Bioenergy companies respond to PFPI report, letter to SEC
A group of investors sent a letter to the U.S. Securities and Exchange Commission on Nov. 20 asking for a review of filings made by Dominion Resources Inc., Southern Co., and Covanta Holding Corp. that they claim include misleading statements about the benefits of biomass energy. The investors also claim that the companies have failed to disclose key information about environmental impacts, expected regulations and financial risks. However, the three companies named in the letter have confirmed to Biomass Magazine that they comply with all applicable disclosure requirements.
The information contained in the letter is based on a report published by the Partnership for Policy Integrity that asks the SEC to ensure that bioenergy companies’ disclosures on environmental impact and on regulation of greenhouse gas emissions sufficiently inform investors of related risks and trends. The report also points to a Supreme Court decision that finds “the obligation to disclose exists even when there is uncertainty about the ultimate impacts of emerging science information.” Much of the information presented in the report is attributed to studies, such as the Manomet study, that have been repeatedly disputed by those in the bioenergy industry.
In the letter, the investors ask the SEC to evaluate disclosures of made by the companies to determine consistency with its disclosures rules and 2010 Climate Guidance. In Jan. 2010, the SEC voted to provide companies with interpretative guidance on existing SEC disclosure requirements as they apply to the issue of climate change. The guidance addressed the impact of legislation and regulation, the impact of international accords, the indirect consequences of regulation or business trends, and the physical impacts of climate change.
“[T]he industry appears to have failed to live up to its obligations for accurate and nonmisleading disclosure … Bioenergy should be required by the SEC to compete for investment dollars without materially exaggerating its value to the environment, or concealing its weaknesses and uncertainties.,” said the investors in the letter. The group also requests that the SEC clarify what companies are allowed to claim in relation to the climate benefits and “carbon neutrality” of biomass energy.
“Burning wood in power plants emits more greenhouse gases than fossil fuels on a day to day basis, as well as air pollutants that degrade air quality and threaten health,” said Mary Booth, director of the PFPI. “Companies that present bioenergy as ‘clean’ and ‘carbon neutral’ are likely to be misleading investors, because bioenergy carbon neutrality, if it occurs at all, may only occur years to decades into the future.”
In response to the letter, Dominion spokesman Dan Genest stressed that the U.S. government considers energy from waste wood to be renewable and sustainable, and pointed to a recent U.S. EPA report on forest residue. “As part of the air permitting process, all five of our stations that use waste wood, were thoroughly reviewed and evaluated by both the Virginia Department of Environmental Quality and the State Corporation Commission to ensure the facilities are environmentally sound, economically prudent and in the best interest of Virginia and our customers,” he said. “In addition, the federal government issues production tax credits for generating units using waste wood and considers them to be renewable and sustainable. Finally, in a report issued Sept. 28, 2012 by EPA’s Science Advisory Board (SAB), the SAB states that it considers forest residues, such as waste wood, to be carbon neutral in the long term.”
Southern Co. has also issued a statement, noting that “Southern Company and its subsidiaries comply with all applicable emissions reporting and disclosure requirements.”
In addition, Covanta has weighed in on the letter. “Biomass is a very small part of Covanta’s overall business and we are very comfortable with our disclosures,” said James Regan, Covanta spokesman, adding that the PFPI report is misleading in that it compares biomass to coal on a per megawatt hour basis and dismisses the difference between biogenic and anthropogenic carbon. “Biomass is a renewable fuel that can be used to generate a sustainable, dependable supply of baseload energy and provides critical environmental benefits,” he said. “This is especially true when using agricultural wastes and wood wastes to generate electricity as Covanta does. Otherwise, this material would go to landfills where it would generate methane, a greenhouse gas 25 times more potent than CO2 and a significant contributor to climate change. The climate benefits of biomass have been identified by a number of prominent researchers. By utilizing wood waste from the forest floor as fuel, biomass plants also make a significant contribution in reducing the potential for forest fires.”
A copy of the letter and the full PFPI report are available on the PFPI website. Investors signing the letter include Domini Funds, Boston Common Asset Management, Green Century Investments and several faith-based institutions.