Deep in the forests of the U.S. South, tree scraps are fueling a little-known but controversial energy boom: wood pellets. Long used to heat homes in the country's Northeast, they're now destined for a new market.

Europe is importing the pellets in ever higher volumes, burning them for electricity to meet renewable energy targets. The demand has transformed the U.S. industry, prompting a doubling of biomass exports last year.

More than half of the exports go to the United Kingdom, where the utility Drax is converting three of its six power plants to burn wood pellets instead of coal. Drax is setting up shop in the U.S. to feed those plants, building two pellet mills in Louisiana and Mississippi that are slated to open next year.

Maryland-based Enviva, a Drax supplier, has opened five wood pellet mills in the last four years. At least four additional export-focused plants are under construction in the South, and a handful of others have been proposed, according to a database at Biomass magazine.

The pellet boom is not without controversy. While it hasn't generated the headlines or large protests that have accompanied the surge in U.S. oil and natural gas production, there's still debate. The pellet industry says it's using wood by-products that would otherwise go to waste. Critics say the expansion hurts forests and does not help the climate.

Unlike fossil fuels such as coal and oil, wood is a renewable fuel: Where one tree goes down, another can grow. As a weapon against climate change, however, harvesting mass quantities of forest and shipping them across the Atlantic has drawn skepticism.

"It's just crazy that there's an idea out there to cut down the things that are supposed to protect us from climate change," said Adam Macon, campaign director at the Dogwood Alliance, an Asheville, North Carolina-based environmental group. "It's backwards thinking."

Exploding Demand Abroad

With global demand for wood pellets set to double over the next decade, the pellet industry is expanding in the southeastern United States. The South holds about 40 percent of the country's timberland, which has long supplied the lumber, pulp, and paper industries.

The industry says it's only using low-grade timber by-products—the treetops, thinnings, and damaged "waste" wood referred to as residue. Seth Ginther, executive director of the U.S. Industrial Pellet Association, a trade group, said that wood pellet producers can't afford to pay for the high-quality wood that goes for saw timber. "All we can do is go in and pick up the by-products," he said.

Photos at logging sites near southern pellet plants show stumpy, clear-cut tracts carved out from large stands of trees. Environmental groups, Ginther said, use such photos to suggest that the biomass industry is "taking everything off that plot of land and sending it to a pellet facility, which is an absolute falsehood."

The truth is less, well, clear-cut. At any logged site, the product—wood—is separated into different merchandise groups, depending on what prices it can fetch. High-quality sawtimber, which can be several times more valuable than lower grades of wood, does not go to pellet mills.

Small, But Significant, Change in the Timber Business

While pellet mills alone are not likely to lead loggers into a stand of trees, environmental groups say increased demand for the lower quality wood on any given acre could create more incentive to cut natural forests or convert them to pine plantations. Dogwood Alliance and the Natural Resources Defense Council say it endangers what little is left of the region's natural forests.

"The issue isn't just about acres of forest, it's about quality of forest," said Debbie Hammel, senior resource specialist with NRDC. She pointed to the south's dwindling bottomland hardwood forests, a critical wetlands habitat that helps preserve water supplies and is home to songbirds, Louisiana black bears, and other animals.

Hammel disputes the industry's suggestion that it is only using timber leftovers. "It's a bit misleading to use the term residue," she said, saying that wood pellet mills are taking "essentially everything that wouldn't go to a very selective sawmill." Without the wood pellet industry, she said, those younger trees would continue to grow, sequester carbon, and continue to provide habitat.

The NRDC has focused on Enviva in particular, saying that it is using bottomland hardwood to produce wood pellets. Enviva declined to comment, but Matt Willey, a spokesperson from Drax, says that wood pellet suppliers including Enviva are subject to random audits that confirm the wood is produced sustainably.

"Enviva may well take residues and thinnings from bottomland forests," Willey said. "That does not necessarily mean there is anything wrong with that. Such areas have been a managed part of the forest industry for many years and supply a range of industries."

Only 10 percent of the remaining bottomland hardwood forest is legally protected from commercial activity, Hammel said. The NRDC wants to see stronger safeguards put in place to ensure that commercial activity in natural forests does not harm the ecosystem.

The industry argues that by using the forests, it is helping to save them. The only reason that U.S. landowners don't convert forestland to cornfields or real estate developments, Ginther said, "is if they have a revenue stream that allows them to keep it a forest. Bioenergy does that."

Forisk, a consulting firm for the forest industry, has pointed out that swamp logging represents less than 5 percent of forestry activity and that the biomass industry is a small player compared with the pulp, paper, and timber industries. Still, Karen Abt, a research economist with the U.S. Forest Service, said the wood pellet industry's growth is "a fairly significant increase in demand on the southern forests. That leads to changes."

The increased demand for pellets, Abt said, has led to higher pulpwood prices and an increase in wood harvesting. That's not necessarily a bad thing, from a carbon perspective.

"We know people plant more when prices go up," Abt said. "We also know that they keep more natural forest as forest when prices go up."

No Clear Answer on Climate Impacts

Both industry and environmental groups point to a U.K. government analysis on the issue. Released in July, it looked at whether using North American wood to generate British electricity can truly cut down on greenhouse gas emissions. It found that using some types of biomass—"wood from a forest that would otherwise be harvested less frequently," for example—would actually send more carbon into the atmosphere than would burning coal.

The U.K. study, along with new guidance from the U.S. Environmental Protection Agency, shows that determining the carbon benefits of biomass is anything but straightforward. How do you label and plug into a carbon equation something so varied and nonstandardized as tree parts and vegetation from a forest?

Ironically, the economic and ecological impacts of the wood pellet industry growth might not be clear until the demand itself has flattened or fallen. After all, growing new trees takes a while—and so does forestry research.

"There's a lot we don't know," Abt said. For studies starting now, "it's going to be 20 years before we can tell exactly what's going on."

The government subsidies driving U.K. demand for wood pellets will have expired by then. Willey said that Drax's plans to run its biomass plants, which are more costly to run than coal-fired ones, run until 2027, when the subsidies expire.

After that? If all goes according to plan with its White Rose power plant, which will capture carbon emissions and store them under the North Sea, Drax will likely turn back toward burning coal.

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