Tracking Economic and Environmental Indicators of Exported Wood Pellets to the United Kingdom from the Southern United States: Lessons for Policy?

This study estimates the abatement cost of greenhouse gas (GHG) emissions for a unit of electricity generated in the UK from wood pellets imported from Southern USA. We assumed that only pulpwood obtained from loblolly pine (Pinus taeda) plantations was used for manufacturing exported wood pellets. The use of imported wood pellets for electricity generation could save at least 69.9 % of GHG emissions relative to coal-based electricity in the UK. The average unit production cost of electricity generated from imported wood pellets (US$222.3 MWh−1) was higher by 30.0 % than the unit production cost of electricity generated from coal (US$171.0 MWh−1) without any price support. In the presence of payments from the established price support mechanisms of Renewable Obligation Certificates (ROCs) and Levy Exemption Certificates (LECs), the unit production cost of electricity generated from imported wood pellets (US$142.9 MWh−1) was lower by about 16.0 % than the unit production cost of electricity generated from coal. Policy makers should consider 1 MWh of electricity generated from imported wood pellets equivalent to 0.58 ROCs or 0.71 ROCs in presence and absence of payments from LECs, respectively. This will ensure zero abatement cost and lead to economic efficiency in reducing GHG emissions. However, a more in-depth analysis focusing on the market risks for power-generating companies and other wood pellet supply chains is required before modifying existing equivalency factors for ensuring continuous use of imported wood pellets for displacing coal-based electricity in the UK.