Assessing the Promise and Peril of Wood Pellet Products, with Francisco X. Aguilar

Notable Quotes

• The US wood pellet industry has boomed in recent years: “[The European Union has] a new directive in place, and it supports the advancement of renewable energy, reducing emissions, and improving efficiency … Under the [Renewable Energy Directive], individual members of the European Union can develop their portfolios to identify the resources that are best suited to meet those [Paris Agreement] targets. Some countries have identified renewable energy—such as biomass from forests—as a key component of that national plan to meet the Renewable Energy Directive targets … In the case of countries that identified wood as a renewable energy source, but don't have as much forest, they are relying on the imports of wood pellets to help meet the targets.” (7:40)
• Tension between forests as ecosystems and forests as industry: “Historically, we have had situations where forests haven't been well-managed. Much of the forest that we see today has [resulted from] the regrowth of forests that were depleted a century ago … So, seeing the expansion of the [wood pellet] industry, given the historical context that we have seen in past centuries, has raised those concerns. There have been a number of environmental groups that have expressed concern that, by removing this extra forest biomass, we are depleting the very same forest we want to protect.” (10:52)
• Careful steps must be taken for forest bioenergy to be renewable: “A major takeaway is that energy from biomass can be renewable, but it must be tested. We must have data, and we must have information to validate the renewable characteristic of the energy and whether it can reduce carbon emissions or not, compared to other alternative sources … From a policy perspective, I think monitoring, being dynamic, and being open to make sure that we're balancing economic objectives with conservation objectives, are key.” (23:03)

Top of the Stack

• “Expansion of US Wood Pellet Industry Points to Positive Trends but the Need for Continued Monitoring” by Francisco X. Aguilar, Ashkan Mirzaee, Ronald G. McGarvey, Stephen R. Shifley, and Dallas Burtraw
• “Wood Energy in America” by Daniel deB. Richter Jr., Dylan H. Jenkins, John T. Karakash, Josiah Knight, Lew R. McCreery, and Kasimir P. Nemestothy
• “Wood Energy Efficiency: More Heat with Less Wood” by the United Nations Economic Commission for Europe
• “Net-Zero America” by Eric Larson, Chris Greig, Jesse Jenkins, Erin Mayfield, Andrew Pascale, Chuan Zhang, Joshua Drossman, Robert Williams, Steve Pacala, Robert Socolow, Ejeong Baik, Rich Birdsey, Rick Duke, Ryan Jones, Ben Haley, Emily Leslie, Keith Paustian, and Amy Swan
• The Overstory by Richard Powers

The Full Transcript

Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host, Daniel Raimi. Today we talk with Francisco Aguilar, professor at the Swedish University of Agricultural Sciences’s Department of Forest Economics and leader of the Team of Specialists on Wood Energy at the United Nations Economic Commission for Europe. Francisco and coauthors recently published a study on the environmental effects of the rapid growth of wood pellets, which are viewed as carbon neutral to meet climate targets in Europe. We'll focus on how the industry's growth has affected the number of trees and carbon stocks in the US Southeast, which is where most of these wood pellets are being produced. The key question here is whether wood pellets are truly renewable and whether they are truly net-zero emissions. Francisco will help us make sense of it all. Stay with us.

Okay. Francisco Aguilar from the Swedish University of Agricultural Sciences. Thank you so much for joining us today on Resources Radio.

Francisco X. Aguilar: Thanks for having me Daniel. It's good to be here.

Daniel Raimi: Yeah. All the way from Sweden. So Francisco, we always ask our guests when we get started with episodes how they got interested in working on environmental issues, and in your case, forestry. So what sort of led you to working on these issues?

Francisco X. Aguilar: I guess it started with my family. My father comes from the countryside so I always had an interest in natural resource management, agriculture, and forestry. I ended up getting a degree in agronomic engineering. And something that I learned from that was that if you study animals, they can kick you, you can get injured. Plants don't move; numbers behave; people don't behave. So I ended up becoming a resource economist after all this. And of all the resources that I could have studied, the one that just captured my passion because of the complexity of the issues is forestry and the study of economics of forests, forest management, and conservation. It's a real passion for myself.

Daniel Raimi: Yeah. Fantastic. Did you spend a lot of time in forests when you were growing up?

Francisco X. Aguilar: A fair amount of time in forests, riding a mule, and milking cows. Something that I learned to appreciate was the complexity of and importance of forests from providing habitat for wildlife species to their role in watershed management. As a kid, you learn to see all those services and you learn to value those services. And it's fascinating again just how important forests are for people, even if we don't realize it. It's a real passion for myself.

Daniel Raimi: Yeah. Well, we are going to talk about forests today and one particular product that comes from forests, which is wood pellets. And the basis of this conversation is a study that you published recently with a number of coauthors in Nature Scientific Reports. The study is called “Expansion of US Wood Pellet Industry Points to Positive Trends But the Need for Continued Monitoring.” We'll have a link to that study of course in the show notes, but let's get started with some basics on wood pellets.

Can you give us a very high level overview of the modern wood pellet industry in the United States and the European Union which we're going to be talking about today in the context of energy markets? I'm also interested in—when we think about where these wood pellets are coming from—if the forests that they're being sourced from, if those trees are being grown specifically to produce wood pellets, or if the pellets are a byproduct from sawmills that might be processing trees for furniture or some other higher value product. So, if you could just get us started by giving us a lay of the land, it would be really helpful.

Francisco X. Aguilar: Absolutely. And perhaps it is good to start, if you have had a pet in your house and maybe you have gone to the pet store and bought pellets, the principle is the same. When we take wood pellets, we take wood fibers—so material from forests, from trees. They are dried so there's less moisture. Then they are compressed into this uniform, homogenized material that has less moisture because water doesn't burn very well. It's more compact, it's more dense, so you have more energy content per volume. So that material is easier to transport; it's easier to package if you want to put it in bags or to transport across the Atlantic, if you are engaging in trade. And that gain in quality of the material enhances the capacity of the same wood to produce more energy. So at the end of the day, it's an issue of efficiency in converting that wood into useful energy, and efficiency in terms of the costs associated with transporting that energy. It is less expensive when you have a material that is more dense and it's easier to burn. The costs per energy, it's lower.

So those are some of the reasons behind pelletization, this process of densifying the content of wood energy into smaller volumes. So pellets can be made from agricultural residues, can be made from forest residues, or can be made from smaller wood particles. So you can pretty much pelletize anything. And in the case of wood pellets in the United States, historically we relied much on residues from mills. So mills were, for instance, making lumber, and you have byproducts like sawdust and shavings. Those materials could be tried and densified into pellets. But as the industry grew larger, as some mills grew larger as well, you had to diversify. You cannot just rely on the byproducts of other companies, you have to procure your own. So one of the biggest differences that we have seen over time is that instead of just relying much on residues from other industries, from other sectors of the wood industry, much of the material is coming directly from forests. In terms of the change over time, that has been a big one.

Daniel Raimi: Yeah. That's really interesting. So we're going to talk mostly today about pellets that are produced in the United States and then marketed in Europe. And there's a policy factor that's kind of driving a lot of this growth in demand for wood pellets in the European Union. Can you talk a little bit about that policy that's been driving growth in demand for wood pellets in Europe?

Francisco X. Aguilar: Yes. So it goes back to the Renewable Energy Directive. Back in 2009, it was approved to promote more efficiency in the energy sector in Europe and a greater role for renewable energy within the portfolio of the European Union. And the third component of the directive was reducing emissions of greenhouse gases. Now we have a new directive in place, and again it supports the advancement of renewable energy, reducing emissions, improving efficiency as a pillar to The Paris Agreement. So that's how the European Union is actually compliant with the Paris Agreement, through this directive. Under the directive, individual members of the European Union can develop their portfolios to identify the resources that are best suited to meet those targets. So some countries have identified renewable energy, such as biomass energy, including biomass from forests, as a key component of that national plan to meet the Renewable Energy Directive targets.

So for instance, here in Sweden, a third of the energy consumed nationally comes from biomass, from bioenergy. So it's a pretty large percent; it's one of the biggest in the European Union. In fact, most of it is procured domestically since we have a lot of forests in Sweden. But in the case of other countries—like let's think Belgium, Denmark, and the Netherlands—they also identified wood as a renewable energy source, but they don't have as much forest. So they are relying on the imports of wood pellets to help meet the targets of the energy directive. As you might have noticed Daniel, I skipped the United Kingdom because the United Kingdom was a member of the European Union at the time, of course. And actually the United Kingdom is the number one importer of American wood pellets on the other side of the Atlantic. So in fact, the United Kingdom is the number one importer of wood pellets from the United States.

Daniel Raimi: That's really interesting. So as many of our listeners are probably aware, there has been quite a bit of controversy and concerns raised about this growth in using biomass for energy and categorizing it as a renewable resource. There's been some reporting here in the United States, and there probably have been other studies that I haven't read, but I'm sure you have Francisco. So what are some of the major concerns that people raise about this large-scale use of wood pellets as a form of renewable energy?

Francisco X. Aguilar: Sure, Daniel. After the approval of the energy directive, there has been a major expansion in the capacity of manufacturing and exporting pellets along the coast of the southeastern United States. Along with that, for instance, back in 2005, there were just about no exports of wood pellets. By 2012, there were over 1.7 million metric tons exported from the United States to the European Union. Last year, it reached nearly seven million tons. So that level of growth has raised some concerns. And I think it's very important to look at where we come from. Historically, we have had situations where forests haven't been well-managed. In fact, much of the forest that we see today has [resulted from] the regrowth of forests that were depleted a century ago. So there is this history that at times we didn't do a good job in terms of forest management, and there is a lot of reality to that. So seeing the expansion of the industry, sort of the historical context that we have seen in past centuries has raised those concerns.

There have been a number of environmental groups and citizen groups that have expressed concern that by removing this extra forest biomass, we are depleting the very same forest we want to protect. And in the interest of European energy expectations and targets, we could be depleting forests in the United States. So that has been a major concern: depletion in terms of how much carbon is stored in those forests, as well as potential impacts on high quality habitats within forests and the communities that depend on those forests.

There have been concerns over the ecological integrity of the forests from which these fibers are procured as well as the actual carbon, and whether this wood energy or energy derived from wood pellets is actually a good environmental alternative. Those are two of the major concerns that I have seen.

Daniel Raimi: Right. And the study that you have recently released does address at least some of those issues. So, let's talk now about what some of the key findings were in that work. We'll talk first about what you found in terms of tree growth in the United States and how it may have changed in relationship to the supply of wood pellets. And then next we'll talk about carbon, what sort of carbon effect you might've found. So let's start first with trees. When you compared regions in the coastal Southeast that were increasingly exporting these wood pellets, you compared them with other forest regions in the United States and places where forest products were produced. What are some of the important findings that you came away with in terms of the number of trees that were growing or that were standing in these different forests?

Francisco X. Aguilar: Sure. Perhaps I will start Daniel with this idea of a wood basket. And that analogy is a good one because given the very thin profit margins that one sees in the wood products industry, one has to procure very locally. So that creates these baskets from where mills get their biomass from. So things can be very localized and that's what we do in the study. We look at these, what we call, “procurement landscapes,” these concentric circles around wood pellet mills. And we tracked them over time, starting in 2005 all the way through 2017 to see how conditions have changed, and conditions specifically within what we call “timberlands,” which are forests that are capable of growing biomass, and the biomass can be harvested commercially. So it hasn't been set aside for conservation or other purposes.

We track those. We track those in the coastal Southeast, and we compare them to the rest of the eastern United States to see how conditions have changed between a region that is the main source of US wood pellets for the European Union, the coastal Southeast, and the rest of the eastern United States.

And something that we found was that in terms of the coastal Southeast, we found a fewer number of live and growing stock trees. But is that a bad thing? And the answer is no, it's not. It's just fewer trees as compared to the rest of the eastern United States, and the fact that there were no changes in carbon pools within those live trees means that simply carbon was accumulated into fewer live trees. So that's a good thing within the coastal Southeast. Regarding the number of trees that you mentioned, Daniel, when we look at a mill that's of a large capacity, so these are mills that cannot just rely on byproducts or residues, but really have to get some of these fibers directly from the forest. And for those mills, we actually found that there were a fewer number of standing dead trees. Again, is it a bad thing? Well, it depends. And you will probably hear me say “it depends” a few times today Daniel. But having fewer standing dead trees could be a good thing or could be a bad thing.

So if you think about wildfires, actually having fewer dead trees on the ground that can catch fire and intensify a wildfire, it could be a good thing if we have fewer of them in the landscape. But on the other hand, there's a lot of biodiversity. There are communities that depend on that dead biomass, like fungi that utilize that biomass, and biomass is eventually incorporated into the soil. So there are very complex ecological dynamics that having fewer standing dead trees could potentially be detrimental. So, as I said already, it depends. It could be a good thing, it could be a bad thing. We're just reporting that we found fewer dead trees, but we are not making a final call on whether this is a good or a bad thing.

Daniel Raimi: Right. That makes sense. So I'm very, very far from a forestry expert, but I did read The Overstory, this wonderful book and that did help me learn about the importance of dead trees for ecosystems even if it's not a scientific book itself.

Francisco X. Aguilar: Yeah, but it's a great book to read. I think it's very good that you read it. I'm glad. If the others have read it, I'm sure they enjoyed it as well.

Daniel Raimi: Yeah. Several folks have actually recommended it on this podcast which is why I read it. So let's turn to another kind of key focus of this study which is carbon stocks. So from a climate change perspective, of course we're all very interested in whether the amount of carbon stored in trees and soils might be affected by this increased demand for wood pellets. So what did you find in terms of trees and also in soil carbon stocks?

Francisco X. Aguilar: So I guess I'll take a quick step back. It's very critical to look at the entire system from where the energy is procured, in this case transported, how it's turned into energy, how it's utilized. So it's very complex. So in the ongoing discussion about trying to label energy from wood stocks as being carbon neutral or not, it is very nuanced. It depends on the system that you're using. Within this very large and complex system or supply chain that procures energy feedstocks until the energy is turned into actual heat or electricity, the first step is procuring that energy and what's happening within the carbon stocks at that wood basket level.

So we're not looking at the entire system; we're looking at the wood basket level. And within that wood basket level, something that we found was that there was more carbon in live trees among mills of a large manufacturing capacity. Most likely that's just that the markets are working. There's a market incentive to supply that fiber, and an incentive to regrow that fiber. And something that is important in our study as compared to others, we're looking at the landscape level. For instance, if you were to look at one acre of forest let's say, you harvest it, you cut it down, and those trees if kept under a forest cover will grow back, but it will take time for them to grow back. So indeed you can make deductions from what happens at that level within one single acre, but markets work at a landscape level. So something that's unique in our study is that we don't look at that very small scale; rather, we look at the entire basket, and we found more carbon live trees. On the other hand, in the coastal Southeast, we did find less carbon in soils.

That is a point of concern, but also keeping in mind that in the way we set up this study, we're comparing the coastal Southeast to the rest of the eastern United States. And in that sense, less carbon in the coastal Southeast might be only indicating that there was more carbon in soils in the rest of the region. So it's good to keep in mind in terms of the statistical comparisons. Another caveat is that we use data from the forest inventory and analysis program.

This is a program from the Forest Service that is essentially the census of forests in the United States. So they have all these inventory plots throughout the entire country, and we use data from these plots to look at the number of live trees and dead trees. And some information from those plots is used to estimate soil carbon. So soil carbon is not measured directly, you don't go and stick somebody in the ground and you measure the carbon in the soil. But it's estimated through all their tertiary equations. And in that sense, it's a caveat to keep in mind in terms of the data.

Daniel Raimi: Great.

Francisco X. Aguilar: Nonetheless, there are new studies that correlate management with lower levels of carbon stocks in soils. And so there is some empirical evidence that intensified management could lead to lower levels of carbon in soils. That’s something very good to keep on monitoring and keeping an eye on.

Daniel Raimi: Right. So not a sort of very clear conclusion here but certainly an area to watch.

Francisco X. Aguilar: It is certainly an area to watch. And one that actually we're looking into in more detail using actually the inventory plots and the state of the art information to see what happens to this carbon in soils. So there's plenty of research that needs to happen in that area.

Daniel Raimi: Yeah, absolutely. And so, as you've been describing some of the results of this work, there are clearly suggestions of positive outcomes and negative outcomes, but also lots of uncertainty as you've described. When you think about the different results that you're kind of piecing together in this puzzle, what are some of the policy implications that are drawn out from your perspective? Of course, there's going to be a need for additional research and additional monitoring to better answer these questions. But at this point with what we know now, what are some of the major policy implications that you take away?

Francisco X. Aguilar: A major takeaway is that in my opinion, energy from biomass, from wood pellets, and from forests can be renewable, but it must be tested. We must have data, and we must have information to validate the renewable characteristic of the energy and whether it can reduce carbon emissions or not as compared to other alternative sources. So the first thing is, I don't give an absolute conclusion. I'm not saying energy from wood pellets is carbon neutral. I'm not saying it is, but it can be. So let's find out. So for a policy perspective that emphasizes the purpose of monitoring and testing things, and we have already seen that within the European Union. One of the requirements within the directive is that carbon stocks cannot be depleted. One has to be observant of protected areas and make sure that key habitats from which biomass is sourced from are not actually sourced from protected conserved habitats.

So the European Union has worked on specific guidelines and requirements for biomass to be labeled renewable and to contribute to carbon neutrality or reduce carbon emissions. So I think that a key point for policy is the need for monitoring, and that applies to not just policy from a public policy perspective, but also policy from a private sector perspective, from the wood pellet industry. There is a strong commitment to sustainability in the US wood pellet industry. And I have seen that and I think it's a very good, very important step, trying to engage in terms of best management practices for forest management and adopting certification systems that try to assure the sustainability of those wood fibers.

So I think there's a lot of sincere, honest, goodwill, trying to make sure this industry is one that doesn't deplete forests. Nonetheless, as this study points out, there might be room for improvement, maybe improvement in terms of soil management, maybe keeping a closer eye on the ecological conditions in terms of dead trees and the functions that they serve. But again, from a policy perspective, I think monitoring, being dynamic, being open to make sure that we're balancing economic objectives with conservation objectives, are key.

Daniel Raimi: Yeah. Those are all great points and it makes me think of how important this is going to be, not just for our current situation, but for the decades ahead. If we look at different scenarios from the Intergovernmental Panel on Climate Change modeling teams, as well as a variety of other modeling teams, when you look at sort of ambitious climate scenarios, most of them have biomass playing an ever-increasing role in the global energy system. These issues of monitoring and tracking are likely to become even more important in the years and decades ahead.

Francisco X. Aguilar: Absolutely. And Daniel, one of the things that we found in this study, when you look at this fancy statistical models and you try to look at how these carbon stocks have changed as a function of A, B, C, D variables that you control in your fancy model, population and extreme weather events were the two variables in our model that carried much of the weight in terms of the changes associated with forest conditions in those wood baskets. So although the industry had an effect, it was population and extreme drought and wildfire that had even a bigger effect. And that has a big implication when it comes to the climate change conversation. We have wildfires and droughts that are becoming more prevalent and are getting worse by the year. Is this an industry, or is procuring biomass a way to try to make these forests more resilient to that? That's a big question. And I think in that sense, maybe an industry like this can help play a role in making more resilient energy systems and more resilient forest systems.

Daniel Raimi: Yeah. That's so interesting to think about the energy security implications of biomass and its unique benefits and vulnerabilities. That's so interesting. So Francisco, this has been so fascinating. I'd really encourage people to check out the study. It's got some great maps that are really fun to look at, and of course fancy equations that some of us love to dig into. But let's close it out now with the same question that we ask all of our guests at the end of each show, what's on the top of your literal or metaphorical reading stack? And I'll start with a quick recommendation of a very long, very interesting analysis that came out of Princeton University and a variety of other organizations called the “Net-Zero America Report.”

It's a study that lays out a variety of pathways for the US to reach net-zero emissions over the next several decades. And it's an incredibly detailed document; it's like 200 pages or something. And I actually made it through the whole thing. And some of the implications are just stunning in terms of the need to start building renewable energy, energy storage, energy transmission, carbon capture and sequestration facilities, and biomass energy sources. It's just a really great piece of work that helped me get a better intuition for the kind of scale of investment that's needed to really reach some of these ambitious climate goals. And we're going to try to get one of the authors of that report on the show sometime soon, but I encourage people to check it out. But how about you Francisco, what's on the top of your stack?

Francisco X. Aguilar: Oh gosh, so many things. I was going to say Hemingway.

Daniel Raimi: Hemingway counts.

Francisco X. Aguilar: It actually is. There was one article I read a couple of years ago back in 2009 titled “Wood Energy in America” by Daniel Richter and others. And it's a very short paper, it came out in Science, and it sort of details how important the utilization of wood for energy can be in terms of climate mitigation, resiliency, and supporting rural economies. As you may have heard Daniel, there are a number of mills that are closing down, demand for some types of papers are declining, and a lot of people that are living there are losing their livelihoods. So wood energy will not completely replace the closing down of a big pulp or paper mill, but it can help feel a void.

And in that sense I think we need to have a better understanding of the socioeconomic benefits of relying on bioenergy at a local level. For those perhaps interested in looking at a very good summary of the positive sides and the negative perspective when it comes to utilizing wood for energy, there was another article in Science published in 2007 that actually goes back to different scientists and how there's one group that says, "this is really bad," and another group that says "this is really good," and already you can tell I'm sort of in the middle. It can be; I just want to look at the data.

But I think it's very good for everyone. I am not the type of person who wants to ever become an influencer. I think we need more thinkers. I would like people to go and find this information from reputable journals and build your own opinion. Something that I love about RFF and this podcast is that you really try to create a diversity of thinkers, criticize, and look at different perspectives. Our listeners are joining us today to do that. Another quick thing, if you are interested in a little short video about how wood energy can be better and be more efficient, the United Nations Economic Commission for Europe put one out. It's titled “More Energy With Less Wood.” It's very cute, and it's very well-done, and it highlights the nuances of this energy system, and how it can be a good thing, but it also could have negative sides. So I think that's sort of some of the points that I would like to raise Daniel.

Daniel Raimi: Great. Yeah. Those all sound really interesting. And we'll make sure to have links to each of those including the video in our show notes. So once again, we'll say thank you so much Francisco Aguilar for coming on Resources Radio and sharing your work with us on the wood pellet industry.

Francisco X. Aguilar: Thanks for inviting me Daniel.

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