by Scott Quaranda

The rapidly expanding wood pellet industry, bolstered by massive government subsidies in Europe, as well as economic development subsidies here in the U.S. has been touted as a boon for the Southern United States.

A new report, however, prepared for Dogwood Alliance by Key-Log Economics shows that the costs likely outweigh any perceived, short-term benefits and urges decision makers on both sides of the Atlantic to stop supporting the rapid buildout of the wood pellet market.

“Wood Pellet Manufacturing: Risks for the Economy of the US South,” explores two major themes: the damage wood pellet production could have on the long-term viability of higher quality wood product manufacturing and markets and the long-term consequences to the services and amenities our forest provide rural and coastal Southern communities.

“All we hear about are the economic benefits from the wood pellet industry, and no one seems to want to talk about the true costs of this industry,” said Danna Smith, executive director of Dogwood Alliance.

“Our rural communities and broader regional economy are bearing the brunt of the long-term costs. It is pretty clear that growing the wood pellet export market is not a sound economic development strategy for the rural South in the 21st-century.”

Highlights from the report include switching from coal to wood pellets as fuel for generating electricity is likely to accelerate climate change with enormous economic costs that would disproportionately impact our coastal communities.

The increased degradation of forests and the natural services they provide could significantly limit a community’s ability to attract new businesses and residents, one of the most important factors affecting economic growth across the South.

If the rapid build-out of wood pellet manufacturing is allowed to continue to expand without limits, it will likely negatively impact the region’s traditional, local lumber, panel and paper manufacturing industries, which create more jobs than wood pellet exports.

Increased logging and the conversion of more natural forests to plantations could harm long-term timber productivity.

All signs point to wood pellet exports being a boom-bust market which will leave rural communities with stranded assets, denuded forests and diminished job opportunities when the massive government subsidies in Europe come to an end.

Standing forests provide critical ecosystem services, supplying coastal communities with natural storm protection and abundant and clean drinking water. Accelerated logging for wood pellet exports threatens to degrade these economically valuable services, with potentially substantial costs borne by the public.

“This is a classic economic justice issue where a few are benefiting at the expense of many.” Smith said. “It’s time to put the brakes on funneling hard-earned taxpayer dollars into the pockets of wood pellet manufacturing companies and European utilities.”

Overall, the report cautions policy-makers and financial institutions from investing in an industry so reliant on subsidies when other economic development strategies and investments are far more likely to deliver long-lasting positive economic benefits.

Investment should be focused on expanding, restoring and paying for ecosystem services and in development of tourism, traditional wood products, manufacturing, true renewables and tech.

Scott Quaranda is the communications director for the Dogwood Alliance. Contact him at scot@dogwoodalliance.org or www.dogwoodalliance.org.