An increasing number of ships are crossing the Atlantic Ocean bearing millions of tons of fuel, all bound for some of Europe’s largest coal-fired power stations. They’re not carrying coal, though, but wood pellets, sourced from forests in the U.S. Southeast.
A large volume of pellets are burned in North Yorkshire, in two recently converted units at the Drax Power Station, which supplies 7 to 8 percent of the United Kingdom’s electricity. According to the U.S. Energy Information Administration, wood pellet exports from the United States nearly doubled from 2012 to 2013, largely driven by European demand.
In light of this trend, there have also been an increasing number of flights across the Atlantic carrying U.S. environmentalists and Drax employees, all headed to meetings with environmental regulators in both nations.
On Jan. 30, representatives with Drax met with U.S. EPA staff, the agency confirmed Wednesday, to present information on the company’s growing biomass use. Then, on Feb. 5, U.K. Secretary of State for Energy and Climate Change Edward Davey agreed to meet with the Natural Resources Defense Council and the Dogwood Alliance, two American environmental groups that oppose wood energy.
The meetings centered on this question: Is the United Kingdom’s biggest, most carbon-emitting coal station’s switch to wood energy a good thing or a bad thing for America’s forests and the climate?
How regulators decide will have a big impact on Drax’s bottom line. The United Kingdom aims to get 15 percent of its energy from renewable sources by 2020, and has used a number of regulatory carrots and sticks to get big utilities like Drax to make expensive changes to the way they produce electricity.
A battlefield over conversion
Working off the assumption that biomass energy is climate-friendly — an assumption most European environment officials have supported — Drax invested vast sums and relied heavily on government subsidies to convert two of its six 660-megawatt coal generation units to run on wood pellets. The first conversion was completed in April 2013, the second in October 2014, and Drax expects a third will be complete before the end of 2016.
In addition to the conversions at home, the company spent hundreds of millions of dollars on new infrastructure in the U.S. South, including a pellet plant in Morehouse Parish, La., and a port facility in Baton Rouge, La., both slated to begin operations this year. Drax learned that Southeastern states have a well-established forest industry, deep water ports, and leaders who are happy to accommodate foreign investment and new jobs. Louisiana Gov. Bobby Jindal (R) called Drax’s move into his state "good news" for the state’s economy, workers and timber industry.
Matt Willey, corporate communications manager for Drax, argues the company’s investment in biomass is also essential if the company is to curb its greenhouse gas emissions.
"Reducing our dependence on coal is essential to tackling climate change," Willey said in an email. "If biomass is sourced sustainably, there is a fundamental difference between biogenic carbon and geologic carbon because sustainably sourced biomass is part of a continuing cycle and not adding new carbon to that cycle."
A number of American green groups oppose this position, and they’re making sure U.K. regulators hear their side of the story.
During the Feb. 5 meeting with U.K. Energy Secretary Davey, Adam Macon, campaign director for the Asheville, N.C.-based Dogwood Alliance, said he and other environmentalists described "the devastation that export of wood pellets for fuel is having on forests, the climate and the communities in the southern U.S."
Macon and his colleagues told Davey that Drax and other big biomass companies are responsible for more frequent clearcutting and the conversion of natural forests into plantations in the U.S. Southeast.
"All of this is being driven by policies — well-intentioned policies — in Europe and especially the United Kingdom," Macon said.
Drax finds green groups ‘aggressive but misinformed’
Macon and Sasha Stashwick, a senior advocate with NRDC who also was at the meeting, both argue that although trees do take in the CO2 put out by biomass energy, it takes too long for forests to grow back and compensate for the emissions.
"At the scale that Drax needs wood, I think it is an open question whether there is enough low-carbon biomass to supply them," said Stashwick.
During the meeting, the environmental groups asked Davey to significantly curb U.K. government subsidies for new biomass energy generation.
Not surprisingly, Drax is worried about how seriously Davey and other U.K. regulators are taking this message.
In a slideshow presentation given to U.S. journalists in January, Drax said "increasingly aggressive but misinformed environmental NGO campaigns" were among the company’s "key supply chain development issues."
"There’s a frustration that we’re criticized about things we’re just not doing," said Willey. "They claim that Drax is causing deforestation — we’re not doing that. They claim that Drax is using saw timber — we’re not doing that."
Adding "those claims don’t make economic sense," Willey asked, "Why would we deplete a forest we will depend on for the long term, and why would we try to acquire the most valuable parts of a tree when we can make use of the much lower-grade fiber?"
Willey argues that Drax’s presence in the U.S. Southeast is not leading to deforestation because the company uses low-value trees and cuttings to manufacture pellets. U.S. forest industries produce 93 million tons of residues and thinnings each year, Willey said, citing a recent Forest Service report that concluded European wood pellet demand will result in growth, rather than depletion, of the South’s forests (ClimateWire, Feb. 3).
How biomass emissions should be regulated under EPA’s Clean Power Plan is also subject to intense debate in the United States. In a controversial November memo, Janet McCabe, EPA’s acting assistant administrator for the Office of Air and Radiation, wrote that biomass energy could be carbon neutral, and perhaps even carbon negative. This statement drew praise from some forest experts and industry groups and condemnation from other forest scientists and environmental groups.
(EPA press secretary Liz Purchia this week informed reporters the memo is "not a definitive statement," adding that the agency will consider states’ proposals to use biomass under the Clean Power Plan on a "case-by-case basis.")
How EPA regulates biomass emissions in the United States has no immediate impact on Drax’s operations. But Willey said EPA’s position in the memo "is good news" for Drax — U.K. regulators are more likely to support wood energy if they see U.S. regulators doing the same.
U.S. and U.K. regulators rethink issue
Despite EPA’s statement, the U.K. government appears to be rethinking its earlier embrace of biomass.
In December, the U.K.’s Department of Energy and Climate Change (DECC) announced one of its key financial support systems for renewable energy, the Renewables Obligation, would not guarantee a long-term subsidy for any more biomass conversions, due to concerns that support for wood energy is diverting government spending away from other carbon-free options like wind and solar.
"The government’s policy is to have a diverse mix of technologies within the U.K.’s energy portfolio," DECC stated in its announcement, adding that biomass should "only be seen as a transitional technology."
"Without significant development in [carbon capture and storage] technology, emissions from such biomass plants are likely to be too high if we are to meet our longer term decarbonization targets," the DECC announcement read.
Shares in Drax dropped 13 percent immediately after this announcement, the London Telegraph reported. Drax has since abandoned plans to convert a fourth unit to biomass.
Stashwick of NRDC said that, at the Feb. 5 meeting, Davey did not indicate how the United Kingdom will handle its biomass subsidies going forward. But Stashwick said she also believes "it’s clear that policymakers in the U.K. understand that there’s a problem."