Wood-Fired Plants Generate Violations

BLUE LAKE, Calif.—Malodorous brown smoke from a power plant enveloped this logging town on April 29, 2010, and several hundred residents fled until it passed.

Six months later, the plant got $5.4 million from a federal program to promote environmentally preferable alternatives to fossil fuel.

The plant, Blue Lake Power LLC, burns biomass, which is organic material that can range from construction debris and wood chips to cornstalks and animal waste. It is among biomass plants nationwide that together have received at least $700 million in federal and state green-energy subsidies since 2009, a calculation by The Wall Street Journal shows.

Yet of 107 U.S. biomass plants that the Journal could confirm were operating at the start of this year, the Journal analysis shows that 85 have been cited by state or federal regulators for violating air-pollution or water-pollution standards at some time during the past five years, including minor infractions.

Biomass is growing as a source of electricity, its production up about 14% in the past 10 years, according to the Department of Energy. Alternative electricity-production sources as a whole generate about 13% of power in the U.S., and biomass is about 11% of the alternative production.

As federal and state governments promote such sources—largely to cut emissions believed to affect the climate but also for related goals such as providing cleaner air to breathe, preventing acid-rain harm to lakes and reducing reliance on energy imports—biomass plants generally qualify along with wind and solar.

Although the biomass plants inevitably produce emissions, since they burn things, what they burn replenishes itself, qualifying them as renewable power.

They also count as carbon-neutral, on the notion that the carbon released when they burn a material such as scrap wood eventually would get into the atmosphere anyway, when the wood decays.

The Biomass Power Association says any emissions noncompliance lies with a small number of plants. "The idea that members of my association are out of compliance with environmental restrictions on a regular basis is totally wrong," said Bob Cleaves, president of the group, which represents more than 80 power plants that burn wood, not including Blue Lake.

Mr. Cleaves, who declined to comment on specific plants, said biomass is cleaner than the fossil fuels because it is carbon-neutral, and produces "clean energy" efficiently. Mr. Cleaves said the biomass industry gets a disproportionately small share of public funding in relation to the amount of energy it generates.

Michael Van Brunt, director of sustainability for a division of Covanta Holdings Corp. that owns eight biomass plants, said such power is a vital piece of the nation's renewable-energy supply and gets less in government support than fossil-fuel sources. Fossil-fuel industries also receive government subsidies, but these generally aren't intended to improve the environment.

Some in the industry say a range of issues, from inconsistent fuel supplies to age, can make compliance with emissions standards challenging at biomass plants. "It's goddamn hard to stay in compliance," said Kevin Leary, co-owner of Blue Lake Power.

Mr. Leary—who blamed its smoke release on low-quality fuel—said a problem some biomass plants face is simply that they are old, tracing back to a Carter-era program to spur alternatives to imported oil, and weren't designed to meet today's more stringent emissions rules.

"Without the ability to change the geometry of the furnace, you've got to pull a rabbit out of a hat" to meet limits on nitrogen-oxides emissions, Mr. Leary said, and use strategies such as large smoke scrubbers and precise monitoring of fuel and oxygen levels.

Blue Lake is 27 years old. It was idle for a decade until Mr. Leary helped restart it in 2010. Since then it has had emissions violations, a machinery fire and an explosion that blew a 6-foot hole in a concrete wall. For a while last year it was on an EPA watch list of plants with compliance issues. Now, Mr. Leary says, it is operating within its permit.

Nearly all U.S. biomass plants receive government support from subsidies, grants or state-approved power contracts. The federal economic-stimulus act of 2009 provided more than $11 billion for renewable power, of which about $270 million went to biomass plants, in grants administered by the Treasury Department. Other federal agencies involved in such subsidies include the departments of energy and agriculture.

More than 30 states require utilities to buy a percentage of their power from sources that are renewable, generally letting the utilities pay more for this power than they would for electricity generated by fossil fuels. Blue Lake sells its electricity to a San Diego utility that pays it about twice as much for coal-fired plants' energy.

In Old Town, Maine, a facility called Old Town Fuel and Fiber has received more than $5 million in federal funds to develop renewable fuels since 2007, most recently $377,000 from the state for equipment.

Old Town also has exceeded state-mandated limits on sulfur or another pollutant in every quarter since the end of 2009, federal records reviewed by the Journal show. Violations continued after the plant paid almost $300,000 in fines between 2008 and 2011.

Company president Dick Arnold said the violations should stop once the plant receives a new state permit, which he said will increase its allowable carbon-monoxide emissions. A spokeswoman for the Maine Department of Environmental Protection said such a permit is in the approval process. She said the department and Old Town are in the process of negotiating a "six-figure settlement" in which Old Town will pay fines for prior violations.

Old Town hasn't been required to pay back its grant funding or subsidies. In almost all cases, green-power subsidies aren't linked to environmental compliance.

Mary Booth has studied biomass power for the Environmental Working Group, an organization that calls for stricter regulation, and the Partnership for Policy Integrity, a smaller group that is critical of biomass plants. She says government agencies should withhold grants from plants that violate emissions standards. "Why are we subsidizing and incentivizing something that's dirtier than coal power in certain ways?" she said.

Daniel Kammen, a professor at the University of California at Berkeley who also studies renewable energy, says that in the long term, creating electricity by burning organic waste should help reduce greenhouse gases. But he says much recent government funding has gone to projects that were already online, old ones that are more prone to break down and are "not necessarily the best in terms of local air quality."

Some violations are attributed to regulatory standards that are still being ironed out. Simpson Tacoma Kraft Co. of Tacoma, Wash., which mills lumber, got an $18 million federal grant in February toward the cost of a new wood-burning boiler that produces electricity and heat. Since it started up in 2009, the boiler has emitted higher levels of nitrogen oxides than its original state-issued permit allowed, according to state regulators and Simpson.

Washington state bases permits on the emissions levels achievable by the best boiler technology. Simpson's permit was based on claims the manufacturer made about what its emissions should be, but the nitrogen-oxide emissions turned out to be higher, said a Simpson spokesman, Dave McEntee. The company has done a study to figure out whether the permit should be changed to allow higher emissions.

Robert Carruthers, a Washington Department of Ecology engineer, said the higher emissions rate is a "nuanced ongoing issue" that may be resolved by increasing the plant's allowable emissions.

Mr. McEntee said the plant currently is in "full compliance" with a temporary limit the state set. He added that EPA calculations show that since the plant started operating it has helped avoid 179,000 metric tons of carbon emissions, versus buying conventionally produced power.

California, with 33 biomass plants, has nearly a third of the nation's total. In the Central Valley, four biomass plants received more than $10 million in state clean-energy subsidies from 2009 through 2011 while accruing more than $2 million in fines during the same period.

Crown Disposal runs a biomass plant near Fresno called Madera Power, which the owner's website describes as producing "green renewable electricity." Crown took it over in 2004. Since then, state regulators have cited the plant more than two dozen times, fining it several times from 2004 to 2009 for failing to perform emissions tests and emitting excess sulfur and visible smoke.

Madera Power nonetheless qualified under a California program that used a "public goods" surcharge on utility bills to fund a "self-sustaining renewable energy supply for California." From 2009 through 2011, when that program ended, Madera Power received nearly $6 million in subsidies, state records show.

During that time, it emitted excess sulfur, particulates, carbon monoxide and nitrogen oxides and at one point was found to be burning plastic and rubber, which weren't allowed.

A second Crown Disposal plant nearby received $3.1 million in state subsidies from 2009 to 2011 and had multiple violations. The San Joaquin Valley Air Pollution Control District fined Los Angeles County-based Crown $1.875 million in 2010 for the violations.

Since then, regulators have fined the Madera plant for continued excess sulfur and carbon-monoxide emissions, regulatory documents show. The air district fined it for excess visible smoke in December, and this year it has had two citations for excess carbon dioxide.

Crown's owner, Thomas Fry, said the Madera plant hasn't been producing power in recent months. "It's pretty darn hard to stay in compliance with anything any more," he said.

Mr. Fry said that officials from the Air Pollution Control District "just come out, decide they need money, and write a citation."

A district spokeswoman said that before levying a fine, officials hold multiple meetings with plant managers to figure out how they can come into compliance. The plants were fined, she said, because they had a pattern of violations and "were burning literally tons of illegal materials" like plastics.

Two nearby Central Valley power plants, in El Nido and Chowchilla, received more than $2.5 million in state clean-power subsidies from 2009 to 2011 and violated restrictions on nitrogen, sulfur and carbon monoxide at various times during those same years. The EPA last year fined them $835,000.

A problem was inconsistent fuel supplies, said a person who had a management role with the plants. They had mainly burned building debris, but the construction slowdown reduced that and forced plants to use more agricultural waste, including orchard trimmings that didn't burn cleanly.

A spokeswoman for the plants' current owner, Akeida Capital Management, said they have been running without violations since it acquired them in December. She added that the plants provide employment for 41 people and use waste that might otherwise go to landfills.

Blue Lake Power, the plant that once sent residents fleeing, was resurrected with the help of federal funds.

Built in 1985, it closed in 1999. Hoping to get into the growing renewable-power industry, Mr. Leary, a former fiber-optic-cable engineer, decided to buy the plant with several partners.

Mr. Leary's group received a $2 million grant from the U.S. Forest Service and more than $16 million in investments to buy and refurbish the plant, knowing a provision of the federal stimulus act would refund 30% of the investment, amounting to subsidies of over $5 million.

Mr. Leary lived for months in the plant's dusty offices, making deals with logging companies for wood waste and getting permits in line. The plant fired up on April 29, 2010, and immediately began spewing dark smoke.

Curtis Thompson, who works at the Mad River Brewery across the street, picked up his wife and young daughter and fled, as did several hundred other residents. "We were smoked out," Mr. Thompson says. The people returned over the next couple of days as the air cleared.

The plant went idle. The North Coast Air Quality Management District investigated and found several violations. It reached a settlement with Mr. Leary requiring Blue Lake to pay $1.4 million but allowed it to spend most of the money buying new pollution-control equipment and developing better operating practices rather than paying the agency.

"It has been painful for us to realize that our performance has not been good at all," Mr. Leary wrote in 2010 to the air board's general manager, Rick Martin.

Blue Lake briefly reopened last year, closing again after a wood-loading conveyor belt caught fire. Last summer the EPA put the plant on its watch list of problematic polluters with unresolved compliance issues. It was removed in October.

The plant restarted again in March 2012 and promptly had a pipe explosion that blew a hole in the boiler and a concrete wall. These have been fixed, and the plant is operating again.

Mr. Martin of the air board says he hopes it can stay in compliance. There are four power plants in his district. Three have been fined for environmental violations over the last two years. They all burn biomass and get subsidies or charge customers a premium for their electricity.

A fourth plant, Mr. Martin says, has a clean environmental record and no renewable-energy subsidies. "It burns natural gas," he says.

Write to Justin Scheck at justin.scheck@wsj.com and Ianthe Jeanne Dugan at ianthe.dugan@wsj.com

A version of this article appeared July 24, 2012, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: 'Green' Wood-Fired Plants Generate Pollution Violations.