Market Status Report: Urban Wood

Table of Contents

Preface

I.  Introduction

II.  Supply of Urban Wood

III.  Demand for Urban Wood

• Biomass
• Other Markets

IV.  Primary Barriers

• Construction and Demolition Practices
• Disposal Costs
• Market Glut/Low Market Prices

V.  Strategies

I.  Introduction

This report primarily discusses urban wood. Although there is no regulator definition for urban wood waste, it is general accepted to be wood that includes pieces generated during the manufacture or processing of wood products; the harvesting or processing of raw woody crops; the wood debris from construction, demolition, and renovation activities; and wood used in packaging and transportation, such as pallets. Urban wood waste excludes green waste, such as tree trimmings, grass clippings, brush, leaves, and weeds (these materials are addressed in the "Compost" Paper). The wood waste generated during the land clearing portion of large construction operations is often included in this definition. The wood being quantified in this section essentially encompasses the wood waste that enters, or potentially could enter, the municipal waste stream. This material has also been called "nonyard wood waste."

Due to inconsistencies in defining and quantifying this material, accurate figures on urban wood waste generation, disposal, and diversion tonnages are not available. However, estimates of the quantities of urban wood waste have been compiled by various sources. They can be used to outline general industry trends and general waste flows.

The California Integrated Waste Management Board (CIWMB) compiled available data on wood waste generation taken from draft "source reduction and recycling elements" (SRRE) submitted by local jurisdictions in 1990. The information in that database estimates that 3,797,655 tons per year of urban wood waste entered the California waste stream, or approximately 9 percent of the total waste stream. Of that amount, 88 percent, or 3,350,185 tons per year were landfilled, while the remaining 447,470 tons were diverted.

The tonnages of wood waste listed above should not have included material sent to biomass facilities or other transformation facilities permitted by the CIWMB. However, some jurisdictions may have included such materials in their reports.

Another supply of wood waste that was not quantified in the SRREs was wood that was disposed in wood-only landfills (wood monofills). As this material does not enter the municipal waste stream, it will not affect overall quantities and will not be discussed further in this report.

II.  Supply of Urban Wood

As indicated in the introduction, almost 4 million tons of urban wood waste enters the California municipal wastestream annually. In 1995 an additional 900,000 tons of urban wood waste was consumed by biomass plants in California.

Of the 4 million tons of urban wood entering the wastestream, the majority comes from two sources: wood waste from activities related to construction, demolition, and renovation; and wood (such as pallet wood) used to package and transport goods. Thus, the vast majority of urban wood waste is generated in the state's large urban centers.

Statistics on the generation, collection, and disposal of wood waste by region are shown in the following table.

Again, the amounts should not include wood waste resulting from logging and milling operations and wood waste going to biomass plants for the production of energy and steam.

Wood Waste Generated by Economic Region (based on information in draft SRREs)

Note that 65 percent of the urban wood waste entering the municipal waste stream originated from the Greater Los Angeles and San Francisco Bay regions.

The regional supply trends should remain consistent for at least the short term, as the supply center for urban wood waste will continue to be the most densely populated areas. However, the overall supply of wood waste should remain high or increase in the near future.

Several factors may affect the potential increase in wood waste generation and disposal. The overall generation of wood waste can be loosely tied to the construction and demolition industries (the largest contributors). These industries, along with shipping and manufacturing, flourish with the overall growth of the population and local and national economies. If the California economy grows, wood waste generation will increase.

The primary factors affecting the amounts of wood waste disposed include low landfill tipping fees and an overall glut in the processed wood waste market. The primary cause of the market glut is based on the fact that processed wood waste continues to be produced while a primary market, biomass fuel, has diminished over the past few years.

III.  Demand for Urban Wood

By far, the largest market for wood waste in California has been as feedstock for fuel in the biomass industry. Lesser markets include wood waste ground for mulch and bedding, feedstocks for fiberboard manufacture, and salvaging whole pieces for reuse and remilling.

Biomass

The biomass industry represents the largest market for processed urban wood waste and material from logging, agriculture, and other sources of wood waste that do not traditionally landfill their waste.

In the 1980s the biomass industry experienced rapid growth in California, fostered by the Public Utilities Regulatory Policies Act of 1978 (PURPA), which promoted renewable energy sources. Facilities that used renewable fuels, such as biomass, and met other criteria qualified for guaranteed contracts at higher energy and power prices than traditional nonrenewable energy facilities.

Many of the contracts held by the biomass plants have reached the end of the ten-year guaranteed contract period. The economics of the new contracts often do not justify continued operation of these facilities. As a result, many plants are closing or curtailing operations. This has resulted in a significant downsizing of the wood waste fuel market and has created the current glut in the market. The current consumption of wood waste by the biomass industry has shrunken to about half its peak of three years ago. The latest figures available are from 1994. This data was provided by the biomass and wood processing industries. At the time the data was compiled, 11 biomass plants, which consumed almost 700,000 tons of urban wood waste, had already ceased operations. The latest data indicates approximately 19 plants are still in operation, consuming about 900,000 tons of urban wood waste per year.

Other Markets

The smaller markets for wood waste represented by fiberboard and particle board (engineered wood) manufacturers and mulch producers have maintained their current markets, but are not large enough to offset the downsizing of the biomass industry. Construction waste represents the most likely source of wood waste feedstock for the engineered wood industry due to its need for clean, homogenous wood. Mixed wood waste generally is not adequate for fiberboard manufacture due to its inconsistent make up. However, advances in sorting and processing techniques may open this market for other wood waste.

Wood waste processors will continue to produce mulch and compost as the market demands. However, there is no accurate data on the current markets at this time. Therefore, it is impossible to determine the current market demands or the appropriate methods to address those demands.

It should be noted that the majority of the 100 or so established wood waste processors in the state sold at least a portion of their end product to the biomass industry. As a result, the shrinking biomass industry will certainly cause closures in the wood waste processing industry and reduce the processing capabilities in the state. No other new markets have surfaced to consume the vast majority of wood waste currently being landfilled.

Discussions with industry representatives stressed that there are numerous niche markets for wood that either reuse the component in its original intent, or craft smaller wood pieces into value-added commodities. Although these businesses are quite small individually, they can represent a significant share of the market when they are combined.

Other potential markets for wood waste that may warrant further investigation include the paper pulping industry, export markets, and methanol/ethanol production. Although the current economics of some of these markets may not be favorable, they are worth mentioning for future reference.

IV.  Primary Barriers

The primary barriers to reusing and processing urban wood waste include the current wasteful practices that generate the material, the relatively low disposal costs for wood waste, the time limitations to hand deconstruction, and a diminishing market for the processed material.

Construction and Demolition Practices

The majority of construction and demolition contractors are generally unaware of wood waste diversion opportunities and the possible economic opportunities that they present. In some instances, local wood waste processors offer drop box services or are willing to accept construction wood waste at no or reduced tipping fees, and the contractor saves the avoided disposal costs. But this practice is not widespread, being limited to the influence of regional biomass facilities, or to a lesser extent, the local particle board manufacturer that purchase the wood waste.

Demolition wood waste however, represents a much larger portion of the municipal waste stream. It is, however, far more difficult to recycle, since wood in demolition debris is commingled with other wastes. The quickest and most common way to demolish a building is through heavy equipment use. This tends to break up and mix the materials that formed the structure, thereby increasing the costs to separate and process the wood. Hand demolition techniques offer an alternative that recovers a much higher percentage of the material; however, time constraints often limit this option. Furthermore, workers must be skilled in deconstruction techniques to make this approach cost-effective.

Disposal Cost

California landfill tipping fees average about $30.00 per ton. Such relatively low disposal costs act as a disincentive to reuse and recycle wood. Economic alternatives need to be evaluated and publicized. If it is currently cheaper to haul wood waste to a landfill than separate, process, and transport it to markets, there is little or no incentive for a generator of wood waste to consider alternatives to disposal.

Market Glut/Low Market Price

The wood waste market is currently glutted with processed material. The overabundance of processed material, compounded by the continual decline of the biomass fuels segment of the market, results in depressed prices, making further collection uneconomical. If the current market trends continue, many of the wood waste processors currently operating will go out of business.

The market glut and low market price for processed wood waste are being exacerbated by the possibility of deregulation of the state's public utilities. The California Public Utilities Commission has been evaluating several scenarios of deregulation of the state's public utilities since 1994 and a decision is not likely this year. This uncertainty in the final form of deregulation has served as an incentive for several of the biomass plants to accept buy-out offers of existing contracts and curtail operations. This has expedited the downsizing of the biomass market for wood waste. Until the final form of deregulation is decided, this trend towards diminished wood waste markets will likely continue.

V.  Strategies

A variety of market forces determine the health and growth of the wood waste market. As such, the CIWMB has little influence on the overall wood waste market. The CIWMB's primary role in assisting markets should be in supporting operations that process wood waste and consume processed wood waste products in order to divert this material from permitted disposal facilities.

The CIWMB should support legislation which increases demand for processed wood waste which would reduce that reaching disposal foster existing markets. The most influential legislation currently being proposed is Assembly Bill (AB) 1202. This bill would require 1.8 percent of all electricity generated in California to be purchased from biomass plants. As the entire capacity of the biomass industry is estimated at 1.5 to 2 percent of the electric energy produced, the passage of this bill would support the biomass industry in California and ensure that at least the current market for wood waste endures. The CIWMB should continue to actively support AB 1202.

The CIWMB should continue to investigate and support additional forms of wood waste reuse and efforts to process wood waste for higher-order uses such as engineered wood production. Further study is needed to determine the viability of using urban wood waste as a feedstock for the manufacture of particle board and fiberboard as well as a source of fiber for pulping mills. These present the only current alternatives to biomass consumption at this time.

The CIWMB should continue to evaluate and encourage diversion and reuse practices in addition to market assistance.

The CIWMB should network with wood processors and large construction firms to encourage reuse of wood waste, an easily recovered material. This can be achieved through the current programs established at the CIWMB including the Construction and Demolition Program, the R-Team, the RMDZ Loan Program, and the Buy Recycled Program. These programs should continue their current effort with possible emphasis on operations that target priority materials and recycling strategies.

Education is needed to show local contractors the economic advantages of either separating the waste on site or using a local wood waste processor as a "disposal" option. Also, in order to recycle greater percentages of demolition wood waste, efforts need to be focussed on educating demolition contractors about deconstruction techniques which will allow them to produce materials for eventual reuse. This can be accomplished by examining successful and profitable operations and documenting them. The information can then be disseminated in fact sheets and case studies to other contractors and operations throughout the State.

The CIWMB should continue its efforts in documenting and publicizing deconstruction techniques that salvage wood for reuse. The information can be distributed by mailings of fact sheets and case studies to trade associations, local enforcement agencies, and specific targeted groups. This information can also be posted on the CIWMB's web site on the Internet.

There is currently very little information regarding new or alternative markets for wood waste. If the CIWMB concludes that alternative markets for wood waste represents a significant potential for consuming this material, further study is needed. The studies might include evaluating operations and techniques used to recover materials generated from construction and demolition activities as well as material recovery facility techniques that economically remove wood waste from mixed demolition materials. The studies should also include the evaluation of potential markets available for the processed wood waste.

Low disposal costs continue to be a major barrier to diversion. With low disposal costs, there is no incentive for wood waste generators to pursue any other options beyond landfill disposal. The options available to the CIWMB to change these economics include landfill bans on wood waste, increases in tipping fees, and assessing strategies to reduce hauling, processing, and manufacturing costs. As tipping fee increases and landfill bans are not viable at this time, methods need to be developed to reduce recycling costs to allow these operations to compete with low disposal costs.

1996 Market Development Plan

Last updated: November 01, 2007