Smithfield Joins Green Groups as Pigs Fly in Clean-Energy Fight

Smithfield Foods Inc. Products Ahead Of Earns

Smithfield Foods products.

Photographer: Daniel Acker/Bloomberg

With North Carolina’s renewable energy mandate under assault from Republican legislators, green groups seeking to save it have found an unlikely ally: the state’s hog industry.

Smithfield Foods Inc. and other companies that raise and slaughter pigs have put aside decades of disagreements and united -- for the moment -- with environmentalists to defend the only state law in the nation that lists swine manure as a renewable resource.

Smithfield has been the target of lawsuits, petitions and political campaigns for stashing hog manure in football-field size lagoons or spraying it on farm fields. Now the company says it has found a way to green its process: capturing the biogas rising off the manure and using it to make electricity.

Unless, that is, a Republican-led drive succeeds to rescind tax incentives and requirements for utilities to use renewable energy.

“The concern here is that when you talk about changing things, then investors get squeamish,” said Kraig Westerbeek, vice president for environment at Smithfield. “This was a complicated process to get going.”

Smithfield, the world’s largest hog producer, is part of an industry that at one time produced more than 15.5 million tons of manure a year from more than 7.5 million hogs in five eastern North Carolina counties, according to a 2008 Government Accountability Office report.

10,000 Workers

The company, with more than 10,000 employees in the state, says it has signed an agreement for a central plant that would convert emissions from the manure into a biogas that could power a generator, and is near a deal on the use of digestors, which also separate out the valuable methane, on six other company-owned farms.

“Smithfield’s support is a good example of what has become increasingly common,” said Malcolm Woolf, senior vice president of Advanced Energy Economy, a Washington group that represents companies such as Microsoft Corp., General Electric Co. and First Solar Inc. “Where 10 years ago it was just the environmentalists working on this, it’s now a number of companies weighing in.”

State requirements for solar, wind or other energy sources to replace coal, natural gas or oil popped up a decade ago, and now exist in about 30 states. North Carolina lawmakers passed a law in 2007 requiring utilities to boost their use of clean-energy sources to 12.5 percent of their total by 2021.

Tax Breaks

The state also offered generous tax incentives, which has helped put the state ahead of schedule on reaching its targets. Last year, 6.6 percent of its power came from from renewable sources, according to Energy Department data. North Carolina installed 397 megawatts of solar power in 2014, trailing only California, according to the Solar Energy Industries Association.

While the use of renewables has grown, conservative groups have pushed back, saying the mandates force consumers to pay the higher costs. And the U.S. boom in natural gas means cheap, domestic resources alternatives are available, they say.

“Much of the costs are passed on to the ratepayers,” said Brian Balfour, policy director for Civitas, a self-described conservative group based in Raleigh. “The core premise comes back to whether we want individuals making these decisions, or having it done by the government.”

In North Carolina, Republican Representative Mike Hager, who worked for the state’s top utility, Duke Energy Corp., has pushed measures that would repeal the mandate or freeze it at its current level. There are also proposals to scrap the tax incentives. Hager didn’t return telephone messages seeking comment.

2021 Goal

Duke Energy said it’s meeting the current targets, and is on track to get to the 2021 goal.

“We didn’t ask for it, and it’s not something we’re pushing,” said Randy Wheeless, a company spokesman, said of Hager’s bill. “We’re neutral on it.”

A few smaller projects are already in place, but the expansion of manure for fuel has lagged the state’s goals, requiring utilities to get waivers from the utility commission. Other projects burn poultry waste for heat or electricity.

Smithfield, now owned by WH Group Ltd. of China, isn’t alone in trying to defend the mandate. Google Inc., Apple Inc. and New Belgium Brewing Co. told lawmakers they support the current law. Amazon.com Inc. announced July 13 it hired the U.S. unit of Spanish energy company Iberdrola SA to build and run a 208-megawatt wind farm in North Carolina. It will use that electricity to power its data centers.

“You have this dichotomy where business and industry is showing that clean energy is working,” said Dustin Chicurel-Bayard, a spokesman for the Sierra Club in North Carolina. But with self-professed, pro-business Republicans leading a drive against the mandates, “it seems to be people with an ideological agenda.”

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