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Pego Power Station Portugal
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By: Biofuelwatch, Environmental Paper Network, Global Forest Coalition & ZERO
Created on: 2021-12-07 15:22:33
Last update: 2022-01-27 00:00:00

Contact:

Oliver Munnion, Global Forest Coalition (GFC), oli@globalforestcoalition.org


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Pego's Power Plant (view from Rossio ao Sul do Tejo). Photo: Chromatic Orb via Wikimedia Commons (CC BY 3.0)
Sector Biomass Electric Power Generation
Location
Status
Cancelled
Design
Agreement
Construction
Operation
Closure
Decommission

About Pego Power Station

Pego Power Station was Portugal’s last remaining coal power station. It is owned by TrustEnergy (56.25%) and Endesa (43.75%). With a capacity of 628 MW of electricity generation, it mostly burned coal imported from Colombia, a country where coal mining is associated with severe human rights abuses and with land and water grabbing. The plant finally stopped burning coal on November 20, 2021. However, instead of closing the power station for good, the power station’s majority shareholder, TrustEnergy, plans to convert it to burning wood pellets.

TrustEnergy is a 50:50 joint venture between the French multinational energy company Engie and the Japanese business conglomerate Marubeni. Endesa, the power station’s minority shareholder, opposes the biomass conversion plans and instead proposes to replace the power station with a large solar PV plant, coupled to battery storage and green hydrogen production.

In February 2021, nine Portuguese and 58 international NGOs issued an open letter to the Portuguese government and the European Commission objecting to TrustEnergy’s biomass conversion plans.

 

Latest developments

Endesa wins tender proposal to build solar and wind energy project at Pego

2022-03-13 00:00:00

Why this profile?

TrustEnergy intends to convert Pego Power Station to burning wood pellets instead of decommissioning it and replacing it with genuinely low-carbon renewable energy. Burning woody biomass emits more CO2 per unit of energy generated than coal, and the demand for wood pellets is accelerating the destruction of wildfire-rich forests. In Portugal, wood pellet production for existing customers has led to pine woodlands being cut down at a much faster rate than they can regrow.

What must happen

Banks should avoid financing TrustEnergy’s project - either directly or via financing Marubeni and Engie - to burn wood pellets in Pego Power Station. Converting the plant to biomass would have a seriously negative climate impact, as well as causing harm to forests. Unless the biomass conversion project is abandoned, financiers and investors should make sure that any further finance given to this company can only be spent on TrustEnergy’s wind energy portfolio.

Impacts

Social and human rights impacts

Due to its location (in a populated area, with several towns and villages within a couple of kilometers), the Pego Power station is likely to pose severe health impacts due to air pollution. Air emissions from wood power and/or heat plants have comparable impacts on human health as coal burning plants. Overall, wood burning for energy is one of the two leading causes of small particulate (PM2.5) emissions in Europe and likely elsewhere, alongside traffic.

Next to that, wood dust exposure of workers and residents is linked to allergic and non-allergic respiratory and nasal problems, allergic dermatitis and two types of cancer. It is a common concern reported around wood pellet plants and woodchip storage sites. In the UK, Drax Plc is facing criminal prosecution for failing to protect workers from harmful wood dust linked to its conversion from coal to wood pellets.

Environmental and climate impacts

At full capacity, the converted Pego Power Station would burn up to 2.6 million tonnes of wood pellets a year, equivalent to up to 5.2 million tonnes of green (i.e. freshly cut) wood. By comparison, existing biomass power and heat plants in Portugal burn an estimated 2.8 million tonnes of green wood, with a further 1.8 million tonnes of wood used for pellet production, most of which is exported. 

The two main species grown for commercial wood production in Portugal are eucalyptus and pine. Eucalyptus wood has a high chlorine content and is therefore not suitable for burning in a plant such as Pego Power Station. TrustEnergy claims that they will get around that problem by producing torrefied wood pellets on-site made from eucalyptus, which would be chemically more similar to coal. However, as an investigation by Biofuelwatch shows, no company in the world has been able to produce torrefied wood pellets at a commercial scale. 

This means that TrustEnergy would need to burn pellets produced domestically from pine and/or imported wood pellets. In Portugal, pine is already being logged at a much faster rate than it can regrow, with the president of Portugal's wood and furniture industry association declaring that “Portugal’s forest management is ruinous”. Pellet imports would likely come from North America, with the largest pellet-exporting region being the south-eastern USA. There, wood for pellets is routinely sourced from the clearcutting of highly biodiverse coastal hardwood forests.

In general, large-scale burning of biomass for energy harms the climate, people, forest and hinders the clean energy transition. This is explained in the Biomass Delusion Statement. 

Governance

Bank policies

The following bank investment policies apply to this project:
Norges Bank
csr policies
2020-04-16 00:00:00

Climate change - expectations of companies

2020-04-16 00:00:00 | Norges Bank Investment Management
Crédit Agricole
csr policies
2015-12-02 00:00:00

CSR Sector Policy - Forestry & Palm Oil

2015-12-02 00:00:00 | Crédit Agricole CIB
csr policies
2016-11-01 00:00:00

CSR Sector Policy - Coal-fired power plants

2016-11-01 00:00:00 | Crédit Agricole CIB
csr policies
2018-04-23 00:00:00

Climate commitments

2018-04-23 00:00:00 | Crédit Agricole
BNP Paribas
csr policies
2011-09-13 00:00:00

Sector Policy - Wood Pulp

2011-09-13 00:00:00 | BNP Paribas
csr policies
2015-12-08 00:00:00

Agriculture Sector Policy

2015-12-08 00:00:00 | BNP Paribas
csr policies
2017-02-08 00:00:00

Coal-Fired Power Generation Sector Policy

2017-02-08 00:00:00 | BNP Paribas
Sumitomo Mitsui Trust Holdings
csr policies
2020-04-28 00:00:00

Environmental Policy

Date listed represents date as accessed on website
2020-04-28 00:00:00 | SMTH
Mizuho Financial Group
csr policies
2021-02-25 00:00:00

Biodiversity policy

Date listed represents date as accessed on website
2021-02-25 00:00:00 | Mizuho Financial Group
JPMorgan Chase
csr policies
2011-04-06 00:00:00

Environmental and social risk assessment policy

2011-04-06 00:00:00 | JP Morgan Chase
ANZ
csr policies
2020-10-31 00:00:00

Energy policy

2020-10-31 00:00:00 | ANZ
csr policies
2021-11-23 00:00:00

Climate change commitment

2021-11-23 00:00:00 | ANZ
csr policies
2020-10-31 00:00:00

Forestry and forests policy

2020-10-31 00:00:00 | ANZ
Sumitomo Mitsui Banking Corporation (SMBC)
csr policies
2021-01-14 00:00:00

Environmental policy

Date listed represents date as accessed on website
2021-01-14 00:00:00 | SMBC
HSBC
csr policies
2020-02-15 00:00:00

Forestry policy

2020-02-15 00:00:00 | HSBC
Deutsche Bank
csr policies
2020-08-12 00:00:00

Climate statement

2020-08-12 00:00:00 | Deutsche Bank
ING
csr policies
2019-12-19 00:00:00

Stance on deforestation

Date listed represents date as accessed on website
2019-12-19 00:00:00 | ING
csr policies
2021-08-19 00:00:00

Biodiversity policy

Date listed represents date as accessed on website
2021-08-19 00:00:00 | ING

Updates

Endesa wins tender proposal to build solar and wind energy project at Pego

2022-03-13 00:00:00

The jury of the tender for the allocation of capacity to connect to the electricity grid that is currently occupied by the Pego coal-fired power station confirmed, in the review of its preliminary report, that the best bid presented in the auction belongs to Spain's Endesa. The winning proposal does not assume converting the coal plant, which closed at the end of 2021, to biomass.

Financiers

A list of investors and financiers of Marubeni can be found on Urgewald’s Global Coal Exit List. Below we list the top investors and financiers of Marubeni and the top shareholders of Engie. Information on the financiers of each company can also be found on the Marubeni and Engie company profiles.

Related companies

The Pego power station is owned by TrustEnergy (56.25%) and Endesa (43.75%). TrustEnergy is a 50:50 joint venture between the French multinational energy company Engie and the Japanese business conglomerate Marubeni.

Project sponsors

ENGIE France

Marubeni Japan show profile

Coal Electric Power Generation | Mining | Pulp, Paper and Paperboard Mills

Other companies

Endesa Spain

News

| |
Type:
Year:
blog
external news
our news

Proposed conversion of former coal plant to biomass is a high risk for investors, new study shows

Portugal to decide on future of Pego power station by late February
2022-01-27 | Portugal | Biofuelwatch, Environmental Paper Network, Global Forest Coalition, ZERO
blog
external news
our news

Associação ambientalista Zero alerta para perigos de transformar central do Pego em biomassa

2022-01-12 | O Jornal Económico
blog
external news
our news

Portugal deixou definitivamente de usar carvão na produção de eletricidade – pego era responsável por 4% das emissões do país

2021-11-21 | ZERO
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