Active Energy’s controversial wood pellet plant in Lumberton on hold — indefinitely

Active Energy’s controversial wood pellet plant in Lumberton on hold — indefinitely

- in Environment, Top Story
Active Energy Renewable Power’s facility in Lumberton. (File photo: Lisa Sorg)

Maine regulators also have questions, are monitoring company’s trial wood pellet project in that state

Active Energy Renewable Power’s plans to manufacture wood pellets at its plant in Lumberton have been delayed indefinitely, prompting the company to launch a trial project in Maine.

In interview with the Carolina Journal, several Republican lawmakers blamed the NC Department of Environmental Quality for the company’s decision. However, a Policy Watch analysis of correspondence and permitting documents show that the delays were of Active Energy’s own doing, including contractual obligations and violations of state environmental law. 

DEQ issued a Notice of Violation to Active Energy on May 5 for constructing new equipment and changing the process design without state approval. At the time, Active Energy contended that emissions would be reduced as a result of the upgrades.

However, the company’s latest permit changes, submitted on April 26, do not appear to reduce emissions — but increase them.

Division of Air Quality spokeswoman Zaynab Nasif said the most recent application “appears to indicate an increase in potential emissions due to these control and process modifications.”

In addition, Nasif said the division “has found inconsistencies in the emissions estimates and has requested additional information, DAQ is waiting on the additional information from Active Energy.”

Facility-wide emissions estimates for six major pollutants are listed in the original permit application; the design changes would increase emissions for five, according the recent changes. The only decrease is nitrogen oxide, whose emissions would fall by roughly half.

The most significant upticks are for carbon monoxide, whose emissions are projected to increase 104%, from 7.9 tons per year to just over 16 tons. Particulate matter — essentially fine dust — would increase dramatically from 0.1 tons per year to 26.7 tons, according to the permit applications.

Hazardous air pollutants, classified by the EPA as those that can cause cancer and other serious health problems, also increased: 6,263 pounds a year, up from 4,963 pounds.

Policy Watch provided the comparison to Active Energy and asked the company to explain the discrepancy. Active Energy did not do so. Instead, a company spokesman John Williams issued an email statement saying, “Active Energy Group has submitted a minor amendment to our existing permit application to the Department of Environmental Quality that we believe meets all safety, emissions and health regulations. If our overall plan meets the specifications, the DEQ will allow us to operate. If the plan does not meet specifications, we will keep adjusting it until they do. We are committed to full compliance.”

The company has heralded CoalSwitch wood pellets as a game changer for utilities. The patented technology creates a pellet that can burned alongside coal or as a standalone fuel in traditional power plants with no loss of heat. Utilities that use CoalSwitch pellets wouldn’t have to spend millions of dollars to retrofit their facilities. And because the manufacturing process uses steam to explode the pellets to remove some contaminants, they burn cleaner than coal.

We have no emissions data from this type of process. We want to see it.” — Eric Kennedy, Maine Department of Environmental Protection

Original CoalSwitch tests conducted in Utah evaluated how well the pellets would perform at utility plants as compared with coal — but not for pollutants emitted during manufacturing of the pellets. Both North Carolina and Maine environmental regulators have questions about emissions from the CoalSwitch manufacturing process. 

Eric Kennedy, director of licensing and permitting for the Maine Department of Environmental Protection, told Policy Watch that the trial period could provide important “operational and emissions data. We have no emissions data from this type of process,” Kennedy said. “We want to see it.”

North Carolina could also use that data to help estimate emissions at the Lumberton facility.

In Maine, the CoalSwitch technology has been added to a recently permitted log extruding plant owned by Player Design. The company, which is also Active Energy’s engineering consultant in North Carolina, manufacturers fireplace logs. 

Active Energy had to find another location to manufacture the pellets to fulfill a contract with PacifiCorp, which plans to burn them at its Hunter Power plant in Utah, according to correspondence with investors.

The pellet manufacturing facility in Ashland, Maine, will be smaller than the one under construction in Lumberton, according to a description of the project provided to Maine environmental regulators. The trial period allows the facility to operate through July 31 and produce 1,000 oven-dried tons of CoalSwitch pellets.

Active Energy CEO Michael Rowan told investors in a letter on May 20 that the company hopes the Maine facility will be a second CoalSwitch plant, and eventually receive approval to produce up to 35,000 tons of pellets per year.

Documents show N.C. permit violation, application to Maine

North Carolina’s permitting process for the CoalSwitch plant began in the fall of 2019, when Active Energy originally contended it did not need an air permit. But after conversations between a company consultant and DEQ, Active Energy applied for its permit on Nov. 3, 2019, according to state documents. 

There were several information errors in the permit application. For example, it stated wastewater would be discharged into the Cape Fear River; the plant is 20 miles from that waterway. The permit was later corrected to say the Lumber River. And temperatures were listed in Fahrenheit, when they were actually in Celsius.

After the draft permit was finalized, the pandemic delayed public hearings for three months. Many Lumberton residents objected to the plant because of its potential harm on air and water quality in a predominantly low-income neighborhood and community of color. On Aug. 3, 2020, DEQ granted the permit.

 

Soon the company began the design revisions that ultimately prompted the notice of violation, according to a notice from the company posted last December on the London Stock Exchange news service. A engineering firm contracted by the company had analyzed the wood pellet process in regards to the air permit requirements, and subsequently changed the design. Construction was to begin in January 2021.

Within the last three months, the delays resulted from the company’s illegal construction of new equipment: 

  • March 29 — a DEQ air quality inspector found that Active Energy’s contractor, Player Holdings, apparently had built emissions control equipment onsite that was not listed in the original permit. 

The permit clearly states — at the top of Page 2 and in bold — that unless exempted, construction or modifications of new air pollution sources or air cleaning devices, must be permitted. However, DEQ did not cite the company for a violation at that time.

  • April 14 — While Maine regulators were evaluating the request, Active Energy and NC DEQ held a conference call. That’s when company representatives confirmed that two unpermitted control devices had been installed at the facility, according to state documents. 

In follow-up conversations with Player Holdings, DEQ learned that the pellet process flow design had also changed from what was originally submitted and reviewed in the permit application. 

  • April 22 — Active Energy confirmed they had stopped building any unpermitted devices.
  • April 26, the company submitted a modification to the original air permit to DEQ. The same day, Active Energy received permission from the State of Maine to conduct its trial project.
  • May 5, DEQ cited Active Energy for violating that permit. It did not assess any fines.

Active Energy has a troubled financial and legal history. The company was sued earlier this year for allegedly failing to pay two top employees during a financial rough spot. 

A CoalSwitch prototype plant was built in Utah, then dismantled and shipped to Lumberton In April 2019, ostensibly to be closer to “feedstock” — forests that could be cut and turned into wood pellets. Yet now the company is paying to ship those pellets from Maine back to Utah for PacifiCorp.

And according to a letter to investors, a saw mill and timber operation at the Lumberton plant are operating “at a lower production rate. As a result, the [Active Energy] Board now expects that revenues from the Company’s lumber and timber operations in the current year will be materially below prior expectations.”

This downturn is occurring even as lumber prices have hit record highs, up 250% over the past year.

Meanwhile, the North Carolina CoalSwitch plant is in limbo, according to an investor letter: “Active Energy is not currently able to provide a revised timetable for completion of the Lumberton Reference Plant.”