U.S. biomass producers say they are helping curb carbon emissions by supplying European power plants with wood pellets, a claim that environmentalists argue is false.
  • The growth in biomass provides environmental and economic benefits, according to industry figures.
  • Environmentalists say that biomass is polluting, and, most importantly, that it takes decades to sequester the carbon released when a mature tree is felled.
  • While there are instances where biomass is sustainable, it remains a sector that impact investors should approach with caution.

Burning wood pellets to produce electricity, known as “biomass,” might be renewable but remains in the crosshairs of environmentalists, making the sector tricky for impact investors.

Industry leaders laud biomass as both renewable and less polluting than other coal, while environmentalists focus on the damage wrought to landscapes and carbon emissions. Forests in the southeastern U.S. have become the biggest source of wood pellets used in Great Britain, where biomass produced 7% of electricity in the fourth quarter of 2019. The possible economic and climate benefits of biomass were explored by speakers on a Boundless Impact Investing webinar.

“As the tree is growing the carbon atoms are being absorbed,” Robert Eckard, senior strategy scientist at Momentum, said on the webinar. An equal amount of carbon is being released as is being absorbed during “long-term regenerative growth,” he said.

Biomass backers argue that since forests grow back and eventually recapture carbon dioxide, the industry should be considered carbon neutral. The EU has encouraged the use of biomass by including it in the “renewable” category along with solar and wind. Biomass, which emits far less carbon than coal and natural gas but more than solar and wind, has the benefit of being relatively cheap, according to Eckard. But burning wood pellets does produce greenhouse gas.

“No matter the spin the biomass industry puts on it, cutting down forests and burning the wood to generate electricity is not a climate solution,” Sami Yassa, a senior scientist at the Natural Resources Defense Council who works on biomass issues, told Karma.  “The more scientists examine this practice, the more biomass shows itself to harm our climate, while also resulting in the loss of important forests and wildlife and the release of toxic air pollution.”

The U.S. has lagged in using biomass for power but American companies are leaders in producing pellets. Wood and wood waste were responsible for about 2% of U.S. energy consumption in 2018, according to the Energy Information Administration.

Enviva Holdings has plants and export terminals in the Southeast U.S. that primarily export to the U.K., Japan and Europe. The company, which is the world’s largest wood pellet producer, argues that it’s green because it requires that the landowners return their land to forest after harvest, and has supported conservation programs protecting bottomland hardwood and longleaf forests. The pellets it produces come from smaller branches, damaged wood and waste left after the valuable timber is harvested from a tree.

The wood being used doesn’t come from old growth forests, Jennifer Jenkins, VP & chief sustainability officer at Enviva, said in the webinar. They source from forests managed for “stable regenerative production,” she said.

Using forests for biomass energy can curb greenhouse gas emission, but only when accompanied by policies that boost the planting of trees that will quickly absorb carbon dioxide, according to a recent study published in Science Advances. This runs counter to other studies that argue that trees don’t sequester carbon while growing and the carbon held in the soil is lost when trees are cut. A Chatham House report claims that since wood is less dense and holds more moisture than fossil fuels, it emits more greenhouse gases when burned.

There’s a consensus that biomass can be carbon neutral in some cases, such as when a paper plant or sawmill burns waste that would decompose, instead of using fuel oil. Environmentalists argue that this isn’t the case when a forest is cut to produce pellets.

“We need to protect our forests and help them thrive in order to cut carbon pollution and tackle this urgent problem,” Yassa said.

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