Last of four parts

MOREHEAD CITY — When he bought his home here two years ago, Fabian Botta knew that he and his family would have to learn to coexist with the neighboring railroad track.

The appeal of the two-story, 102-year-old American Foursquare style home with a grand front porch and water view overshadowed worries about the railroad track running alongside Arendell Street, the town’s main thoroughfare.

“We’ve gotten used to it,” said Botta, part owner and head chef of The Ruddy Duck Tavern.

Plans to build a wood pellet storage facility at the port in Morehead City has the Bottas and their neighbors now wondering if they will be forced to adapt to more train traffic. The proposal raises questions about how such a facility may change the face of this small town where the economy relies so heavily on tourism.

Sentiments about the proposed facility and the additional rail traffic it’s projected to create range from cautiously optimistic to skeptical.

Mayor Jerry Jones

The project has the approval of the Morehead Town Council, which adopted a resolution in November supporting the proposed facility. Commissioners in Swansboro passed a similar resolution in November as well.

“Our feeling was that the facility is a good match,” said Jerry Jones, the Morehead City mayor. “It’s an organic material coming through this city.”

The facility would receive and store wood pellets to be shipped to Europe, where there’s growing demand from utility companies to use as an alternative fuel. The N.C. State Ports Authority plans to build similar storage facilities at the port in Wilmington.

Since the Morehead City port was designed as a shipping and receiving operation, a wood pellet storage facility would be a good fit, Jones said. That wasn’t the case for a sulfur melting plant proposed for the port. That project was killed in 2011 following vehement opposition from town leaders and residents.

Nevertheless, town leaders and residents are concerned about additional rail traffic, which cuts across an intersection of U.S. 70.

“I do know that there are some plans that could mitigate this concern that we have,” Jones said. “I’m not really familiar with what the plans are. I haven’t sat down with anybody. I’m comfortable it can be worked out. Morehead City was founded around the railroad track. I don’t foresee any more traffic delays with increased rail traffic than what we already have.”

During an Oct. 30 public presentation, Tom Bradshaw, the Ports Authority executive director, said rail traffic through Morehead City would increase by no more than 75 cars in a single train and increase by about one extra train a day for five or six days a week. The ports authority and railroad will try to operate the trains at odd hours to prevent disrupting tourist traffic, he said.

The authority, state Department of Transportation, and N.C. Railroad Company, which owns the more than 300 miles of track running from Charlotte to Morehead City, will have to do more than that to reduce a drastic impact on the town, said Neal Littman, chief operating officer and general manager of Morehead City Yacht Basin. He was one of the leaders of the opposition to the sulfur smelter.

Here’s an artist’s conception of the proposed wood pellet facility at the state port in Morehead City. The pellets would be stored in the four domed structures at the bottom. Photo: N.C. State Ports Authority

“What it’s going to do to the local community is really devastating unless they take some really expensive steps to minimize it,” Littman said. “It’s going to change the character of Morehead City. They need 17,000 rail cars per year at the design capacity they’re talking about. If you do some simple math that means you’ve got an extra train of 50 rail cars at least every day except Sundays and holidays. A 50-rail car train is larger than the trains that they currently build and run through Morehead. It leaves you with the state, at some point, needing to build a second rail line. Where are they going to put it? It creates a whole new layer of troubles.”

Morehead City’s economy is based on tourism, not industry, he said. By the Ports Authority’s own estimation, the storage facility would create a small number of locally based jobs. Overall, the facility would reportedly create nearly 600 jobs regionally and generate an estimated $14.8 million a year in revenue. Good for the state, Littman said, but not necessarily a direct benefit to the town.

“I’m not sure if it’s going to be for the betterment of Morehead City,” Littman said.

Ports Authority plans call for tearing down old warehouses on the south side of the port and replacing them with four, domed storage buildings. The new buildings will reportedly be 150 feet tall – about twice the height of the pot ash domes at the port.

The domes will hold up to 1 million tons of wood pellets a year. The Ports Authority board voted in November to spend up to $5 million for the design of the facility. They hope to begin shipping from the new facility by January 2014.

“From the perspective of a taxpayer in the state, I worry about spending a lot of money on building this infrastructure and then the Europeans waking up and thinking, ‘Gee, our cost per kilowatt hour is costing too much,’” Littman said.

Denard Harris, owner of Portside Marina, which sits next to the port’s front gate, has different concerns.

“I do have a question having grown up here that I have dealt with internally,” he said. “Why aren’t we using wood pellets ourselves? Where is our market here in the United States? What do they know that we don’t?”

Locals can learn to deal with extra rail traffic, he said.

“It’s part of our life,” said Harris, who lives less than a block from the railroad track. “If it will generate jobs and meets the smell test we haven’t got a problem with it. We are concerned about keeping people employed around here. You can put up with a lot of things you probably don’t think you can.”

Botta isn’t necessarily convinced that will be the case.

“I’m not really thrilled about,” additional rail traffic, he said. “I think a lot more trains coming by here is not going to help Morehead City. I’m not adamantly opposed to it. I think there’s ways of working together. I just hope everyone makes the right decisions with this.”

Third of four parts

Does North Carolina have an adequate supply of trees to feed the maws of European power plants? Does the state have policies and rules in place to ensure that its wood lands won’t be so cut up as to threaten water quality, wildlife and natural diversity? What about more trains through Morehead City?

Those and many other questions should first be answered before the N.C. State Ports Authority moves ahead with plans to spend as much as $200 million to build shipping facilities to export wood pellets to Europe, said Todd Miller, the executive director of the N.C. Coastal Federation.

The federation joined the Southern Environmental Law Center and the Clean County Coalition, an advocacy group in Carteret County, in asking the authority to do an thorough environmental review of the project under the State Environmental Policy Act, or SEPA.

The law requires such review for any project that used state money or land, requires a state action such as a permit and has the potential to effect the state’s environment or the public’s health.

Todd Miller

Will McDow

The groups asked for the review in a letter they sent they sent in October to Thomas Bradshaw, the executive director of the ports authority. The agency has yet to respond.

Construction of the facility at the state port in Morehead City could quadruple freight rail traffic through town. That prospect along with the increasing cutting of the region’s woodlands requires a thorough environmental review before proceeding, Miller said.

“As a state agency spending public money on public land on a project that has this potential significant impact we believe they must comply with SEPA,” he said. “As part of the letter we’re verifying whether they’ve met the public notice requirements. We haven’t seen any notices.”

Environmental reviews require a public process that systematically explores potential issues and keeps people informed as to how their tax money will be spent. “We don’t want the same thing to happen here that happened with the international port,” Miller said.

That proposed project in Brunswick County eventually died from lack of support following staunch opposition from locals, environmental groups and politicians, but not before the authority invested $30 million in 600 acres of land.

“The ports authority basically tied up and wasted $30 million by moving so quickly on land that is now not nearly anywhere worth what they paid for it,” Miller said. “They did it quickly without any real discussion or public analysis.”

Whether the state’s forests can support being the fuel depots of Europe and what the real carbon implications of making the pellets here and shipping them overseas are two issue that need to be carefully explored, said Will McDow, manager of Southeast Center for Conservation Incentives for the Environmental Defense Fund in Raleigh. His organization last year produced a ground-breaking report on Europe’s growing use of southeastern U.S. wood pellets and is looking at both forest sustainability and the overall carbon “footprint.”

European regulations on where the pellets come from, how they’re harvested and whether logged tracts have to be replanted are still in flux, McDow said. Regulators are trying to work through carbon scoring for pellets and whether shipping pellets across the ocean is a threat to the “carbon-neutral” standing of biomass.

“I don’t think Europe has thought through the true carbon accounting of biomass,” McDow said.

Any change in that could have big implications for wood pellet operations.

Still, McDow said, in the short term there is little doubt that producers are moving ahead with a strategy of shifting away from coal through the use of wood. “In terms of the wood pellet trade, it’s not a question of whether they’re going to use them but who is going to provide them,” he said.

“This is a new angle and it could be potentially a large market,” he said. “We have to take that seriously and make sure it’s not a threat to North Carolina’s forests.”

Right now, he said, the decline of the paper industry and the slump in housing construction means that there are places where there’s adequate wood to supply the industry. Georgia, which is featured in the EDF report on pellets, has gotten into the pellet business in a big way and thanks to extensive plantings in the 1980s, has huge stocks of timber.

This plant in Georgia makes 750,000 tons of wood pellets a year for electric utilities in the Netherlands.  It is the largest pellet plant in the word. Photo: Essent

“They’re riding the wave,” McDow said, “They hit it at the right time.”

But Georgia, he said, is in a unique situation. “We didn’t have the same kind of plantings in North Carolina and we’ve had more forest land lost,” McDow’s noted. “Our inventories are not as strong as Georgia’s.”

Dickson Phillips, chair of the Renewable Energy Committee of the state’s Environmental Management Commission, said measuring the effectiveness and potential impacts of alternatives like wood pellets is extremely complicated.

The commission in 2010 studied the questions raised by the growing use of biofuels as part of a bill that the General Assembly passed three years earlier that mandates alternative energy sources. The bill considers wood a source of renewable energy.

Phillips said the growing use of wood pellets as a source of electricity could have a significant effect on forests and air and water quality. The state, he said, needs to develop clear standards to protect its forests and its people.

“We need management requirements that really protect against a worst-case scenario,” he said.

The state’s Biofuels Center, which focuses on liquid fuels from biomass, is also looking into the growth of the use of wood pellets and their effects. Researchers at the Kenan Institute of Private Enterprise are working with the center to compare the costs and benefits of using pellets to converting waste wood into liquid fuels and the potential for pellets in electricity generation.

McDow agrees that more research needs to be done and that more safeguards should be in place ahead of the potential pellet boom, which could easily be burst by new regulations, new technologies or changes in carbon accounting. State or federal regulations should be in place, McDow said, that guarantee high standards, instead of relying on pressure from European customers to make sure the forests are managed right.

The standard now is that 70 percent of the wood must come from certified sustainable producers, McDow said, but what if that standard drops or the demand jumps to the point where producers start cutting corners?

“I’m not saying it’s going to,” he said, “but that’s a concern — that the demand would be so great that they’ll ignore the rules.”

Second of four parts

The prospect that North Carolina’s forests would become a resource for fuel to generate electricity is by no means a new idea.

But even after a 2010 law added wood to the list of renewable sources pushed — sometimes with ample incentives — by state policy makers, there was no significant response by power companies in the state to add wood pellets to their fuel portfolio.

That changed significantly in the past few years, not here but overseas, with the adoption of rules and incentives in the European Union that made pelletized wood a more attractive fuel. While domestic demand remained weak, mainly due to growth in natural gas supplies, across the Atlantic the market was starting to take off.

Now, the forests of the southeastern U.S. are a growing source of fuel for power plants in the United Kingdom, the Netherlands and Belgium, countries where power suppliers are using wood pellets to replace coal. In North Carolina, with a plan in the works for more pellet manufacturing plants and major shipping facilities at the state ports in Morehead City and Wilmington, there’s a renewed focus on how the surge in demand will ultimately affect the state’s 18 million acres of wood land.

The N.C. Environmental Management Commission in a 2010 report found that “the use of woody biomass for energy production has a broad range of potential impacts that, without adequate safeguards, could be harmful for the environment, public health and culture of the State.”

Converting natural forests to plantations to grow trees as fuel could severely affect biodiversity and wildlife, the report noted. Water quality could also suffer. The National Wildlife Federation in a March 2010 report echoed many of the same fears from a nationwide perspective.

Robert Hosford

Eastern North Carolina would seem most vulnerable since that’s where most of the large tracts of privately owned woodland are.

Robert Hosford, international marketing specialist with the N.C. Department of Agriculture and Consumer Services, said the sustainability of the forests that will supply new pellet mills has been a focus of discussions.

Hosford, who is working with a European client on the project, said regular audits of the suppliers to make sure sustainable practices are in place are already part of the deal, with an emphasis on using certified sustainable forests. Several potential areas, he said, already have conservation requirements on them and some are already certified and sustainably managed.

“The standards are going to be tightly controlled,” he said. “The folks in Europe will not take the product unless it’s handled properly.”

Hosford said the N.C. Forest Service estimates that in hardwood and softwood combined North Carolina has an annual 16 million metric tons that could be harvested. Right now, for all uses, from chips to lumber, the annual harvest is around 6 million metric tons.

The proposed wood pellet shipping facilities, supported by at least three new pellet plants, would ship an additional 1.7 million metric tons to start with a goal of reaching 4 million metric tons by 2020.

The location of the harvest also plays a role in measuring the sustainability, Hosford said, with a target range of 50 to 60 miles from the ports. For the European power producers to get sustainability tax incentives, he said, they have to know the cost in carbon of transportation from pellet mill to port and from port to its final destination.

“They’re analyzing this down to the nth degree,” Hosford said.

Clay Alitzer, a utilization forester with the state forest service, has analyzed the available timber in the state’s coastal plain to determine if the resources are there. He said the wood being sent to the pellet mills will mainly come from lands being harvested for other reasons.

He said it’s unlikely that any landowner will conduct a harvest solely for pellet production.

“It doesn’t pay for itself,” he said.

Landowners will still look to saw timber and pulp wood as main sources of revenue, but the pellet market opens up another stream and another use for smaller diameter trees — likely those less than five or six inches — and scraps and leftovers from larger ones.

“I think a lot of what will go to the pellet mills will be limbs and tops,” he said.

Researchers for the Southern Environmental Law Center came to a different conclusion. As the pellet industry expands in the Southeast, biomass energy will increasingly come from cutting standing trees instead of using wood residues from sawmills and other sources, they concluded in a study published last year. The study emphasizes the need to balance forest ecosystem health and related values, such as drinking water and wildlife habitat, with renewable energy objectives.

“While biomass offers some environmental benefits, any expanded use of logging residue and live trees will affect forest structure and nutrient cycling,” said Robert Perschel, eastern forests director with Forest Guild.  “This raises questions of long-term forest health and other environmental factors, such as water quality and wildlife habitat, that need to be addressed by further study and reasonable guidelines for the industry.”

Thursday: What policies will protect the state’s forest

First of four parts

The quiet piney woods of the N.C. coast are a long way from the bustle of Berlin, London and Amsterdam, but those trees may soon be lighting up those far-off foreign capitals thanks to the unlikely convergence of European eco-policy and abundant Southeastern pine trees.

In a sort of back-to-the future moment, Europe is turning to the fuel source of the Middle Ages to fire up its power plants and is looking increasingly to Southern states to supply it. Europeans have circled back to the past because policy makers there think they know something futuristic that the dukes of Cornwall or the earls of Hapsburg couldn’t conceive centuries ago when they threw another log in the fireplaces of their medieval castles: Wood is “green.”

The European Union considers wood to be a renewable energy source that is also “carbon neutral,” meaning that it won’t worsen global warming by adding additional carbon dioxide to the atmosphere when burned. Coal, which is the primary fuel for generating electricity in Europe as it is in North Carolina, is neither of those things.

Wood pellet production by country: The highest increase in production capacity was in North America  and Russia,followed by traditional European-producing countries,such as Germany, Sweden and Austria. Source: Global Wood Pellet Industry Market and Trade Study, IEA Bioenergy, Dec. 2011.

European countries in 2009 instituted ambitious policies that encourage power companies to cut their emissions of greenhouse gases and increase their use of renewable energy sources by 20 percent in 10 years. Utility companies responded by switching from coal to wood pellets, pencil-sized, compressed forms of wood that burn more efficiently and transport more easily than logs.

And they’ve been doing it with gusto.  The consumption of wood pellets in Europe has increased almost 50 percent since 2008, far outpacing the ability of the continent’s forests to meet the demand, which is forecast to continue its dramatic rise for the rest of the decade.

The growth has ignited a boom here in the United States, transforming what had been a small industry that made wood pellets from sawdust to heat homes in New England into a rapidly growing export trade of pellets made primarily from Southern trees. The dense forests of the Southeast have long been one of the globe’s wood baskets, and those trees have now propelled America into the world lead in the production of pellets. At least 30 pellet plants have been built or are proposed – many with the financial backing of Europeans – in Georgia, South Carolina, Virginia, Florida, Alabama, Mississippi and, most recently, North Carolina, according to a study done last year by the Southern Environmental Law Center. All but one of the existing plants have opened since 2008.

To cash in on the boom, the N.C. State Ports Authority announced plans late last year to invest as much as $200 million at its two sleepy ports in Wilmington and Morehead City to ship pellets made in North Carolina to Europe.

Using the state’s coastal forests as fuel depots for foreign countries raises numerous questions that should be considered before we rush off into the woods with chain saws roaring. We’ll explore some of those questions here over the next four days: Can our forests handle all this cutting and still maintain their aesthetic qualities and their ecological importance to wildlife and water quality? Does the state have policies in place to prevent clear cutting and ensure that cut tracts are replanted? What will increasing train and truck traffic mean in Morehead City, whose residents and businesses rely primarily on tourists for their livelihood?

Is Wood Really Green?

Driving the overseas policies that will affect the forests of the N.C. coast is the assumption that wood pellets are better than coal, that burning them will not overheat the planet. But is it true? In other words: Is wood really green?

Will McDow of the Environmental Defense Fund in Raleigh has spent a great deal of time studying what’s known as “bioenergy,” which refers to renewable energy contained in living or recently living biological organisms. Organic material, such as plants and trees, contain bioenergy that is known as “biomass.”

Christopher Galik

Will McDow

We first posed the question to McDow two years ago for the federation’s State of the Coast Report on renewable energy.  This is what he said then: “It’s a shade of green. It’s a very challenging subject. You have a lot of cheerleaders out there and you have the naysayers. It depends on how you collect it, what you use and how you use it.”

Like many environmentalists, McDow supports biomass as a future fuel because it’s renewable and less polluting than coal, but he also knows that, as with any fuel source, there are tradeoffs. Relying on the trees of a few U.S. states to power a continent could have serious implications, he said recently.

“We’re very reluctant to draw black and white lines in the sand,” said McDow, who co-wrote a study last year on the implications of pellet plants in the Southeast. “But we have to raise these questions. We don’t want to see so much capital investment that it overshoots our forest inventory.”

Burning wood produces various emissions that would have to be controlled and, like coal, creates carbon dioxide, a powerful greenhouse gas. Promoters like to claim that wood is “carbon neutral” because the trees soak up carbon dioxide from the atmosphere as they grow, and that balances out the CO2 they produce when burned.

It’s not that simple, though, noted Christopher Galik, senior policy associate at Duke University’s Nicholas Institute for Environmental Policy Solutions.  “We stay away from the term ‘carbon neutral,’” he said. “It’s a more nuanced story.”

It all depends on where the wood comes from, how it’s harvested, whether whole trees or wood waste — such as tops, limbs and sawdust — are used and if the land is replanted with trees afterward.

These varied conditions and the actual method used to account for the carbon explain the mixed research results. Some studies show a no net gain in carbon emissions when burning wood pellets, while more recent studies suggest that burning pellets actually emits more CO2 than an equivalent amount of coal.

The ‘Carbon Debt’

The Manomet Center for Conservation Sciences in Massachusetts did probably the most famous and influential study on the subject in 2010 for that state’s Department of Energy Resources.  The study blew a major hole in the carbon-neutral theory. It concluded that there’s a carbon “debt” when biomass is burned for energy and that burning trees or other types of biomass often releases more carbon at the time of combustion than an equivalent amount of fossil fuel. It then takes a certain amount of time to repay that debt by recovering that additional carbon.

A wood pellet plant in Ahoskie.

In other words, the CO2 released from burning a large pine tree, say, would exceed what’s emitted by an equal amount of burned coal. The extra CO2 wouldn’t be recovered for years, until a new pine tree grows large enough to take up the extra carbon through photosynthesis.

The study’s researchers concluded that it takes about 42 years to begin to create a net carbon dividend compared to coal when biomass is used to make electricity.

Researchers for the Southern Environmental Law Center came up with similar findings in their study. Based on current trends in using wood for utility-scale power plants and exporting pellets to Europe, biomass energy in the Southeast is projected to produce higher levels of atmospheric carbon for 35 to 50 years compared to fossil fuels, they concluded. After that, biomass will result in significantly lower atmospheric levels as re-growing forests absorb carbon from previous combustion.

“The timing problem is central to this issue, since adding even more carbon from biomass to the atmosphere over the next 35 to 50 years could accelerate global warming stressors,” said Julie Sibbing, director of agriculture and forestry with National Wildlife Federation. “We run the compounded risk of losing forests to severe weather events triggered by climate change, such as droughts and flooding, undermining their ability to sequester carbon over the long run.”

The Carbon Inventory

The law center study also predicted that whole trees, and not just limbs and other wood “waste,” would have to be used to meet the demand of European utilities. If the logged tracts aren’t replanted – and there’s no law in North Carolina that would require that on private land – then even any future carbon savings would be jeopardized.

Trees store a lot of carbon during their lifetimes, McDow noted. Reducing future forest cover would likely lead to even higher increases in future atmospheric CO2.

“In past debates on forestry issues, we always argued about having enough trees,” he said. “This has changed the debate to can we do this in a way that doesn’t reduce the carbon inventory.”

Ninety scientists and researchers on this issue made the same point in a letter to Congress in May, 2010. “… clearing or cutting forests for energy, either to burn trees directly in power plants or to replace forests with bioenergy crops, has the net effect of releasing otherwise sequestered carbon into the atmosphere, just like the extraction and burning of fossil fuels,” they wrote.

Wednesday: The potential effects on coastal forests