USDA FS Forest Products Laboratory (FPL)
One Gifford Pinchot Drive, Madison, WI 53726
While teaching the economics component of a logging engineering short course in New Zealand (1990), Ted began developing a financial model that could be used to calculate capital equipment costs based on discounted cash flows. The model provided more accurate answers and was far more flexible and powerful than what was then currently used in that industry. Ted has since modified the model and used it to analyze the economics of small-scale as well as large-scale biomass gasification, and the feasibility of extracting hemicellulose prior to pulping woodchips. He incorporated this latter work incorporated into the financial modeling component of the American Forest and Paper Association’s $2.5 million value prior to pulping program. As part of a team and working with engineers, they found that the economics of the process in thermo-mechanical pulping work because the additional conditioning of the chips to extract the hemicellulose means that less market kraft pulp needs to be added to make an acceptable pulp mixture, and the higher that kraft pulp prices go, the better the economics become. Ted also incorporated this financial modeling structure into a comprehensive model to analyze the economics of log sort yards.
On a different project, Ted worked with a forester and a forest consultant to develop a model to analyze the economics of managing a forest stand for carbon sequestration and enrolling the land in the Chicago Climate Exchange’s (CCE) carbon trading exchange. While the model they developed received publicity in the forestry press and was used to evaluate the costs and benefits of enrolling in the exchange, the CCE itself is no longer active.
This past work is highly relevant for the W2W project. Ted will use the equipment costing methodology that he developed and apply it to both the pre-harvesting equipment and to the processing equipment that will be developed as a part of the project. In tandem with this effort, he will work with a post-doc researcher to modify and adapt a carbon sequestration valuation model that he helped develop for the CCE, so that it will be able to determine the value of sequestering carbon with biochar on forest lands in California. This is important work since California’s carbon market legislation is the first of its kind in the United States and there are no models available to help facilitate carbon valuation and management. The model will be useful for the project to determine the value of biochar sequestered on forest land, but more broadly and generally it will enable landowners and consultants skilled in carbon sequestration management to more easily and quickly value the benefits of managing forest land for carbon.
The work his team will do will be combined with the market investigations being conducted elsewhere in the project to determine the overall economics of the processes. The economics work they do will also feed into the lifecycle work to help determine the overall long-term sustainability of the processes.