Beware the Biomass Boom and Bust

Enviva depends on overseas sales for its product: wood pellets.

However, the Dutch government is on the precipice of writing biomass out of its energy future.

The Netherlands are concerned about the perverse effects of importing vast amounts of wood from overseas for combustion in coal-fired power stations, the high level of continuous subsidies involved, and increasing public outrage. For Enviva’s investors, this should inspire hesitancy on any Enviva proposals to receive more capital for a facility build-out in the Southern United States.

Burning biomass like wood pellets for energy is not cost-competitive in the electricity marketplace without subsidies, which is why it plays such a minor role in the US energy system. Subsidies to wood pellet companies are based on the belief that the pellet industry is “green” and sustainable, but over the past 10 years, this industry-led story has been proven false by scientists and community testimonials. Cleaner and more affordable forms of renewable energy, such as solar and wind, offer a host of economic benefits to communities, reduce carbon emissions, do not degrade natural forests, and can pave the way towards energy justice.

When left standing, forests are one of the most important and affordable ways to fight climate change. Why would we send our forests up in smoke then? 

While the EU erroneously counts electrical energy produced by burning biomass as carbon neutral, science has shown unequivocally that wood pellets release more CO2 than coal. As problematic as the Renewable Energy Directive set by the EU is, it allows member states to set further sustainability requirements on what qualifies as renewable energy.

In the Netherlands, as tense public and political debates reach a tipping point, biomass may finally be on the chopping block.

Last year, the Netherlands government announced an additional EUR 11.4 billion for biomass installations. Immediately, protest sparked from communities all around the country. A poll in a conservative newspaper found that 98% of readers favored ending subsidies for forest biomass. Motions to place limits on biomass and the accompanying subsidies began popping up in the Senate continuously, slowly but surely gaining more political champions. The SER, the Netherlands’ Social and Economic Council, just released a report calling for an end to biomass subsidies, a phase-out of biomass use for energy, and a priority for forest-materials to be used elsewhere. Among the list of concerns for the public are greenhouse gases, air pollution, subsidy-dependency, the need to protect biodiversity, resource inefficiency, and limited place for biomass in a long-term energy transition. Clearly, the fate of biomass is uncertain.

Forests are indispensable in our fight against climate change.

They are protectors from soil erosion, natural water purifiers, cool the air, and store carbon dioxide. As forests are carbon sinks, they mitigate climate change and its related disasters such as sea-level rise and natural disasters.

Climate change is already costing governments billions of dollars in damages.

These costs are preventable if we scale up the protection of forests, especially from unnecessary “false renewables” like harvests for biomass energy. In the United States, understanding the political debate in importing countries is particularly necessary before investing in production facilities at home.

Biomass power has never taken off in the United States, and for communities that have invested in energy plants reliant on biomass, they have literally paid millions for that mistaken investment. For example, the Deerhaven Renewable Energy Plant in Gainesville, Florida has been idle for almost the entirety of its lifespan, since 2013, as the energy it produces is too costly. Because the city entered into a 30-year + $2.1 billion agreement with the plant, citizens have paid $70 million/year through their electricity bills for a power plant that produces no power. Recently, the city acquired the plant and is now using it to produce a very small amount of energy, a fraction of the capacity it was constructed for.

Wood pellet production facilities have similarly received community disdain.

Coming with the promise of jobs, though, they have been government sweethearts for too long. For states in the Southern US, where companies like Enviva and Drax are turning their attention to large production facility build-outs, state governments should be wary of subsidizing an industry whose customer base threatens to shrink. To learn more, we encourage you to check out other resources on this topic:

Wood Pellet Manufacturing: Risks for the Economy of the US South
The True Value of Wetland Forests
Risky Biomass Business
Investors Petition SEC to Crack Down on Biomass Climate Claims

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