Wood energy's future looks strong as long as subsidies, carbon accounting rules remain
The U.S. wood pellet industry has grown almost 60% since 2016. Companies are cutting trees and making pellets, mainly to feed power plants in Europe and Asia that burn them for electricity. The industry is biggest in the southeast, including North Carolina.
WFAE and WUNC are collaborating this week on a series The Wood Energy Dilemma. We're looking at the industry's impact on the climate and the communities where these plants are located. With WFAE's Morning Edition host Marshall Terry to talk about their stories are reporters, Celeste Gracia of WUNC and David Boraks of WFAE.
Terry: Welcome to both of you. So this first question is for both of you. Why is North Carolina and for that matter, the South, ground zero for wood pellet production? And I'll start with you, Celeste.
Gracia: Well, I think there's a few reasons. For one, there's a lot of trees in the southeastern U.S. to make wood pellets from. There's quite literally hundreds of millions of acres of trees in this region. And according to the National Wildlife Federation, over 90% of these forests are privately owned. Which leads us to another reason for private landowners working with the wood pellet industry, working with companies like Enviva, which we will be talking about. It's attractive because it allows these private landowners to make even more profit off their land.
Boraks: It's also because our region has major ports along the Atlantic coast, including Wilmington and Norfolk, Virginia. They offer easy access to Europe, which is currently the main market for wood pellets, so transportation costs are less. And it's because our state government has provided subsidies for wood pellets - about $7 million since 2007.
Boraks: It also has something to do with our region's long history of cutting trees for profit going back to the 17th century. You know, the Carolinas have long been timber suppliers for things like wood products, construction and the paper industry. In fact, one of the reasons Enviva first started building plants here in North Carolina was that it was able to buy a former lumber plant, the Georgia Pacific plant, in Ahoskie in northeastern North Carolina.
Terry: And I want to stick with you for a moment, David. The company that is by far the leading producer of wood pellets for energy production overseas, is that one that you just mentioned — Enviva? What do we know about this company in how they operate in North Carolina and also globally?
Boraks: Well, Enviva has been around since 2004. They now have nine wood pellet plants from Virginia to Mississippi in areas with a good supply of trees nearby. That includes four plants in North Carolina and one in South Carolina. Most are in rural communities where jobs are welcome, but the plants also raise environmental concerns related to clear-cutting and air quality.
Gracia: Enviva says that it's a good corporate citizen. Employees typically make 40% more than the average wage in these areas. And there are a lot of related jobs with trucking companies and contractors. We talked to Don Calloway, Enviva's head of equity, inclusion and impact.
Calloway: We pay well. We're very proud of that because these are communities which have been hit hard by the move away from industrialization over the last 50 years. A lot of facilities of all kinds —textiles, forest products, industry have left these towns.
Boraks: Enviva also operates shipping facilities at major East Coast and Gulf Coast ports. And Celeste and I visited the Port of Wilmington, where Enviva has two large pellet storage domes towering over the waterfront there. It's really quite a sight.
Terry: Well, it sounds like it. Celeste, describe what these plants look like. You spent some time in Sampson County, east of Fayetteville, and spoke to folks there. What is it like living near one of these wood pellet plants?
Gracia: Yeah. So the plant in Sampson County is really big. It seems like it's on a very large campus. It's located sort of in between the towns of Clinton and Faison. There's a lot of trucks coming and going all the time. And there's also really big, heavy machinery that's always running. About a quarter of a mile away from the plant is a small neighborhood of about two dozen small houses and mobile homes. I spoke to about a dozen people there, and I would say about half the people that I talked to said they don't like the plant because it's loud, it causes a lot of traffic and brings smoke over to their houses. Here's Latony Herring:
Herring: I don't let my kids come outside no more because I don't know where them trucks are going to come and if their ball rolls out in the street... He can't stop. They're gone. I can't. I can't do that.
Gracia: But the other half said they don't have a problem with the facility. They feel like it's really great for the economy. Also, it's worth noting that everyone I spoke to was either Black or Hispanic, and the majority of them said that their house or the property that their house is on has been in their family for generations, at least since the 60s or 70s.
Terry: And David, you spoke to folks in Northampton County in northeastern North Carolina who live around the Enviva plant there. Did they express similar experiences?
Calloway: Yeah. Marshall, I definitely heard the same things. You know, it's a similar kind of area. The demographics are the same. It's mostly African American residents who live around there. And then there's the traffic. I sat and watched and saw trucks pulling in and out day and night.
Terry: Celeste, in your story, you included a quote from Ray Jordan. He's the assistant director for Sampson County Economic Development. And this is what he had to say about Enviva and the plant there.
Jordan: Enviva, since they've been in our community, has paid $4.1 million in property taxes, makes them the third-largest taxpayer in Sampson County. So obviously, you know, we're very thrilled to have them here and we've had a good relationship since day one.
Terry: Celeste, how vital are these facilities to the local economy?
Gracia: I would say these facilities are very vital. The populations of the towns of Clinton and Faison, where the facility is located in Sampson County, is less than 10,000 people combined, which just goes to show how rural this area of Sampson County is.
In terms of education, about half the population in Sampson County has a high school diploma or less, according to public data. And the average household income in the county is about $42,000 and Enviva says jobs at their facility pay more than $35,000. So given all this, working at this plant is usually the best option people have for a stable, relatively well-paying job.
Terry: David, U.S. exports of wood pellets have grown 59% over the past five years. What's driving that?
Boraks: Well, for one Enviva and other companies have put together really good supply chains. But the business opportunity initially was created mainly because of two things. First is global accounting policies that treat wood pellets as zero carbon, even though they actually emit more carbon than coal when burned. But when you do the carbon accounting, that's the way it works out. And government subsidies on both sides of the Atlantic promote cutting forests and burning wood pellets for energy.
The Drax plant in England is the largest consumer of wood pellets and it's the main customer of Enviva. It burns wood pellets in place of coal, and it gets more than $1 million in British government subsidies every day. Altogether, the industry gets more than a billion dollars in subsidies and tax credits every year for burning wood.
Terry: How climate friendly are wood pellets?
Boraks: Well, the wood pellet industry's argument is that wood energy is renewable because trees can be replanted and grow back, right. And as we said, carbon accounting rules let wood burners claim their plants are zero carbon. The carbon is supposed to get counted where the trees are cut, like North Carolina, but it's not clear that that's happening the way it should around the world. And those rules also don't take into account all the other ways that wood pellet production produces carbon. Trucking logs to the mills, producing the pellets, then trucking the pellets to port. They all use fossil fuels, and so do the ships that take the pellets to Europe, and burning wood actually releases more carbon than coal.
Terry: Finally, what's the future of the wood pellet industry in North Carolina?
Boraks: Well, as long as there's a strong and growing market, we'll see more plants. You know, as we mentioned, right now Enviva mostly sells to energy plants in Europe, and they're starting to get a lot more business in Asia. They're also targeting new industries like steel and other companies that burn coal with their factories. Those companies are trying to meet climate goals, too, just like power plants. They like the idea of getting credit for going green by burning wood instead of coal. But there is a threat to that growth. You know, if governments take away those subsidies and change their policies that make wood pellets look climate-friendly, you know, that could change their business.