Friday, August 22, 2008

The Work of Foundations: Doing What Others Can't or Won't

We plan to do few things and to do those very well. The Endowment’s Board of Directors has made a commitment to invest in those things where, but for the Endowment’s engagement, there is little chance of progress. The catch phrase that has guided us since our creation is to be “systemic, transformative and sustainable” in our work.

In this regard we point to one of our current activities as an example of what one might expect of the Endowment.

Growing Markets
One of our earliest initiatives considers the potential of agricultural “check-off” programs to be used as a vehicle to grow the market pie for softwood lumber in North America. Check-offs have been successfully used by nearly every agricultural product in America – from “Beef, It’s What’s for Dinner” to “Got Milk?” – two of the better known check-offs that have been used to grow markets for beef and milk, respectively. Forest products are eligible for these “voluntary, self-funded” mechanisms, yet, none has ever been attempted at the national level.

Some would say that growing markets is industry’s role alone. We agree; but, we also think there is a role for us as well. First, it is extremely difficult for a highly-diversified and competitive industry to do the work necessary to give full consideration to an effort that would bring all together for the good of the whole – especially where that “good” goes beyond profits to address broader societal values. As an independent third-party “without a dog in the fight,” the Endowment can truly do something that others can’t – conduct an independent study of the potential of check-offs and then serve as a convening catalyst to bring industry leaders together to consider the benefits of such an initiative.

A Sustained Source of Funds to Keep Forests in Forests and Jobs in North America
As we near the end of the assessment phase of the potential to use a check-off to grow softwood lumber markets in the U.S., we also remind others of what’s in it for the Endowment. While we would not be the recipient or manager of funds generated under a program if one were to be adopted, a check-off could generate between $30-50 million annually on an on-going basis to promote the environmental and other attributes of wood products – especially those produced here. We believe that such a program would have several benefits that match the Endowment’s mission and objectives.

First, and foremost, we want to see wood products jobs retained here at home. Second, markets for products link directly to the ability to keep forests in forests and to keep those forests healthy. Jobs, economic value to landowners and retention of manufacturing facilities in rural communities with all of their attendant benefits would multiply a very small Endowment investment many times over. We think that’s a wise investment of the Endowment’s limited resources that could pay-off for generations to come.

Learn More
If you are interested in learning more about the potential of ag-type check-offs to benefit forests, forest product markets and keep jobs in North America, read a copy of the project Overview report that can be found on the Publications page of our website.

Monday, August 04, 2008

Wood, Trees and Forests in the 21st Century Bio-Economy

My good friend and colleague Ken Arney recently loaned me a precious first edition book entitled “Nazis in the Woodpile.” The wonderful work published in 1942 chronicles Hitler’s plot to create a near monopoly in wood to undergird his war effort.

As a forester and veteran of America’s forest products industry I’d never before heard of the pivotal role that wood, trees and forests played in Hitler’s plan for world domination. I asked myself, as author Egon Glesinger asks, “Why not oil?” Germans themselves had noted the world was in the “Age of Oil.” According to Glesinger there are “Two reasons. In the first place, the Nazis know they can secure world control of oil only by a final Anglo-American defeat…And then there is the second reason – they have made wood the backbone of their war economy. Wood helps them meet, to a large extent, their deficiencies in food, clothes, motor fuel and other war essentials. With true German thoroughness… they have come to the conclusion that wood is the coming raw material, and that Hitler’s “Thousand-Year Reich” will be the “Age of Wood.” They have given wood the surname Universalrohstoff, i.e., the material which can produce anything.”

Wood’s Place in a Post Cheap Oil World
For more than a century our world has built and moved on fossil fuels, most notably oil. While Hubbert predicted that oil production in North America would peak around 1970 followed by a worldwide peak near 2000, America continued to build its economy as if nothing would ever change. Gas guzzling SUVs filled our roads that stretched from our urban jobs to our suburban homes. With scarcely a blip caused by the 1973 oil embargo and other periodic jumps in oil prices we tenaciously stayed the course. In the ensuing years domestic production of crude dropped and imports steadily rose -- today standing north of 60%.

Many Americans seem to be slowly awakening to the fact that the age of cheap oil is over. Too, many are realizing that $1-1.5 billion daily sent to foreign producers who don’t share our views or values probably isn’t a good thing. Even if we take our Canadian friends – the biggest exporter of oil to the U.S. – out of the equation, let’s say it is just a $1 billion/day. That’s still a lot of money that won’t go to keep jobs in America. Even with talk of reopening coastal zones or the Alaska National Wildlife Refuge (ANWR) to exploration, we won’t drill or even conserve our way out of this era.

Companies as diverse as Duke Energy and Wal-Mart acknowledge the reality of climate change and the need to build a new energy future. Yet, potential sources of new supply aren’t any more evenly distributed or available than are current supplies of crude. As new technologies advance and as the costs of producing those products come down, solar may be a great fit for some, but not all areas. Likewise dependable sources of sustainable wind aren’t found everywhere. Yet, one-third of our nation is covered by trees…and still more by ag crops that could yield burgeoning supplies of residues or intentionally grown fibers for energy.

What Hitler’s master planner, Hermann Goering, knew in the early 1940’s, is even truer today. Wood, which can readily be “stored on the stump,” can provide a sustainable source of:
1. Solid and liquid fuels
2. Food and fodder
3. Cellulose and textile fibers
4. Structural material; and
5. Wood by-products as basic materials for chemical industries

Our Thinking on Woody Biomass and the Future
If wood held great potential in an era of cheap oil during World War II, why couldn’t it be one of the major foundational pieces for our world today when oil fluctuates in the low- to mid-$100s/barrel? With the Endowment’s vision to promote sustainable forestry and aid forest-reliant communities across the nation, there are few single “fixes.” Yet, wood-for-energy is truly the triple-play.

We think wise management and use of America’s forests for biofuels can play a significant role in addressing all three of our focal initiatives:
Ø Retention and restoration of healthy working forests;
Ø Identification and capture of multiple value streams; and
Ø Capacity and leadership at the community level.

We say wise management because we do not envision wholesale conversion of forests to energy crops. The greatest gains will come with “right-sized” opportunities that are matched to the local forest condition and, wherever possible, where products and services are used as close to where they are produced as is practical.

The transition to an economy that uses wood and forests to their full potential will not be successful if it “throws-out” traditional forest industry (paper and wood products); rather, it must be designed to eke out the highest and best use of each log, chip and chemical extract.

Endowment Actions
At the Endowment we’ve charted two routes on our course to use biomass to meet our mission. First, we soon will have a two-part effort underway that will first assess the current state-of-the-commercial-science in regard to woody biomass conversion to biofuels. The second aspect of that project will seek to create a first-ever system to track the current and emerging use of wood for energy by facility and region to better undergird sound forest management planning and economic development.

Next, we know that large investors and big industrial players have the expertise they need to make their decisions. However, we don’t believe the same is necessarily true of smaller players and communities. Therefore, we plan to work with the best experts across the nation to amass information and resources to aid communities in asking the right questions and to help in sifting the “wheat from the chaff” in the burgeoning field of bioenergy production.

We know all-too-well that the transition from one era to another (e.g. ag to industrial; industrial to information; and now, information to a bio-based economy) can be highly disruptive. Yet, from this disruption will come innovation, family supporting jobs and new sources of wealth.

At the Endowment we aspire to play a role in ensuring that America’s forests and forest-reliant communities are winners in this transition.