A Pulp Fiction - Pt. 1

Burning trees to generate electricity is a quintessential form of "Sustainabilchemy".

Bad ideas flourish because they are in the interest of powerful groups. - Paul Krugman

Time and the law of unintended consequences have a way of testing ideas and policies that once seemed worthwhile against the harsh judgment of reality. What seemed right, obvious and supported by “The Science” at one moment in time often turns out to be viewed later as ludicrous, wasteful, and costly.

This phenomenon plays out across all areas of life: wars, vaccines, and policies targeting social, agricultural, conservation, wildlife management, immigration and foreign relations “improvements” are only a few examples.

Energy, environmental and economic policies are no exception. In fact, where they intersect, they are among the absolute best examples.

In the mid-1990s, scientists at the UN were refining methods for counting CO2 emissions. In an effort to avoid double counting and simplify the process, they suggested CO2 emissions from burning biomass be counted in the country where the trees are cut down rather than where the wood pellets are burned.

In Spring 2009, European environmentalists concerned about “climate change” cheered the European Union’s (EU) recently passed “Directive on the promotion of the use of energy from renewable sources”. The EU’s new Renewable Energy Directive (RED) as it became known established mandatory national targets “consistent with a 20 % share of energy from renewable sources and a 10 % share of energy from renewable sources in transport in Community energy consumption by 2020.”  When Germany, Europe’s largest economy and center of industrialization, passed its “Energiewende” into law a year later, it became the darling of Europe’s Green Party. (Today, it is a victim of its own “success”.)

While setting a goal for “renewable energy” to supply 20% of the EU’s energy by 2030, its 2009 Directive codified biomass from wood in the European Union’s definition of “renewable energy” and deemed that CO2 emissions for wood burning for electricity generation do not count toward EU emissions reductions objectives. In the process, it unleased the law of unintended consequences (something which seems to have a propensity for hanging around environmental and energy policy) in one of the most paradoxical and absurd manners since Rachel Carson wrote Silent Spring more than 60 years ago. In a Twilight Zone throwback to the era before coal, today burning wood to generate electricity accounts for almost half of all “renewable” energy consumption in the EU.

In its update to RED (RED II) in 2018, the EU voted to keep “biomass” included in the definition of “renewable energy” while increasing the renewable energy goal to 32% by 2030. But it did nothing to address the growing reality that wood biomass – in the form of whole trees – was being sourced, mainly from U.S., Canada, and Baltic forests to fuel electricity production in the EU from wood biomass.

After separation from the EU, the UK government published its “Biomass Policy Statement” in 2021. It included wood biomass in the UK’s “carbon free” taxonomy, as had the EU’s two previous RED versions.

The EU had another chance to amend its tree-burning ways in 2023 when it updated RED again (RED III), increasing the renewable energy target to 42.5% by 2030. Instead, some concessions were made for additional soil and forest protection.

Count us among those skeptical that these changes will stop the vast majority of live tree harvesting for wood pellet production from American, Canadian, and Baltic forests. We have seen this before, in Southeast Asia, where the EU’s “sustainable biodiesel” policy incentivized clearing of Indonesian and Malaysian rainforest for palm oil plantations. REDII and REDIII additional protections aimed at biodiesel sourcing may have reduced but have not stopped the problem.

REDIII takes care to avoid upsetting two paradigms from the first two versions regarding wood biomass. First, electricity generated from burning wood pellets remains categorized as “carbon-free renewable energy”, the same as “zero carbon” wind or solar, despite the fact that burning wood for electricity generation produces more CO2 per unit of energy generated than burning coal. Second, that the environmental consequences of harvesting and pelletizing whole trees (and then combusting them) categorized as “thinning” and “low value roundwood” are justifiable tradeoffs for “climate change”.  Ironically, it is likely that REDIII’s goal of 42.5% “renewable energy” by 2030 in the EU will only drive more live tree harvesting to attempt to satisfy the EU’s goals.

An irreconcilable paradox for western “environmentalists”, the world’s largest biomass power plant is the Drax Power Station near Selby in North Yorkshire, England. Since 2017, the facility has been subsidized to the tune of almost £7 billion by UK taxpayers to burn whole trees from the U.S., Canada, and Baltic states.

Eats trainloads of trees | Shutterstock

In a piece we published in February 2023 titled Sustainabilchemy, we used Drax’ burning wood to generate electricity as one of three examples of our title’s contribution to modern vocabulary manifest today. In that story, we also highlighted the appetite of the world’s largest wood pellet producer, Enviva for consuming Southern U.S. pine and hardwood forests.

Last week, in a piece titled Cooking the Books, Doomberg highlighted the “lunacy of the green new math” around Drax and burning wood for electricity generation. The outstanding article highlights the energy density folly and the “carbon counting con” by which the EU and UK classify wood burning for electricity generation as “carbon neutral energy” under the three REDs. It notes the allegations and controversies facing Drax over burning whole trees and a resulting UK government investigation. And the paradox that in the midst of the investigation, Drax recently received £2 billion in UK government support for its “BECCS” (Bioenergy with Carbon Capture & Storage) project to capture and store CO2 that apparently does not exist (h/t Doomberg) from its Yorkshire Plant under the North Sea.

We enthusiastically recommend you read Cooking the Books. As the incomparable Doomberg team wryly noted (emphasis ours):

“For its part, Drax powers on with its mission to scrub the atmosphere of CO₂, promising to capture and store the carbon it is currently emitting that nobody is counting. In this upside-down scheme, grabbing unrecorded carbon from the air and putting it underground will make Drax’s power plant carbon negative. (So maybe it does exist?)”

But Drax, a company that likely would not exist but for RED and the UK’s carbon taxonomy, is doing more than just burning whole trees at its power station. For Enviva - the world’s largest wood pellet producer and largest supplier to the Drax Power Station - things got a whole lot more “interesting” in March. And in addition to the “carbon counting fraud,” there are plenty of other good environmental reasons why burning wood to generate electricity is sheer idiocy.

Besides burning wood pellets made from whole U.S., Canadian and Baltic trees at its UK power station, what else does Drax do? What happened at Enviva that effects Drax and other wood biomass power generation facilities? And what are some other environmental consequences of burning wood for electricity generation aside from the “carbon counting con” and aesthetics of clear-cutting trees? Put on your field chaps. The understory here is thick, and some poisonous snakes inhabit these woods.

We begin by noting that Drax is not just the owner/operator of a converted coal-fired power station that now burns wood biomass. It is also one of the largest wood pellet producers in North America (which provides the largest share of its wood pellet fuel), producing around half of the fuel consumed by the Drax Power Station.

Drax’ pellet production business operates seventeen plants in North America, ten in Canada and seven in the U.S., providing a total nameplate capacity of over 5 million metric tons (MT) annually. In addition to the seventeen plants (with an additional plant under development), the company operates four deepwater port facilities with a fifth under development, as depicted in the graphic below from the firm’s 2023 Annual Report:

Corporate Pine Beetles | Drax 2023 Annual Report

Drax’ wood pellets travel almost 12,000 nautical miles from the Port of Prince Rupert, British Columbia to the Port of Immingham, UK, commonly on Panamax sized cargo ships, where they are received for rail shipment to the Drax Power Station. Those cargo ships are powered 100% by wind and solar. Just kidding, they burn diesel (or worse, dirtier low-grade bunker fuel). A cargo ship hauling Drax pellets from the Port of Prince Rupert, BC will burn well over 1 million gallons of diesel on its voyage.

Aside from the controversial issue of burning wood at Draw Power Station, procuring wood to feed the beast is a source of media, non-profit, and UK government investigations, opprobrium and negative publicity for Drax as well as Enviva and other wood pellet fuel producers. Here, Drax 2023 annual report helps:

Biomassacre energy champion | Drax 2023 Annual Report

In 2023, >78% of the biomass fuel consumed at Drax came from the U.S. Adding in Canada brings the total to almost 87%. Of the U.S. wood pellets imported by Drax, those made from tree “thinnings” and “low grade roundwood” made up almost 63% (almost 3 million tons). 99% of the total “thinnings” and about 74% of the total “low grade roundwood” consumed by Drax came from U.S. forests. Of the total of almost 6 million tons of biomass consumed by Drax, ~60% came from “thinnings” and “low value roundwood” (read: whole trees).

Drax, Enviva and other wood pellet producers tout “sustainable” harvest by virtue of voluntary participation in industry standards set by organizations like Sustainable Biomass Program (SBP). But careful examination of SBP standards shows that they automatically classify any pellets produced under one of the three main forest management certification schemes – Forest Stewardship Council (FSC), Programme for the Endorsement of Forest Certification (PEFC) and Sustainable Forestry Initiative (SFI) - as meetings its standards. And these standardization organizations allow what has become known as “roundwood” and “thinnings” within their certification framework in terms of “sustainably” harvesting trees for wood pellet production.

“Roundwood” is generally any wood from a forest, whether hardwood or planted pines, that by virtue of its shape or diameter or other feature makes it unsuitable as a “sawlog” for a sawmill. “Thinnings” refer to forestry management that intentionally takes out the less desirable or healthy trees (diameter, condition, shape, etc.) to improve the success of the remaining trees in a stand or forest. Call them what you will, “roundwood” and “thinning” come from whole, live trees. Other sources include sawmill residues, branches and tops from harvest (called “slash” in forestry terms), end of life (dead) trees) and agricultural residues, the last two of which contribute little.

To be fair to Drax and Enviva, they became a viable market for Southeastern private landowners, from whose land over 96% of softwood/hardwood trees classified as “roundwood” by Drax and Enviva destined for pellets are harvested. We cannot blame landowners for finding an efficient market for the live trees sawmills don’t want as part of clear-cutting, or from thinning as part of good management practices. We can blame the EU RED and UK’s biomass policies – especially the lucrative subsidies – for fueling the fire.

How critical are those subsidies to Drax financial condition? A report by UK chartered accounting firm Keartland & Co. commissioned by the U.S. based Southern Environmental Law Center (SELC) provides a helpful graphic for the period 2018 - 2022:

Masterpiece of Green Central Planning | Keartland & Co.

Incredibly, take away the UK’s subsidies in the form of Renewables Obligation Certificates and Contract For Difference and Drax profit evaporates. While Keartland’s report doesn’t include 2023, the mean annual UK subsidy for the period above (~£785 million) exceeds Drax’ recently reported 2023 pre-tax profits again. Drax’ current UK subsidy scheme (and here, we use the term in the American sense, not the formal English) ends on March 31, 2027, a matter we return to in Part 2.

On March 12^th this year, U.S.-based Enviva filed for Chapter 11 bankruptcy reorganization. As the world’s largest supplier of wood pellets (including third party supplier of fuel to Drax), this creates a “spot of bother” as the British like to say for Drax and biomass generation facilities throughout the EU.

In Part 2, we delve into Enviva’s bankruptcy, a whistleblower’s allegations about the company, and the broader issue of why burning trees to generate electricity is a bad idea beyond the mere aesthetics. And, how both Drax’s and Enviva’s futures may hang in the balance based on U.S. and UK subsidies.

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