Economic impact of wood pellet co-firing in South and West Alabama

Alabama imports coal from other states to generate electricity. This paper assessed the direct and indirect economic impacts of small-scale wood pellet production to be co-fired with coal for power generation in Alabama. Three sizes of wood pellet plants and a regional input–output model were used for the analysis. The results showed that the economic impact increases with the size of the plant. Wood pellet production will have a multiplier effect on the economy, especially forest-related services, retail stores, the health service industry, and tax revenue for the government. Domestic wood pellet production can reduce the use of imported coal, allow the use of local woody biomass, and create economic activities in Alabama's rural communities. A policy to support the production of wood pellet will serve to encourage the use of wood for power generation and the local economy.

► We developed a regional input-output model of region with the highest forest cover in Alabama.
► We examined the impact of co-firing wood pellet and coal for power generation.
► We examined the impact of wood pellet production on commercial logging and forest production sectors.
► The increased demand for wood chips impact directly and indirectly various sector in the regional economy.
► Encouraging the wood pellet sector will have impact on the regional economy.