Pergamon Biomass and Bioewgy Vol. 8, No. 4, 235-244, 1995 pp.

Copyright 0 1995 Elwier Science Ltd 0961-9534(95)ooo15-1 Printed in Great Britain. All ri&ts reserved

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SHORT-ROTATION FORESTRY AS AN ALTERNATIVE LAND USE IN HAWAII

VICTOR D. PHILLIPS,*§ WEI LIU,* ROBERT A. MmuuAMt and RICHARD L. BAIN$ *College of Tropical Agriculture and Human Resources, University of Hawaii at Manoa, Honolulu,

HI 96822, U.S.A. TForestry Consultant, 616 Pamaele St., Kailua, HI 96734, U.S.A.

SNational Renewable Energy Laboratory, 1617 Cole Blvd, Golden, CO 80401-3393, U.S.A.

(Received I May 1994; accepted 6 November 1994)

Abstract-The traditional mainstays of Hawaii’s economy: sugarcane and pineapple crops, have declined such that as much as 80,000 hectares of agricultural land are now available for alternative land uses. Concurrently, imports of fossil fuels continue to accelerate and now provide over 90% of the total energy supply at a cost exceeding $1 billion annually exported from the local economy. The feasibility of short-rotation forestry on these former sugarcane and pineapple plantation lands to produce a variety of wood products, including biofuels, is being evaluated using a species-and site-specific empirical model to predict yields of Eucalyptus s&gnu, a system model to estimate delivered costs of wood chips to a bioconversion facility, and a geographic information system to extend the analysis to areas where no field trials exist and to present results in map form. The island of Hawaii is showcased as an application of the methodology. Modeling results are presented for using tropical hardwoods as dedicated feedstocks from biomass energy plantations to produce methanol, ethanol and electricity. A hypothetical, integrated, high-value hardwood, veneer, utility lumber and wood-chip operation is featured in contrast to the biomass energy plantation scenario. Short-rotation forestry may hold some promise for the greening of Hawaii’s energy system and even greater promise for the industrial production of value-added wood products for the benefit of the state’s citizens and visitors. The methodology is readily transferable to other regions of the United States and the rest of the world.

Keywords-Short-rotation forestry; tropical hardwoods; alcohols; electricity; biomass economics; Hawaii.

1. INTRODUCTION

As traditional plantation crops, such as sugarcane and pineapple, continue to decline in Hawaii (Fig. 1), landowners and other decision- makers are considering diversification to new crops and markets. Locally-grown fresh fruits, vegetables and animal products, speciality products with value-added processing, such as coffee and macadamia nuts, hypoallergenic taro flour, and landscape and nursery materials (including cut flowers) are some of the potentially viable agricultural alternatives (Tables 1 and 2). An example of the opportunity to more than double market share by substituting local agricultural products for imports in Hawaii is presented for fruits and vegetables in Fig. 2. Because there is great concern for the fate of displaced sugarcane and pineapple workers, employment rate as a function of alternative agricultural land uses is important (Table 3). While growing fruits and vegetables may be more labor-intensive than other types of farming, the

EjAuthor to whom correspondence should be addressed.

potential for creating new jobs in the agricultural sector may be greater in other crops. For example, an emerging forest industry, which has a relatively low (0.075) employment rate per hectare, will require extensive tracts of land and, therefore, a large total labor force. Of course, down-stream processing and manufacture of value-added products would generate additional agricultural jobs in Hawaii.

Many of the diversified crops now being considered do not require large tracts of land, due primarily to limits imposed by the relatively small size of their niche markets, which are readily saturated. Forestry, or perhaps a rejuvenated beef industry, however, is an agricultural land use that has the greatest potential to replace extensive land areas previously planted with sugarcane and pineap- ple. The current forest industry in Hawaii, which generates approximately $29 million in total revenues annually, is based principally on the use of the endemic Acacia koa (Hawaiian koa) for woodcarvings and furniture, as well as other materials from native forests for speciality items

235

236 V. D. F'HILLIPS et nl.

O-l I lQ!iO lD55 1060 1965 1970 IQ75 1980 1995 lS90 1992

Harvest year

Fig. 1. Harvested area of sugarcane and pineapple in Hawaii, 195Ck1992. From references’7~2’~z2.

(e.g. leis and medicines), and on the use of high-value, exotic, tropical hardwoods, such as Flindersia brayleyana (Queensland maple), Gre- villea robusta (silky oak) and Mangifera indica (mango), for parquet, veneer and furniture manufacture.’ The profit potential for an expanded Hawaiian forest industry to produce saw logs for high-quality lumber, veneer logs for laminated veneer lumber/plywood, saw logs for utility lumber, and chip logs for export to paper mills has been estimated by J. Groome (personal communication, 1993) (Table 4).

The need to develop additional markets for short-rotation intensive-culture (SRIC) forestry products, cited as wood chips for energy or pulp and paper production, was ranked within the top 10 priority constraints statewide in a recent Hawaiian forest industry analysis.* Groome

Poyry, Ltd3 identified the production of utility timber used for construction from saw logs of fast-growing species such as Eucalyptus microco- rys (tallow wood), E. saligna (blue gum) and E. deglupta (painted gum), as well as chips for particle board or medium-density fiberboard and laminated veneer lumber/plywood as commer- cially-viable products from sustainably-man- aged SRIC hardwood plantations in Hawaii. Whitesell et a1.4 provided management guidelines for SRIC Eucalyptus plantations in Hawaii, based on experience from field trials established in 1978. While these guidelines were focused primarily on biofuels production, the infor- mation is useful for other end products manufactured from fast-growing Eucalyptus.

Because Hawaii has no fossil fuels and imports over 90% of the total energy supply at a cost

Table 1. Land area in production and sales of selected crops in Hawaii, 1992

Area in crop*

(ha)

Sugar and molasses Pineapple (fresh) Tomatoes Ginger Bananas coffee Macadamia outs Poi Taro

58,280 24,680 237,600 9.63 10,480 NA 102,100 9.74

96 96 2,976 31.00 NA 116 6,380 55.00

384 348 4,920 14.14 1,080 640 4,100 6.41 8,200 7,000 32,640 4.66

122 NA 1,664 13.64

Area Annual value harvested* of sales*

(ha) (SlOOO)

Annual gross income per harvested hat

(SlOOO)

*Referen&. tAmma value of sales divided by area harvested.

Short-rotation forestry

Table 2. Production and sales of selected animal products in Hawaii, 1992*

231

Kilograms sold Value of sales Livestock Operations ($1000) ($1000)

Cattle and calves 900 21,022 29,235 Hogs 450 3628 6521 Milk 80 56,423 32,495

*Reference [ 171.

exceeding $1 billion annually, motivation exists to substitute fossil fuels with renewable biofuels derived from short-rotation woody crops.5 However, previous studies concluded that the manufacture of an energy product (e.g. electric- ity, methanol or ethanol) from tropical hard- wood feedstocks that are grown, harvested and delivered from a dedicated tree farm to a bioconversion facility provides a lower rate of return for potential investors in comparison to the other crops and forestry applications featured above.“” In this paper, we feature a hypothetical, integrated, high-value hardwood, veneer, utility lumber and wood-chip operation to illustrate one such potentially-viable option available to landowners in Hawaii. We then present a dedicated biomass feedstock supply system for energy production based on a SRIC Eucalyptus plantation on the island of Hawaii. We have deliberately chosen to present biomass energy production as the most conservative,

242 220 1 I

20 0, 1870 1276 1220 1222 1220

Yllllon pounda 2M , 7 - . 220

200 180 160 140

120 102 00 60 40

20 0 1*70 1272 lS20 l@M 1220

Fig. 2. Market supply of (a) fruits and (b) vegetables in Hawaii. From reference [17], p. 59.

‘worst-case-scenario’ for forestry or other agricultural enterprises being considered in Hawaii. We have reasoned that if short-rotation forestry for energy production (again the least economic activity envisioned) is determined to be viable commercially, then other forestry and agricultural ventures hold even greater promise and should be considered as a higher priority.

2. HYPOTHETICAL, INTEGRATED FORESTRY OPERATION FOR HAWAII

To illustrate how value-added forest products can enhance the profitability of a forestry venture, a hypothetical, integrated, high-value hardwood, veneer, utility lumber and wood-chip operation appropriate for the island of Hawaii might be scaled at 17,200 hectares (former Hamakua and Hilo coast sugarcane land), with a harvesting unit of approximately 860 ha yr-’ at a rotation age of 20 yr (Table 4). The annual production of these forest products is 32,000 dry Mg yr-’ in high-quality saw logs, 44,000 dry Mg year-’ in veneer logs, 56,000 dry Mg year-’ in utility logs, and 145,000 Mg year-’ in wood chips (anticipated harvesting and handling losses of 15% have been subtracted from the annual production values). These yield values are based on 20-yr cumulative totals for each 860-ha unit, which include the products from commercial thinnings at $10 and 15 years after planting. The initial commercial thinning after 5 yr of growth will provide only wood chips. At year 10, a second thinning will produce 25% utility saw logs and 75% wood chips, and the last thinning at 15 years after planting will provide 25% veneer logs, 25% utility saw logs and 50% wood chips. Stumpage at the rotation age of 20 yr will provide 25% high-quality saw logs, 25% veneer logs, 25% utility saw logs and 25% wood chips.

Using unit stumpage values of $200 dry Mg-’ for high-quality saw logs, $100 dry Mg-’ for veneer logs, $50 dry Mg-’ for utility saw logs, and $10 dry Mg-’ for wood chips and a discount rate of 5%, the combined total stumpage value for a single harvesting unit is approximately %6,660,000. By subtracting stumpage production

238 V.D. P~LLIPS et al.

Table 3. Comparison of employment rate by alternative land use in Hawaii

Land use Labor

(No. of people ha-‘)

Hectares in production

(ha) Total labor

(No. of people)

Crops Sugar 0.08* 62,240 5146 Pineapple 0.15t 11,360 1700 Vegetables 0.331 1875 610 Fruits and melons 0.231 2054 480

Forestry 0.0565

*The employment at sugar companies in 199 1 divided by the number of hectares of sugar crops in 1991.“,‘*

tThe employment by the pineapple industry in 1990 divided by the number of hectares of pineapple in 1990.“,r9

IEstimated increase in employment in 1991 divided by the estimate of additional hectares.*O §Assume 30% less than the sugar plantation.

Table 4. Net return estimates of a hypothetical integrated forest products system for Hawaii

Total area (ha) 17.200

Area harvested after 20 yr (ha yr-‘) 860 Rotation age (yr)* 20 Annual production*,t (rn’ yr-‘) (dry Mg yr-‘)

High-quality saw logs 64,300 32,150 Veneer logs for laminated veneer lumber/plywood 88,580 44,290 Saw logs for utility lumber 111,380 55,690 Wood chips 290,300 145,150

Unit stumpage value$ (S m-3) High-quality saw logs 100

(S dry ?Q-‘)

Veneer logs for laminated veneer lumber/plywood 50 100 Saw logs for utility lumber 25 50 Wood chips 5 10

Stumpage present value ($1000 yr-I)§ High-quality saw logs 2545 Veneer logs for laminated veneer lumber/plywood 1885 Saw logs for utility lumber 1310 Wood chips 919 Combined total stumpage value 6659

Production cost (SlOOO yr-‘)]I 5073 Net return

$1000 yr-‘7 1586 $ ha-’ yr-’ 1843

*Yield values are 20-yr cumulative totals for each 860-ha unit. Commercial thinning at year 5 will provide 100% chip logs, commercial thinning at year 10 will provide 25% saw logs and 75% chip logs, commercial thinning at age 15 will provide 25% veneer logs, 25% utility saw logs and 50% chips, and stumpage at age 20 will provide 25% high-quality saw logs, 25% veneer logs, 25% utility saw logs and 25% chip~.~~~*~~~

THatvesting and handling losses of 15% have been subtracted from annual production values.

SPersonal communication (1993) with J. Groome, Consulting Forester of Groome Poyry Ltd.

§Discount rate if 5%. (IProduction cost is exclusive of harvesting, transport and processing costs. BNet return = stumpage value-production cost.

costs, which are exclusive of harvesting, transport and processing costs, of approximately $5070,000 for each harvesting unit, the estimated net return for stumpage in a single harvesting unit is approximately $1,590,000, or $1,840 ha yrr’ (Table 4).

The production and revenue percentage estimates, which are inversely related, for this hypothetical forestry operation in Hawaii are summarized in Table 5. For example, while the

high-quality saw log component makes the smallest contribution (only 11%) to total production from the harvesting unit, it generates the largest portion (38%) of revenue. The wood-chip component makes the largest contri- bution (52%) to production, yet because of the low stumpage value for wood chips contributes the least (only 14%) to total revenue. The veneer logs and utility saw logs are intermediate in contributions to both production and revenue. It

Short-rotation forestry 239

is noteworthy that the 14% contribution to revenue attributable to wood chips may correspond to an investor’s expected profit margin.

The integrated forest products system pre- sented above would provide a total of approximately 145,000 dry Mg of Eucalyptus wood chips from each 860-ha harvesting unit over 20 yr. In the following section, a dedicated biomass energy feedstock supply system, which features E. saligna wood-chip production exclusively on a 7-yr rotation at a Hilo coast plantation, would roughly produce an equivalent amount of wood chips (151,000 dry Mg) from a single, whole-tree harvest of a harvesting unit of the same size. By considering three rotations (21 yr), the dedicated biomass energy plantation, which converts all of the above-ground biomass to wood chips, could produce over 300% more chips per harvesting unit than the integrated forestry operation, or 454,000 dry Mg. A complex of economics, energy and environmen- tal security, politics and public opinion, ultimately determines which, if either, land-use

scenario the people of Hawaii might choose to implement.

3. SRIC WOODY BIOMASS DECISION SUPPORT SYSTEM

To provide useful information to those interested in short-rotation forestry dedicated solely for energy production, our research team at the University of Hawaii developed a decision support system featuring three integrated components: (1) empirical SRIC yield models of three promising tropical hardwoods, Eucalyptus grandis (flooded gum), E. saligna and Lmcaena leucocephala (arboreal or Salvador leucaena), constructed using growth data, site character- istics and management variables from field trials in Hawaii; (2) a SRIC biomass system model of production costs, including establishment, main- tenance, harvesting, transport and storage; and (3) a geographical information system to extend the analysis to areas where no field trials exist and to enhance the communication of results visually. 5~12~‘3 In this paper, three sites on the

Table 5. Production and revenue percentage estimates for a hypothetical integrated forest products system in Hawaii

Contribution Contribution to production to revenue

Forest product (%) (%) High-quality saw logs 11 38 Veneer logs for laminated veneer lumber/plywood 16 28 Saw logs for utility lumber 20 20 wood ChiDS 52 14

Table 6. Assumptions for the SRIC biomass system model and financial/economic cost estimates of E. saligna chip production on the island of Hawaii

Input parameter/operation* Hamakua coastt Hilo coast7 Ka’u$

Plantation size (ha) 7778 9433 3892

Land lease and taxes Establishment

(land preparation and sowing) Herbicide & fertilizer application Harvesting Transport Storage and handling/processing loss

(15% of harvested biomass) Total delivered cost

6.09

4.22 10.02 15.58 3.16

6.91 46.04

($ dry Mg-‘) 5.98

3.63 9.32

14.59 2.26

6.11 40.76

19.51

7.50 12.66 19.92 3.72

8.45 71.76

*Analvtical assumntions include $100 ha-’ for land lease and taxes, discount rate of 5%, 30-yr I& of production, and two coppice cycles before replanting with seedlings, plantation establishment cost ranges from S680 to $830 ha-‘, maintenance cost ranges from $940 to $1076 ha-‘, and transport cost equals $0.10 dry Mg-’ km-’ on paved road and SO. 14 dry Mg-’ km-’ on unpaved road.4.12.”

tGrowing space = 7 m*, rotation age = 7 yr, nitrogen fertilizer application = 0.15 kg tree-‘.

$Growing space = 12 m2, rotation age = 9 yr, nitrogen fertilizer application = 0.15 kg tree-‘.

240 V.D. PHILLIPS et al.

Table 7. Potential SRIC production of E. suligna based on optimized management strategy at three sites on the island of Hawaii

Yield range

(dry Mg ha-‘)

<lOo 100-150 150-200 >200

Total

Average yield

Hamakua coast* Biomass

Area production

(ha) (10’ dry Mg)

1322 108 1852 231 1859 320 2745 725

7778 1384

178 (dry Mg ha-l)

Hilo coast* Biomass

Area production

(ha) (10” dry Mg)

22 2 1830 238 5468 975 2113 449

9433 1664

176 (dry Mg ha-‘)

Ka’ut Biomass

Area production

(ha) (10” dry Mg)

4524 253 501 58

14 2 741 265

5780 578

100 (dry Ma ha-‘)

*Growing space = 7 m*, rotation age = 7 yr, nitrogen fertilizer application = 0.15 kg treee’. TGrowing space = 12 m*, rotation age = 9 yr, nitrogen fertilizer application = 0.15 kg tree-‘.

Table 8. Cost estimates of E. saiigna chips delivered to specific bioconversion plants on the island of Hawaii

Hamakua coast plantations Hilo coast plantations to Ka’u plantations to Ka’u to Hamakua Sugar Co. mill Hilo Coast Processing Co. mill Agribusiness Co. mill

Cost range at Haina (15 km)* at Pepeekeo (11 km)* at Pahala (15 km)*

(S dry Mg-‘) (10’ dry Mg yr-‘)t

<35 83 36 25 3W 18 90 0 >40 67 75 30

*Average distance from plantations to mill. tIncludes 15% feedstock handling and storage loss.

island of Hawaii were analyzed using the above methodology to estimate yield and delivered cost of feedstocks for conversion to ethanol, methanol, and electricity. Estimates of capital, 0 and M, feedstock, and production costs at the plant gate ($I-’ and $ kWh-‘) are presented for one site on the north-eastern, ‘Hilo’ coast of the island of Hawaii.

Because E. saligna demonstrated the highest yields and lowest delivered costs at all three sites modeled, we only present results for this species. Assumptions for the SRIC biomass system model and financial/economic cost estimates for E. saligna chip production on the island of

were calculated for the Hamakua coast, Hilo coast and Ka’u district on the island of Hawaii (Tables 7 and 8). The Hilo coast site was the most productive one modeled and could provide more than 1,600,OOO dry Mg over 7 yr (Table 7) with most of the feedstock costing under $40 dry Mg-’ (Table 8). Using an optimum SRIC management strategy of approximately 7 m* of growing space and 7 yr of age at harvest for Hilo coast E. saligna plantations, the average cost of chips delivered to a bioconversion facility located at Pepeekeo is x$40 dry Mg-’ (Fig. 3). The ‘bulls-eye’ of $40 dry Mg-’ identified in Fig. 3 is the least-cost production target achieved by optimizing _ _

Hawaii are listed in Table 6. Yield (dry Mg) and cost estimates ($ dry Mg-‘) of delivered chips

zm

$ 6”. -0 C

ISa - .

H d 1 lrn

Pa B

% m-

?%?&!!a urlay_lrs w wk?vug ef&.y -up 8 J.-/

0 A&. drlliered 2 @/dry :g, 40 42

* 2 4 timwing &a (rr?)

10 11 9.

Fig. 4. Potential biomass supply curve of Eucalyptus sdigna

Fig. 3. Optimum SRIC management strategy for Eucalyptus based on optimized management strategy for Hilo coast

saligna plantations, Hilo coast, Hawaii. plantations with delivery of chips to Hilo Coast Processing

Co. mill at Pepeekeo, Hawaii.

Short-rotation forestry 241

188 158 1838 ha

150 - 288 5468 ha

Hi lo Coast Proce55

Fig. 5. Estimated Eucalyptus saligna yield based on optimized management strategy, Hilo coast plantations, Hawaii.

growing space and rotation age to result in the of the plantation area after 7 yr of growth, minimum delivered cost of E. saligna from the 200,000 dry Mg year-’ could be produced at Hilo coast plantation to the Pepeekeo factory. A ~$40 dry Mg-’ (Fig. 4). Hilo coast E. saligna potential biomass supply curve of E. suligna from yield and delivered cost maps, which feature the the Hilo coast indicates that from a harvest of l/7 results of cumulative production of the total

DEL IUERED COST

(doI lors’dry Mgl I. sol igna 1423 trees/ha

8.15 kg flltree 1 year5

35 f 35 ?ilrlllBB dry lig

) 40 639rlflM dry tig 525xlg9g dry Hg

?? Uiaronuersion Plant

Proce:s at Pepeel

ir ye

:_.

L

Fig. 6. Cost estimates of Eucalyprus saligna chips delivered from Hilo coast plantations to Hilo Coast Processing Co. mill at Pepeekeo, Hawaii.

-5 0 +5 40

% Change to component

Fig. I. Sensitivity of delivered cost of Eucalyptus saligna chips to changes in SRIC biomass system component costs and

yield.

plantation area at the 7-yr rotation age, are showcased in Figs 5 and 6. Sensitivity analyses revealed that delivered cost is affected mostly by biomass yield and harvesting costs (Fig. 7).

4. COST ESTIMATES OF BIOMASS ENERGY PRODUCTS

These feedstock results were then used with specific bioconversion processes for estimating

242 V. D. PHILLIPS et al.

0’ I 14 II R*skdRel oil pricd;m) 10 (0

Fig. 8. Sensitivity of internal rate of return (IRR) to changes in residual fuel oil price (FOB) Hi10 coast, Hawaii.

the costs of manufacturing energy products at a plant capacity of 95 million 1 yr-’ (25 million gallons yr-‘) for ethanol and methanol fuels and 25 MWe for electricity. The technology and assumptions for each of the bioconversion processes used to estimate costs are described by Hohmann and Rendleman14 for ethanol, Wyman et ~1.‘~ for ethanol and methanol, and the U. S. Department of EnergyI for electricity. Using the plant capacities and bioconversion processes above, calculations for ethanol production were

Table 9. Component costs for deriving cost estimates of biomass energy products

Ethanol* Methanol? Electricity?

Plant size (dry Mg year-‘) 250,000 134,000 100,000 Plant capacity (lo6 1 day-’ or MW) 95 95 25 Capital cost ( IO6 $) 56.2 55.0 38.2 Capital cost ($I-’ yr-’ or % kW-‘) 0.596 0.583 1582 Stream factor (%) 90 91 70

Cost of production (g 1-l or $ kWh-‘) A: capital cost 0.151 0.091 0.035 B: feed cost 0.096 0.047 0.021 C: non-feed operating cost 0.073 0.076 0.015

Total (A + B + C) 0.320 0.214 0.071

*Based on references’4~‘s and feed cost of $40 dry Mg-‘. tBased on an after-tax return using 45% debt, 10% cost of debt, 10% cost of capital, 38%

tax, 20-yr modified accelerated cost recovery depreciation schedule, and feed cost of $36 dry Mg-‘.

Table 10. Cost estimates of biomass energy products manufactured at a hypothetical bioconversion facility at Pepeekeo, Hawaii

Energy product

Cost estimates* Ethanol (lo6 %)t Methanoli Electricity (106 %)§

(106 8)

Capital costs 56.2 55.0 38.2 0 and M costs 1.7 7.9 2.2 Feedstock costs 9.1 4.4 3.3

Levelized cost $0.32 1-l $0.21 1-l $0.071 kWh-’ (El.21 gallon-‘) ($0.80 gallon-‘)

*1991 us $. tSimultaneous saccharification and fermentation system, capacity = 95 x 106 1 yr-‘. SLOW-pressure indirect gasifier with hot-gas conditioning and methanol synthesis,

capacity = 95 x lo6 11 yr-I. $Fixed-bed gasifier coupled to open cycle turbine, capacity = 25 MWe.

Short-rotation forestry 243

based on a simultaneous saccharification and fermentation system that would achieve 378 1 ethanol dry Mg-’ feedstock (100 gallons ethanol dry Mg-‘) and would require approximately 250,000 dry Mg feedstock annually. Calculations for methanol production were based on a low-pressure indirect gasifier with hot-gas conditioning and methanol synthesis that would provide 704 1 methanol dry Mg-’ feedstock (186 gallons methanol dry Mg-‘) and would require approximately 134,000 dry Mg feedstock annu- ally. Electricity calculations were based on a fixed-bed gasifier coupled to an open-cycle turbine that would generate approximately 1,400 kWh dry Mg-’ feedstock and would require approximately 100,000 dry Mg feedstock annu- ally.

The component costs for deriving cost estimates of biomass energy products are summarized in Table 9. Preliminary levelized cost estimates are $0.32 1-l for ethanol (at 2/3 energy equivalent of gasoline, the energy-equiv- alent cost of ethanol is $0.48 l-l), $0.21 1-l for methanol (at l/2 energy equivalent of gasoline, the energy-equivalent cost of methanol is $0.42 l-‘), and $0.071 kWh-’ for electricity (Table 10). For comparison, the prices of the current sources of energy in Hawaii are roughly $0.40 1-l for unleaded regular gasoline, and $0.10-0.12 kWh-’ for electricity generated by burning residual fuel oil, which fluctuates between $15-20 barrel-‘. The energy content of one barrel of residual fuel oil is equivalent to 0.336 dry Mg biomass. Because biomass would replace residual fuel oil in this renewable energy scenario, the sensitivity of internal rate of return (IRR) to changes in residual fuel oil price was analyzed (Fig. 8). The IRR calculation, which applies only to feedstock production, was based on the assumption that wood chips would be sold as fuel and valued at the market price of residual fuel oil. An increase in residual fuel oil price of $3 barrel-’ would result in almost an eight-fold IRR increase (from x0.01 to x0.08).

5. CONCLUSION

Sustainable SRIC tree-farming and biocon- version of woody feedstocks to renewable biomass energy end-products that could replace imported petroleum for surface transportation fuels and electricity appear to be economically feasible in Hawaii. While short-rotation forestry for biofuels production may hold some promise for the greening of Hawaii’s energy system, other

value-added uses of fast-growing tropical hardwoods may have greater economic poten- tial. Marketing studies of fiberboard, veneer, plywood, utility lumber, chips for pulp and paper products and other wood products should be initiated to confirm opportunities for attracting investors, providing jobs and stimulating the local economy in Hawaii.

Acknowledgements-The research was supported by the U.S. Department of Energy and administered by the National Renewable Energy Laboratory through subcontract No. X2-2-12025-1 to the Hawaii Natural Energy Institute, University of Hawaii at Manoa. We thank the Department of Biosystems Engineering (Tung Liang), University of Hawaii at Manoa, for access to the Hawaii Natural Resource Information System geographical information system and database. We recognize the pioneering efforts on SRIC forestry of the BioEnergy Development Corporation (Thomas Crabb and Thomas Schubert), Hilo, Hawaii; the U.S. Forest Service Institute of Pacific Islands Forestry (Craig Whitesell), Honolulu, Hawaii; the Hawaiian Sugar Planters’ Association (Robert Osgood and Nick Dudley), Aiea, Hawaii; and the Department of Horticulture, University of Hawaii at Manoa (James Brewbaker, Robert Wheeler and Michael Austin), Honolulu, Hawaii, from whom we collected data for constructing our SRIC biomass system models. We thank the National Renewable Energy Laboratory for access to process simulation and economic evaluation software. This paper is Hawaii Agricultural Experiment Station Journal Series Number 3999.

1.

2.

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