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Wood from the Carolinas is increasingly being used overseas for energy. While the industry creates jobs, communities are also paying a price. Our ongoing coverage looks at the local and global policy debate and the communities feeding the world’s appetite for wood energy.

Shares of wood pellet maker Enviva plummet as losses widen

Enviva's Northampton County, N.C., wood pellet plant.
David Boraks
Enviva's Northampton County, N.C., wood pellet plant.

Enviva, the world's largest maker of wood pellets with four plants in North Carolina, saw its stock price plummet this week after it canceled its dividend and told investors it expects bigger losses to come.

Enviva's shares fell about 60% after Wednesday's announcements. The Maryland-based company posted a bigger-than-expected loss for the first three months of 2023 as European customers delayed pellet orders and expenses ballooned for unplanned repairs and maintenance.

CEO Thomas Meth acknowledged it was a disappointing start to the year.

“Our results this quarter were much softer than we expected. Mainly driven by (a) cost position that is not acceptable. But we believe it can be remedied in the short term," Meth said.

Enviva said it now expects a larger-than-expected loss for the full year. To save money, it will stop paying a dividend to shareholders, though it promised to buy back shares. The company is also is trimming other costs.

The company also announced a new 10-year contract with a Japanese customer, which Meth said is a sign of continued growth.

"Our industry continues to be persistently structurally short supply. So signing new contracts like the one we just announced means new production capacity must get built. And therefore these new contracts are underwriting our large-scale fully contracted capacity expansions," Meth said.

Enviva cuts down trees and turns them into wood pellets at plants across the South, then ships them to Europe and Asia where they're burned in place of coal and classified as clean energy. But that designation is controversial among many scientists and environmental groups. They would rather see renewable energy like wind and solar expanded, not wood substituted for coal. And they note that wood burns dirtier than coal and that producing and shipping pellets creates more carbon pollution.

The European Union is close to adopting changes to its renewable energy rules that could limit the use of wood pellets. But Meth told investors the changes are minor and won't affect the business.

"The European Union will finalize the text related to its Renewable Energy Directive 3 over the next month, which we expect will continue to provide demand tailwinds for woody biomass, given how important this renewable resource is to the net zero targets of the EU member nations," Meth said.

Enviva has four plants and a port facility in eastern North Carolina, one plant in South Carolina and one in Virginia. It’s come under fire in eastern North Carolina over concerns about air pollution and noise.

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David Boraks previously covered climate change and the environment for WFAE. See more at www.wfae.org/climate-news. He also has covered housing and homelessness, energy and the environment, transportation and business.