Wood-pellet fuel emits more carbon than coal’: U.S. watchdog to probe shock claims on power giant Drax’s ‘green’ supplier Read more
By Paul Homewood
h/t Dave Ward
From the Mail:
Britain’s biggest power station has been plunged into crisis by a bombshell complaint to America’s financial regulator over its biggest supplier of ‘green’ fuel.
The complaint alleges that the supplier to the Drax plant in North Yorkshire, US group Enviva, used a loophole in EU and UK law to falsely claim to American investors that its wood-pellet fuel emits far less carbon dioxide than coal.
It also attacks Enviva’s claims that its operations are ‘certified’ for ‘sustainability’. In fact, the UK body responsible for such certification – chaired by Dorothy Thompson, who is also chief executive of Drax – is still auditing Enviva.
Complaint: The supplier to the Drax plant in North Yorkshire, has been accused of using a loophole in EU and UK law to falsely claim to American investors that its wood-pellet fuel emits far less carbon dioxide than coal
The power station is already reeling from a profits slump after green subsidies were cut by Chancellor George Osborne last year and growing questions over its strategy of burning ‘environmentally friendly’ wood pellets.
The complaint, signed by the managers of 34 US pension and investment funds, targets Enviva, a Maryland-based firm that has a contract to supply Drax with one million tons of pellets every year.
It will be filed tomorrow with the powerful federal watchdog, the Securities and Exchange Commission, along with a report by environmental think-tank the Partnership for Policy Integrity (PFPI).
The report says it has found ‘misleading statements by Enviva about its emissions and environmental impacts’ in its prospectus when it was floated on the New York stock exchange last April.
The report says Enviva has claimed that ‘burning wood in power plants reduces carbon emissions compared to coal’. But the study says Drax’s own data shows that while burning coal leads to emissions of 1,901lb of carbon dioxide per megawatt hour (Mwh), the figure for wood is significantly higher – 2,128lb per Mwh.
Enviva’s claim is only possible because of a UK and EU ‘policy loophole’ – which does not apply in America – classing biomass fuel such as wood pellets as ‘zero carbon’.
According to the study, Enviva has not made this clear. Its claim to the SEC that using its pellets ‘reduces’ emissions only applies to making and shipping the pellets, not burning them.
The complaint calls on the SEC to launch an investigation to ‘establish and enforce clear guidelines applicable to companies that may be claiming climate benefits’.
Drax produces eight per cent of the UK’s electricity – enough to power six million homes. Half of its six 650 megawatt (MW) generators have been converted from coal to burn wood pellets from America. Drax spokesman Andrew Brown yesterday confirmed the firm wants to adapt its remaining three furnaces.
Under EU rules, burning wood counts as ‘zero carbon’ because wood cut to make pellets will one day grow back and reabsorb the CO2 emitted from Drax’s chimneys.
This means it qualifies as renewable energy – attracting subsidies for Drax that currently run to about £350 million a year. Brown admitted that without the subsidies, Drax’s business would collapse.
In 2015, its net profit was £56 million, a 56 per cent fall on the previous year. Its shares have plummeted over the past two years to 269p from a high of 820p in 2014.
The report also says that Enviva claims its operations are ‘certified’ for ‘sustainability.’ Following rules introduced by the Department of Energy and Climate Change in December, Enviva is only now being audited by the Sustainability Biomass Partnership (SBP), chaired by Drax chief executive Dorothy Thompson.
An SBP spokeswoman insisted its evaluation of Enviva would be ‘robust and independent’. But she agreed that if Enviva did not get SBP approval it would be devastating to the firm and Drax.
The report also claims Enviva has ‘misled’ investors over the fact that a high proportion of its hardwood pellets come not from ‘sawmill residue’ and ‘waste’ but whole tree trunks – as witnessed by The Mail on Sunday during a visit to its plant in North Carolina two years ago.
Steven Heim, of Boston Common Asset Management, one of the complainants, said yesterday: ‘I hope the SEC examines this very closely.
There is no such thing as green carbon dioxide and Drax is still emitting it. Wood pellet power makes no sense from a climate or environmental perspective.’
Drax’s Brown said he could not comment on the report or complaint, saying only that under EU rules, Drax’s biomass emissions showed an 86 per cent reduction on coal. Enviva spokesman Kent Jenkins denied the firm’s SEC filings were misleading, adding: ‘Enviva produces wood pellets using sustainable practices that protect US forests.’
I am sure we can all have the greatest confidence that Drax’s Dorothy Thompson will carry out a fully impartial audit of Enviva!
Meanwhile Geoffrey Lean , writing in the failed Independent is worried that shale gas can create even more pollution than coal. Given that the report he highlights is written by a former director of the EPA, I would suggest we view the results with caution.
But at least right at the bottom of his piece he writes:
However, expert allegations that fracking maybe responsible for a surprise 30 per cent increase in methane over the United States in the last decade are challenged by new research, published in the journal Science, suggesting that it may instead be due to agriculture especially dairy farming.
Lean also appears concerned about the industrial renaissance which has resulted from cheap energy:
The report – “Greenhouse Gases from a Growing Petrochemical Industry” – adds that the cheapness of shale gas is encouraging other energy-intensive industries to expand. Seven new fertiliser industry projects are scheduled to emit another 15.8 million tons of carbon dioxide equivalent, and seven new chemical plants would add another 17.6 million tons.
He obviously yearns for the good old days when energy was expensive and these sort of industries moved to China and elsewhere.