By Donald MacCallum
A little known but fast-growing industry has been causing a disturbance in the Canadian environmental space recently, as the burning of wood pellets in thermal power plants is raising concerns over a higher-than-expected environmental impact and increased risk of deforestation.
The past decade has seen an explosion in the production of wood pellets, which have been touted as a sustainable biofuel given that they primarily use sawmill and low harvest residuals from traditional forestry operations that would otherwise be burnt. This production is being shipped mainly to Europe and Japan where it is being utilized as an alternate fuel in repurposed coal plants. The conversion of these power plants is expedited by subsidies as well as regulations that allow them to claim biofuels as net zero emissions.
However, this claim is being refuted by several scientists and environmental groups alike, as recent studies indicate that the lifecycle production of wood pellets is as emission intensive as coal, given the potential deforestation and disruption to the ecosystem. This is of great concern given that British Columbia is already one of the largest regions of wood pellet production in North America with 14 plants producing over 2.5 million metric tons of material a year, while the industry is quickly spreading to the rest of the country.
As Canada and the world moves towards “greening” the electricity grid, it will require a wide range of capital investments, new technologies and various sources of clean energy to achieve our common need for renewable energy generation. We have been told in recent years by industry that one piece of the puzzle is the use of wood pellets as a clean and renewable biofuel for thermal power plants.
This has caused a ramp up of wood pellet production to meet the demand of repurposed coal plants in Europe and Asia. Global demand for premium heating wood pellets was just over two million metric tons in 2004 and has grown to over 20 million metric tons by 2022. This demand is being driven by countries like the UK and Japan, which have increased their wood pellet imports by more than eight-fold in the past 10 years to fuel the converted coal plants.
This demand is being met by increased forestry operations in North America, particularly in the Southern US, where over three per cent of forestry operations are designated for wood pellet production. Manufacturers in North Carolina don’t even consider the industry as a “clean energy” source despite being a major exporter for that purpose, because they see how damaging the deforestation and production is to the local ecosystem.
Canadian wood pellet production is also significant, with exports equalling over four million metric tons of material per year. Drax Group PLC, the UK based conglomerate, is attempting to corner the market in British Columbia, with ownership stakes in eight of the fourteen plants in the province. The company has also continued its expansion into the rest of the country with the recent acquisition of two of the largest plants in Alberta.
Drax claims that production is sourced solely from waste wood materials, a byproduct of existing logging operations that otherwise would’ve been burnt. However, a report commissioned by the Wood Pellet Association of Canada (WPAC) found that almost 20 per cent of wood pellet raw materials are in fact logged trees. The association does not support forestry operations that are directly for use in pellet production. Their goal is to promote the traditional wood pellet market while ensuring the preservation of Canada’s woodland ecosystems.
A better public energy investment would be to increase the roll out of solar and wind installations, or even expand the stock of nuclear power, at least where there is little danger from seismic fault lines. Renewable energy is much more cost effective as solar power alone can create 100 times more energy per acre than wood pellets, while providing significantly cheaper electricity costs to consumers.
It is also pivotal to restrict the production of biofuel to industry waste and by-products to prevent the disruption of prices and supply chains of key forestry resources. These supply chains will need to be sufficiently regulated to avoid incentivizing the growth of logging activity solely in the interest of producing biofuels.
If Canadians knew that a globally subsidized industry is contributing to deforestation at home to fuel dirty energy production, while profits are being siphoned off overseas, the industry might not enjoy the same growth it has seen in recent years.
Donald MacCallum has a master’s degree in economics with several years experience in the non-profit sector as well as banking industry, with previous work experience at S&P Global in Washington D.C and the United Nations Capital Development Fund in Brussels. He is a member of several Calgary based NGOs that focus on developing sustainable climate action and has collaborated on several newspaper articles on climate awareness and advocacy.
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