Tag: investors

In a crisis people come first

Will Gardiner, Chief Executive Officer, Drax Group

14 May 2020

Opinion

This crisis will be remembered for many things. Many are not positive, but some are inspiring. Around the world we’ve seen tremendous acts of kindness and witnessed remarkable resilience from people continuing to live, work and to support one another. The actions we are all taking as individuals, businesses and communities will not only help us get through this crisis, they will shape how we emerge from it.

At Drax we are proud of the ongoing role we’re playing in supporting the UK and its essential services, continuing to generate and supply the electricity needed to keep people healthy and the economy running.

It is what we have always done, and it is what we will continue to do.

This is possible because our people have continued to carry out their important work in these uncertain times safely and responsibly. My leadership team in the UK and US must continue to support them, and we must also support the communities they are a part of.

Employees Drax Power Station show their support and appreciation for the heroic efforts of those within the NHS by turning one of its cooling towers blue at 8pm each Thursday

Employees Drax Power Station show their support and appreciation for the heroic efforts of those within the NHS by turning one of its cooling towers blue at 8pm each Thursday

Our communities are at the core of what we do and who we are. They support our business globally and enable us to supply energy to the country. We have a responsibility to do what we can to help them through this crisis.

To do this we have put together a Covid-19 support package totalling more than three quarters of a million pounds that goes beyond just financing to make a positive impact. I’d like to highlight a few of these.

Supporting communities in Great Britain and the US

The Robinson family collect their laptop at Selby Community Primary School

The closures of schools and the need to turn homes into classrooms has been one of the biggest changes for many families. With children now depending on technology and the internet for schooling, there’s a very real chance those without access may fall behind, with a long term negative impact on their education.

We want to ensure no child is left out. So, we have donated £250,000 to buy 853 new laptops, each with three months of pre-paid internet access, and delivered them to schools and colleges local to our sites across the UK.

This has been implemented by Drax, working closely with headteachers. As one of our local heads Ian Clennan told us: “Schools don’t just provide education – they’re a whole support system. Having computers and internet access means pupils can keep in touch with their teachers and classmates more easily too – which is also incredibly important at the moment.”

In the US, we’re donating $30,000 to support hardship funds for the communities where we operate. Our colleagues in Louisiana are playing an active role in the community, and in Amite County, Mississippi, they have helped provide PPE to first responders as well as supporting charities for the families worse affected.

Helping businesses, starting with the most vulnerable

As an energy supplier to small and medium sized businesses (SMEs), we must act with compassion and be ready to help those who are most economically exposed to the crisis. To do this, we are launching a number of initiatives to support businesses, starting with some of the most vulnerable.

It’s clear that care homes require extra support at this time. We are offering energy bill relief for more than 170 small care homes situated near our UK operations for the next two months, allowing them to divert funds to their other priorities such as PPE, food or carer accommodation.

But it is also important we understand how difficult a period this is for small businesses of all kinds. Many of our customers are facing financial pressure that was impossible to forecast. To help relieve this, we have agreed deferred payment plans with some of our customers who are unable to pay in full. We have also extended current energy prices for three months for 4,000 customers of Opus Energy who have not been able to secure a new contract during this period.

The impact of this crisis will be long term, so we made a significant, two-year charitable donation to Business Debtline. A dedicated phoneline and webpage will be provided to our small businesses customers, offering free debt advice and helping them to recover for the future.

An engineer looks up at flue gas desulphurisation unit (FGD) at Drax Power Station. The massive pipe would transport flue gas from the Drax boilers to the carbon capture and storage (CCS) plant for CO<sub>2</sub> removal of between 90-95%.

An engineer looks up at flue gas desulphurisation unit (FGD) at Drax Power Station. The massive pipe would transport flue gas from the Drax boilers to the carbon capture and storage (CCS) plant for CO2 removal of between 90-95%.

Change for the future recovery

While there is still uncertainty around how the UK, the US and the world will emerge from the pandemic it is the responsibility of the whole energy industry to show compassion for its customers and to take the actions needed to soften the economic blow that Covid-19 is having across the globe.

The disruption to normal life caused by the pandemic has changed how the country uses electricity overnight. In the coming weeks we will be publishing a more in-depth view from Electric Insights showing exactly what effect this has had and what it might reveal for the future of energy.

No matter what that future holds, however, we will remain committed to enabling a zero carbon, lower cost energy future. This will mean not only supporting our people, our communities and our countries through the coronavirus crisis, but striving for a bright and optimistic future beyond it. A future where people’s immediate health, safety and economic wellbeing are prioritised alongside solutions to another crisis – that of climate change.

Responsibility, wellbeing and trust during the COVID-19 outbreak

Will Gardiner, Chief Executive Officer, Drax Group

25 March 2020

Opinion
Engineers in PPE working at Drax Power Station

We are living through unprecedented times. Coronavirus is having far reaching effects on all industries not just here in the UK, but around the world. At Drax, we take our responsibilities as a member of critical national infrastructure and as an essential service provider very seriously. We are committed to maintaining a continuous, stable and reliable electricity supply for millions of homes and businesses in the UK.

The wellbeing of our people

Firstly, I’d like to thank our employees, contractors, supply chain workers and their families as well as the communities in the UK and US in which we operate, for their fantastic support and continued hard work during these difficult and uncertain times. Our employees’ health and wellbeing are vital, and we’re working hard to ensure we are supporting them with both their physical and mental health, whether working at home or at one of our sites.

Engineer maintaining equipment in Drax Power Station

Engineer maintaining equipment in Drax Power Station [Click to view/download]

Across all our sites we are have implemented strategies to reduce the chances of people spreading the virus and have operational plans in place to ensure continued delivery of power into the grid.

Power station resilience

At Drax Power Station, the UK’s largest power station, largest decarbonisation project in Europe and biggest source of renewable power into the national grid, we have arranged for the separation of key operational teams and employees so that they are physically distanced from each other. We have moved as many employees as possible to work from home, so that there are fewer people in our workplaces reducing the risk of the spread of infection, should it arise. We have strict controls on visitors to the site and on our contractors and suppliers. Our resilience teams are working well and we have contingency plans in place to manage risks associated with colleague absences.

We have closed the visitor centres at Cruachan pumped storage hydro power station and Tongland hydro power station in Scotland, as well as at Drax Power Station in North Yorkshire. We have also stopped all but critically important travel between our sites.

Our supply chain

Sustainable biomass wood pellets destined for Drax Power Station unloaded from the Zheng Zhi bulk carrier at ABP Immingham [Click to view/download]

It is vital we maintain a resilient supply chain for the sustainably sourced biomass wood pellets required to produce electricity at Drax Power Station, the country’s largest power station. We’re working closely with our suppliers in the US and Europe to maintain biomass supplies as well as with rail and port infrastructure in the US and UK to ensure continuity of supply.

Just last week Associated British Ports (ABP) and Drax received and unloaded the largest ever shipment of sustainable biomass to arrive at the Port of Immingham in the UK’s Humber region. The vessel transported 63,907 tonnes of Drax’s wood pellets from the US Port of Greater Baton Rouge in Louisiana. The consignment supplies Drax Power Station with enough renewable fuel to generate electricity for 1.3 million homes.

Our three wood pellet manufacturing plants are running well, with US authorities classifying our employees as key workers. The same is the case for our rail freight partners on both sides of the Atlantic. In the UK, GB Railfreight recognises the strategic importance of biomass deliveries to Drax Power Station.

Our customers

Businesses – both large and small – are feeling the economic effects of this virus. Our employees involved with the supply of electricity, gas and energy services to organisations are working hard to support them. More information can be found via these links:

We are working closely with BEIS, HM Treasury and our trade associations to explore how government and industry can further support business through this challenging time. Organisations facing financial difficultly can access the unprecedented level of support already announced by the Chancellor, Rishi Sunak via:

Drax employee in high visibility clothing on the telephone

Drax employee in high visibility clothing on the telephone [Click to view/download]

Leadership

Our Executive Committee is meeting regularly via video conference to discuss our contingency planning as the situation changes. We are working closely with the UK, US state and Canadian governments, National Grid and Ofgem to ensure that we remain up to date with the latest advice and that we are prepared for any further escalation.

This is an unprecedented time for the UK and the world. Rest assured that Drax’s critical national infrastructure and essential service operations, as well as its employees, are working hard 24/7 to make sure individuals, families, businesses and organisations are supplied with the vital electricity needed to keep the country running.

Climate change is the biggest challenge of our time

Will Gardiner, Chief Executive Officer, Drax Group

28 July 2019

Opinion
Drax Group CEO Will Gardiner

Climate change is the biggest challenge of our time and Drax has a crucial role in tackling it.

All countries around the world need to reduce carbon emissions while at the same time growing their economies. Creating enough clean, secure energy for industry, transport and people’s daily lives has never been more important.

Drax is at the heart of the UK energy system. Recently the UK government committed to delivering a net-zero carbon emissions by 2050 and Drax is equally committed to helping make that possible.

We’ve recently had some questions about what we’re doing and I’d like to set the record straight.

How is Drax helping the UK reach its climate goals?

At Drax we’re committed to a zero-carbon, lower-cost energy future.

And we’ve accelerated our efforts to help the UK get off coal by converting our power station to using sustainable biomass. And now we’re the largest decarbonisation project in Europe.

We’re exploring how Drax Power Station can become the anchor to enable revolutionary technologies to capture carbon in the North of England.

And we’re creating more energy stability, so that more wind and solar power can come onto the grid.

And finally, we’re helping our customers take control of their energy – so they can use it more efficiently and spend less.

Is Drax the largest carbon polluter in the UK?

No. Since 2012 we’ve reduced our CO2 emissions by 84%. In that time, we moved from being western Europe’s largest polluter to being the home of the largest decarbonisation project in Europe.

And we want to do more.

We’ve expanded our operations to include hydro power, storage and natural gas and we’ve continued to bring coal off the system.

By the mid 2020s, our ambition is to create a power station that both generates electricity and removes carbon from the atmosphere at the same time.

Does building gas power stations mean the UK will be tied into fossil fuels for decades to come?

Our energy system is changing rapidly as we move to use more wind and solar power.

At the same time, we need new technologies that can operate when the wind is not blowing and the sun is not shining.

A new, more efficient gas plant can fill that gap and help make it possible for the UK to come off coal before the government’s deadline of 2025.

Importantly, if we put new gas in place we need to make sure that there’s a route through for making that zero-carbon over time by being able to capture the CO2 or by converting those power plants into hydrogen.

Are forests destroyed when Drax uses biomass and is biomass power a major source of carbon emissions?

No.

Sustainable biomass from healthy managed forests is helping decarbonise the UK’s energy system as well as helping to promote healthy forest growth.

Biomass has been a critical element in the UK’s decarbonisation journey. Helping us get off coal much faster than anyone thought possible.

The biomass that we use comes from sustainably managed forests that supply industries like construction. We use residues, like sawdust and waste wood, that other parts of industry don’t use.

We support healthy forests and biodiversity. The biomass that we use is renewable because the forests are growing and continue to capture more carbon than we emit from the power station.

What’s exciting is that this technology enables us to do more. We are piloting carbon capture with bioenergy at the power station. Which could enable us to become the first carbon-negative power station in the world and also the anchor for new zero-carbon cluster across the Humber and the North.

How do you justify working at Drax?

I took this job because Drax has already done a tremendous amount to help fight climate change in the UK. But I also believe passionately that there is more that we can do.

I want to use all of our capabilities to continue fighting climate change.

I also want to make sure that we listen to what everyone else has to say to ensure that we continue to do the right thing.

Is biomass demand out of control?

13 April 2018

Sustainable bioenergy

Electricity systems around the world are decarbonising and increasingly switching to renewable power sources. While intermittent sources, such as solar and wind, are the fastest growing types of renewables being installed globally, the reliability and flexibility of biomass and its ability to offer grid stabilisation services such as frequency control and inertia make it an increasingly necessary source of renewable power. According to the International Energy Agency biomass generation is forecast to expand as planned projects come online.

Sustainable wood pellets

A versatile resource

Biomass comes in many different forms.  When looking to assess future demand and use, it is important to recognise benefits that different types of biomass bring. Compressed wood pellets are just one small part of the biomass spectrum, which includes many forms of agricultural and livestock residues, waste and bi-products – much of which is currently discarded or underutilised.

Maximising the use of these wastes and residues provides plenty of scope for expansion of the biomass energy sector around the world. The global installed capacity for biomass generation is expected to reach close to 140 gigawatts (GW) by 2026, which will be fuelled primarily by expansion in Asia using residues from food production and the forestry processing industry.

However, the use of woody biomass can also provide many benefits too, such as supplying a market for thinnings, providing a use for harvesting residues, encouraging better forest management practices and generating increased revenue for forest owners.

How much surplus exists?

In areas like the US South, traditional markets for forest products have declined, whilst forest growth has significantly increased. According to the USDA Forest Inventory and Analysis (FIA) data, there is an average annual surplus of growth in the US South of more than 176 million cubic metres compared to removals – that’s enough to make around 84 million tonnes of wood pellets a year, from just one supply region.

Of course, not all of this surplus growth could or should be used for bio-energy, much of it is suitable for high value markets like saw-timber or construction and some of it is located on inaccessible or protected sites. However, new and additional markets are essential to maintain the health of the forest resource and to encourage forest owners to retain and maintain their forest assets.

In the current wood pellet supply regions for Europe, Pöyry management consulting has calculated that there is a surplus of low grade wood fibre and residues that could make an additional 140 million tonnes of wood pellets each year.

Wood pellets in context

Sustainable wood pellets for biomass

Compressed wood pellets on a conveyor belt

It is also necessary to look at the global production of all wood products to put wood pellet production into context. In 2016 the global production of industrial roundwood (the raw material used for construction, furniture, paper and other wood products) was 1.87 billion cubic metres, while the global production of wood fuel (used for domestic heating and cooking) was 1.86 billion cubic metres[1]. Only around 1.6% of this feedstock was used to make wood pellets, both for industrial energy and residential heat. The total production of wood pellets in 2016 was 28.4 million tonnes, of which only 45% was used for industrial energy[2].

While Forestry consulting and research firm Forisk predicts demand for industrial wood pellets (those used in electricity generation rather than residential heating) will grow globally at an annual rate of 15% for the next five years, reaching 27.5 megatonnes (Mt) by 2023, they are also clear that this growth, in context, will not impact forest volumes or other markets:

‘The wood pellet industry in the US South is not exploding, it is a tiny component of the overall market. Forest volumes in the South in total will continue to grow for decades no matter what bioenergy markets or housing markets do. The wood pellet sector simply and unequivocally cannot compete economically with US pulp and paper mills (80% of pulpwood demand in South) for raw material on a head-to-head basis[3].’

So, while demand for wood pellets is likely to increase over the next 10 years, this increase will be well within the scope of existing surplus fibre. The question, therefore, is can suppliers keep up with this demand? And can they do this while ensuring it remains sustainable, reliable and renewable?

What’s driving demand?

In the short-term, intelligence firm Hawkins Wright estimates global demand will increase by almost 30% during 2018 to reach 20.4 Mt, while Forisk predicts a smaller jump: an almost 5 Mt increase compared to 2017.

Most of this will continue to come from Europe (73% of global demand by 2021, more than 80% in 2018), where projects such as Lynemouth Power Station’s conversion from coal to biomass, as well as five co-firing units in the Netherlands are all set to come online very soon. While smaller in number, Asia is also developing a growing appetite for biomass and in 2018 demand is forecast to grow by 1.98 Mt.

These estimates might paint a picture of a continually soaring demand, but Forisk’s forecast actually expect this growth to plateau, levelling off around 2023 at 27.5 Mt. Hawkins Wright expects a similar slow down, forecasting manageable growth of under 15% between 2023 and 2026.

A forestry specialist at Drax Group, believes this plateau could come even sooner.

“Current and future forecasts in industrial wood pellet demand are based on a series of planned conversions and projects coming online,” he explains.

“But once these projects are active, demand in Europe will likely plateau around 2021 and then gradually reduce as various EU support schemes for industrial biomass come to an end. Any long term use of biomass is likely to be based on agricultural residues and wastes.”

But even with this expected slowdown, the biomass demand of the near future will be substantially higher than it is right now. So, the question remains, can suppliers meet the need for biomass pellets?

Responding to today’s growing demand

Meeting this growing demand depends on two factors: sufficient raw materials and the production capabilities to turn those materials into biomass pellets.

In today’s market, there’s no shortage of raw materials and low grade fibre. Instead, what could cause challenges is the production of pellets.

Hawkins Wright reports the capacity for global industrial pellet production was roughly 21.4 Mt a year at the end of 2017 and will increase by a further 3 Mt by 2019 as facilities currently under construction reach completion.

It means that to meet even Forisk’s conservative 27.5 Mt prediction by 2023, pellet production needs to increase. However, Drax’s forestry specialist points to the three to four years needed to complete pellet facilities and the relatively short period of time financial support programmes will remain in place as something that could lead to a slowdown in new plants coming online. Instead, he says, expansions of existing plants and the increased use of small-scale facilities will become crucial to increasing overall production.

However the biomass market changes and develops, it remains critical that proper regulation is in place, efficiencies are found and that technological innovation continues within the forestry industry so forests are grown and managed sustainably.

As we move into a low-carbon future we know that biomass demand will increase. But for this to be truly beneficial and sustainable we need to ensure we are not only meeting the demand of today but also of tomorrow, the day after tomorrow and beyond.

Discover the steps we take to ensure our wood pellet supply chain is better for our forests, our planet and our future. Visit ForestScope.info. 

[1] Source: FAOSTAT

[2] Source: Hawkins Wright, The Outlook for Wood Pellets, Q4 2017

[3] https://www.forisk.com/blog/2015/10/23/nibbling-on-a-chicken-or-nibbling-on-an-elephant-another-example-of-incomplete-and-misleading-analysis-of-us-forest-sustainability-and-wood-bioenergy-markets/

Building a sustainable business

Will Gardiner, Chief Executive Officer, Drax Group

21 March 2018

Opinion

The UK energy sector is changing rapidly. The boundaries between users, suppliers and generators are blurring as energy users are choosing to generate their own energy and are managing their energy use more proactively while, conversely, generators are increasingly seeing users as potential sources of generation and providers of demand management.

“The UK is undergoing an unprecedented energy revolution with electricity at its heart – a transition to a low-carbon society requiring new energy solutions for power generation, heating, transport and the wider economy”

In that context, our Group’s purpose is to help change the way energy is generated, supplied and used for a better future. This means that sustainability, in its broadest sense, must be at the very core of what we do. Successful delivery of our purpose depends on all our people, across all our businesses, doing the right thing, every day. With the right products and services, we can go even further and help our customers make the right, sustainable energy choices.

As our businesses transform and we embrace a larger customer base, different generation technologies and operate internationally, the range of sustainability issues we face is widening and becoming more complex. At the same time, the range of stakeholders looking to Drax for responsible leadership on sustainability is increasing. The need for transparency is greater than ever, so our website’s sustainability section provides a comprehensive insight into the Group’s environmental, social and governance management and performance during 2017.

Some of the highlights include:

  • Carbon reduction: I am pleased that, in 2017, the proportion of our energy generation from renewable sources remained high. 65% of our generation during the year came from sustainable biomass and accounted for 15% of the country’s overall renewable generation. We maintained our rigorous and robust approach to ensure that we only ever use biomass that is sustainably produced and legally sourced.
  • People: Another key achievement was the roll out of our people strategy to 2020 – One Drax – which focuses on talent to deliver on our strategic and operational objectives.
  • Safety: The health and safety of all our employees and contractors is of paramount importance to Drax. While the Group’s safety incident rate remained on target in 2017, the fire at our biomass rail unloading facilities in December did cause an outage, with disruption lasting into 2018. It highlighted once again that the risks of generating using biomass must be mitigated through robust safety procedures and a risk-based plant investment and maintenance programme. Safety therefore remains at the centre of our operational philosophy and we are determined to do even better.
  • Customers: Our business to business (B2B) Energy Supply business received recognition for their dedication to customer service. Opus Energy won “Utilities Provider of the Year” at the British Small Business Awards 2017.

We initiated a process which would allow us to participate in the United Nations Global Compact (UNGC). We are committed to the initiative and its ten principles, which align with our culture of doing the right thing.

Our website’s sustainability section also sets out our commitment to achieving the United Nations’ Sustainable Development Goals through our operations, the services we deliver to our customers and in partnership with others.

Global ambitions and goals are important, but so too are our ambitions for our local and regional communities. As such, we have played a key role in the UK Northern Powerhouse Partnership, initiatives such as POWERful Women and a comprehensive programme of stakeholder engagement.

“Sustainability, in its broadest sense, must be at the very core of what we do”

Finally, I do not believe any organisation, however well intentioned, can get its commitment to sustainability perfect on its own and I am very keen for Drax to learn from people reading our website’s sustainability section. It sets out what we see as our achievements and aspects in which we believe we need to do better. I would like to invite any stakeholder with an interest to comment on what we’re doing and help us improve where we can. Feedback can be submitted at Contact us or via our Twitter account or Facebook page.

Read the Chief Executive’s Review in the Drax Group plc annual report and accounts

The sustainable development goals

Sustainable business

In 2015, the United Nations launched 17 Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all by 2030. At Drax, improved performance has guided our business purpose for over four decades. We are committed to play our part in achieving the UN SDGs through our operations, the services we deliver to our customers and in partnership with others.

Drax Group has the most significant impact on the Global Goals listed below:

Affordable and clean energy

We provide 6% of the UK’s electricity and play a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low-carbon future. In 2017, 65% of the electricity we produced came from biomass, rather than coal. Our B2B Energy Supply businesses encourage customers to be more sustainable, including through the provision of reliable, renewable electricity at no premium compared to fossil fuel-generated electricity.

Customers

Low Carbon

Decent work and economic growth

We directly employ over 2,500 people in the United Kingdom and United States and their health, safety and wellbeing remains our highest priority. Our B2B Energy Supply business offers energy solutions and value-added services to industrial, corporate and small business customers across the UK.

Society

Industry, innovation and infrastructure

We develop innovative energy solutions to enable the flexible generation and lower-carbon energy supply needed for a low-carbon future. We also innovate to improve the efficiency of our operations and increase our production capacity, notably in our biomass supply chain. Our B2B Energy Supply business offers “intelligent sustainability” and innovative products and services to our customers.

Customers

Low Carbon

Climate action

Our electricity generation activities are a source of carbon emissions. We are committed to helping a low-carbon future by moving away from coal and towards renewable and cleaner fuels, including biomass electricity generation and our planned rapid-response gas plants. We also help our business customers to be more sustainable through the supply of renewable electricity.

Low Carbon

Life on land

We source sustainable biomass for our electricity generation activities and engage proactively with our supply chain to ensure that the forests we source from are responsibly managed. We work closely with our suppliers and through tough screening and audits ensure that we never cause deforestation, forest decline or source from areas officially protected from forestry activities or where endangered species may be harmed.

Low Carbon

Sourcing

Environment

Partnerships for the goals

We engage with stakeholders regularly and build relationships with partners to raise our standards and maximise what can be achieved. Our collaborations align closely with our business, purpose and strategy.

Stakeholder Engagement

Society

Commitment to the UNGC

Sustainable business

In 2017, we initiated a process which will allow us to participate in the United Nations Global Compact (UNGC) a global sustainability initiative and we will evidence progress next year. We made progress in preparing for participation outlined in the following sections:

Human rights

We seek to safeguard fundamental human rights for our employees, contractors and anyone that is affected by our business. We ensure that our suppliers apply high standards to protect human rights.

Modern Slavery Statement

Labour

We have policies and standards in place to safeguard our employees and contractors. We respect our employees’ rights in areas such as freedom of association and collective bargaining and we do not tolerate forced, compulsory or child labour. We are committed to providing a safe and healthy workplace for all our people and we strive to prevent discrimination and promote diversity in our workforce.

People

Environment

As a generator and supplier of electricity, we take our responsibility to protect the environment very seriously. We have transformed our generation business and are seeking to further reduce our environmental impact. We focus on reducing our emissions to air, discharges to water, disposal of waste, and on protecting biodiversity and using natural resources responsibly. We have invested heavily in lower-carbon technology as we continue to transition away from coal to renewable and lower-carbon fuels.

Customers

Low Carbon

Environment

Anti-corruption

We do not tolerate any forms of bribery, corruption or improper business conduct. Our “Doing the Right Thing” framework sets out the ethical principles our people must uphold, which is supported by the Group corporate crime policy. Our strict ethical business principles apply to all employees and contractors and we expect the same high standards from anyone we do business with.

Ethics and Integrity

Active management of forests increases growth and carbon storage

28 July 2017

Sustainable bioenergy

A study on the historical trends in the forest industry of the US South, carried out by supply chain consultancy Forest2Market, and commissioned by Drax Group, the National Alliance of Forest Owners and the U.S. Endowment for Forestry and Communities, found that over the last 60 years, as demand for forestry products has increased, the productivity of the area’s forests has increased too. In short, the more we’ve come to use them, the more forests have grown.

A forest is not like a mine – there is not a finite amount of wood in the ground that disappears when it is extracted, never to return. Forests are a renewable resource that can be replanted, improved, and harvested for as long as the land is managed responsibly.

What’s more, landowners have a strong financial incentive to not only maintain their holdings but to improve their productivity – after all, the more of something you have, the more of it you have to sell. It is an economic incentive that works.

Six decades of growth

The Forest2Market report found that increased demand for wood is statistically correlated with more annual tree growth, more wood volume available in the forest, and more timberland.

For example, between 1953 and 2015, tree harvests increased by 57%, largely driven by US economic growth and increased construction. Over the same period, annual wood growth increased by 112%, and inventory increased by 108%. In total, annual growth exceeded annual removals by 38% on average.

Annual forest growth in the US South increased from 193 million cubic metres in 1953 to 408 million cubic metres in 2015. Inventory increased from 4 billion to 8.4 billion cubic metres.

The forest products industry funded private-public research projects to enhance the quality and performance of seedlings and forest management practices to ensure a stable supply of wood. Because of these efforts, landowners saw the value of active management techniques, changing their approach to site preparation, fertilization, weed control, and thinning, and the use of improved planting stock. Healthy demand made it easy for landowners to take a long-term view, investing in more expensive management practices up front for greater returns in the future. And the results were extraordinary: seedlings established in the last 20 years have helped plantations to become nearly four times as productive as they were 50 years ago.

A changing market

Markets for wood have changed over the last two decades, precipitated by decreased demand for writing paper and newsprint, increased demand for absorbent hygiene products and containerboard and increased demand for biomass. These changes in demand have not impacted the way that landowners manage timberland, however. As sawtimber (the largest trees in the forest) remains the most valuable timber crop, it also remains the crop the landowners want to grow. Pulpwood is harvested from the forest only when the forest is being thinned to create optimal conditions for growing sawtimber or when sawtimber is harvested and the forest is being cleared for replanting.

Pellet production has expanded rapidly in the US South, though its overall footprint is still small in comparison to more traditional forest product industries.

In some local wood basins, however, like the one surrounding Bastrop, Louisiana (the location of one of Drax’s US production facilities), the use of biomass to create pellets has filled a gap left by the closure of an 80-year old paper mill. Drax’s decision to locate in this area is integral to supporting forest industry jobs and landowners who carefully consider local demand when deciding whether to continue growing trees.

According to Tracy Leslie, Director of Forest2Market’s biomaterials and sustainability practice, “As history has shown, forests in the US South have benefitted from increased demand for all types of wood. The rise of the pulp and paper industry did not detract from landowner objectives to maximize production of higher value sawtimber nor did it result in a shift in focus to growing only pulpwood. This new demand did, however, provide landowners with important interim and supplemental sources of income. Forest2Market’s research shows that an increase in demand for pellets will have the same effect, incentivizing landowners to grow and re-grow forests, increasing both forest inventory and carbon storage.”

The real threat to forests

Not only does demand for forest products increase the productivity and carbon storage of forests and provide an incentive for landowners to continue growing trees, but it also helps counter factors that irrevocably destroy this natural resource. The real threat to forests in the US is not demand for wood, but urbanisation. Nearly half of all US forestland that converted to another use between 1982 and 2012 was cleared for urban development.

Commercial forestry protects forested lands from development; between 1989 and 1999, just 1% of managed pine plantations in the US South were cleared for non-forest development compared to 3% of naturally-regenerated forest types.

Urbanisation, not the forest products industry, places the most pressure on forests in the US South. Forest2Market’s findings demonstrate that demand associated with healthy timber markets promotes the productivity of forests and mitigates forest loss by encouraging landowners to continue to grow, harvest, and regenerate trees.

Read the full report: Historical Perspective on the Relationship between Demand and Forest Productivity in the US South. An At A Glance version plus an Executive Summary are also available as a separate documents.