Active Energy disregards state rules (again), DEQ cites wood pellet plant for violations

Active Energy Renewable Power has racked up yet another environmental violation — and the controversial wood pellet plant in Lumberton isn’t even built yet.

The NC Department of Environmental Quality this week cited the company for several violations of its air quality permit after inspectors found emissions controls had been built without a permit. That inspection led to the discovery of a more significant problem: The company had redesigned its wood pellet process, known as CoalSwitch, from what was originally submitted in its air permit and subsequently approved by DEQ.

Neither Antonio Esposito, chief operating officer for Active Energy Renewable Power, nor company spokesman Tom Huddart responded to Policy Watch emails seeking comment.

More than a year behind schedule, the wood pellet plant at the former Alamac Knits factory hasn’t been built; meanwhile, a sawmill operates there. Community members and environmental advocates have opposed the plant not only because of air quality concerns, but also its proximity to the Lumber River.

The plant lies within an environmental justice community: 90% of residents in the same census block are persons of color, many of them Native American. Two-thirds of the households are low-income, according to census data.

According to a letter to the company, the initial inspection by the Division of Air Quality was conducted on March 29. Two weeks later, on April 14, the agency and company representatives held a conference call about the state of construction and design of the plant. During that call Active Energy representatives confirmed that two unpermitted control devices had been installed; division officials told the company that installation violated its air quality permit.

Yet during a follow-up inspection on April 27, Division of Air Quality inspectors found yet another unpermitted device had been built. The company claimed that that device had been built before the earlier conference call and that they had since stopped construction.

According to a notice from the company posted last December on the London Stock Exchange news service, Active Energy had been working on these design revisions since October 2020. A engineering firm contracted by the company had analyzed the wood pellet process in regards to the air permit requirements, and subsequently changed the design. Construction was to begin in January 2021.

The company’s announcement aligns with comments made by an individual with knowledge of Active Energy’s business plan. That person told Policy Watch in an interview that it was unlikely the previous design could meet the permit requirements. The person, who no longer is affiliated with the company, asked not to be named because they said they feared retribution from company officials for speaking out.

The person told Policy Watch that equipment had to be shipped from elsewhere in the U.S., which the company announcement also confirmed. “The company says it has a low carbon footprint,” the person said. “But they’ve trucked the plant from Utah and now the rest of the equipment. This is not green.”

Active Energy projects it will manufacture 40,000 tons of wood pellets per year. But the company has told shareholders that it expects to ramp up production to 400,000 tons annually. Even at initial production estimates, the plant is expected to emit 11,300 tons of greenhouse gases per year, plus 7.9 tons of carbon monoxide, 2.5 tons of hazardous air pollutants and 23.6 tons of volatile organic compounds, according to its air permit.

“We’re glad to see DEQ finally take action and hold Active Energy accountable for violations of its air quality permit,” said Heather Hillaker, attorney with the Southern Environmental Law Center, via email. “We remain concerned, however, that Active Energy has still not applied for a permit to authorize water pollution that is expected once the pellet mill starts operating. We hope DEQ will be as diligent in examining this issue and ensuring that Active Energy’s operations do not result in additional environmental violations.”

The Division of Air Quality also told the company it must submit a permit modification as soon as possible to address all changes; it did so on April 26. Given the public interest in the proposed plant, DEQ could hold a public hearing on the modified permit. At the very least, there would be a public comment period. The p

Active Energy has until May 19 to explain why it violated the terms of its permit.

As Policy Watch reported last year, CoalSwitch was tested in 2016 at the University of Utah’s Institute for Clean and Secure Energy. The results showed that CoalSwitch wood pellets could be burned alongside coal or as a standalone fuel in traditional power plants with no loss of heat. Utilities that chose to use CoalSwitch pellets wouldn’t have to spend millions of dollars to retrofit their facilities. And because the patented technology uses steam to explode the pellets, which resemble black kibble, to remove some contaminants, they burn cleaner than coal.

However, the Institute for Clean and Secure Energy, funded in part by the U.S. Department of Defense and the Department of Energy, as well as the fossil fuel industry, did not, however, test the stack emissions for CoalSwitch. The tests catered only to utilities, which would buy the pellets, generating energy for themselves and substantial profits for Active Energy. 

A British company, Active Energy is publicly traded on the London Stock Exchange. It has been embroiled in controversy since it tested its technology in Utah. Two former employees have sued company, alleging financial irregularities.

Last year, DEQ found the company was illegally discharging stormwater from the site; it later applied for and received a stormwater discharge permit. In March 2021, the Southern Environmental Law Center on behalf of Winyah Rivers Alliance, sued the company, alleging its discharge of wastewater into Jacob’s Branch, a tributary of the Lumber River, violated the Clean Water Act.

The wastewater originates beneath the ground and is contaminated. At least one previous tenant polluted the groundwater with dry cleaning solvents.

This week, the company filed a Motion to Dismiss the suit, and issued an announcement, saying it “strongly refutes and denies the allegations.”  Active Energy said it also “intends to seek sanctions against SELC for having failed to conduct a reasonable inquiry as to the facts and/or law prior to filing this suit.”