Open Journal of Energy Efficiency, 2013, 2, 125-132
http://dx.doi.org/10.4236/ojee.2013.23016 Published Online September 2013 (http://www.scirp.org/journal/ojee)
Wood Pellet Co-Firing for Electric Generation
Source of Income for Forest Based Low
Income Communities in Alabama
Ellene Kebede1*, Gbenga Ojumu2, Edinam Adozsii1
1Department of Agriculture and Environment Science,
Tuskegee University, Tuskegee, USA
2Department of Agriculture, Nutrition & Human Ecology,
Prairie View A&M University, Prairie View, USA
Received February 25, 2013; revised April 4, 2013; accepted May 20, 2013
Copyright © 2013 Ellene Kebede et al. This is an open access article distributed under the Creative Commons Attribution License,
which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
ABSTRACT
Alabama imports coal from other states to generate electricity. This paper assessed the direct and indirect economic
impacts of wood pellet production to be co-fired with coal for power generation in Alabama. Four sizes of wood pellet
plants and regional input-output models were used for the analysis. The results showed that the economic impact in-
creases with the size of the plant. Wood pellet production will have a multiplier effect on the economy especially, for-
est-related services, retail stores, the health service industry, and tax revenue for the government. Domestic wood pellet
production can reduce the use of imported coal, allow the use of local woody biomass, and create economic activities in
Alabama’s rural communities. Policies that support the production of wood pellet will serve to encourage the use of
wood for power generation and support the rural economies.
Keywords: Wood Pellet; Electricity; Co-Firing; Coal; Input-Output; Forest Industry
1. Introduction
Renewable energy is widely recognized as a substitute
for fossil fuels that can reduce the United States’ de-
pendence on foreign petroleum and enhance the domestic
economy [1]. To date, emphasis has been on producing
biofuels from field crops such as corn, sorghum, and oil-
seeds. Recently, however, advanced biofuels derived
from nonfood feed stocks such as switch grass, agricul-
tural residue, and woody biomass have received growing
attention and are considered to be the future of the biofu-
els industry [2]. Regulations grouped under the Renew-
able Portfolio Standard (RPS) are also designed to in-
crease the production of energy from renewable energy
sources. The policy, a result of legislation passed in 1978
under the umbrella of the Public Utility Regulatory Poli-
cies Act, mandated increased energy production from
renewable resources. The regulations introduced guide-
lines that a minimum percentage of electricity supply
tobe produced from renewable energy sources. Producers
with a certified renewable energy generator earn certifi-
cates for every unit of electricity they produce [3].
The renewable energy certificate is an incentive for
electricity producers to use renewable feedstocks in their
power generation operations. A good example is the Eu-
ropean Union 2020 Energy policy, which is committed to
reaching 20% share of renewable energy sources by 2020
[4]. There is a wider use of co-firing for power genera-
tion in Europe to substitute for coal. Imported wood pel-
lets are mainly used for co-firing. Canada was previously
the main source of supplier, but currently, the US-based
wood pellet industry is gaining a major share. The new-
est plants in the southeast Georgia, Florida, and Alabama
are designed for export markets. The largest wood pellet
plant in the world is located in the state of Georgia,
USA... Production is exported mainly to The Netherlands
and the United Kingdom [5]. As of 2011 a new export-
based wood pellet plant is also under construction in
Alabama. Initially, the plant produces 250,000 metric
tons of wood pellets per year, and a plant capable of pro-
ducing 500,000 metric tons per year at full capacity is
under construction in Aliceville, Pickens County in Ala-
bama. This plant will start deliveries in 2012 [6].
*Corresponding author.
C
opyright © 2013 SciRes. OJEE

E. KEBEDE ET AL.
126
Literature shows that woody biomass can be used for
biofuel as liquid transportation fuel and as non-liquid
source to generate heat or electricity [7-9]. Wood pellets
are used to generate residential heating and commercial
power. Residential use in Europe is concentrated mainly
in Sweden and Austria and to a lesser extent in Spain and
Portugal [10]. The residential wood pellet fuel industry in
North America was created in the early 1980s in re-
sponse to the energy crisis. Currently, almost one million
tons of wood pellets are sold each year to heat nearly
500,000 pellet stoves and fireplace in homes in the
United States and Canada. Consumption is greatest in the
Pacific Northwest and Northeastern states, where wood
pellets are manufactured from sawmill and wood product
residues and where heating energy requirements are sig-
nificant [11].
Using wood pellets has the potential to reduce the use
of fossil fuels and also attract new business opportunities
for investors to consider processing in the rural timber-
based communities. States in the Southern US could play
a dominant role in the woody biomass industry for gen-
erating power. The South is dominated by private forest
ownership, and 61% of the wood residues in the US
come from the South [12]. Forest residues and excess mill
residues, as well as urban residues, agricultural residues,
and dedicated energy crops are assumed to be grown to
support energy facilities [13]. Using woody biomass for
bioenergy production will create a market for nontradi-
tional sources of fuel such as logging residues, small
diameter trees, and thinning residues, which can also be
used as feedstocks [14,15]. An assessment by [16] of the
potential impact of a new bioenergy sector examined
using three sources of new energy demands for the South:
export, cellulosic ethanol, and biomass electricity. They
concluded that because of the established supply chain,
relatively low cost and abundant supply of wood, and the
consistency of wood’s material characteristics, it is rea-
sonable to expect that renewable energy markets would
select wood as a preferred biomass feed stock.
Biomass for generating electricity is in its infancy, and
economic analysis of biomass feed stock is limited. It is
known, however, that co-firing with coal in producing
electricity has proven to be technically feasible and cost
effective [17]. Alabama Power is the major supplier of
electricity in Alabama, and imported coal from other
states is used to produce about 85% of the state’s elec-
tricity [18]. The company has future plans to substitute
renewable sources for fossils fuel, mainly coal. In
co-firing, a percentage of biomass is introduced as fuel
into an existing coal-fired boiler, often directly blended
with the coal itself. Co-firing coal with switch-grass has
been tried, and the electricity produced during the tests
has been made available for sale to customers through a
renewable pricing program [19,20]. Co-firing green pine
chips with coal was also tested successfully, with one of
the findings being that ampere, the current flow of the
mill, was related to the percentage of dry wood in the
fuel mix [21].
Forestry is an important sector in Alabama. Only nine
of 68 counties in the State of Alabama are less than
one-half forested with the lowest concentration in the
North and the highest in the West Central and Southeast
[22]. About 95% of forest land in Alabama is privately
owned, and the area of timber land has increased by 5%
in the 20-year span of 1997 to 2007 [12]. Private forests
are composed of 78%nonindustrial private forest (NIPF)
and 16% forest industry. The industrial forest has de-
clined by 16%, whereas the NIPF increased by 12% be-
tween 1987 and 2002. This indicates a transition from
industrial to nonindustrial timber and non-timber uses of
forested land. The pulp and paper industry has declined;
accordingly, so too has the utilization of forest and for-
est-processing residues [23]. With the decline of the pulp
and paper industry, the utilization of forest and forest-
processing residues could provide opportunities not only
to reduce fossil fuel consumption but also to create and
sustain employment and income thus contributing to lo-
cal economies. Past studies have shown the potential
effect of woody biomass for cellulosic ethanol produc-
tion [24]. Cellulosic ethanol is not produced commer-
cially in Alabama, but co-firing of coal with woody bio-
mass has been tested. Given these various factors, the
purpose of the present paper is to assess the direct and
indirect socioeconomic impacts of small scale wood pel-
let production for domestic co-firing on forest landown-
ers and rural communities.
2. Wood Pellet in the South
The Southeast and South Central US are timber-produc-
ing states and consist of more than half of the recover-
able logging residues in the USA... Georgia, Alabama,
and Mississippi are among the top three states for log-
ging residues from growing stock. As such, the region,
these states would be favorable places for commercial
development of biomass fueled power generating plants
and reducing carbon emissions from coal-generated elec-
tricity [25].
Generating electricity through co-firing biomass with
coal reduces the out flow of pollutant gases compared
with coal alone. An existing power plant facility can blend
biomass (up to 5%) with coal or inject biomass sepa-
rately (up to 20%) into the boiler [26]. The Southern
Company has partnered with the USDA Forest Service,
National Forests in Alabama, Forest Southern Research
Station, Auburn University, Forest Products Develop-
ment, and the CAWACO Resource Conservation and
Development Council to test co-firing green wood chips
in a boiler. Subsequently, green wood chips were co-

E. KEBEDE ET AL. 127
fired successfully in blends with coal between 8% and
15% wood by weight. With 10% co-firing, boiler effi-
ciency was about the same as coal alone, whereas a slight
reduction was observed inefficiency with 15% wood
[21].
Wild fire is a burning problem in many parts of the
United States, and studies showed that thinning treatment
will reduced wild fire and improve forest health. Ala-
bama has a prescribed burning program to burn fallen
branches and trees, low-quality wood, dried grasses, and
the like that contribute to wild fire and affect forest
health and productivity [23]. Forest thinning could gen-
erate feed stock for co-firing and wood pellets for resi-
dential and business space heating fuel [27,28]. It is es-
timated that combined bio power use by the industrial
sector and electric utilities will meet about 4% ofenergy
demand in 2010 and 5% in 2020 [13].
Alabama ranks third in the nation for forest and pri-
mary mill residues, which come mostly from the West
and South regions of Alabama. The lumber market has
lost ground since 1995 due to non-wood substitutes, and
the paper mill industry, which is concentrated in southern
Alabama, has also declined because recycled materials
increased to 38% of the total fiber need by 1998 [26,
29].The availability of wood biomass makes Alabama
attractive for producing biomass-based biofuels and bio-
energy. In addition, biomass as a feedstock has a positive
externality by lowering greenhouse gas emissions. If CO2,
as a social cost is incorporated in economic evaluations
of generating electricity, logging residues will become a
competitive fuel source [25,30].
The woody biofuels markets can create additional
revenues to non-industrial private forest landowners and
other economic agents that can stimulate employment
which could contribute to rural development and benefit
local communities [8]. These developments are also ex-
pected to contribute to the diversification of local econo-
mies and rural communities, in particular those that tra-
ditionally depend on timber production [31,32]. A na-
tional study using input-output and Policy System Analy-
sis (POLSYS) model estimated the amount of ethanol
that can be produced from cellulosic feedstock and the
cumulative gain in new jobs, taxes, and reduced petro-
leum imports [33]. An input-output and CGE model
based assessment of the economic impacts of wood bio-
mass as bioenergy feedstock in Florida showed an in-
crease in gross state product, employment, and a slight
decrease in gasoline use [34].
A study by [35] estimated the benefits of using logging
residues to generate electricity in East Texas and showed
that their use reduces site preparation cost. The input-
output model result showed that the logging residue use
and electricity generation together would have a ripple
effect on employment and output. Although biomass-
based power generation has a relatively high initial in-
vestment, the benefits of using local feedstock in the long
run will trickledown to the local economy compared to
the use of coal for generating power [32]. Research has
also shown that the high moisture of the green wood
chips and coal mixtures resulted in low mill tempera-
tures and caused a 5% reduction than its rated maximum
power when co-firing [21]. Low moisture content and
long storage time are the two advantages of wood pellet.
Taken together, the low moisture content and consistent
texture make wood pellet a better feedstock for power
generation.
3. The Model
An input-output (I-O) model was employed to assess the
economic impact of wood pellet for power generation in
Alabama. I-O models trace commodity flows from pro-
ducers to intermediates and finally consumers. Industries
produce goods and services to meet final demand and
purchase raw materials from producers. Producers, in
turn, purchase goods and services from other industries.
The total industry purchases of commodities, services,
value-added, and imports are ultimately equal to the
value of the commodities produced. I-O models also
provide multipliers that estimate the relationship between
the initial effect of a change in final demand and the total
effects of that change [36,37]. An I-O model can be
written in the matrix form as follows:
X
AX Y

 (1)

1
X
IAY

 (2)
where X is the vector of total output; A is the matrix of
technical coefficients (aij), the amount of output of sector
i consumed by sector j); Y is the vector of final demand.
Equation (1) wasrearranged to provide Equation (2). The
matrix (I − A) is the Leontief matrix and (I − A)−1 the
Leontief inverse is a matrix of multipliers.
A multiplier for an industry is expressed as a ratio of
direct, indirect, and induced effects, and is used to esti-
mate the impacts on output throughout the economy. A
Type I multiplier is direct plus indirect effects divided by
direct effects. A Type II multiplier is direct plus indirect
plus induced impact divided by direct impacts. A Type II
multiplier tends to provide a higher estimate than Type I.
Type II multipliers are used in the present study.
The multiplier is a coefficient that relates a change in
output, employment, and value added as a consequence
of change in final demand. The employment multiplier
measures the total employment in all sectors in the
economy attributable to the job created directly by the
sector under consideration. The output multiplier of a
sector measures the total production in all sectors of the

E. KEBEDE ET AL.
128
economy that is necessary in meet the demand of the
sector under consideration.
In the present study, a regional I-O model that in-
cluded eight contiguous counties in the South and West
regions of Alabama was developed to assess the eco-
nomic impact on households(value-added employment
compensation, proprietor income, other property income)
and government (indirect business taxes) and the regional
economy. The counties included in the model were:
Pickens, Sumter, Greene, Hale, Marengo, Perry, Dallas,
and Wilcox. These counties have the highest timberland
in Alabama. Greene and Hale counties have 53,000 to
67,000 acres each under timber, and the other six coun-
ties have 67,000 to 105,000 acres of timberland each [22].
Table 1 shows the per capita personal income as a per-
cent of state average and the unemployment rate of the
counties included in the model. There is slight increase in
share of per capita personal income between 2005 and
2010, but these counties have the lowest per capita per-
sonal income in the State of Alabama. They also experi-
ence the highest unemployment rate which ranges be-
tween 11% and 22% compared to state average of 9.5%
in 2010.
The data for earnings by industry indicates that the
government, at the state and federal levels, was the main
source of income, accounted for 20% to 35% of the total
earnings by industry.
This was followed by manufacturing (10% - 25%),
health care and social assistance (15%), and retail trade
(7% - 8%). Forestry and logging, which accounted for
less than 1% was reported in four of the eight counties,
and none of the counties reported agriculture and forestry
support services in 2010. The paper industry was also
important in the state during the 1970s and 1980s, but the
counties included in the study, except Sumter County,
never supported paper manufacturing [38].
Table 1. Per capita personal income as percent and unem-
ployment rate.
Per capita personal income1 Unemployment rate2
County
2005 2010 2010
Dallas 82 84 17.3
Greene 93 95 16.9
Hale 83 90 12.1
Marengo 91 95 12.4
Perry 76 74 16.5
Pickens 79 86 11.3
Sumter 68 73 14.2
Wilcox 66 75 21.7
1[39]. 2[40].
The data for these eight counties were obtained from
the 2009 IMPLAN Alabama economic data set [41]. Two
IMPLAN sectors were selectedf or the analysis: forestry,
forest products, and timber tract production (sector 15)
and commercial logging (sector 16). It is also assumed
that 25% and 75% of the feedstock originates from sec-
tors 15 and 16, respectively [42].
4. Model Assumptions
The study assumes that the demand for wood pellet for
co-firing is in place and pine chips are used as a raw ma-
terial for producing wood pellets. The demand for wood
chips was based on the following three assumptions: 1)
raw material will be obtained within a 100-mile radius,
which also covers the counties in the model; 2) pine
chips have about 40% moisture content [43]. Based on
the literature, co-firing is efficient with 15% wood [21],
the pelleting process reduces the moisture content by
about 25%, from 40% to 15%; and 3%) the plants will
operate 16 hours per day, a 67% operational rate for 365
days.
dh
CTP
s

 (3)
cdp
RCW (4)
where Cd is the annual wood chips demand; Th is the
tons of pine chips per hour; Ps is the plant size; Fc is the
cost of raw material; and Wp the price of pine chips [44].
The price includes transportation costs within the 100-
mile radius.
Plant size affects the efficiency and feasibility of a
plant. The efficiency of producing pellets increases with
size, and larger pellet producers are often more profitable
than smaller producers [45]. Capital investment costs per
ton decrease with an increase incapacity, and pellet mills
are cost effective when they produce more than 10 tons
per hour (t/h) of pellets [46,47]. This study shows the
economic impact of four different plant sizes expressed
in tons of wood pellet per year: 10 t/h or 50,000 tons per
year; 20 t/h or 100,000 tons per year; and 40 t/h or
200,000 tons per year plants and the current export-based
production with approximately 95 t/h 500,000 tons per
year. The estimated annual wood chip cost for different
plant sizes were imported to the regional input/output
model.
5. Results and Discussions
The South and West regions of Alabama have a large
forested area and are experiencing a higher level of un-
employment accompanied with lowest per capita per-
sonal income in the State and can benefit from the estab-
lishment of woody biomass processing plants like wood
pellets. As indicated by the input-output results, the 10
industries that will benefit from the wood pellet produc-

E. KEBEDE ET AL. 129
tion are the main suppliers and related support services.
The top three sectors that accounted for 70% of the em-
ployment and income are: commercial logging (sector
16); forestry, forest products and timber tract production
(sector 15), and support activities for agriculture and for-
estry (sector 18). In addition, the food and beverage ser-
vices sector will benefit from the increase in demand and
income in the economy. The other sectors that gain from
the wood pellet production are: private household opera-
tions; nursing and residential care facilities; retail stores
for food and beverages; wholesale trade businesses; and
health services.
The ripple effect is associated with the demand from
these industries to supply services required by the wood
pellet industry. This is captured in the Type II employ-
ment and output multipliers. Table 2 compares the mul-
tipliers of sector 15 and 16 with the paper manufacturing
sector (sector 105). The employment multiplier is what
every job created in the sector will create in other sectors
of the economy. Sector 15 had a larger employment mul-
tiplier (4.533) than sector 16 (1.39), generating more
overall jobs for each job created in the sector. A job cre-
ated in the forest/forest related sector will create 4.533
jobs in the economy, whereas the logging sector will
create 1.39 jobs in the economy for each job created in
the sector. The output multiplier for the sectors, therefore,
is not significantly different.
The multipliers apply to any size plants, but the total
effect will vary with the plant size.
The results of the economic impact of the four plant
sizes analyzed are provided in Tables 3-6. Based on past
studies, the increase in plant size will enhance cost effec-
tiveness, and for this analysis an increase in the plant size
increased the total impact on the regional economy. The
increase in plant size from10 t/h to 40 t/h increased labor
income, value added, and output by300%, and increased
Table 2. Type II employment and outp ut multiplie rs.
Sector Employment Multiplier Output Multiplier
Commercial Logging 1.390 1.499
Forest Products and
Timber Tract Production 4.533 1.655
Table 3. The results of the economic impact of 10 tons per
hour wood pellet plant.
Type of
Impact
Direct
Effect
Indirect
Effect
Induced
Effect
Total
Effect
Indirect + Induce/
total Effect
Employment 19 11.4 5.9 36.3 0.48
Labor Income
(M $) 1.04 0.39 0.17 1.61 0.35
Value Added
(M $) 1.41 0.51 0.35 2.27 0.38
Output (M $) 3.33 0.96 0.59 4.87 0.32
Table 4. The results of the economic impact of 20 tons per
hour wood pellet plant.
Type of ImpactDirect
Effect
Indirect
Effect
Induced
Effect
Total
Effect
Indirect +
Induce/total
Effect
Employment38 22.8 11.7 72.51 0.48
Labor Income
(M $) 2.080.79 0.34 3.22 0.35
Value Added
(M $) 2.821.02 0.71 4.55 0.38
Output (M $)6.661.91 1.18 9.74 0.32
Table 5. The results of the economic impact of 40 tons per
hour wood pellet plant.
Type of ImpactDirect
Effect
Indirect
Effect
Induced
Effect
Total
Effect
Indirect +
Induce/total
Effect
Employment75.945.6 23.5 145 0.48
Labor Income
(M $) 4.171.58 0.69 6.43 0.35
Value Added
(M $) 5.642.04 1.41 9.09 0.38
Output (M $)13.313.82 2.35 19.49 0.32
Table 6. The results of the economic impact of 95 tons per
hour wood pellet plant.
Type of ImpactDirect
Effect
Indirect
Effect
Induced
Effect
Total
Effect
Indirect +
Induce/total
Effect
Employment15895 49 302 0.48
Labor Income
(M $) 86.7232.7614.34 133.83 0.35
Value Added
(M $) 117.3742.3429.40 189.12 0.38
Output (M $)276.8779.4548.91 405.33 0.32
to 800% when the plant size increases to 95 t/h. Most of
the employment was created in the commercial logging
and forestry-related sectors. These sectors had an impor-
tant indirect and induced impact on the economy espe-
cially in the 10 major sectors. The share of the indirect
and induced to total effect showed that 48% of the em-
ployment, 35% of the labor income, 38% of the value
added, and 32% of the total output resulted from the in-
direct and induced effects.
Distribution of value added showed that employment
compensation (wages and salaries) accounted for 57%;
other property type income (rental) accounted for 18%;
proprietor income accounted for 16%; and indirect busi-
ness taxes to the government accounted for 10% of the
value added. The logging industry uses heavy machinery
and equipment and the higher compensation could be
associated the skilled manpower employed by the log-

E. KEBEDE ET AL.
130
ging industry.
Notably, the region has the highest forest cover where
forestry logging is less than 1% of income generated in
the economy. Establishing a wood pellet plant could
stimulate the forest industry and commercial logging,
which could increase the income earned from forestry.
Furthermore, it could be an incentive to the establish-
ment of the forest-related services sector that is not cur-
rently making a significant contribution to the regional
economy.
6. Conclusion
Woody biomass is a major resource that could be used as
a substitute for coal ingenerating electricity in Alabama.
Wood pellet is not used widely for power generation in
the United States, especially in the South. However, the
State of Georgia has one of the largest wood pellet plants
in the world, and Alabama has one wood pellet plant that
produces products for export. The present study esti-
mated the socioeconomic impacts of small-scale wood
pellet plants for co-firing in power generating plants in
the south and west regions of Alabama. Alabama Power
Company, the major electricity supplier in the state, has a
coal-based plant in Greene County with a generating
capacity of 1,220,000 kW [20]. Wood pellet plants in the
counties studied will be within a good proximity to the
power generation plant. The company has successfully
tested co-firing coal with green wood, and the results
showed that wood can be co-fired up to15%, but mois-
ture content affects the ampere, the current production.
Wood pellet has the added advantage of low moisture
and a consistent texture to mitigate the loss of current
output. The present paper assumed demand levels for
wood pellet and assessed the economic impact of wood
pellet for co-firing for generating power. The study tested
four sizes of wood pellet plants and showed that the im-
pact increases with the increase in plant size. Most of the
employment, value added, and output will be generated
in the commercial logging sector and forestry and forest-
production tracts sector. These sectors will create de-
mand for skilled manpower related to logging, equipment
handlers, and transportation as well as provide income to
the owners of forested land. The high employment mul-
tiplier showed that using wood pellets for co-firing will
generate additional employment in the service sectors.
The increase in demand for wood will encourage the use
of forest residues and other biomass that have not been
used to date that could generate income to property own-
ers. The economic impact of the current large size plant
for export is larger than the small-scale plants, but be-
cause it is export-oriented, its impact on reducing coal
import and carbon emission in the state is none. The pre-
sent study has shown that small-scale wood pellet plants
can play a triple role in the economy, enhance the eco-
nomic activity of the region, reduce the use of imported
coal, and reduce CO2 emissions. The use of wood bio-
mass might be expensive, but studies [25,30] have shown
that if the social cost of CO2 emissions is considered,
woody biomass can be competitive for producing elec-
tricity. Given the current 10% co-firing [21], which is
regarded as efficient, the use of wood pellet will reduce
coal import and carbon emission and generate economic
activity in the region. In conclusion, the use of woody
biomass for generating power will have a long-term
economic impact on the community and the region.
These benefits to the region and the community could be
the basis for government support for developing the
wood pellet sector.
7. Acknowledgements
The paper was part of a study funded by USDA Office of
the Chief Economist/Energy Policy and New Uses.
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