Owner of Georgia wood pellet plant – the world's largest – files for bankruptcy

The owner of a southern Georgia facility considered the world’s biggest producer of wood pellets used for fuel has filed for bankruptcy following months of uncertainty.

The announcement comes on the heels of criticism by environmental groups about Maryland-based Enviva’s Waycross plant, which they say has been releasing up to three times its permitted limit of hazardous pollutants, and ongoing scrutiny of the company’s claim that its production is a “carbon-neutral” process that does not contribute to climate change.

Enviva, the largest global industrial wood pellet supplier, announced Wednesday that it intends to cut about $1 billion of debt by restructuring agreements with creditors, including those that have invested heavily in new facilities.

“These agreements with our lenders and noteholders represent a significant milestone in the ongoing process to transform our business, as we focus on improving profitability, reducing costs, enhancing asset productivity, and optimizing our capital structure," company CEO Glenn Nunziata said in a statement. "We look forward to emerging from this process as a stronger company with a solid financial foundation and better positioned to be a leader in the future growth of the wood-based biomass industry."

The company said in the filing that its debts exceed $2.6 billion and that it owes $780 million to a Delaware bank, $348 million to a German energy company, as well as $353 million in bonds from local development authorities in Mississippi and Alabama.

Enviva operates 10 production facilities in the Southeast, where it turns readily available trees into pellets that are shipped overseas and burned to generate power.

The company bought the already-operating Waycross facility in 2020. It now produces nearly 1 million oven-dried tons of wood pellets per year there.

The bankruptcy follows months of turmoil as Enviva’s stock price plummeted by more than 90 percent, leading to warnings that the company could be delisted from the New York Stock Exchange.

“Enviva’s financial collapse demonstrates what we have argued for years: the biomass energy industry is not financially viable,” said Heather Hillaker, a senior attorney at the Southern Environmental Law Center. “Enviva’s bankruptcy wasn’t caused by just one or two bad contracts, it’s because of a failing industry model that pollutes communities, hurts the climate and is dependent on government handouts.”

More: Georgia has world's largest wood pellet factory, and state says its exceeding pollution limits

Late last year, environmental groups blasted Enviva for pollution released from its Waycross plant.

The federal Clean Air Act sets thresholds for 188 types of toxic emissions considered particularly dangerous for people and the environment. Limits for the Waycross facility are capped at 10 tons per year for individual hazardous pollutants and a combined 25 tons per year for all highly unhealthy emissions.

In a filing with the Georgia Environmental Protection Division’s Air Protection Branch, Enviva estimates that when running at capacity, the Waycross plant could release a maximum of nearly 45 tons per year of methanol, which is one of the regulated toxins, and total hazardous pollutants at a rate of 79 tons annually.

Methanol, also known as wood alcohol, is a poisonous substance that can be absorbed through the eyes, skin, lungs and digestive system, and overexposure can lead to death, according to the Centers for Disease Control and Prevention.

Enviva, meanwhile, positions itself as a frontline contributor in the fight against climate change.

“Wood-based bioenergy is part of an all-in renewables strategy to reduce carbon emissions and limit dependence on fossil fuels,” the company claims in its promotional material.

Advocates for the pellet industry point to research concluding that the production process is “carbon-neutral” because, with effective reforesting, there is no net loss in carbon-absorbing tree cover.

“These studies build on the scientific literature that consistently shows existing regulations are working as intended to ensure biomass is responsibly sourced in the U.S. Southeast to provide a positive impact on the climate and the environment,” Amandine Muskus, executive director at the U.S. Industrial Pellet Association, said last year in response to a study published in the journal Nature.

However, critics counter that those assessments don’t consider the full "value chain" of the pellets – a process that determines the true climate impact across the entire lifecycle of a product.

In the preproduction stage for pellets, trees are cut using machinery then trucked to a facility.

At the plant, the wood is reduced to sawdust – typically by machinery powered at least in part by fossil fuels – then formed into pellets.

In the case of the Waycross plant, the pellets are carried by trucks to the Port of Savannah, loaded on ships and transported to Europe, where they are burned as an alternative to coal.

Heat-trapping pollution that contributes to climate change is produced at each stage.

“It takes a very long time before you can sequester the amount of carbon that was emitted at the time of the (tree) harvest and the (related) combustion,” Hillaker explained. “So, if you look at this in a 150-year timeframe, maybe you'll get to some point of ‘carbon neutrality’ or ‘carbon parity.’ But we don't have 150 years.”

Over the past decade, wood pellet facilities in the Southeast have been hit with nearly 60 environmental or occupational citations and nearly $7 million in related fines, according to the SELC. Nearly two-dozen of those actions involved Enviva plants.

There have been no reported violations in Waycross since the company bought the facility, although the previous owners were fined $100,000 for infractions a decade ago.

John Deem covers climate change and the environment on the Georgia coast. He can be reached at [email protected]

This article originally appeared on Savannah Morning News: Wood pellet producer Enviva files for bankruptcy