfire air, it is very difficult to maintain an
efficient fire. The fans for the underfire air system also must be maintained
regularly because heat from the burner often reduces their utility.
2-7
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For a tepee burner to operate properly, it must always be well
maintained. However, such maintenance is often a low priority for sawmill
operators. If some part of the tepee burner becomes defective or inoperable
during the week, there is a very little chance that the remainder of the mill
will be shut down until the defect is repaired. Defects often are allowed to
exist until they are brought to the mill operators' attention by an Air Quality
Bureau Inspector.
In sunmary, it is relatively difficult and sometimes nearly
impossible to operate a wel1-maintained tepee burner without causing smoke and
settled particulate problems. If the tepee burner is not adequately
maintained, these problems are almost inevitable.
2-8
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SECTION 3.0
TRENDS IN THE WOOD PRODUCTS INDUSTRY IN MONTANA
Mills in Montana that continue to employ tepee burners are often
comparatively small, many of them processing on the average perhaps 10 million
board feet (MM8F) or less of lumber per year. Such mills are especially
vulnerable to the vagaries of the wood products markets in the United States.
This section establishes the context in which tepee burner mills operate by
sketching some of the major trends in the industry and indicating their
implications for the smaller mill snploying tepee burners.*
3.1 Recent Employment and Production Trends in Montana Timber Production
At the end of World War II, demand for forest products surged in
Montana, partly because of the dramatic increase in domestic construction and
*This section draws heavily on a report prepared by Charles E. Keegan III of
the 3ureau of Business and Economic Research, University of Montana, entitled
Montana's Forest Products Industry: A Descriptive Analysis, September 1979.
GEOMET, Incorporated expresses its aopreciation to Mr. Keegan and to Maxine
Jonnson, Director of the 3ureau of 3usiness and Economic Research, University
of Montana, for their assistance. This section also draws on a report prepared
by the Governor's Office of Commerce and Small 3usiness Development, Office of
the Coordinator for the Old West Regional Commission, entitled Montana Public
Investment Planning Process 1979, July 1979.
3-1
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partly because of the decline of forest yield in many Eastern States. Despite
the year-to-year fluctuations in demand characteristic of the industry, the
Montana forest products industry grew and diversified over the years, adding
pulp, paper, plywood, particleboard, and other commodities to its product
line. As prices for lumber products continued to rise, a strong market
developed for residuals such as chips and shavings, increasing the efficiency
of the industry, reducing the seasonal fluctuation in lumber industry
employment, and making yet another marketable product for the mill owner. This
increase in efficiency has allowed the industry to employ more people in recent
years even though total production of lumber has declined scmewhat since the
peak year of 1973 (Table 3-1).
Total demand for wood products is closely tied to interest rates and
credit availability. These economic factors strongly affect housing starts
and associated limber demand and, to a lesser extent, the paper and
particleboard industries. The iimiediate future of demand for forest products
was especially difficult to forecast during the spring of 1980, the period
during which this report was written, because of high interest rates and
national credit restrictions. Yet both factors suggest a drop, perhaps a
dramatic one, in demand in the irrniediate future for wood products, especially
lumber.
3-2
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TABLE 3-1
MONTANA LUMBER EMPLOYMENT AND OUTPUT
Output3
Output Per
Year
Employment
(MM8F)
Person Employed
1960
7,300
1,035
0.1417
1961
7,400
1,152
0.1558
1962
8,000
1,259
0.1573
1963
8,500
1,166
0.1372
1964
8,400
1,271
0.1513
1965
3,600
1,311
0.1524
1966
8,900
1,375
0.1544
1967
8,700
1,347
0.1548
1968
8,900
1,499
0.1684
1969
8,900
1,397
0.1570
1970
8,200
1,281
0.1562
1971
8,700
1,397
0.1605
1972
9,200
1,311
0.1425
1973
9,800
1,445
0.1474
1974
9,500
1,165
0.1226
1975
3,100
1,038
0.1281
1976
9,100
1,197
0.1315
1977
9,300
1,250
0.1344
1978
10,700
1,260
0.1178
Yearly Average
8,747
1,271
0.1458
aThe production figure is measured in millions of board feet of cut
lumber and does not include processed materials.
Source: Western Wood Products Association and the Montana Department
of Labor and Industry
3-3
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3.2 The Geography of Lumber Production
The vast majority of Montana's lumber is produced in the western part
of the State. Counties west of the Continental Divide contributed most of the
roundwood products from Montana timberlands. The counties supplying the
largest amounts are typically Lincoln with 293 MMBF in 1976, Flathead with
233 MMBF, Sanders with 153 MMBF, and Missoula with 152 MMBF (Table 3-2).
Counties west of the Continental Divide yielded about 37 percent of Montana's
harvest in 1976, a percentage that has remained fairly constant over the years.
Several counties east of the Continental Divide, however, also produced signi-
ficant amounts. Gallatin, Park, and Lewis and Clark Counties together produced
more than 70 MMBF in 1976. Figure 3-1 plots the location of tepee burner mills
in terms of Montana employment growth rates by county. In general, such mills
are typically located in areas where employment growth rates have been in the
upper half of the statewide growth rates.
3.3 Public Versus Private Lands as Timber Sources
Public lands have supplied much of the raw materials used in the wood
products industry (Figure 3-2). Public lands include those managed by the U.S.
Forest Service, the Bureau of Land Management, the State of Montana, and the
Bureau of Indian Affairs. Most of the logging in public lands in Montana has
been in the national forests under U.S. Forest Service supervision.
3-4
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TABLE 3-2
ROUNOWOOO PRODUCTS HARVESTED FROM
MONTANA TIMBERLANOS 8f COUNTY [N 1976
County
Mill 1on Board Feet
(Scnbner)
Percentage
Of State-Wide Total
L incoln
293
25
F lathead
233
20
Sanders
153
13
Missoula
152
13
Mineral
50
4
Lake
42
4
Rava 111
36
3
Powell
36
3
Gallatin
29
2
Lewis and Clark
28
I
Gran 1 te
25
I
Park
21
2
All other counties
71
_S
Total harvest
1,169
99
Note- Percentages may not add up to 100X because of rounding.
Source: University of Montana, 8ureau of Business and Economic Research, Montana
Forest Industries Data Collection System (Missoula, Montana, 1979)
3-5
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Co
I
cr»
Figure 3-1
TEPEE BURNER MILLS IN RELATION TO GROWTH IN EMPLOYMLNT BY COUNTY
1970-77
Note: Triangles indicate tepee burner location. In some instances, two or more burners are indicated
by a single triangle.
Source: Montana Public Investment Planning Process 1979, submitted to the Old West Regional Commission
by the State of Montana, and prepared by the Governor's Office of Commerce and Snail Business
Development, July, 1979.
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FIGURE 3-2
ROUNDWOOD PRODUCTS HARVESTED FROM MONTANA TIMBERLANDS
8Y TYPE OF LAND OWNERSHIP, 1962-76
tTOO-
«CO<
300
1004
Sources: [1962-68] Ervin G. Schuster, Montana's Harvest and Timber Using
Industry: A Study of Relationships, Bulletin 41, University of Montana, School
of Forestry, Montana Forest and Conservation Experiment Station (Missoula,
Montana, 1978) and unpublished data from U.S. Forest Service, Region 1 (Mis-
soula, Montana, 1979); Bureau of Indian Affairs (3il lings, Montana, 1979);
Bureau of Land Management (Billings, Montana, 1979); State of Montana, Divi-
sion of Forestry (Missoula, Montana, 1979). [1969-75] Allan L. Hearst, Jr.,
U.S. Forest Service, Region 1, unpublished data compiled from above-mentioned
land management agencies (Missoula, Montana, 1979). [1975] University of
Montana, Bureau of Business and Economic Research, Montana Forest Industries
Data Collection System (Missoula, Montana, 1979).
3-7
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The proportionate contribution of roundwood from public lands varies
by type of product. In 1976, public lands supplied 51 percent of the saw-log
harvest, whereas private lands supplied 49 percent. Private timberlands were
the major suppliers of veneer logs, supplying over 67 percent of the total with
national forest lands supplying 29 percent and other public lands supplying
4 percent. Almost 58 percent of the output of other roundwood products
harvested in Montana was supplied by public lands, and 42 percent of other
roundwood products was harvested on private lands.
The significance of these proportions lies in the future supply of
accessible forest lands, particularly from the smaller mills' perspective.
Possible changes in public land management associated with the Roadless Area
Review and Evaluation (RARE) process, and the 1976 National Forest Management
Act could reduce access to Federal lands.
Reduced access to such lands would reduce Montana's productive
capacity, in the opinion of many in the State's forestry industry. In addi-
tion, it could complicate the market position of smaller mill owners, whose
access to non-Federal lands is limited. As the next section indicates, the
number of small mills has been declining rapidly in recent years.
3-8
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3.4 Trends in the Size and Number of Sawmills
At the peak of the post-World War II boom in 1956, an estimated 330
sawmills, mostly small, were located in Montana; only 26 of these produced more
than 10 million board feet annually.* Since that time, the trend has been
towards fewer, but larger, mills. Small mills have declined in number at a
disproportionately high rate, as indicated by Table 3-3.
Moreover, sawmills in the various size categories differ in terms of
the source of raw materials (Table 3-4). Sawmills in the largest class
(Category A—lumber production in excess of 50 IWF) drew heavily on industrial
timberlands and national forest lands for their raw materials in 1976; indus-
trial forests supplied 48 percent of their raw materials, whereas national
forest lands provided 42 percent. Other private lands and other public lands
in combination supplied only 10 percent.
The mills in Category B ( 1976 lumber production 25-50 PfllBF) were more
dependent on national forest lands than were mills in other classes, receiving
56 percent of their logs from national forests. Six percent of their mill
*Arnold W. 8olle, Will iam K. Gibson, and Elizabeth Hannum, The Forest Products
Industry in Montana, Bulletin Number 31 (Missoula, Montana! University of
Montana, School o7 Forestry, Montana Forest and Conservation Experiment
Station, May 1966).
3-9
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TABLE 3-3
NUMBER OF MONTANA SAVMIUS 8Y SIZE Of PRODUCTION,
SELECTEO YEARS 1956-76
Year
Under
10 WBF
10-50 KMBF
Over
50 mBF
Total
M11 Is
1956
304
26
a
330
1966
111
37
a
148
1973
36
22
7
115
1976
_68
24
6
_98
Percent decline
since 1956
78
08
NA
70
aM111s with limber production In excess of 50 MM8F have been included fn the
10-50 WBF category for 1956 and 1966.
Sources: [1956 and 1973] Oennis l. Schweitzer, Robert E. Benson, and
Richard McConnen, A Descriptive Analysts of Montana's Forest Resources.
Resource Bulletin INT-11 (Ogden, Utah* U.S. Department of Agriculture,
Forest Service, Intermountain Forest and Range Experiment Station, January
1975). (1966) Theodore S. Setzer and Alvin K. Wilson, Timber Products In
the Rocky Mountain States, 1966, Resource Bulletin INT-9 (Ogden, Utah-
U.S. Department of Agriculture, Forest Service, Intermountain Forest and Range
Experiment Station, 1970). [ 19761 Unlversl ty of Montana, Bureau of Business and
Economic Research, Montana Forest Industries Data Col lection System (Missoula,
Montana, 1979).
3-10
-------
TABLE 3-4
SOURCE OF SAM LOGS USED BY MONTANA HILLS IN 1976
BY SIZE OF HILL
(millions of board feet, ScrIbner)
Pi Ivate Tlinberlands
Public Timber lands
Slje Class4
Industrial
Other
Nat tonal
Forests
Other
Unknown
All
Sources
A--over 50 HM01
190,506
(48X)
24.421
(6X)
168.224
(42X)
15,491
(«)
--
390,722
(I00X)
B -over 25-bO MMUF
18,599
(6X)
90,475
(31X)
164,466
(56X)
21,908
(7X)
--
295,448
(I00X)
C--over 10-25 HMBF
41,605
(26X)
36,917
(23X)
75,170
(47X)
6,402
(4X)
1,270
161,644
(100%)
0--over 1-10 MMOF
7,229
(22X)
14,550
(44X)
10,087
(30X)
1,540
(5X)
--
33,406
(100X)
E--I Mf-Ull diul below
1,290
(15*)
3,492
(40X)
2,723
(31X)
1.296
(15X)
--
B.OOI
(100X)
All Mills
259,509
(29X)
169,055
(I9X)
420,670
(47X)
46,637
(5X)
1,270
890,021
(100X)
a0ased on lepoited 1975 pi eduction.
Note feicent ayes may not add up to 100X because of rounding.
Source University of Montana, Bureau of Business and Economic Research. Montana Forest Industries Data Collection System
(Ml ssould, Mont and, 19/9)
-------
input came from industrial forest lands and 31 percent from other private
1 ands.
Mills in Category C (over 10-25 NM8F of 1976 limber production) drew
more heavily on industrial forest lands than did mills in all but the largest
category. These mills received 26 percent of their timber from industrial
forests, with other private lands supplying an additional 23 percent.
National forest lands were the major source of saw logs for these mills,
providing 47 percent of saw logs, with other public lands supplying 4 percent.
The 68 mills in Categories 0 and E (less than 10 NWBF production in
1976) obtained less of their raw materials from national forests than did m-ilis
in the other categories and depended more on private timber, especially from
nonindustrial lands. Category D mills obtained over 65 percent of their raw
materials from private lands; and those in Category E, almost 56 percent.
Tepee burners are likely to be found at mills in Categories C, D, and E.
3.5 Residue Produced by the Wood Products Industry
All wood products manufacturers using roundwood as raw material
generate mill residue. In the past, disposal of this residue has been both
expensive and a source of air pollution when burned in tepee burners. 3urmng
mill residue is also an enormous waste of wood fiber because only about
3-12
-------
60 percent of the total wood fiber delivered to sawmills is actually processed
into lumber. With the growth of the pulp and paper industry the particleboard
industry and the installation of wood-fired boilers by many wood products
manufacturers, most of the residue has now become useful either as a raw
material or as fuel.
Plywood plants and sawmills generate three types of salable residue:
(1) coarse, chippable materials, consisting of slabs, edges, and trimmings
from sawmills and cores from plywood plants; (2) fine residue, consisting of
sawdust, sander dust, and planer shavings; and (3) bark. Estimates of these
mill residues generated in Montana have been made by the Bureau of Business and
Economic Research, University of Montana.* These estimates, based on total
1976 limber and plywood production, were derived from data gathered by the
Montana Forest Industries Data Collection System. Factors expressing the
proportion of total raw material that becomes residue were applied to the 1976
figures to determine the vol tine of the various types of mill residue generated
per thousand board feet of lumber or per thousand square feet of plywood.
Residue factors were obtained from the Intermountain Forest and Range Experi-
ment Station in Ogden, Utah, and were modified by the Bureau of Business
~Charles E. Keegan III, Montana's Forest Products Industry: A Descriptive
Analysis, Bureau of Business and Economic Research, University of Montana,
Missoula, MT, September 1979, Part II, Chapter 4.
3-13
-------
and Economic Research in consultation with mills and manufacturers in Montana
to fit the local situation.
Montana sawmills and plywood plants generated an estimated
1,630 thousand bone dry units (fBDU's) of mill residue in 1976 (Table 3-5),
down considerably from the estimated 2,028 MBDU's of total residue generated in
1969. Utilization of mill residue on a percent basis in 1976, however, was up
considerably. Utilization on a volune basis declined slightly for coarse
residue from 1969-76 but increased for bark and fine residue.
Since 1969, utilization of mill residues has steadily increased.
This trend is partly due to improved sawmill technology, spurred by the Sawmill
Improvement Program that is jointly sponsored by the U.S. Forest Service and
State Forestry Agencies. It is partly because of the increasingly competitive
price of wood fiber fuels as compared with fossil fuels, and partly because of
the emergence of new products made from wood residue. If current trends in
utilization continue, the proportion of wood residue that goes unutilized in
Montana will continue to decline, though perhaps less rapidly. If tepee
burners can be phased out in a way that converts the wood residue formerly
burned into marketable products, this desirable trend will be encouraged.
3-14
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3.6
Trends in Production by Size of Mill
Since 1956, Montana's sawmill industry has evolved from one in which
the lion's share of production was accomplished by a large number of small
mills to the pattern today whereby a small number of large mills produce the
majority of wood products (Table 3-6). Whereas mills producing less than
10 million board feet per year accounted for 33 percent of total Montana
lumber output in 1956, by 1976 they accounted for only about 4 percent. More-
over, by 1976, 81 percent of Montana's lianber was being produced by the largest
two categories of mills, whereas the smallest two accounted for only 4 percent
of total production (Table 3-7).
3-15
-------
TABLE 3-5
ESTIMATED VOLUME OF WOOD RESIDUE GENERATED
IN MONTANA SAWMILLS AND PLYWOOD PLANTS
COMPARING 1969 WITH 1976
Residue Estimated Volume
Type by (OOO 8one Dry Units)
Year Utilized Utilized Total
Coarsea
1969 698 (87%) 107 (13%) 796 (100%)
1976 658 (95%) 32 (5%) 690 (100%)
Fineb
1969 443 (60%) 297 (40%) 740 (100%)
1976 453 (84%) 87 (16%) 540 (100%)
8ark
1969 137 (28%) 355 (72%) 492 (100%)
1976 296 (74%) 104 (26%) 400 (100%)
)ta1
1969 1,268 (63%) 759 (37%) 2,028 (100%)
1976 1,407 (86%) 223 (14%) 1,630 (100%)
aMaterial suitable for chipping, such as slabs, edgings, and trimmings.
^Material such as sawdust and shavings.
Source: 3ased on Theodore S. Setzer, Estimates of Timber Products Output
and Plant Residues, Montana, 1969 (Ogden, Utah: U.S. Department of
Agriculture, Forest Service, Intermountain Forest and Range Experiment
Station, March 1971), and University of Montana, 8ureau of Business and
Economic Research, Montana Forest Industries Data Collection System
(Missoula, Montana, 1979).
3-16
-------
TABLE 3-6
PERCENTAGE OF MONTANA LUMBER OUTPUT BY SIZE OF MILL
FOR SELECTED YEARS BETWEEN 1956 and 1976
Year
Percentage from
Mills with
Annual Production
below 10 MMBF
Percentage from
Mills with
Annual Production
10 MMBF and above
Total
Lumber
Output
(MMBF)
1956
33
67
979
1962
13
87
1,259
1966
10
90
1,375
1976
4
96
1,176
Source: %1956, 1962, and 1966H) Theodore S. Setzer and Alvin K. Wilson, Timber
Products in the Rocky Mountain States, 1966, Resource Bulletin INT-9 (Ogden,
Utah: U.S. Department of Agriculture, Forest Service, Intermountain Forest
and Range Experiment Station, 1970). kl975H University of Montana, Bureau of
Business and Economic Research, Montana Forest Industries Data Collection
System (Missoula, Montana, 1979).
3-17
-------
TABLE 3-7
MONTANA LUMBER PRODUCTION BY SIZE OF MILL IN 1976
Average
Mill Size Class: Number of Volume Percentage per Mill
Annual Production Mills (MM8F) of total (MMBF)
A--over 50 MMBF
6
514
44
85.7
B~over 25-50 MMBF
12
433
37
36.1
C—over 10-25 MMBF
12
177
15
14.8
0—over 1-10 MMBF
15
41
3
2.7
E—under 1 MM8F
53
11
1
0.2
Total
98
1,176
100
12.0
Source: University of Montana, 8ureau of 8ustness and Economic Research,
Montana Forest Industries Data Collection System (Missoula, Montana, 1979)
3-18
-------
SECTION 4.0
THE ROLE OF THE TEPEE BURNER IN SMALL SAWMILL OPERATIONS
Those sawmills in Montana still using tepee burners do so for reasons
they consider compelling. Without alternatives for the disposal of wood
residue, these mills would be unable to continue operations without their
burners. This section of the report describes the role that the tepee burner
plays in the operations of mills still using them and indicates some possible
strategies for phasing out the burners while preserving the viability of the
mi 11s.
4.1 A Profile of Mills Employing Tepee Burners
Sawmills in Montana that still employ tepee burners are by no means
identical in size, method of operation, markets served, or financial strength.
However, a sketch of those sawmills still using the burner is helpful for the
perspective it provides on the mills and their problems.
Approximately 30-35 tepee burners are located in the State of
Montana, although some of these may not be operational at any given time
4-1
-------
TABLE 4-1
NUMBER OF TEPEE BURNERS IN EACH AIR QUALITY
CONTROL REGION AND COUNTY IN MONTANA
Air Quality
Control Region
(AQCR)
Popul at ion
in the
AQCR (1970)
Nunber
of Mil 1s
Nunber of
County Mills/County
140
135,263
2
Fergus 1
Wheatland 1
141
144 , 070
0
142
167,154
13
Beaverhead 1
Broadwater 1
Gallatin 1
Granite 1
Lewis and Clark 1
Meagher 1
Park 5
Powell 1
Silver Bow 1
143
93,221
2
Rosebud 2
144
154,691
18
Flathead 4
Lake 2
Lincoln 2
Mineral 1
Missoula 1
Ravalli 1
Sanders 4
Source: 1978
Directory of
Montana's
Forest Products Industry
Montana Department of Natural
Division, September 1978
Resources
and Conservation, Forestry
4-2
-------
because of market fluctuations or for other reasons. Table 4-1 lists these
mills according to Air Quality Control Region (ACQR), county, and gross area
population. The vast majority of tepee burners, of course, is located in the
forested western portion of the State. Of the 35 burners shown, 31 are located
in AQCR 142 and AQCR 144, which together contain approximately 46% of Montana's
total population (1970 census data). Figure 4-1 shows the geographic distribu-
tion of these AQCR' s plotted against population growth rates. The size distri-
bution of mills with tepee burners appears below. Twenty-two of the thirty-two
mills (68.7%) can be classified as medium to small.
Size In Yearly Production Nimber of Mills
More than 50 WBF 3
25-50 WBF 7
10-25 WBF 8
5-10 WBF 6
3-5 WBF 3
Less than 3 MMBF 5
Traditionally, sawmills have disposed of the wood residue generated
during their operations by burning it. In recent years, the largest mills, and
subsequently many of the smaller mills, have been able to market a share of
this residue instead. Chips and shavings have been marketed most readily, but
the so-called "low value" residues such as bark and sawdust have cane into
greater demand, particularly as fuel for wood-fired boilers (i.e., hog fuel).
4-3
-------
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LEGEND
Figure 4-1
AIR QUALITY CONTROL REGIONS AND MONTANA COUNTIES BY RATE OF GROWTH
Source:
Population growth rates from U.S. Bureau of the Census; Federal Air Quality Control Regions from
U.S. EPA, Federal Air Quality Control Regions, Rockvllle, HO, January 1972.
-------
The most systematic estimate of the amount of residue generated by all
Montana sawmills (including mills that do not use tepee burners) has been made
recently by the Bureau of Business and Economic Research, University of
Montana, for the year 1976. Table 4-2 reports their results. Among other
things, the table indicates that over 95 percent of the coarse residue (chips
and shavings) generated in the State was used productively. The figures for
fine residue and bark were roughly 83 and 69 percent, respectively. This
suggests that the greatest potential for improvement in marketing wood wastes
lies in fine residue and bark. Although there are no systematic data to
docunent the point, it can be inferred from Table 4-2 that the majority of
unused wood residue is generated by tepee burner mills.
4.2 Economic Problems Facing Tepee Burner Mills
The trend toward fewer, larger mills discussed in Section 3.0 is
partly because of economic conditions in Montana's sawmill industry. In many
manufacturing industries, larger firms can often achieve lower per unit costs
of production than smaller ones. They are able to do this by using newer, more
efficient production processes and equipment, buying materials in larger
quantities•at lewer costs, diversifying their product line so as to minimize
downtime when a given market softens, acquiring needed capital improvement
loans with greater ease and often at better rates, owning their own
timberlands, and spreading their fixed costs over a greater nunber of salable
units.
4-5
-------
TABLE 4-2
MILL RESIDUE FROM MONTANA SAUMULS AND PLYWOOD PLANTS IN 1976
(bone dry units)
Mill Residue
Broadwater
Lewis and Clark
Meagher
County
Beaverhead
Gallatin
Madison Flathead Lincoln
Missoula Park
Granite
Powell Sanders
Ravalli Lake
Silver Bow Mineral
Total Percent of
Total Residue
i
CTl
Bark
Unused
Used
Hog fuel
Other
Total
Fine residue
Unused
Used
Hog fueI
Board plants,
pulp, and paper
Oilier
Total
Coarse residue
Unused
Used
Hog fueI
Pulp and paper
Other
Tola I
Residue Totals
22,311
22,311
34,955
34,955
840
31,734
32,574
89,040
6,574 21,074 2,160 289 9,435 16,879 27,260 105,902
7,885 46.759 61.278 69,611
14,459 67.833 63,438 69,900 9,435 27,820 69,628 344,824
6.177
10,611
1,825
827
17,618
827
21,097
58,208
61,942
38,627
22,652 106,271
3,700
128,006
2,960
134,666
308,770
9,759 42,268 237,560
1,182 100 1,282
5,864 5,702 3,304
13,061 10,822 16.399 90,187
74.138 41.256
17.890 68,254 1,721
3,975
14,525
18,238
5,320
10,576
960
17,772
120,556 202,028 3,199 39,916
125.876 219,800 13,775 40.876
200.701 399,210 37,992 112,201
16,247
76,439
99,387 109,510 14,782 43,585 109,085
7,710
3,000
90,435
635
101,780
200,502
214,205
231.780
3,975
540.227
30,931
21,607
633,492
4,422
690.452
1,575,503
21.0
34.3
43.8
100.0
Note: One bone dry unit equals 2,400 pounds oven dry weight.
Source: University of Montana, Bureau of Business and Economic Research, Montana Forest Industries Data Collection System (Missoula, Montana,
1979).
-------
During the time the total number of sawmills in Montana declined from
330 (1956) to 98 (1976), almost all the closures were small mills. Moreover,
there were only 68 mills producing less than 10 WBF during 1976, as compared
to 304 of them in 1956. The nunber of mills producing more than 10 MMBF, on the
other hand, has been relatively stable, reaching a high of 37 in 1966,
declining to 29 in 1973, and then increasing to 30 in 1976.
No studies of Montana sawmills have been done to determine the size of
efficient operation. Based on other research, however, rough estimates are
available for the upper and lower bounds for efficient sawmill operation. The
lower bound appears to be a capacity of approximately 40 thousand board feet
(MBF) per 8-hour shift. A study of mills in Oregon, Washington, and California
concluded that sawmills below this size were not effective ccmpetitors.*
All sawmills in Montana producing more than 10 WBF in 1976 had 8-hour
shift capacities greater than 40 MBF. Almost all mills producing less than
10 MMBF had a capacity of less than 40 NBF per shift (Table 4-3). Between 1956
and 1976, the nunber of mills with capacities above the efficient size minimum
has remained relatively constant. The nunber of mills less than the estimated
*W.J. Mead, Competition and Oligopsony in the Douglas-Fir Lumber Industry,
(Los Angeles: University of California, 1966), as discussed in Charles E.
Keegan III, Montana's Forest Products Industry: A Descriptive Analysis,
Bureau of Busi ness anci Economi c Research, Uni versi ty o? Montana,
September 1979, Part II, Chapter 2.
4-7
-------
TABLE 4-3
LUMBER PROOUCTtON ANO CAPACITY &Y SIZE Of MILL
IN MONTANA, 1976
Size Class In 1976
Number of
Mills
Production
Volume
(MMBF)
Percentage
of Total
Average/
Mill
(MMBF)
Average
Capacity/
8-h Shift
(M8F)
A -- over 50 MMBF
6
514
44
B5.7
228.5
8 -- 25-50 Wf8F
12
433
37
36.1
96.3
C -- 10-25 MMBF
12
177
15
14.8
39.5
0 - 1-10 WBF
15
41
3
2.7
7.2
E - under 1 WF
53
11
1
0.2
0.54
Total
98
1,176
100
12.0
Computed by GEOHET on the basis of a 12-h working day, 5 d/wk, 50 wk/yr. In the case
of smaller mills, this stability of production may be unrealistic.
Source: University of Montana, Bureau of Business and Economic Research, Montana
Forest Industries Data Collection System (Missoula, Montana, 1979)
4-8
-------
lower bound has declined steadily. This suggests that medium and large saw-
mills in Montana have an operating efficiency advantage over smaller mills.
This does not mean that Montana sawmills with capacities less than
40 MBF per shift can (or should) be expected to fail. Peculiarities in timber
supply, market specialization, or skilled labor, permit some small mills to
operate as efficiently as larger mills and to maintain economic viability. In
addition, some small mill owners are quite skilled and efficient and may be
able to compete directly with larger mills. It does mean, however, that
smaller mills typically can be expected to operate under a very delicate
balance of financial resources and cannot easily make substantial capital
outlays to meet unplanned requirements. This is particularly true in a time of
high interest rates and tight credit. Many smaller mills are viewed by banks
as comparatively risky loan recipients because of the volatility of the forest
products market and the rate at which small mills have gone out of existence in
recent years.
4.3 Opportunities for Marketing Wood Residue
Fortunately the market for low value residues appears to be expanding
dramatically in Montana. This trend appears to have been gathering momentum
since the oil embargo of 1973-74 and the subsequent rapid rise in petroleum
prices. In the opinion of most observers of the fuel situation in Montana,
4-9
-------
there is now a substantial shift from petroleum-based industrial fuels towards
fiber-based fuels. This trend is likely to continue in the future at a steady
rate because of the continuing rise in petroleum prices vis-a-vis those of
wood.
Several specific markets for wood residue now exist in Montana.
Champion International's pulp plant in the Missoula area is completing a major
expansion of its facility. This expansion will greatly increase Champion's
demand for hog fuel for its new boiler during the sunmer and fall of 1980. The
company anticipates that it will "buy about 90 percent of the wood residue
produced in Montana" when this expansion is complete during the early fall of
1980*. During the writing of this report, Champion International was in the
midst of seeking long-term suppliers of wood residue of all types, including
sawdust, bark, and shavings. In this effort, it has contacted most of the
mills in Montana and declares itself willing to work with sawmills of any size
in almost any location in Montana.
Other possible markets exist as well, though they are not as large or
inmediate. One is the use of low value residues in processed fuels such as
Woodex, Presto-logs and other similar products. At least two comparatively new
companies exist in Montana that produce such products. If they are successful
*Statement by Marvin McMichael, Wood-Waste Procurement Manager, Champion
International Corporation, to the project team on March 10, 1980.
4-10
-------
in becoming established and continue to grow, they could become substantial
purchasers of bark, sawdust, and other low value residue. While writing this
report, it was difficult to forecast the probable success of such companies,
because their markets and supply source arrangements were still being
developed.
A third market, somewhat speculative and uncertain in the short run
but potentially promising in the future, is the use of wood residue in the
production of gasohol. This automative fuel is still in the research and
development stage in the opinion of most persons with whom the project team
consulted. The technical problems in converting wood residue to gasohol are
not difficult, but the production processes needed to produce gasohol at a
competitive market price are not yet commercially feasible. Nonetheless, as
the price of gasoline continues to rise, it seems likely that such economic
problems will be solved, presaging the emergence of a gasohol industry in some
form. Wood residue as input to this industry, should it emerge, seems to have
an especially bright market future. Other inputs commonly discussed for
gasohol, such as grain and other agricultural products, will be in great future
demand for other purposes. Wood residue will have comparatively few
alternative uses, making it attractive as an input.
Thus, if certain practical problems can be solved, it appears that
many small mills currently using tepee burners can instead market their low
value residue. They can thereby convert wood residue from a problem that
4-11
-------
incurs costs and creates air pollution to a product that earns profits (or at
least avoids costs) and is pollution-free.
4.4 Practical Problems Facing Tepee Burner Mills that Desire to Market
Wood Residue
There are two major problems to be solved. One is purchasing the
necessary equipment for converting wood residue into a salable product readily
transportable to markets. The second problem is the transportation costs
associated with such transport. These problems are discussed below.
The typical mill now using a tepee burner does not have the equipment
to convert wood residue into a salable product, nor does it have the storage
facilities needed to make truck pickup convenient and economical. These
capital improvements can be expensive from the perspective of a small mill
(Table 4-4). As the table indicates, a mill would need to purchase a hog
(either new or used) to grind up its wood residue into hog fuel. This hog would
require installation on a solid concrete pad and would require a conveyor
system for transporting the hog fuel to a storage location. Storage could be
handled in one of two ways, each of which is convenient for subsequent truck
pickup. A mill could purchase one or more "drive under bins". These are the
quickest and most convenient storage devices from the trucker's viewpoint
because the truck simply drives under the bin, the bottom of the bin is opened,
4-12
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TABLE 4-4
REPRESENTATIVE CAPITAL COSTS FOR A SAWIILL ENTERING
THE HOG FUEL MARKET (prices in spring 1980)
Equi pment
Initial
Purchase Price a
(dollars)
Yearly Maintenance
(dollars)
Making hog fuel
New hog
Used hog
Hog installation
on concrete pad
Conveyor equipment
(assumed length:
200 ft)
Storing hog fuel for
truck transport using
"drive under" bins
New bin (33-unit
capaci ty)
Used bins (33-unit
capacity)
Instal lation
Storing hog fuel for
truck transport using
backstop loading dock
Construction using
logs and earth
25,000-30,000
7,500-8,500
5,000-6 , 000
17,000-18,000
21,300-22,000
20,000-21,000
8,500-10,000
20,000 plus front
loader if not already
avai1 able
1,500
1,500
500
500
500
200
aFigures are estimates.
Source: New equipment prices courtesy of the Mill Supply Company, Missoula,
Montana. Other estimates provided by various mi 11 operators vi si ted by the project
team.
4-13
-------
and the stored material drops into the truck bed. Alternatively, a mill could
build a backstop loading dock out of logs. Employing such a dock, the truck
drives alongside, and the stored material is transferred from the dock to the
truck bed using a front-end loader. Table 4-4 indicates that depending on the
mix of options selected, the minimim capital expenditures required can range
from roughly $49,500 to $86,000, excluding subsequent maintenance costs.
Mills with more complicated installation problems, or those seeking greater
production and storage capacity, would experience even higher capital costs.
However, once these expenditures are made, the mill should be in a
position to market its wood residue. Furthermore, these capital costs should
be compared against the year-to-year costs incurred in using a tepee burner.
An estimate appears below for a typical, well-maintained burner:
Yearly maintenance needed to keep $30,000
burner running as efficiently as
possi ble
Rescreening the burner every other 16,000
year
Additional fire insurance 8,000
Yearly motor replacement 500
Pay for worker to supervise 11,250
burner operation (5/d at $9/h)
Total Yearly Cost $57,500"
*Source: Estimates by the various mill operators visited by the project team
4-14
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In practice, of course, not all tepee burners are maintained as
efficiently as possible, nor is fire insurance always purchased, so the actual
costs to a mill may be lower. But where the maintenance costs are scrimped on,
the burner's performance suffers, making it an even greater air pollution
problem.
The second major practical problem facing the mill operator wishing
to market his wood residue is transporting it to markets. For most mills in
Montana, truck transport is the only feasible means of moving hog fuel to
markets. The major railroad in Montana, Burlington Northern, does not run
lines or schedules that are convenient for most of the mills of the size and
location typical of tepee burner mills. Moreover, there is often a transport
car shortage in Montana for hog fuel shippers because the railroad tends to
transfer cars to the markets and locations at which they bring greater revenue.
Under present market conditions, the highest value rail hauls are commodities
other than hog fuel and they often lie outside Montana. A second problem
limiting the usefulness of train transport is that the rates for hog fuel are
based on the definition of hog fuel as a "wood product" rather than as raw
material, thereby justifying somewhat higher shipping rates (Table 4-5).
A rule of thumb used by most shippers in the forest products industry
in Montana is the that truck transport of wood residue is economically feasible
4-15
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TABLE 4-5
RAILROAO SHIPPING RATES BASED ON
VARIOUS ORIGINS TO SCHILLING. MONTANA1'
CarmodUles
Transported Montana
Rates in Cents pec Unit
In Carloads Destination Origin of ZOO cu ft
E2
E3
E4
E5
Pulpwood Chips,
Belgrade
2002
2148
2269
2396
Hog Fuel, or
Bozefflari
2051
2201
2324
2455
Sawdust
Brownman
Spur
1500
1610
1701
1796
Cedars
1210
1298
1371
1448
Schilling Ounham
1313
1409
¦1488
1571
Dupuls
1362
1461
1544
1630
Livingston
2198
2359
2492
2631
Silver City
1660
1781
1880
1986
Woodl 1n
1S00
1610
1701
1796
£2 - Effective January 1,
1980 and expires with December 31,
1980
E3 - Effective January 1,
1981 and expires with December 31,
1981
E4 - Effective January I,
1982 and expires with December 31,
1982
E5 - Effective January 1,
1983 and expires with December 31,
1983
'Charges on shipments per unit will be based on full loading capacity of car used, determined by
dividing the cubical capacity of the car used by unit of 200 cu ft.
Mallear unloading facility at Champion International Plant west of Missoula, Montana.
Source: ourlington-Northern Railroad Ccmmodlty Tariff 109. Rates are subject to a 3.5X fuel
surcharge plus an additional 1.12 fuel surcharge.
4-16
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up to a distance of 100 miles and that rail transport is feasible up to about
250 miles at current fuel costs, shipping rates, and market prices for hog
fuel. Combinations are possible, however. For example, in the Townsend area,
Champion International is building a rail head dump for wood residues that
serves as a collection point for wood residues hauled in from surrounding
mills. When a sufficient amount accumulates, it can be loaded at Townsend for
rail transport to Champion's pulp mill in the Missoula area. Also, a truck/
rail transportation system will be used at Col strip, Montana, to ship wood
residues to a Wisconsin paper mill. Similar arrangements are possible in other
areas of Montana, thereby extending the range from which Champion can draw hog
fuel for its Missoula plant.
Truckers who carry wood residue on an unscheduled basis in Montana
work under rates that are negotiated between the shipper and the trucker. In
terms of Montana trucking regulations, such truckers are called Class C
contract carriers. Because most mills in Montana would ship their residue to a
market within the state (due to distance limitations), such mills would either
seek to negotiate rates with an available trucking firm or work out an
arrangement with a major purchaser of wood residue. For tepee burner mills,
the latter strategy is the more likely.
At least two major buyers of wood residue who are willing to enter
into such arrangements were contacted by the project team--Louisiana Pacific's
parti cl eboard plant (a buyer of shavings, primarily) and Champion
4-17
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International (a buyer of all types of wood residue, particularly hog fuel),
both located in the Missoula area. Both companies are willing to pick up wood
residue from small mill suppliers using the trucking company they have under
contract. The typical arrangement between such buyers and small mill sellers
involves a price for the residue that is a bit lower than the market price to
cover at least a part of the shipping cost. If a fair price can be worked out
between a tepee burner mill and either of these two major buyers (or perhaps
others), this solution to the transportation problem is probably the best
available. It requires no public subsidy or other actions, and it capitalizes
on the natural incentives of both buyer and seller.
4-18
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SECTION 5.0
STEPS THAT WILL ENCOURAGE A SHIFT AWAY FROM 8URNING WOOD
RESIDUE IN TEPEE 8URNERS IN MONTANA
Interviews with persons knowledgeable concerning the wood products
industry in Montana and a review of available data suggest that there are
several lcw-cost ways to encourage a reduction (and perhaps complete elimina-
tion) in reliance on tepee burners in Montana. Most tepee burner mills already
wish to market their residue because of the economic benefits of doing so.
Almost all are aware of possible markets in which their residue could be sold.
Their major problem is meeting the initial capital costs in equipping them-
selves to market wood residue. It appears that most mills could begin market-
ing their wood residue successfully by the fall of 1980 if they were able to
purchase a hog for grinding up the residue into hog fuel, a storage bin
suitable for truck pickup, and the associated auxiliary equipment needed to
assure effective operation. As the previous section pointed out, the initial
cost of such equipment is substantial, particularly for a small mill operating
on a thin financial margin. Several solutions to the problem are described in
this section.
5-1
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5.1
Solutions that Assist Mills in Meeting Initial Capital Costs
Low interest loans and loan guarantees to tepee mill operators are a
promising means for assisting such mills. As this report was written, the
prime interest rate nationally was at record high levels. Given the market
uncertainties facing small mill operators, loan money at even these high rates
would typically not be available. Even if available, the repayment schedule
would be too demanding given the financial position of most small mills.
Fortunately, low interest loans and loan guarantees are currently available
under two Federal programs and could be made available under State sponsorship.
Federal Low Interest Loans
The SBA has two lew interest loan programs appropriate to the needs of
small mill owners: (1) the Regulatory Compliance Loan Program; and (2) the
Small Business Energy Loan Program. Each is described below.
The SBA Regulatory Compliance Program
Under Section 7(b)(5) of the Small Business Act, as amended, the SBA
may make loans to assist any small business concern in effecting additions to
or alterations in the equipment, facilities, or methods of operation of such
concern to meet requirements established pursuant to any Federal law, or any
State law enacted in conformity therewith, or any regulation or order of a duly
5-2
-------
authorized, Federal, State, regional, or local agency issued in conformity
with such Federal law. The SBA must determine that such concern is likely to
suffer substantial economic injury without assistance under this paragraph.
An example of such laws is the Clean Air Act of 1970.
A loan applicant must qualify as a small business under SBA employment
or sales size standards that are available at any SBA office. Proceeds may be
used for new construction, remodeling, or renovation (including equipment)
when required to meet inspection standards, paying bank loans used for such
purposes, replacing working capital expended for compliance purposes, or
helping to finance startup costs and meet continuing fixed costs when opera-
tions are curtailed because of construction or changes in methods of operation.
There is no statutory limitation on the dollar amount. Direct loans
and the SBA share of a bank participation loan are limited to $500,000, except
in cases of extreme hardship. Bank loans guaranteed by the SBA have no dollar
limit. Loan maturity is based on applicant's ability to repay, but repayment
must be made at the earliest possible date. The maximum term is 30 years.
The private lender sets the interest rate on guaranteed loans and on
its portion of immediate participation loans not to exceed a ceiling set by the
SBA. The interest rate on direct loans and SBA1s portion of immediate
participation loans is subject to change, depending on the average annual
5-3
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interest rate on all interest-bearing obligations of the United States. In the
spring of 1980, this rate was #5 percent.
An applicant's financial situation must be sound, and there must be
reasonable assurance of repayment ability. Also, the borrower must pledge
whatever collateral is available and give security to the extent possible.
Applicants must, in appropriate cases, furnish a list of required changes
issued by the appropriate enforcing authority (in this case the Montana
Department of Health and Envirormental Sciences) based on its inspection or
review of plans and specifications considered necessary to correct existing
violations or other evidence of economic injury covered by the law, regulation,
or order. Forms are available from participating banks and SBA field offices.
The SBA Small Business Energy Loan Program
Small business energy loans are available to start, continue, or
expand small businesses that are developing, manufacturing, selling,
installing, or servicing specific energy conservation measures. Loans may
also be made for engineering, architectural, consulting, or other professional
services connected with these specific energy measures. Energy loans are not
available to firms for installing or undertaking energy conservation measures
in their own plants or offices. For this purpose, small firms may apply under
SBA's regular business loan program.
5-4
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Small firms engaged in a nunber of energy conservation activities are
eligible. The applicable areas for tepee burner mills are
o Equipment used primarily to produce energy from wood, bio-
logical waste, grain, or other biomass sources
o Equipment for industrial cogeneration of energy, heating,
or production of energy for industrial waste
o Products or services using devices that will increase the
energy efficiency of existing equipment, or improve opera-
tion of systems that use fossil fuels and are on the Energy
Conservation Measures List of the Secretary of Energy or
approved by SBA on evidence of energy savings
Proceeds of these loans may be used to purchase land for plant con-
struction, for buildings, machinery, equipment, furniture, fixtures, facili-
ties, supplies, materials, or working capital. Generally, energy loan funds
cannot be used for research and development.
Direct, or immediate participation loans may not exceed $350,000.
Loans under the SBA/bank guaranty program may not exceed $500,000 or 90 percent
of the total loan. Repayment period is a maximum of 15 years. A direct loan
cannot be made if an inmediate participation loan is available and an immediate
participation loan cannot be made if a guaranteed loan is available. The
maximum size of a loan available to any one borrower will include all other SBA
business (hut iq* disaster) loans outstanding with the a-pplicant and all its
aff illates.
5-5
-------
Although there are no statutory requirements with respect to
collateral or security for these loans, an applicant must pledge whatever
collateral is available and give such personal guarantees as may be required.
Loans must be sound enough to assure repayment, but may have a greater accept-
able risk than SBA's regular business loans. Because greater risk is associ-
ated with these loans, more emphasis is placed'on the technical validity of the
product or process; the technical qualifications of the applicant's principals
and employees; the quality of the product or service; and the financial status
of the firm. Loan funds must not be otherwise available on reasonable terms.
Further details on both these programs are available from John R.
Cronholm, Director, U.S. Small Business Adninistrati on Field Office, Helena,
Montana.
State Low Interest Loan Programs
At present, there appears to be no loan program sponsored by the State
of Montana that is specifically oriented towards the needs of small sawmills
seeking to eliminate their dependence on tepee burners. However, it might be
possible to establish one, drawing on the proceeds of the Coal Severance Tax.
Under Montana law, 50 percent of the annual proceeds of this tax is placed in
Trust, and 50 percent is available for purposes specified in Section 15-35-108
of the Montana Code. Sections (2)(b) and (j) of the current law appear to be
relevant:
5-6
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(2) Coal severance tax collections remaining after allocation
to the trust fund under subsection (1) are allocated in the
following percentages of the remaining balance:
(b) Two and one-half percent until December 31, 1979, and
thereafter 5% to the earmarked revenue fund to the
credit of the alternative energy research development
and demonstration account
(j) All other revenues from severance taxes collected
under the provisions of this chapter of the credit of
the general fund of the state
A loan program that is specifically appropriate to the needs of small
mill operators employing tepee burners would probably require action by the
State Legislature, which convenes in January of 1981.
5.2 Solutions that Encourage Initial Operating Profitabi lity
It may prove desirable to further encourage operators of tepee burner
mills to shift to marketing their wood residue by providing State incentives
for such marketing during the first few years after conversion. At least two
types of incentives could be explored: (1) tax incentives in the form of
rebates to the mill owner per unit of wood residue sold during the first few
years after conversion, and (2) accelerated capital depreciation schedules for
small mills on the equipment they purchase that allows them to market their
wood residue. Each is discussed below.
5-7
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Tax Incentives in the Form of Tax Rebates to Mill Owners
It may be desirable to permit a special State income tax rebate to
small mill owners who begin marketing wood residue after a specified date as a
means of encouraging their shift away from wood residue burning. The rebate
could be permitted for mills that are medium to small in size, and could be
based on the amount of wood residue sold (i.e., the larger the amount sold, the
higher the rebate). Such a tax rebate should be temporary and self-terminat-
ing. It should be claimable only during the first 2 or 3 years of wood residue
marketing, and declining in amount year by year after the first year of eligi-
bility. Tying the amount of the rebate to the amount of residue sold would
have the effect of encouraging maximum productive utilization of wood residue.
Making the rebate temporary would prevent the establishment of a permanent
state subsidy in a market that shows no sign of needing one.
Accelerated Capital Depreciation Schedules for Selected Capital Equipment
It may also be desirable to permit accelerated capital depreciation
schedules on State tax for tepee burner mill owners who purchase equipment that
puts them in a position to market their residue. Such an acceleration would
have the effect of lowering tax burdens on such mills during the first few
years of postacquisition operation, thus providing an incentive to purchase
such equipment. Accelerated depreciation schedules have the advantage that
they are easily targeted on tepee burner mills—the recipient of the tax
5-8
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advantage must purchase the equipment to receive the benefits. The dis-
advantage is that the incentive effect is not fully felt by the mill owners
until several years after the purchases are made, and may therefore be
weaker.
5.3 Incentives that Focus on the Transportation Aspects of Wood Residue
Marketing
In Montana, only two modes of transportation are significant, truck
and rail. Truck transport of wood residue within the State of Montana is done
overwhelmingly under rates that are mutually agreed on by shipper and trucker.
Transport that goes across state lines does so at rates that are established by
the Interstate Ccmnerce Commission. These rates are not readily susceptible to
reforms beneficial only to tepee burner mills in Montana. During the course of
its work, the project team listened to several suggestions concerning ways to
improve the incentives facing truckers, including the allowance of trucks of
greater length, greater weight-carrying capacity, and other such concessions.
These suggestions for reform, while interesting, did not focus solely on the
problems facing tepee burner mills. Moreover, a thorough consideration of
their merits would require an examination of the bas^s for Montana's intrastate
trucking regulations, a task well beyond the scope of this report.
Accordingly, on the basis of the evidence gathered, there is little room for
improving the incentives facing truck transporters of wood residue.
5-9
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Rail transport i.n Montana is potentially useful to a comparatively
small nunber of tepee burner mills, especially those mills whose principal
market for wood residue is more than 100 miles away (the distance at which rail
transport begins to be cheaper per unit per mile than truck transport). Hog
fuel made from wood residue is classified by the railroad tariff in the same
category as chips, a higher value conmodity. It might be desirable to seek a
reclassification of hog fuel into a lower cost category as a means of reducing
the.cost of shipping hog fuel to distant markets. Some tepee burner mills
would benefit from such a reclassification, principally those in the Living-
ston area. But there are two disadvantages in such a strategy. First, it
would be difficult to be certain that the benefits would accrue only to small
tepee burner mills; and second, lower rates for an important class of cargo
might simply encourage Montana's railroads to reduce the nunber of cars
available for such shipments in favor of other cargoes paying a higher return.
5.4 Some Criteria for Choosing the Best Incentive Mix to Solve the Tepee
Burner Problem in Montana
The alternative incentive strategies that have been sketched in this
section could be applied in various combinations and forms. Criteria for
choosing the "best" combination are offered below. They are discussed in
greater detail in Appendix 0.
5-10
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o Equity
The mix of incentives should be fair to all parties concerned.
No one should be singled out for special treatment or given substan-
tial public concessions on unwarranted grounds. In particular, there
is no evidence that a permanent subsidy is warranted in the current
Montana forest products industry. To create one would be inequitable
to other participants in the industry who have a history and tradition
of economic independence.
o Targetabil ity
The incentive program selected should be designed so that it
meets three "targetability" tests: (1) it focuses on precisely the
target population that requires assistance, (2) it renders exactly
the assistance required and no other, and (3) the intent of the
program is not subverted (intentionally or otherwise) to other
purposes.
o Effectiveness
The incentive program selected should achieve the desired
result, which is to help tepee burner mills to shift towards the
marketing of their wood wastes. If the incentives are not great
enough, public resources will have been wasted without achieving the
desired end. If they are too great, a desirable objective will be
achieved but at excessive cost.
o Self-Terminating
As noted earlier, there is no evidence that tepee burner mills
require more than tenporary assistance to help overcome short-term
capital equipment acquisition problems. In view of this situation,
the program selected should be self-terminating.
It appears, given these criteria, that the most desirable incentive
program would feature the "front-end" incentive of low interest loans to tepee
burner mills eliminating their burners, together with the startup incentive of
a self-terminating, declining scale tax rebate program operating over the
first 3 years of post-tepee burner operation.
5-11
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APPENDIX A
THE METHODOLOGY EMPLOYED IN THE STUDY
This study was completed employing three major steps. First, the
literature was reviewed on tepee burner emissions, on alternative uses for wood
residue, and on the incentives available to government at various levels for
bringing about desired results. The results of this review appear in
Appendices B, C, and D, respectively. Appendix E lists the literature
references consulted.
Second, a mail survey was conducted by the State Air Quality Bureau of
the mills in Montana using tepee burners. This mail survey gathered
information concerning the amount and kind of wood residue burned in each mill,
together with other information related to the study.
Third, the ideas and opinions of various knowledgeable persons in
Montana were gathered in face-to-face interviews. Persons selected for these
interviews are a sample of the major participants and observers in the Montana
forest products industry. Interviews with these individuals were conducted by
Mr. Dennis Haddow of the Montana State Air Quality Bureau, Mr. Michael
Davenport of the U.S. Environmental Protection Agency, and Dr. Michael
Harrington of GEOMET, Incorporated. All interviews took place during the
A-l
-------
period of March 3-14, 1980. The ideas of all these persons contributed sub-
stantially to the success of this project, but none of the interviewees is
responsible for the specific form or content of this report.
A listing of persons, consul ted ap
Randy Adams
Stoltze Land & Lumber Company
Columbia Falls, MT
Arnold Arnett
Mill Supply Company
Missoula, MT
Willi am 81 ac k
Plum Creek Lumber
Columbia Fal1s, MT
Ralph Boehlke, Supervisor
U & R Express
Missoula, MT
Gene Carroll
Northwest Transportation
Consulting Firm
Helena, MT
Don Copley
Department of Transportation
State of Montana
Helena, MT
John Cronholm
U.S. Small Business Administration
Helena, MT
Michael Driscoll
Plant Superintendent
Louisiana Pacific Corporation
Columbia Fal1s, MT
below:
Jack Gunderson, Manager
Hail Insurance Unit
Department of Agriculture
State of Montana
Helena, MT
Robert Hansen
Willow Creek Lumber Co.
Livingston, MT
8en Havdahl, Vice President
Motor Carriers Association
of Montana
Helena, MT
Allan Hearst, Jr.
U.S. Forest Service
Missoula, MT
Robert Helding
Montana Wood
Products Association
Missoula, MT
Charles Keegan, III
8ureau of Business and
Economic Research
School of Business
Administration
University of Montana
Missoula, MT
Ki tty Kvi nge,
Information Officer
Renewable Energy Bureau
Department of Natural Resources
Helena, MT
A-2
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(List Continued)
Pat Flaherty
Northwest Transportation
Consulting F irm
Helena, MT
James E. Gordon
Gordon-Prill, Inc.
Missoula, MT
Maxine Johnson
Bureau of Business & Economic Res
School of Business Administration
University of Montana
Missoula, MT
Terry Mace, Supervisor
Forest Products Utilization
Department of Natural Resources
State of Montana
Missoula, MT
C. 0. Ough
Burkland Studs, Inc.
Livingston, Mt
Raynond L. Pri11,
Gordon-Prill, Inc.
Missoula, MT
A1 Reed
Louisana Pacific Corp.
Columbia Falls, MT
John Lopach, Director
Governor's Office of Commerce
State Capi tol 8ui1ding
Helena, MT
Marvin McMichael
Champion International
Timber lands Division
Mi 11 town, MT
Ken Swart
Northwest Forest Fuels
Livingston, MT
Elmer Van Schoick
Louisiana Pacific Corp.
Missoula, MT
Dr. Fred Shafizadeh, Director
Wood Chemistry Laboratory
University of Montana
Missoula, MT
Richard Webb
Brand S Limber
Livingston, MT
Douglas Williams
Vice President for Cartage
Missoula Cartage
Missoula, MT
A-3
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APPENDIX B
A REVIEW OF THE LITERATURE ON TEPEE BURNERS AND
THEIR IMPACT ON AIR QUALITY
Since roughly 60 percent of the total wood volume that enters wood
processing mills is actually converted to primary wood products, disposal of
the remaining wood "residue" is necessary. Burning of some or all of these
residues in tepee wood-waste burners is a disposal method utilized by some
34 mills in Montana. Although these burners solve the residue disposal
problem, they create another, due to their emission of both gaseous and parti-
culate pollutants.
The impact of tepee burners on air quality depends on the (1) volume
of material processed, (2) operating conditions during burning, (3) locations
of these sources of air pollution and degree of overlap from neighboring
locations, (4) ambient air quality levels from distant and other types of
sources, and (5) meteorological conditions that affect the transport and dis-
persion of air pollution on a day-to-day basis.
B.l OPERATING AND MAINTENANCE FACTORS AFFECTING TEPEE BURNER EMISSIONS
The following emission estimates on combustion of wood refuse in tepee
burners are taken from the EPA (1973) guide on emission factors:
B-l
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Type of
Pol 1 utant
Parti culates
Emission Factor
(kg/MT)
(16/ton)
0.5 (500% excess air, 370°C exit temp)
3.5 (1200% excess air, 204°C exit temp)
10.0 (1500% excess air, 204°C exit temp)
1.0
7.0
20.0
0.1
13.0
11.0
1.0
Sulfur oxides
Carbon monoxide
Hydrocarbons
Nitrogen oxides
0.05
5.5
5.5
0.5
However, the quantity of pollutants emitted from these burners may
vary tremendously both over time and among burners. According to the EPA
The quantities and types of pollutants released from conical
burners are dependent on the composition and moisture content of
the charged material, control of combustion air, type of
charging system used and the condition in which the incinerator
is maintained. The most critical of these factors seems to be
the level of maintenance on the incinerators. It is not uncoamon
for conical burners to have missing doors and nunerous holes in
the shell, resulting in excessive combustion air, low
temperatures, and therefore, high emission rates of combustible
pol1utants.
Therefore, operating conditions have a significant effect on the emission of
pollutants from these burners. For example, large amounts of excess air will
cool the combustion materials, resulting in higher pollutant emissions.
Figure 8-1 shows the estimated relationship between exit gas temperature and
particulate emissions (Corder et al., 1970). 8oubel and Walsh (1976) suggested
that exit gas temperatures of greater than 600° F will minimize the emissions
~All references appear in Appendix E.
(1977)*:
B-2
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9 f S0U4U13 n« SA/U
& « «cffrt»» >
-------
(c) an adequately designed underfire air system be provided. Such
a system must be adjustable or of sufficient capacity for the
maximum rate of fuel supply and must introduce air with suffi-
cient dispersion to preclude channeling through the fuel pile.
(d) adjustable, tangential overfire ports be provided of ample
capacity to supply at least 10 times the underfire air volume at
a differential pressure corresponding to the burner stack
effect at 300 F exit and 90 F ambient temperatures.
(e) the burner shell be reasonably airtight to preclude parasitic
leakage and thus cooling effect and lack of control of overfire
air.
(f) adequate maintenance practices be observed to assure optimum
performance of the underfire air system at all times.
(g) operational practices include frequent adjustment of underfire
air volume (firing rate) and overfire air volume as required to
maintain optimum exit temperature at all times.
Furthermore, the burner should be cleaned and inspected often to ensure
that it is in good repair, and operating logs and temperature records should be
kept (Boubel and Walsh, 1976).
Other tepee burner modifications that have been suggested and subse-
quently rejected include:
o Gas scrubbers
o Fuel drying systems
o Preheating combustion air
o Sprinklers for cinder control
o Refractory linings
o Natural gas or propane mixed with underfire air
Most of the above modifications are either too expensive for a small mill
to install or ineffective in controlling pollutant emissions. As a general
8-4
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rule, add-on exhaust control equipment is prohibitively expensive for most
mill tepee burners; it is more economical to purchase a new burner fully
modified for good control than to install exhaust gas cleaning equipment
(Boubel and Walsh, 1976).
B.2 MILL RESIDUE IN MONTANA
Due to its large amount of forested land, a substantial number of wood
product companies are located in Montana. The 1978 Directory of Montana's
Forest Product Industries lists 241 sawmills, 79 post and pole processors,
9 plywood and particleboard processors, 1 pulp mill, 25 log home manufac-
turers, 633 loggers, and 8 secondary manufacturers. Thus, a large amount of
wood residue is generated and must be disposed of in some way. Because this
study is concerned with the disposal of wood residue by combustion in tepee
burners, sawmills using such burners are, therefore, the major topic of discus-
sion. Table B-l lists the estimated volumes of wood residue generated in
Montana sawmills and plywood plants in 1969 and 1976. As this comparison makes
clear, the proportion of unutilized residue has been declining steadily in
recent years. This decline is due partly to improvements in sawmill equipment
and to improved procedures, but also to increased marketability of wood resi-
dues. More wood residues can be converted into salable products than ever
before, and this trend is expected to continue. Appendix C of this report
documents these markets and sketches their technical prerequisites.
B-S
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TABLE B-l
ESTIMATED VOLUME OF WOOO RESIDUE GENERATED
IN MONTANA SAWMILLS AND PLYWOOD PLANTS
1969 and 1976
Estimated Volume
Residue (OOO Bone Ory Units J Percentage of Total
Type
Utilized
Unutilized
Total
Utilized
Unuti1ized
Total
Coarse3
1969
689
107
796
87
13
100
1976
656
32
690
95
5
100
F1rteb
1969
443
297
740
60
40
100
1976
453
87
540
84
16
100
8 ark
1969
137
355
492
28
72
100
1976
296
104
400
74
26
100
Total
1969
1,269
759
2,028
63
37
100
1976
1,407
223
1,530
86
14
100
Material suitable for chipping, such as slabs, edgings, and trlinnlngs.
Material such as sawdust and shavings.
Source: Based on Theodore S. Setzer, Estimates of TImber Products Output and Plant
Residues, Montana, 1969 (Ogden, Utah: U.S. Department of Agriculture, Forest
Service, Intermountain Forest and Range Experiment Station, March 1971), and
University of Montam, Bureau of Business and Economic Research, Montana Forest
Industries Data Collection System (Missoula, Montana, 1979).
8-6
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B.3 THE NUMBER AND LOCATION OF TEPEE 8URNERS IN MONTANA
At this time (Spring, 1980), 35 tepee burners are operating in Montana.
Figure 8-2 shows the location of these burners in relation to Montana's
counties and employment growth. Table B-2 lists the Montana sawmills operating
tepee wood-waste burners. As this map demonstrates, the vast majority of these
burners are located in the forested western portion of the state. Of the 35
burners shown, 31 are located in air quality control region (AQCR) 142 (13
burners) and AQCR 144 (18 burners). These two regions have respective
population of 167,164 and 154,691 and therefore together account for 46 percent
of Montana's population (1970 census data). Furthermore, the two burners in
AQCR 140, as well as the major population centers of Great Falls and Billings,
are located relatively close to this western portion of the State.
Within regions 142 and 144, many burners are located near population
centers. For example, seven burners are located in the Columbia Falls-
Kali spel1 area and six burners are located within 26 miles of Bozeman. In AQCR
144 particularly, the burners are located near each other. The fact that these
burners are located near population centers compounds their associated air
pollution problems.
The size of the sawmills that operate tepee burners is important, since
feasible disposal options probably vary among the different size classes.
Table B-2 lists the size class of each Montana mill that operates a tepee
burner. Approximately 75 percent of Montana's sawmills belong to the smallest
si ze class (A).
B-7
-------
DO
I
CO
Figure B-2
LOCATION OF TEPEE BURNER MILLS IN RELATION TO COUNTIES BY EMPLOYMENT
GROWTH RATE, 1970-77
Note: Triangles Indicate the location of one or more tepee burners.
/••II w/SsSa/^j
v/>\**?yyX\'' • v ''111 Xffly/;
tea I • I I I I IWM %%%%
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^V!'!i.i!i.'!iL'
I i'iVi'ij
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•«((? Cftftlt
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(IILOWIIVNI
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1111 " ' '""M
LEGEND
Q 7.1-20.8 Medium High QuarliU
H 21.0-58.8 High QuarliU
18.5 — O.I Low QuarliU
O.I- 6.9 Medium Low Quarlll*
Source: U.S. Department of Commerce
-------
TABU 8-2
MONTANA SAW1IU5 WITH TEPEE BURNERS
MP Key
Nuober
Conpany
Address
Town
County
St;
AQCR 140
(2 tepees)
1.
Brand S timber
Bon
1165
Lewlslown
Fergus
C
2.
Spring Creek Forest Prod.
Bo*
128
Judith Sap
Wheat land
0
AQCR 141
(no tepees)
AQCR
(13 tepees)
3.
FH Stoltze Land i limber
Box
389
Dillon
Beaverhead
0
4.
'rflckes Forest Industry
Sax 675
Towns end
Broadwater
0
5.
re Hows tone Pine Co.
Box
325
Belgrade
Gallatin
0
6.
Sorenson Brother! Limber
Box
243
Drum end
Granite
A
7.
Champion Building Products
Silver City, Box 854
1 Helena
lewis 4 Clark
e
3.
Castle Mountain
P 0.
Box J
White Sulfur Springs
Meagher
0
9.
Brand S limber
Box
1033
Livingston
Park
C
LO.
Burkland Studs, Inc.
8ox
498
c
11.
Park Limber Co.
Sox
1137
A
12.
Donna Limber
Box
498
A
13.
Willow Creek limber Co.
Box
1297
B
14
loutsana-Pjctffc Corp.
Box
J89
Deer Lodge
Powell
E
IS.
Montana Pole
Box
3506
Butte
Silver Sow
-
AQCR 143
\Z tepees)
16.
Black limber Co.
8ok
357
lane (Jeer
Rosebud
A
17.
Northern Cheyenne
Box
78
Ash!and
Sosetwd
0
AQCS 144
(18 tepees)
10,19
Plun Creek Limber
160
4th Ave. W.
Colunbla Falls
Flathead
F
JO.
Loulslana-Paclf 1c Corp.
Sox
153
E
21.
FH Stoltze Land t limber
Box
490
E
22.
Plun Creek Evergreen Division
Box
160
Kal Ispell
B
23.
ml-Wont Limber Co.
Box
1039 NU Oam
c
24.
Kllnger
Box
1031
B
25.
P lun Creek Limber
Pablo
F
26.
Kennedy-Stevens Limber Co.
Box
985
Eureka
Lincoln
C
27
Kssnka I inter Co
01v1s1on of Plun Creek
Box
28
Fortlne
E
28.
Dlanond International Corp.
Box
548
Superior
Mineral
F
29.
Pyramid Mt. limber Co.
Box
20
See ley late
Missoula
0
30.
Stoltie-Conner Limber Co.
Box
415
Darby
Ravalli
0
31.
Flodln limber Co., Inc.
Box
309
Plains
Sanders
32.
Thorn&son Falls limber
Division of W.I. Forest
Products, Inc.
Bon
368
Thompson Falls
E
33.
Watters Brothers limber Co.
Sox
SS
A
34
Louisiana-Pacific Corp.
Box
1402
Trout Creek
0
Key
Sawmtll Sizes
Air
OualIty Control
Reqtons
A SJ.flW MS?
140
* ailUngs
3 J-5,000
141
» Sreat Falls
C 5-10,000
142
• Helena
0 10-25,000
143
= Miles City
E 25-50,000
144
» Missoula
F 150.000
8-9
-------
B.4 LEGISLATION AFFECTING TEPEE BURNERS IN MONTANA
The State of Montana has promulgated regulations that set maximum
emission standards for certain pollutants emitted by wood-waste burners and
specify other requirements. The two regulations that are particularly
applicable to tepee burners are State of Montana Air Quality Rules 16-2-14(1)-
S14030 Wood-Waste Burners and 16-2.14(1)-S1470 Sulfur Oxide Emissions. The
text of 16-2.14(1)-S14030 follows:
16-2.14(1)-SI4030 WOOD-WASTE BURNERS
(1) Construction, reconstruction, or substantial alteration of wood-waste
burners is prohibited unless the requirements of the permit rule, ARM 16-
2.14(1)-S1415, have been met.
(2) No person shall cause or authorize to be discharged into the outdoor
atmosphere from any wood-waste burner any emissions which exhibit an opacity of
twenty percent (20%) or greater averaged over six (6) consecutive minutes.
(3) No person shall cause or authorize to be discharged into the outdoor
atmosphere from any wood-waste burner particulate matter in excess of
0.1 grains per standard cubic foot corrected to twelve percent (12%) Coj.
(4) A thermocouple and a recording pyrometer or other temperature measurement
and recording device approved by the department shall be installed and main-
tained on each wood-waste burner. The thermocouple shall be installed at a
location six (6) inches above and near the center of the horizontal screen or
at another location approved by the department.
(5) A daily written log of the wood-waste burner's operation shall be main-
tained by the owner or operator to determine optimum patterns of operations for
various fuel and atmospheric conditions. The log shall include, but not be
limited to, the time of day, draft settings, exit gas temperature, type of
fuel, and atmospheric conditions. The log or a copy of it shall be submitted
to the department within ten (10) days after it is requested.
(6) No person shall use a wood-waste burner for the burning of other than
production process wood waste transported to the burner by continuous flow
conveying methods.
(7) Rubber products, asphaltic materials, or materials which cause dense
smoke discharge shall not be burned or disposed of in wood-waste burners.
B-10
-------
(8) Exception: For building of fires in wood-waste burners, the provisions of
section (2) and (3) of this rule may be exceeded for not more than sixty (60)
minutes in eight (8) hours. (History. Sec. 75-2-203, MCA; Eff. 12/31/71; AMD,
1978 MAR p. 1732; Eff. 12/29/79.)
In addition, Rule 16-2.14(1)-S1470 states that "coimiencing July 1, 1972,
no person shall burn liquid or solid fuel containing sulfur in excess of one
pound of sulfur per million BTU's fired" (State of Montana Air Quality Rules,
April, 1979).
B -11
-------
APPENDIX C
A REVIEW OF THE LITERATURE ON
ALTERNATIVE USES OF WOOD RESIDUE
There are many uses for wood residue other than burning it in tepee
burners. Evidence exists that the number of uses is increasing, spurred by the
negative incentive of increasingly stringent restrictions on emissions and by
the positive incentive of new markets for wood residue. A simmary of the
various categories of sawmill wood residues and their possible uses appears in
Table C-l. This appendix focuses on the major alternatives discussed in the
literature under the following two headings:
o Productive uses of wood residue
o Nonproductive uses of wood residue
C.l PRODUCTIVE USES FOR WOOD RESIDUE
The proportion of wood residue that has gone into productive use has
grown larger in recent years, both in Montana and elsewhere in the United
States. This fact alone attests to the steadily growing list of productive
uses for wood residue. This section discusses the major uses that are now
relevant in Montana, or that could become relevant in the near future.
C-l
-------
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-------
C.l.l Pulp Raw Material
At this time, the use of wood residue as pulping material is perhaps
most important in terms of market potential, as the pulp and paper industry is
the major consumer of mill wastes. Furthermore, this use is increasing nation-
ally at the rate of 10%/yr (Stone, 1976).* In the past, the major raw
materials used by pulptnills were roundwood and coarse residues, such as slabs,
edgings, and veneer cores, produced by sawmills, veneer mills, and other
plants. Recently, because of advances in pulping technology, finer residues,
such as sawdust and shavings and in seme cases bark, may also be utilized
(USDA-FS 1977), depending on the pulping process employed and the desired
quality of the end product (Bublitz, 1978). Problems that still remain and on
which research should be focused include decreased product yield and product
strength with the use of sawdust as a raw material (3ublitz, Yang, 1975) and
the presence of specks when bark is included (Styan, 1978).
At least three possibilities exist for the use on Montana's sawmill
wood wastes as pulp raw material. First of all, wastes may be purchased by
pulp mills already in operation in Montana. The Champion International plant
in Missoula is presently a major purchaser of mill wood residue in Montana.
Its consumption should increase in the future because of a major increase in
its plant capacity during 1980.
*A 11 references appear in Appendix E of this report.
C-3
-------
Second, a survey conducted in 1977 determined that "the Northwest
leads in pulping residues from solid wood-processing plants and all Northwest
mills report the use of residues" (Bublitz, 1978). In fact, the survey results
showed that residues comprised 82% of the total pulp consumption in the North-
west, as opposed to 35% in the Midwest and 40% in the South. The lower figures
for the Midwest and South do not reflect an undesirability of residues as raw
material or technical problems, but rather the low availability of wood resi-
dues in these areas (Bublitz, 1978; Stone, 1976). Perhaps, here is one of the
highest profit uses of Montana's wood residues, especially chips. Because
pulpwood is a high-value residue use, the cost benefit of longer range hauls to
markets make such a possibility feasible where it might not be for other wood-
waste uses. In Montana, few mills are unable to sell all the chips they
produce.
Finally, the pulp and paper industry itself has projected a national
mill residue consumption of 15 million cords by the year 2000. This would mean
the consumption of nearly all forecasted recoverable mill and logging resi-
dues. However, a problem may remain in that the sites of the projected pulp
industry expansion may be far from the residue supply. Therefore, the siting
of future pulp and paper mills near major lumber and sawmills may be a profit-
able solution.
C-4
-------
C.1.2 Composition Boards
The composition board industry is a second large consumer of sawmill
wood residue. Composition board includes such major products as particle-
board, hardboard, and insulation board, as well as more recently developed pro-
ducts. Sunmaries of the types and quantities of the raw materials used in the
particleboard industry appear in Table C-2.
The largest market for western particleboard manufacturers seems to
be corestock or industrial board, large amounts of which are shipped to other
regions. The use of higher-value residues in composition board is well docu-
mented. Only recently has research been focused on the feasibility of inclus-
ion of lower-quality residues in the manufacture of these products. Use of
bark has an added advantage in this use, as research has been done on the use of
its extracts (to be discussed in more detail later) as bonding agents. Bark
also has good insulation properties (Wisherd and Wilson, 1979).
Whether the addition of bark to particleboard manufacturer is benefi-
cial depends on the grade of board, the location of the bark in the board, the
type and amount of bark, and the bark-grit content. Thus, underlaynent and
mobile-home decking seem to be the best uses for particleboard that includes
bark. However, in general, it has been determined that because bark is struc-
turally weaker than wood, the addition of bark causes a linear decrease in the
strength of the board. It has been determined that high-quality board can be
C-5
-------
TABLE C-2
TONS AND PERCENT OF RAW MATERIALS USED BY THE PARTICLEBOARD
INDUSTRY IN THE SOUTH AND PERCENT USED IN THE UNITED STATES, 1973*
Tons Used in West
Percent Used
Type of Raw Material
(Dry-Weight Basis)
Southwest
United States
Roundwood
0
0
7
Venere Core
(1)
(1)
(2)
Planer Shavings
1,858,444
74
65
Plywood Mill Waste
225,265
9
10
Slabs, Edgings, and Trimmings
93,658
4
3
Sawdust
263,796
10
9
Chips
52,109
2
5
8ark
0
0
0
Other
(1)
(1)
1
Total
2,099,511
100
100
(1) Data withheld to avoid disclosure.
(2) Less than one-half of 1%.
Source: Dickerhoof, 1977
C-6
-------
made only if the percentage of bark is generally under 20 percent (Wisherd and
Wilson, 1979).
Projections made in 1975 call for doubled particleboard and hardboard
production and a 50-percent increase in insulation board production by the year
2000 (Christensen, 1975). Lehmann and Wahlgreen in 1978 projected the follow-
3
ing construction-related totals for 1980: 212 mill ft for particleboard,
148 mill ft^ for insulation board, and 0.71 mill ft^ for hardboards. However,
the energy situation may cause a greater increase than expected in insulation
board production (Dickerhoff, 1974). This increased composition-board
manufacture will increase the utilization of all types of mill residues,
especially because Dickerhoff has also predicted the "declining availability
of conventional wood furnish for production of boards...." The marketability
of these panels are due to their light weight and p'refabrication, which saves
on labor costs (USDA-FS No. 861).
The extent of the market is important as a determinant both of the
demand for the product as well as for the amount of available raw materials.
Eighty-eight percent of the raw materials used by Western particleboard plants
are in the form of mill residues. Therefore, the status of sawmill production,
which reflects the residential construction market, will affect the particle-
board production even though this industry has a broader market. Therefore,
construction slowdowns will have a large impact on the particleboard industry
(Dickerhoof, 1977).
C-7
-------
Competition with other products will also affect the composition
board market. Plywood may be a major competitor for seme of these markets.
But, as Schaffer (1976) has predicted, success in marketing sheathing grades
products should be especially good after 1980 when softwood plywood products
will probably no longer be able to meet its demand.
Competition for the raw material used will affect the industry.
Should decreases in nearby mill residue raw materials become a reality, utili-
zation of residues from further distances would become necessary. This could
only benefit the sawmill industry in such areas as Montana whose residues may
now be considered unavailable as far as the feasibility of long-haul transport
in concerned. Although the maximum trucking radius for composition board raw
materials a few years ago was 25-50 miles in many areas, it is now up to
100 miles (Wilson, 1975).
The rapid increase in the price of the petroleum-based phenolic
resins used as binders in these products will also affect the industry
(Schafer, 1976) and will necessitate further research into chemical alterna-
tives, such as those found in bark itself (Anderson et al., 1974). These
alternatives will be increasingly important as the adverse health effects of
formaldehyde, a component of composition board adhesives, are further docu-
mented .
C-8
-------
In conclusion, projected increases in the composition board industry,
which will necessitate the increased consumption of mill residues, will be a
great benefit to the sawmill industry, especially if the new innovations in
utilization of sawdust and bark in these products materialize. The extent to
which this will affect Montana will depend on where new plants are sited and
the value that this industry places on mill wastes as a raw material.
C.1.3 Soil Amendments
The use of wood waste residue as soil amendment is another promising
venture. The use of residues is generally restricted to low-value wastes such
as sawdust and bark because competition for raw materials from the composition
board and pulping industry precludes the use of higher-value residues.
Sawmill residues can be used as a soil conditioner and mixed with the
soil, or used as mulch or ground cover. In both cases, the benefits derived
are similar, except that soil mixing and nutrient release would be greater in
the former case. According to Bollen and Glennie (1961), "The chief benefits
to be derived from relatively inert or slowly decomposable wood wastes added to
soil are increased moisture retention, greater aeration and better tilth.
Mulches retard erosion, hinder weed emergence, reduce evaporation and retain
warmth. Decomposition of organic materials on or in the soil results in
complex transformations of carbon and nitrogen compounds and eventually
supplements the native humus."
C-9
-------
However, despite the advantages, many have been hesitant to use wood
wastes in this manner. Wood-waste soil conditioners have often been accused of
having toxic qualities because of the presence in bark of extractive compounds,
such as tannins, resins, and turpentine. This has been disputed by research
that shows that any "toxicity" observed is probably because of depletion of
available nitrogen (Allison and Anderson, 1951; Bollen, 1969; Bollen and
Glennie, 1961; Howard, 1970). Although sawdust in particular may be slightly
acidic, the claim of increased soil acidity is probably not warranted.
However, one claim that does have a factual basis is that wood causes
a depletion of available soil nitrogen. Although wood contains at least
adequate amounts of necessary plant nutrients, it is low in nitrogen, which is
required by the soil microorganisms responsible for wood decomposition.
(Baxter, undated; Neil 1 , 1976). Fortunately, there are methods to correct this
drawback. Nitrogen may be added to the material to bring the soil nitrogen to
the 1.2-1.5 percent level that is required to ensure no nitrogen depletion by
the microorganisms (Allison, Anderson, 1951; Baxter, undated).
In Montana itself, the use of wood wastes as soil amendments should be
of major importance. Montana has a large potential market because of the
extent of the agriculture and forestry industries. Also, the amount of pro-
cessing required for this product is minimal; therefore, no transport to a
manufacturing plant is required.
C-10
-------
C.1.4 Animal Bedding
As previously discussed, ground bark may also be used as ammal
bedding (Smith and Paterson, 1976). Pressure on both farmers, because of water
contamination by livestock waste, and sawmill operators, because of residue
incineration regulations, forced the formulation of a residue utilization pro-
ject in the Bitteroot Valley of Montana. Advantages determined are:
(1) animals remain dry on feet, legs, and udders; (2) the mounds generate
spontaneous heat that the animals find comfortable; (3) there are fewer
injuries from freezing or slipping; (4) liquids are absorbed into the top few
inches of materials; (5) fresh dry material is exposed by scraping off the top
few inches with a tractor-mounted blade; (6) if piled and turned in the lot, or
dozed to the outside of the lot, the material appears to compost readily;
(7) there appears to be no fly or rodent problem; (8) the material stands up
well under heavy traffic, forming a corky layer that resists trampling into the
mud; (9) the material is easily moved or handled with conventional tractor-
mounted manure loaders and spreaders; and (10) it does not mat, as does straw,
and the material retains a generally granular handling characteristic, even
when there is more than 50 percent livestock waste. After use and compost, the
former bedding becomes a greatly enhanced soil amendnent (Bergneir and Bjergo,
1972). According to this study, the major disadvantage is the available
quantity of bark waste. If this is true, there seems to be substantial market
potential in Montana for livestock bedding that could be tapped more fully.
C-ll
-------
C.1.5 Physical and Chemical Derivation and Uses
The fractionation of wood wastes into component chemical parts is
especially promising over the long run. Bark, in particular, has physical as
well as chemical properties that makes it amenable to such treatment. There-
fore, it is on this material that most research has been conducted.
Wood is basically composed of cellulose fibers associated with other
carbohydrates and lignins and also includes rosin, fats, waxes, and other
chemicals. Bark has greater potential in this area, because it also contains
tannins and polyflavanoids, and cork, as well as more waxes and distinctive
chemical compounds than wood (Herrick, 1971).
Use of Physical Fractions
Although the physical components of bark often differ (Sproull,
1969), these components, cork, fiber, and fines, are the source of many useful
products. Cork itself is one such product that is already familiar to the
consimer and for which a market already exists. In addition to its established
uses, its use as a thermoplastic binder and in insulation and sound proofing in
floorings has been suggested (Hall, 1971). Bark fractions have also been used
as wel 1-drill ing muds or fluids (Chow et al., 1976; Sproull, 1979; Harkin and
Rowe, 1969; Hall, 1971).
C-12
-------
The physical and chemical properties of bark have suggested its use in
trickle filtering because of its capability for ion exchange and physical
filtration. Some suggested uses for bark in this filtration capacity include
use in sewage plant effluents, pulp mill cooking, cannery wastes, and effluents
containing pesticides, fungicides, radioactive materials, and oil wastes.
Furthermore, its absorptive capacity for gases may allow bark to be utilized as
a gaseous effluent purifier (Howard, 1970; Sproull, 1969; Bergmeir and Bjergo,
1972; Boll en, 1969).
Chemical Extraction
Because of increasing technological sophistication, the extraction
and utilization of specific chemical fractions of bark is becoming
increasingly important. Goldstein (1976) describes the use of wood in general
as a chemical source, and states that wood as a source of carbon can be used to
synthesize any organic material and that almost all of the 18 million tons of
plastics, synthetic fibers, and rubber produced in the United States in 1974
could be obtained from wood as a raw material.
Bark basically consists of three chemical components: hemicellulose,
cellulose, and lignin (Goldstein, 1976; Smith and Paterson, 1976). Through
high temperature processes, these components can yield many products that are
of great use. A listing of important chemicals derived from 1ignocellulose and
their 1974 U.S. production follows (Goldstein, 1976):
C-13
-------
Chemicals from Liqnocellulose
1974 U.S. Production
Total Lignocellulose (Millions of Tons)
Ammonia 15.7
Carbon
Methanol 3.45
Hydrocarbon Oils
Hemicellulose
Ethanol 1
Furfural
Cellulose
Ethanol 1
Ethylene 11.75
Butadiene 1.85
Levulinic Acid
Liqmn
Phenol 1.15
Benzene 5.55
Extraction of bark with nonpolar solvents can yield such products as
waxes, fats, fatty acids, volatile oils, higher alcohol, hydrocarbons, lignor-
ceryl alcohol, lignocenic acid, phytosterol, and beheinic and fesulic acids.
Oehydroquercetin, protocatechuic acid, and sane flavenoids may be extracted
with ether. Ethanol extractions will yield phlobarphenes, tannins, and alka-
loids. Tannins, soluble carbohydrates, muscillages and gums, pectins and
glucosides, are produced in large volune by aqueous extraction. Sugars present
include sucrose, fructose, galactose, mannose, and arabinose. Finally,
extractions with sodium hydroxide produces phenolic acid, hemicellulose, and
C-14
-------
perhaps low lignin polyners, tannins, and phlorphenes (Smith and Paterson,
1976).
The phenolic polyners are at this time considered to be the most
important chemical products derived from bark (Chow et al., 1976). An impor-
tant use of these compounds is as phenol formaldehyde-type adhesives (Sproull,
1979; Hall, 1971; Goldstein, 1976). Much work in the use of bark adhesives has
been done by Anderson et al., (1974, a, b, c). This self-bounding property of
bark has suggested other possible uses such as in those that are generally
termed "molded products,". This property has also made possible the
development of bark "pellets," which are basically self-bonded densified bark.
Other uses suggested for the polyf1avanoid compounds include use as coating
agents to disperse and reduce viscosities of suspensions of clay, minerals,
pignents and pesticides, and for use in boilers and cooling water treatments
because of their ability to prevent corrosion or plugging of pipes (Chow et
al., 1976).
Tannin, which is related to the phenolic compounds already described,
is an important bark product used primarily in the tanning of leather (Herrick,
1971). However, the market for this product is probably declining as leather
products are replaced by products of different composition.
Two other bark products, for which market growth does not seem to be
substantial, are rosin and turpentine, which have been produced in the United
C-15
-------
States for quite same time. Furfural, which may also be produced from bark,
may be used as a chemical intermediate, in lubricating oil refining, or as a
solvent (Forest Service, 1976).
The cellulose portion of wood wastes may also be partly or wholly
hydrolyzed to sugars, and used as livestock feed. Ruminants, because they
possess their own hydrolytic capabilities, are able to digest the partly hydro-
lyzed material, whereas the requirements of other animals are more stringent.
Use of such a product would reduce the quantity of grain necessary for
inclusion in livestock diets (Smith and Paterson, 1976; Millet et al., 1976;
Harkin, 1969).
The sugars produced in the above-mentioned process may also be used in
liquid fermentation systems that produce proteins or chemicals that could be
further utilized by the petrochemical industry (Smith and Paterson, 1976). EPA
is now involved in a project that would convert cellulosic wastes to glucose by
acid hydrolysis. After conversion, the glucose produced would be "transported
to fermenting centers for conversion into alcohol or other chemicals" (Energy
Users Report No. 310).
Although chemical extraction of bark does seem to be a profitable use
of wood waste, particularly bark, there are factors that must be considered
before attempting such a venture. First of all, further bark residues will
still remain after the desired chemicals have been extracted. Therefore, final
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residue disposal or use must be included in the overall planning as well as
determination of the market potential and feasibility of final disposal (Neil,
1976). Extraction of a single compound is probably not economically feasible,
which necessitates the development of a multiproduct technology. Because many
chemicals are to be extracted, the market potential of all these products must
be determined to judge "the most economic balance of the product mix"
(Atherton, 1969).
Although the technology for these chemical applications is not new,
such conversion was not economically feasible when petrochemical source costs
were low. According to Goldstein (1976), "the recent rapid escalation of
petroleim costs along with the recognition that an integrated plant producing
products from all wood components could spread the wood costs over multiple
products have brought cost estimates for some chemicals from wood into the same
range as petrochemicals."
C.1.6 Energy Uses
Energy production from wood wastes may become the most important use
of mill residue, especially of bark and other residues that are unsuitable in
large quantities for other higher value uses. In the past, wood was a major
energy source and still is in many parts of the world. Since 1974, most
industrialized countries that rely on nonrenewable energy sources such as
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fossil fuels, are experiencing rising fuel costs and shortages. This is
causing renewed interest in wood as an energy source.
Wood compares favorably with other alternative fuels, but when making
such a comparison, the heating value of the particular residue, as well as its
moisture content, species, and age must be established because these proper-
ties, which may vary widely, affect the value of the wood as fuel (Hall, 1977).
Combustion processes commonly discussed include electricity genera-
tion frcm central plants, onsite steam production, incinerating with municipal
refuse, and conversion to other combustion products.
Electrical Generation
Wood-fired electrical generation plants are not very corranon; however,
a few are now in operation. The Eugene Water and Electric Board operates a
32-MW capacity steam-electric powerplant in Eugene, Oregon. It utilizes mill
residues for fuel, producing steam and electricity (Berguall, 1978; Grantham
et al., 1974). The Burlington Electric Department converted a generator to
wood fuel and thereby decreased the electricity production costs to 2.5
-------
In general, the economics of commercial electrical production using
wood as a fuel are highly dependent on locally determined factors such as
adequate wood supply, demand, and fuel costs. Grantham et al., (1974) deter-
mined that "plants of less than 24-MW capacity appear to be too small to
operate because scale economy is lost; above 50-MW, fuel supply requirements
are limiting" because they would require 100 tons of wood per hour. Others who
have noted this 50-MW limit for a single boiler plant include Bergvall et al.
(1978) and the Canran Corporation (1974). Thus, siting of such a plant near a
mill would perhaps increase the upper size limit because of residue availabi-
lity and decreased transportation costs.
In later studies, Inmann (1977) determined that "the price of gene-
rated electricity at a 220-MW capacity wood-fired power plant ranges from
24 mills to 42 mills per kilowatt hour, at feedstock prices of $1.00 to $2.50
per 10® 8TU. Such wood-fired plants will probably never compete with large
(1000-MW capacity) coal-fired or nuclear plants. Retrofitting small oil or
gas-fired power plants to burn wood is competitive with new coal-fired plants
of similar capacity or with retrofitting to burn coal. The major opportunity
for biomass in electric generation is in small plant retrofit or cofiring with
coal in large plants to reduce sulfur oxide control costs."
Many of the problems with the use of wood fuel are the same for both
electricity generation and onsite steam production or direct firing and will be
discussed later. Seme problems unique to electricity generation may limit its
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feasibility at this time. The efficiency of conversion from wood to electri
city is only about 25 percent (Karchesy and Koch, 1979), which is low, especi-
ally when considering the volunes of wood required to produce competitive
amounts of electricity. Other problems associated with the use of wood as fuel
are due to its bulk and volune, which result in higher transportation costs,
larger storage volunes (Corder, 1974), and difficulty in handling (Hoff,
1977). This further results in higher capital and operating costs. Although
sulfur stack emissions are not a problem as with coal, particulate emission
control is a problem that must be dealt with. This, along with additional
labor costs, may further add to the operating costs.
However, because the price of fossil fuels is rising so rapidly, the
economic feasibility of using wood as a fuel for the commercial production of
electricity should be reexamined and the placement of such plants in forest
product producing areas, such as Montana, should be studied.
Use as Fuel for In-Plant Processes
Despite the limited utilization of wood as a fuel in this manner, the
use of wood for steam production in the forest product industry itself has
proven quite successful. The advantages of onsite fuel availability, at no
cost, mill experience with handling of this fuel (Karchesy and Koch, 1979),
reduction or elimination of other fuel costs, and variability of other wood
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waste markets make this a very attractive possibility. Elimination of residue
transportation costs is another major benefit (Grantham, 1978).
Many sawmills and other wood-product manufacturers that create a
large volune of wood residue might be able to acquire energy self-sufficiency
by the use of wood as fuel. However, because fuel is still a relatively
low-value residue use, it may be advantageous to confine the use to such low-
value wastes as sawdust and bark. Because of their high resin content, the
latter has a higher heating value than wood.
Recently, examples of such in-plant residue use as fuel have been
published. Lane Plywood saved $2,300 (1973 prices) in gas fuel costs for
1 month by the installation of an Energex Vortex burner that utilizes all
available sander dust (White, 1973). A fully automatic boiler that produced
steam from sawdust and bark fines was installed at the Coin Limber Company.
This boiler eliminated a $380,000 annual oil bill (1974 prices). The addition
of a 1500-MW steam-driven generator was being considered at the time and may
now be in production. This company also disposes of its other residues by
exporting its chips, selling its planer shavings for particleboard production,
and bark to a decorative bark product manufacturer, as well as excess hog fuel
to other plants, exemplifying the potential product mix that can be marketed
(Blackerby, 1974). The KW Muth Co. of Sheboygan, Wisconsin, which produces
various composition board and other board products, uses its waste as fuel,
"generating a net 5.5 million BTU's per hour, disposing of 90 percent of the
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firm's waste products and saving an estimated $53,000 in fuel and waste-hauling
costs the first year" (Anonymous, Pulp and Paper, 1977). And, in Montana
itself, Champion International of Missoula supplies 84 percent of its power
needs by burning waste wood from its plywood mill. It has similar plans for
its Dee, Oregon, plant.
Pulp and paper mills are by far the largest energy user in the forest
product industry (USDA-FS 1976; Arola, 1976). Because they mainly consune, not
produce, wood waste, "package-deal" sales of mill residues to the pulp mills
should be a profitable enterprise. Sawmills could sell all grades of wastes to
the pulp mills, which would use the suitable residues for pulping, and burn the
remaining portion as fuel.
Cogeneration
Further advantages may be realized by the forest product industries
if generation of electricity is combined with process steam production. These
plants could utilize some electricity produced and sell the excess to local
energy consumers or utililities. This combination of processes is commonly
termed cogeneration. Because what would normally be waste heat is utilized as
process steam for the plant's own use, the overall conversion efficiency may be
increased from 25 to 50 or 60 percent (Grantham, 1978). This process steam may
be used for direct drying (of both wood products and the fuel itself) as well
as for heating and cooling (Johnson, 1977).
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A further possibility is the combustion of wood in combination with
fossil fuels, particularly (in Montana) natural gas. A large plant without a
sufficient wood supply might choose this alternative (Hall et al., 1977). The
goal of energy self-sufficiency in the forest product industry may be met
through the use of wood as fuel. The attairment of this goal would reduce the
problems of both declining fossil fuel costs and supply.
C.1.7 Energy Conversion
The fuel potential of wood waste is not confined to direct combustion
in boilers or other combustion devices. Much research is currently being done
on conversion of these residues into other energy forms. However, one dis-
advantage of conversion of solid waste to other forms, such as gases or
liquids, is the loss of energy in this process (Corder, 1976). Sane of the
processes discussed below are still in the development, testing, or conmerci-
ally unfeasible stage.
Gasificati on
Gasification may be the most promising conversion possibility for
wood wastes. This process entails the production of gases such as carbon
monoxide, hydrogen, and methane from wood wastes (Halak, 1977, Karchesy and
Koch, 1979, Bergval et al., 1978). There are quite a few reasons for the
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potential of gasification of wood wastes. Although the capital expense of a
gasification plant and incineration systems are similar, the gas has a higher
thermal efficiency and lowered pollutant emission. Another benefit of wood
gasification is that the "synthesis gas (hydrogen and carbon monoxide) can be
used to produce several important chemicals and fuels. Methane, hydrogen,
aimionia, methanol, ethylene glycol, and gasoline can be made directly from
synthesis gas. Additionally, a high-octane gasoline can be produced from
methanol in a one-step process" (Karchesy and Koch, 1979). Such a plant has
been tested in Stockton, California, in 1977. The estimated capital costs of
this type of plant, producing 130 million BTU's per hour was $300,000. The
cost of the gas produced may be less than $1.00 per million BTU's (California
Energy Resources Conservation and Development Ccntnission, 1977), although the
output will vary with the original moisture level and material type (Hodaw,
1978).
Albert Industrial Developments, Ltd., has a "Thermex Reactor which
produces both gas and charcoal, the respective amounts of which can be varied"
(Halak, 1977). Hammond et al., have also studied the wood-gasification process
and "processing about 200 bone-dry metric tons of wood waste (45 percent
moisture content) per day, they estimated an operating cost of $6 . 60-9 . 90 per
bone-dry metric ton and an energy conversion efficiency of 80 percent" (Corder,
1976).
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Michael Antal at Princeton University has recently developed a method
to convert cellulosic wastes to hydrocarbon fuels using "silvered mirrors"
that concentrate sunlight. The gases produced include ethylene, hydrogen, and
carbon dioxide (Environmental Science and Technology, November 1979).
Conversion to Crude Oil
The conversion of wood chips to crude oil is another possible energy
use of mill residues. However, more research is necessary before this process
becomes feasible because at this time the process uses more energy than is
produced. Bechtel Corporation of San Francisco is operating such a plant in
Albany, Oregon, for the Department of Energy on a test basis (Karchesy and
Koch, 1979).
Conversion to Methanol
The conversion of wood wastes to methanol is another possibility. Up
to 15 percent methanol can be added to gasoline without requiring automobile
modifications. It may also be burned as fuel and can be used in fuel cells that
generate electricity (Bergvall, 1978). Major industrial use of methanol is in
formaldehyde conversion and as a solvent and in plastic manufacture.
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In the future, decreasing amounts of natural gas and other priority
uses of coal, which are the present primary methanol sources, may increase the
use of wood wastes in this process.
Conversion to Ethanol
Ethanol, which at the present time is primarily produced from the
petrochemical ethylene and industrial and beverage fermentation, may also be
produced from wood (USDA-FS, 1976 and Bergvall, 1978). Ethanol may be used as
t
a motor fuel additive in addition to its use in chemical manufacture,
toiletries and cosmetics, acetal dehyde, and industrial solvents and
detergents.
Capital costs for ethanol plants using wood as a source are about
three times higher than those utilizing ethylene or grain. Although both wood
and grain-based plants utilize the fermentation process, because wood contains
50 percent of the sugar of grain, the capital production costs of the wood
plant are therefore higher.
Research into the degradation of cellulose may produce technological
advances that will help to lower costs of ethanol production. A recent devel-
opment in this area is the discovery by University of Georgia researchers of
bacteria that are able to degrade cellulose to ethanol (Energy Users Report No.
314). Finally, a $92 , 000 grant that would finance "pilot projects to study
various alternative energy sources in Montana" has been suggested. Twenty-
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five thousand dollars of this grant would support a plant at Thompson Falls
that would produce alcohol fuel from waste wood (Great Falls Tribune, 12/9/79)
C.1.8 Wood Densification
The high volume of wood residue is often mentioned as a deterrent to
further utilization. Therefore, the densification of wood wastes into bri-
quets is a promising development. Such a densi f 1 cati on has two major benefits:
transportation costs may be reduced because the volume and weight transported
are lessened (Steffenson, 1973); and in the case of fuel applications because
energy content is increased (Steffenson, 1973; Sprout-Waldron and Co., 1961).
Specifically, densification of bark is highly promising because of its self-
bounding properties.
Products manufactured include fuel logs such as Pres-to-logs, the
industry standard (OSU, 1977; Steffenson, 1971), and Fire-Glo, produced by
Agnew Environmental Products (Pease, 1972); stoker fuel (OSU, 1977); pellets
such as Woodex; and charcoal (Blackman, 1978).
Other possible benefits of these pellets and other such products are
ease of storage and lowered transportation costs (due to decreased volume),
lowered conveying cost (due to ideal shape), ease of packing, and potential of
lowered labor costs due to autcmatic firing (Steffenson, 1973; Currier in
Spokesman-Review, April 19, 1972 ; and The Portland Oregoman, April 20, 1972).
C-27
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These pellets may be used in conventional boilers as well as in other
combustion devices and dryers (Steffenson, 1973). Construction of a 40,000-
50,000 KW capacity electric generating plants, to be fueled by woodex (composed
of wood and agricultural waste), is scheduled for July 1980. The plant will be
located in Madera, California and is expected to begin operation in July 1981.
(Energy users Report No. 345). Homeowner use is increasing. A firm in Vermont
is currently developing a small gasification furnace using pellets for home
heating (Perham, 1979). Pellets have other uses besides as an energy source.
Nutrients may be added to densified bark or wood, which then serves as a
fertilizer medium. Addition of insecticides or fungicides to these pellets is
another possibility (ITF-FSU, October 5, 1977). Although a discussion of
pellet compost was directed at municipal refuse, this concept could probably
apply to wood waste as well (Fuller, 1966).
The production of briquets from charcoal is a potentially profitable
venture, as these briquets have found use in homes and especially in outdoor
recreational cooking. Charcoal has other uses, however, such as in the manu-
facture of carbon disulfide, carbon tetrachloride, sodiun cyanide, and other
industrial chemicals.
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C.2
NONPRODUCTIVE USES OF WOOD WASTE
This section discusses methods of wood waste disposal that do not
result in the production of a marketable product. Such methods include alter-
native incineration methods, burial of wastes, and residue reduction.
C.2.1 Other Incineration Methods
Alternatives to burning wastes in tepee burners are discussed by
Boubel and Walsh (1976). These includes fuel bin, multiple chamber, and open
pit or air curtain destructor systems. The fuel bin system differs from a
tepee burner in that it stores the wastes that are not being burned at a given
time. The multiple chamber system is the most efficient incinerator type, but
wastes must be reduced in size before use. Lastly, the air curtain destructor
has often been discussed as a replacement for the tepee burner. Problems
associated with this systan include inability to burn small-sized wastes and
unacceptable particulate emission (Hoyt, 1975).
Because the predominance of tepee burner systems in Montana at this
time may be due to favorable cost factors, it is likely that the use of other
systems will be more costly for some mills. This is especially true of the
multiple-chamber system that may cost 10 times as much as the tepee burner.
However, the reduction in incinerator size that is prompted by the fuel bin
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system may compensate for the additional costs of waste storage and increased
hours of operation necessary (Boubel and Walsh, February 1976).
Many of the air pollution problems associated with any incineration
system, including tepee burners, will be encountered with these systems also;
therefore, other disposal methods should be sought if air quality is to be
enhanced in Montana.
C.2.2 Burial of Wood Waste
Although burial of wood wastes solves the air pollutant emission
problem of tepee burners, this disposal method also has disadvantages and
environmental impacts. Pollution of the groundwater may occur, especially if
the wood waste is deposited below the water table (Sweet, 1975). Other
environmental effects to be considered include potential mechanical injury to
trees through disturbance and breakage of roots and subsequent increased sus-
ceptibility of the disturbed vegetation to fungus infections and other
diseases. The area that has been disturbed may become nonproductive if topsoil
is not properly replaced (Ward, 1976) and erosion may occur. Once the wood
waste is buried, decomposition, settling of the burial site, and the possible
production of methane gas must be considered (Evans, 1973).
Cost is another factor to be considered. Capital outlay may or may
not be necessary depending on whether the burial equipment is bought or rented.
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Either way, operating costs will include increased labor and perhaps equipment
rental. The tremendous volume of wood wastes generated, even if most were
disposed of in alternative ways, would entail progressively more distant
burial sites, resulting in increased transportation costs. This transport, as
well as the actual burial process, might further disturb the ecosystem.
Furthermore, burial is usually not possible in rocky areas or on steep ground
(Schinke, 1966). The winter stoppage might necessitate a large onsite storage
capacity, especially-™ areas such as Montana.
C.2.3 Residue Reduction
Perhaps the most obvious solution to the wood-waste problem would be
the reduction of the amount of sawmill residue produced. Such a trend has been
projected, due to technological advances in yarding systems, presence of log-
sorting centers, new pulping systems, and finer, more accurate sawing (Adams
and Smith, 1976). Dickerhoof (1975) has predicted advances in technology that
would accomplish a 23-percent decline in shavings volune and 36 percent in
sawdust volixne in the next 5-15 years, depending on the availabil ity of invest-
ment money.
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APPENDIX 0
A REVIEW OF THE LITERATURE ON
GOVERNMENTAL INCENTIVES THAT MIGHT BE USED TO ENCOURAGE
ALTERNATIVES TO BURNING WOOD WASTE IN TEPEE BURNERS
There are three broad alternatives that government at various levels
might use to create or reinforce desirable incentives concerning disposal of
wood residue in the forest industry. They are (1) employing governmental
programs that subsidize or otherwise encourage desired activities in the
industry, (2) altering the tax structure for producers or users of wood waste,
and (3) employing direct regulation to achieve desired results. All three
alternatives have a long history in various U.S. industries, and the literature
suggests that each has strengths and weaknesses in the forest industry. Rele-
vant aspects of this literature are reviewed under the following major
headi ngs:
o Possible incentives that can be created by governmental programs
o Possible incentives that can be created by changes in the tax
structure
o Possible incentives that can be created by regulatory activities
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D.l
POSSIBLE INCENTIVES CREATED WITH GOVERNMENTAL PROGRAMS
A vast amount of literature exists on ways in which government at
various levels can reach desirable public goals by spending money.* Those that
are plausible for encouraging desirable means of wood residue disposal are
discussed belcw.
D.l.l Direct Subsidies
First, direct subsidies to wood residue sellers, buyers, or
transporters might be considered. Such subsidies could be achieved in various
ways. The State government could purchase wood residue directly, perhaps for
subsequent use as an energy source or for other purposes. The current use of
wood residue to heat several State university campuses in Montana exemplifies
this approach. Or an appropriate governmental agency might pay for a portion
of the capital equipment that mills require to shift from tepee burners to more
desirable methods of disposal. Or the agency might undertake to pay a portion
of the transportation cost associated with moving wood residue from mill to
markets. Still another possibility is to guarantee the minimum market price at
which wood residue can be sold, much as the USDA does for many agricultural
products. Such strategies might be especially effective if the wood residue
*See, for example, discussions appearing in the 8rookings Institution series,
Setting National Priorities, published each year since 1971, which analyzes
the effects of the Federal budget on public policy objectives.
D-2
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market in question is just on the verge of being economically self-supporting.
In such situations, a public subsidy, perhaps even a small one, can be just
enough to assure that a market exists for the wood residue.
On the other hand, public subsidies such as this are often criticized
on grounds that (1) they represent an unfair use of govermiental buying power
on behalf of the "special recipients" who reap the resulting benefits; (2) they
run the risk of being permanent, rather than a temporary "priming of the pump;"
and (3) they interfere with the normal market place in ways that tend to
promote waste and inefficiency (Musgrave, 1973).*
0.1.2 Loan Guarantees
A second possibility is for the Federal or State government to offer
low interest capital improvement loans to target businesses. The U.S. Small
Business Adnim strati on (SBA), among other Federal agencies, has substantial
experience with this broad strategy. In particular, under its Regulatory/
Compliance and Small Business Energy Loan programs, SBA makes loans to
regulated industries that must meet the requirements of the Clean Air and Toxic
Substances Control Acts. This alternative is often desirable in situations
where the target business will be able to operate as desired once the initial
(but sometimes high) capital improvements are made. In the present
*A11 references appear in Appendix E.
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context, many small Montana mills now using tepee burners (or other forest
products manufacturers for that matter) can successfully produce marketable
products from-their wood wastes if they can purchase the necessary equipment.
In a time of high interest rates and tight money, the offer of low interest
loans (SBA's rate is currently 8*3 percent) might provide a substantial incen-
tive. Loan guarantees in such forms as the Industrial Revenue Bonds are a
variation of this strategy.
Experience with publicly subsidized loans suggests that if they are
to work effectively at reasonable cost to the public, several prerequisites
must be met so that they can achieve the desired end. They should not be
offered on such favorable terms that money in the capital market is diverted
from other desirable purposes. One of the most important prerequisites,
however, is subsequent viability. The demand for the product made available as
a result of the use of the loan (in the present case, marketable wood waste)
must be sufficiently high to assure the economic viability of the product once
the investment is made. In other words, public programs should never make
loans to a dying industry. Some have argued that low interest loans are
unnecessary except in times of natural disaster. If an investment is a good
one, runs this argument, the capital markets will find a way to fund it. If it
is not, the project will usually fail, with or without subsidized loans (Davie
and Duncombe, 1972).
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0.1.3 Market Creation Strategies
A third type of direct expenditure involves government programs to
assist in the creation of a market for the wood residue. An example of this
strategy is embodied in the proposal introduced by Montana Senator Melcher on
November 9, 1979 (Senate Bill 1996). This bill would "pay timber purchasers
for their costs in the removal and processing of wood residues from U.S.
National Forests to points of prospective use as fuel, or conversion to use as
industrial hydrocarbons, alcohols, petrochemical substitutes, or wood
products." Another example is the proposed U.S. Forest Service Young Adult
Conservation Corps, which, among other things, would improve access to
national forests for purposes of recovering marketable wood waste. Both these
initiatives focus on the supply side of the market. They seek to increase the
amount of wood waste available for marketable purposes. As such, their short
run effect might be to drive down the price of wood waste. But as wood-waste
fuels become increasingly competitive with petroleum fuels, the shift from the
latter to the former may accelerate among U.S. industries. The result could be
an even stronger market for wood waste (Bergvall et al., 1979).
0.1.4 Research and Development Projects
The fourth strategy involves funding research or demonstration
projects that develop or demonstrate the feasibility of some key aspect of the
market. For example, there are numerous such research and demonstration
projects being funded by government at all levels focusing on the conversion of
wood waste into gasohol. If successful in both technical and economic terms,
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such projects would promote the development of a strong market for wood
residue.
Historically, research and development (R&D) has been one of the most
successful and politically defensible uses of public money, particularly when
directed toward applied research projects. The advantages of such programs
usually cited are that they promote innovation by lowering the economic risk to
the private sector associated with new ventures and they allow experimentation
with technologies or production procedures that many industries could not
support long enough to prove (or disprove) their value. The principal criti-
cisms of such programs usually involve arguments over the desirable balance
between "basic" and "applied" research, and whether "sufficient" money is
allocated to projects that promise inmediate economic gain. It should be
possible to devise R&D projects focusing on wood residue uses that capitalize
on these advantages without suffering the disadvantages.
D.1.5 Information Gathering and Oissemination
A final strategy requires that the government fund information
gathering and dissemination programs aimed at benefiting buyers or sellers of
wood residue. Such programs would inform these buyers or sellers of the
existence of an emerging market for wood wastes, the availability of a new
technology that would make a market more competitive, the existence of new
government technical assistance programs designed to improve the market, the
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range of tax credit or subsidy programs available to business that deal in wood
wastes, or other such activities. The buyers or sellers of wood residue might
be so informed through goverrmentally sponsored pamphlets, "market fairs,"
statistical sunmaries of relevant business sectors, and the like. This
strategy can be quite effective, if well planned. It is subject to less
possible criticism than some of the other strategies, since it is comparatively
cheap and most people regard the dissemination of economic information as a
legitimate, highly desirable governmental activity.
D.2 POSSIBLE INCENTIVES CREATED BY CHANGES IN THE FEDERAL OR STATE TAX
LAWS
An equally vast literature exists on ways in which government can
encourage or discourage industry behavior through use of the tax system. Here
again, attention will focus on those methods that have potential value in the
Montana forestry industry.
D.2.1 Early Year Tax Reductions
Government could encourage the adoption of alternative methods of
disposing of wood residue by reducing or even eliminating an appropriate tax
paid by those wood producers who adopt environmentally sound disposal methods.
Both income and property taxes have been used this way, of course, for many
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years (Pechman, 1974). This incentive could be established for the first year
of the producer's changed operation, or it could be retained indefinitely if
necessary. Several methods have been used to reduce taxes. For example, the
tax could be reduced by the same percentage as the reduction in wood residue
burned in tepees during a given tax year. This method might provide an
especially effective incentive for small mills, which currently burn much of
their residue. Or the tax might be reduced by a fixed dollar amount per unit of
wood residue disposed of in an environmentally benign fashion. Other possibi-
1ities exist as well.
For this kind of incentive to be effective, the tax reduction must be
sufficiently large to offset substantially the cost to the mill owner incurred
in shifting to the desired alternative. Furthermore, the provision of the tax
law must be sharply focused so as to assure that the beneficiary cannot accept
the tax reduction without changing his activities. Sellers, buyers, or trans
porters of wood residue could be made eligible for appropriately designed tax
treatment.
0.2.2 Investment Incentives
An investment credit provision could be established for the target
industry (i.e., mills, wood residue transporters, even seme categories of wood
residue buyers, such as those who convert from oil to wood fired burners).
This tax credit would permit the deduction from taxable income of a portion (or
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even all) of the capital investment made by a business; such a deduction has
the effect of encouraging markets for wood residue. A variation of this
strategy, most appropriate for low income target industries, would permit the
investment cost to be credited against the tax actually due. Still another
variation would permit faster depreciation of capital equipment purchased to
dispose of wood residue in desirable ways, thereby reducing the tax burden
experienced by the target business during the life of the new equipment
(Pechman et al1977).
Certain user tax rates could be reduced as a means of reducing the
cost of operating within a particular market for wood residue. For example, a
reduction in the vehicle-weight-per-mile tax on truck transport in Montana
might improve the economic feasibility of moving wood residue to distant
markets by truck. User tax reductions are easier to target effectively against
particular impediments to market viability, such as the cost of truck trans-
portation for wood residue. The typical disadvantage of reducing user taxes is
that the revenue frcm such taxes is usually earmarked for the maintenance of
what is being used (e.g., State highways in Montana). The reduced revenue must
be made up for from other sources.
0.2.4 Product Tax Reductions
It might be possible to reduce the tax rates paid on products made
from wood residue as a means of increasing demand for them. By lowering the
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price of these products, such a tax reduction might encourage the demand for
them to rise, thereby expanding the market. For example, it might be possible
to exempt wood products from some or all State or local sales or excise taxes.
Another possibility is to reduce the per gallon tax on fuels blended with
alcohols made from wood waste.
D.2.5 Choosing Between Spending and Taxing Incentives
In terms of cost to the government involved, little choice exists
between a tax reduction and a program expenditure of identical dollar size.
For this reason, the term "tax expenditure" has come into cornnon use for
describing selective tax reductions (Pechman, 1978). However, the pattern of
incentives established by the two can differ. For example, the literature
points out that a tax reduction can often be of greater benefit to larger, more
well-to-do companies than to smaller, struggling ones for several reasons.
Larger companies often have access to greater expertise in interpreting the tax
laws. They frequently are more diversified and therefore may have more
opportunities to take advantage of a given incentive provision. They often are
better able to plan their activities on a multiyear basis, thereby taking more
complete advantage of those possible incentives that involve advance planning.
A second difference between program expenditures and tax reductions
is that tax reductions are less visible to the general public than are program
expenditures. If gaining sufficient political support for an incentive
0-10
-------
program is likely to be a problem, a tax reduction may be easier to enact than a
program expenditure, even if they result in exactly the same dollar drain on
the public treasury.
D.2.6 A Summary of the Incentive Strategies
Two tables summarize the possible strategies available to the State
of Montana. Table 0-1 summarizes the probable effects of the various
strategies on the incentives that operate in the forestry industry. These
effects are simmarized in terms of the extent of a given incentive:
o Improves expected economic rewards to the target industry
o Reduces risks to the industry in shifting away from tepee
burners
o Reduces the marketplace uncertainty inherent in such a shift
o Improves the industry's access to capital.
Table D-2 summarizes seme of the probable policy implications of each
incentive strategy in terms of four criteria. Included are simmary evaluations
of each strategy's effectiveness in:
D-11
-------
TA8LE 0-1
PR08A8LE EFFECTS OF VARIOUS STRATEGIES
ON INCENTIVES IN THE FORESTRY INDUSTRY
Probable Impact on Investment Decision
Process
Incentive-Creating Strategy
Improves
Expected
Reward to
Industry
Reduces
Project
Risks to
Industry
Reduces
Marketplace
Uncertainty
Improves
Access to
Capital
Front-end Incentives
Investment tax credit
P
S
-
S
Capital cost expensing
P
S
—
S
Accelerated depredation
P
S
—
S
Construction grant
P
S
—
P
Olrect loan
—
-
-
Purchase agreements
P
—
--
P
Loan guarantee
-
—
-
Production Incentives
Tax credit tied to
production levels
P
s
--
--
Price guarantee
—
P
—
Sales tax reduction
—
"
P
—
Property tax reduction
—
—
—
—
Other Incentives
Sponsoring R&D
-
—
P
—
Market information
dissemination
--
"
P
-
Legend: P » Primary impact
S * Secondary Impact
D-12
-------
TABLE 0-2
PROBABLE POLICY IMPLICATIONS OF INCENTIVE
CREATING STRATEGIES IN THE FORESTRY INOUSTRY
Incentive-Creating Strategy
ImpIies
Requires Promotes Offers Least Uncertain
Least Greatest Greatest Financial
Governmental Economic Public Exposure to
Involvement Efficiency Participation Government
Front-end Incentives
Investment tax credit
Capital cost expensing
Accelerated depreciation
Construction grant
Olrect loan
Purchase agreements
Loan guarantee
Production Incentives
Tax credit tied to
production levels
Price guarantee
Sales tax reduction
Property tax reduction
Other Incentives
Sponsoring R&D
Market Information
dissemination
M
M
M
L
L
L
M
M
L
M
M
M
M
M
H
H
H
M
M
H
M
M
Legend- H * High effectiveness
M ¦ Medium effectiveness
L * Low effectiveness
D-13
-------
o Requiring the least governmental involvement
o Promoting the greatest economic efficiency
o Offering the greatest breadth of public participation
o Implying the least uncertain governmental financial exposure
The conclusions represented in these tables are based solely on the literature
and are highly preliminary.
D.3 POSSIBLE INCENTIVES ASSOCIATED WITH REGULATORY ACTIVITIES
The principal regulatory tool available to the State of Montana to
reduce tepee burner emissions is Section 16-2.14(1)-S14030 of the Air Quality
Rules established under the Clean Air Act of Montana (revisions effective
July 1, 1979). This section governs wood-waste burners, and its applicable
provisions are quoted below:
16-2.14( P-S14030 WOOD-WASTE BURNERS
(1) Construction, reconstruction, or substantial alteration
of wood-waste burners is prohibited unless the requirements of
the permit rule, ARM 16-2.14(1)-S-1415 have been met.
(2) No person shall cause or authorize to be discharged into
the outdoor atmosphere from any wood-waste burner any emissions
which exhibit an opacity of twenty percent (20%) or greater
averaged over six (6) consecutive minutes.
0-14
-------
Remedies available under the Clean Air Act of Montana are contained in
Part 4 of the Act. Relevant portions of this part include:
Enforcement, Appeal, and Penalities
75-2-401. Enforcement
(1) When the department believes that a violation of this
chapter or a rule made under it has occurred, it may cause written
notice to be served personally or by registered or certified mail
on the alleged violator or his agent. The notice shall specify
the provision of this chapter or rule alleged to be violated and
the facts alleged to constitute a violation and may include an
order to take necessary corrective action within a reasonable
period of time stated in the order. The order becomes final
unless, within 30 days after the notice is received, the person
named requests in writing a hearing before the board. On receipt
of the request, the board shall schedule a hearing.
(2) If, after a hearing held under subsection (1) of this
section, the board finds that violations have occurred, if shall
either affirm or modify an order previously issued or issue an
appropriate order for the prevention, abatement, or control of
the emissions involved or for the taking of other corrective
action it considers appropriate. An order issued as part of a
notice or after a hearing may prescribe the date by which the
violation shall cease and prescribe time limits for particular
action in preventing, abating, or controlling the emissions. If,
after hearing on an order contained in a notice, the board finds
that no violation is occurring, it shall rescind the order.
(3) Instead of issuing the order provided for in subsection
(1), the department may either: (a) require that the alleged
violators appear before the board for a hearing at a time and
place specified in the notice and answer the charges complained
of; or (b) initiate action under 75-2-412 or 75-2-413.
(4) This chapter does not prevent the board or docunent from
making efforts to obtain voluntary compliance through warning,
conference, or any other appropriate means.
(5) In connection with a hearing held under this section,
the board may and on application by a party shall compel the
attendance of witnesses and the production of evidence on behalf
of the parties.
D-15
-------
If the alleged violator believes he has been unfairly judged, he may
seek legal relief at the conclusion of this process. The Act specifies the
procedures under which such actions may occur:
75-2-411. Judicial review
(1) A person aggrieved by an order of the board or local
control authority may apply for rehearing upon one or more of the
following grounds and upon no other grounds:
(a) the board or local control authority acted without
or in excess of its powers;
(b) the order was procured by fraud;
(c) the order is contrary to the evidence;
(d) the applicant has discovered new evidence,
material to him, which he could not with reasonable diligence
have discovered and produced at the hearing; or
(e) competent evidence was excluded to the prejudice
of the applicant.
(2) The petition must be in such form and filed in such time
as the board shall prescribe.
(3) (a) Within 30 days after the application for rehearing
is denied or, if the application is granted, within 30 days after
the decision on the rehearing, a party aggrieved thereby may
appeal to the district court of the judicial district of the State
which is the situs of property affected by the order.
(b) The appeal shall be taken by serving a written
notice of appeal upon the chairman of the board, which service
shall be made by the delivery of a copy of the notice to the
chairman and by filing the original with the clerk of the court to
which the appeal is taken. Immediately after service upon the
board, the board shall certify to the district court the entire
record and proceedings, including all testimony and evidence
taken by the board. Inrnediately upon receiving the certified
record, the district court shall fix a day for filing of briefs
and hearing argunents on the cause and shall cause a notice of the
same to be served upon the board and the appellant.
(c) The court shall hear and decide the cause upon the
record of the board. The court shall determine whether or not the
board regularly pursued its authority, whether or not the
findings of the board were supported by substantial competent
0-16
-------
evidence, and whether or not the board made errors of law pre-
judicial to the appellant.
(4) Either the board or the person aggrieved may appeal
from the decision of the district court to the supreme court. The
proceedings before the supreme court shall be limited to a review
of the record of the hearing before the board and of the district
court's review of that record.
0.3.1 Incentives Resulting From Regulatory Approaches
These provisions express a common regulatory approach to the
problem of bringing about changes in public behavior—that of proscribing
specific actions and bringing legal action against alleged offenders.
Although this approach cannot be avoided, the incentives that such an
approach engenders among those regulated should be recognized. The
literature argues that this approach gives the regulated industry incen-
tives to (1) avoid being detected violating environmental standards,
rather than searching for ways to meet them; (2) if detected, challenge the
action of the regulatory body in court; and (3) appeal decisions made
against it at each level of judicial review (Schultz, 1977).
The judicial review procedures outlined above are highly
#
desirable for assuring due process of law. However, they may also promote
a time-consuming legal struggle against the desired changes in industry
behavior as well as providing no positive incentive to adopt nonpol luting
behavior. For these reasons, direct regulation alone should be viewed as a
D-17
-------
last resort. It is most effective when used in conjunction with positive
incentives in a "carrot and stick" fashion.
D-18
-------
APPENDIX E
A LIST OF REFERENCES ON
WOOD RESIDUE TOPICS
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Its Reduction Through Marketing Practices." USDA-Forest Service, General
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Station.
Adkinson, V.J. June 1978. "The Economic and Social Effect of Hogged Fuel on
the Environment of Lane County, Oregon." Forest Products for Proceedings
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Commi ttee.
Allison, F.E. and M.S. Anderson. November 1951. "The Use of Sawdust for
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Anderson, A.8., A. Wong, and King-Tsuen Wu. January 1974. "Utilization of
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. July 1974. "Utilization of White-fir Bark and Its Extract in Particle-
Board." Forest Prod. J. 24(7) :40-45.
. August 1974. "Utilization of Ponderosa Pine Bark and Its Extract in
Particleboard." Forest Prod. J. 24(8):48-53.
Arola, R.A. 1975. "Loqqinq Residue; Fuel, Fiber or Both." ASAE Trans.
18(6):1027-31.
. November 1976. "Wood Fuel -- How Do They Stack Up?" Proceedings from
the Energy and the Wood Products Industry, FPRS #P-76-14, Atlanta, GA.
Atherton, G.H. and S.E. Corder. February 1969. "A Study of Wood and Bark
Residue Disposal in the Forest Products Industries." Preliminary report
to 55th Legislative Assembly.
Baker, A.J. and E.H. Clarke. 1976. "Wood Residue As An Energy Source --
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Industry Conference.
Baxter, H.O. (Compiler). "Summary of Research on Sawdust and Bark for Agricul-
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University of Georgia, Athens, GA.
E-l
-------
Bergmeir, R.E. and A.C. Bjergo. April 1972. "Ground 8ark for Bedding, the
First Phase of the Bitterroot Recycling Project." Proceedings from the
27th Annual Northwest Wood Products Clinic, Spokane, WA.
Bergvall, J.A., D.C. Bullington, L. Gee, January 1979. "Wood Waste for Energy
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of Representatives Committee on Natural Resources.
Bergvall, J.A., I. Gee, and W. Koss. January 1979. "Wood Waste for Energy
Study—Executive Sumnary." Prepared for State of Washington House of
Representatives, Committee on Natural Resources.
Blackman, T. (associate editor). February 1978. "Crude Oil from Wood Chips?
Test Plant Shows It's Pos-sible." Forest Industries 105(2):50-1.
Boubel, R.W.,M. Northcraft, A. VanVliet, and M. Popovich. 1958. "Wood Waste
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Experiment Station, Oregon State University, Circular No. 34.
Buongiorno, J. and R.A. Oliveira." 1977. "Growth of the Particleboard Share of
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Journal of Forest Research 7(2):383-391 -
Camran Corporation. November 1974. "A Proposal for Resource Recovery of
Logging Wastes in Region X Area."
Carpenter, E.M. 1977. "Secondary Wood Residue Production, Use and Potential
in the Twin City Area." USDA-Forest Service Research Paper NC-144. North
Central Forest Experiment Station.
Christensen, G.W. 1975. "Wood Residue Sources, Uses and Trends." Proceedings
from Wood Residue As An Energy Source, FPRS No. P-75-13, p. 39-41.
Clarke, E.H. and J.W. Henley. "Unused Mill Residuals May All Serve as Fuel."
Forest Industries 105(2):54-5.
Corder, S.E., G.H. Atherton, P.E. Hyde, and R.W. Bonlie. March 1970. "Wood
and Bark Residue Disposal in Wigwam Burners." Forest Research Laboratory,
Oregon State University, Bulletin 11.
Corder, S.A. February 1974. "Wood-Bark Residue is Source of Plant Energy."
Forest Industries 101(2):72-3.
-------
Currier, R.A. November 1971. "Physical Considerations." In Converting Bark
into Opportunities. Compiled by Antone C. Van Vliet. Proceedings oF
conference held March 8-9, Oregon State University Forest Products Depart-
ment.
. April 1972. "An Assessment of Current Bark Utilization Opportunities."
Proceedings from the 27th Annual Northwest Wood Products Clinic,
Spokane, WA.
Currier, R.A., and M.L. Laver. "Utilization of Bark Waste." Department of
Forest Products, Oregon State University, Terminal Progress Report, EPA
Grant No. R-EP 00276-04.
Currier, R.A. and W.F. lehmann. November 1971. "Bark As An Ingredient in
Molded Items, Particleboards, Adhesives and Other Products." In
Converting Bark into Opportunities. Compiled by Antone C. Van Vliet.
Proceedings of conference held March 8-9. Oregon State University Forest
Products Department.
Davie, B.F. and B.F. Duncombe. Pub!ic Finance, Holt, Rhinehart and Winston,
Inc., New York, 1972.
Dell, J. (editor). "A Status Report on Potential Use of Forest Residues for
Energy Production." Prepared by Aviation and Fire Management.
Dickerhoof, H.E. "Insulation Board, Hardboard and Particleboard Industries:
Past Acccmplishments, Future Problems and Opportunities." Forest Products
Journal 25(41):11-16.
. "Parti cl eboard Production, Markets and Raw Materials in the U.S."
Forest Products Journal 26(10):16-20.
. February 1977. "Parti cl eboard Production, Markets and Raw Material Use
in the Western U.S. as surveyed by U.S. Department of Agriculture."
Plywood and Panel.
Ellis, T.H. October 1975. "Should Wood Be a Source of Commercial Power?"
Forest Products Journal 25(10):13-16. Forest Products Laboratory,
Madison, WI.
__ . 1975. "The Role of Wood Residue in the National Energy Picture."
"Proceedings from Wood Residue as an Energy Source, FPRS No. P-75-13, p. 17-
20.
Enckson, J.R. "Harvesting of Forest Residues." AIChE SymDOSium Series
71( 146):2 7-29.
E-3
-------
Evans, R.S. July 1973. "Hogged Wood and Bark in British Colunbia Landfills."
Department of the Environment — Canadian Forest Service (Information
Report) UP-X-118.
Fahey, T.D. and E. Starostovic. April 1979. "Changing Resource Quality:
Impact on the Forest Products and Construction Industries." Forest Pro-
ducts Journal 29( 4):39—43.
Fuller, W.H. 1966. "New Organic Pelleted Compost." Ccmpost Science, Autunn-
Winter, p. 30.
Grantham, J.B. 1974. "Status of Timber Utilization on the Pacific Coast."
USDA-Forest Service, General Technical Report PNW-29. Pacific Northwest
Forest and Range Experiment Station. Portland, OR.
1976. "Energy Potential of Forest Residue." USDA-Forest Service,
Proceedings from the Northwest Forest Fire Council Annual Meeting, pp. 76-
79.
. February 1978. "Wood's Future Seems Directed to Energy Ahead of
Chemicals." Forest Industries 105(2):52-3.
Grantham, O.B. and T.H. Ellis. September 1974. "Potentials of Wood for
Producing Energy." J. Forestry 72(9):552-556. Forest Products
Laboratory, Madison, WI.
Grantham, J.B., E.M. Estep, J.M. Pierovich, H. Tarkow, and T.C. Adams. 1974.
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States. A Summary of a Preliminary Feasibility Investigation." USDA-
Forest Service, General Technical Report PNW-18. Pacific Northwest Forest
and Range Experiment Station, Portland, OR.
Halak, 8. August 1977. "COFI Backing Gasification Project." Bri tish Colimbia
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Haley, T.I. May 1971. "Wood Waste Fuel-Economics-Supply-Prospects-Prepara-
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Control Workshop, Olynpia, WA.
Hail, E.H. November 1976. "Comparison of Fossil and Wood Fuel s." Proceedings
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45. Atlanta, GA.
Harkin, J.M. November 1969. "Uses for Sawdust, Shavings and Waste Chips."
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Madi son, WI.
E-4
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Harkin, J.M. and J.W. Rowe. October 1969. "Bark and Its Possible Uses."
USDA-Forest Service, Research Note FPL-091. Forest Products Laboratory,
Madison, WI.
Hoda/n, R. February 1978. "Economical Energy Conversion Promised by Wood
Gasification." Forest Industries 1Q5(2):56.
Hoff, E.B. November 1976. "Handling of Forest Products Fuel." Proceedings
from the Energy and the Wood Products Industry, FPRS No. P-76-14, pp. 46-
48. Atlanta, GA.
Hokanson, A.E. andR.M. Rowell. 1977. "Methanol from Wood Waste: A Technical
and Economic Study." USDA-Forest Service, General Technical Report PL-
12, Forest Products Laboratory, Madison, WI.
Host, J.R. and D.P. Lowery. February 1970. "Potentialities for Using Bark to
Generate Steam Power in Western Montana." Forest Products Journal
20( 2): 35 -6.
. 1970. "Portable Debarking and Chipping Machines Can Improve Forestry
Practices." USOA-Forest Service, Research Note INT-112. Intermountain
Forest and Range Experiment Station, Ogden, UT.
Howlett, K. and A. Gamache. May 1977. "Silvicultural Biomass Farms. Volume
VI: Forest and Mill Residues as Potential Sources of Bicmass." Prepared
by Mitre Corp., METREK Division. For ERDA (Division of Solar Energy),
Contract No. EX-76-C-01-2081.
Hoyt, G.W. July 1975. "Air Curtain Destructors." Waste Age, pp. 37-43.
Inman, R.E. 1977. "Silvicultural Bicmass Farms. Volime I: Surmiary." METREK
Division, Mitre Technical Report No. 7347 - Vol. I. Sponsor: ERDA.
No. E (49-18)-2081. Project No. 2170, Department: W52.
Interim Task Force — Forest Slash Utilization. October 1977. "Minutes of
Alternative Uses Subcommittee." State of Oregon.
Johnson, R.C. July 1975. "Seme Aspects of Wood Waste Preparation for Use as
Fuel." Tappi 58(7):102-106.
Junge, D.C. November 1977. "Outline for Presentation to the Task Force on
Forest Slash Utilization." Portland, OR.
Kalish, J. August 1977. "Pros and Cons of TMP Discussed at Mechanical Pulping
Meeting." Pulp and Paper, pp. 107-111.
E-5
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Knapp, H.J. November 1976. "Potential of Industrial Wood Residue for Energy."
Proceedings: Energy and the Wood Products Industry.' FPRS No. P-76-14, pp.
105-107. Atlant a, GA.
Knudson, R.M., R.M.T. Stout and O.E. Rogerson. September 1978. "Plywood Glue
Extender From Particleboard Sander Dust." Forest Products Journal, p. 44.
lehmann, W.F. and H.E. Wahlgreen. 1978. "Status and Prospects of Residue
Utilization in Board Product Manufacture in the U.S. and Canada." Forest
Products Journal 28(7):24-29.
Lempicki, E.A., G.H. Pierson, and G. Niskala. October 1978. "Wood Residue
Utilization Program in New Jersey." Forest Products Journal 28(10):83-85.
Lowery, D.P., J.P. Krier, and J.R. Host. June 1977. "Bark Residues inWestern
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Forest and Range Experiment Station, Ogden, UT.
Maloney, T.M. August 1973. "Bark Boards from Four West Coast Softwood
Species." 1973. Forest Products Journal 23(8):30-38.
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Mater, Jean. January 1969. "How to Turn Bark into Dollars." 1969. Wood and
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. August 1971. "Utilization of Bark in Highway Landscaping." Forest
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Science 178(4061):599-602.
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Proceedings from Wood Residue As An Energy Source. FPRS No. P75-13, pp.
21-26. Denver, CO.
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tion and Utilization. Proceedings of Pulp and Paper Seminar, Chicago, IL.
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E-6
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Pechman, J.A., and B.A. Okner. 1974. Who Bears the Tax Burden? The Brookings
Institution, Washington, DC.
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Youngs, R. 1972. "Residue Utilization Research at Forest Products Labora-
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"Farmer (official publication of Forest Farmer Association, Atlanta, GA).
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E-8
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TECHNICAL REPORT DATA
{Pleas* /tad Insnvcnons on the reverse oejore comvlem%)
' E^Wl-80-001
2.
3. RECIPIENT'S ACCESSIOfPNO.
4. TITLs ANO SUBTITLE
S. REPORT OATE
May 15,1980
ECONOMIC ALTERNATIVES IO ru^EJi bURNI3\o rUK lHh DISPOSAL
OF WOOD RESIDUE IN MONTANA
S. PERFORMING ORGANIZATION COOS
76-00-056-2
7 AUTHOR(S)
a. performing organization report mo.
M. B. Harrington, P. 0. Tlemey, D. J. Moschandreas
GEOMET Report No. ESF-820
9 ?SRPORMING ORGANIZATION NAME ANO AOOR6SS
10. program element no.
GEDMET, Incorporated
15 Flrstfield Road
Gaithersburg, Maryland 20760
11 CONTRACT/GRANT NO.
68-01-4144, Task 6
12. SPONSORING AGENCY NAME ANO AOORESS
Air Quality Bureau, Department of Health & Environmental Sciences
State of Montana and U. S. Emrironmnetal Protection Agency,
Helena, Montana
13. TYPE OP REPORT AND PERIOD COVEREO
Final
14. SPONSORING AGENCY COOE
a»A/ Pegion VIII
13. SUPPLEMENTARY notes
16. ABSTRACT
During Che spring of 1980, there were still over 30 tepee burners operating within the State of Montana. Though these
burners are useful to sawmills still employing them, the burners are expensive Go operate, consistently violate Montana's
air quality rules, and are an extremely wasteful method for disposing of an increasingly valuable natural resource.
This study was conducted to determine the problems facing mills employing tepee burners that might prevent them
from shifting away from the burning of wood residues towards marketing them, and to determine steps that the State
of Montana and/or the U. S. Government might take to encourage that shift without levying an undue hardship on these
mills or the forest products Industry.
The major problem facing tepee burner mills, particularly smaller ones, is financing the capital equipment necessary
to make wood residue marketable. A secondary problem U transporting the wood residue to markets.
Several existing methods for solving the But problem exist. The U. S. Small Business Administration (SBA) offers
low interest loans In two of its programs that can assist small mills to make the necessary capital expenditures at feasible
return rates. Furthermore, it might be possible for the State of Montana to initiate a low interest loan program tailored
to the small sawmill's needs, using revenues from the Coal Severance Tax.
If additional startup assistance appears necessary, the State might also consider a short term tax rebate program
aimed at sawmills that phase out their burners and begin selling their wood residues, or an accelerated depreciation
schedule for mills purchasing the necessary capital equipment, or combinations thereof. These Incentive programs,
together with the rising for wood residue in Montana, indicate that it should be possible to phase out the tepee
burners in a way that eliminates the air pollution problem while improving the economic position of mills now using them.
17.
KSY WORQS ANO OOCUM6NT ANALYSIS
a. oescaiPTORs
b, 1CENT! PI6RS/OPEN ENOED TERMS
c. C3SAT1 F'eid/Group
Tepee Burners
Wood Residue
Lumber Mills
Waste Disposal
Combustion
Montana
19. QISTRI9UTION STATEMENT
19. SECURITY CLASS (Thu Riport)
UNCLASSIFIED
21 NO OP PAGES
134
RELEASE TO PUBLIC
20. SECURITY CLASS (Tha pagv)
UNCLASSIFIED
22. PRICE
SPA Form 2220-1 (9-73)
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