Tag: biomass energy

Changing forest structure in Virginia and North Carolina

21 May 2020

Sustainable bioenergy
Photos: Roanoke Rapids area near the North Carolina, Virginia border, courtesy of Enviva.

Forest owners have responded to the recovery in pine saw-timber markets, since the global financial crisis of 2008, by planting more forest and investing more in the management of their land. The same period has witnessed increased demand from the biomass sector which has replaced declining need for wood from pulp and paper markets.

The area of timberland (actively managed productive forest) has increase by around 89,000 hectares (ha) since 2010. This change is due to three important factors: new planting on agricultural land; the planting of low-grade self-seeded areas with more productive improved pine; and the re-classification by the US Forest Service (USFS) of some areas of naturally regenerated pine from woodland to timberland.

The 2018 data shows that pine forest makes up 46% of the timberland area, of which 61% is planted and the remainder naturally regenerated. Hardwoods cover 43% of the timberland area, with 93% of this naturally regenerated. The remaining area is mixed stands.

Composition of timberland area

Since 2000 there have been some significant changes in the composition of the timberland area with a transition from hardwood to softwood. Pine has increased from 39% of the total area in 2000 to 46% in 2018 and hardwood has decreased from 50% to 43% over the same period.

All pine areas have increased since 2000 with naturally regenerated pine increasing by 13,000 ha and planted pine by 340,000 ha since 2000. Mixed stands have declined by 6,500 ha as some of these sites have been replanted with improved pine to increase growth and saw-timber production.

The biggest change has been in the hardwood areas where there has been a decline of around 314,000 ha, despite the total area of timberland increasing by 31,000 ha.

Change in forest type

This change has been driven by private forest owners (representing 91% of the total timberland area), seeking to gain a better return on investment from their forest land.

Hardwood markets have declined since the 2008 recession and demand for hardwood saw-timber has not recovered. Demand for pine saw-timber has rebounded and is now as strong as pre-crisis.

Pine also offers much faster growth rates and higher total volumes in a much shorter time frame (typically 25-35 years compared to 75-80 years for hardwoods).

The decision to change species is similar to a farmer changing their agricultural crops based on market demand and prices for each product. Where forests are managed for revenue generation then it is reasonable to optimise the land and crop for this objective. This can be a significant positive, from a carbon perspective more carbon is sequestered in a shorter time frame and more carbon is stored in long term wood products, if the quantity if saw-timber is increased.

Increased revenue generation also helps to maintain the forest area (rather than conversion to urban development, agriculture or other uses).

A potential negative is the change in habitat from a pure hardwood stand to a pure pine stand, each providing a different ecosystem and supporting a different range of flora and fauna. There is no conclusive evidence that one forest type is better or worse than the other; there is a great deal of variety of each type.

Some hardwood forests are rich in species and biodiversity, others can be unremarkable. The key is not to endanger or risk losing any species or sensitive habitat and to ensure that any conversion only occurs where there is no loss of biodiversity and no negative impact to the ecosystem.

It is not clear whether all of the lost hardwood stands have been directly converted to pine forests, some hardwood stands may have been lost to other land uses (urban and other land has increased by 400,000 ha). Some may have been directly converted to pine by forest owners encouraged by the increase in pine saw-timber demand and prices.

Whatever the primary driver of this change it is clearly not being driven by the biomass sector.

Change in forest type – timing

The chart above demonstrates that the biggest change, loss of hardwood and increase in planted pine, occurred between 2000 and 2012, prior to the operation of the pellet mills. Since 2012, there has been no significant loss of natural hardwood and only a small decline in planted hardwood.

Read the full report: Catchment Area Analysis of Forest Management and Market Trends: Enviva Pellets Ahoskie, Enviva Pellets Northampton, Enviva Pellets Southampton (UK metric version). Explore Enviva’s supply chain via Track & Trace. This is part of a series of catchment area analyses around the forest biomass pellet plants supplying Drax Power Station with renewable fuel. The series includes: Estonia, Morehouse Bioenergy, Amite Bioenergy, and the Drax forestry team’s review of the Chesapeake report on Enviva’s area of operations.

Chesapeake catchment area analysis

Sustainable bioenergy
Photos: Roanoke Rapids area near the North Carolina, Virginia border, courtesy of Enviva.

Increased timberland, increased carbon stored in the forest, robust prices and new markets benefiting forest owners and forest workers, are among the findings of a report by Hood Consulting.

This fourth in a series of catchment area analyses for Drax looks at the area surrounding three pellet plants operated by Enviva: Ahoskie, Northampton and Southampton.

Enviva catchment area in Virginia and North Carolina

Forests and woodlands represent 68% of the total area at just over 5.4 million hectares (ha) with 87% of this area classified as timberland. The area of timberland (actively managed productive forest) has increased by around 89,000 ha since 2010 and there have been some significant changes in forest type.

The overall area of forest has increased and there is no evidence of deforestation occurring.

Land use by area

Since 2000, the total volume of standing timber in the catchment area has increased by 170 million cubic metres (m3). Sixty five percent of this increase has occurred since 2012, indicating a growing/maturing forest resource and an expanding forest area. Most of the increase in volume has been in the saw-timber categories for both pine and hardwood, although the hardwood pulpwood size class has also increased by nearly 10 million m3 since 2012 following a small decline between 2000 and 2012.

Timber inventory by product category

The increased demand from the three Enviva pellet mills, beginning operation in 2012 in the Chesapeake region, appears to have had no negative impact of the accumulation of forest carbon in the growing stock of the region. Since this time, all categories of timber product have increased.

Timber inventory by product category – pre and post-Enviva

This increase in inventory is also reflected in the comparison of average annual growth to removals. The surplus of un-cut growth has increased substantially since 2010 from 4.7 million m3 per year  to 15.9 million m3 p.a. Over this period annual growth has increased by 35.5% whereas removals have decreased by 8.6%.

Annual growth vs. removals and surplus volume

Demand for timber products has fluctuated since 2000. The global financial crisis in 2008-09 impacted all product categories, but particularly pine and hardwood saw-timber where there was a combined drop of over five million tonnes in 2010 compared to 2000. This was a loss of over 20% of total annual demand in the catchment area. Pine saw-timber has now recovered to pre-crisis levels, but hardwood demand has remained low. Hardwood pulpwood demand also declined around this time, with the closure and decline of existing pulp mills in the catchment area. Demand had fallen by one million tonnes p.a. by 2011 prior to the Enviva pellet mills opening. From 2012 the new biomass demand enabled the hardwood pulpwood market to recover to pre-crisis levels with demand in 2018 at almost exactly the same level as in 2000.

Annual demand by product category

This fluctuation in demand is reflected in the average annual stumpage price data shown on the chart below, this is the value that the forest owner gets for each product. The trends are generally as expected, with the exception of the hardwood saw-timber price, which has increased substantially despite a decrease in demand. This is due to supply chain issues, reduced capacity of loggers and access to land.

Average annual stumpage prices

Detailed below is an edited version of the consultant’s review and analysis of key issues in the catchment area.

The full version can be found in the main report.

Is there any evidence that bioenergy demand has caused the following?

Deforestation

No. US Forest Service (USFS) data shows the opposite. The total area of timberland in the Enviva Chesapeake catchment area has increased an estimated 82,818 hectares (+1.8%) since Enviva Pellets Ahoskie commenced full production in 2012.

A change in management practices (rotation lengths, thinnings, conversion from hardwood to pine)?

No / Inconclusive. Changes in management practices have occurred in the catchment area since 2012, but there is little evidence to suggest that bioenergy demand has caused these changes. Conversion of hardwood and mixed pine-hardwood timberland to planted pine timberland has occurred in the catchment area.

Diversion from other markets

No / Inconclusive. Since 2012, pulpwood demand not attributed to bioenergy has decreased 19%; however, this decrease is largely attributed to decreased demand from the pulp/paper sector. Also, demand for softwood and hardwood sawlogs have increased an estimated 14% and 7%, respectively, since 2012.

An unexpected increase in wood prices

No / Inconclusive. The increase in hardwood biomass demand coincided with price increases of 10-24% for delivered hardwood pulpwood. These price increases were likely linked to a combination of both supply chain issues (shortage of local loggers following pulp/paper mill closures in the region) and elevated prices offered by Enviva to ensure guaranteed wood supply for the first several years of operation, as prices for delivered hardwood pulpwood and hardwood chips proceeded to decline 16% and 9%, respectively, from 2014 to2017 once the market stabilised.

Since 2014, prices for pine products have held flat even though softwood raw material purchases (demand) by Enviva have more than doubled. In this catchment area, changes in pine pulpwood and pine chip prices are largely driven by demand attributed to the pulp/paper sector.

A reduction in growing stock timber

No. Total growing stock inventory in the catchment area increased 19% from 2012 through 2018. Over this period, inventories increased as follows for each of the five major timber products: +33% for pine sawtimber, +23% for pine chip-n-saw, +14% for pine pulpwood, +12% for hardwood sawtimber, and +14% for hardwood pulpwood.

The increase in timber inventory can be linked to a combination of increased forest area (additional hectares = additional inventory) and annual harvest levels below the sustainable yield capacity of the catchment area forest (i.e. annual growth has continued to exceed annual removals, resulting in increased inventory levels).

A reduction in the sequestration rate of carbon

No. US Forest Service data shows the average annual growth rate of growing stock timber has increased slightly since 2012. Increased timber growth rates/carbon sequestration rates can be linked to a combination of changes in species composition and silvicultural practices.

Softwood (pine) grows at a much quicker rate compared to hardwood species, and in the Enviva Chesapeake catchment area, pine timberland area increased from 43.6% of total timberland area in 2011 to 46.0% in 2018. Also, improvements in silviculture have continued to enhance growth and overall productivity. Together, these factors help explain how average per hectare volume growth increased from 5.9 m3 in 2011 to 7.7 m3 in 2018.

An increase in harvesting above the sustainable yield capacity of the forest area

No. In 2018, the latest available, growth-to-removals ratio for pine and hardwood pulpwood, the timber products utilised by bioenergy, equalled 2.49 and 2.76, respectively (a value greater than 1.0 indicates sustainable harvest levels). Even with the increased harvesting required to satisfy bioenergy demand, harvest levels remain well below the sustainable yield capacity of the catchment forest area.

What has been the impact of bioenergy demand on?

Timber growing stock inventory

Neutral. Total wood demand increased an estimated 14% from 2012-2018, and much of that increase can be attributed to increased demand from bioenergy. In this catchment area, inventories are so substantial that increases in demand from bioenergy, as well as from other sources, have not been great enough to offset annual timber growth. Total growing stock inventory has continued to increase – an average of 2.9% per year since Enviva first entered this market in 2012.

Timber growth rates

Neutral. Timber growth rates have increased for pine sawtimber, pine chip-n-saw, pine pulpwood, and hardwood pulpwood since 2012; hardwood sawtimber growth rates have declined slightly. Evidence suggests these overall increases in growth rates are linked to changes in age class distribution (i.e. a younger forest), not due to changes in bioenergy demand

Forest area

Positive / Neutral. Total forest (timberland) area in the catchment area increased nearly 83,000 hectares (+1.8%) from 2012 through 2018, the latest available. Our analysis of biomass demand and forest area found a strong positive correlation between these two variables but also a moderately strong correlation between softwood sawlog demand and forest area.

Wood prices

Neutral / Negative. The additional wood demand placed on this market by Enviva from 2012-2014 coincided with a 19% increase in delivered pine pulpwood price and a 24% increase in delivered hardwood pulpwood price. Pine and hardwood chip prices also increased 10-11% over this period. Analysis found evidence that increases in hardwood pulpwood and hardwood chip prices can be linked to increases in total hardwood pulpwood demand. However, given that hardwood bioenergy demand has accounted for over 75% of total hardwood pulpwood demand in the catchment area since 2014, it is reasonable to conclude that hardwood pulpwood demand attributed to bioenergy has had some level of impact on delivered hardwood pulpwood and hardwood chip prices.

Markets for solid wood products

Positive. In the Enviva Chesapeake catchment area, demand for softwood and hardwood sawlogs used to produce lumber and other solid wood products increased 15% and 9%, respectively, from 2012-2018. A by-product of the sawmilling process are sawmill residuals – a material utilied by Enviva’s three mills to produce wood pellets. With the increased production of both softwood and hardwood lumber, so too has come an increase in sawmill residuals, some of which has been purchased/consumed by Enviva.

Not only has Enviva benefited from the greater availability of this by-product, but lumber producers have also benefited, as Enviva’s three mills have provided an additional outlet for these producers and their by-products.

Forest landowners

Positive. Increased demand attributed to bioenergy has been a positive for forest landowners in the Chesapeake catchment area. Not only has bioenergy provided an additional outlet for pulpwood (particularly hardwood pulpwood), but the increase in pulpwood prices as a result of an overall increase in both softwood and hardwood pulpwood demand has transferred through to landowners (improved compensation).

Specifically, since 2013 (the first year all three Enviva pellet mills were operating), hardwood pulpwood stumpage price – the price paid to landowners – has averaged roughly $5.60 per ton in the Chesapeake catchment area. This represents a 47% increase over the approximately $3.80 per ton averaged by hardwood pulpwood stumpage in the catchment area over the 10 years prior (2003-2012). Similarly, pine pulpwood stumpage price has averaged $12.95 per ton in the catchment area since 2013, up 67% from the 2003-2012 average of $7.75 per ton.

Read the full report: Catchment Area Analysis of Forest Management and Market Trends: Enviva Pellets Ahoskie, Enviva Pellets Northampton, Enviva Pellets Southampton (UK metric version). Read the Drax forestry team’s blog ‘Changing forest structure in Virginia and North Carolina‘. Explore Enviva’s supply chain via Track & Trace. This is part of a series of catchment area analyses around the forest biomass pellet plants supplying Drax Power Station with renewable fuel. Others in the series include: Georgia Mill, Estonia, Latvia, Morehouse Bioenergy and Amite Bioenergy.

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.

End of coal generation at Drax Power Station

27 February 2020

Investors
Coal picker, Drax Power Station, 2016

Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)
RNS Number : 2747E

Following a comprehensive review of operations and discussions with National Grid, Ofgem and the UK Government, the Board of Drax has determined to end commercial coal generation at Drax Power Station in 2021 – ahead of the UK’s 2025 deadline.

Commercial coal generation is expected to end in March 2021, with formal closure of the coal units in September 2022 at the end of existing Capacity Market obligations.

Will Gardiner, Drax Group CEO, said:

“Ending the use of coal at Drax is a landmark in our continued efforts to transform the business and become a world-leading carbon negative company by 2030. Drax’s move away from coal began some years ago and I’m proud to say we’re going to finish the job well ahead of the Government’s 2025 deadline.

“By using sustainable biomass we have not only continued generating the secure power millions of homes and businesses rely on, we have also played a significant role in enabling the UK’s power system to decarbonise faster than any other in the world.

“Having pioneered ground-breaking biomass technology, we’re now planning to go further by using bioenergy with carbon capture and storage (BECCS) to achieve our ambition of being carbon negative by 2030, making an even greater contribution to global efforts to tackle the climate crisis.

“Stopping using coal is the right decision for our business, our communities and the environment, but it will have an impact on some of our employees, which will be difficult for them and their families.

“In making the decision to stop using coal and to decarbonise the economy, it’s vital that the impact on people across the North is recognised and steps are taken to ensure that people have the skills needed for the new jobs of the future.”

Coal in front of biomass storage domes at Drax Power Station, 2016

Coal in front of biomass storage domes at Drax Power Station, 2016

Drax will shortly commence a consultation process with employees and trade unions with a view to ending coal operations. Under these proposals, commercial generation from coal will end in March 2021 but the two coal units will remain available to meet Capacity Market obligations until September 2022.

The closure of the two coal units is expected to involve one-off closure costs in the region of £25-35 million in the period to closure and to result in a reduction in operating costs at Drax Power Station of £25-35 million per year once complete. Drax also expects a reduction in jobs of between 200 and 230 from April 2021.

The carrying value of the fixed assets affected by closure was £240 million, in addition to £103 million of inventory at 31 December 2019, which Drax intends to use in the period up to 31 March 2021. The Group expects to treat all closure costs and any asset obsolescence charges as exceptional items in the Group’s financial statements. A further update on these items will be provided in the Group’s interim financial statements for the first half of 2020.

As part of the proposed coal closure programme the Group is implementing a broader review of operations at Drax Power Station. This review aims to support a safe, efficient and lower cost operating model which, alongside a reduction in biomass cost, positions Drax for long-term biomass generation following the end of the current renewable support mechanisms in March 2027.

While previously being an integral part of the Drax Power Station site and offering flexibility to the Group’s trading and operational performance, the long-term economics of coal generation remain challenging and in 2019 represented only three percent of the Group’s electricity production. In January 2020, Drax did not take a Capacity Market agreement for the period beyond September 2022 given the low clearing price.

Enquiries

Drax Investor Relations:
Mark Strafford
+44 (0) 7730 763 949

Media

Drax External Communications:
Ali Lewis
+44 (0) 7712 670 888

 

Website: www.drax.com/us

END

How biomass wood pellet mills can help landowners grow healthy forests

29 January 2020

Sustainable bioenergy
Working Forests US South

International Paper’s pulp and paper mill, located in the Morehouse parish of Louisiana, had been in operation since 1927 and was once the largest employer in the area. However, as a result of the global recession of 2008, the company was forced to lay off over 550 employees and shut the facility. Other mills in the area have also reduced production including Georgia Pacific which let go around 530 people at its Crossett, Arkansas plant 18 miles to the north of Morehouse in 2019.

For an area dominated by forests, such as Northern Louisiana and Southern Arkansas, this decline in traditional markets came as a serious blow. It’s a region where a healthy market for wood products is vital for the local economy and, in turn, the health of the region’s forests. Luckily other wood product manufacturers and industries have since began to fill the gap.

Engineers in front of wood pellet storage silos at Drax's Morehouse BioEnergy biomass manufacturing facility in northern Louisiana

Engineers in front of wood pellet storage silos at Drax’s Morehouse BioEnergy biomass manufacturing facility in northern Louisiana

Drax Biomass has opened a mill in Morehouse parish that uses some of the the low-grade wood previously used to supply the paper industry to produce compressed wood pellets, which are used to generate renewable electricity in the UK.

Commissioned in 2015, the plant employs 74 people and can produce as much as 525,000 metric tonnes of biomass pellets a year. This makes it an important facility for local employment and the wood market in the region. However, to ensure it is positively contributing to the area and its environment, the demand for wood must be sustainably managed.

Morehouse BioEnergy sources low-grade wood from a catchment area that covers a 60-mile radius and includes 18 counties in Arkansas and four in Louisiana.

As Drax Biomass doesn’t own any of the forests it sources wood products from, it regularly examines the environmental impact of its pellet mills on the forests and markets in which it operates. The aim is to ensure the biomass used by Drax to generate 12% of Great Britain’s renewable electricity is sustainably sourced and does not contribute to deforestation or other negative climate and environment impacts.

A new report by forestry research and consulting firm Forisk evaluates the impact of biomass pellet demand from Morehouse BioEnergy on the forests and wood markets within the mill’s catchment area.

Map of pulpwood-using mills near Morehouse timber market

Map of pulpwood-using mills near Morehouse timber market

It found that biomass demand in the region does not contribute to deforestation, nor increase forest harvesting above a sustainable level. Overall, growth of the region’s pine timberland, which supplies Morehouse BioEnergy, continues to exceed removals, pointing to expanding forest carbon and wood inventory.

Annual growth compared to harvesting removals

Annual growth compared to harvesting removals

Growing forests and increasing timber stocks

The study focuses on timberland – working forests – in the plant’s sourcing area, which the US Forestry Service categorises as productive land capable of providing timber on an industrial scale.

The timberland here is made up of 63% softwood trees, which includes pines, and 37% hardwoods such as oak. Pellet manufacturing as a whole (including other pellet producers in the area), accounts for only 6% of the demand for wood products in the region. Of that, Morehouse BioEnergy contributes to 4% of total pellet demand.

Total area of timberland

Total area of timberland

Lumber – such as sawtimber – makes up the bulk of demand for wood products, accounting for 46% of total demand, largely as a result of its high market value and landowners’ aims to extract maximum revenue from their pine stands.

However, the less valuable wood – parts of trees that are misshapen, too short or thin to be used for lumber – can be sold at a lower price to biomass pellet mills. This wood might previously have been sold to paper and pulp mills exclusively, but with International Paper’s departure, Morehouse BioEnergy now fills a part of that role.

Total volume of growing stock on timberland

Total volume of growing stock on timberland

Maintaining healthy markets for both high and low-value wood is key to enabling landowners to reforest areas once they have been harvested in the knowledge it will provide a valuable return in the future. Ultimately, however, the way forests are maintained depends on the individual landowners and how they want to use their land.

The advantages of corporate ownership

Morehouse BioEnergy’s catchment area covers 28,000 square kilometres of timberland, within which 96% of the timber is privately owned. While some of that is owned by families with small patches of productive land, 54% is held by corporate owners. This includes businesses such as real estate investment trusts (REITs) and timber investment management organisations (TIMOs), which advise institutional investors on how to manage their forest assets.

This high percentage of corporate ownership influences forest management and replanting, as owners look to maximise the value of forests and seek to continue to generate returns from their land.

“In general, corporate owners are spending more money on silviculture and actively managing their timber stands,” explains Forisk Consulting Partner Amanda Lang. “They are investing more in fertiliser, their seedlings and harvest control on pine stands, because that leads to larger trees of a higher quality and more profit in the long run.” This is reflected in the higher growth rates found in the private sector, leading to faster rates of carbon sequestration.

Annual growth per hectare by owner type

Annual growth per hectare by owner type

Smaller private landowners, meanwhile, may have other objectives for their land like recreation and hunting, in addition to timber income. As a result, some owners may be less inclined to intensively manage their timber stands, forgoing fertilisation and competition control (due to cost) and might harvest on a less regular basis. Although these landowners may not be maximising the productivity of their timber resource to the same degree corporate owners do, their unique management often contribute to greater diversity on the landscape.

Demand and forest health

In 2018 the annual average price for a metric tonne of pine sawtimber in Morehouse BioEnergy’s catchment area was $25.71, down from a 10-year high of $31.60 in 2010. Similarly, pine pulpwood, from which biomass pellets are made, was valued at $7.75 per metric tonne in 2018, down from a 10-year high of $13 in 2010.

These low wood prices have caused many landowners to delay harvesting forests in hopes for a more lucrative wood price. As a result, pine timber inventories have grown across Morehouse BioEnergy’s catchment area. In 2010 the US Forest Service counted more than 167 million metric tonnes of pine inventory. By 2018 this had increased by more than 35% to reach 226 million.

Morehouse BioEnergy market historic stumpage prices, $/metric tonne

Morehouse BioEnergy market historic stumpage prices, $/metric tonne

The report suggests this price slump is an ongoing result of the 2008 recession, which greatly affected US house construction – one of the primary uses of sawtimber and many other types of wood products in the US. Some areas have already seen sawtimber prices increase as they recover from the recession, however, the report suggests this is not spread evenly on a national level.

The inventory overhang in Morehouse BioEnergy’s catchment area is expected to begin reversing in 2024 or 2025, as Lang explains: “We expect inventories to increase for a few more years and then start to decline. That said, inventories will remain higher than pre-recession levels.”

While high inventories suggest an abundant resource, lower inventory volumes are not indicative of declining or unhealthy forests. Rather, they can point to younger, growing forests that have recently been replanted, which will later grow to higher inventory volumes as they mature. Both suggest a healthy forestry industry in which landowners continue to reinvest in forests.

Overall, the analysis of the region points to healthy, growing forests and, importantly, a sustainable industry from which Drax can responsibly source biomass pellets. Ensuring the biomass used at Drax Power Station is sustainably sourced is crucial to its generation of renewable, carbon-neutral electricity, and in turn laying the path to negative emissions.

Read the full report: Morehouse, Louisiana Catchment Area Analysis. A short summary of its analysis and conclusions, written by our forestry team, can be read here. Explore every delivery of wood to Morehouse BioEnergy using our ForestScope data transparency tool.

Morehouse catchment area analysis

28 January 2020

Sustainable bioenergy
Working forest in southern Arkansas within the Morehouse catchment area

The forest area around the Drax Morehouse BioEnergy plant has a long history of active management for timber production. 96% of the forest owners are private and around half of these are corporate investors seeking a financial return from forest management. The pulp and paper (p&p) sector dominates the market for low grade roundwood with over 75% of the total demand. The wood pellet markets use only 6% of the roundwood, of which 4% is used by Morehouse.

Given the small scale of demand in the pellet sector, the extent of influence is limited. However, the new pellet markets have had a positive impact, replacing some of the declining demand in the p&p sector and providing a market for thinnings for some forest owners and a new off-take for sawmill residues.

Pine forest is dominant in this area with an increasing inventory (growing stock) despite a stable forest area. Active management of pine forests has increased the amount of timber stored in the standing trees by 68 million tonnes from 2006 to 2018.  Over the same period the hardwood inventory remained static.

Chart showing historic inventory and timberland area in Morehouse catchment

Historic inventory and timberland area in Morehouse catchment; click to view/download.

US Forest Service FIA data shows that the pine resource in this catchment area has been maturing, the volume of timber has been increasing in each size class year on year. This means that the volume available for harvesting is increasing and that more markets will be required to utilise this surplus volume and ensure that the long-term future of the forest area can be maintained.

Chart showing historic pine inventory by DBH Class

Historic pine inventory by DBH Class in Morehouse catchment; click to view/download.

This is reflected in the growth drain ratio – the comparison of annual growth versus harvesting. A ratio of one shows a forest area in balance, less than one shows that harvesting is greater than growth. This can be the case when the forest area is predominantly mature and at the age when clear cutting is necessary.

A growth drain ratio of more than one shows that growth exceeds harvesting, this is typically the case in younger forests that are not yet ready for harvesting and are in the peak growing phase, but it can also occur when insufficient market demand exists and owners are forced to retain stands for longer in the absence of a viable market.

Drax Morehouse plant

Drax’s Morehouse BioEnergy compressed wood pellet plant in northern Louisiana

This can have a negative impact on the future growth of the forest; limiting the financial return to forest owners and reducing the cumulative sequestration of carbon by enforcing sub-optimal rotation lengths.

The current growth drain ratio of pine around Morehouse is 1.67 with an average annual surplus of around 7 million metric tonnes. This surplus of growth is partly due to a decline in saw-timber demand due to the global financial crisis but also due to the maturing age class of the forest resource and the increasing quantity of timber available for harvesting.

Historic growth and removals of pine in Morehouse catchment (million metric tonnes)

YearGrowthRemovalsNet GrowthGrowth-to-Drain
200914.112960762411.1860124622.92694830041.26166145535
201014.580331100610.91819493463.662136166021.33541589869
201115.129903273610.72162297824.408280295451.41115792865
201215.357258404710.30755904395.049699360811.48990254039
201315.63898206189.701617808065.93736425371.61199733603
201415.91041518229.376564771556.533850410651.69682773701
201515.94235364499.669133266476.273220378431.64878828387
201616.43527840789.579357241816.855921165961.71569740985
201716.838075354610.1594737396.678601615681.65737672908
201817.770968348910.65938820047.111580148561.66716588371

The chart below shows the decline in pine saw-timber demand in the catchment area following the financial crisis in 2008. It also shows the recent increase in pulpwood demand driven by the new pellet mill markets that have supplemented the declining p&p mills.

Sawmills are a vital component of the forest industry around Morehouse, with most private owners seeking to maximise revenue through saw-timber production from pine forests.

As detailed in the table below, there are 70 markets for higher value timber products around this catchment area. These mills also need an off-taker for their residues and the pellet mills can provide a valuable market for this material, increasing the viability of the saw-timber market.

Operating grade-using facilities near Morehouse timber market

TypeNumber of MillsCapacityCapacity UnitsHardwood Roundwood At Mill From MarketSoftwood Roundwood At Mill From Market
Consumption, million green metric tonnes
Lumber6810538.8235294M m³1.737194320550.88604623042613.06745552335.69986977638
Plywood/Veneer2904M m³000.9617438725360.506109617373
Total701.737194320550.88604623042614.02919939586.20597939376

Pulp and paper mills dominate the low grade roundwood market for both hardwood and softwood. The pellet mill market is small with just 3 mills and therefore does not influence forest management decisions or macro trends in the catchment area. However, demand for wood pellet feedstock exceeds 1.5 million tonnes p.a. and this can provide a valuable market for thinnings and sawmill residues. A healthy forest landscape requires a combination of diverse markets co-existing to utilise the full range of forest products.

Operating pulpwood-using facilities near Morehouse timber market

TypeNumber of MillsCapacityCapacity UnitsHardwood Roundwood At Mill From MarketSoftwood Roundwood At Mill From Market
Consumption, million green metric tons
Pulp/Paper117634.86896M metric tons3.489826926741.192570970097.557287050371.66598821268
OSB/Panel62412.55M m³002.567325398621.19890681942
Chips178395.08999M metric tons2.938909722111.46484421365.287607151192.18745126814
Pellets31573.965975M metric tons002.078219858451.01128896402
Total346.428736648862.6574151836917.49043945866.06363526426

In its analysis, Forisk Consulting considered the impact that the new pellet mills including Morehouse BioEnergy have had on the significant trends in the local forest industry. The tables below summarise the Forisk view on the key issues. In its opinion, the Morehouse plant has had no negative impact.

Bioenergy impacts on markets and forest supplies in the Morehouse market

ActivityIs there evidence that bioenergy demand has caused the following?Explanation
DeforestationNo
Change in forest management practiceNo
Diversion from other marketsPossiblyBioenergy plants compete with pulp/paper and OSB mills for pulpwood and residual feedstocks. There is no evidence that these facilities reduced production as a result of bioenergy markets, however.
Increase in wood priceNoThere is no evidence that bioenergy demand increased stumpage prices in the market.
Reduction in growing stocking timberNo
Reduction in sequestration of carbon / growth rateNo
Increasing harvesting above the sustainable yieldNo

Bioenergy impacts on forests markets in the Morehouse market

Forest metric Bioenergy impact
Growing Stock Neutral
Growth Rates Neutral
Forest Area Neutral
Wood Prices Neutral
Markets for Solid Wood Neutral to Positive*
*Access to viable residual markets benefits users of solid wood (i.e. lumber producers).

Read the full report: Morehouse, Louisiana Catchment Area Analysis. An interview with the co-author, Amanda Hamsley Lang, COO and partner at Forisk Consulting, can be read here. Explore every delivery of wood to Morehouse BioEnergy using our ForestScope data transparency tool.

This is part of a series of catchment area analyses around the forest biomass pellet plants supplying Drax Power Station with renewable fuel. Others in the series include: ,

Others in the series include: Georgia Mill, Estonia, Latvia, Chesapeake and Drax’s own, other three mills LaSalle Bionergy, Morehouse Bioenergy and Amite Bioenergy.

Findings and Recommendations from the First Meeting of Drax’s Independent Advisory Board on Sustainable Biomass (IAB)

9 January 2020

Sustainable bioenergy
Sir John Beddington

Dear Will,

Findings and Recommendations from the First Meeting of Drax’s Independent Advisory Board on Sustainable Biomass (IAB)

The Independent Advisory Board on Sustainable Biomass provides this statement following its first meeting on Friday 15th November 2019.

Attendees: John Beddington (Chair), John Krebs (Deputy Chair), Virginia Dale, Sam Fankhauser, Elena Schmidt, Robert Matthews (Ex-Officio Member).

During the meeting, IAB members:

The IAB shares this summary of its findings and recommendations.

  • The IAB agreed that its role is to provide independent advice to Drax on its sustainable biomass policy and practice. IAB members will do this by scrutinising the science and evidence, informing Drax’s approach, and by providing independent feedback to Drax on how it can adopt best practices. In addition to holding two face to face meetings each year, the IAB agreed to hold two interim telephone meetings.
  • The IAB recommended Drax refer to “forest environment” not “natural environment” in its policy.
  • The IAB noted that the ten criteria Drax have outlined to reduce the carbon emissions of its biomass approach have been designed to reflect the findings of Forest Research’s Carbon Impacts of Biomass Consumed in the EU report (2018). The IAB found that the Drax criteria are an accurate interpretation of the report.
  • The IAB would like to explore how the science can further be developed with regard to the use of small, early thinnings and small roundwood, and consider how Drax’s policy might evolve.
  • The IAB and Drax discussed the possibility of developing some sub criteria for specific forest types.
  • The IAB suggested Drax could consider a “Restatement of the Evidence” academic review process to better understand, and draw alignment on, where there is scientific evidence on the sustainability of biomass.
  • The IAB suggested Drax should consider both a goal to continuously improve and consider the longer term implications of its policy commitments in light of potential climate changes.
  • The IAB emphasised that the way Drax operationalises its commitments will be critical. It stressed the importance of robustly exploring the counterfactuals to Drax’s biomass activities, highlighting the potential for trade-offs between climate and biodiversity outcomes as an area for more detailed review.
  • The IAB highlighted a number of considerations for Drax in its use of the Sustainable Biomass Program (SBP). It welcomed SBP’s adoption of a multi-stakeholder approach and suggested it will be important to scrutinise its evolution. It noted that, as Drax’s sustainability commitments go beyond SBP’s current criteria, Drax needs a strategy on how to evidence the compliance for these additional commitments.
  • The IAB expressed interest in learning about Drax’s long term vision. It noted that the ceasing of subsidies in 2027 will be a key milestone and highlighted its interest in exploring Drax’s strategy for managing this.

In future meetings with Drax, the IAB will further examine evidence of Drax’s approach, performance and impact against its commitments, to identify any changes that Drax may need to make. The IAB noted the following specific topics for further consideration:

  • Evidence relating to the impact of thinning a forest on carbon, pest control and fire risks;
  • How Drax operationalises its commitments, the counterfactuals of Drax’s biomass activities, and potential trade-offs between biodiversity and carbon outcomes;
  • Drax’s approach to biodiversity;
  • Drax’s long term vision including its plans for developing and scaling bioenergy with carbon capture and storage (BECCS) and its broader roadmap to net zero carbon emissions;
  • Drax’s evidencing for each of its climate related commitments;
  • Potential differences between the standards expected by stakeholders and local legal standards;
  • Water and soil management practices.

Yours sincerely,

Professor Sir John Beddington
Chair of the IAB

View/download the PDF version here. 

How a Mississippi wood pellet mill supports healthy forests and rural economies

19 December 2019

Sustainable bioenergy
Pine saplings in Weyerhaeuser tree nursery, Hazlehurst, Mississippi

The landscape of the Amite catchment area in Mississippi is dense with forests. They cover 84% of the area and play a crucial role in the local economy and the lives of the local population.

Amite BioEnergy catchment area – land area distribution by land classification & use (2017)

Amite BioEnergy catchment area – land area distribution by land classification & use (2017)

On the state’s western border with Louisiana, near the town of Gloster, Drax’s Amite BioEnergy pellet mill is an important part of this local economy, providing employment and creating a market for low-grade wood.

Amite produces half-a-million metric tonnes of wood pellets annually that not only benefit the surrounding area, but also make a positive impact in the UK, providing a renewable, flexible low carbon source of power that could soon enable carbon negative electricity generation.

However, this is only possible if the pellets are sourced from healthy and responsibly managed forests. That’s why it’s essential for Drax to regularly examine the environmental impact of the pellet mills and their catchment areas to, ultimately, ensure the wood is sustainably sourced and never contributes to deforestation or other negative climate and environment impacts.

In the first of a series of reports evaluating the areas Drax sources wood from, Hood Consulting has looked at the impact of Amite on its surrounding region. The scope of the analysis had to be objective and impartial, using only credible data sources and references. The specific aim was to evaluate the trends occurring in the forestry sector and to determine what impact the pellet mill may have had in influencing those trends, positively or negatively. This included the impact of harvesting levels, carbon stock and sequestration rate, wood prices and the production of all wood products.

The report highlights the positive role that the Amite plant has had in the region, supporting the health of western Mississippi’s forests and its economy.

Woodchip pile at Amite BioEnergy (2017)

Woodchip pile at Amite BioEnergy (2017)

The landscape of the Amite BioEnergy wood pellet plant 

Amite BioEnergy’s catchment area – the working forest land from which it has sourced wood fibre since it began operating – stretches roughly 6,600 square kilometres (km2) across 11 counties – nine in Mississippi and two in Louisiana.

Map showing Amite BioEnergy catchment area boundary

Amite BioEnergy catchment area boundary

US Forest Service data shows that since 2014, when Amite began production, total timberland in this catchment area has in fact increased by more than 5,200 hectares (52 million m2).

An increase in market demand for wood products, particularly for sawtimber, can be one of the key drivers for encouraging forest owners to plant more trees, retain their existing forest or more actively manage their forests to increase production.

Markets for low grade wood, like the Amite facility, are essential for enabling forest owners to thin their crops and generate increased revenue as a by-product of producing more saw-timber.

Around 30% of the annual timber growth in the region is pine pulpwood, a lower-value wood which is the primary source of raw material used at Amite. More than 60% of the growth is what is known as sawtimber – high-value wood used as construction lumber or furniture, or chip n saw (also used for construction and furniture).

Amite BioEnergy catchment area – net growth of growing stock timber by major timber product. Source: USDA – US Forest Service.

Amite BioEnergy catchment area – net growth of growing stock timber by major timber product. Source: USDA – US Forest Service.

The analysis shows that harvesting levels in each product category are substantially lower than the annual growth (as shown in the table below). This means that every year a surplus of growth remains in the forest as stored carbon.

Amite BioEnergy catchment area – harvest removals by major timber product (2017). Source: USDA – US Forest Service.

Amite BioEnergy catchment area – harvest removals by major timber product (2017). Source: USDA – US Forest Service.

In 2017, total timber growth was 5.11 million m3 while removals totalled 2.41 million m3 – less than half of annual growth. Of that figure, the pine pulpwood used to make biomass pellets grew by 1.52 million m3 while just 850 thousand m3  was removed.

The table below shows the ratio of removals to growth in the pine forests around Amite. A ratio of 1 is commonly considered to be the threshold for sustainable harvesting levels, in this catchment area the ratio is more than double that amount, meaning that there is still a substantial surplus of annual growth that has not been harvested.

Amite BioEnergy catchment area – annual growth, removals & growth-to-removal ratios by major timber product (2017). Source: USDA – US Forest Service.

Amite BioEnergy catchment area – annual growth, removals & growth-to-removal ratios by major timber product (2017). Source: USDA – US Forest Service.

Between 2010 and 2017 the total stock of wood fibre (or carbon) growing in the forests around Amite increased by more than 11 million m3. This is despite a substantial increase in harvesting demand for pulpwood.

Timber inventory by major timber product (2010-2017); projected values (2018)

Timber inventory by major timber product (2010-2017); projected values (2018)

The economic argument for sustainability

The timberland of the Amite BioEnergy catchment area is 85% privately owned. Among the tens of thousands of smaller private landowners are larger landowners like forestry business Weyerhaeuser; companies that manage forest land on behalf of investors like pension funds; and private families. For these private owners, as long as there are healthy markets for forest products forests have an economic value. Without these markets some owners may choose to convert their forest to other land uses (e.g. for urban development or agriculture).

More than a billion tree saplings have been grown at Weyerhaeuser’s Pearl River Nursery in Mississippi. The facility supplies these young trees to be planted in the Amite catchment area and across the US South.

Strong markets lead to increased investment in better management (e.g. improved seedlings, more weeding or fertilisation, thinning and selecting the best trees for future saw-timber production).

“Thinning pulpwood is part of the forest management process,” explains Dr Harrison Hood, Forest Economist and Principal at Hood Consulting. “Typically, with pine you plant 500 to 700 trees per acre. That density helps the trees grow straight up rather than outwards.”

But once the trees begin to grow beyond a certain point, they can crowd one another, and some trees will be starved of water, nutrients and sunlight. It is therefore essential to fell some trees to allow the others to grow to full maturity – a process known as thinning.

“At final harvest, you’ve got about 100 trees per acre,” continues Dr Hood. “You remove the pulpwood or the poor-quality trees to allow the higher-quality trees to continue to grow.”

These thinnings have typically been used as pulpwood to make things like paper, but with the slight decline of this industry over the last few decades there’s been a need to find new markets for it. Paper production in the Amite catchment area has declined since 2010 (as shown on the chart on the right), whilst demand for saw-timber (lumber) has been increasing following the economic recovery after the recession of 2008.

Producing saw-timber, without a market for thinnings and low-grade wood is a challenge. The arrival of a biomass market in the area has created a renewed demand – something that is even more important at the current time, when there is an abundance of forest, but wood prices are flat or declining slightly.

“Saw-timber prices haven’t moved much over the last six to eight years,” explains Dr Hood. “They’ve been flat because there’s so much wood out there that there’s not enough demand to eat away at the supply.”

Pulpwood consumers such as Amite BioEnergy create demand for pulpwood from thinning, allowing landowners to continue managing their forests while waiting for the higher value markets to recover. Revenue from pulpwood helps to support forest owners, particularly when saw-timber prices are weak.

Amite BioEnergy catchment area mill map (2019)

Amite BioEnergy catchment area mill map (2019)

“There’s so much pulpwood out there,” says Dr Hood. “You need a buyer for pulpwood to allow forests to grow and mature into a higher product class and to keep growing healthy forests.”

The picture of the overall forest in the catchment area is of healthy growth and, crucially, a sustainable environment from which Drax can responsibly source biomass pellets for the foreseeable future.

Read the full report: Catchment Area Analysis of Forest Management and Market Trends: Amite BioEnergy (UK metric version). A short summary of its analysis and conclusions, written by our forestry team, can be read here. This is part of a series of catchment area analyses around the forest biomass pellet plants supplying Drax Power Station with renewable fuel. Others in the series include: Morehouse BioEnergy.