As Financial Turmoil Threatens Plans for an Alabama Wood Pellet Plant, Advocates Question Its Climate and Community Benefits

EPES, Ala.—Portia Shepherd said “it’s a God thing.”

When she learned that Enviva, an international wood pellet company, is facing a financial crisis that may impact its plans in Alabama, she was thrilled.

Shepherd is the founder of BlackBelt Women Rising, a nonprofit committed to environmental justice in the community. She’s been a vocal opponent of Enviva’s planned wood pellet plant in Epes, Alabama, a majority-Black town of just a few hundred people. 

In recent months, financial turmoil at the biomass company has begun to cast doubt on the future of Enviva’s investments in the state. In its quarterly earnings report, the company disclosed a crisis, writing that “conditions and events in the aggregate raise substantial doubt regarding the company’s ability to continue as a going concern.”

The company’s expansion into the U.S. Southeast, fueled by European demand for an allegedly “sustainable” energy source, had left marginalized communities holding onto hope for jobs and economic prosperity. 

Public officials who attended the company’s June groundbreaking in Epes have not responded to requests for comment on the revelations concerning Enviva’s pressing financial woes. 

Shepherd, though, knows exactly where she stands. 

“God knew this was going to be bad, so maybe He’s blocking it,” she said. 

Burning Wood to Save the Planet?

Enviva calls itself the world’s largest producer of wood pellets for power generation, what it claims is a “renewable and sustainable energy source.” 

Peer-reviewed studies, however, have shown that producing energy by burning wood pellets emits more carbon dioxide emissions than coal, leading environmentalists to accuse the company of greenwashing. 

Scot Quaranda, communications director for environmental nonprofit Dogwood Alliance, said that while words like biomass, a catch-all term that includes fuels like wood pellets, may sound confusing or complicated, at its most fundamental, it’s fairly simple.

“Let’s burn down trees to save the planet,” Quaranda said. “That’s essentially the business model. It’s like we’re going back to caveman days.”

Wood-pellet fueled energy production is anything but the “planet savior” Enviva claims it is, Quaranda explained. 

“Trees are literally our best defense against climate change, and they want to cut it down—to burn it—and supposedly say that it’s good for the climate,” he said. “There’s nothing about it that makes any sense at all.” 

A Plan for Alabama

Despite a concerted effort by environmentalists to debunk Enviva’s claims about environmental benefits, though, the company had expanded with the support of capital investments from moguls like Jeff Ubben, an ExxonMobil board member often labeled as an “activist investor” who is keen on environmental issues. 

Public officials and economic development staffers in southern states largely welcomed Enviva’s expansion with open arms, even providing public money to support the private company’s planned operations. 

In Alabama, Gov. Kay Ivey and other public officials attended the groundbreaking of Enviva’s planned Epes plant, which the company said would be not just the largest plant in its portfolio but the largest in the world, with the capacity to produce more than a million metric tons of wood pellets per year. The plant, the company promised, would create 100 direct jobs and 250 indirect jobs, with an expected opening in mid-2024.

“Make no mistake about it, this is a very big day for West Alabama,” Ivey said at the groundbreaking. “Enviva’s commitment here at the Port of Epes will breathe new life into this community and region as a whole.”

In 2020, Ivey awarded $750,000 in funding from the U.S. Department of Housing and Urban Development to help “improve infrastructure necessary for Enviva,” namely water and sewer infrastructure at its Epes plant location. 

Portia Shepherd said that when she initially heard about the plant coming to Epes, she was optimistic. At the time, she had never heard of a wood pellet.

It was when she began to do her own research on wood pellet production that she began to understand that the benefits Enviva had promised were only one small part of a larger, grimmer story, Shepherd said. 

She connected with residents in communities where wood pellet plants, including Enviva’s, were already located. 

“Some of these people are really, really sick,” Shepherd said. “And a lot of the people in Epes haven’t even been told about these risks.”

Pollution caused by wood pellet production can lead to increased health risks, including cardiovascular disease and mortality, environmental groups have warned. 

Shepherd also traveled to Washington D.C. to attend an event held by the Environmental Protection Agency about the biomass industry and its impacts. To help her better understand the mechanics of the discussions, she brought along a guest: her former ninth-grade science teacher. 

She said they talked to each other after every session, reflecting on the testimonies of those already coping with truck traffic, noise pollution and dust emissions from wood pellet facilities. 

What struck her teacher, Shepherd said, was that communities in which companies like Enviva construct wood pellet plants are places with existing environmental and economic challenges.

That dynamic is playing out in Epes. Ninety-eight  percent of the U.S. population has a lower risk of developing cancer during their lifetime from air pollutants than residents living within one mile of the site of the Epes plant, according to EPA data. 

Operating a wood pellet plant in the community, then, will only compound an existing tragedy in the name of job creation, Shepherd said. 

“I am a huge supporter of the Black Belt coming out on top, but not if it’s going to kill me,” Shepherd said. “Who’s even going to be there to enjoy any economic impact?”

Shepherd said she’s particularly enraged by the state’s use of federal funds to build water and sewer infrastructure for a large corporation when residents in the Black Belt have fought for decades to secure adequate residential sanitation systems. 

In 2017, Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights, toured Black Belt communities during a U.S. visit and noted the lack of adequate sewage treatment infrastructure as a major concern.

“I have seen and heard a lot over the past two weeks… I saw sewage-filled yards in states where governments don’t consider sanitation facilities to be their responsibility,” Alston said after the visit. 

A photograph taken in the Black Belt of a playground flooded with sewage spurred President Biden to invest $10 million from the 2021 infrastructure law to help address the problem. 

Just this month, a peer-reviewed study suggested that groundwater in Black Belt communities may be contaminated by poor sewage infrastructure, leading to increased pathogens in the stool samples of children who rely on well water for drinking. 

Addressing those issues—individuals’ ability to use a working bathroom—should be the government’s priority, Shepherd said, not investing in water and sewer infrastructure for a super-polluting international corporation. 

“You’ve got people begging the government to help fix their water problems who actually pay taxes, and they can’t even get the same support a company can when they want to flush their toilet,” she said. 

The Alabama Department of Economic and Community Affairs, the state agency that administered the grant, did not respond to questions about the future of the plant or its ability to claw back grant funds if promised jobs don’t come to fruition. 

For Quaranda, Enviva’s expansion in the U.S. South should be thought of in global terms, too. The wood pellet market in the country is largely fueled by demand from European Union countries that use biomass to appear more environmentally friendly “on paper,” he explained. 

“The back of the envelope calculation was—if you cut down a tree and burn it and plant another tree in its place, that’s carbon neutral,” Quaranda said. “But that defies science and it defies logic.” 

The business plan is simple—companies like Enviva cut down large swathes of forests in the U.S. Southeast, where supply is bountiful and regulation is light, then grind up the trees at plants like the one proposed at Epes. The resulting wood pellets would then be transported down local waterways to ports in Southern cities like Mobile, and eventually shipped to European buyers for energy production and heating. 

European exploitation of marginalized communities in the U.S. certainly isn’t without precedent, Quaranda said, and its history provides an informative contextual backdrop for what’s happening today. 

“It fits the model,” he said. “It’s like colonialism never died.”

But the business model couldn’t persist without the complicity of leaders in the U.S., Quaranda emphasized. 

“It’s the county commissioners. It’s your governor showing up to tout this facility,” he said. “It’s the economic developers. But do these folks care? No. They’ll say we’re bringing jobs, but they’re never going to put plants like this in their own backyards.”

Catherine Coleman Flowers, founding director of the Center for Rural Enterprise and Environmental Justice, said that she, too, thinks it’s wise to consider environmental justice issues from a global perspective. 

Flowers pointed to “cancer alley,” an area of the Gulf South with elevated cancer risks due to industrial pollution, as another example of the way industry impacts marginalized communities without hesitation. 

“Why do we care so little about our own nation that we will, for a dollar, for profit, we will allow these companies to come in and defile our natural resources and kill our people with pollution?” Flowers asked. “It doesn’t make any sense. Whether it’s cancer alley or the Black Belt, whether they’re exploiting minerals or cutting down trees or taking water on the African continent. It’s the same thing. It’s happening around the world.”

As we move toward truly sustainable energy production, Flowers said, shifting these economic paradigms will be critical to ensuring a just transition. 

Understanding and responding to the needs of residents in marginalized communities, not just to corporate recruiters, is key to achieving that goal, Flowers said. 

“Don’t ignore the the African-American communities that have been there all the time asking for infrastructure and asking to get off septic tanks because they’re failing, and they’re failing everywhere,” Flowers said. “And one of the factors is climate change: they’re not designed for resilience. So that is a failed economic paradigm, where they will ignore the needs of the community and put in place infrastructure for industry that may or may not remain, but the people that’s going to be there all the time are left behind. That’s not fair.”

Things Go South

Enviva’s financial crisis crystallized in a third-quarter Security and Exchange Commission filing in which the company disclosed that, due to “operational challenges” and “market prices at levels unsupportive of creating margin,” it may be in breach of of credit terms as soon as the end of the year. Enviva’s stock has declined steadily throughout the year, from a high of $51 in January to just over $1 a share at the time of publication. 

The company’s disclosure sent ripples through the financial world, stoked further by news that board member Ubben, the “activist” Exxon board member, plans to shut down Inclusive Capital, which held significant investments in Enviva, according to SEC filings. 

Well before the quarterly report, though, blood was already in the water. 

In May 2023, the company’s board chose to eliminate its dividend because of “substantial doubt about our ability to continue” because of potential noncompliance with credit requirements. 

In September, a stockholder filed a class action suit alleging that Enviva executives made “false statements” that were “premised on misrepresentations of existing fact,” according to court filings. These misrepresentations, the plaintiffs alleged, violated federal law and led to shareholder losses. 

Securities firms were actively seeking additional shareholders to join the suit as recently as November. 

That month’s quarterly report, then, was only a confirmation of what many already suspected—Enviva was in deep financial trouble. 

The slow drip of bad news for the biomass giant was a stark change from previous years, when global circumstances like Putin’s invasion of Ukraine drove wood pellet prices up, leading to a reported “windfall” for companies like Enviva. But times were changing. 

Hope for the Future?

Enviva has not responded to Inside Climate News’ requests for comment on the future of the company’s Alabama plant. 

In a press release announcing its third-quarter results, the company noted that construction of Epps “is progressing well” and did not revise its anticipated date to start operations. Its full SEC filing was much less bullish, however, noting a shortage in cash slated for the Alabama and Mississippi construction projects.

“This restricted cash is not sufficient to fund the full construction costs of these projects,” the filing said.

The company also wrote that it “is evaluating” delaying the company’s proposed plant in Bond, Mississippi, by up to 12 months.

Various elected officials and economic development staffers present at the Epes groundbreaking did not respond to requests for comment on Enviva’s financial troubles or the future of the plant.

Sen. Bobby Singleton, who represents the area in the state legislature, said in a phone call Monday that he was unaware of any financial issues at Enviva but would look into it. A day later, in a brief conversation, Singleton said he still hasn’t learned more.  

For Shepherd, any obstacle placed in Enviva’s way on its road to cutting down Alabama’s trees is a blessing. She said that she believes her community was sold a bill of goods when it comes to the Epes plant. 

Any possibility that its doors will never open, she said, is welcome news to her. 

“There’s always hope,” she said.