Jul
30
2016

Brexit Presents Economic Opportunity for U.S. Wood Energy Export

The following op-ed from PACE Executive Director Lance Brown was published by AL.com this past Saturday, July 30th. You can view it online here.

Lance_Brown

In recent weeks, coverage of the U.K.’s vote to leave the European Union has dominated headlines. Stock markets have begun to recover, and the consequences of the Brexit could prove less cataclysmic than some anticipated. However, the full economic impact remains to be seen. I recently wrote about the potential fallout of the Brexit on global energy sourcing and the related politics – in particular, the EU’s role as a buffer against dependence on Russian natural gas and the potential of EU policies to negatively affect the affordability and reliability of British energy.

A clean and renewable source of energy being produced right here in Alabama stands ready to help address both of these challenges. As of late, there has been a growing interest in the potential to generate carbon-neutral energy from compressed wood pellets, which are derived from low-grade wood fiber byproducts like sawdust or other mill residue as well as the thinning of fast-growing trees within managed forests.

While fossil fuels will remain an important part of the energy mix, wood energy can serve as a reliable alternative. According to studies conducted by the National Renewable Energy Lab and U.S. Environmental Protection Agency, co-firing industrial wood pellets alongside coal reduces emissions of air pollutants. For that reason, wood energy is proving to be a critical asset to British energy security, allowing the U.K. to meet its emissions goals and avoid over-dependence on foreign natural gas.

The benefits of exporting industrial wood energy has already been recognized by a number of federal officials. In March, U.S. Secretary of Agriculture Tom Vilsack wrote a letter to the U.K.’s then Secretary for Energy and Climate Change, Amber Rudd, highlighting the sustainability of the U.S. wood energy and the positive effects of the export for energy generation in Great Britain. As he writes, “Biomass generation provides significant greenhouse gas benefits to the U.K., due to reduced fossil fuel combustion. In addition, demand for wood pellets also delivers compelling carbon and societal benefits to the United States.”

In Europe, demand for biomass sources like wood pellets has grown in recent years due to carbon emissions mandates instituted by the EU. This has led European nations such as the U.K. to seek out renewable energy sources like carbon-neutral wood energy. And while Brexit may limit foreign energy imports to the U.K., the wood energy supply from Alabama and other southeastern states will continue, helping to fuel both British and local stateside economies.

According to published estimates, Alabama has 22.7 million forested acres, 72 percent of which are naturally regenerated. As a result, our state stands to play a major role in the future development of biomass energy.  Alabama also has a longstanding history of sustainable forest management, headlined by companies like Westervelt Renewable Energy, which has been headquartered in Tuscaloosa since 1929.  In addition, Zilkha Biomass Energy recently built a plant in my hometown of Selma, which sent its first shipment of wood pellets in August 2015. The plant supports 222 jobs and is certified under multiple forest sustainability programs—a testament to the company’s dedication to responsibly managing its forests.

Demand for biomass products has also proven advantageous for the shipping industry, including Alabama’s ports. Enviva, the world’s largest producer of wood pellets, holds a long-term lease in the Port of Mobile. This location is ideally situated to receive supplies from Enviva’s manufacturing facilities in Amory, Mississippi, situated on the Tennessee–Tombigbee Waterway, and Wiggins, Mississippi, just over 90 miles west of the Mobile Bay. These are just a few examples of the ways in which the renewable wood energy export is creating jobs for Alabamians. In fact, the forestry industry as a whole supports nearly 100,000 jobs in Alabama, many of which are in rural communities where jobs can be hard to come by. All in all, forestry generates over $3.5 billion in state wages annually.

There is good reason to feel optimistic about the economic contributions the wood energy industry has the potential to make in Alabama and beyond. According to a recent report published by forestry data analysis firm Forest2Market, existing and under construction export pellet plants in the South have the potential to produce enough pellets to account for over 80 percent of Europe’s total annual industrial consumption. This helps provide an alternative to fuel sources controlled by Russia. This flexibility could also prove especially beneficial to Great Britain as it faces the challenge of transitioning out of the European Union.

The Southeast, including Alabama, has long been known for its abundant supplies of wood. Industries such as pulp and paper have led the way in enacting responsible supply protections that are sustainable in the long term, in addition to creating jobs and real economic value in our state. While it does represent just one segment of the larger forestry sector, the wood energy industry has the potential to create jobs and economic value in the southern regional economy, while also offering an important energy alternative to our partners across the pond and around the world.