Clean Power from the Americas to Europe

   Tracking Major Developments for Carolina-Pacific

1. Gulf Coast Oil Remediation

Carolina-Pacific joined forces with another leading renewable energy company, Show Me Energy Cooperative of Centerview, Missouri beginning on May 1, 2010 to deliver Switchgrass Pellets as an oil sorbent to the open oceans and barrier islands of the Louisiana Gulf Coast affected by the April 20, 2010 Deepwater Horizon oil rig rupture.

Chairman Kern and Show Me Energy President Steve Flick traveled to Southern Louisiana to meet with BP Amoco officials, Coast Guard representatives and local politicians, including Governor Bobby Jindal in order to deliver support to the affected regions of the state.

Mr. Kern (left) with National Wildlife Federation President Larry Schweizer (center) & Show Me Energy Cooperative President Steve Flick in Venice, LA, May 5 2010

The natural properties of Switchgrass, once dried and pelletized, make it a natural sorbent for oil remediation. With this alternative use of the 100% organic product, the oil is wicked from the surface of the salt water and bonded to the cell structure of the plant particles.

The company intends to contract with local City and Parish authorities in Louisiana for hte delivery of remediation services, utilizing Show Me Energy's Switchgrass BM-007 (TM) Pellet Product to the locally affected areas. Carolina-Pacific's logistics team will secure offshore and coastal delivery and retrieval methods for the pellet products.

2. European Export Operations

In conjunction with the SC State Ports Authority, the Company announced on July 29, 2009 that it was commencing export operations at the Port of Georgetown, South Carolina. CAROLINA-PACIFIC has taken possession of a 103,000 square foot warehouse and production facility on the water's edge in this town of 20,000 hard working South Carolinians.

Carolina-Pacific's sister company, Carolina-Pacific Briquetting Co. LLC, delivered the first shipment of wood briquette products in March 2010.

Carolina-Pacific began its export operations earlier this year utilizing intermodal containers, but this was primarily for testing of products and logistics. Once serious supply requirements were called for, the company moved toward the bulk carrier shipment model.

3. Trading Activities

Beginning in October, 2008, CAROLINA-PACIFIC began trading product along the Eastern Seaboard, from as far as Maine and Georgia to homes, schools and businesses in the New York area.

CAROLINA-PACIFIC is expanding its trading activities in advance of the 2009-10 heating season and focused on taking advantage of its Port of Georgetown facility for exports as well as domestic supplies. Management anticipates that given the port facility's excellent rail connections and waterfront position, this facility will serve as a magnet for biomass export activities in the Southeastern United States.

4. SC Research & Development Grant

On December 20, 2007, CAROLINA-PACIFIC was awarded a Research & Development Grant by the State of South Carolina to pursue the development of compaction and combustion technologies for South Carolina biomass products. Research was concluded in March, 2009.

CAROLINA-PACIFIC was joined by several team members in pursuing the optimum parameters for products to be exported to utilities in the European Union. The six month research project commenced in February 2008 and began the process or refining Carolina-Pacific's ROCette(TM) products as alternatives to 6-8 mm wood pellets commonly used in home heating applications in the Northeast and by a few large scale energy producers. The grant also authorized research into the EU's increasing demand for renewable fuels and the transportation logistics encompassed by the state's response to this demand. Team members include the following entities and supporting researchers:

      Grant Forest Products, Inc.;

      Weima America, Inc.;

      John B. Kern International Law LLC;

      Dr. Andy W.C. Lee of Clemson University's Dep't of Forestry & Natural Resources;

      Clemson University's Pee Dee Research and Education Center;

      The South Carolina Department of Commerce (European Office);

      The South Carolina State Ports Authority;

      The South Carolina Forestry Commission; and,

      Georgetown County (SC) Economic Development Authority.

5. Clean Power Mandates

5.1 Hands-Off: Washington Promotes "Innovation," Will Not Curb "Smokestack" CO2 Emissions:

The United States, and in particular the Southeastern Region of the Country, is blessed with abundent agricultural and timber resources to meet the rising challenge of combustible, pyrolosic and cellulosic biofuels for the 21st century. However, in 2010, the nation finds itself facing a perpetual floor of costly coal prices and coal ash and SO2 remediation expenses, $80 per barrel crude oil, an overdependence on middle east energy supplies, "global warming" trends and evidence of melting polar caps, alarming mercury levels in water supplies and escalating air pollution emissions. Nevertheless, the nation has witnessed a lackluster response from Washington - primarily embodied in a shift to corn-to-ethanol and soy-derived biodiesel transportation fuels.

In two of his later State of the Union addresses, President Bush challenged the nation to move toward biomass and biofuels, relying largely on research initiatives, some $12 billion in grant funding to universities and the innovation of the private markets to solve the GHG issue.

In February of 2007, the President traveled to Franklinton, North Carolina and extolled the virtues of cellulosic ethanol. (See News page on this website.) 

Congress, which rejected the Kyoto Protocol in 1997 by a vote in the US Senate of 95-0, has paid little attention to this call out of concern over the potential consequences of slowing the economy by increasing the costs of energy. Meanwhile, oil has reached all-time highs and consumers are paying for the consequences of inaction when our dependence on Middle East oil has been termed an "addiction" by the nation's chief executive. Dominated by divisions over ANWAR and off-shore drilling, and seeking to take advantage of proven coal reserves that could, if economically feasible, provide an answer to the nation's balance of trade debacle within the energy field, the nation has had no cohesive energy strategy and no strategic means of advancing the biomass industry. 

Eventually, within a span of one week in December of 2007, Congress came together to enact two measures which will focus attention on the biofuel industry for the coming 12 years.

On December 14th, 2007, Congress adopted a revised version of the House 2007 Farm Bill Extension Act, setting the stage for a March 2008 adoption of the 2008 Farm Bill to revitalize the rural economy of the country by encouraging the growth of bioenergy crops.

On December 20th, 2007, President Bush signed the Energy Independence Act of 2007 creating higher requirements for "tailpipe" auto emissions and calling for a tremendous increase in the use of ethanol in the coming 12 year period. The bill paves the way for investors to pursue establishing cellulosic ethanol power plants.

In 2009, Congress passed an $878 billion stimulus bill, with roughly 10% of bill's benefits designed to flow to renewable energy "shovel ready" projects. Most of the programs authorized were again focused on liquid biofuels, as well as 'clean coal' technologies, with some public expenditures in fuel cells and hydrogen or intercity rail transport projects.

With the exception of Clemson University's wind turbine research facilty located in North Charleston, South Carolina has seen very little from these government funding endeavors. 

The other top generator of CO2 in the atmosphere is the US coal burning utility industry. In spite of steady improvements in "scrubber" technologies since the adoption of the 1972 Clean Air Act, power utilities now push some 25% more CO2 into the atmosphere than they did in 1990. A single 1,000 MW coal-burning power plant pushes 6 million tons of CO2 into the atmosphere each year, according to the nation's Electric Power Research Institute. Consequently, the US is far and away the world's greatest GHG polluter, and Congress chose not to require any reductions in "smokestack" emissions as part of the Clean Energy Act of 2007.

While Governor of Texas, President Bush signed landmark legislation to advance the state's use of Wind Power. Today, Texas is the nation's leader in this category of renewable fuels. However, while in the White House, President Bush determined to not require greater advancements of renewable fuels at the expense of power generators nationally, contending that a 'one size fits all' approach would not work and therefore could not be credited within the debate on the 2007 Energy Independence Act. In the end, no progress was made to advance the role of renewables in electricity production.

 President Bush with Congressman Jim Clyburn and other Congressional Leaders at the December Signing of the 2007 Energy Independence Act

During President Obama's term, efforts to curb CO2 emissions from power generators have been defined by partisan division. Republicans express concern for price stability and consumers while Democrats advocate the imposition of a "carbon tax" on generators and consumers of power.

5.2 Leadership in the States: "25 in 25"

The vacuum of national leadership over the past several years has resulted in a patchwork of interstate compacts coming to the fore. More detailed information about each of these initiatives can be obtained from the Pew Center for Global Climate Change. This quilting of US renewable energy markets was emboldened by the Supreme Court in the April, 2007 decision in Massachusetts v. United States, where the state acquired the right to waive the federal EPA air emission standards for cars and adopt those put in place by already-exempted California. Strikingly, the Southeastern states have foregone participation in this arena. Note the lack of portfolio participation in the Southeast region:

5.3 Status Quo in the Southeastern States:

According to the Atlanta-based Common Purpose Institute, the Southeastern United States, heavily dependent upon bituminous coal for electrical power generation, creates nearly 70% the CO2 pollution of the world's second greatest polluter, China. The SE US easily outpaces third-highest polluting nation, Russia (including the CIS) and as a region, outpaces Japan (4th in the world) and Germany (5th) combined as a greater polluter of CO2 into the atmosphere. The Southeastern region of the nation is responsible for nearly 40% of the nation's CO2 production:

U.S. REGIONAL CO2 POLLUTION

With the states of North Carolina, Alabama, Georgia and Tennessee each relying upon coal for greater than two-thirds of their energy supply, West Virginia and Kentucky are reliant upon coal for greater than 90% of their energy supply. (California garners just 1% of its power from coal.) Meanwhile, Florida is the nation's most reliant state upon oil, burned as a heating source for its power plants. Florida burns more than three times the next closest state - New York.

In July 2007, the Governor of Florida committed his state to reducing its power plant emissions to 1990 levels by 2025. (See the News page on this web site.) This recent adoption is not reflected in the following September 2007 chart from the National Renewable Energy Laboratory showing each state's legislative or executive order "Renewables Portfolio Standards" to reduce CO2 emissions over a period of years, with general targets for measurable restrictions falling in the twenty to twenty-five year range, the so-called "25 in 25" standard:

Nonetheless, Florida's political commitment reflects a demand which Carolina-Pacific estimates will consume some 4.5 million tons of biomass annually within the State of Florida. At present, Florida burns 30 millon tons of coal  and spends $3 billion on Venezualean and Mexican oil annually.

North Carolina's August 20, 2007 adoption of a statute, referenced above, ensures that utilities selling retail power in the state must generate at least 12.5% of that power from biomass or other sources. Carolina-Pacific estimates that North Carolina will require a regional biomass market in excess of 2 million tons of wood and woody grasses in the coming years to meet this demand.

Maryland's portfolio standard, enacted April 24, 2007, calls for 9.5% of power to be generated from renewable sources by 2022. Maryland is heavily dependant upon oil and natural gas, rather than consuming significant quantities of coal (consumption is less than 1.5 million tons annually), and will rely significantly upon technological and building efficiencies to reduce power consumption in the future.

Virginia has committed to reducing its current CO2 emissions by 12 percent by 2022, in fifteen years. Virgnia burns 18.5 million tons of coal annually, and Carolina-Pacific predicts that in order to meet its goal, the state will require a biomass market of 2.6 million tons annually.  

South Carolina has no measures in place to compel utilities to generate power from biomass or other renewable sources of fuel. South Carolina utilities burned some 14.5 million tons of coal in 2005, the last year for which the State Energy Office maintains records. Carolina-Pacific calculates that the resulting emission of CO2 is some 2.67 million tons annually from the State of South Carolina alone. Moreover, the state's energy producers risk having subordinated interests vis-a-vis other neighboring states and with our European trading partners' power producers who would like to "lock up" supply for other markets where there is real demand in the near term.The long-term consequence of inaction promises to create an even greater imbalance in the energy supply chain for South Carolina utilities. One utility in the state has publicly proposed substituting as much as 40% of its energy supply in the future with renewable fuels, but also contends that in the near term, an additional coal-burning power plant is required for its energy mix, because no renewables markets exist to offset the state's increasing population and energy demand. Carolina-Pacific estimates that South Carolina presents the potential for energy production of up to 4 million tons of biomass annually.

Like South Carolina, neither Georgia, Alabama, Mississippi, Arkansas, Louisiana or Tennessee has any portfolio standard to reduce CO2 emissions.

5.4 The European Approach:

Instead of focus on aspirational goals in a twenty-year time frame, European leaders in Brussels, London, Berlin and Stockholm have instead adopted the Kyoto Protocol, and sought to compel European auto manufacturers and power generators to run cleaner through the 2012 end of the treaty's effect. Kyoto and the 2003 EU Directive implementing the treaty invoked a Carbon Cap & Trade regime which has met difficulties since its introduction 2005, despite more than $30 billion flowing into this artificial market.  

The European ethanol market is just 8% of the US ethanol output. Instead, auto manufacturers have turned their attention to high mileage diesel vehicles.

Nonetheless, the continent is moving forward with steadily increasing demand in the home heating market and in the power utility markets for wood biomass. Many of the standards proposed in the 2003 to 2005 era within Europe have already been met, compared with the plans among the States for reaching goals in the 2020 to 2025 timeframe.

Demand for exportable US biomass is considerable and immediate. In 2006, demand throughout Europe for cogeneration and electrical production from wood resources was 20.8 million mt. In 2010, this figure is expected to reach over 25 million metric tonnes. Sweden already relies upon wood fuel for 25% of its power requirements, and aims to go higher. Other leaders are Belgium, Germany, Austria and the Netherlands.

Continent wide, demanded for wood used in electrical power generation is expected to reach 100 million mt, while in the UK alone, this figure is expected to reach nearly 40 million metric tonnes. 

Carolina-Pacific is well positioned to capture a share of this market demand.

5.5 The Consequence of Inaction:

Not satisfied with Washington's technology and innovation approach, or the states' "25 in 25" portfolio standards, national environmental activists and Democratic party candidates have argued for a Carbon Tax on source-point emissions of CO2, as a means to force the utility industry to accept practices for reduced GHG emissions. On November 2, 2007, even Republican New York Mayor Michael Bloomberg adopted this approach as well (see News page on this website), signalling a change in the Republican message leading into the 2008 presidential election cycle.

In 2008, the presidential nominees of both political parties endorsed "cap and trade" approaches to controlling emissions of CO2. (Please refer to the Clean Energy News section on this web site for greater detail.)

In strict economic terms, the turn to renewable fuels will swell the value of wood products in the Southeastern US. Consequently, early adopters of green energy standards will achieve supply agreements with more favorable terrms than those acting under compulsion. Carolina-Pacific expects that the market will experience an unprecedented growth curve, and a 50% to near 67% increase in prices in the coming two years.

5. The Promise of "Clean Coal" in South Carolina

The Palmetto State promises to trail nearly all its counterparts in the United States. In spite of fierce local opposition and no Clean Air Act permit, the State-owned utility, Santee-Cooper, committed itself to building a 1,200 MW facility near the town of Kingsburg near Florence, SC. Estimates of the construction cost were initially stated as $970 million but welled to $1.5 billion in just the last four months and eventually to $2.4 billion. After the utility purchased $200 million in components for its unapproved plant, the Kingsburg effort failed and was scrapped.  

Santee-Cooper invested nearly three quarters of a million dollars on a public relations campaign, urging residents to welcome the power source as "clean coal." This was matched by another large grant to the University of South Carolina to further the study of "Clean Coal." The state exports $14 billion annually for coal purchases, yet in spite of the state's relative wealth of wood and agricultural resources, has no power stations at the present which derive heat from biomass except as they exist within the confines of the state's paper plant operations. (The USDOE is planning on a facility at the Savannah River Site.)

Carolina-Pacific urges the directors of Santee-Cooper, Progress Energy, Duke Power and South Carolina Electric & Gas, to pursue renewable fuel sources raised within the Palmetto State to fuel the state's growth in the future. Otherwise, in the absence of a federal mandate, it appears that South Carolina will be an ignominous leader in CO2, SO2 and mercury emissions for years to come.

"Clean Coal" - Coming Soon to South Carolina