The Mohegan Tribe of Connecticut wants to turn one of Tennessee's biggest renewable energy failures into a business success with another type of renewable product in growing demand around the globe.
Northeast Wood Products, a wood pellet maker the Mohegans started a couple of years ago, plans to take over part of the shuttered Tennol Energy plant in Jasper, Tenn., to begin making wood pellets from waste wood collected in the region. By November, the abandoned ethanol-producing plant should be retrofitted to produce up to 125,000 tons of wood pellets a year and employ about 25 workers at the site.
"With Jasper being on the Tennessee River and having a 40-railcar siding, we now have easy access to the Gulf, East Coast ports and points beyond," said Guy Mozzicato, president of Northeast Wood Products, which also operates smaller wood pellet plants in Ohio, Virginia and Indiana. "I'm looking forward to the near future when we have additional announcements of our global development."
But the Mohegans' entry into the land of the Cherokees isn't being welcomed by all --and not because of any tribal disputes.
Although energy generation from wood pellets is considered carbon neutral and encouraged by the European Union and other countries as an alternative to burning coal and gas, some environmentalists worry that turning to wood products may encourage the exploitation of area forests.
Two decades ago, environmental leaders fought back plans to build chip mills in Marion County, charging that such plants might encourage clear cutting and deforestation along the Tennessee River.
"This is the invasion of the chip mills round 2," said Dennis Haldeman, a Chattanooga environmental activist who is a member of the Energy Justice Network opposed to biomass energy generation. "There isn't waste wood around here any more and I just worry they are going to go after the same trees that the chip mills were going to try to clear cut and harvest 20 years ago. It's not clean, it's not sustainable, and it's not environmentally friendly in any way, shape or form."
Haldeman vowed to try to fight any permits required by the Tennessee Valley Authority or Army Corps of Engineers for barge shipments of the wood pellets.
But in an interview Tuesday from a conference in London, England, Northeast Wood Products Senior Vice President Michael D. Reid said the company plans to use waste wood and won't try to harvest area forests or clear cut land to get the wood needed for pellet production.
"We would anticipate sourcing from about a 100-mile radius with wood wastes and other wood materials readily available in this region," Reid said. "The majority will be sawmill residue or waste wood that typically is of no use to anybody else."
Most of the pellets will either be packaged in 40-pound bags under the company's brand, Therma Glo, or shipped in bulk overseas to Europe or other markets where utilities burn pellets to generate power, Reid said.
The company will use the tanks, loading docks, and some of the plant equipment originally installed on the site more than three decades ago when the government-backed Tennol Energy built the ethanol plant in 1984. The original $72 million plant was never successful in making much ethanol and defaulted on its government loans.
In 1994, the abandoned facility was bought for $10.4 million by AG Processing Inc. of Omaha, Neb., and then Community Bank later acquired the site through foreclosure. Renewable Fuels LLC, which operates under the name Carbellus, purchased what was left of the original $74 million plant for only $2.6 million in 2009 and has since operated only a small biodiesel facility using chicken parts.
Despite the failure of the original ethanol facility, Reid said the site and its location near flooring manufacturers, sawmills and wooded areas in the Southeast make it attractive for the rapidly growing Northeast Wood Products.
"This is a good location for trucking, for rail and for barge shipments and we plan to be able to use a lot of the infrastructure that is now on the site," Reid said.
The Connecticut Mohegan tribe began investing proceeds from its casino into the wood pellet business a couple of years ago. The company has purchased pellet plants in Ligonier, Ind., Peebles, Ohio, and Kenbridge, Va.
Northeast Wood Products has agreed to a 20-year lease from Renewable Fuels of part of the former Tennol plant. Within the next year, the company anticipates making 450,000 tons of wood pellets at all of its plants.
"We want to be a major player in this industry because we see real growth potential," Reid said.
The business is owned by the Mohegan Tribe, a sovereign, federally recognized Indian nation founded on the banks of southeastern Connecticut's Thames River by Chief Uncas in the early 17th century. After its federal recognition in 1994, the Tribe opened the casino resort Mohegan Sun on its reservation land in Uncasville, Conn., in 1996.
The Mohegan Holding Company, LLC was created by the Tribe for business diversification in non-gaming areas, and now includes interests in franchise restaurants, sustainable energy resources and manufacturing, and office digital solutions.
"We're well on our way toward meeting our five-year goal of 1.5 million tons of annual capacity (for wood pellets)," Mozzicato said. "The market demand for quality product is evident, and we're working to meet those needs."
The Pellet Fuels Institute, a trade group for those making wood pellets, projects that North American wood pellet production is growing at a 14 percent annual pace and will increase from 7.9 million tons in 2013 to 15.5 million tons in 2018.
Made from compressed pieces of wood and sawdust, pellets can be burned in either a specialized woodstove or boiler system to heat homes.
Jennifer Hedrick, executive director of the Pellet Fuels Institute, said nearly 3 million tons of wood pellets are burned by consumers in the United States, mostly in the Northeast as a substitute for more expensive home heating oil.
"It's going to be one of the big new heating sectors in the near future," said Bram Claeys, Massachusetts' Department of Energy Resources' deputy director for renewable and alternative energy development.
But Hedrick said the biggest growth is coming from exports to utilities around the globe, especially in Europe where the European Union has set a goal of replacing coal-fired generation with renewable sources, such as biomass.
"We're a carbon-neutral, clean energy source and we expect demand for wood pellets will continue to grow," she said.
Contact Dave Flessner at email@example.com or at 757-6340.