Innovative Natural Resource Solutions LLC provides consulting services at the intersection of forest industry, energy, and economic development. The future of Maine's forest industry faces challenges from shrinking pulp and paper markets but opportunities from new technologies and markets for wood products including cross laminated timber, wood pellets for heating, and capturing value from recreational use of forestlands. The industry is likely to see some mill closures but also new small and mid-sized facilities innovating at the edges while land ownership diversifies beyond traditional timber production goals.
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The Future of Forests & Forest Industry in Maine
1. The Future of Forests &
Forest Industry in Maine
Eric Kingsley
Innovative Natural Resource Solutions LLC
Phone 207-233-9910, kingsley@inrsllc.com
2. Innovative Natural Resource Solutions LLC
โข Founded in 1994
โข Offices in New Hampshire and Maine
โข Focus at the intersection of forest industry, energy and economic
development
โข Author of Maine Future Forest Economy Project (2005)
โข Services include:
- consulting in renewable energy
- advocacy
- forest management and protection
- forest certification and sustainability
โข Clients from the private, non-profit and government sectors
โข Conducted work in all regions of North America
โข www.inrsllc.com
22. All figures in 2013 dollars, using the US Bureau of Labor Statistics CPI
Inflation Calculator, http://www.bls.gov/data/inflation_calculator.htm
Stumpage Price for Selected Pulpwood Species, 2004 - 2014
Statewide Average from Maine Forest Service - Stumpage Price Reports
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Mixed Hardwood Spruce / Fir White Pine
23. Pulp and Paper
โข Pulp and paper mills remain Maineโs largest consumer of wood
products, and represent significant fixed infrastructure.
โข Mills produce a variety of products, including market pulp,
dissolving pulp, communication papers (coated and uncoated),
and tissue. Each of these markets is unique.
โข The Northern American paper industry has been shrinking, both in
output and capacity. Individual mills often do well, but new
investment in production is extremely limited in the U.S.
โข More turmoil to come, but Maine will remain a paper producing
state for well into the future
โข I expect reduced pulpwood consumption, and reduced prices for
pulpwood (a bunch of factors in this one, not just demand).
24. Challenges to the Pulp & Paper Industry
โข You will hear
โข High taxes
โข High energy costs
โข High wood costs
โข And so on
โข There are all very real, and present real challenges to the
industry
โข Mills and regions now fighting over a shrinking pie
โข They arenโt the fundamental issue, which is change in the
marketplace, and a capital intensive industry that is hard to
change with any reasonable speed
28. Wood Pellets for Thermal Use
โข Wood pellets used in thermal (heating) applications for homes and
small businesses
โข Can be as primary (boiler) or supplemental (stove) heat source in a
home
โข Cost competitive with oil (on a BTU basis)
โข Maine and Northeast highly dependent upon oil
โข At this moment, not true โ pellets and oil about the same on a $ per MMBTU
basis
โข A primary issue in industry is developing downstream market (boilers,
stoves) and encouraging customer adoption
31. Wood Pellets Now Seeing Large-Scale Users
Jackson Laboratory, Bar Harbor, Maine
32. Maineโs Forest Industry
โข Incredibly diverse
โข Well positioned for access to consumers
โข Facing challenges and opportunities
โข Enjoys broad support as an economic engine
โข Will see mill closures, will see new industries
โข Massive opportunity for energy products, if we can figure out how to
capture and properly value
โข My crystal ball โ more small / mid-sized facilities, reduction in large
facilities
โข Big, capital-intensive projects are hard everywhere, very hard in Maine
33. Income from Maine Forestland
โข Are TIMOs and REITs getting the return they need on their
investment?
โข Currently working on this, Iโm not sure what the answer is
โข If NO, who are the new buyersโฆand what are their objectives?
โข Family offices, high-net worth individuals, conservation buyersโฆ
โข Forest products income is important, but canโt be all there isโฆ
โข $ from recreational use
โข Carbon sequestration
โข Ecosystem services (maybe a pipe dream)
โข Energy leases (e.g., wind)
โข Some of this will challenge and disrupt tradition โ for land users, for rural
towns, for the industry, for the landowner
34. My Crystal Ball (which can be very cloudy)
โขA forest industry that is:
โขA little smaller
โขWorking hard to hold on
โขNew opportunities for small and mid-scale
businesses
โขInnovating at the edges, and experiencing
failures as part of the process
35. My Crystal Ball (which can be very cloudy)
โขLand ownership that:
โขHas more families โ individuals in the ownership
group
โขGets very creative about capturing economic value
from non-timber activities
โขContinues to see conservation buyers โ who the
industry often views as โundisciplinedโ
โขViews the proximate population as an asset โ and
monetizes it
36. My Crystal Ball (which can be very cloudy)
โขA public that:
โขBelieves that the industry is dying
โขWants to support the industry that remains
โขViews private land as something they have a right
to access
โขThinks that landowners should be incredibly
generous and provide lots of services for free
37. My Crystal Ball (which can be very cloudy)
โขA government that
โขIs reactive
โขHas a better rear view mirror than windshield
โขWould invent a time machine if it could
โขIs focused on protecting a mill or a sector, instead
of industry health
โขThere is nothing unique to Maine about this โ this is
how the world works (โthe futureโ is a very
nebulous constituency)