[Editor’s note: This is the sixth of a multi-part series on the Enviva Southampton plant.]

COURTLAND

No new, permanent jobs are expected to result from Enviva’s proposed $75.7 million expansion in Southampton County.

According to a copy of Southampton County’s performance agreement with Enviva — which Enviva and county representatives signed in May 2019 — the company “proposes that the project will result in an investment in equipment of not less than seventy-five million seven hundred thousand dollars ($75,700,000) within the performance period… .” The “performance period” is five years. In return, the county proposes to provide an annual economic incentive grant to Enviva for those five years, equivalent to a 50 percent reduction in the plant’s machinery and tools taxes. The value of this incentive grant is projected to total $2,725,200 at the end of the five-year period. This agreement is signed by Chris Tynan, Enviva’s vice president of expansion projects; Dallas Jones, Chairman of the county’s Board of Supervisors; and A. Ashburn Cutchin III, chairman of the county’s Industrial Development Authority.

An “investment in equipment of not less than” $75.7 million would seem to indicate that the expansion of the Southampton County plant will consist solely of new equipment, including new pollution controls, rather than the creation of any new, permanent jobs. Southampton County Administrator Mike Johnson confirmed this to be an accurate reading of the grant agreement, and that the benefit to the county would consist solely of new taxable machinery assets.

When asked about Enviva Southampton’s economic impact on the county to date, he said Enviva has been among the county’s largest taxpayers each year. In fiscal year 2019, tax revenues the county received from Enviva accounted for almost 4 percent of the total collected by the county in general property tax revenues.

“That’s equivalent to almost 6 cents on the county’s real estate tax rate,” Johnson said.

When asked about the lack of new, permanent jobs related to the expansion, Patrick Anderson, legal counsel for the Environmental Integrity Project, said, “That’s somewhat surprising to me. They are adding a fair amount of new equipment so I would have expected at least some new staff, but these plants do seem to be pretty automated, with a lot of staff monitoring and adjusting operations from control rooms.”

Anderson, as previously reported, had sent a letter to Gov. Ralph Northam in April of last year on behalf of the EIP and other environmental groups, alleging that Enviva Southampton was over-polluting. This letter was one of several sources of information the Virginia Department of Environmental Quality relied on when sending a letter to Enviva Southampton in June 2018 asking for site-specific testing for hazardous air pollutants (HAPs) and volatile organic compounds (VOCs).

Enviva’s expansions in other localities seem to mostly involve adding duplicates of existing units, such as a second wood dryer, Anderson explained, “so perhaps the staff that runs the existing wood dryer will be capable of running both.”

But as to whether this is atypical for the wood pellet industry or something that might suggest the focus of this expansion is more on pollution mitigation than actually expanding production, he couldn’t say.

“Unfortunately, I don’t really have jobs numbers from other recent expansions in the industry, so I’m not sure how it compares to other companies,” Anderson said.

He added that the company Drax — which purchases much of Enviva’s feedstock and operates three of its own wood pellet plants, two in Louisiana and one in Mississippi — recently announced those plants would be expanding.

“I haven’t seen anything about new jobs [in those cases], however,” he said.

Franklin City Manager Amanda Jarratt had told The Tidewater News in December last year — when she had been serving in her previous capacity as president and CEO of Franklin-Southampton Economic Development Inc. — that FSEDI was expecting about 300 jobs related to construction during the expansion process, as well as some retraining of the current workforce.

Barry Porter, who represents the Franklin District (in which the plant is located) on Southampton County’s Board of Supervisors, said that when he first heard of Enviva’s expansion plans in December 2018, he had considered it “a very positive announcement” because “it showed they were more committed to the area and were going to make a significant investment, which was going to increase our tax base.”

Porter, who was first elected to the Board in November 2011 and took office in 2012 before the Enviva Southampton plant began operations, recalled that Enviva had placed money into a bank account under the control of Southampton County for the purpose of extending a natural gas pipeline up General Thomas Highway to the plant’s location on Rose Valley Road. This, he recalled, would have been used to power machinery for drying softwood. These plans fell through when, in 2013, Enviva decided to process mostly hardwood at the Southampton facility for the reasons reported in the Wednesday, July 23 edition of The Tidewater News. Porter said that Enviva, following its December 2018 expansion announcement, requested the release of these funds. Johnson confirmed that as of May 22, 2019, Enviva and the county reached an agreement to release these funds, which as of that date totaled $428,913.46, so that the Southampton plant can finally complete the proposed pipeline now that the plan is to increase its production of softwood. The county’s 2019 gas line reimbursement agreement with Enviva specifies that Columbia Gas of Virginia will install roughly 4,240 feet of mainline along Rose Valley Road and Enviva Way to serve Enviva at the proposed meter location just west of the end of Enviva Way.

The cost of clean air

When asked to provide a breakdown of the $75.7 million expansion in terms of what would be spent on new pollution controls versus what would be spent on expanding production, Maria Moreno, spokeswoman with Enviva’s corporate office, had said she did not believe this could be broken down, claiming that one was related to the other. However, consulting engineer Joe Sullivan’s 2013 letter to the DEQ on behalf of Enviva Southampton — which was last referenced in the Wednesday, Aug. 7 edition of The Tidewater News — had included cost estimates when requesting that Enviva Southampton’s air quality permit issued in 2012 be revised to no longer include a regenerative thermal oxidizer (RTO) requirement for pollution control. This letter had claimed, “The economic impacts associated with RTO control are clearly cost prohibitive.”

To support this claim, Sullivan had provided estimates from Enviva for the purchase, installation and annual operation of three RTO units. These estimates indicate the company would have needed to invest roughly $12.2 million upfront to purchase and install the three units, plus an additional $4.7 million each year to power and maintain the devices.

This would have equated to an investment of roughly $35.8 million over a five-year period had Enviva chosen to purchase and install the three RTOs in 2013 rather than switch to hardwood and eliminate the RTO requirement. This estimate — which does not include any additional equipment other than the RTOs, or any planned increase in production — is already nearly half of the proposed $75.7 million expansion announced in 2018.

The $75.7 million expansion will also be over a five-year period, as indicated in Enviva Southampton’s economic incentive agreement with Southampton County. Therefore, assuming the 2013 cost estimates were and still are accurate — and given that the proposed DEQ permit for the $75.7 million expansion calls for not three but four RTOs, plus additional pollution control equipment — it appears likely that more than half of the $75.7 million Enviva plans to spend in Southampton County over the next five years will go toward pollution control rather than increasing production.

Anderson, however, advised caution in using Enviva Southampton’s 2013 cost estimates to predict what the company will spend on pollution control during the expansion, which is slated to begin once Enviva Southampton’s 2019 DEQ permit is finalized. The attorney explained that in situations like the one from 2013, where Enviva is arguing against the necessity of pollution controls, it is almost always in the company’s interest to inflate pollution control costs when communicating with the DEQ. That agency’s decision on whether to require a plant to implement pollution controls, Anderson said, “frequently comes down to cost.”

That said, a 2014 air quality permit application for the expansion of an Enviva plant in Hamlet, North Carolina, indicates that at least some of the company’s 2013 cost estimates for Enviva Southampton are comparable to what was submitted to North Carolina’s DEQ for the Enviva Hamlet expansion.

In 2013, Sullivan had estimated the cost of installing an RTO on Enviva Southampton’s hammermills to be about $4.16 million for purchase and installation, plus an additional $1.53 million annually for operating costs. By comparison, according to the North Carolina DEQ application, Enviva Hamlet estimated the cost of an RTO on that facility’s hammermills to be about $4.26 million for the initial purchase, installation and startup, plus another $1.58 annually in operating costs. Additional price comparisons between Enviva Southampton’s 2013 figures and Enviva Hamlet’s 2014 figures were not possible, as the other pollution controls planned for Enviva Hamlet in 2014 are different than what was priced out for Southampton in 2013.

Even if more than half of the $75.7 million is spent on pollution control, there may still be some increased production. At the Virginia DEQ’s public information meeting on Tuesday evening, Stanley Faggert, a DEQ air permit coordinator, said that Enviva’s proposed expansion included plans to increase production from 535,000 tons of wood pellets per year to about 781,000 tons per year and increasing the plant’s use of softwood from 10 percent to 80 percent. To do this, in addition to installing the aforementioned pollution controls, Enviva plans to install a second wood dryer and green wood hammermills. The green wood hammermills, he said, would take the place of a machine that is used to tear up logs before they are loaded into the wood dryer.

Faggert, however, said the DEQ was uncertain whether Enviva would follow through with its plans for a second wood dryer. When asked about this uncertainty, he explained that the proposed air quality permit for the expansion does not require Enviva to install a second dryer. The permit, he said, requires pollution controls to be implemented on the plant’s existing processes. One of the RTOs would be installed on the new dryer and green hammermills, Faggert said, with the other three going on the existing dryer, hammermills and pellet cooler.

“If they [Enviva Southampton] decide in based on market conditions in three to six months that maybe they don’t really need to go to 781 [tons per year] or can go without that second dryer, that is their decision to make,” he said. “We don’t try to drive those kind of decisions.”

Heather Hillaker, an attorney with the Southern Environmental Law Center, also asked at this meeting if Enviva would be allowed to increase production before completing the installation of the new pollution controls, to which Faggert replied that they would not. He added that while the new pollution controls are projected to decrease HAP and VOC emissions, the devices themselves emit some pollution and are projected to cause the facility’s carbon monoxide, sulfur dioxide, particulate matter (PM 10) and nitrogen oxides to increase, which is why these emissions are allowed at a higher level in the draft permit than the current limits.

The DEQ’s timeline for issuing Enviva a new permit for the expansion, Faggert said, is dependent on how many responses the agency receives during the public comment period, which will be from Aug. 12 through Sept. 27 of this year. The DEQ’s public hearing for oral comments will be Sept. 12 at Camp Community College.

Correction:

In the story titled “No new jobs from Enviva expansion?” published on Sunday, Aug. 11, it was reported that more than half of Enviva’s $75.7 million expansion in Southampton County was likely to be spent on pollution control. This was based on upfront and annual cost estimates prepared by consulting engineer Joe Sullivan for Enviva Southampton in 2013, multiplying the annual cost over a five-year period.

While Southampton County’s economic incentive grant, equivalent to a 50-percent reduction in machinery and tools taxes, is for a five-year period, the county’s performance agreement with Enviva actually specifies that the $75.7 million expansion is to be completed within 36 months (three years) from when it was signed in May 2019, assuming no unforeseen delays. When Sullivan’s 2013 cost estimates for three regenerative thermal oxidizers (RTOs) are applied over a three-year period rather than five, the total cost would be $14,166,183, or roughly 18.7 percent of the proposed $75.7 million expansion. Factoring in a fourth RTO with a cost of $5,638,380 and a $10,530,654 cost for a second wet electrostatic precipitator (one of the other pollution controls Enviva will be required to install as part of  its expansion), this would bring the total pollution control component of the three-year investment at Southampton to $30,335,217, which would be about 40 percent of the $75.7 million total investment. This is based on what Enviva reported as the upfront and annual costs of a wet ESP for a plant in Hamlet, North Carolina in 2014, with the annual costs multiplied over three years.

According to the Virginia Department of Environmental Quality, Enviva Southampton will also be required to install two wet scrubbers as part of its expansion. The Tidewater News has no cost estimates for wet scrubbers, and so the amount of the $75.7 million devoted to pollution control may still be close to 50 percent. DEQ representatives have confirmed that Enviva would be required to add pollution controls whether or not the plant was expanding, and, as was reported on Sunday, have cast doubt on whether Enviva will follow through with its plans to install a second wood dryer and/or actually increase production to 781 tons per year.