Project – ActiveThis profile is actively maintained
Gary Hughes - Biofuelwatch
Why this profile?
This project represents a myriad of threats to forest ecosystems and the climate, as well as serious public health and safety risks to communities living in areas surrounding the pellet mills or in the sourcing area, as well next to port operations.
What must happen
The Project presents serious reputational risks to associated financial institutions. Harm to forest ecosystems, threats to public health, and governance irregularities are deeply embedded in this project, and should give pause to any potential investor in the project. This project has already been delayed due to local opposition and has not yet secured all necessary permits to begin construction. Next to that, the project poses risks to financial institution’s net-zero commitments, as burning biomass to generate electricity produces more carbon emissions at the smokestack than coal per unit of electricity produced. We highly recommend that banks and other investors choose not to support this project.
|Biomass Electric Power Generation
The Golden State Natural Resources “Forest Resiliency Demonstration Project” (‘the Project’) includes plans to build a port terminal and two wood pellet production facilities in California – one in Lassen County and the other in Tuolumne County. These facilities will manufacture around one million tons of wood pellets a year for export to other countries such as Japan, Korea and the UK through the proposed Port of Stockton. The Lassen County wood pellet plant would be among the top 10 largest wood pellet plants in the United States, producing 700,000 tons/year. The Tuolumne County facility would produce upwards of 300,000 tons/year.
The company proposes to source wood for the facilities from a 100+ mile radius around either facility, taking trees of all sizes and species from both public and private lands.
Project feasibility study documents secured through the California Public Records Act reveal a third party assessment concluding the Project was not economically viable.
Impact on human rights and communities
The Project poses significant air and noise pollution risk to local communities that are already suffering from high pollution rates from other industries and port operations, not the least of which are petroleum and biofuels refineries and already existing biomass and fossil gas burning power plants. These impacts come with associated health risks. Some of the communities where project components will be sited are also highly impoverished.
The Tuolumne wood pellet production site has a higher-than-average pollution burden and high rates of asthma and cardiovascular disease. The proposed wood pellet production facility will only exacerbate these harms, given that such operations emit toxic and hazardous air pollutants linked to increased rates of premature death and serious illnesses such as cancer, respiratory diseases, and heart disease. Further, trucks will be needed to deliver wood to the mills, causing noise and diesel pollution in the communities they pass through.
The proposed inland port location of Stockton is a low-income community of color that suffers some of the greatest pollution burdens in California, including high exposure to particulate matter. The transport and shipping of wood pellets from GSNR’s facilities through Stockton – by truck and/or rail and ocean-going vessels – would worsen the community’s exposure to PM and NOx. An estimated 40-48 truck trips/day or over 7,000 rail cars/year, or any combination of the two, would be used by GSNR to transport material to the port.
Further, the storage of wood pellets in Stockton poses a serious fire hazard to residents. Wood pellet piles are prone to spontaneous combustion, with fires and explosions erupting at pellet storage locations in at least five states. In 2017, a wood pellet storage silo in Port Arthur, Texas, caught fire and burned for more than 100 days, sending many local residents to the hospital.
Inadequate stakeholder engagement
Throughout the environmental review process, GSNR has failed to engage with impacted stakeholders – most notably, the communities near the Port of Stockton where the wood pellets would be stored and exported. GSNR’s first Notice of Preparation (NOP) proposed that the wood pellets travel through two ports: the Port of Richmond and the Port of Stockton. However, GSNR failed to directly engage with either Port community during the initial scoping process. This, combined with community opposition and a lack of interest from the private port terminal operator in Richmond, led GSNR to drop Richmond from the proposal and to issue a new NOP focused solely on Stockton. However, GSNR has continued to ignore opposition from the Stockton community and to exclude the community from the decision making process. Indeed, as of November 2023 GSNR has not held any sort of community outreach meeting with Stockton residents.
Poor working conditions
Working conditions for forestry service workers are incredibly dangerous, with forestry services and logging suffering the highest fatality rate of any major industry in California. Research and news articles have also revealed allegations of worker mistreatment, including wage theft, by forestry companies. Forestry workers in California have increasingly been migrants who suffer from poor job quality and who often work for private contractors that are difficult to trace. However, GSNR does not seem to care about these issues. For example, recently, GSNR unsuccessfully requested that California’s governor veto state legislation requiring a prevailing wage for forestry workers.
Impact on climate
Wood pellets are a highly carbon-intensive, polluting, expensive, and inefficient energy source. Burning wood to generate electricity produces more carbon emissions at the smokestack than coal per unit of electricity produced. Greenhouse gas emissions and air pollution would be emitted at every step of the project—from cutting forests, producing pellets, transporting pellets, and burning them at smokestacks. This Project could incentivize a massive ramp-up of logging of California’s forests, releasing their stored carbon and preventing them from sequestering carbon in the future at a time when forests are critical to combating climate change.
Impact on nature and environment
The Project poses a severe threat to California’s forest ecosystems due to its creation of ongoing demand for logging to produce one million tons of wood pellets per year. GSNR initially suggested that it would only use dead wood, forest residues, and other waste materials to make pellets, thus strengthening forest resiliency against wildfires – a problematic activity which has been criticized. However, GSNR has since broadened its sourcing plans to include any type of tree of any size within a 100-mile radius of each pellet facility. This includes 18 of California’s national forests and treasured places like Yosemite National Park, Lake Tahoe, Mono Lake, June Lake, Mammoth, Lassen Volcanic National Park, Mount Shasta, and Shasta Lake. GSNR anticipates relying heavily on roundwood (i.e., whole trees) to make pellets. This type of intensive logging results in the destruction and fragmentation of forest habitats, soil compaction, and water pollution, among other impacts. This will also negatively impact sensitive and endangered species located in these forests.
This Project would divert political resources and public attention from the pressing need to reform industrial forestry practices in the state in a manner that conserves ecological functions and processes while increasing the long term capacity of the landscape to provide climate stability. The project is currently creating a policy distraction that reduces attention on known solutions to create equitable economic opportunity implementing necessary actions designed to protect communities from extreme wildfire behaviours. If GSNR intends to support rural communities in California facing wildfires that could impact their health and safety, putting political and technical capital into aggressive logging and wood pellet production is a distraction away from proven fire-safety solutions focused on homes and communities.
Furthermore, the governance of GSNR provides possible investors some reasons to pursue serious due diligence. GSNR is essentially an offshoot of an organization called Rural County Representatives of California (RCRC), a grouping of county officials from the rural regions of California. Interestingly enough, RCRC is also the entity that formed the Golden State Finance Authority (GSFA), a ‘joint powers authority’ that provides a vehicle for advancing multi-jurisdictional projects within the state. GSFA had made an original $10 million dollar loan as ‘seed capital’ to GSNR. GSFA also has assumed responsibility as the ‘lead agency’ overseeing and managing the environmental review of the GSNR project. In this way, the agency responsible for environmental review also has a financial stake in the project that it is assessing. GSFA has made another loan to GSNR since the environmental review process was initiated, as the financial state of GSNR in 2023 is not that strong. It’s worth noting that the only way for GSFA to recoup the millions it has loaned GSNR is if the project goes through a successful CEQA review. At this stage we have calculated that GSFA has provided nearly $12 million worth of loans to GSNR.
While GSNR has not yet publicly confirmed the projected construction cost of the wood pellet facilities, we estimate that it would cost more than half a billion dollars.
From monitoring the proceedings of the board of directors of this quasi-public entity since summer 2020, we have gained information about the Project’s financial status and aspirations. At several recent board of directors’ meetings, the Board has explicitly identified Barclays Bank as a preferred financial partner that has shown interest and offered advice to the Project’s developers.
GSNR had retained Barclays Bank in 2023 for ‘investment banking services.’ This service would have included providing technical advice and assistance for securing direct financing, loans, and even the issuance of bonds; a variety of financial instruments have all been floated as possibilities. However, in December 2023 at the GSNR board of directors meeting it was explained that, due to GSNR financial limitations, Barclays Bank will no longer be retained for services. Simply put, GSNR does not have the liquidity to continue paying Barclays for banking services. Despite the absence of a financial commitment, Barclays is however loaning its reputation and status to the project, as well as providing technical advice.
The Board has not identified any other financial entities with this level of specificity. However, GSNR board members have made ambiguous and opaque references to Drax – the UK’s biggest bioenergy company and an active business partner of Barclay’s – as a possible investor and product offload partner. GSNR’s executive staff have also referenced unspecified and unnamed investor and product offload/purchase stakeholders in Japan.
2023-11-07 00:00:00 | Project under environmental review
The Project is currently undergoing environmental review, as required by the California Environmental Quality Act (CEQA). The project proponent, Golden State Natural Resources (GSNR) submitted a Notice of Preparation (NOP) – the first step in the CEQA process – in November 2022. After opposition to the project from civil society exposed legal flaws in the initiation of the environmental review process, a revised NOP was released for public comment in June 2023. Dozens of groups from California, across the USA and around the world have provided comments opposing the GSNR project, including at a virtual public hearing held in June 2023. The next step – a Draft Environmental Impact Report – is expected in early 2024.
GSNR is also seeking a variety of local jurisdiction permits for their proposed facilities and a contractual agreement with the Port of Stockton for the study, planning and design of port facilities for the export of their wood pellet product.
2023-01-01 00:00:00 | Brief history
In 2019, the creation of GSNR was announced to the membership of RCRC and shortly thereafter GSNR signed a 20-year ‘master stewardship agreement’ with the leadership of Region 5 of the United States Forest Service (USFS). It was in this same timeframe that GSNR began to acquire the properties in Lassen and Tuolumne Counties for the siting of the wood pellet manufacturing facilities. By 2022 GSNR was actively lobbying for access to port terminal infrastructure in Richmond to host export operations. It was late in 2022 that GSNR initiated the scoping of the environmental review process for the project. However, due to the failure of GSNR to have properly engaged with the Richmond community for the initiation of scoping of the environmental review of the project by early 2023 Richmond port operator interests had already turned against the GSNR project. Thus it was in June 2023 that GSNR once again initiated environmental review but with an explicit focus on the Port of Stockton for export operations. As it stands in late 2023 the GSNR project is in pursuit of local jurisdiction permits for construction of their project even though the draft environmental impact report is not anticipated for release until early 2024.