The world’s largest wood pellet producer has applied for a major clean energy tax credit for building a new plant in Epes, Ala., but critics say burning wood pellets for energy won’t reduce the greenhouse gases that drive climate change.
Enviva — which is currently constructing what will be its largest pellet mill to date in Sumter County — recently told investors in an earnings call that it has applied for tax credits under the Department of Energy’s “Advanced Energy Project Credit,” meant to reduce greenhouse gas emissions and promote renewable energy.
The wood pellets produced at Epes would be ground up from whole or partial trees, and shipped overseas to countries where burning the wood pellets in power plants is considered a carbon-neutral or renewable energy.
However, a number of scientific studies have found that burning wood for energy actually emits more carbon dioxide than the coal-fired power plants they are replacing and would take a century or more to result in a carbon decrease.
Last week, a collaboration of 25 environmental groups sent a letter to U.S. Secretary of Energy Jennifer Granholm, urging the department to reject Enviva’s request and exclude pellet mills from the program.
“[The tax credit] is intended to be used for an energy transition away from polluting energy,” the letter said. “We must not divert its limited funding towards projects that continue to perpetuate harms to the climate and communities on par with fossil fuel combustion.”
Neither Enviva nor the Department of Energy responded to requests for comment on the letter.
The letter was signed by a coalition of environmental groups including Friends of the Earth, the Natural Resources Defense Council, the National Wildlife Federation, Earthjustice, the Southern Environmental Law Center and Save Chandler Mountain 501c3.
The Southern Environmental Law Center told AL.com via email that these pellet mills will harm Alabama communities already burdened by industrial air and water pollution.
“These tax credits are meant to help projects that will invest in clean energy and benefit local communities – Enviva’s proposed wood pellet facility would do neither,” said SELC attorney Heather Hillaker.
“Wood pellet facilities create large amounts of air pollution and dust that can cause increased rates of asthma and heart disease in nearby communities. Additionally, burning trees for power emits more climate-warming carbon than burning fossil fuels like coal.”
The tax credit
The Advanced Energy tax credit has been around for years but received a $10 billion boost last year thanks to the Inflation Reduction Act, championed by President Joe Biden.
Under the program, qualifying facilities can apply for a tax credit of up to 30% of the construction of qualifying facilities. Enviva has said it expects to invest $375 million in the Alabama facility, meaning it could potentially seek as much as $112 million in tax credits.
The Epes facility would be Enviva’s largest to date, but the company has announced plans to build a similar-sized facility in Mississippi, for which it is also seeking the tax credit.
Similar pellet mills in North Carolina and elsewhere throughout the South have resulted in complaints of high levels of air pollution, noise, and environmental injustice as the plants are often located in economically disadvantaged or high minority communities.
“The Biden administration should not give handouts to companies looking to build dirty facilities that will pollute Alabama communities, degrade Southern forests, and worsen the impacts of climate change,” SELC’s Hillaker said.
Why are wood pellets a thing?
The wood pellet market in Alabama and the Southeast has exploded in recent years, largely due to subsidies offered in the European Union and some Asian countries that count wood pellets or biomass as renewable energy like solar or wind.
By one estimate, European countries spend 16 billion euros ($17 billion) of taxpayer funds per year on subsidies for wood-burning biomass energy to replace fossil fuels.
Whether that is effective is hotly debated.
The U.S. Energy Information Agency says that biomass can be carbon neutral because burning the trees releases basically the same amount of carbon that tree captured during its lifetime.
When fossil fuels like coal are burned for energy, they release carbon dioxide into the atmosphere that’s been sequestered in the ground for millions of years, thereby adding to the total concentration of CO2 in the atmosphere. Wood pellets only release carbon that has been sequestered over the last few decades and would eventually return to the atmosphere as the tree died and decomposed.
However, studies have shown that burning wood for energy — because it requires much greater amounts than coal — actually releases more CO2 into the air than burning coal to generate the same amount of energy.
In addition, a study conducted by the European Union’s Joint Research Centre found that for most types of biomass energy it would take more than a century, or would be outright impossible, to recapture the amount of carbon emitted by burning the trees.
“Such technology is not effective in mitigating climate change and may even increase the risk of dangerous climate change,” the European Academies Science Advisory Council concluded based on that study.
In 2021, a group of 500 scientists co-signed a letter to leaders in the U.S., EU, Japan and South Korea, urging the leaders of those countries to end biomass subsidies.
“We urge you not to undermine both climate goals and the world’s biodiversity by shifting from burning fossil fuels to burning trees to generate energy,” the letter states.
Some countries such as Australia, the Netherlands, and the U.S. state of Massachusetts have revoked or put severe restrictions on their biomass energy subsidies.
Despite the growing criticism of biomass energy, the EU voted last year to keep counting biomass as a carbon-neutral energy source, as many of its member states scramble to meet clean energy goals and/or divest from fossil fuels coming from Russia.
Full steam ahead in the Southeast
The recent EU vote and continuing subsidies in countries like South Korea, Japan and the United States has companies like Enviva and UK-based Drax opening new pellet mills across the Southeast, including Alabama.
Drax recently opened its second pellet mill in Alabama, a $100 million facility in Demopolis, in Marengo County. The other Drax mill in Alabama is in Aliceville, in Pickens County.
In Enviva’s latest quarterly report to investors, the company forecasts strong growth in Europe and said it had shipped two test shipments to Poland, a potential new customer.
“Poland has one of the highest per-capita rates of coal usage in the EU, and historically has been very dependent on Russian fossil fuels,” the company said.
Enviva expects its Epes plant in Alabama to open next year and reach full production by 2025. The plant is expected to create around 100 direct jobs in an area with few economic opportunities.
“Enviva’s significant commitment at the Port of Epes will undoubtedly breathe life into a community and region eager for new, long-term opportunities,” Alabama Gov. Kay Ivey said at the Enviva plant’s groundbreaking ceremony in June.
“It truly is an exciting day for West Alabama, and I sincerely appreciate Enviva’s decision to plant roots here in our great state.”
