Energy giant Drax’s monopoly of BC’s wood pellet industry must be investigated, union, conservation and public policy groups demand

February 16, 2022

VANCOUVER — The company operating the world’s largest wood-fired thermal electricity plant has too much control of British Columbia’s wood pellet industry and must be ordered to divest of some of its holdings, union, environmental and public policy organizations say. 

In a letter sent today to the Competition Bureau of Canada, the organizations say the UK’s Drax Group now directly controls or is a partner in seven of BC’s 13 pellet mills and has a lock on two thirds of the nearly 2.5 million tonnes of pellets produced in the province annually. 

The letter was prompted after news late last year that Drax had acquired $675 million in sales contracts from Pacific Bioenergy, BC’s second-largest wood pellet maker. Days later, Pacific Bioenergy’s owners announced that they will close the facility in March at a cost of 55 jobs. 

“We are obviously extremely concerned at the impact the closure will have on our members and their families. But we are equally concerned about Drax’s stranglehold on BC’s wood pellet industry and what it may mean for our forests and forest industry workers in the months and years ahead,” says Gary Fiege, president of the Public and Private Workers of Canada, which represents workers at the Pacific Bioenergy plant. 

The Drax Group operates a massive thermal electricity plant in the UK that burns 10 million tonnes of wood pellets annually. Drax claims the pellets it burns are made from waste or “residual” wood chips and sawdust from lumber mills. But both union and environmental leaders in BC say the pellet industry is, in fact, turning tens if not hundreds of thousands of logs from trees cut down each year in the province directly into pellets. 

“We are deeply troubled by evidence of massive numbers of whole logs being chewed up at Drax operations. Drax’s monopoly should be reviewed immediately by Canada’s Competition Bureau. And, we also want the BC government to appoint an independent expert to assess how many tens if not hundreds of thousands of logs per year are being consumed at Drax operations, especially logs from primary forests that have never before been subject to industrial logging activity,” says Conservation North director, Michelle Connolly. 

Figures published by the Wood Pellet Association of Canada and analyzed by the Canadian Centre for Policy Alternatives show that Pinnacle Renewable Energy Inc., which was purchased last April by Drax, owns or is a partner in seven pellet mills in BC. 

The manufacturing capacity of Drax’s BC mills is nearly 1.6 million tonnes per year, which represents 64 per cent of the nearly 2.5 million tonnes of productive capacity in the province’s pellet industry, minus the production at the soon-to-be-idled Pacific Bioenergy mill. 

In neighbouring Alberta, which has only five pellet mills, Drax’s two mills account for 82 per cent of wood pellets produced in the province. Canada-wide, Drax now controls 44 per cent of all of Canada’s pellet production. 

“We think that level of control is unhealthy. Not only does it stifle competition, but it further entrenches a company that generates among the fewest number of jobs per unit of wood processed of any sector in Canada’s forest industry. There’s only one forest product with a worse domestic job-creation record, and that’s raw, unprocessed logs that are loaded into the holds of ocean freighters and sent overseas for processing without ever entering a mill in Canada,” says Ben Parfitt, CCPA resource policy analyst. 

“We worry this is just the beginning for Drax in Canada. With  a limited number of trees to go around, we should do all we can to maximize the jobs we create. That means prioritizing an array of solid-wood products and then turning true wood waste into other things that may include pellets. Allowing a foreign producer to monopolize the pellet industry and then to cut down trees directly to make pellets threatens both our forests and forest industry workers,” says Scott Doherty, executive assistant to Unifor’s national president. 

For more information contact: Jean Kavanagh, Canadian Centre for Policy Alternatives, 604-802-5729, [email protected]