SUSTAINABILITY

The Highland Sustainability Commitment

Highland’s commitment to sustainability is at the core of who we are. Our pledge to operate in a transparent, ethical manner is essential to how we conduct business with our customers, our partners, and our stakeholders. Our commitment extends beyond current U.S. standards to the stringent European standards provided by the Sustainable Biomass Program, the Renewable Energy Directive and EU Deforestation Regulations.

Highland Pellets Procurement Strategy

Highland does not use any large trees that have greater value as sawlogs or poles — it is commercially disadvantageous to do so. All the tree thinnings have low market value with limited local demand.  Highland does not source any wood from virgin forests or areas with protected species. Every truck load of wood used by Highland is tracked and traced, verifying its origin from commercial working forests which are proven to meet the high sustainability standards of the European market. This means that Highland must demonstrate that the wood it is using is sourced from legal and sustainable sources which do not harm the local environment, wildlife or local inhabitants. To do this, Highland provides detailed evidence to its auditors each year of where it is purchasing its wood. This requires compliance with a European standard known as the Sustainable Biomass Program (SBP) which demands more evidence than is provided through local sustainable forest programs, such as the Sustainable Forestry Initiative® (SFI). Highland will also be compliant with the EU Deforestation Regulations (EUDR) which will be implemented shortly and require Highland to provide evidence of exactly where it sources its wood fiber.

The responsible thinning and harvesting of working forests ensure that landowners have a stake in the sustainability of their holdings and provides an incentive for the owners to reinvest into growing their working forests.  This in turn supports a much needed ‘in-woods’ industry that many families rely on for their livelihoods and is an economic driver for rural areas.  Highland has repeatedly heard from local citizens who have delayed thinning their working forests for many years because there are insufficient markets to sell their wood. Forests that are not thinned will become over-crowded so that the value and quality of the holdings will deteriorate over time.

The practice of thinning has multiple benefits:

  • Improving forest health by removing poor quality, deformed trees and strategic portions of the stand of fiber, allowing the remaining stand greater access to light, water and nutrients so as to increase productivity and growth into higher value products
  • Capturing fiber from trees that would otherwise die from overcrowding
  • Lowering fire hazard and susceptibility to insects and disease
  • Allowing the landowner access to another source of revenue
  • Allowing for visual and volume variety in an otherwise similar age group of timber
  • Modifying the stand structure for the benefit of wildlife habitat or biodiversity

A stand of timber has a point of maturation where both the economic value and health of the stand begin to decline.  This is when a land manager will typically perform a final harvest.  During this stage, the majority of the fiber is sorted for higher value products such as saw timber, ply logs and poles.  There is, however, also a need for a market for the unwanted treetops and lower quality wood fiber that are not usually merchantable from any timber stand. Tree tops that are left over from the harvesting of sawlogs and telephone poles are either burned or left to rot if they can’t be sold.

The tops, branches and smaller poor-quality trees that will not meet the criteria for higher value products are an important part of the fiber mix for our facility at Pine Bluff, thereby enabling a greater use of every tree.  Access to this market will add to the economic value for landowners investing and continuing forest management in the Pine Bluff area.

Forests absorb carbon dioxide from the atmosphere and therefore play a crucial role in reducing global GHG emissions. A forest that has been well managed is more likely to be healthy, provide environmental and biodiversity benefits and absorb more carbon dioxide from the air than if the same forest contained over-crowded trees competing for light, water and nutrients.

Adverse Weather Policy

In wet weather, harvesting timber is more likely to cause environmental damage due to rutting of wet ground by forest machinery and greater water run-off from harvest areas into neighboring streams. Highland helps to reduce the likelihood of environmental damage by working to build a strong wood inventory prior to the winter months when there is a greater risk of prolonged wet weather. In addition, the procurement staff conducts forest checks of best management practices (BMP). Conducting BMP checks allows us to verify that good practices are being followed year-round (e.g., set down of branches and treetops onto the forest floor to reduce damage to the forest floor, use of dual or high flotation tire). We give our suppliers feedback that can improve on any problematic areas. In truly intense weather, such as a hurricane, Highland holds the right to curtail procurement if there is a risk that continued harvesting would lead to environmental damage of the forests.

Highland Sustainable Forestry Policy

Highland is committed to continually achieve certification to the Sustainable Biomass Program (SBP), Sustainable Forestry Initiative® (SFI) Fiber Sourcing Standard, Forest Stewardship Council® (FSC®) and Programme for the Endorsement of Forest Certification (PEFC) Chain of Custody and Controlled Wood Standards, as well as comply with applicable environmental, social, and health and safety laws and regulations.

Highland supports strong labor laws and commits to observe and give effect to the below:
  • The organization shall not use child labor.
  • The organization shall not employ workers below the age of 15, or below the minimum age as stated under national, or local laws or regulations, whichever age is higher, except as specified in the following: In countries where the national law or regulations permit the employment of persons between the ages of 13-to-15 years in light work, such employment should not interfere with schooling nor, be harmful to their health or development. Notably, where children are subject to compulsory education laws, they shall work only outside of school hours during normal daytime working hours.
  • No person under the age of 18 is employed in hazardous or heavy work except for the purpose of training within approved national laws and regulations.
  • The organization shall prohibit the worst forms of child labor.
  • The organization shall eliminate all forms of forced and compulsory labor.
  • Employment relationships are voluntary and based on mutual consent, without the threat of a penalty.
  • There is no evidence of any practice using forced or compulsory labor, including, but not limited to, the following:
    • physical and sexual violence
    • bonded labor
    • withholding of wages /including payment of employment fees and or payment of deposit to commence employment
    • restriction of mobility/movement
    • retention of passport and identity documents
    • threats of denunciation to the authorities
  • The organization shall ensure that there is no discrimination in employment and occupation.
  • Employment and occupation practices are non-discriminatory.
  • The organization shall respect freedom of association and the effective right to collective bargaining.
  • Workers are able to establish or join worker organizations of their own choosing.
  • The organization respects the full freedom of workers’ organizations to draw up their constitutions and rules.
  • The organization respects the rights of workers to engage in lawful activities related to forming, joining or assisting a workers’ organization, or to refrain from doing the same, and will not discriminate or punish workers for exercising these rights.
  • The organization negotiates with lawfully established workers’ organizations and/or duly selected representatives in good faith and with the best efforts to reach a collective bargaining agreement.
  • Collective bargaining agreements are implemented where they exist.
  • Indigenous Peoples’ rights, workers’ and communities’ right to know, and use of prevailing wages are respected.

Highland’s commitment to sustainability is at the core of our foundation. Our pledge to operate in a transparent, ethical manner is essential to how we conduct business with our customers, our partners and with our own stakeholders. That commitment extends beyond the current U.S. standards, as we will also be in complete compliance with stringent European standards provided by the Sustainable Biomass Program (SBP)[1]. We are in the business of delivering sustainable fuel products. Our business can only succeed if we make sustainability a key principle for Highland.

Highland promotes the practice of sustainable forest management including:
  • Sustainable Forestry
  • Forest Productivity and Health
  • Protection of Water Resources
  • Protection of Biological Diversity
  • Aesthetics and Recreation
  • Protection of Special Sites
  • Legal Compliance
  • Research
  • Training and Education
  • Community Involvement and Social Responsibility, and respect for Indigenous Rights
  • Transparency
  • Continued Improvement
  • Responsible Fiber Sourcing

In production, our commitment to sustainability extends to minimizing our energy use in both our pellet production and transport logistics. To the extent commercially practicable, we use all the waste bark from our roundwood deliveries as fuel for our drying process to reduce our greenhouse gas emissions. Our pellets are transported to port by rail or barge to help minimize our transportation emissions. Each Highland pellet site undertakes a detailed independent sustainability audit each year to ensure that our fiber supply is sourced and used to the high sustainability regulations required by customers.

Summary:

Highland’s wood pellet business is environmentally friendly and sustainable in several ways:

  • Wood pellets directly replace coal burned in European power stations, reducing the emission of GHG emissions by over 80%. 2
  • Contributes to protecting the commercial viability of the forestry sector, thereby helping forests to remain as forest rather than be converted to alternative land uses.
  • Our wood pellets are sourced from waste material from mills. Our fiber demand creates an additional local market which helps the livelihood of local rural communities.

Highland is committed to sourcing wood and residual fiber from renewable, legal and sustainable sources and to promote the principles of sustainable development and use of renewable resources.  It also strives to broaden the practice of sustainable forestry and improve the professionalism of forest workers and the forestry community.

Highland has set an overall goal of increasing the use of renewable wood energy, reducing wood waste and decreasing greenhouse gas emissions. The use of woody biomass as a replacement for fossil fuels is a proven way to improve forest utilization, facilitate regeneration of the forest, reduce the risk of wildfire, reduce carbon emissions, and improve the international trade in forest-based products. It will also provide a market incentive for landowners to keep their lands in forest cover.

To help implement and achieve the above sustainability, renewability and greenhouse gas reduction objectives, Highland has developed and adopted appropriate programs and documented procedures to guide its wood and fiber procurement, sustainable forestry practices, and certification claims.

We are committed to annually review the effectiveness of our Sustainable Forestry Policy, chain of custody and responsible fiber sourcing programs to continually improve our wood procurement systems and to ensure legal and regulatory compliance.

Notes:
[1] https://sbp-cert.org/

[2] Source: Highland FR data using Ofgem UK Solid and gaseous Biomass Carbon Calculator, Model Version 2.0 (Build 36, released 2nd October 2015)

A Market for Unwanted Biomass Helps Keep Forests Healthy 

Our commitment to sustainability also extends to minimizing our energy use in both our production processes and transport logistics. All our pellet material is dried using waste wood rather than natural gas. Each plant undertakes a detailed independent sustainability audit every year to ensure our fiber supply is sourced and used to the high sustainability regulations required by our customers and government regulators.

Although Highland does not own or directly manage any forests, our strong relationships across the forest supply chain and our role as a buyer of forest fiber allows us to positively influence forest management practices. We are committed to working with forest owners to deliver innovative, high-quality products that sustain and strengthen our nation’s forests.

We are part of a broader sustainable forestry sector with a track record of encouraging best forest management practices among U.S. landowners that have a positive impact on forests. According to data from the U.S. Forest Service Forest Inventory and Analysis (FIA) Program, U.S. forests have increased over the last 100 years, and forest carbon stocks have doubled since the 1950s. These gains happened despite a tripling of the U.S. population, record commercial and urban development, and devastating forest fires.

No, biomass is part of a closed cycle involving the atmosphere and biosphere. Trees take carbon from the atmosphere when they are growing and release it again when they decay in the forest or are burned. This is known as the carbon cycle. In contrast, when fossil fuels are burned, carbon is released that has been stored for millions of years, which increases the amount of carbon in the atmosphere. This carbon would have continued to have been stored if it was not burned. Instead, the burning of fossil fuels adds to a net increase in the amount of carbon in the cycle, which adversely contributes to the greenhouse effect.

Biomass-fueled power stations are available to be ramped up or down when needed by the power system operator. Biomass is therefore an alternative to dispatchable fossil fueled energy, which intermittent wind and solar are unable to replace. (Dispatchable power sources can be adjusted on demand by grid operators to match supply with electricity demand.) In the last few years, many European countries have significantly changed their energy mix away from fossil fuels to include a much greater proportion of renewable energy. The prior high dependence on coal has largely been replaced by a combination of solar and wind, while natural gas remains an important dispatchable source of power for balancing the networks.

However, with most European countries now committed towards a net-zero carbon economy by 2050, natural gas remains part of the emissions problem until carbon capture storage (CCS) technology becomes commercially available and enables natural gas to become carbon neutral. Applying CCS to biomass (biomass energy carbon capture storage or BECCS) would move biomass energy from carbon neutral (existing carbon cycle) to carbon negative (most emissions captured and used in other production of goods or stored underground). BECCS technology is being developed by several utilities internationally and is expected to be commercially available within the next five years.

Biomass is therefore important today as a carbon neutral form of dispatchable energy that is cleaner than natural gas and more controllable than alternative forms of renewable energy. In the future, BECCS will be essential for countries hoping to achieve a carbon-neutral power sector by 2030 or if it is to meet its legally binding net-zero carbon targets by 2050.

An assessment of the carbon stock of a forest must include the whole forest and not just a single tree. As trees are harvested in one area of a managed forest, there will be several other areas with new trees growing. A working forest in the U.S. Southeast will harvest around 100 mature trees per acre as high value lumber for sawmills. That land will then be replanted with approximately 500 – 700 new tree saplings. The collective annual growth of the new trees is greater than the amount of wood that has been removed, not just due to the number of trees planted, but also because of the vertical growth of the young trees which can increase in height 1-to-2 inches per month in the U.S. Southeast. It is important that the trees are thinned after around 15 years to enable the remaining trees to mature into large heathy trees that have higher value for sawmills. The low-value thinned trees are too small for sawlogs and are purchased by pellet producers.

The carbon stock therefore needs to look at the region in question and assess whether there are as many trees absorbing carbon than is lost through the harvest of trees, so that there is no net loss of carbon. Sometimes the growth-to-removal ratio is used to assess the balance of harvest versus new growth. If the ratio is equal or greater than one, then there will be more trees absorbing carbon than carbon lost through the harvest of trees. Healthy demand for wood stimulates supply and ensures forests remain as forests. That is why forest cover in the U.S. is growing year-on-year and has been growing for each of the last 50 years. Highland follows stringent sustainability criteria that ensures our supply of pellets does not lead to a net increase in carbon levels.

The economies of scale are a big advantage as we are able to ship our biomass in vessels with a capacity of 65,000 tonnes. Highland Pellets measures the carbon footprint of every step in the supply chain, so we know exactly how much carbon is emitted during harvest, processing and transport. Even when this entire life cycle is taken into account, savings relative to coal are over 80%. Wind power cannot be relied upon to respond to changes in demand when needed. Other renewables are important, but on their own they cannot meet our electricity needs.

Although wood is one of the oldest sources of energy, modern technology now enables it to be processed into densified pellets that can be efficiently transported to power stations overseas. Even after allowing for the energy spent in collecting the wood, processing it into pellets and transporting the pellets by ship to Europe, the amount of greenhouse gas (GHG) released from burning the pellets is over 80% less than if the power station in Europe burned coal. Highland uses carbon calculators approved by the European Commission’s REDII protocols to monitor its greenhouse gas emissions. This allows Highland to monitor its emissions and look to make continuous improvements where possible.

Highland uses the best-available technology to ensure that any emissions are within the strict limits and regulations of our air permit.

Highland is incorporating a green grinding process to produce a very precise, smaller particle size distribution. By grinding to a smaller particle size, Highland is assured to get full penetration of the dryer heat through the cross section of the wood particle — resulting in a uniform moisture content through the particle when dried. Uniform and thorough drying reduces the difference in the shell and core moisture content assuring that any volatile organic compounds (VOCs) are released at the dryer where they can be destroyed by the regenerative thermal oxidizer (RTO). Managing this process minimizes the release of VOCs in the downstream processes.

A wet electrostatic precipitator (WESP) is used to clean particulate from the dryer air so it can be further processed to remove VOCs. Half of the dryer conveying air is recycled within the dryer, half travels through a stainless-steel quench duct where it is sprayed with water to separate the large solid particles. The moisture laden air passes through collection tubes where they are introduced to an electrostatic field which pulls the fine solid particles from the gas stream. Once the solid particles have been removed, the moist air is transferred to an RTO.

The moist air contains VOCs that have been driven from the wood fiber as it is subjected to high temperatures in the dryer. The VOC laden air is conveyed through a ceramic media bed heated to 815°C. The air is subjected to these high temperatures for approximately two seconds, which destroys 99.9% of the VOCs. After passing through the high-temperature medial beds, the cleaned air is exhausted to the atmosphere.

No, biomass provides an additional market for wood fiber that is otherwise uncommercial. This additional demand creates new value for the forest and helps to further stimulate investment in sustainable forests. In fact, wood thinnings are created as a consequence of good forestry management aimed at stimulating forest growth and development, thus maximizing carbon reduction. Highland only harvests from forests with responsible forest management practices to make sure that forests are being maintained and are not contributing to deforestation.

Highland only uses residual parts of trees (tops and sawdust) or trees that have low commercial value because they are diseased or damaged or cut down to thin the forest and encourage growth, but are too small to be sold into any other market (“thinnings”). It makes no commercial sense to use good quality mature whole trees for biomass since the mature tree has substantially more value being made into sawlogs or furniture — we simply cannot afford to use whole trees to make pellets because the wood is too expensive. The forest owners will maximize their revenue by selling the best wood into the highest value markets. Biomass provides a valuable additional source of revenue to forest owners by providing a market for wood fiber that would otherwise be non-merchantable. This helps forests stay commercially viable as forests, where many managed forests are under threat of being developed into other land uses because of the global collapse in the demand for paper caused by technical innovation.

Fiber is sourced from thinnings, low-grade pulpwood and treetops from the surrounding private forests, as well as mill residual products such as chips, bark and sawdust from local sawmills. This provides a route for sawmills to dispose of their waste products and ensures that less waste is produced from the timber supply chain.

Commercial thinning is considered a best practice common in southern yellow pine timber management where a portion of the standing timber is removed. Forest thinnings are young smaller trees, typically around 10 inches in diameter at chest height, which must be removed from the commercial forest to allow more light and nutrition for the remaining trees to grow to full size. Trees removed during thinning are too small to be used as quality sawlogs and yet stands without a market outlet for thinnings are often left to struggle to grow.

There are several methods of commercial thinning, whether it is selecting every other tree, removal of a row, or a combination of both. The type of thinning performed is determined by the initial stocking and the desired volume and design of the remaining stand.

Forest owners typically supply a range of markets including sawmilling, panel board, pulp and paper, energy and heat; therefore, wood for energy is just one use among many. The forest owners will sell the best wood to the highest-value markets, such as sawlogs. Large-diameter logs from the trees’ lower trunks are usually the most valuable part of a tree. It is typically sawn and used in construction, joinery and furniture-making.

Biomass often uses leftover fiber that is low value, because it has no alternative market. It is often the case that a new pellet facility will be located in an area where there was once a paper factory but has since closed due to the dramatic decline in the demand for paper in recent years due to advances in technology. Pellet facilities therefore help to replace old industries and provide new value streams for forests, enabling them to remain commercially viable and preserve local employment.

Wood pellets make up a very small amount of the overall wood products industry. Wood pellet production made less than 4% of total production of U.S. forest products 2022. Wood pellets therefore do not have a strong impact on the furniture and construction industries because they are much larger markets and use higher quality saw logs rather than low-quality fiber for pellet production.

Yes, Highland is independently audited against stringent sustainability standards covering a range of issues including protection of biodiversity and conversion of forestland to other uses. Highland puts feet on the ground to have firsthand knowledge that any material coming to Highland follows state-level forest best management practices. At the federal level in the U.S., forestry is regulated nationally by the Clean Water Act, Clean Air Act, Endangered Species Act, Migratory Bird Treaty Act, Coastal Zone Management Act, and the Lacey Act, and internationally by several more regulations, including the European Union Deforestation Regulation (EUDR). At the state level, it is regulated by a range of water quality management regimes, established industry best practices, wetlands protections and zoning, and landscaping ordinances.

Certifications

Forest certification programs ensure that raw materials for Highland products are sourced from forests that prioritize forest health, biodiversity conservation, soil protection, and climate-smart forestry.

SFI

SFI is a sustainability leader through its work in standards, conservation, community, and education. Organizations certified to SFI standards conserve wildlife and water, practice climate-smart forestry, and support relationship-building with Indigenous Peoples.

SBP is a certification system designed for woody biomass used in industrial, large-scale energy production. It provides assurance that woody biomass is sourced legally and sustainably. SBP includes a rigorous risk assessment to ensure that the wood is sourced from environmentally, economically, and socially sound practices.

PEFC is an umbrella organization that endorses forest certification systems that have been developed through multi-stakeholder processes and tailored to local priorities and conditions. PEFC endorses SFI.

FSC policies unify a diverse set of stakeholders around common guidelines for forestry that are environmentally appropriate, socially beneficial, and economically viable. FSC’s open and transparent standards include safeguards to ensure that stakeholders throughout the forest supply chain live up to the principles that protect healthy and resilient forests for all—forever.

Community Engagement

Highland recognizes that building relationships with local communities involves being a responsible corporate citizen, contributing positively to community development initiatives, and addressing any concerns or grievances that may arise. We engage with community stakeholders to foster goodwill, support rural economies, and encourage people to see our business as an employer of choice.

Sustaining Rural Economies

Highland contributes to rural economic development by creating stable, well-paying jobs within the forestry and manufacturing sectors. Investments in timber harvesting, processing, and associated industries that supply sustainable wood pellet feedstocks can generate substantial income and employment opportunities for local communities. Sustainable forestry practices also stimulate ecotourism activities such as hiking, mountain biking, hunting, birding, and fishing —attracting visitors and invigorating local businesses.

Resources

Forest of Exceptional Conservation Value (FECV) In Highland’s Supply Region