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Testimony:

Before the Subcommittee on Forests and Forest Health, Committee on 
Resources, House of Representatives:

United States Government Accountability Office:

GAO:

For Release on Delivery Expected at 2:00 p.m. EDT:

Tuesday, May 24, 2005:

Natural Resources:

Federal Agencies Are Engaged in Numerous Woody Biomass Utilization 
Activities, but Significant Obstacles May Impede Their Efforts:

Statement of Robin M. Nazzaro, Director, Natural Resources and 
Environment:

GAO-05-741T:

GAO Highlights:

Highlights of GAO-05-741T, a testimony before the Subcommittee on 
Forests and Forest Health, Committee on Resources, House of 
Representatives:

Why GAO Did This Study:

In an effort to reduce the risk of wildland fires, many federal land 
managers--including the Forest Service and the Bureau of Land 
Management--are placing greater emphasis on thinning forests and 
rangelands to help reduce the buildup of potentially hazardous fuels. 
These thinning efforts generate considerable quantities of woody 
material, including many smaller trees, limbs, and brush--referred to 
as woody biomass--that currently have little or no commercial value. 

GAO was asked to determine: (1) which federal agencies are involved in 
efforts to promote the use of woody biomass, and the actions they are 
undertaking; (2) how these agencies coordinate their activities; and 
(3) what the agencies see as obstacles to increasing the use of woody 
biomass, and the extent to which they are addressing the obstacles. 
This testimony is based on GAO's report Natural Resources: Federal 
Agencies Are Engaged in Various Efforts to Promote the Utilization of 
Woody Biomass, but Significant Obstacles to Its Use Remain (GAO-05-
373), being released today. 

What GAO Found:

Most woody biomass utilization activities are implemented by the 
Departments of Agriculture (USDA), Energy (DOE), and the Interior, and 
include awarding grants to businesses, schools, Indian tribes, and 
others; conducting research; and providing education. Most of USDA's 
woody biomass utilization activities are undertaken by the Forest 
Service and include grants for woody biomass utilization, research into 
the use of woody biomass in wood products, and education on potential 
uses for woody biomass. DOE's woody biomass activities focus on 
research into using the material for renewable energy, while Interior's 
efforts consist primarily of education and outreach. Other agencies 
also provide technical assistance or fund research activities. 

Federal agencies coordinate their woody biomass activities through 
formal and informal mechanisms. Although the agencies have established 
two interagency groups to coordinate their activities, most officials 
we spoke with emphasized informal communication--through e-mails, 
participation in conferences, and other means--as the primary vehicle 
for interagency coordination. Internally, DOE coordinates its woody 
biomass activities through its Office of Energy Efficiency and 
Renewable Energy, while Interior and the Forest Service--the USDA 
agency with the most woody biomass activities--have appointed officials 
to oversee, and have issued guidance on, their woody biomass 
activities. 

The obstacles to using woody biomass cited most often by agency 
officials were the difficulty of using woody biomass cost-effectively 
and the lack of a reliable supply of the material; agency activities 
generally are targeted toward addressing these obstacles. Some 
officials told us their agencies are limited in their ability to 
address these obstacles and that incentives--such as subsidies and tax 
credits--beyond the agencies' authority are needed. However, others 
disagreed with this approach for a variety of reasons, including the 
concern that expanding the market for woody biomass could lead to 
adverse ecological consequences if the demand for woody biomass leads 
to excessive thinning. 

Kiosk Constructed from Small-Diameter Wood:

[See PDF for image]

[End of figure]

What GAO Recommends:

In its report, GAO recommended that the Secretary of Agriculture direct 
the Chief of the Forest Service to appoint an official or organization 
responsible for overseeing and coordinating the agency's woody biomass 
activities. The Forest Service has done so. 

www.gao.gov/cgi-bin/getrpt?GAO-05-741T. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Robin M. Nazzaro at (202) 
512-3841 or nazzaror@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss federal agency efforts to 
increase the utilization of woody biomass. As you know, federal land 
management agencies--including the Forest Service in the Department of 
Agriculture (USDA) and the Bureau of Land Management (BLM) in the 
Department of the Interior--continue to focus on the threat that 
wildland fire poses to our nation's communities and ecosystems. In 
addressing this threat, agencies are placing greater emphasis on 
thinning forests and rangelands to help reduce the buildup of 
potentially hazardous fuels. These thinning efforts will generate 
considerable quantities of woody material, including some larger trees 
that are commercially valuable timber and many smaller trees, limbs, 
and brush that generally have little or no commercial value today. This 
low commercial value material is often referred to as woody 
biomass.[Footnote 1]

Unlike commercial timber, this material typically has been piled and 
burned, left in the forest, or deposited in landfills because there is 
often little or no demand for it. Some industries make use of this 
woody biomass, however--for example, by burning it to generate 
electricity or turning it into products such as road signs or animal 
bedding. Using woody biomass in these and other ways can have several 
beneficial side effects, including stimulating local economies and 
potentially facilitating fuel reduction efforts by creating a demand 
for thinned material. However, the cost of harvesting and transporting 
the material, combined with the relatively low value of the products 
produced, has meant that woody biomass has not been widely utilized. 

My testimony today summarizes the findings of our report being released 
today that discusses federal agency activities to promote woody biomass 
utilization, agency efforts to coordinate their activities, and the 
primary obstacles that agencies believe are standing in the way of 
increased woody biomass utilization.[Footnote 2] This report is based 
on our interviews of officials from a wide range of federal and 
nonfederal organizations, including the Departments of Agriculture, 
Commerce, Energy, the Interior, and Transportation, as well as various 
agencies within these departments; state governments; Indian tribes; 
environmental organizations; academia; and others. We also reviewed 
agency documents, federal and nonfederal studies of woody biomass 
utilization issues, and pertinent laws and other documents. 

Summary:

Most woody biomass utilization activities within the federal government 
are being undertaken by USDA, the Department of Energy (DOE), and the 
Department of the Interior and include awarding grants to businesses, 
schools, Indian tribes, and others; conducting research; and providing 
education and outreach. Some of these activities involve multiagency 
efforts--for example, the three departments signed an agreement in 2003 
to support the utilization of woody biomass, and USDA and DOE jointly 
award grants for biomass research and development. Each department also 
carries out its own activities. 

Federal agency efforts to coordinate their woody biomass utilization 
activities, both among and within agencies, occur through both formal 
and informal mechanisms. Although the departments have established an 
interagency group to coordinate their activities, most agency officials 
we spoke with emphasized informal communication--such as telephone 
discussions, e-mails, participation in conferences, and other means-- 
rather than this group as the primary vehicle for interagency 
coordination. Regarding internal woody biomass activities, DOE 
coordinates its activities through its Office of Energy Efficiency and 
Renewable Energy, while both Interior and the Forest Service--the USDA 
agency with the most woody biomass activities--have appointed officials 
to oversee their woody biomass activities and have issued guidance on 
these activities. 

Agency officials cited two principal obstacles to increasing the use of 
woody biomass: the inherent difficulty in using woody biomass cost- 
effectively, in large part because of the relatively high costs of 
harvesting and transporting it, and the lack of a reliable supply of 
the material. And although agency activities are generally targeted 
toward these obstacles and others identified by agency officials, some 
officials told us that additional steps that are beyond the agencies' 
authority to implement--such as subsidies or tax credits to offset the 
costs involved in using woody biomass--are needed. Other officials 
disagreed with this view, however, stating that neither subsidies nor 
tax credits were appropriate mechanisms for promoting the use of woody 
biomass and that such incentives could have adverse, unintended 
consequences on the ecological health of the national forests. 

Background:

The Forest Service and Interior collectively manage about 700 million 
acres of federal land, much of which is considered to be at high risk 
of fire. Federal researchers estimate that from 90 million to 200 
million acres of federal lands in the contiguous United States are at 
an elevated risk of fire because of abnormally dense accumulations of 
vegetation, and that these conditions also exist on many nonfederal 
lands. Addressing this fire risk has become a priority for the federal 
government, which in recent years has significantly increased funding 
for fuels reduction. Fuels reduction is generally done through 
prescribed burning, in which fires are deliberately lit in order to 
burn excess vegetation, and mechanical treatments, in which mechanical 
equipment is used to cut vegetation. 

Although prescribed burning is generally less expensive on a per-acre 
basis than mechanical treatment, prescribed fire may not always be the 
most appropriate method for accomplishing land management objectives-- 
and in many locations it is not an option, because of concerns about 
smoke pollution, for example, or because vegetation is so dense that 
agency officials fear a prescribed fire could escape and burn out of 
control. In such situations, mechanical treatments are required, 
generating large amounts of wood--particularly small-diameter trees, 
limbs, brush, and other material that serve as fuel for wildland 
fires.[Footnote 3]

Woody biomass can be used in many ways. Small logs can be peeled and 
used as fence posts, or can be joined together with specialized 
hardware to construct pole-frame buildings. Trees also can be milled 
into structural lumber or made into other wood products, such as 
furniture, flooring, and paneling. Woody biomass also can be chipped 
for use in paper pulp production and for other uses--for example, a New 
Mexico company combines juniper chips with plastic to create a 
composite material used to make road signs--and can be converted into 
other products such as ethanol and adhesives. Finally, woody biomass 
can be chipped or ground for energy production in power plants and 
other applications. 

Citing biomass's potential to serve as a source of electricity, fuel, 
chemicals, and other materials, the President and the Congress have 
encouraged federal activities regarding biomass utilization--but until 
recently, woody biomass received relatively little emphasis. Major 
congressional direction includes the Biomass Research and Development 
Act of 2000, the Farm Security and Rural Investment Act of 2002, the 
Healthy Forests Restoration Act of 2003, and the American Jobs Creation 
Act of 2004. Utilization of woody biomass also is emphasized in the 
federal government's National Fire Plan, a strategy for planning and 
implementing agency activities related to wildland fire management. For 
example, a National Fire Plan strategy document cites biomass 
utilization as one of its guiding principles, recommending that the 
agencies "employ all appropriate means to stimulate industries that 
will utilize small-diameter woody material resulting from hazardous 
fuel reduction activities."[Footnote 4] Federal agencies also are 
carrying out research concerning the utilization of small-diameter wood 
products as part of the Healthy Forests Initiative, the 
administration's initiative for wildland fire prevention. 

Most Woody Biomass Utilization Activities Are Implemented by the 
Departments of Agriculture, Energy, and the Interior and Include 
Grants, Research, and Education:

Most of the federal government's woody biomass utilization efforts are 
being undertaken by USDA, DOE, and Interior. While some activities are 
performed jointly, each department also conducts its own activities, 
which generally involve grants for small-scale woody biomass projects; 
research on woody biomass uses; and education, outreach, and technical 
assistance aimed at woody biomass users. 

Some Woody Biomass Activities Are Performed Jointly by Multiple 
Agencies:

USDA, DOE, and Interior have undertaken a number of joint efforts 
related to woody biomass. In June 2003, the three departments signed a 
memorandum of understanding on woody biomass utilization, and the 
departments sponsored a 3-day conference on woody biomass in January 
2004. The departments also have established an interagency Woody 
Biomass Utilization Group, which meets quarterly to discuss relevant 
developments and to coordinate departmental efforts. 

Another interdepartmental collaboration effort is the Joint Biomass 
Research and Development Initiative, a grant program conducted by USDA 
and DOE and authorized under the Biomass Research and Development Act 
of 2000. The program provides funds for research on biobased products. 
DOE also has collaborated with both USDA and BLM on assessment of 
biomass availability, while USDA and Interior have entered into a 
cooperative agreement with the National Association of Conservation 
Districts to promote woody biomass utilization.[Footnote 5]

USDA, DOE, and Interior also participate in joint activities at the 
field level. For example, DOE's National Renewable Energy Laboratory 
(NREL) and the Forest Service have collaborated in developing and 
demonstrating small power generators that use woody biomass for fuel. 
The Forest Service also collaborates with Interior in funding and 
awarding grants under the Fuels Utilization and Marketing program, 
which targets woody biomass utilization efforts in the Pacific 
Northwest. The agencies also collaborate with state and local 
governments to promote the use of woody biomass--for example, the 
Forest Service, NREL, and BLM entered into a memorandum of 
understanding with Jefferson County, Colorado, to study the feasibility 
of developing an electricity-generating facility that would use woody 
biomass. 

USDA's Efforts Related to Woody Biomass Utilization Are Concentrated in 
the Forest Service, with Some Efforts Under Way in Other USDA Agencies:

Most of USDA's woody biomass utilization activities are undertaken by 
the Forest Service and involve grants, research and development, and 
education, outreach, and technical assistance. The Forest Service 
provides grants through its Economic Action Programs, created to help 
rural communities and businesses dependent on natural resources become 
sustainable and self-sufficient. The Forest Service also has created a 
grant program in response to a provision in the Consolidated 
Appropriations Act for Fiscal Year 2005, which authorized up to $5 
million for grants to create incentives for increased use of biomass 
from national forest lands. Two other USDA agencies--the Cooperative 
State Research, Education and Extension Service (CSREES) and USDA Rural 
Development--maintain programs that could include woody biomass 
utilization activities. CSREES oversees the Biobased Products and 
Bioenergy Production Research grant program and the McIntyre-Stennis 
grant program, which provides grants to states for research into 
forestry issues under the McIntyre-Stennis Act of 1962. Within USDA 
Rural Development, the Rural Business-Cooperative Service oversees a 
grant program emphasizing renewable energy systems and energy 
efficiency among rural small businesses, farmers, and ranchers, and the 
Rural Utilities Service maintains a loan program for renewable energy 
projects. 

Forest Service researchers are conducting research into a variety of 
woody biomass issues. Researchers have conducted assessments of the 
woody biomass potentially available through land management projects 
and have developed models of the costs and revenues associated with 
thinning projects. Researchers also are studying the economics of woody 
biomass use in other ways; one researcher, for example, is beginning an 
assessment of the economic, environmental, and energy-related impacts 
of using woody biomass for power generation. The Forest Service also 
conducts extensive research, primarily at its Forest Products 
Laboratory, into uses for woody biomass, including wood-plastic 
composites and water filtration systems that use woody biomass fibers, 
as well as less expensive ways of converting woody biomass to liquid 
fuels. 

In addition, the Forest Service conducts extensive education, outreach, 
and technical assistance activities. Much of this activity is conducted 
by the Technology Marketing Unit (TMU) at the Forest Products 
Laboratory, which provides woody biomass users with technical 
assistance and expertise in wood products utilization and marketing. 
Forest Service field office staff also provide education, outreach, and 
technical assistance, and each Forest Service region has an Economic 
Action Program coordinator who has involvement in woody biomass issues. 
For example, one such coordinator organized a "Sawmill Improvement 
Short Course" designed to provide information to small-sawmill owners 
regarding how to better handle and use small-diameter material. The 
Forest Service also has partnerships with state and regional entities 
that provide a link between scientific and institutional knowledge and 
local users. 

DOE Is Engaged Primarily in Biomass Research and Development Activities:

Most of DOE's woody biomass activities are overseen by its Office of 
the Biomass Program and focus primarily on research and development, 
although the department does have some grant and technical assistance 
activities. DOE's research and development activities generally address 
the conversion of biomass, including woody biomass, to liquid fuels, 
power, chemicals, or heat. Much of this work is carried out by NREL, 
where DOE recently opened the Biomass Surface Characterization 
Laboratory. DOE also supports research into woody biomass through 
partnerships with industry and academia. Program management activities 
for these partnerships are conducted by DOE headquarters, with project 
management provided by DOE field offices. 

In addition to its research activities, DOE provides information and 
guidance to industry, stakeholder groups, and users through 
presentations, lectures, and DOE's Web site, according to DOE 
officials. DOE also provides outreach and technical assistance through 
its State and Regional Partnership, Federal Energy Management Program 
(FEMP), and Tribal Energy Program. FEMP provides assistance to federal 
agencies seeking to implement renewable energy and energy efficiency 
projects, while the Tribal Energy Program provides technical assistance 
to tribes, including strategic planning and energy options analysis. 

DOE's grant programs include (1) the National Biomass State and 
Regional Partnership, which provides grants to states for biomass- 
related activities through five regional partners; and (2) the State 
Energy Program, which provides grants to states to design and carry out 
their own renewable energy and energy efficiency programs. In addition, 
DOE's Tribal Energy Program provides funds to promote energy 
sufficiency, economic development, and employment on tribal lands 
through renewable energy and energy efficiency technologies. 

Interior's Woody Biomass Activities Include Education, Outreach, and 
Some Grant Programs:

Interior's activities include providing education and outreach and 
conducting grant programs, but they do not include research into woody 
biomass utilization issues. Four Interior agencies--BLM, the Bureau of 
Indian Affairs (BIA), Fish and Wildlife Service (FWS), and National 
Park Service (NPS)--conduct activities related to woody biomass. These 
agencies conduct education, outreach, and technical assistance, but not 
to the same degree as the Forest Service. For example, BIA provides 
technical assistance to tribes seeking to implement renewable energy 
projects, and while FWS and NPS conduct relatively few woody biomass 
utilization activities, in some cases the agencies will work to find a 
woody biomass user nearby if a market exists for the material. Interior 
plans to expand its outreach efforts by using the National Association 
of Conservation Districts, with which it signed a cooperative 
agreement, to conduct outreach activities related to woody biomass. And 
while Interior's grant programs generally do not target woody biomass, 
BIA has provided some grants to Indian tribes, including a 2004 grant 
to the Confederated Tribes of the Warm Springs Reservation in Oregon to 
conduct a feasibility study for updating and expanding a woody biomass- 
fueled power plant. 

Several Other Federal Agencies Participate in Woody Biomass Activities:

Several other federal agencies are engaged in limited woody biomass 
activities through their advisory or research activities. The 
Environmental Protection Agency provides technical assistance, through 
its Combined Heat and Power Partnership, to power plants that generate 
combined heat and power from various sources, including woody biomass. 
Three other agencies--the National Science Foundation, Office of 
Science and Technology Development, and Office of the Federal 
Environmental Executive--also are involved in woody biomass activities 
through their membership on the Biomass Research and Development Board, 
which is responsible for coordinating federal activities for the 
purpose of promoting the use of biobased industrial products. 

Woody Biomass Coordination Efforts among and within Federal Agencies 
Include Both Formal and Informal Mechanisms, and the Forest Service, 
DOE, and Interior Have Assigned Responsibility for Overseeing Woody 
Biomass Activities:

Two groups serve as formal vehicles for coordinating federal agency 
activities related to woody biomass utilization. One, the Woody Biomass 
Utilization Group, is a multiagency group that meets quarterly on woody 
biomass utilization issues and is open to all national, regional, and 
field-level staff across numerous agencies. The other, the Biomass 
Research and Development Board, is responsible for coordinating federal 
activities to promote the use of biobased industrial products. The 
board consists of representatives from USDA, DOE, and Interior, as well 
as EPA, the National Science Foundation, Office of the Federal 
Environmental Executive, and Office of Science and Technology Policy. 
When discussing coordination among agencies, however, agency officials 
more frequently cited using informal mechanisms for coordination-- 
through telephone discussions, e-mails, participation in conferences, 
and other means--rather than the formal groups described above. Several 
officials told us that informal communication among networks of 
individuals was essential to coordination among agencies. Officials 
also described other forms of coordination, including joint review 
teams for interagency grant programs and multiagency working groups 
examining woody biomass at the regional or state level. 

The Forest Service--the USDA agency with the most woody biomass 
activities--developed a woody biomass policy in January 2005, and, in 
March 2005, in response to a recommendation in our draft report, the 
agency assigned responsibility for overseeing and coordinating its 
woody biomass activities to an official within the Forest Service's 
Forest Management branch. In addition, the agency has created the 
Biomass Utilization Steering Committee, consisting of the staff 
directors of various Forest Service branches, to provide direction and 
support for agency biomass utilization. 

DOE coordinates its woody biomass utilization activities through its 
Office of Energy Efficiency and Renewable Energy. Within this office, 
the Office of the Biomass Program directs biomass research at DOE 
national laboratories and contract research organizations, while the 
Federal Energy Management Program and the Tribal Energy Program conduct 
a small number of other woody biomass activities. 

Interior has appointed a single official to oversee its woody biomass 
activities and is operating under a woody biomass policy adopting the 
principles of the June 2003 memorandum of understanding among USDA, 
DOE, and Interior. Interior also has appointed a Renewable Energy 
Ombudsman to coordinate all of the department's renewable energy 
activities, including those related to woody biomass, and has worked 
with its land management agencies to develop woody biomass policies 
allowing service and timber contractors to remove woody biomass where 
ecologically appropriate. Similarly, BLM has appointed a single 
official to oversee woody biomass efforts and has developed a woody 
biomass utilization strategy to guide its activities that contains 
overall goals related to increasing the utilization of biomass from 
treatments on BLM lands. 

Most Officials Cited Economic Obstacles to Woody Biomass Utilization, 
and While Agencies Generally Targeted These Obstacles, Some Officials 
Believe Additional Steps beyond the Agencies' Authority Are Needed:

Agency officials cited two principal obstacles to increasing the use of 
woody biomass: the difficulty in using woody biomass cost-effectively 
and the lack of a reliable supply of the material. Agency activities 
are generally targeted toward the obstacles identified by agency 
officials, but some officials told us that their agencies are limited 
in their ability to fully address these obstacles and that additional 
steps beyond the agencies' authority to implement are needed. However, 
not all agree that such steps are appropriate. 

Most Officials Noted the Difficulty Involved in Using Woody Biomass 
Cost-Effectively, and Many Also Cited the Lack of a Reliable Woody 
Biomass Supply:

The obstacle most commonly cited by officials we spoke with is the 
difficulty of using woody biomass cost-effectively. Officials told us 
the products that can be created from woody biomass--whether wood 
products, liquid fuels, or energy--often do not generate sufficient 
income to overcome the costs of acquiring and processing the raw 
material. One factor contributing to the difficulty in using woody 
biomass cost-effectively is the cost incurred in harvesting and 
transporting woody biomass. 

Numerous officials told us that even if cost-effective means of using 
woody biomass were found, the lack of a reliable supply of woody 
biomass from federal lands presents an obstacle because business owners 
or investors will not establish businesses without assurances of a 
dependable supply of material. Officials identified several factors 
contributing to the lack of a reliable supply, including the lack of 
widely available long-term contracts for forest products, environmental 
groups' opposition to federal projects, and the shortage of agency 
staff to conduct activities. A few officials cited internal barriers 
that hamper agency effectiveness in promoting woody biomass 
utilization, including limited agency expertise related to woody 
biomass and limited agency commitment to the issue. A variety of other 
obstacles were noted as well, including the lack of a local 
infrastructure for handling woody biomass, consisting of loggers, 
mills, and equipment capable of treating small-diameter material. 

Agency Efforts Are Generally Targeted toward the Obstacles Identified, 
but Officials Cited the Need for Additional Actions Such as Subsidies 
and Tax Credits:

Agency activities related to woody biomass were generally aimed at 
overcoming the obstacles agency officials identified, including many 
aimed at overcoming economic obstacles. For example, Forest Service 
staff have worked with potential users of woody biomass to develop 
products whose value is sufficient to overcome the costs of harvesting 
and transporting the material; Economic Action Program coordinators 
have worked with potential woody biomass users to overcome economic 
obstacles; and Forest Products Laboratory researchers are working with 
NREL to make wood-to-ethanol conversion more cost-effective. 

Despite ongoing agency activities, however, numerous officials believe 
that additional steps beyond the agencies' authority are need to fully 
address obstacles to woody biomass utilization. Among these steps are 
subsidies and tax credits, which officials told us are necessary to 
develop a market for woody biomass but which are beyond the agencies' 
authority. According to several officials, the obstacles to using woody 
biomass cost-effectively are simply too great to overcome by using the 
tools--grants, outreach and education, and so forth--currently at the 
agencies' disposal. One official stated that "in many areas, the 
economic return from smaller-diameter trees is less than production 
costs. Without some form of market intervention, such as tax incentives 
or other forms of subsidy, there is little short-term opportunity to 
increase utilization of such material." Some officials stated that 
subsidies have the potential to create an important benefit--reduced 
fire risk through hazardous fuels reduction--if they promote additional 
thinning activities by stimulating the woody biomass market. Rather 
than incentives or subsidies, some officials noted the potential for 
increased use of woody biomass through state requirements--known as 
renewable portfolio standards--that utilities procure or generate a 
portion of their electricity by using renewable resources, which could 
include woody biomass.[Footnote 6]

But not all officials believe these additional steps are efficient or 
appropriate. One official told us that, although he supports these 
activities, tax incentives and subsidies would create enormous 
administrative and monitoring requirements. Another official stated 
that although increased subsidies could address obstacles to woody 
biomass utilization, he does not believe they should be implemented, 
preferring instead to allow research and development efforts and market 
forces to establish the extent of woody biomass utilization. Further, 
not all agree that the market for woody biomass should be expanded. One 
agency official told us he is concerned that developing a market for 
woody biomass could result in overuse of mechanical treatment (rather 
than prescribed burning) as the market begins to drive the preferred 
treatment, and representatives of one national environmental group told 
us that relying on woody biomass as a renewable energy source will lead 
to overthinning, as demand exceeds the supply that is generated through 
responsible thinning. 

Conclusions:

The amount of woody biomass resulting from increased thinning 
activities could be substantial, adding importance to the search for 
ways to use the material cost-effectively rather than simply disposing 
of it. However, the use of woody biomass will become commonplace only 
when doing so becomes economically advantageous for users--whether 
small forest businesses or large utilities. Federal agencies are 
targeting their activities toward overcoming economic and other 
obstacles, but some agency officials believe that these efforts alone 
will not be sufficient to stimulate a market that can accommodate the 
vast quantities of material expected--and that additional action may be 
necessary at the federal and state levels. Nevertheless, we believe the 
agencies will continue to play an important role in stimulating woody 
biomass use. The Forest Service took a significant step recently by 
designating an agency lead for woody biomass activities, responding to 
a need we had identified in our draft report and enhancing the agency's 
ability to ensure that its multiple activities contribute to its 
overall objectives. Given the magnitude of the woody biomass issue and 
the finite nature of agency budgets, it is essential that federal 
agencies appropriately coordinate their woody biomass activities--both 
within and across agencies--to maximize their potential for addressing 
the issue. 

Mr. Chairman, this concludes my prepared statement. I would be pleased 
to answer any questions that you or other Members of the Subcommittee 
may have at this time. 

GAO Contacts and Staff Acknowledgments:

For further information about this testimony, please contact me at 
(202) 512-3841 or at nazzaror@gao.gov. David P. Bixler, James Espinoza, 
Steve Gaty, Richard Johnson, and Judy Pagano made key contributions to 
this statement. 

FOOTNOTES

[1] Although biomass can be considered any sort of organic material-- 
including trees, grasses, agricultural crops, and animal wastes--the 
term "woody biomass" in this testimony refers to small-diameter trees 
and other traditionally noncommercial material cut as part of thinning, 
harvesting, or other activities on forests or rangelands. The term 
"woody" is used to distinguish this material from agricultural biomass, 
such as corn stalks or sugar cane residue. 

[2] GAO, Natural Resources: Federal Agencies Are Engaged in Various 
Efforts to Promote the Utilization of Woody Biomass, but Significant 
Obstacles to Its Use Remain, GAO-05-373 (Washington, D.C.: May 13, 
2005). 

[3] Fuel reduction efforts are not the only source of this material. 
Woody biomass can result from a variety of activities related to 
improving or maintaining forest and rangeland health, as well as forest 
management activities such as timber harvests. Further, according to 
Forest Service officials and others, millions of acres of pine trees in 
the southeastern United States face a depressed market because of the 
closure of pulp mills. These trees thus constitute another potential 
source of woody biomass. 

[4] Departments of Agriculture and the Interior and the Western 
Governors' Association, A Collaborative Approach for Reducing Wildland 
Fire Risks to Communities and the Environment: A 10-Year Comprehensive 
Strategy (Washington, D.C.; August 2001). 

[5] The National Association of Conservation Districts is a nonprofit 
organization that represents the nation's 3,000 conservation districts-
-local units of government established under state law to carry out 
natural resource management programs at the local level. 

[6] According to the Database of State Incentives for Renewable Energy, 
a DOE-funded project, 19 states and the District of Columbia had 
renewable portfolio standards as of February 2005.