Wake Forest, NC— One unexpected result of new environmental regulations in England has been the rapid growth of the wood pellet business in North Carolina.
A coal-fired power plant in England recently announced plans to convert half of the power plant to burn wood instead of coal. This project is primarily to avoid a new carbon dioxide tax that applies to coal. The new tax does not apply to wood since it is renewable. However, the wood fuel is expected to cost about three times the cost of coal and, of course, the extra cost will be reflected in higher electric rates.
What is stunning is the amount of wood fuel needed for this one project – 7.5 million metric tons of wood pellets are needed each year. That amount far exceeds what is available in England so nearly all will be imported from the US and Canada.
Port facilities are being expanded in Morehead City and Wilmington to handle both the materials and the increased numbers of ships necessary to move that much material across the Atlantic Ocean.
Originally envisioned as a use for wood waste, such as tops and limbs, generated by conventional logging operations, some environmental groups have raised concerns due to the increasing scale of these projects, that whole forests in eastern North Carolina will be clear-cut to provide this fuel. Some have estimated that it would take nearly 3 million acres of forest to supply this one project on a continuous basis.
As electric utilities in Great Britain and the European Union adjust to new rules that require 20% of all energy by 2020 to be renewable, they predict that the need for imported wood pellets will increase by at least ten times in just the next 5 years. That’s 75 million metric tons of wood pellets per year and nearly 30 million acres of forest.
We have watched the development of environmental regulations in the UK and EU with interest and wondered about the implications for the US. While you always worry about the “unintended consequences” of any new regulations, we had not expected the source of wood fuel to be the issue. It’s also surprising that these unintended effects have happened so quickly and so close to home.
Do you have a question or comment about using wood as a fuel source to generate electricity? Suggestions for future topics? Please submit them to MAC@wemc.com.