News | September 18, 2015

Loss of U.K. biomass subsidy delivers blow to U.S. wood pellet industry

This summer the British government announced it would end a major subsidy for the use of biomass—wood and other plant material—as a fuel source.

Enviva, the U.S.-based company that provides most of the biomass from our region, saw it’s stock decline significantly with news of the subsidy’s end. Drax, Britain’s largest consumer of biomass, is Enviva’s primary customer. In 2014 Drax received an estimated $500 million in subsidies and many are watching to see how it will handle this change in fortunes. While the company already converted two of its power plants to biomass, plans to convert four more are now less certain. 

SELC has been working for years to publicize the destructive effects of this supposedly renewable fuel. Biomass, when it is sourced from hardwood forests, is actually worse for CO2 emissions than burning coal. And increasing demand from Europe has been devastating Southern forests. In June, a new SELC report detailing the problem received prominent coverage in the Washington Post and Britain’s Daily Mail. The Mail reported that the British government was taking the report seriously.

The policy change did have one significant downside, however, as the British government also withdrew the tax exemption—specifically designed to address climate change—from legitimately clean sources of energy. The hope is that economic and environmental factors will continue to create support for truly renewable power sources, leaving Southeastern forests out of the mix.