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Home › Dodgy Deals ›
Dodgy Deal
MGT Teesside biomass power stationUnited Kingdom

Project – On record

This profile is no longer actively maintained, with the information now possibly out of date
Profile by:
BankTrack, Biofuelwatch, Dogwood Alliance, Markets for Change & NOAH (Friends of the Earth Denmark)
Contact:

Adam Macon, Dogwood Alliance. Bente Hessellund Andersen, NOAH (Friends of the Earth Denmark)

Last update: 2020-08-14 00:00:00
Clearcutting of coastal swamp forests in North Carolina, which supplies wood to an Enviva pellet mill. Photo: Dogwood Alliance

Project – On record

This profile is no longer actively maintained, with the information now possibly out of date
Profile by:
BankTrack, Biofuelwatch, Dogwood Alliance, Markets for Change & NOAH (Friends of the Earth Denmark)
Contact:

Adam Macon, Dogwood Alliance. Bente Hessellund Andersen, NOAH (Friends of the Earth Denmark)

Last update: 2020-08-14 00:00:00
Why this profile?

What must happen

PKA and Macquarie should immediately divest their 50% equity stakes in MGT Power. PKA in particular prides itself on its responsible investment, as they have shown by divesting from 31 coal companies (source the Financial Times). Furthermore, private sector banks should avoid supporting this project. 

The project cannot go ahead with the supply arrangements as currently planned, neither could a huge biomass power station like this be run in a sustainable manner. The project will need pellets and woodchips from almost 3 million green tonnes of wood a year. To compare, the UK's total wood production is only 10.8 million green tonnes a year. 

About
Sectors Biomass Electric Power Generation
Location
Status
Planning
Design
Agreement
Construction
Operation
Closure
Decommission
Website http://www.mgtteesside.co.uk/
This project has been identified as an Equator Project

MGT Teesside recently started building a 299 MW biomass power station at Teesport in the northeast of England. This will be the world's biggest purpose-built biomass power station. It will burn up to 1.5 million tonnes of pellets per year, made from around 3 million tonnes of green wood: wood that has been recently cut and therefore has not had an opportunity to dry by evaporation of the internal moisture. MGT Teesside has entered into a sourcing contract with Enviva, the biggest US pellet producer, for one million tonnes of pellets each year. NGOs and reporters have gathered evidence that Enviva is sourcing a significant proportion of their wood from the clearcutting of highly biodiverse coastal wetland forests on the North American Coastal Plain, which has been declared a Global Biodiversity Hotspot.

Impacts

Social and human rights impacts

In general, biomass power stations cause similar levels of air pollution to coal power stations of the same capacity. Using biomass as a fuel produces air pollution in the form of carbon monoxide, carbon dioxide, NOx (nitrogen oxides), VOCs (volatile organic compounds), particulates and other pollutants at levels above those from traditional fuel sources such as coal or natural gas in some cases (such as with indoor heating and cooking).

Apart from these impacts on people in the Teesside area, communities in the southern US by Enviva’s pellet plants will also be affected. Dogwood Alliance has worked with some of those communities to document the impacts from noise, traffic, pollution and, particularly worryingly, wood dust. Long-term wood dust exposure is carcinogenic according to the World Health Organisation, and it is also linked to allergic and non-allergic respiratory and nasal problems.

Forests play a vital role in maintaining clean water on which communities depend. They filter and store freshwater and they help to regulate regional rainfall cycles. This is particularly vital in a region such as the southern US, which is already seriously affected by extreme rainfall events (droughts and floods) that are exacerbated by climate change. Increased pressure on the remaining wetland forests of the region will thus put the local population at greater risk from the further disruption of the water cycle.


Environmental and climate impacts

The UK is already burning significantly more wood in power stations annually than the country produces in total every year. MGT Power will source around 1 million tonnes of pellets (equivalent to 2 million tonnes of green wood) from Enviva, who are the largest US pellet producer and who are rapidly expanding their pellet capacity across southern US. US conservation NGOs, including Dogwood Alliance and Natural Resources Defense Council, have carried out detailed investigations of some of Enviva’s pellet plants. They have found that a high proportion of Enviva’s pellets is made from hardwood, which in the region is not found on tree plantations but only in biodiverse forests. By following logging trucks to the forest and back to an Enviva pellet plant, they have documented that whole trees clearcut in wetland forests are being turned into pellets which are then shipped to Europe, especially to the UK.

Coastal wetland forests in the southern US are one of the world’s most biodiverse temperate forest and freshwater ecosystems. They form part of the North American Coastal Plain biodiversity hotspot, which is home to 1,816 endemic species of vascular plants, 138 endemic species of freshwater fish, 57 endemic species of amphibians, as well as many endangered bird, reptile and mammal species. Enviva misleadingly describes whole trees from clearcut forests as ‘residues’ or ‘thinnings’, despite clear evidence to the contrary.

Financiers

The project is financed with GBP 650 million debt and GBP 250 million equity. The GBP 650 million are loans obtained from Lloyds, Natixis, SMBC, Shinsei Bank, Development Bank of Japan, Korea Development Bank, Santander, Hastings City Bank, Edmund de Rothschild Asset Management, Finnvera, and Macquarie Bank, each likely to be 10 percent of the total loan. Macquarie acted as financial advisor raising the debt. Macquarie will own 50 percent of the equity in the project, with Danish pension fund PKA as an equity co-investor and partner who will own the remaining 50 percent stake (source Macquarie; GTReview).

Update: on December 1, Environmental Finance wrote that Macquarie Group "is understood to be in discussion to sell a stake in the world's largest biomass power plant", referring to the equity of this project. The stake is likely to be sold to a consortium of Korean investors, of which are reported to include Hana Financial Investment and NH-Amundi Asset Management. 

Institution type
Finance type
Year
Companies

Project sponsor

MGT Teesside Ltd.

United Kingdom
Website
Project's sponsor. Subsidiary of MGT Power
No companies

Other companies

Enviva

United States
Profile
Website
US producer of wood pellets
No companies
Governance
Bank policies
Norms & standards
Other regulations
The following bank investment policies apply to MGT Teesside biomass power station:
Lloyds Banking Group
2013-11-20 00:00:00

Environmental Statement

Bank policy
2013-11-20 00:00:00 | Lloyds Banking Group

Applicable norms and standards

Equator Principles

PKA A/S has signed the Global Investors Statement on Climate Change.

 

News
BankTrack
Partners
Blog
External
BankTrack news BankTrack blog Partner news Partner blog

COVID-19 delays construction of 299 MW biomass power plant in UK

2020-03-26 | Biomass Magazine
BankTrack news BankTrack blog Partner news Partner blog

Macquarie negotiating sale of GIG stake in world’s largest biomass plant

2017-12-01 | Environmental Finance
BankTrack news BankTrack blog Partner news Partner blog

Divest from False Solutions like Biomass Power Plants - Days of Action

2017-10-24 | NOAH
BankTrack news BankTrack blog Partner news Partner blog

Press release: Danish pension fund's green credentials questioned

2017-09-19 | Dogwood Alliance
BankTrack news BankTrack blog Partner news Partner blog

A smokescreen for forest destruction

2017-06-29 | Dogwood Alliance
BankTrack news BankTrack blog Partner news Partner blog

N.C. citizens group, SELC challenge permit for polluter issued without public notice

2017-05-08 | Southern Environmental Law Center
BankTrack news BankTrack blog Partner news Partner blog

MGT Power show off remarkable progress at £650m Teesside Renewable Energy Plant

Teesside Renewable Energy Plant (TeesREP) will generate electricity for the equivalent of 600,000 homes by around 2020
2017-05-02 | GazetteLive
BankTrack news BankTrack blog Partner news Partner blog

Aggressive forest protection needed to meet US climate goals

2017-03-21
BankTrack news BankTrack blog Partner news Partner blog

Burning wood for energy ignites fierce academic row

2017-03-15 | BBC
BankTrack news BankTrack blog Partner news Partner blog

£450m lost over failed green power programme

Minister who backed plan now works in sector
2017-02-23 | The Times
BankTrack news BankTrack blog Partner news Partner blog

Amerikanske miljøorganisationer langer ud efter dansk pensionskasse

(text in Danish)
2016-11-17 | Altinget.dk
BankTrack news BankTrack blog Partner news Partner blog

NGOs pressure funder of GBP 650m MGT Power project

2016-11-17 | Endswasteandbioenergy.com
BankTrack news BankTrack blog Partner news Partner blog

America's Southern Forests Are Being Decimated to Supply Europe With Energy

2016-10-14 | Alternet.org
BankTrack news BankTrack blog Partner news Partner blog

Health Groups to Congress: Burning Biomass is Bad for Health

2016-09-14 | NRDC
BankTrack news BankTrack blog Partner news Partner blog

Teesside biomass plant reaches financial close

2016-08-11 | Newpower.info
BankTrack news BankTrack blog Partner news Partner blog

Dirtier than coal: burning forests for 'green' energy

2016-07-19 | The Ecologist
BankTrack news BankTrack blog Partner news Partner blog

Macquarie and MGT Raising Debt for $1 Billion U.K. Biomass Plant

2016-07-07 | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Many trees, but few forests in the southern US

2016-04-04 | Eubioenergy.com
BankTrack news BankTrack blog Partner news Partner blog

New Report Seeks Securities and Exchange Commission Investigation of Misleading Climate Claims by Biomass Industry Giant

2016-03-14 | Not a lot of people know that
Resources
Documents
Videos
Links
2017-09-19 00:00:00

Why PKA must divest from MGT Teesside if it wants to live up to its green credentials

NGO document
2017-09-19 00:00:00 | NOAH, Dogwood Alliance, Verdens Skove, Biofuelwatch & Markets for Change
2017-06-30 00:00:00

The Sustainable Biomass Program: Smokescreen for forest destruction and corporate non-accountability

NGO document
2017-06-30 00:00:00 | NRDC & Dogwood Alliance
2016-09-13 00:00:00

Letter from Health organisations to USA Congress on Biomass

Correspondence
2016-09-13 00:00:00 | Health organisations
2017-03-31 00:00:00

Letter from Chatham House to IEA Bioenergy on response to IEA Bioenergy letter

Correspondence
2017-03-31 00:00:00 | Chatham House
2017-04-30 00:00:00

Multi-functionality and sustainability in the European Union’s forests

Science Advice for the Benefit of Europe
Other document
2017-04-30 00:00:00 | European Academies Science Advisory Council (EASAC)
2017-03-21 00:00:00

The Great American Stand

US Forests and the Climate Emergency
NGO document
2017-03-21 00:00:00 | Dogwood Alliance
2017-02-28 00:00:00

Woody Biomass for Power and Heat Impacts on the Global Climate

Research paper on the impacts of biomass
Other document
2017-02-28 00:00:00 | Chathan House
2016-03-14 00:00:00

Carbon Emissions and Climate Change Disclosure by the Wood Pellet Industry

A Report to the SEC on Enviva Partners LP
NGO document
2016-03-14 00:00:00 | Partnership for Policy Integrity and Dogwood Alliance
2015-10-31 00:00:00

In the U.S. south east, natural forests are being felled to send fuel overseas

NGO document
2015-10-31 00:00:00 | NRDC
2013-08-30 00:00:00

Our forests aren't fuel

Enviva’s Wood Pellet Mill in Ahoskie, North Carolina Threatens Endangered Ecosystems and Wildlife
NGO document
2013-08-30 00:00:00 | NDRC and Dogwood Alliance
2016-11-15 00:00:00

Letter from Dogwood Alliance et al to PKA on MGT Power's Teesside Biomas power station

Correspondence
2016-11-15 00:00:00 | Dogwood Alliance et al
2016-10-31 00:00:00

Burning trees for energy is no solution to climate change

NGO document
2016-10-31 00:00:00 | Fern

Rising Up with Richmond County

2017-06-20 10:31:50

Selling Out Sampson County - How the Wood Pellet Industry is Disrupting Rural Southern Communities

2017-05-09 16:53:39

Our Forests Aren't Fuel: Injustice in Northampton

2016-12-12 12:03:05

Our Forests Aren't Fuel: Wetlands Up in Smoke

2016-12-12 12:00:57

Bos als brandstof

Report and documentary on the Dutch television about wood as fuel.

Updates

2016

2016-11-17 00:00:00 | Environmental campaigners in US and Denmark urge key investor to withdraw investment from large biomass power station project MGT Teesside

A large new biomass power station planned at Teesport has come under fire from US environmental campaigners, who have teamed up with Danish campaigners to persuade a key investor to pull their money out because of the serious effects the development would have on southern US forests and on the climate. Fourteen US organisations sent an open letter to the Danish pension fund involved in the scheme. Energy company MGT Power is planning to build the world’s largest dedicated biomass power station, MGT Teesside at Teesport in the UK. The US NGOs’ letter points out that the power station will source around 1 million tonnes of wood pellets from US pellet producer Enviva, which “has been well documented by organisations in the Southern US, as well as leading media outlets, to be sourcing whole hardwood trees from high biodiversity wetland forests for their pellets”.  It further highlights that the region from which Enviva is sourcing wood has recently been designated a new global hotspot for biodiversity. The NGOs’ letter warns about the serious impacts which burning wood from clearcut forests in a power station has on biodiversity as well as on carbon emissions and the climate (source Biofuelwatch).

2016-08-11 00:00:00 | MGT Teesside biomass power station reaches financial close

Macquarie Capital and Macquarie Commodities and Financial Markets have reached financial close on GBP 900 million of funding for a 299MW biomass-fuelled combined heat and power plant on Teesside. Developed by MGT Power, Tees REP claims to be the world’s largest new-build biomass plant. Construction is due to start imminently and be completed by 2020. The project is located on a brown-field site adjacent to the Tees Dock near Middlesbrough. The total construction cost is approximately GBP 650 million, with a further GBP 250 million raised for working capital and operating costs (source newpower.info).

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