economics_debt
Britain’s bond-buying accelerates fall in global borrowing costs.
Britain’s revived programme of mass bond-buying accelerated a fall in global bond yields on Wednesday in the latest sign of how central bank policy has intensified a worldwide collapse in borrowing costs this year.
The Bank of England this month announced a new £70bn asset purchase programme designed to address fears of an economic slowdown after Britain voted to leave the EU, joining the European Central Bank and Bank of Japan to become the third major central bank engaged in quantitative easing.
The speed and extent of market reaction to the BoE’s monetary easing programme indicated a change among investors who previously doubted the ability of central banks to further suppress bond yields, said Steven Major, head of fixed income research at HSBC.
“The Bank has made it clear that the next move is lower rates and possibly more QE — if they can find the bonds to buy — which is why this new round of easing is having an influence on everything in markets. It has shifted expectations towards further easing in Europe and away from a rate rise in the US.”
Demand for UK bonds meant yields on two short-dated gilts due in March 2019 and March 2020 briefly traded in negative territory on Wednesday while interest rates across all other maturities fell to fresh lows.
UK’s benchmark 10-year borrowing rate fell to an all-time low of 0.51 per cent on Wednesday as the BoE successfully completed its third day of QE after failing to buy £1.17bn of long-dated paper on Tuesday.
Rates on long-dated 30-year gilts fell to 1.26 per cent for the first time as investors bet that the central bank would be forced to pay sharply higher prices for the debt in order to meet its purchase targets as pension funds and insurance companies prove reluctant to sell.
In global markets, yields on 10-year bonds issued by Spain and Ireland set new record lows of 0.9 per cent and 0.33 per cent respectively. Investor demand for the sale of new 10-year US Treasury notes was strong on Wednesday and the yield for the current benchmark fell 3 basis points to 1.51 per cent. China’s benchmark bond yield fell below 2.7 per cent, the lowest since the global financial crisis.
FT Explainer: BoE bond buying hits turbulence
Holders of long-dated gilts resist selling, and rally in short-dated paper takes yields negative
The moves marked a sharp reversal in sentiment from just six months ago, when many investors had begun to doubt the potency of central bank policies following the BoJ’s adoption of negative interest rates after more than a decade of other measures failed to stimulate inflation.
“This reaction is striking when you consider that we are only on day three of a six-month QE programme in the UK,” said Mike Amey, portfolio manager at Pimco, one of the world’s largest investors, which expects to see further rate interest rate cuts in the UK.
BoE governor Mark Carney has explicitly stated that negative interest rates — which put pressure on bank profits — are not an option but policymakers have left the door open to a further interest rate cut.
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As China's economy slows, Beijing's growth push loses punch.
High debt and a glut of unneeded factories are hindering the government’s usual method of using spending and lending to create more activity.
By NEIL GOUGH and OWEN GUOJULY 15, 2016
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The construction site for a coal-fired power plant in Leizhou, China. It is among projects approved by the government as part of a push for economic revival. Credit Lam Yik Fei for The New York Times
LEIZHOU, China — Mo Ping for years made his living by tending the mango and jujube trees that he grew on less than an acre on this tip of land in the far south of China.
Then last year Mr. Mo and others in his village near the city of Leizhou received what they considered a lowball offer to sell their land to make way for a $1.5 billion coal-fired power plant. Most rejected it, but the local government sent in bulldozers anyway.
“There were several hundred police on the scene, and they wouldn’t allow us to get anywhere near the farm,” said Mr. Mo, a 51-year-old with dirt caked under his close-trimmed fingernails. “My heart ached and I cried because I was really upset.”
The coal plant is part of a huge and expensive government push to reinvigorate the Chinese economy. Officials have fast-tracked the plant in recent months along with scores of bridges, railways, factories and other construction projects to counter an economic slowdown. China on Friday reported that its economy grew 6.7 percent in the quarter ended in June compared with a year ago, a level that matches the slowest pace since the global financial crisis.
Such revival efforts have worked before. Seven years ago, in the aftermath of the financial crisis, China unleashed a lending-and-spending binge that spared the country the painful recessions that struck the United States and Europe.
But times have changed, economists say. With China’s debt levels mounting and its industries plagued with unneeded factories, China’s traditional tactics don’t pack the same punch.
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Mo Ping, a mango and jujube farmer who says he was offered too little for his land, which was taken anyway to make way for the Leizhou power plant. Credit Lam Yik Fei for The New York Times
Instead of new growth, “we’re going to continue to see a rise in debt levels, and credit not really having the impact that it could to support the economy,” said Julian Evans-Pritchard, China economist at Capital Economics.
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Late last year, as China’s economy slowed, officials ramped up project approvals to stir up more economic activity. At the same time, the country unleashed a lending spree through its state-controlled banks. Credit in China is now growing four times as fast as the broader economy, estimates George Magnus, an associate at the China Center at Oxford University and a senior adviser at UBS, the Swiss bank.
But thanks in part to the post-crisis stimulus effort, China’s corporate debt now amounts to 160 percent of its economic output and is growing fast, according to a recent International Monetary Fund report. With so much debt on their books, Chinese companies are less able to spend on new projects, even with generous government aid, because they face large outlays for interest costs.
After the financial crisis, as now, a lot of the government money went into areas where China already has too many idle or underused factories, like steel, manufacturing and coal-fired power plants. “Credit creation is driving a rising misallocation of resources,” Mr. Magnus said.
The Leizhou plant is one of scores of new coal-fired plants being built across China, representing about 200 gigawatts of generating capacity, according to estimates from Greenpeace, or about twice the total capacity of Britain.
Coal-fired power plants, in particular, look increasingly unnecessary. Last year, China’s coal plants — which generally aim to operate an average of about 5,500 hours per year — operated at an average of about 4,300 hours, according to Alvin Cheng and Jenny Huang, energy analysts at Fitch Ratings. Fitch expects average use to fall to fewer than 3,600 hours by next year.
Beijing, worried about waste and the country’s pernicious pollution problems, in April published guidelines that would halt approvals for new coal-fired plants in many areas of the country. But that ban would not apply to projects already under construction, like the plant in Leizhou.
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Construction work for the Leizhou plant. Critics say the country already has too many power plants. Credit Lam Yik Fei for The New York Times
“There’s so much overcapacity, there is no point in building a plant like this,” Lin Boqiang, an energy expert at Xiamen University, said in a telephone interview. “This would be a waste of investment,” he added. “It’s as simple as this.”
Built by an arm of the state-run company China Datang Corporation, the Leizhou plant will be able to produce up to 2 gigawatts of power — more than the total coal-fired power generation capacity installed in the state of New York.
Datang had been trying to build the plant for a decade but started construction in earnest only in December, after receiving final approval around the time that many other infrastructure projects around China were getting the green light or expedited. Officials said antipollution equipment will make it a “near zero emission” plant that will be “internationally advanced.”
It will also, they say, help the local economy. The plant will “kick off a big industry era locally,” said Liu Xiaohua, a local Communist Party secretary, at a ceremony in December. (Mr. Liu has since committed suicide, according to Chinese state media. There is no evidence that his suicide was connected to the plant or his work in Zhanjiang, which includes Leizhou in its jurisdiction.)
Local officials and Datang executives did not respond to requests for comment.
Leizhou is one of the poorer places in Guangdong Province, according to official data. Industry is scant here, although the province includes one of China’s main manufacturing hubs. In Leizhou’s main urban area, giant billboards tower over street intersections warning against the dangers of taking drugs — locals say methamphetamine and ketamine are most common.
Mr. Mo is one of hundreds of villagers who say their livelihoods and the local environment are at risk. For generations, people in villages here along the coast of the Gulf of Tonkin have lived off the land and the sea, farming, fishing and processing sea salt. The ample summer rains and subtropical climate lend themselves to growing fruit.
Some residents are skeptical that the plant will bring jobs for locals, saying that most likely it will import workers from other areas.
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Villagers affected by the building of the Leizhou power plant. Many locals have protested against land seizures. Credit Lam Yik Fei for The New York Times
“The project brings us no benefits, and we have no compensation,” said Zhou Shu, 35, a fisherman who was playing cards with friends in the shade of a tree near a village store on a recent afternoon.
They worry instead that related construction along the coastline could destroy their livelihoods. “We live by the sea, so we depend on it to make a living,” he said.
The big worry for many is pollution. “We don’t have a lot of land to farm in our village,” said Liang Zhuang, a fisherman from Gangcai whose family has been making a living from the sea here for generations. “So if there’s pollution in the sea, we will lose the main safeguard of our livelihood.”
The land seizures began two years ago after a number of farmers declined buyout offers. The money local officials offered to Mr. Mo, the onetime mango and jujube farmer, who made about $1,500 a year selling the fruit he grew, was less than half what Chinese law requires for official land purchases.
On a recent steamy afternoon, with a rooster crowing in his backyard, Mr. Mo showed a petition against the land seizures that was signed by around 400 villagers, who included their thumbprints in red ink on the reams of sweat-stained paper. Mr. Mo figures that maybe only a third of villagers who lost their land had agreed to the compensation offer.
Others protested. When Mr. Mo’s wife joined thousands of other villagers in a protest last year against the plant, she was beaten by the police with electric batons, he said. His wife pointed to her back to show where the batons fell.
Mr. Mo said that he plans to travel to Beijing, some 1,500 miles away, to petition national authorities if he cannot get satisfactory compensation. Other than that, he said, he has few options.
“Sometimes it’s pointless for us to fight government attempts to take our land,” Mr. Mo said. “They will put us in jail. We’re afraid.”
Cao Li contributed research from Beijing.
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California biomass plants make pitch for dead trees to produce electricity.
Trees are dying in the Sierra at modern-day unprecedented rates, posing elevated fire danger and creating health, water and air quality concerns, but a possible solution to rid the forest of dead and dying trees is getting the short end of the stick, officials say.
BY MARC BENJAMIN
mbenjamin@fresnobee.com
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Trees are dying in the Sierra at modern-day unprecedented rates, posing elevated fire danger and creating health, water and air quality concerns, but a possible solution to rid the forest of dead and dying trees is getting the short end of the stick, officials say.
California’s biomass industry, set up regionally to turn agricultural waste into electricity while eliminating open burning, but many local biomass plants have closed or are closing soon because it costs less to produce electricity with solar and wind.
As contracts expired with investor-owned utilities, biomass plants have shut down in Delano, Mendota, Firebaugh, Dinuba, and Terra Bella, leaving a handful in the Valley: Malaga, Chowchilla, El Nido and Mount Poso, north of Bakersfield.
Environmentalists criticize biomass plants because they emit pollution, but the San Joaquin Valley Air Pollution Control District’s executive director says they are preferable to open agricultural burning or a raging forest conflagration that could pump huge amounts of unfiltered smoke and particulates airborne – as did the recent Erskine fire and the Rough fire last year.
At its peak, the Rough fire was emitting 25 times more particulate matter, 105 times fine particulate matter, eight times more nitrogen oxides and 16 times more volatile organic compounds than occurs on a normal day in the Valley, said Seyed Sadredin, executive director of the San Joaquin Valley Air Pollution Control District.
Such fires, fueled by dead and dying trees, cost tens of millions of dollars to fight and add to the potential for health problems and lost lives and property.
“The state has made it a big priority to get rid of these dead trees, and one way they wanted to do it is to send them to biomass facilities,” Sadredin said. “But they are not doing what they should to keep biomass facilities afloat.”
Electricity generated by biomass is costlier than other options such as solar and wind, a concern to state and pubic utilities commission officials who are responsible to ratepayers, said Julee Malinowski-Ball, executive director of the California Biomass Alliance.
Diverting organic materials to biomass plants helps the state meet certain air quality and landfill goals.
California requires a 50 percent reduction of landfill waste from cities and counties compared to 1990. The state has set a policy goal of 75 percent by 2020, but it’s not mandated.
“It’s truly a no-brainer because there are a number of well-located (biomass) facilities that are underutilized,” Malinowski-Ball said. “It means millions of tons of organic material diverted from the least favorable environmental outcomes, such as landfilling and burning.”
Meanwhile, a large supply of organic material looms in the Sierra.
There are an estimated 66 million dead trees in California’s forests. The forest service has cut down 87,590 in the Sierra, Sequoia and Stanislaus national forests, the most severely hit by drought and bark beetle infestation. Thousands more have been cut down by Caltrans, electric utilities and other state and local agencies.
Trees are being cut down strategically, based on their problem potential, such as being along roadways or in danger of hitting utility lines or falling on homes, said Kim Carr, Cal Fire’s assistant deputy director for Climate and Energy, who also sits on the state’s Timber Mortality Task Force.
“There are thousands of acres of dead and dying trees, and there aren’t the resources to cut all of them,” she said.
And it’s going to get worse before it gets better, said Len Nielson, Cal Fire’s forester in the Madera-Merced-Mariposa Unit.
“It’s a curve that is getting steeper and steeper,” he said. “At some point we are going to run out of trees and bugs, and the increase will taper off.”
In more than 100 years of recordkeeping, California’s forests have never had this level of tree mortality, said Sheri Smith, regional entomologist for the U.S. Forest Service.
Madera County Supervisor Tom Wheeler points out that ratepayers also are taxpayers who will pay hundreds of millions of dollars to fight more dangerous fires and pay higher insurance rates because of destruction from fires.
“You have no control over a fire or its costs,” he said. “There are all these incentives for wind and solar but they cut them all out for biomass; it doesn’t make sense.”
Contract expiring
Minutes south of Fresno, Rio Bravo plant officials in Malaga are already chipping in, said plant manager Rick Spurlock. The plant sells 24-plus megawatts from agricultural and forest wood waste, powering an equivalent of 24,000 homes. But its electricity generating contract with Pacific Gas & Electric expires at the end of October.
Rio Bravo’s contract is one of several end this year, meaning there will be fewer options for disposing of agricultural waste locally. Meanwhile, air pollution control officials are concerned that closing Rio Bravo will lead to more open burning or increased landfilluse, and will limit options for disposing of the dead and dying trees on the forest floor and littering roadway and mountain home properties.
Contracts for biomass plants in the Valley are expiring just when they could offer the most benefit, Spurlock said.
The most recent plant to close was in Delano, which was the largest and had a potential to produce 50 megawatts. It joined plants in Mendota, Dinuba, Terra Bella and Firebaugh in recent closures because of expired contracts.
Spurlock said Rio Bravo’s shutdown will result in the loss of 25 plant jobs and a $3.5 million payroll, as well as plant expenditures of $2 million for maintenance and another $5.5 million in fuel purchases, wood and agricultural waste. Overall, he said, there are about 100 employees in the plant’s supply chain.
And, despite concerns that Rio Bravo pollutes the air, Spurlock said critics should consider the alternative.
“We are burning 35 tons of wood an hour and you see nothing come off,” he said, pointing to a smokestack behind him. “If you lit a stack of wood right here more smoke would come out.”
Solar and wind energy companies employ fewer people and have fewer expenses, and also benefit from significantly larger tax credits and property tax exemptions, he said.
Spurlock said Rio Bravo might snagutilities contracts through the state Public Utilities Commission later this year, but it will max out at 20 megawatts of power for Pacific Gas & Electric and Southern California Edison and 10 megawatts for San Diego Gas & Electric. Overall, 190 megawatts of biomass-generated electricity is going offline later this year, officials say.
The plant, built in 1988, underwent a $10 million renovation eight years ago. Each hour, it turns 35 tons of wood from agricultural waste and the forest into power sufficient for a city nearly the size of Clovis.
Spurlock said the plant keeps 98 percent of key pollutants that would have come from open field burning – nitrogen oxides, sulfur dioxides, carbon dioxide and particulates – out of the the air. Sadredin puts the figure between 80 percent and 90 percent.
Larry Osborne, general manager of the idled Dinuba and Firebaugh plants, said there’s no way to operatebiomass without a subsidy, like those provided for solar and wind energy. The Dinuba plant closed last October, and Firebaugh’s was shut down in 2012.
“It’s not like we’re trying to make a lot of extra money, it just costs more money to make power this way,” he said.
In Mendota and Delano, two plants owned by Covanta were closed when contracts expired at the end of 2014 and 2015. At one point, Covanta had five California biomass plants producing 113 megawatts. It has none now.
Opportunities to reopen will rely on subsidies and whether the state utilities commission contracts are lengthy enough to justify reopening, said James Regan, director of communications for New Jersey-based Covanta.
The 50 megawatts of biomass statewide likely won’t be enough for Covanta to restart its plants because there are no guarantees for long-term profit.
“It’s about knowing you can operate for five to 10 years that would make it viable for us to reopen,” said Regan.
He said biomass should be examined through a different prism than solar or wind. It should be viewed as an alternative to a landfills or burn piles that will pollute or allow wood to rot, Regan said.
And biomass should be judged as a power source that uses recycled material.
“I think the benefits are being overlooked,” he said.
Wood Morgue
Richard Thornton expanded his tree and orchard removal business, Right-A-Way Construction, and calls it The Wood Morgue on Dinkey. But it can’t stay open if Rio Bravo closes.
In a 5-acre clearing off Dinkey Creek Road behind signs for “The Fishing Club,” Thornton collects bark beetle-infested trees and woody debris from Southern California Edison contractors, mountain residents and their paid contractors in the Shaver Lake area.
The wood is placed in separate piles before it is run through a massive grinder and converts into wood chips. The chips are then shipped to Rio Bravo and turned into electricity.
“If they go away I don’t know what we’re going to do,” Thornton said. “There’s no use in chipping it, you may as well burn it.”
Thornton isn’t running a high-profit business because the wood has virtually no value, but the volume seems potentially endless. It costs about $400 to transport a 25-ton load from Shaver Lake to Rio Bravo, he said.
The amount Thornton charges to chip the trees pays himself and three employees, as well as the cost of transportation to Fresno.
Thornton said the magnitude of the problem is obvious, pointing to a red Mack dump truck, an Edison-hired contractor from Florida.
He is ready to open a second location near Meadow Lakes, about 25 minutes west, but would need to buy another grinder, which could cost close to $1 million.
“I’d buy another grinder because I have the work for it, but that’s only if I know I have a home for the product,” Thornton said, referring to Rio Bravo.
Riley Allen, a seventh-generation logger from Auberry who takes wood to Thornton, said the Sierra needs more businesses like The Wood Morgue.
“Without grinders and what he has and without a place to take it, everyone would be up a creek,” Allen said.
Richard Bagley, president of the Highway 168 Firesafe Council, said Thornton and the Rio Bravo plant are providing a valuable service to Fresno County’s Sierra residents.
“Everybody benefits from that being available,” Bagley said. “Right now, there would be no place for people to take their material without biomass.”
Health effects
Fires leave a swath of destruction in their wake, but one of the lingering effects of a large blaze is coughing, wheezing and extended illnesses.
The Erskine fire in Kern County last month spread so quickly, in large part, because of dead trees, fire officials say.
The June 23 fire took more than two weeks to contain in the community of 15,000 near Lake Isabella. It destroyed 250 homes and two people died. It also led to more breathing difficulties for residents.
Making matters worse, Kern Valley Hospital was forced to close because of fire-related problems.
The hospital closure left the local ambulance company scrambling and American Red Cross officials as a medical lifeline for residents struggling to breathe. Ambulances shuttled patients to Bakersfield hospitals.
The last week of June was a treacherous one, said Tim McGlew, chief executive officer for the Kern Valley Healthcare District.
When the hospital was evacuated it had 69 patients in its skilled nursing facility and 10 in acute care. In addition to low water pressure, phone lines were down and most cell phone service was compromised, he said.
“The fire was literally coming right at us,” said McGlew. “We knew we were in trouble when we saw the way the wind was blowing.”
WE GOT INHALERS, NEBULIZERS, ANYTHING TO HELP THE RESIDENTS; IT’S BEEN THE OLD, THE YOUNG, EVERYONE HAS HAD PROBLEMS BECAUSE OF THE AIR QUALITY.
Jessica Piffero, American Red Cross, regional communication director
The fire also hit home in the workplace. Nine employees and a half dozen hospital volunteers were among the 250 families that lost their homes, he said.
Patients were moved to Bakersfield by ambulance and county bus transportation. Each bus had medical staff aboard. McGlew said it was a smooth operation under chaotic circumstances.
Steve Davis, chief operating officer with Liberty Ambulance in Ridgecrest, said the 911 calls were overwhelming. Many of the calls were for respiratory complaints.
A volunteer fire chief in Inyo County, Davis said, he had never seen a fire like Erskine. He said it was decades in the making because of overgrowth and dead trees.
“I thought I was driving through Armageddon,” he said recalling his first trip into the fire zone. “It was dark and there were three- to six-foot flames on either side of me.”
Residents were reporting problems ranging from asthma, COPD, allergies and other breathing issues, said Jessica Piffero, regional communication director for the American Red Cross.
“Since day one it was a problem,” she said. “We got inhalers, nebulizers, anything to help the residents; it’s been the old, the young, everyone has had problems because of the air quality.”
As firefighters gained the upper hand on the fire, the number of breathing problems subsided. Some residents, Piffero said, left Kern Valley with plans to return when it’s safe.
But even after the fire, breathing issues could persist as residents begin to sift through debris.
“We are doing what we can to provide appropriate masks and gloves for them,” Piffero said.
Bills and hearings
Jim Costa, D-Fresno, held a hearing in Clovis in June to discuss tree mortality and followed up with a trip to the Sierra.
He said he plans congressional hearings in September to further explore tree mortality issues and develop a federal disaster declaration for the Sierra, which could bring aid to residents.
Biomass, he said, is an additional tool that can be used to clean the forest.
“I’m suggesting that on a short-term basis this could involve a subsidy and utilize this resource to get dead trees out of the forest,” Costa said. “In the meantime we need to keep our fingers crossed that we don’t have a repeat of the Rim or the Rough fires.”
Tom McClintock, R-Elk Grove, said he will introduce legislation in the coming weeks to propose a “categorical exclusion” exempting contractors from federal environmental rules to allow cutting of dead trees in counties where emergencies are declared.
If the trees aren’t cut down and put to a productive use, such as biomass, they can only be buried or burn, he said.
“We have environmental laws that stopped cutting with the express promise it would improve forest ecology,” McClintock said.
It didn’t, he said.
Historically, the forest maintained 20 to 100 trees per acre, but the California average on national forests is 266 per acre, said McClintock, whose district extends south along the spine of the Sierra into Fresno, Madera and Mariposa counties.
Those dead trees should be put to productive use, he said.
“We have more than 60 million trees available,” McClintock said. “It’s ludicrous that we have forests filled with dead trees and policies that keep us from removing them.”
In a report issued last October, the U.S. Forest Service said that fighting wildfires comprised more than 50 percent of the agency’s budget in 2014 compared with 16 percent in 1995. The forest service study expected wildfire expenses to continue growing.
State Assembly Member Brian Dahle, R-Bieber, said he can’t get his bill funded to keep biomass plants operating using cap and trade funds.
The bill would use $70 million to subsidize the plants by using dead trees to make electricity. The benefits is decreasing the potential for larger fires, reducing health effects and the bill to taxpayers for fighting fires. Battling the Rough fire last year cost more than $100 million.
Assembly Member Brian Dahle, R-Bieber, has proposed a $70 million bill to keep existing biomass plants open to use dead trees from the forest to make electricity. If the plants close, there will be no place to send cut trees.
$70 million
The amount of money that was set aside for biomass in Assembly Bill 590
He’s invited fellow legislators from across California to his district to see the forest devastation, reminding them that much of their water comes from Northern California, water that can be tainted from large fires.
Dahle’s bill passed but not funded. The idea, he said, was to offset costs to the plants that will close because of expiring contracts, including Rio Bravo in Fresno, by using the state’s Greenhouse Gas Reduction Funds.
“We need to come in and fill that gap, but they didn’t fund it, Dahle said. “I was asking for money to keep the plants running in high-severity areas.”
The state, he said, spent $3 billion on fire suppression since 2008, an average of about $400 million per year.
Devon Mathis, R-Visalia, said incorporating biomass into the electricity grid is common-sense policy, not partisan.
“A fire is going to burn, so take the material and put it to good use in a biomass plant and generate electricity,” he said.
Environmentalists concerned
Environmentalists say biomass is unnecessary and could be hazardous for people living near the plants.
Delano resident Lupe Martinez, assistant director with the Center for Race, Poverty and the Environment, said the biomass plant at the southern edge of his city left an acrid-smelling fog or cloud late at night or early in the morning some days.
In the 25 years the biomass plant was operating, Martinez said, the health effects weren’t clear.
“I ask myself if there would be such a high level of health problems if it wasn’t here?” he said. “How many more asthma cases and respiratory problems do we have in Delano because of it?”
Delano has one of the highest unemployment rates in the state and community leaders made attracting jobs a priority. but Martinez questions the cost?
“We all need jobs, but we need to do it in an environmentally friendly way,” he said.
Polluting companies are often attracted to less affluent communities, Martinez said.
But despite being critical of the plant, he admits that biomass also has benefits because “I don’t want the growers burning.”
In the meantime, he hopes the Delano-area can become home to more environmentally friendly jobs.
“I think we’ve learned a lot,” he said. “We can’t just say yes because we’re going to get an extra job.”
Others are more critical of biomass and say solutions are available now. Composting is less polluting and trucking tree waste from the mountains several times a day worsens air quality.
“They do have to clear dead trees off roads, away from power lines and structures, that’s a priority, but the rest of the trees should stay in the forest and break down right there,” said Tom Frantz, a Shafter farmer and leader of the Association of Irritated Residents.
A standing dead tree that’s bare of needles isn’t the same danger as a recently dead, dying or live tree with all its needles, he said.
“I don’t think we increase the fire danger by leaving the dead trees except when they just die off and their needles are extremely flammable,” said Frantz.
More efforts should be made to compost and putting dead tree remnants back into the soil, he said.
Chipping dead trees in the forest and leaving the chips on the forest floor is constructive, too, so there’s no need to transport chips for electricity, Frantz said.
$475,000
The amount of Valley Air District fines against biomass facilities since 2010
If agricultural burning returns to the Valley, Frantz said, it would only occur when environmental conditions allow it.
But Sadredin, the San Joaquin Valley Air Pollution Control District’s executive director, said open burning would cause more air quality problems than emissions from biomass plants.
He said biomass plants were a major factor in the 80 percent reduction in open burning since 2005.
While Sadredin endorses more use of biomass plants, the Valley Air District has fined Valley plant owners about $475,000 in the past six years. The Malaga plant wasn’t fined during that period. The Mendota plant was fined $2,100 and the Delano plant about $108,000, according to Valley Air District records.
But, Sadredin added: “If we don’t have a viable biomass industry or reasonable cost-effective alternatives to open burning then we have no choice but to roll back our prohibitions against open burning.”
Environmentalists, he said, believe cost-effective “non-burning” alternatives exist that but aren’t be used.
There are pilot programs under way, Sadredin said, that allow fuel production from agricultural waste, but none has proven to be cost effective on a widespread basis.
One idea is composting in warehouse-sized buildings with piping that would “gasify waste with little or no emissions,” Sadredin said. But such a plan would take hundreds of Costco-sized buildings with specialized piping to divert gases, an expensive proposition, he said.
In addition, Sadredin said, transporting waste to composting sites also produces pollutants. Instead, biomass is a solution available now and it can be quickly resurrected, he said.
The ideal scenario, Sadredin said, was to have enough biomass available to serve both agriculture and dead trees from the forest.
“We have all that investment sitting idle,” he said. “We need to find a way to bring those back to life rather than starting from scratch.”
Water worries
Steve Haugen, the Kings River watermaster, has been observing runoff from last year’s massive Rough fire in eastern Fresno County.
It will take three to five years before it’s known whether water, debris and sediment running off from storms in the area of the Rough fire has caused problems. Even then, it may not really be clear.
He estimates that up to a quarter of the 150,000 acres scarred in the Rough fire was a severe burn area. A “severe burn” is one where the ground was basically cooked, he said, which means it will take longer for grasses and shrubs to re-establish. That means more sediment and debris trickles into waterways.
“After a burn you have changed the character of the watershed and it takes quite a bit of time to heal,” Haugen said.
The first winter passed without significant storms, which reduced the amount of debris going into waterways and eventually to Pine Flat Lake, where water is moved into the Kings River channel and is then diverted for drinking water and agriculture.
AFTER A BURN YOU HAVE CHANGED THE CHARACTER OF THE WATERSHED AND IT TAKES QUITE A BIT OF TIME TO HEAL.
Steve Haugen, Kings River water master
But if large storms come, even a one in every five or 10 years storm, it could drive more debris into waterways than was seen in the first winter, he said.
A floating debris barrier is in place at Pine Flat Lake that reduces areas for recreation. The barrier catches large chunks of debris, such as logs and sticks before they can get to the main portion of the reservoir.
Debris can take up space that would normally be filled with water. In some cases, reservoirs have had as much as eight percent of space filled by fire debris, space that would otherwise be filled with water and represents about 8,000 acre feet at Pine Flat.
Fine sediment creates turbid water that also takes is toll, but it’s more subtle. Such water could be stained, discolored and just won’t look as good even though it will still tastes similar, he said.
It can affect water filters at treatment plants by pushing down water production, as well as in-home water filters. On farms, water doesn’t go into the ground as quickly, potentially affecting crop growth and water recharge, micro-sprayers also are less effective.
“It’s little things, those kinds of things you really can’t put your finger on,” Haugen said. “It’s small, incremental change, but every one of them has a cost.”
Future uncertain
Plans are under way to use money to build small biomass plants in communities close to high-severity zones with California Energy Commission funds, but those tiny plants can’t accommodate the number of trees cut down or dead in the forests. The energy commission has $15 million available for forest biomass projects.
Locally, a two-megawatt plant is proposed in North Fork along with a one-megawatt Mariposa plant.
But seven plants supplying 190 megawatts of electricity to the grid will go offline by the end of October because of expiring contracts, said Carr, Cal Fire’s assistant deputy director for Climate and Energy and sits on the state’s Timber Mortality Task Force.
Madera County Supervisor Wheeler, who also is a member of the state’s 10-county Tree Mortality Task Force, said those biomass plants will be too small to make a dent in the dead wood load. He said 100 times more wood waste is ready for biomass than the plants in North Fork or Mariposa will handle when they open beginning in 2018.
That’s where the closed plants in Delano, Dinuba and Firebaugh, a combined 86.5 megawatts, could play a role, he said.
And for those remaining, “they will be shut down by the end of year unless they are a paid a little bit more money” to generate electricity, Wheeler said.
190 megawatts
Amount of electricity generation from biomass facilities that have contracts expiring this year
The California Public Utilities Commission is proposing 50 megawatts in biomass contracts to improve forest health, but critics say it’s not enough.
Covanta once had in excess of 100 megawatts of electricity alone, 75 megawatts coming from plants in Delano and Mendota and another 38 from three plants in Northern California.
And, in the months before shutting down, Regan said, their plants were getting more wood waste from farms due to the drought.
“We were seeing 50 percent more clearings just because there wasn’t water,” he said. “Citrus trees were being brought in like crazy. Are you going to just burn it?”
Meanwhile, dead trees are stacked on private property or left along roadsides throughout the Sierra because there’s no place for them.
If all 66 million trees were cut down and sent to the Dinuba plant, Osborne said, they could operate it for 1,674 years.
Osborne said he is working on bid packages for the state Public Utilities Commission for the Dinuba, which he said could open in two to four weeks once contracts are approved.
“I don’t know how successful we’re going to be,” Osborne said. “I’m getting a lot of calls from people who will give us the fuel because they have nowhere else to go, but I don’t want to end up with wood that I can’t use.”
Marc Benjamin: 559-441-6166, @beebenjamin
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