Forest Futures: Convening experts in Policy, Forestry, and Investment

Forest Futures Logo

In mid-September 2019, nearly fifty leaders gathered in Truckee and Loyalton, CA, for an honest investigation into solutions to the dangerous overcrowding of California’s forests. Invited guests included policy makers, philanthropists, investors, forestry experts, and biomass market experts. Tahoe Truckee Community Foundation (TTCF) sponsored this event alongside Sierra Business Council (SBC), ARP Renewable Power (ARP), and facilitating partner the Joint Institute for Wood Innovation through the California Board of Forestry.

Our objective was to engage diverse leaders on one question:

How do we create regional biomass economies in rural California as a way to approach forest management?

FOREST HEALTH: A PRESSING NEED AND AN IMMINENT THREAT

Our forests are dangerously overcrowded, we can see this every day as we drive through the Tahoe-Truckee region, not unique to other forests in California. Decades of mismanagement has led to hazardous conditions that have been amplified through years of prolonged drought. Dead and dying biomass slash piles of limbs, branches and small diameter trees, awaiting removal in massive piles known as ‘decks’ all throughout our region. In the meantime, they sit on the land increasing fire hazard in a community already slated as high risk. The question is:

How do we flip this challenge into an opportunity? How do we get this biomass, and our trees to work for us?

We convened experts from diverse fields to tackle this wide-reaching issue. Our aim was to create opportunities for people to ask questions, receive immediate answers, test assumptions, and draw out potential pathways to solutions – real time.

This slash pile has been waiting for forest removal for three years. Currently, there are 800,000 piles like these on our forest floor.

FOUR STEPS TO HEALTHIER FORESTS: HARVEST, TRANSPORT, PROCESS, BRING TO MARKET

Together, we brainstormed how California could develop a campus- style or coop-style system that gets the small-diameter trees and biomass out of the forest and into high value wood-products. This will require research, the right partnerships, policy shifts, community support and private and philanthropic investments. Throughout the event’s tours, presentations, and workshops, the collective agreed that addressing the challenge across sectors is critical and agreed that one goal might be a campus-model.

Harvesting and Transportation: A Sharing Economy

Harvesting and transportation of biomass is costly. Tahoe’s slash piles are located deep in the forest and require special, expensive equipment to access and harvest the wood. For a forest project operator to own and operate this equipment, millions of dollars are required upfront to purchase. It also requires trained professionals to operate, maintain and repair the equipment. Employing technically-skilled professionals requires consistent reliable financing. In short, it’s a costly, vulnerable, challenging business to operate. This is a major concern in improving supply-predictability for end-market processors. 

One solution takes a page from the sharing economy. A cooperative of organizations could use a blend of philanthropic and public funds to purchase these expensive suites of equipment for local projects. Forest operators, often small entrepreneurs, could rent the equipment avoiding the upfront capital costs, and encouraging more forest projects to scale at the pace we need.  To scale at the pace we need. The obligation to maintain the equipment and the liability for damage would fall not on small business entrepreneurs incapable of absorbing that kind of expense, but rather on the collective itself who own the equipment.

Processing: A Campus Model

Rural forested communities often suffer from a lack of opportunity. Since the closure of the Loyalton lumber mill in 2010, Sierra County’s population has aged significantly and declined 8% as workers fled to find jobs elsewhere. Reviving wood-based industries in will create living-wage jobs and more vibrant rural  communities.

Legacy infrastructure exists in many rural areas: old abandoned sawmills and biomass facilities. If small biomass processing facilities were locally-owned and/or cooperatively owned, that anchor infrastructure could provide the stability for these locations to become testing grounds for new products — hubs or campuses for the production of innovative wood products, building demand and a pipeline for the trees that otherwise sit, like kindling, on our public lands. 

The touch-stone project of the Forest Futures gathering was the 200-acre Loyalton Biomass Facility and Resource-Regen Campus. Loyalton’s biomass facility closed ten years ago, and with it fell Loyalton’s population. Two years ago, American Renewable Power bought the biomass plant. In consort with Sierra Business Council, ARP is moving towards a campus model. The vision is to engage entrepreneurs and businesses with wood-products, to match with Impact Investors, to  offer job training and residences on site, create a campus of innovation and entrepreneurship, powered by renewable energy, heat and steam processed on-site and supported by lightning fast gigabit fiber already in place.

Markets: From Electricity to Advanced Structural Wood Products

Biochar, a by-product of pyrolisis and a currently nascent-stage market in California, has been the darling of many advocates for its carbon sequestration potential. However, markets for biochar remain stagnant for a variety of reasons related to displacement of fertilizers and ecological and economic challenges in scaling. Throughout the conversations there was a tension between structural wood products and the shift thinking away from power and energy and toward profitable advanced wood products like small diameter wood processing, cross-laminated timber (CLT), oriented strand board (OSB) and bioplastics.  Discussions reflected the need to think of several end-markets and product categories along a combined supply chain in order to increase the efficiency and economics of processing — in other words, a symbiotic processing relationship between biomass to electrical energy which enables the lower cost production of value added wood products through co-generated power

Not only do these advanced structural wood products sequester carbon for a long period of time, they also replace the use of carbon-intensive steel and concrete. With supportive policy shifts, such as requiring new public sector buildings and incentivizing housing developers to use California-produced wood products, we could see these products play a big role in restoring our forests, helping California meet its ambitious climate goals.  Imagine our small-diameter trees, the high hazard fuels that currently put us at risk, playing a significant role in our State’s housing crisis and decreasing the risk of catastrophic fire in the process.

INNOVATIVE FINANCING

Innovative financing and blended capital is critical to to breaking through the uncertainty that curtails private capital investment and unlocking reliable, long-term public funding. Public, private, and philanthropic leaders must leverage collective resources and think creatively about opportunities to scale solutions cooperatively. 

Pre-development financing is critical to decreasing uncertainty for public land managers and harvesting and contracting businesses. Blue Forest Conservation’s Forest Resiliency Bond is one such model – a public-private partnership to provide upfront funding for approved forest management projects in the form of a bond, which then provides a modest return to investors after public financing is complete. This may be, for example, a wise and low-risk investment for insurance companies, Institutional investors and others who stand to benefit from increased ecological resilience (by fulfilling fewer claims) as a result. The financing is repaid to investors – with interest from ecosystem services co-benefits – by public utilities, state agencies, and flood control districts. 

Reliable investment in end-market products is also needed to scale ecological forestry and secure any ‘wood innovation campus model’. One option may be a diversified Opportunity Zone fund which is de-risked through real estate and land investments in peri-urban Opportunity Zones while putting significant capital toward kick-starting structural wood businesses and processing infrastructure for high hazard fuels in California.

A VISION FOR THE FUTURE: 20 YEARS AHEAD

Decreasing catastrophic fire in our state may be the motivation for swift action and increased funding, but it’s the co-benefits and avoided costs, both in dollars and carbon, behind these strategies which is truly exciting.  These strategies can save the communities we love, reduce the spread of toxic air in our urban communities, increase biodiversity, reduce mudslides, maintain (and possibly improve) healthy watersheds for the entire state, and the list goes on. 

Together, we envisioned what these benefits might look like 20 years from now:

  • California is able to compete in national and international sustainable wood markets by tapping our State’s cutting edge tech sector and translating it to our wood-use industries. 
  • California is a more equitable economy by all measures. 
  • Fire and health insurance are readily available to rural residents.
  • Kids from rural communities can live- and raise their families – on living-wage jobs.
  • Our State is invested in education and jobs that focus on rural California — resulting in the growth of economic value of our rural regions and is seen as a critical component of the ecosystem services of our urban regions. 
  • Forest carbon is accounted for, effectively, in California’s carbon markets.
  • There is a “big rowdy party” every year, celebrating California as the #1 lowest carbon economy in the world

WHAT YOU CAN DO NOW

To move this work forward, we need policy makers to continue to engage, local leaders to advocate, entrepreneurs to innovate, and donors and investors to give and invest. If you would like to learn more about this work, please contact us. 

Stacy Caldwell, CEO- Tahoe Truckee Community Foundation: stacy@ttcf.net

Steve Frisch– Director, Sierra Business Council: sfrisch@sierrabusiness.org

Kevin Lee– CEO, American Renewable Power: kevin.lee@amerpower.com

Teal Brown– Galvanize Partners: teal@galvanizepartners.com