To some it sounds like 21st-century colonialism: To keep their air cleaner, Europeans prefer burning wood over coal, so they’re plundering America’s natural resources — in this case, North Carolina’s forests. But instead of being met with pitchforks, companies making wood pellets for overseas power production are showered with money by local and state officials. In return, Bethesda, Md.-based Enviva LP — the nation’s largest pellet manufacturer — has invested $112 million in two plants, with plans for two more, while San Diego, Calif.-based International WoodFuels LLC wants to build a $60 million one.
A coalition of environmental groups, led by Asheville-based Dogwood Alliance, wants to slow the growth, fearing thousands of acres of privately owned pine and hardwood stands will quickly be depleted. The best wood goes to sawmills for lumber, while other cuttings become pulp for paper mills. Pellet-makers say they get what’s left behind: limbs, tops and smaller trees culled to let their stouter cousins grow larger, along with low-quality, diseased and crooked trees. They debark, dry, grind and compress this into pieces that resemble rabbit feed, which can be burned alone or mixed with coal. The environmental group claims that last year it tracked logs hauled from a forest to Enviva’s Ahoskie plant, which it says shows the state is allowing clear cutting. (The group’s observers might have seen logs on trucks, a company spokesman says, but trimmed tops are often confused for tree trunks.)
Where environmentalists see peril, economic developers see potential, fueled by the European Union’s mandate that 20% of its energy come from renewable sources by 2020. (The U.S. leaves such standards up to the states. In North Carolina, investor-owned utilities must get 12% from renewables by then.) For the Ahoskie plant, which opened in 2013 and employs about 80, Hertford County offered a package totaling $840,000, while the town pledged $730,000. The state’s One North Carolina Fund kicked in $240,000. For Enviva’s Garysburg plant, which opened in 2011 and employs about 75, Northampton County secured a $2 million federal grant to extend water and sewer lines. Both counties have poverty rates 50% higher than the state average. “Rather than handing out money like candy to companies that will spend the next 20 years cutting down trees, they should be investing in companies that create high-paying jobs and that have real economic value,” Dogwood spokesman Scot Quaranda says.
Enviva is owned by New York-based Riverstone Holdings LLC and Washington, D.C.-based The Carlyle Group. Its two Tar Heel plants ship pellets to European customers via a company-owned port terminal in Chesapeake, Va. Last year, it signed a $35 million agreement with the N.C. State Ports Authority to build two storage domes and a conveyor system to ship pellets from Wilmington by next July. To feed the terminal, Enviva plans to open plants in Sampson and Richmond counties and in Laurens County, S.C. WoodFuels will ship up to 300,000 metric tons a year through Morehead City from a plant it plans to open next year in Wilson County. The project hinges on $165 million of bonds that the county’s Industrial Facilities and Pollution Control Financing Authority expects to issue this fall.
Dogwood and its partners — including Newport-based North Carolina Coastal Federation, Charlottesville, Va.-based Southern Environmental Law Center and New-York based Natural Resources Defense Council — pressed the Ports Authority for a public hearing and an environmental-impact study on woodlands and communities near the sites. Instead, officials hired a consultant. Results from the Morehead City study are pending, but the Wilmington one found no major environmental impact, noting that whole trees are taken in only “rare instances.” The environmental groups responded with more than 6,000 letters — most of them form letters — demanding a more-extensive study and public hearing.
When the new plants are open, pellets could provide the ports $3 million in annual revenue. That would be a 7% increase over $44.3 million of revenue last year, when the authority reported an operating profit of $3.8 million as it rebounded from losses in the 2009-10 business slump. Demand is expected to grow, with U.S. pellet exports reaching 10 million tons by 2015, triple the level of 2003, according to the Ports Authority. “North Carolina is well-positioned to be part of an emerging biomass industry, and continued improvements at our state ports will help tremendously,” Agriculture Commissioner Steve Troxler said last fall. “New opportunities such as this one will help revitalize our state’s forest-products industry.”
Academic studies differ on the impact. UNC Chapel Hill’s Kenan Institute of Private Enterprise concluded last year that eastern North Carolina has sufficient “sustainable forest capacity” to supply at least five pellet plants. There’s twice as much wood as Enviva needs to meet expected demand within 50 miles of its plants, the study says. But N.C. State University economist and forestry expert Robert Abt has contended in reports and presentations that demand will rapidly exceed the supply of low-quality timber desired by pellet-makers.
Dogwood Alliance has targeted forest-products companies since its inception in 1996, initially setting its sights on paper mills. In 2005, it won an agreement from Resolute Forest Products Inc., a Montreal-based newsprint producer, to stop turning hardwood forests into pine plantations. In 2009, the group turned its attention to pellets.