European climate policy drives wood pellet boom in NC

bsiceloff@newsobserver.comAugust 17, 2013 

  • The pellet economy

    Enviva estimates the economic impact of its pellet mills in Ahoskie and Garysburg and its planned export terminal at the Wilmington port:

    • Ahoskie: 74 workers, average salary $35,000. Enviva buys timber worth $21 million from North Carolina and Virginia loggers. Produces 365,000 tons of pellets for $170 a ton.

    • Garysburg (Northampton County): 79 workers, average salary $35,000. Enviva buys timber worth $35.4 million from North Carolina and Virginia loggers. Produces 500,000 tons of pellets for $170 a ton.

    • Wilmington: $40 million to build export terminal, to begin operation in 2015 with 23 workers, average salary $37,783. One million tons of pellets to be exported on 25 to 30 vessels per year.

    Not included here: Two mills that will produce pellets for export through Wilmington.

    Source: Enviva LP

— In the searing August heat, big yellow logging machines pile up the harvest from 153 acres of sweet gum, red oak and maple trees.

A roaring log loader grabs the trunks to slice off 16-foot logs and stack them for one of the sawmills that provide a traditional market for Eastern North Carolina timber. These logs are worth $20 to $40 a ton and will be turned into plywood, cabinets and veneer.

In a second woodpile, there’s new money. Limbs and leafy treetops are stacked alongside trees as big as 16 inches across. They cannot be sold as saw logs because they’re forked or knotty, crooked or hollow.

This pile will be fed into a chipper and milled at an Ahoskie factory that makes 1,000 tons, every day, of a minor American fuel product suddenly in hot demand on the other side of the Atlantic: wood pellets.

Two years ago, everything in this second pile would have been left on the ground to rot, said David Jennette, a Windsor forester who is managing this timber harvest. Now it brings $2 to $8 a ton.

“When you’re talking about 50 to 75 tons of chips to the acre, and maybe more, that’s a significant amount of money going back to the landowner that we weren’t able to get before,” Jennette said.

The wood pellet industry is enjoying a speedy, zero-to-60 growth surge across the southeastern United States. Hundreds of millions of dollars are being invested in factories – some of them converted from old lumber mills – in coastal plain forests from Virginia to Louisiana.

They are serving a market created, almost overnight, by paradoxical environmental policies that are driving European electric utilities to burn imported wood in their boilers instead of coal.

Maryland-based Enviva LP, the nation’s biggest pellet maker, opened its Ahoskie mill in 2011 and a second one in Northampton County this year. Together, they produce 865,000 tons of pellets annually to be shipped out of the port at Chesapeake, Va.

In 2015, Enviva expects to start exporting an additional million tons from a planned $40 million terminal at the Wilmington port. The company is scouting sites for two new pellet mills in southeastern North Carolina, one of them in Sampson County.

At the same time, California-based International WoodFuels has said it will produce 285,000 tons a year from a planned pellet mill in Wilson County and a new export terminal at the Morehead City port.

The pellet industry is founded on a climate-friendly, carbon-neutral rationale. Our forests use photosynthesis to soak up carbon dioxide, enough to compensate for 14 percent of all emissions in the United States. This stored-up carbon is released into the air when wood pellets are burned, but wood is called a renewable fuel because that carbon eventually is recaptured by new trees that grow in place of the old ones.

Conservationists are attacking the pellet industry’s green-energy luster on two fronts.

They worry that the booming market for pellets will encourage industrial logging and sully the sensitive ecosystems of bottomland hardwood forests. And they counter European government carbon-cycle calculations with their own assessment that burning trees is, in the words of a British environmental group’s campaign, even “ dirtier than coal.”

“It just doesn’t make sense that we’re logging the world’s forest ... burning it into the atmosphere and calling it clean, green, renewable energy,” said Danna Smith of the Asheville-based Dogwood Alliance, a network of Southern conservation groups.

A push toward pellets

The European Union and Great Britain have adopted aggressive targets for reducing greenhouse gas emissions that contribute to global warming. They have created incentives for electric utilities to cut back on their use of coal and will require renewable sources to provide 20 percent of all energy by 2020. Wind and solar power are expected to meet only a small share of that demand.

Power companies are looking to close the gap with biomass – primarily with imported wood pellets. Biomass use in Great Britain, 3 million tons last year, is expected to grow tenfold over the next five years.

Britain’s biggest carbon emitter is the Drax Group, a Yorkshire utility that operates the largest power plant in western Europe. Drax is converting half its plant from coal to wood pellets. Coal is one-third the price of pellets, but Drax CEO Dorothy Thompson said her company is responding to renewable-energy credits and a British carbon tax, introduced this year at $7 a ton, that will grow by 2020 to more than $60 a ton.

“And that is very substantial,” Thompson told a BBC-TV interviewer in July. “When we burn biomass, we don’t pay that. Because biomass is carbon-neutral. When we burn coal, the cost is very high.”

With coastal forests close to its seaports, the South has become the top pellet source for Drax and other European utilities. Pellet makers also are taking advantage of declines in the region’s pulp and paper industry, which uses some of the same low-grade wood. Loggers in northeastern North Carolina lost their main buyer for hardwood pulpwood a few years ago when International Paper closed a mill in Franklin, Va.

“We generally fill that void that was historically used by the pulp and paper industry,” Thomas Meth, Enviva’s executive vice president and co-founder, said during a tour of the Ahoskie mill. “We generally site our locations where we’ve had a lot of plant closings, to avoid most of the competition.”

Enviva built on the site of a Georgia Pacific sawmill that closed in 2005. Residents of a nearby Ahoskie neighborhood say they never had problems with Georgia Pacific, but they are complaining now about noise and occasional clouds of sawdust wafting from Enviva’s pellet mill.

Anne Williams, a retired hospital aide in her 70s, said she sweeps her porch once or twice a day to clean off the fine, dark sawdust that blows from Enviva across a tobacco field to her comfortable manufactured home. Dust coats cars and clogs air-conditioners in the neighborhood, she said. She keeps her windows closed.

“They claim it won’t hurt you,” Williams said. “But the way it sticks to everything out there, you know it’s got to be sticking to your lungs.”

Meth said Enviva has reduced the dust problem and hopes to eliminate it later this year.

“We have always been within our permitted limits,” Meth said. “But in order to have a good relationship with the neighbors, we’ll take an extra step and build some extra dust protection.”

Pellet makers won’t bid against sawmills for valuable timber that has higher uses, Meth said. He guided visitors through a woodlot stacked 20 feet high with treetops and whole trees, many with crooked or diseased trunks that he said make them unsuitable for saw timber.

“We use by-products of the normal harvesting process in wood fiber,” Meth said. “And residues, in the broadest sense. There’s a lot misperception as to what we actually use. The value of what we take is 10, 20 percent of the whole harvest.”

Carbon calculations

Enviva gives delivery truck drivers a flier explaining that the company won’t accept valuable saw logs, and it rejects logs wider than 26 inches at the base.

Critics say the company uses big trees that cannot be considered mere “residue.”

“Their yard was not filled with log waste,” said Debbie Hammel of the Natural Resources Defense Council, looking at photos taken by environmentalists at the Enviva site earlier this year. “It was filled with whole trees. It meant that their sourcing activity has a bad carbon profile associated with it.”

The carbon calculations are complicated. After the pellets from a single tree are burned, Hammel and the Dogwood Alliance’s Smith said, it takes 50 years for a replacement tree to absorb enough carbon to offset the pollution.

But some economists and foresters look at this differently. They argue that a healthy demand for lumber encourages woodland owners to keep planting more trees, which will absorb more carbon from the air. A landowner unhappy with the economic return from forestry is more likely to cut down the trees and divert the land to farming or urban development.

“Losing timberland to agriculture is a worse carbon story than the cycling of trees that probably would have been harvested anyway,” said Bob Abt, a forestry professor at N.C. State University. “The carbon accounting is messier than saying that the tree is going to take 50 years to replace.”

Enviva said switching from coal to wood pellets reduces carbon emissions by more than 74 percent.

British government standards say that pellet makers must draw only on environmentally sustainable logging sources. But Abt said he agrees with environmentalists who say “the wording there is vague.” Meth said Enviva meets the sustainable forestry standards set by professional certification organizations, including the Forest Stewardship Council.

British officials say they are taking a closer look at their pellet policies. Ed Davey, the British energy secretary, recently called biomass an interim solution.

“Making electricity from biomass based on imported wood is not a long-term answer to our energy needs,” Davey told the BBC.

Jennette, the Windsor forester, said the new pellet market brings both economic and environmental benefits. Enviva accepts more of the logging leftovers than the hardwood paper mills did in the old days, he said.

“The whole tree goes to Enviva,” Jennette said. “And the tonnage goes way up when you start doing tops and limbs and everything else.”

It can be enough money to make a difference in the profitability, and the timing, of a timber sale. Jennette’s Hertford County client expects to clear about $1,000 an acre – most of it from valuable saw timber, but somewhere between $150 and $300 for those chips.

Replanting will be easier, too, he said.

“As clean as this site will be, we’re able to reforest for less money,” Jennette said. “As long as we reforest what we cut and we do a good job of the sustainability piece of it, we’ll never stop.”

Siceloff: 919-829-4527 or blogs.newsobserver.com/crosstown. On Twitter @Road_Worrier.

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