US forests to fuel European power plants – a green supply chain ?

Posted on May 29, 2013 by aviyer2010

An article in the Wall Street Journal (May 28, 2013) describes exports of US forest generated pellets to replace coal in European power plants as Europe cuts down on fossil fuel use and tries to decrease emissions of carbon dioxide. But this supply chain also results in new trees being planted in US forests, that can absorb more carbon than mature trees. Is this substitution of wood pellets for coal, and new trees for old, a supply chain that improves the carbon footprint globally ? Given the jobs generated by the logging in the US, should that be included in any calculation of the “consumer welfare” effect of this supply chain ? How should the supply chain be monitored to ensure that “best practice” recommended by the European Union is followed by US loggers ?

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This entry was posted in Global Contexts, Operations Management, Supply Chain Issues, Sustainability and tagged coal, Coordination, Cost, Environment, Europe, exports, Global, power plants, Suppliers, Supply Chain, Sustainable, USA, wood pellets. Bookmark the permalink.

3 Responses to US forests to fuel European power plants – a green supply chain ?

Anubhav Nigam says:

August 27, 2013 at 3:25 am

A green supply chain should also be sustainable supply chain. The rate of cutting of old and useless trees should be less than the rate of planting the saplings which will grow up to replace the old trees .
Though the European law stipulates the rules for cutting specific trees for power generation but actual compliance with the law will always remain a controversial issue .

Any supply chain is seen from end to end alignment of interests of involved parties. Here , it should be taken care of that logging in U.S. may provide power to Europe but it may also harm the environment in U.S.

A surge in demand of logging is expected because European companies would get carbon credits for using wooden pellets for power generation.the financial gain made by European power generators must be shared with US stakeholders to counter the excessive or illegal logging.

As of now it seems to me , that European power generation companies are working in their silos to squeeze the benefit of supply chain for their own favour.

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Rahul Dsouza says:

August 30, 2013 at 4:06 pm

Firstly, the carbon footprint calculation needs to be done as below:

Carbon Footprint Improvement (Coal to US Pellets) + Carbon Footprint Decrement ( Cutting of Old trees) + Carbon Footprint Improvement ( Planting of new trees) = Total Carbon Footprint Change..

We need to see that the total equation is positive. But having a positive number doesnt ensure that the supply chain is green. We not only need to see the carbon footprint KPI, but also the ecosystem affected due to the cutting of the old/mature trees. Cutting of old/mature trees also disturbs the current ecosystem which has been established over the years. We cannot just conclude that if we plant new trees over cutting the old trees down for better carbon footprint, that the supply chain is green. This aspect is controversial.

This will indeed have a good impact on the employment status of logging in the US. But what about the impact on the employment status of the coal quarries? The demand for logging will increase, but the demand for coal quarries will decrease, thus decreasing their jobs.

Carbon Footprint Change + Ecosystem Damage + Consumer welfare effect in US + Consumer welfare effect in the Coal quarries are the contributing factors for this debate. We cannot have all 4 in the green zone.

Thus many aspects needs to be revisited, before calling it a day.

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Jiaji (Ashley) Zhou says:

September 24, 2013 at 4:00 pm

I agree with Rahul’s idea about monitoring Carbon Footprint Improvement, but add “Unsuccessfully planting of new trees” or “Gap between cut of old tress and plant of new trees” into “Carbon Footprint Decrement”.

About the “Consumer Welfare”, since this should be a cooperation between the US and EU, Consumer Welfare=job demand changes in related industry (Logging and coal) in both EU and the US + the benifit for people’s life + the possible inconvenient to people’s life + unknown effect on the environment & Eco-system.

Taking all th above into consideration, we may move forward to see if this is a good practice.

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