Energy Transition: In Conversation, with John Keppler, Chairman & Chief Executive Officer, Enviva
Ahead of November’s Energy Transition Europe Summit, we caught up with John Keppler to get his vision for a sustainable future. Over the past decade, Mr. Keppler has been responsible for Enviva’s strategic direction and leading the company’s growth from a startup to the world’s largest producer of woody biomass fuels.
John, In a post-Covid era, where many countries have successfully gone ‘coal free,’ how do you evaluate the future of biomass as an energy provider?
It’s been remarkable to observe the effectiveness of the transition from coal to renewables, especially against the COVID-19 backdrop. For instance, the United Kingdom recently completed a record-breaking 67-day period without burning coal. That’s the longest the UK has been without coal since the dawn of the industrial revolution and it could not have been possible without biomass, which delivered 11% of the electricity on average, and managed peak demand at much higher generation rates. That’s because biomass is an important, dependable and dispatchable baseload renewable fuel that complements the intermittency of wind and solar and further supports the transition from traditional to new energy.
So, with that lens, we’re pretty bullish on the opportunity for biomass as an essential generating resource to continue to be adopted for system-critical power generating and Combined Heat and Power (CHP) assets around the world.
Looking ahead, there is really no way to effectively address climate change or get to ‘Net Zero’ by 2050 without a radical rethink on how we reduce the use of fossil fuels. Looking at recommendations from the United Nations’ Intergovernmental Panel on Climate Change (IPCC), every pathway to meeting the decarbonization goals that limit the impact of global warming includes wood biomass, and most nations agree. For example, the Netherlands Environmental Assessment Agency, after an extensive review process that involved joint fact-finding with 150 non-governmental organizations, research institutes, businesses, and other stakeholders, and testing its arguments against more than 400 scientific studies and reports, concluded in a report published in May that the country will not be able to achieve its climate reduction targets without substantially increasing biomass utilization and that a significant role for biomass is a “prerequisite” for a climate-neutral circular economy.
Enviva is one of very few companies today that has the track record, the resources, and the know-how operationally to successfully deliver this practical solution to customers around the globe.
What has the impact of the pandemic been upon your operations and growth more generally?
COVID-19 has clearly had a vast impact on the energy sector, affecting everything from the price of crude oil and what we pay at the pump to how we use electricity and think about future investments in energy infrastructure.
Fortunately, Enviva has been largely unaffected by the impact of the COVID-19 pandemic. That’s not to say we haven’t faced challenges, but we are very proud of what we have been able to do to keep our people healthy and safe. This has enabled us to keep our plants and ports running 24-7 and ensuring a safe, efficient and effective supply of renewable energy to our customers across the globe.
On the growth and demand side, our company conducts business through long-term off-take contracts with fixed volumes and pricing that have not been impacted by volatile commodity prices. And as we have reported on our quarterly earnings calls, to date, all Enviva facilities have been fully operational without any material impact to production, operations, or shipping.
But is biomass really carbon neutral? What about the carbon debt argument?
The carbon debt argument relies on flawed assumptions about stand-level carbon accounting and is therefore misleading. But don’t just take my word for it. I’d like to refer you to a recently published report by IEA Bioenergy, which is an international contingent of respected scientists and academics basing their work on hard data. The report states that “managed forests usually consist of a mosaic of stands of different ages, which are harvested at different times to obtain a continuous flow of wood for the forest industry. The harvest/replanting cycle maintains the forest in an active stage of growth, thus maintaining the forest carbon sequestration. Due to the staggered harvest, carbon losses in harvested stands are balanced by carbon gains (growth) in other stands, so across the whole forest the carbon stock in managed forests is roughly stable.”
IEA Bioenergy also dispelled the myth of the so-called “carbon loophole,” finding that “under the agreed approach for preparation of national greenhouse gas inventories, countries report harvest of forest for any purpose, including bioenergy, as a CO2 emission in the land use sector” and that “CO2 emissions from combustion of biomass for energy are not counted in the energy sector to avoid double counting with the land use sector.”
In terms of reducing greenhouse gas emissions, at Enviva we ensure that stack emissions from biomass are offset by forest growth in the source landscape, which are the areas in the U.S. Southeast that have increasing forest stocks. This is backed by data showing that there is continued forest regrowth and sequestration across 98% of the landscape while only 2% of the forest area is being harvested annually.
And this is not a new trend. U.S. Forest Service inventory data, dating back to 1953, show that increased demand for forest products in the U.S. Southeast has resulted in more, not less, forest inventory in the region year over year. In fact, since 1953, forest inventories in the region have more than doubled while the region has continued to be an important wood basket, providing 12% of the timber used globally each year while comprising just 2% of the world’s forest area. In addition, the forest growth-to-drain ratio for the U.S. Southeast overall is about 1.7, which means that for every ton of wood that is harvested each year, almost two tons grow back in that same year.
Looking ahead, we expect the role of biomass in the energy system to evolve as we look to exponentially reduce carbon emissions globally. Good biomass offers a low-carbon replacement to coal- and gas-fired furnaces in heavy industries such as steel, aluminium, and cement. What’s even more exciting is the possibility of teaming bioenergy with carbon capture and storage – known as BECCS – to create negative emissions technology. If we cannot totally decarbonize sectors of our economy by 2050, then it is critical we develop carbon-negative solutions to offset the emissions that remain.
And when we think of even more future-oriented solutions, such as the development of the Hydrogen Economy, biomass will still have an important role to play. The most obvious is to use biomass directly to create hydrogen through gasification and thereby avoid carbon emissions that are associated with natural gas (methane) without carbon capture. Even further down the road, when surplus solar and wind could potentially be used to create hydrogen at scale, there is an exciting opportunity to produce aviation and other fuels with carbon capture of biomass that could result in even fewer net greenhouse gas emissions.
How do you balance the need for enormous afforestation with the development of biomass?
Interesting question. This is one we get a lot. Enviva relies on the forest – in our case, in the U.S. Southeast. The forests we source from are grown by thousands of private landowners, primarily to produce timber for construction. We buy low-grade wood that is a by-product of a traditional timber harvest– such as branches, limbs, treetops, diseased/warped trees, and sawmill residues, etc. – and turn that material into wood pellets that can generate a dependable and renewable source of power and heat.
It may feel counterintuitive, but the stronger the demand is for forest products, the more forests grow. This is because people invest in forests when there are markets for forest products. Over time, we believe that these market incentives are the most important part of afforestation. Data in the U.S. Southeast prove this out. As I’ve mentioned, we are seeing continued growth and carbon sequestration across 98% of the landscape in the U.S. Southeast, and over the last 25 years, these forests have grown by more than 40%. This is due in part to the fact that sustainable biomass provides a low-value commodity market to incentivize forest landowners to continue to grow more trees while deterring landowners from converting their property to non-forest use, such as agriculture or commercial development.
Clearly though, we need to ensure that sensitive forest land remains protected within the wider landscape. That’s why we’ve developed our Responsible Sourcing Policy (RSP) to ensure we do not source from areas designated as having High Conservation Value (HCV), and it’s also why we created our industry-leading Track & Trace® technology, which provides publicly available data on where all of our wood is sourced. Our most recent Track & Trace® data show that between 2011 and 2019, forest inventory in our supply base increased by more than 300 million tons.
Does CCS / Offsetting come into your strategy, and if so, how?
Carbon capture and storage can be a potentially large driver of growth for the bioenergy industry because BECCS will create negative emissions, which are vital for meeting Net Zero targets There are some sectors of our economy– for example, steel, aluminium, cement, and aviation – that will be impossible to totally decarbonize by 2050; as a result, we need solutions to take some of the carbon out of the atmosphere altogether. BECCS is one of the few options on the table for doing this. Having a dependable supply chain of sustainable biomass will be critical to making BECCS a global reality. In fact, we are already speaking to customers about how we can support them in achieving this goal.
How wide is the ‘scope’ on biomass as an energy source – what does the future look like for the industry?
We believe our future is very promising and that we will continue to grow. Take the example of converting currently operating coal plants: a major benefit of using wood pellets for energy is that we can recycle our existing energy infrastructure. The potential scope is huge. When you convert a coal plant, you keep the boilers, the grid connection, and the transport links, and provide for continued employment and community support. In addition to lowering costs and preserving jobs, converting existing infrastructure can deliver change in coal-dependent countries potentially very quickly and at scale while cutting carbon emissions and minimizing environmental impact from new infrastructure development and build-out.
Wood pellets are also a great alternative in industrial and CHP applications. Or as I referenced above, as a sustainable, carbon-neutral replacement to coal- and gas-fired furnaces in heavy industries such as steel, aluminium, and cement.
Our business is all about fostering a global supply chain that utilizes a sustainable and renewable resource that we can all rely on while contributing to the global fight against climate change. We are proud to support our customers in reducing carbon emissions and mitigating climate change.
Kind regards,
Owen
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