In North Carolina, the Biofuels Center of North Carolina has awarded $1.6 million for 15 projects statewide to accelerate the commercialization of renewable liquid fuels. Awards are made through the 2011 Statewide Biofuels Development Grants Program. By 2017, 10% of North Carolina’s liquid transportation fuels is expected to come from biofuels grown and produced within the state. The Center received 58 pre-proposals totaling more than $5.2 million from 23 institutions following its December 2010 request for proposals.
The complete list of grant awards follows:
Regional woody biomass analyses:
* $50,000 ~ Assess Potential of Woody Biomass for Advanced Biofuels Production ~ North Carolina’s Eastern Region ~ Kinston
* $50,000 ~ Regional Site Assessment of Woody Biomass Resources for N.C.’s Northeast Region ~ North Carolina’s NE Economic Development Commission ~ Edenton
* $50,000 ~ Regional Analysis of Assets for Biofuels Firm ~ Charlotte Regional Partnership ~ Charlotte
* $50,000 ~ Extraction and Refinement of Oils from Biodiesel Feedstocks ~ North Carolina’s Southeast Region ~ Elizabethtown
These four regions will work with forestry consultants to assess the availability of woody biomass in their respective regions. The strategy is a three-phase approach that will provide a regional assessment suggesting the optimum two sites per region, the validated infrastructure required for a biofuels production facility, and a detailed woody biomass assessment for the selected sites.
Municipal solid waste projects:
* $145,988 ~ Assessment of Municipal Solid Wastes into Biofuels via Pyrolysis ~ N.C. A&T State University ~ Greensboro
This project will assess the conversion of municipal solid waste into bio-oil using pyrolysis, analyzing the technical and economic feasibilities.
* $93,119 ~ Utilizing Municipal Solid Waste as a Biofuels Feedstock ~ Environmental Research and Education Foundation ~ Raleigh
This project will explore the use of gasification that can be used on about 60 percent of solid municipal waste (MSW). It will also study the process of MSW into liquid fuels compared to other forms of energy from MSW.
Energy grasses projects:
* $133,776 ~ Native and Non-Native Mouse Interactions in Switchgrass – Pine Systems ~ UNC-Greensboro ~ Greensboro
This project will assess if there are sustainability issues with intercropping. Certain mouse species function as “canaries in the coal mine,” giving warning if there are sustainability issues.
* $85,542 ~ Suitability of N.C. Piedmont Soils for Bioenergy Crop Production ~ N.C. State University’s Soil Science Department ~ Mills River
This project will study the effects of perennial bioenergy grasses on soil chemistry and physical properties.
* $150,000 ~ Expanding Piedmont Perennial Grass Production Through Grower Engagement ~ N.C.
State University’s Biological and Agricultural Engineering Department ~ Jackson Springs, Salisbury, and Reidsville.
This project will provide equipment assistance to growers; build a collaboration between growers, seed and tissue providers, and biomass consumers; and develop a comprehensive marketing plan to help link producers and potential consumers.
Production innovations:
* $149,488 ~ Sorghum Biofuels: A Route to Commercialization in North Carolina ~ N.C. State University’s Biological and Agricultural Engineering Department ~ Roper
This project will analyze sorghum as a source of biomass. Sorghums contain high levels of fermentable sugars and significant cellulose materials while requiring relatively low agronomic input. The grant will also study the impact of second harvests in industrial-scale production.
* $97,088 ~ Environmental Protection and Biofuels Production on Waste Application Fields ~ N.C. State University’s Forestry and Environmental Resources Department ~ Gibson and Jacksonville
This project will analyze the state’s potential acreage for waste application. It also will demonstrate using the fields for biocrop production and pollutant mitigation, and evaluate economic value of the strategies.
* $144,082 ~ Pilot Scale Continuous Flow Microwave Pretreatment of Grasses ~ N.C. State University’s Food, Bioprocessing, and Nutrition Sciences Department ~ Raleigh
Microwave heating technologies have been shown to be effective as a pre-treatment of feedstocks such as grasses to enhance hydrolysis and remove lignin. This project will study how continuous flow microwave using a patented technology may increase commercialization. It will include validation of the process.
* $148,419 ~ Loblolly Pine Biomass Cropping Study ~ N.C. State University’s Forestry and Environmental Resources Department ~ Butner
This project will test Loblolly pine varieties for the potential use as feedstock in the Piedmont region.
* $119,675 ~ Cooking Oil Recycling Program ~ Metropolitan Sewerage District of Buncombe County ~ Asheville
This project will analyze increasing access to a low-cost feedstock by providing public collection sites. The grant will also study the impact of public education programs in multiple communities.
* $145,665 ~ Efficient Biodiesel Production from Inexpensive Feedstocks ~ Wake Forest University ~ Winston-Salem
This project will study a newly developed enzyme and technology to replace acid pre-treatment.
Friday, April 29, 2011
Pellet Projects: Developers plan to build two pellet mills in Virginia.
Wood Fuel Developers LLC, an affiliate of Industrial TurnAround Corp., is developing two wood pellet facilities in Virginia, having received multiple grants.
The company announced its plans for Greensville County in January of 2010, armed with more than $3.5 million in federal and state funds, and planning to invest $18.7 million itself, according to ITAC. The company reported that the project received $1 million from the American Recovery and Reinvestment Act, along with $2.3 million from the Greensville County Industrial Development Authority for construction of the plant and site improvements and infrastructure, $175,000 from the Governors Opportunity Fund and $175,000 from Tobacco Region Opportunity Funds.
Also, in January, Virginia Gov. Bob McDonnell announced a new $8.6 million pellet mill undertaking for Wood Fuel Developers in Sussex County, with another $185,000 in state funds from the governor’s office and Tobacco Region Opportunity Funds. Wood Bioenergy US, a Forisk Consulting report, said the company will convert a former particleboard plant in the Sussex County town of Waverly into a pellet plant.
The company announced its plans for Greensville County in January of 2010, armed with more than $3.5 million in federal and state funds, and planning to invest $18.7 million itself, according to ITAC. The company reported that the project received $1 million from the American Recovery and Reinvestment Act, along with $2.3 million from the Greensville County Industrial Development Authority for construction of the plant and site improvements and infrastructure, $175,000 from the Governors Opportunity Fund and $175,000 from Tobacco Region Opportunity Funds.
Also, in January, Virginia Gov. Bob McDonnell announced a new $8.6 million pellet mill undertaking for Wood Fuel Developers in Sussex County, with another $185,000 in state funds from the governor’s office and Tobacco Region Opportunity Funds. Wood Bioenergy US, a Forisk Consulting report, said the company will convert a former particleboard plant in the Sussex County town of Waverly into a pellet plant.
Ideas for Investing in Cellulosic Ethanol
By Tony D’Altorio
Biofuel certainly seems like an up and coming global growth industry.
The International Energy Agency sees worldwide consumption increasing from an annual 55 million tons of oil equivalent to 750 million in 2050.
Right now, biofuel makes up a mere two percent of the transportation fuel market. But analysts expect it to increase to 27 percent in four decades.
Here in the U.S., however, the issue is controversial. Rising corn prices have renewed debate over ethanol, a corn-based fuel for vehicles
.
The argument comes down to a matter of food vs. fuel. After all, the U.S. uses 40 percent of its corn crop to create ethanol every year.
That demand is one of the factors driving up corn prices around the world.
Fortunately, there is a viable alternative in cellulosic ethanol.
Cellulosic Ethanol
Cellulosic ethanol, a second-generation ethanol, is derived from agricultural waste. Because it comes from straw husks, sugar cane off-cuts and the like, it does not compete with food production.
McKinsey predicts this market will amount to $75 – $140 billion worldwide by 2020. The consultancy firm sees this happening as the U.S., Europe, China and others promote biofuels to reduce carbon emissions and oil dependency.
But the cellulosic ethanol industry has not taken off yet.
Doubts about its economic viability remain. And the U.S. corn industry has objected too, since it doesn’t like competing for space at the government trough.
Yet Italy just began construction on the world’s first commercial-scale production facility. Due for completion next year, the plant will have a 13 million gallon per year capacity.
With production costs around $2.50 a gallon – similar to corn-based ethanol – it will be competitive with current fuel prices.
Before this point, the U.S. had the lead in this new market. President Obama had aimed for 250 million gallons this year alone, but his administration cut the target to just 6.6 million after delays to planned U.S. production facilities.
And now, Europe, China and Brazil all have plans to start full-scale production by 2013.
DuPont and Danisco
Because of its nearly $6 billion takeover bid for the number two company in the cellulosic ethanol industry, DuPont (NYSE: DD) looks likely to come out ahead in this market.
Its target, the Danish company Danisco ADR (Other OTC: DNSCY.PK), makes food ingredients. It also produces enzymes that allow biomass, such as switchgrass, to ferment into ethanol.
The two companies already jointly develop cellulosic ethanol at a demonstration plant in Tennessee. But the planned acquisition would give DuPont full control.
Currently, the fuel contributes a fraction of Danisco’s $2.67 billion of annual revenues. But if second-generation ethanol fulfills even a fraction of its forecast potential, it could transform the company’s growth prospects.
The same goes for Novozymes ADR (Other OTC: NVZMY.PK), the market leader. It invests heavily in the fuel and plans to build a demonstration plant in China this year.
Enzyme makers expect just a sliver of the billions the industry should generate. But analysts think it could still double the size of the market to over $5 billion annually.
If so, Danisco seems like a wise acquisition for DuPont to make. Though the deal could still fail…
Danisco shareholders don’t seem to like the offer. They think DuPont should pay more for the company’s green energy potential.
In order to win over those investors, DuPont will probably have to raise its bid. But even so, that takeover will pay off in the long term.
Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U (and affiliated companies) must wait 24 hours after an initial trade recommendation is published on online - or 72 hours after a direct mail publication is sent - before acting on that recommendation.
Biofuel certainly seems like an up and coming global growth industry.
The International Energy Agency sees worldwide consumption increasing from an annual 55 million tons of oil equivalent to 750 million in 2050.
Right now, biofuel makes up a mere two percent of the transportation fuel market. But analysts expect it to increase to 27 percent in four decades.
Here in the U.S., however, the issue is controversial. Rising corn prices have renewed debate over ethanol, a corn-based fuel for vehicles
.
The argument comes down to a matter of food vs. fuel. After all, the U.S. uses 40 percent of its corn crop to create ethanol every year.
That demand is one of the factors driving up corn prices around the world.
Fortunately, there is a viable alternative in cellulosic ethanol.
Cellulosic Ethanol
Cellulosic ethanol, a second-generation ethanol, is derived from agricultural waste. Because it comes from straw husks, sugar cane off-cuts and the like, it does not compete with food production.
McKinsey predicts this market will amount to $75 – $140 billion worldwide by 2020. The consultancy firm sees this happening as the U.S., Europe, China and others promote biofuels to reduce carbon emissions and oil dependency.
But the cellulosic ethanol industry has not taken off yet.
Doubts about its economic viability remain. And the U.S. corn industry has objected too, since it doesn’t like competing for space at the government trough.
Yet Italy just began construction on the world’s first commercial-scale production facility. Due for completion next year, the plant will have a 13 million gallon per year capacity.
With production costs around $2.50 a gallon – similar to corn-based ethanol – it will be competitive with current fuel prices.
Before this point, the U.S. had the lead in this new market. President Obama had aimed for 250 million gallons this year alone, but his administration cut the target to just 6.6 million after delays to planned U.S. production facilities.
And now, Europe, China and Brazil all have plans to start full-scale production by 2013.
DuPont and Danisco
Because of its nearly $6 billion takeover bid for the number two company in the cellulosic ethanol industry, DuPont (NYSE: DD) looks likely to come out ahead in this market.
Its target, the Danish company Danisco ADR (Other OTC: DNSCY.PK), makes food ingredients. It also produces enzymes that allow biomass, such as switchgrass, to ferment into ethanol.
The two companies already jointly develop cellulosic ethanol at a demonstration plant in Tennessee. But the planned acquisition would give DuPont full control.
Currently, the fuel contributes a fraction of Danisco’s $2.67 billion of annual revenues. But if second-generation ethanol fulfills even a fraction of its forecast potential, it could transform the company’s growth prospects.
The same goes for Novozymes ADR (Other OTC: NVZMY.PK), the market leader. It invests heavily in the fuel and plans to build a demonstration plant in China this year.
Enzyme makers expect just a sliver of the billions the industry should generate. But analysts think it could still double the size of the market to over $5 billion annually.
If so, Danisco seems like a wise acquisition for DuPont to make. Though the deal could still fail…
Danisco shareholders don’t seem to like the offer. They think DuPont should pay more for the company’s green energy potential.
In order to win over those investors, DuPont will probably have to raise its bid. But even so, that takeover will pay off in the long term.
Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U (and affiliated companies) must wait 24 hours after an initial trade recommendation is published on online - or 72 hours after a direct mail publication is sent - before acting on that recommendation.
Thursday, April 28, 2011
Making Ends Meet
North American pellet manufacturers talk about supply, demand and competition.
In the wood pellet industry there is always competition for raw material and for making sales. It doesn’t matter if you’re just a small guy, because in this industry, the small guys matter. One or two new small-scale producers in the right area can wreak havoc on the sales of a pre-existing plant.
That’s the perspective of Chris Sharron, owner of Western Oregon Wood Products. “A lot of the smaller ones can add up to quite a bit of tonnage,” Sharron says.
And, they may have advantages over large-scale manufacturers, one being that they don’t have a lot of production to sell so lags in market demand don’t affect them as much. “A sawmill plant utilizing its own materials doesn’t have transportation costs to bring materials to the plant,” he says. “A lot of them are using their own byproducts that are kiln dried, so there are also no drying costs. They can be highly competitive although they aren’t very big, and they take little mouthfuls out of the market in a particular region that some former supplier was supplying into.”
WOWP, which was started by Sharron and his brother in 1985, operates two pellet plants in Banks and Columbia City, Ore., which have a combined annual capacity of 80,000 tons. Seeing the industry evolve over the decades, Sharron says there was a period of rapid growth several years ago, but in the past couple of years things have become rather flat. “There’s been an increased demand over the years, especially in the past five years, but it hasn’t been real steady growth,” Sharron says. “It’s spiky. Fossil fuel costs go up, and if the economy is conducive to where people have jobs and disposable income, they might look at an alternative way to heat their homes, one being a pellet stove.”
When that happens, demand can increase at a quick pace and there may be spot shortages of fuel, which potential developers can misconstrue as a beckoning opportunity. “[Shortages] hit the headlines and people decide pellet making is a business they should get into,” Sharron says. “What they don’t realize is that there is a lag time in putting the project together—permitting and installing the equipment—and by the time they’re ready to turn the keys and start bagging fuel, the industry has cycled back the other way, and there’s an oversupply. That’s kind of what’s happened in the past few years. It’s highly competitive now, because the market hasn’t grown enough.”
To put that into perspective, Sharron says that there were roughly 40,000 new pellet stoves sold in the U.S. last year, and a general rule of thumb is that on average, a stove uses 2 tons of pellets per year. That equals an additional demand of 80,000 tons annually. “There are a number of plants where just they by themselves are producing that or more,” he says.
Charlie Niebling, general manager of New England Wood Pellet, says pellet demand was off the charts in 2008 because of the big run-up in fossil energy pricing, but things slowed down in 2009, and 2010 was a soft year for the company. Despite that fact, he says things are beginning to pick up again.
Supplying Close to Home
New England Wood Pellet operates three plants in Jaffrey, N.H., Schuyler, N.Y., and Deposit, N.Y., which have a combined capacity of about 250,000 tons per year when running at full tilt.
Much like WOWP, most of the pellet volume produced at NEWP ends up in residential heating applications—about 98 percent. Despite the fact that U.S. pellet exports are being touted by the government as a great opportunity, Niebling says it is unlikely that the company will ever ship overseas, as long as the domestic market is strong enough. “Philosophically, we strongly believe in focusing our efforts on solving America’s energy challenges, not Europe’s, and from a practical standpoint it’s something that is very difficult to do viably from the Northeast U.S.”
That’s because of the region’s high wood material costs, and its lack of port facilities set up for bulk cargo shipping of pellets. “Our plants aren’t conveniently located near port facilities; we have a lot of inland freight,” Niebling says. “Where it works in this country is where there is less expensive wood feedstocks, and rail to get the product to a port, one that can stage a large volume for bulk cargo shipping. The Northeast just doesn’t have the circumstances that are well-suited to that, given the current pricing overseas.”
Sharron says that with the nature of pellets—a relatively low value versus bulk and weight—freight is a big issue, so most pellet plants only have the ability to distribute regionally. “Being here in western Oregon, our markets are Washington, Oregon, California, Nevada and Idaho and Utah a little bit, but past that point we’re not very competitive due to that freight issue.”
WOWP has looked at many opportunities to ship overseas and has had a lot of inquiries over the years, but it just doesn’t pencil out, Sharron says. “The value on the other end will only bear so much,” he says. “By today’s standards, we’re not a huge producer, so we don’t have the economies of scale that some of the other exporters do have. Alongside that, the raw material costs in this area are not conducive to getting things to balance out, certainly not to Europe or the Asian markets, where some activity is starting.”
For Pinnacle Renewable Energy in British Columbia, shipping overseas makes the most sense for the company for a number of reasons, one being the close proximity of its plants to rail and ports.
Pinnacle has six plants in B.C. that produce a total of 1.1 million metric tons per year. The company ships about 90 percent of its product overseas to the large-scale industrial power generation sectors in both Asia and Europe, but mainly to Europe, according to Leroy Reitsma, Pinnacle’s chief operating officer.
Reitsma says demand has slowed in advance of new legislation being defined and introduced in both Asia and Europe, but indications for future demand remain strong.
The company’s plant development model has kept it from experiencing some of the obstacles other manufacturers are facing, such as stiff competition for raw materials and transportation costs. All of Pinnacle’s plants are strategically located close to Canadian sawmills, and have formed material supply relationships with them. “Fiber pricing is more a function of local economic factors, due to the high price of transporting raw residuals,” Reitsma says.
Competing for Raw Material
In an industry that is a branch of the larger biomass power industry, wood resources of all kinds are sought after for different purposes. “We compete for our feedstock, there is no question about it,” Niebling says. “When our plants are at 100 percent capacity, we are dependent on round wood chips, and then we’re competing much more directly with the pulp and paper industry. Also to some extent, [we compete with] the biomass power plants we have up this way, although we have a slightly different feedstock need than they have because they can use a much lower quality chip than we can to make a premium grade pellet.”
Michael Curci, business development manager for Indeck Energy, says competition for feedstock is always a source of concern in the region where the company operates. Indeck has a two-year old, 90,000-ton pellet manufacturing facility in Ladysmith, Wis., that sells about 60 percent of its product for residential use, the rest commercial and industrial.
“There are three pellet mills within close proximity to us, and there are some proposed biomass power plants in the area that are under review by the state, so it’s something we have to keep an eye on,” Curci says. “If prices go up with more competition, pellet prices will reflect that. That won’t be the case at any individual production facility, but across the board in our region.”
The cost of raw material is a cyclical issue, Sharron says. “Our two plants rely on byproducts or residuals from sawmilling operations, for the most part,” he says. “In these past few years, with the housing and construction markets being soft, a lot of the area sawmills have curtailed production or even shut down completely, so there’s less supply on the market.”
A big competitor for the materials WOWP uses is the composite/particle board industry, but it has been affected by the depressed wood product industry as well. “They aren’t as stiff a competitor as they have been at other times,” Sharron says. “On the other hand, pulp mills also use the same fiber, and their markets have been relatively strong, so there’s always something, depending on the cycle.”
Niebling says raw material prices float, according to what fossil fuel prices are doing. “If oil and propane prices keep going up, and there’s enough margin for the retailer, the distributor and manufacturer to operate profitably even with higher wood costs, that price threshold can be higher than it is today.”
Some plants can afford to pay more for their raw materials than others, Sharron says. “That depends on a lot of things, such as debt service,” he says. “If it’s a new plant, it probably has a higher debt load and it might not be able to afford as much as an older manufacturer who doesn’t carry as much debt. It’s all relative to what the value of a finished product is at a given time.”
When competition for wood fiber material is fierce and prices are high, looking for alternative feedstocks is an appealing idea on the surface, but it isn’t as easy as it sounds.
Searching for Alternatives
“We’ve looked at [alternative feedstocks], but never seriously, because when you design and build plants like we have, you do it to handle one type of feedstock,” Niebling says. “The handling, conveying, refining and processing of biomass is unique to each individual type of feedstock. When you start to introduce different types of materials it changes your plant performance. You have to understand how those different feedstocks affect operations.”
Furthermore, the residential market is still the major market in the U.S., and there aren’t many appliances or pellet stoves that can handle the quality characteristics of an ag-based pellet, which has higher ash content and is more prone to clinkering. “You may not even be able to manufacture a lower grade pellet that you would have to sell for less, because some lower quality materials are more expensive to turn into a pellet, unless it’s offset by the cost of the raw material at the gate,” Sharron says. “That might be less of an issue on a commercial or industrial basis, but no matter what the pellet is made of, we’re competing with coal and it’s extremely difficult to compete with the cost of a Btu of coal.”
Those in the industry know that making pellets is a low-margin proposition. “There’s not a lot of profit in it and there isn’t a lot of room for inefficiency, so we’ve been reluctant to consider blends or to make different types of pellets from other feedstocks,” Niebling says. “We want to get really good at doing one thing, but that doesn’t mean that won’t change in the future. If wood gets really expensive and suddenly hybrid willow or poplar starts to look more attractive, we’d consider that. I don’t see it any time soon, but if this industry grows the way we believe it will, we might all be looking at a variety of feedstocks.”
Author: Anna Austin
Associate Editor, Pellet Mill Magazine
(701) 738-4968
aaustin@bbiinternational.com
Pellet Pitfalls
German utility RWE Innogy is building a wood pellet mill in the Southeast U.S. to supply fuel for its parent company’s power plants in Europe. The move could be an indication of the challenges in consistently shipping high-quality pellets overseas.
The Southeast U.S. offers an abundance of wood resources for pellet manufacturers and several have taken up residence there to utilize that supply chain. Some larger facilities are shipping their pellets overseas to better-developed markets in Europe that incentiveize industrial biomass use. While the U.S. pellet export market seems to be evolving and more companies are trying to break into it, one particular European utility has opted to come halfway around the world and operate its own pellet plant, shipping its product to its own European utilities.
Georgia Biomass in Waycross, Ga., is in its precommissioning phase and expects to begin shipping pellets in the second quarter of this year, according to Chief Financial Officer Sam Kang. The mill will produce about 750,000 metric tons of pellets per year for internal use by subsidiaries of German utility RWE, including recently acquired Dutch utility Essent, one of the largest pellet users in the world. With the marriage of Essent and RWE, Georgia Biomass—a subsidiary of RWE Innogy—completes the loop.
Of course the Southeast has ample resources and strict, reliable sustainability codes, but why not just purchase the pellets from U.S. producers already operating there?
Supply, Quality, Price
Many pellet mills, not just in the U.S., are privately funded and may not be well-capitalized, Kang says. Mills with thin margins or those that are kept afloat shipment-by-shipment can’t always provide security of supply, one of three main reasons RWE is constructing its own mill. Pellet mills with credit problems can run out of cash, putting their off-takers at risk of insufficient fuel supply. “[Essent has] had instances when people don’t deliver because the price of sawdust or shipping went up, for instance,” he says. “Little things like that happen and we just don’t want to be open to that.”
The next reason for an internal pellet plant is no surprise: quality. “Quality is very important and is one reason we did invest in our own pellet facility here in the U.S.,” Kang says. “We want to make sure we get the same consistent good quality.” Ash content, fines and calorific value are a few of the important elements, he says. “Yes, Essent has turned away shipments because of quality.” Contracts specify quality parameters for the delivered fuel and the buyer can and most likely will refuse a shipment if it does not meet those specifications. “Based on that, if there was any opportunity to renege on a contract, [the customer] would, and rightfully so,” says John Swaan, chief operating officer for Green Frontiers Energy Group. “If the criteria aren’t met, they have every right to refuse a shipment.”
“We’ve made tens of millions of euros in investments to convert existing coal plants to be able to cofire, so we want to be able to make sure that we will also be receiving those high-quality pellets so we get subsidies to repay our investments,” Kang says.
Quality problems can arise when using poor raw materials or having inadequate cooling in the pelletizing, storage and handling processes, according to Swaan. “You cannot pile up residue, process it, bring it in and expect it’ll be magically altered and refined to something that’s suitable,” he says. “Junk in is still junk out.” Management of the raw material is crucial, he adds, and handling it correctly, in the case of forest residues, means avoiding scraping it through the forest floor and pushing it into piles. “As soon as you contaminate it with dirt, obviously you’re going to have some issues.” While the problem isn’t common in U.S. pellet mills, it has happened in the past and is a lesson today’s manufacturers can learn from others’ mistakes. “What the industry has to learn … in North America is that even though it’s an industrial pellet, it still means that you need quality residues,” Swaan says.
The final major driver in RWE’s decision to develop Georgia Biomass is price risk. “Part of vertical integration is that then you would be insensitive to large price movements,” Kang explains.
But supply, quality and price aside, Georgia represents an ideal location because it has sustainably grown and harvested desirable trees as crops for decades. “We specifically chose Georgia in the Southeast U.S. for the southern pine,” Kang says. The tree is abundant, and has ideal calorific value for RWE’s processes. “More trees are grown than cut down each year,” he says. “We’re looking for long-term production here.”
It goes without saying that not all U.S. pellet manufacturers are guilty of supply and quality issues, and many are successfully shipping pellets to Europe fairly frequently, such as Green Circle BioEnergy Inc. in Florida and Fram Renewable Fuels LLC in Georgia. Some say success in export markets depends on proximity to wood supply and port access. “European buyers are the same as buyers the world over,” says Harold Arnold, president of Fram Renewable Fuels. “They want the product at the lowest possible price. Not every project in every location can be profitable. All have their unique problems and conditions.”
Similarly, the hardships RWE and Essent have endured with suppliers are not attributable only to North America. “It can happen anywhere,” Kang says, adding that the economics, logistics, fiber sustainability and material quality in the U.S. simply represented the best opportunity for RWE and its internal pellet demand at the time it made its investment decision.
Disconnect?
But while some European pellet customers might say suppliers and brokers aren’t following through on their quality, volume and price commitments, it’s possible they simply don’t understand the cost of delivering a consistent quality product overseas, says Pete Stewart, president and CEO of Forest2Market, a provider of market trend and industry information for forest products and bioenergy. “On one hand, European utilities say they can’t get consistent deliveries at a good price,” he says. “But on the other hand, they won’t pay the price to get a quality product over there.”
Stewart doesn’t consider RWE to be one of those ill-informed utilities. “They pretty much understand the cost,” he says, adding RWE might not fully nail down exact cost figures until it begins shipping commercial quantities from Georgia. “Right now, their costs to manufacture and deliver a pellet is way in excess of market price, so they’ll certainly be losing on [Georgia Biomass], or they could easily replace the volume in that plant with market-based product, but that doesn’t mean they can replicate the quality of their product in the market, or the timeliness of delivery,” he says. Timeliness and quality are major components of cost, he adds. “I would suggest the price right now doesn’t really take into account consistency or strict adherence to quality measures and that might be the disconnect between the markets and what it really costs to get a decent product to a location in Europe.”
The U.S. is the No. 2 producer of wood pellets in the world, but only exports 20 percent of its product, according to the American Biomass Trade Cooperative (ABTc). In comparison, Canada exports about 80 percent of its product. International investors are indeed reluctant to work with American producers because of shipping hurdles and the inability to secure on-time and undamaged product, according to the cooperative. In accordance with RWE’s reasoning, that security of supply is the primary concern of foreign pellet customers, according to Scott Miller, founder and president of bioenergy marketing and consulting firm The Miller and De Wulf Corp., and marketing consultant for the ABTc. Among other initiatives, the cooperative seeks to serve as a middleman between American biomass product manufacturers and foreign customers, marketing and connecting the two.
“We will definitely be trying to streamline communication across the pond,” Miller says. The possible pricing disconnect is one element of biomass exporting that the cooperative could tackle with its work. “It’s an understandable concern,” he says.
In the thick of it, though, the view might be much different. “That’s just typical business,” Arnold says of the suggested pricing disparity. “I don’t think there’s a disconnect. I think it’s just the long-term situation in business.” The buyer will never propose to pay more than the market price, he adds. “It’s capitalism at its best.”
There is substantial risk involved in the pellet export industry, specifically for startups, which account for a significant portion of manufacturers in the U.S., Kang says. But Georgia Biomass avoids that risk by supplying its own internal demand, although Kang says selling to third parties is an option if excess supply exists after RWE’s demands are met. Even though RWE’s mill means reduced interest in the global pellet market, Kang is still hoping for the success of pellet producers because it builds stability in that market. “I would be very happy to see the success of all the pellet producers because it only helps the whole industry,” he says.
But it is a tough business to be in, Arnold cautions. “Wood pelleting is not a get-rich-quick scheme,” he says. “It is capital intensive and dirty, dusty manufacturing at its best.” He adds that the hype surrounding the wood pellet industry and its export potential has led many project developers to believe pellet manufacturing is a business with guaranteed profits. “Unfortunately it is not,” he says. “The same discipline must be applied to the pellet business as any other. You can make a little money at it, but there’s an awful lot of hard work to do it.”
Author: Lisa Gibson
Associate Editor, Pellet Mill Magazine
(701) 738-4952
mailto:lgibson@bbiinternational.com
The Pellet Market from Different Perspectives
Feeding the residential pellet market requires suppliers to strike the right balance between feedstock supply, transportation costs and customer demand, and sometimes to look to others for inspiration.
South Dakota’s Spearfish Pellet Co. LLC was built to add value to the byproducts—wood chips, sawdust and shavings—produced at the Spearfish sawmill.
The plant was originally owned by Pope & Talbot Inc. and was purchased in 2008 by Neiman Enterprises Inc., which also owns three sawmills in the area.
At full capacity, the Spearfish plant can produce 50,000 tons of pellets, which makes it an average-sized plant in the U.S. According to USDA’s “North America’s Wood Pellet Sector” report, the majority of pellet plants in the U.S. produced between 30,000 and 70,000 metric tons (33,000 and 77,000 tons) in 2009.
Unlike some of the new industrial pellet mills being proposed in the U.S. that are being built to supply European biomass power and heating customers, the Spearfish plant, like other plants its size, sells most of its product to residential customers within a 300- to 400-mile radius of the facility, says Todd Carlson, plant manager for Spearfish Pellet Co. “For us to get to the East or West Coast and put pellets on a barge to go to Europe, that’s a long ways,” he says. Carlson says they do move pellets by rail to a few customers on the East Coast, but it takes a while to get the pellets to their destination.
Supply and Demand
Because of byproduct commitments at its sawmill, high diesel prices and other forces impacting the wood products industry, the Spearfish Pellet plant is not currently looking to add many new customers.
“We’ve nearly sold out the last several years, so for us to take in more market share, we would have to increase our production No. 1, and No. 2 somehow figure out how to get these diesel prices back down,” says Everett Follette, sales and marketing for Spearfish Pellet. “The diesel is having a huge effect on how far out I can ship right now.”
Spearfish Pellet shares its feedstock supply with a particle board plant and a pulp mill. “The other two plants have increased their production immensely and want more product than we have,” Follette says. “So right now we’re not able to expand because of contracts with these other two companies. Currently, we are producing at the same rate we did this past season so all our customers should be fine for next season if they don’t wait too long.”
Business is up about 35 percent from a year and a half ago at the particle board plant, Follette says, and the pulp mill has more business because so many other mills have shut down or cut production. “I don’t know if their demand has necessarily gone up, but their supply of wood chips has gone down and maybe that’s why they have been asking us to supply even more.”
If they were able to increase their feedstock supply and increase pellet production, Follette says they would probably look at supplying pellets to big box stores such as Lowes and Home Depot. Pellets from the Spearfish plant mainly go to lumber yards or wood stove shops. “At the time when [big box stores] got into the pellet business we were sold out so we don’t work with very many of the big box chains,” Follette says.
Currently, Spearfish Pellet is holding its own against the big box stores because they provide quality pellets with a higher Btu per pound. “We might not have the cheapest pellets, but our quality will help you get more Btu from the pellets,” he says. Spearfish Pellet uses Ponderosa pine, producing pellets with an average of 8,631 Btu per pound, Carlson says.
Quality and Consistency
Spearfish Pellet satisfies its customer base by providing a high-quality consistent product. When Carlson was looking to add a third pellet mill, he checked out several equipment manufacturers but in the end went with Amandus Kahl, the company that had supplied its other mills.
Carlson says he had two major concerns when he was shopping for another mill: not having to spend a lot of extra money to double his parts inventory and making sure that the quality of the pellets produced was consistent. “Consistency is the name of the game for anything,” he says. “If something isn’t broke you don’t fix it.”
Amandus Kahl uses a flat die pellet mill because it’s an efficient, quiet system and the cost to keep the machine operating is low, says Patrick Clark, vice president of sales and marketing.
“Our die is flat and stationary in comparison to a ring die machine where the die obviously is a ring and it rotates and with their ring die machine the rolls are fixed and in our Amandus Kahl flat die pellet mills our rolls rotate,” Clark says. “So it’s basically 180 degrees opposite of the other technologies. That allows it to grind even though our revolutions per minute (the shaft speed) are at approximately 62 revolutions per minute, what happens is the inside feet per minute or rate of travel is different than the feet of or rate traveling on the outside of that roll shell and as that goes across the die, it gives us the grinding action.”
Clark says one of the many benefits of using their equipment is that he can take an inexperienced person, who has never been around their machines and teach them to change the roll head and die in less than 50 minutes. “A lot of our experienced guys are doing it in 20 to 30 minutes,” he says, adding that reduced down time, especially for plants that run 24 hours, seven days a week is important.
Building the Pellet Market
While Spearfish Pellet’s mission is to add value to forest residue, Maine Energy Systems LLC (MESys) is working to increase the market share for pellet producers in the U.S. Northeast and it’s doing it European style.
MESys has long-term contracts with premium-grade wood pellet producers and distributes the pellets in bulk to homes and businesses in Maine and New Hampshire. The trick is to make pellet heating as simple and seamless as heating with propane or fuel oil, with which people are already familiar.
According to the “2011 State of the Hearth Industry Report,” only about 5 percent of the 1 million hearth appliances shipped out in the U.S. in 2010 were pellet-fueled, 70 percent were gas-fueled and the remaining 25 percent used cordwood. The study, which was conducted by the Hearth, Patio & Barbecue Association also pointed out that 34 percent of wood or pellet stove owners viewed their stove as a major heat source, 50 percent considered it a secondary source of heat.
MESys aims to increase the percent of pellet fueled heating appliances and to show residents and businesses how they can make pellets their primary heat source. The company has modeled its business after the pellet industry in Europe, and over a year ago partnered with an Austrian pellet boiler manufacturer ÖkoFEN, says William Strauss, who co-founded MESys with Les Otten and Harry “Dutch” Dresser.
MESys chose to work with ÖkoFEN because the company is considered a pioneer in the pellet boiler industry and manufactures one of the leading models in Europe. “It’s the most modern, cleanest, trouble-free, efficient pellet boiler in Europe,” Strauss says. “The homeowner doesn’t even know it’s there, just set the thermostat and you’ve got heat. No bags to deal with no ash removal no cleaning. It periodically has to be serviced like any boiler that’s really it.”
The company offers semi- and fully-automated wood pellet boiler equipment systems, which require bulk storage bins that hold 3 to 4 tons of pellets, a tube or hose that goes from the bin to the boiler and a pneumatic system that automatically moves the pellets to the boiler.
MESys also offers a product for pellet stove owners who want bulk delivery but don’t have a bulk storage bin and don’t want to lift the 40-pound bags of pellets. “It’s a free-standing bag that holds a little over a ton of pellets and will take bulk delivery,” Strauss says. “It takes up about the same space as a pallet of bagged pellets and it has a little gauge at the bottom where the homeowner can open the gate and fill a bucket full of pellets and then dump those in the pellet stove.”
The company delivers bulk pellets by truck using a pneumatic pellet delivery system. “These trucks are state of the art,” Strauss says. “They are able to deliver rapidly and gently.” He says some companies use modified feed trucks to deliver pellets resulting in loss through breakage and dust creation. “They rip the pellets to pieces.”
Market Fluctuation
When MESys was founded in 2008 and oil prices spiked there was a flurry of interest in pellet heat, Strauss says. Then oil prices went down—equivalent to pellet heat and even lower—and interest died down.
“But right now pellet energy is the equivalent of about $1.95 per gallon of heating oil and heating oil in Maine is about $2 to $3.75, it really is about half the cost for equivalent energy,” he says. A home that burns 1,000 gallons of heating oil in a season will use slightly less than 8 tons of wood pellets. At current prices, 1,000 gallons of heating oil is about $4,000 and 8 tons of wood pellets is about $2,000, cutting annual fuel costs in half.
Strauss expects the pellet market will continue to fluctuate, however, until the public and policy makers understand, support and adopt pellet heating systems as they have in Europe. “In the U.S. 98 percent of pellets are burned in pellet stoves and in Europe 98 percent of pellets are used in pellet boilers,” Strauss says. “In Europe it’s normal to have a home heating system fueled by pellets. In fact, in Austria most new homes are built with pellet systems, but in the U.S. people don’t even know they exist. And they think it is primitive and dirty and requires a lot of attention and that’s just not true.”
Author: Rona Johnson
Editor, Pellet Mill Magazine
(701) 738-4940
rjohnson@bbiinternational.com
The plant was originally owned by Pope & Talbot Inc. and was purchased in 2008 by Neiman Enterprises Inc., which also owns three sawmills in the area.
At full capacity, the Spearfish plant can produce 50,000 tons of pellets, which makes it an average-sized plant in the U.S. According to USDA’s “North America’s Wood Pellet Sector” report, the majority of pellet plants in the U.S. produced between 30,000 and 70,000 metric tons (33,000 and 77,000 tons) in 2009.
Unlike some of the new industrial pellet mills being proposed in the U.S. that are being built to supply European biomass power and heating customers, the Spearfish plant, like other plants its size, sells most of its product to residential customers within a 300- to 400-mile radius of the facility, says Todd Carlson, plant manager for Spearfish Pellet Co. “For us to get to the East or West Coast and put pellets on a barge to go to Europe, that’s a long ways,” he says. Carlson says they do move pellets by rail to a few customers on the East Coast, but it takes a while to get the pellets to their destination.
Supply and Demand
Because of byproduct commitments at its sawmill, high diesel prices and other forces impacting the wood products industry, the Spearfish Pellet plant is not currently looking to add many new customers.
“We’ve nearly sold out the last several years, so for us to take in more market share, we would have to increase our production No. 1, and No. 2 somehow figure out how to get these diesel prices back down,” says Everett Follette, sales and marketing for Spearfish Pellet. “The diesel is having a huge effect on how far out I can ship right now.”
Spearfish Pellet shares its feedstock supply with a particle board plant and a pulp mill. “The other two plants have increased their production immensely and want more product than we have,” Follette says. “So right now we’re not able to expand because of contracts with these other two companies. Currently, we are producing at the same rate we did this past season so all our customers should be fine for next season if they don’t wait too long.”
Business is up about 35 percent from a year and a half ago at the particle board plant, Follette says, and the pulp mill has more business because so many other mills have shut down or cut production. “I don’t know if their demand has necessarily gone up, but their supply of wood chips has gone down and maybe that’s why they have been asking us to supply even more.”
If they were able to increase their feedstock supply and increase pellet production, Follette says they would probably look at supplying pellets to big box stores such as Lowes and Home Depot. Pellets from the Spearfish plant mainly go to lumber yards or wood stove shops. “At the time when [big box stores] got into the pellet business we were sold out so we don’t work with very many of the big box chains,” Follette says.
Currently, Spearfish Pellet is holding its own against the big box stores because they provide quality pellets with a higher Btu per pound. “We might not have the cheapest pellets, but our quality will help you get more Btu from the pellets,” he says. Spearfish Pellet uses Ponderosa pine, producing pellets with an average of 8,631 Btu per pound, Carlson says.
Quality and Consistency
Spearfish Pellet satisfies its customer base by providing a high-quality consistent product. When Carlson was looking to add a third pellet mill, he checked out several equipment manufacturers but in the end went with Amandus Kahl, the company that had supplied its other mills.
Carlson says he had two major concerns when he was shopping for another mill: not having to spend a lot of extra money to double his parts inventory and making sure that the quality of the pellets produced was consistent. “Consistency is the name of the game for anything,” he says. “If something isn’t broke you don’t fix it.”
Amandus Kahl uses a flat die pellet mill because it’s an efficient, quiet system and the cost to keep the machine operating is low, says Patrick Clark, vice president of sales and marketing.
“Our die is flat and stationary in comparison to a ring die machine where the die obviously is a ring and it rotates and with their ring die machine the rolls are fixed and in our Amandus Kahl flat die pellet mills our rolls rotate,” Clark says. “So it’s basically 180 degrees opposite of the other technologies. That allows it to grind even though our revolutions per minute (the shaft speed) are at approximately 62 revolutions per minute, what happens is the inside feet per minute or rate of travel is different than the feet of or rate traveling on the outside of that roll shell and as that goes across the die, it gives us the grinding action.”
Clark says one of the many benefits of using their equipment is that he can take an inexperienced person, who has never been around their machines and teach them to change the roll head and die in less than 50 minutes. “A lot of our experienced guys are doing it in 20 to 30 minutes,” he says, adding that reduced down time, especially for plants that run 24 hours, seven days a week is important.
Building the Pellet Market
While Spearfish Pellet’s mission is to add value to forest residue, Maine Energy Systems LLC (MESys) is working to increase the market share for pellet producers in the U.S. Northeast and it’s doing it European style.
MESys has long-term contracts with premium-grade wood pellet producers and distributes the pellets in bulk to homes and businesses in Maine and New Hampshire. The trick is to make pellet heating as simple and seamless as heating with propane or fuel oil, with which people are already familiar.
According to the “2011 State of the Hearth Industry Report,” only about 5 percent of the 1 million hearth appliances shipped out in the U.S. in 2010 were pellet-fueled, 70 percent were gas-fueled and the remaining 25 percent used cordwood. The study, which was conducted by the Hearth, Patio & Barbecue Association also pointed out that 34 percent of wood or pellet stove owners viewed their stove as a major heat source, 50 percent considered it a secondary source of heat.
MESys aims to increase the percent of pellet fueled heating appliances and to show residents and businesses how they can make pellets their primary heat source. The company has modeled its business after the pellet industry in Europe, and over a year ago partnered with an Austrian pellet boiler manufacturer ÖkoFEN, says William Strauss, who co-founded MESys with Les Otten and Harry “Dutch” Dresser.
MESys chose to work with ÖkoFEN because the company is considered a pioneer in the pellet boiler industry and manufactures one of the leading models in Europe. “It’s the most modern, cleanest, trouble-free, efficient pellet boiler in Europe,” Strauss says. “The homeowner doesn’t even know it’s there, just set the thermostat and you’ve got heat. No bags to deal with no ash removal no cleaning. It periodically has to be serviced like any boiler that’s really it.”
The company offers semi- and fully-automated wood pellet boiler equipment systems, which require bulk storage bins that hold 3 to 4 tons of pellets, a tube or hose that goes from the bin to the boiler and a pneumatic system that automatically moves the pellets to the boiler.
MESys also offers a product for pellet stove owners who want bulk delivery but don’t have a bulk storage bin and don’t want to lift the 40-pound bags of pellets. “It’s a free-standing bag that holds a little over a ton of pellets and will take bulk delivery,” Strauss says. “It takes up about the same space as a pallet of bagged pellets and it has a little gauge at the bottom where the homeowner can open the gate and fill a bucket full of pellets and then dump those in the pellet stove.”
The company delivers bulk pellets by truck using a pneumatic pellet delivery system. “These trucks are state of the art,” Strauss says. “They are able to deliver rapidly and gently.” He says some companies use modified feed trucks to deliver pellets resulting in loss through breakage and dust creation. “They rip the pellets to pieces.”
Market Fluctuation
When MESys was founded in 2008 and oil prices spiked there was a flurry of interest in pellet heat, Strauss says. Then oil prices went down—equivalent to pellet heat and even lower—and interest died down.
“But right now pellet energy is the equivalent of about $1.95 per gallon of heating oil and heating oil in Maine is about $2 to $3.75, it really is about half the cost for equivalent energy,” he says. A home that burns 1,000 gallons of heating oil in a season will use slightly less than 8 tons of wood pellets. At current prices, 1,000 gallons of heating oil is about $4,000 and 8 tons of wood pellets is about $2,000, cutting annual fuel costs in half.
Strauss expects the pellet market will continue to fluctuate, however, until the public and policy makers understand, support and adopt pellet heating systems as they have in Europe. “In the U.S. 98 percent of pellets are burned in pellet stoves and in Europe 98 percent of pellets are used in pellet boilers,” Strauss says. “In Europe it’s normal to have a home heating system fueled by pellets. In fact, in Austria most new homes are built with pellet systems, but in the U.S. people don’t even know they exist. And they think it is primitive and dirty and requires a lot of attention and that’s just not true.”
Author: Rona Johnson
Editor, Pellet Mill Magazine
(701) 738-4940
rjohnson@bbiinternational.com
Friday, April 22, 2011
New association to address U.S. industrial pellet export issues
According to Executive Director Seth Ginther, the U.S. Industrial Pellet Association will focus on three main issues: certification standards for industrial wood pellets, sustainability and uniformity of contracts. There are other pellet trade groups in the U.S., he said, but none that address those specific issues.
The group was officially formed in February by Enviva Biomass, Fram Renewable Fuels, Green Circle Bio Energy Inc. and the Westervelt Company, according to Ginther, and interest has been extremely high.
“We’re looking for other producers to become members, or anybody who is involved in the value chain or supply chain of industrial wood grade pellets. That includes landowners, transporters, equipment manufacturers, ports, European utilities and trading groups.”
On U.S. pellet export activity right now, Ginther said it’s not just talk. “It’s happening, and during the next five years, pellet demand in Europe will continue to rise dramatically. There’s an enormous demand for this product and that will continue.”
Though in the future the largely residential-based U.S. pellet market may begin to expand more to industrial-scale use, Ginther said the domestic wood pellet market as a whole is very small right now compared to Europe’s.
The USIPA plans to work with Canada on policy issues, he added, as Canada currently exports the vast majority of wood pellets imported to Europe.
Thursday, April 21, 2011
BIO Releases Policy White Paper
Posted by Joanna Schroeder – April 21st, 2011
“The Renewable Fuel Standard, as it has been implemented by the Environmental Protection Agency, can provide the long-term, stable, market-based government policy mechanism that advanced biofuel producers and investors have been looking for. It provides both and assured market and a significant degree of price certainty for cellulosic and advanced biofuels, which can significantly mitigate the capital risk associated with commercialization of new technologies,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section.
Erickson notes that the RFS is very effective for incentivizing biofuels innovation. He said that with this policy, companies have already made significant investments in research and development. He continued by highlighting the amount of good jobs and positive economic opportunities that the industry provides and then went on to stress that federal support must continue in order for the industry to realize commercial scale production levels. Today, many of these investments are seeing fruition in that several companies in the industry are beginning to make major commercialization announcements.
“Access to capital remains the biggest challenge for the industry, especially as high oil prices threaten to plunge the country into another recession. The RFS must work in coordination with other federal programs administered by the USDA and DOE to provide the industry, its investors and obligated parties needed stability and forward-looking guidance. This paper should reassure capital markets that advanced biofuels represent a sound opportunity. And coupled with the recent USDA loan guarantees and DOE grants the advanced biofuels sector should experience a surge in 2011 and beyond,” concluded Erickson.
You can view photos from the Advanced Biofuels Leadership Conference in my Flickr photo album.
Report analyzes European pellet markets
This chart shows the demand and supply situation in the major European pellet markets in 2009. Only markets larger than 500,000 tonnes are illustrated. PHOTO: Biofuels, Bioproducts & Biorefining
In 2009, Europe consumed a total of 9.8 million metric tons of wood pellets, with 9.2 million going to the 27 European Union member states, according to the 2011 report European Wood Pellet Markets: Current Status and Prospects for 2020.
Six European authors representing universities, pellet organizations and renewable firms collaborated on the work with three main goals in mind: map current European national wood pellet demand and supplies; provide a comprehensive overview of major market types and prices; and discuss the future outlook in light of raw material supply. The work was published in the peer-reviewed journal Biofuels, Bioproducts & Biorefining (Biofpr).
In 2009, approximately 670 pellet plants in Europe produced more than 10 million metric tons of pellets, making the continent the largest producer in the world. At the time of the report, Sweden and Germany were the largest pellet producers in Europe, both producing about 1.5 million metric tons. In light of that fact, it might not be surprising that Sweden is also the largest consumer of wood pellets at about 2 million metric tons. Germany with a consumption of just below 1 million metric tons, exports more than 500,000 metric tons, according to the report. An illustrative chart within the analysis maps out consumption, production, import and export figures for the 15 largest European pellet markets including Sweden, Germany, Denmark, Austria, France, Italy and others.
After Europe, North America has the largest pellet production capacity, which grew from 1.1 million metric tons in 2003 to 6.2 million in 2009, the report says. Canada exports 80 percent of its pellets and the U.S. exports only 20 percent, due largely to the fact that the majority of U.S. pellets are used in residential applications.
The report also studies residential and industrial pellet pricing, as well as transport costs and pellet trends. “The pellet market is quite dynamic due to economic developments and recently released government biomass support plans,” the report reads. “Public support is needed to cover the additional costs of capital investment, operation and maintenance of renewable energy equipment, and pellet fuel feedstock, in comparison with their fossil fuel alternatives.”
In addition, the report considers current and future supplies for pellet production and analyzes future demand for pellets. It lists the EU member states with the most potential for additional wood and wood waste use for heating and electricity production as: Germany (43 million metric tons), France (19 million), the U.K. (14 million), Spain (13 million), Poland (7 million), Belgium (7 million), Greece (6 million) and Italy (6 million). “It is uncertain to what extent the demand for woody biomass will be covered by wood pellets,” according to the report, which concludes by saying that pellets and other woody biomass sources could play a significant role in meeting the EU’s renewable energy goal of 20 percent by 2020.
To view the study click here and register for a free Biofpr account.
In 2009, Europe consumed a total of 9.8 million metric tons of wood pellets, with 9.2 million going to the 27 European Union member states, according to the 2011 report European Wood Pellet Markets: Current Status and Prospects for 2020.
Six European authors representing universities, pellet organizations and renewable firms collaborated on the work with three main goals in mind: map current European national wood pellet demand and supplies; provide a comprehensive overview of major market types and prices; and discuss the future outlook in light of raw material supply. The work was published in the peer-reviewed journal Biofuels, Bioproducts & Biorefining (Biofpr).
In 2009, approximately 670 pellet plants in Europe produced more than 10 million metric tons of pellets, making the continent the largest producer in the world. At the time of the report, Sweden and Germany were the largest pellet producers in Europe, both producing about 1.5 million metric tons. In light of that fact, it might not be surprising that Sweden is also the largest consumer of wood pellets at about 2 million metric tons. Germany with a consumption of just below 1 million metric tons, exports more than 500,000 metric tons, according to the report. An illustrative chart within the analysis maps out consumption, production, import and export figures for the 15 largest European pellet markets including Sweden, Germany, Denmark, Austria, France, Italy and others.
After Europe, North America has the largest pellet production capacity, which grew from 1.1 million metric tons in 2003 to 6.2 million in 2009, the report says. Canada exports 80 percent of its pellets and the U.S. exports only 20 percent, due largely to the fact that the majority of U.S. pellets are used in residential applications.
The report also studies residential and industrial pellet pricing, as well as transport costs and pellet trends. “The pellet market is quite dynamic due to economic developments and recently released government biomass support plans,” the report reads. “Public support is needed to cover the additional costs of capital investment, operation and maintenance of renewable energy equipment, and pellet fuel feedstock, in comparison with their fossil fuel alternatives.”
In addition, the report considers current and future supplies for pellet production and analyzes future demand for pellets. It lists the EU member states with the most potential for additional wood and wood waste use for heating and electricity production as: Germany (43 million metric tons), France (19 million), the U.K. (14 million), Spain (13 million), Poland (7 million), Belgium (7 million), Greece (6 million) and Italy (6 million). “It is uncertain to what extent the demand for woody biomass will be covered by wood pellets,” according to the report, which concludes by saying that pellets and other woody biomass sources could play a significant role in meeting the EU’s renewable energy goal of 20 percent by 2020.
To view the study click here and register for a free Biofpr account.
Conference to highlight forest bioenergy opportunities
The 31st Southern Forest Tree Improvement Conference promises to have something for everyone interested in developing, growing and utilizing biomass for the production of bioenergy.
The event, which is being held June 13-16 at the Imperial Palace Resort and Spa in Biloxi, Miss., is mostly dedicated to tree genetics, but the session on June 14 called Biomass and Biofuels Production is designed to educate the general public about the role of renewable biomass in producing biofuels and bioenergy.
Speakers during this portion of the conference include, Mississippi Lt. Gov. Phil Bryant, John Gacskaylo of KiOR Inc., Tim Eggeman of ZeaChem Inc. and Mike Cunningham of ArborGen.
The conference theme is Unlocking Tree Genomes for the Sustainable Economy and the bulk of it will focus on genetics and biotechnology and the challenge of increasing biomass quantity and quality of both pines and hardwoods for the emerging bioenergy /biofuel systems and traditional forest products industries on a finite land base, according to Randy Rousseau, associate extension research professor at Mississippi State University, who is helping to organize the event.
“Environmentalists say they don’t want to see every tree cut down and they don’t want to see anything brought in that might be invasive like in the case of the [genetically modified] eucalyptus,” Rousseau said. “So our hands are being tied by only working with technology that existed back in the 70s simply because, from a forest standpoint, we can’t move into the biotech or the genetic modification field.”
Rousseau, who is researching populous and willow for short-rotation woody crops production at MSU, said that it takes millions of dollars to go through the deregulation process to allow genetically modified trees to be grown and at this time many companies aren’t prepared to do that.
“The genetic modification of trees has been done before and it’s sort of on the shelf,” he said. “People who have it on the shelf don’t see a large enough market for it and don’t want to go through the whole deregulation process. Without the deregulation it just sits there.”
Rousseau said the same is true for biotechnology such as herbicide resistance in hardwoods. Being able to plant herbicide-resistant trees drives the cost of establishment down, which is crucial for developing a forest-based bioenergy industry.
Despite the challenges, there is movement in the industry. Recently Mississippi Gov. Haley Barbour provided Texas-based KiOR with $50 million to help it build five facilities to produce biocrude oil from wood chips and other biomass in Mississippi.
“That’s significant for Mississippi because other than poultry plants, forestry is our biggest industry,” Rousseau said. “You do see some growth here, but there is a lot of room for utilization of biomass in the state of Mississippi, in the state of Alabama and I’m sure in Georgia and elsewhere.”
For more information on the conference, go to http://sftic.msstate.edu/index.html.
Wednesday, April 20, 2011
Forest carbon map released for the US
http://news.mongabay.com/2011/0420-hance_us_carbonmap.html
mongabay.com
April 20, 2011
The National Biomass and Carbon Dataset (NBCD) map of the continental US courtesy of Woods Hole Research Center. Click to enlarge.
mongabay.com
April 20, 2011
The National Biomass and Carbon Dataset (NBCD) map of the continental US courtesy of Woods Hole Research Center. Click to enlarge.
The Woods Hole Research Center (WHRC) has released the first hectare-scale map displaying aboveground woody biomass and forest carbon in US forests. The map, which also shows canopy heights, is known as the National Biomass and Carbon Dataset (NBCD).
"The dataset represents a comprehensive assessment of forest structure and carbon stock within the lower 48 States at the beginning of the third millennium, providing an important baseline with which to improve our understanding of the United States forest resources and its link to the terrestrial carbon flux in North America," said Dr. Josef Kellndorfer, who led the project, adding that "this dataset will be useful to foresters, wildlife ecologists, resource managers, and scientists alike."
The map shows forest conditions for the year 2000 and, as such, will provide a baseline for future changes to US forest cover.
"Naturally we are keen to produce the next generation data sets of this kind to assess in detail how carbon stock and forest structures are changing in this country, and internationally," said Kellndorfer.
The map was funded under NASA's Terrestrial Ecology Program with support from the Landscape Fire and Resource Management Planning Tools Project (LANDFIRE).
The map can be accessed at: Woods Hole Research Center's National Biomass Carbon Dataset.
Jeremy Hance
"The dataset represents a comprehensive assessment of forest structure and carbon stock within the lower 48 States at the beginning of the third millennium, providing an important baseline with which to improve our understanding of the United States forest resources and its link to the terrestrial carbon flux in North America," said Dr. Josef Kellndorfer, who led the project, adding that "this dataset will be useful to foresters, wildlife ecologists, resource managers, and scientists alike."
The map shows forest conditions for the year 2000 and, as such, will provide a baseline for future changes to US forest cover.
"Naturally we are keen to produce the next generation data sets of this kind to assess in detail how carbon stock and forest structures are changing in this country, and internationally," said Kellndorfer.
The map was funded under NASA's Terrestrial Ecology Program with support from the Landscape Fire and Resource Management Planning Tools Project (LANDFIRE).
The map can be accessed at: Woods Hole Research Center's National Biomass Carbon Dataset.
Massive Pellet Production
When I hear announcements of jumbo pellet plants in the works, I can’t help but wonder when the U.S. will jump on the industrial wood pellet bandwagon.
When I hear announcements of jumbo pellet plants in the works, I can’t help but wonder when the U.S. will jump on the industrial wood pellet bandwagon and not only begin producing large-scale power from biomass, but begin creating and refining a domestic market for those pellet companies.
Newly formed venture Franklin Pellets LLC is in the preliminary stages of developing a 500,000-ton-per-year pellet plant in Franklin, Va. I did ask George Lyons, vice president of business development for parent company MultiFuels L.P., if the plant will be exporting its products, but I knew the answer even before he said it. Of course.
It’s no secret that the domestic pellet market revolves around residential heating applications and massive plants like Franklin’s wouldn’t be satisfied with the pellet appetite the U.S. can offer. The plant will rank among the nation’s largest, tied with Green Circle Bio Energy Inc.’s Cottondale, Fla., plant and second to RWE Innogy’s 750,000 ton-per-year facility in Georgia. Both of those pellet plants are exporting their products to Europe and while Franklin Pellets declined to share with me its target market, it’s probably safe to assume most if not all of its pellets will be used there, too.
Export markets are indeed important and a number of programs and agencies are focused primarily on defining and enhancing them for U.S. manufacturers. I’ve heard the tired excuses that lean on policy shortcomings and now could even factor in widespread opposition to biomass, but it seems to me a complementary domestic market could boost production and create jobs, too. And in the midst of an economic recovery (or so we’re told), we can’t afford to let any opportunities slip through the cracks.
Newly formed venture Franklin Pellets LLC is in the preliminary stages of developing a 500,000-ton-per-year pellet plant in Franklin, Va. I did ask George Lyons, vice president of business development for parent company MultiFuels L.P., if the plant will be exporting its products, but I knew the answer even before he said it. Of course.
It’s no secret that the domestic pellet market revolves around residential heating applications and massive plants like Franklin’s wouldn’t be satisfied with the pellet appetite the U.S. can offer. The plant will rank among the nation’s largest, tied with Green Circle Bio Energy Inc.’s Cottondale, Fla., plant and second to RWE Innogy’s 750,000 ton-per-year facility in Georgia. Both of those pellet plants are exporting their products to Europe and while Franklin Pellets declined to share with me its target market, it’s probably safe to assume most if not all of its pellets will be used there, too.
Export markets are indeed important and a number of programs and agencies are focused primarily on defining and enhancing them for U.S. manufacturers. I’ve heard the tired excuses that lean on policy shortcomings and now could even factor in widespread opposition to biomass, but it seems to me a complementary domestic market could boost production and create jobs, too. And in the midst of an economic recovery (or so we’re told), we can’t afford to let any opportunities slip through the cracks.
Pellet mill may occupy shuttered Virginia paper mill
Franklin Pellets LLC, a new joint venture between Houston-based energy development firm MultiFuels LP and Virginia-based diversified investment firm CMI LP, would produce 500,000 tons of pellets annually, destined for export. The company is not yet prepared, however, to release details on where the pellets will be shipped, according to George Lyons, vice president of business development for MultiFuels.
Franklin Pellets has just recently signed a letter of intent to complete evaluation of the project including due diligence and feasibility studies. If all goes well, the plant could be operational by the middle of 2013, Lyons said.
Not only did the workers at the International Paper Co. paper mill lose their jobs when it closed, but it significantly affected the workforce operating in the wood basket, Lyons said. A local newspaper reported that the closing cost the community about 1,100 workers at the plant alone. “We’re looking to restore some of these jobs,” he said. Franklin Pellets is in negotiations for a long-term contract for the wood chips and round wood the plant will use to make its pellets. Besides the fact that all the necessary material will come from just one contract, Lyons declined to release details of the agreement.
“We are pleased that the site owner has selected our team to explore the development of this project,” said Randy Gibbs, CEO of MultiFuels. “We are very impressed with the Franklin site and believe this wood basin provides a sustainable source of wood and wood chips, making it an ideal location for the production of wood pellets to meet the growing demand for bioenergy.”
Lyons also declined to release cost estimates for the project. He did say, though, that Franklin Pellets is looking at alternatives for local and grant moneys, but the company is not predicating the economics of the facility on that.
Nova Scotia reduces forest biopower cap
The eastern Canadian province of Nova Scotia has lowered by 30 percent its cap on the amount of new forest biomass that can be used to produce power, defending the act as a measure to further protect the sustainability of forests in the province.
The new cap is 350,000 dry metric tons annually, down from 500,000 as specified in Nova Scotia’s renewables program. “As we work to meet our target to generate 40 percent of the province’s electricity from renewable sources by 2020, we are continually assessing our information,” said Charlie Parker, Nova Scotia’s minister of natural resources. “We have decided that the original 500,000 [metric ton] cap, laid out in the 2010 Renewable Electricity Plan and subsequent regulations, can be more cautious on the basis of current analysis.”
When the plan was released in April 2010, the province made a commitment to defer to a Natural Resources Strategy process in setting the biomass cap, according to Parker’s office. “The Phase Two steering panel report in the Natural Resources Strategy process states that government should exercise caution in the use of biomass for power generation,” he said. “We are paying attention to that advice while continuing to rely on forest biomass as part of a diversified approach to renewable energy.”
Provincial forest biomass will not be cofired in Nova Scotia power plants, and other biomass projects will continue to be covered under the cap, according to Parker’s office. That includes community-based biomass projects under the province’s new Community Feed-In Tariff program. Forest biomass is used in Nova Scotia in a number of applications including firewood in more than 100,000 homes, a cogeneration facility in the southern portion of the province, an agricultural college, two hospitals and several other institutions.
In addition, NewPage Port Hawkesbury Corp., in partnership with Nova Scotia Power, is also developing a 60-megawatt cogeneration facility that will use 200,000 metric tons of biomass annually, but the company is unconcerned with the cap. “The provincial announcement lowering the cap on the annual amount of new forest biomass does not affect our NewPage biomass project,” said Patricia Dietz, communications manager for NewPage Port Hawkesbury. “The change refers to projects that may come forward in the future.” The steam turbine project is well underway and expected to be operational by January 2013. But new policies to reduce clear cutting to 50 percent will apply to the plant, according to Parker’s office.
The province will release an economic impact analysis of recent policy changes on the forestry industry, particularly the clear cutting reduction target, in the next few weeks, it said.
Saturday, April 16, 2011
Friday, April 15, 2011
APX-Endex to Offer Wood-Pellet Trading Starting Next Quarter
By - Apr 15, 2011 4:55 AM ET
APX-Endex Holding BV, the Amsterdam-based energy-exchange company, plans to offer biomass trading starting next quarter as utilities seek alternatives to fossil fuels to burn at power stations.
APX-Endex, whose spot power and gas volumes were worth about 5 billion euros ($7 billion) last year, will offer wood pellets contracts, with physical settlement to be arranged between counterparties based on their existing trade agreements, Chief Operating Officer Pieter Schuurs said yesterday at a presentation in London.
“It’s a small product compared with power and gas, but it’s interesting enough,” he said.
Biomass is the cheapest way for the Netherlands to generate renewable electricity, APX-Enex and its partner Port of Rotterdam said in July when they signed a letter of intent for the project. Governments across the world are promoting and subsidizing renewable energy to reduce greenhouse gas emissions from power generation.
APX-Endex began a wood-pellets index in 2008 and 15 traders including German utilities E.ON AG (EOAN) and RWE AG (RWE) submit prices on a weekly basis. Year-ahead delivery of wood pellets exceeded 140 euros a metric ton in February 2009 and was valued at more than 130 euros in February, according to slides at the presentation.
The traders need to agree on standardized quality and specifications for the contracts before trading can begin and an accord may be reached by the middle of this year, Schuurs said.
Cleared biomass trading products, in which a central counterparty guarantees the settlement of trades, may be introduced in the first quarter of 2012, he said.
To contact the reporters on this story: Lars Paulsson in London at lpaulsson@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
Getting UNC coal-free: When big plans are made, they should be made with foresight and demand continued attention
UNC’s energy transition seems not to be going as smoothly as was hoped. A few bumps in the road are hardly worth despairing over. But the obstacles highlight a lack of foresight in the energy plan — and the student body is left unclear as to when the transition will happen, or whether it will actually be sustainable.
Whether UNC can create the market it needs with its own demand remains to be seen. At the very least, the University must diligently work to ensure the few suppliers it can use have the proper certification.
The Energy Task Force, which was formed more than a year ago and presented its recommendations to the University last October, suggested wood pellets as a more sustainable alternative to coal.
Many of the delays to the project were beyond the control of the parties involved. First, UNC couldn’t get enough wood pellets to its energy plant because it couldn’t secure proper railcars. By the time this was resolved, it was too far into the winter to test a new source of energy.
The initiative’s current problems surround the difficulty of verifying the sustainability of the distributor’s practices. After ruling out N.C. distributors, the University settled on a company in Virginia.
It’s not exactly what the Energy Task Force had in mind. The final recommendations explicitly stated preference for biomass taken from N.C. forests through certified sustainable practices.
UNC’s supplier, WoodFuels Virginia, says it is “aggressively pursuing” certification, but does source its own wood. In the meantime, it’s unclear whether or not using biomass would actually be degrading another natural resource.
The creation of the Energy Task Force was the culmination of admirable efforts by student environmental groups. They succeeded in bringing problems with coal to the forefront of the University’s attention.
For their part, administrators responded promptly and took the concerns seriously. When the 10-person task force was assembled, two students were included.
But implementing the plan seems to be harder than creating it. We understand the immense complexity of energy issues, especially with a budget that offers little wiggle room for expensive experimentation.
It’s all the more reason to aggressively ensure that we are not just meeting a time line, but making truly sustainable choices. We’d like to see the plan’s original advocates sustain their initial passion to see the plan through.
Whether UNC can create the market it needs with its own demand remains to be seen. At the very least, the University must diligently work to ensure the few suppliers it can use have the proper certification.
The Energy Task Force, which was formed more than a year ago and presented its recommendations to the University last October, suggested wood pellets as a more sustainable alternative to coal.
Many of the delays to the project were beyond the control of the parties involved. First, UNC couldn’t get enough wood pellets to its energy plant because it couldn’t secure proper railcars. By the time this was resolved, it was too far into the winter to test a new source of energy.
The initiative’s current problems surround the difficulty of verifying the sustainability of the distributor’s practices. After ruling out N.C. distributors, the University settled on a company in Virginia.
It’s not exactly what the Energy Task Force had in mind. The final recommendations explicitly stated preference for biomass taken from N.C. forests through certified sustainable practices.
UNC’s supplier, WoodFuels Virginia, says it is “aggressively pursuing” certification, but does source its own wood. In the meantime, it’s unclear whether or not using biomass would actually be degrading another natural resource.
The creation of the Energy Task Force was the culmination of admirable efforts by student environmental groups. They succeeded in bringing problems with coal to the forefront of the University’s attention.
For their part, administrators responded promptly and took the concerns seriously. When the 10-person task force was assembled, two students were included.
But implementing the plan seems to be harder than creating it. We understand the immense complexity of energy issues, especially with a budget that offers little wiggle room for expensive experimentation.
It’s all the more reason to aggressively ensure that we are not just meeting a time line, but making truly sustainable choices. We’d like to see the plan’s original advocates sustain their initial passion to see the plan through.
USDA, DOE to fund $30 million in biomass R&D initiative
"Since taking office, the president has clearly articulated the goal to ensure a cleaner, safer and more secure energy future," said Agriculture Secretary Tom Vilsack. "These projects will contribute knowledge and technologies that will ultimately help us break our dependence on foreign oil and move our nation toward a clean energy economy that creates jobs and keeps America competitive."
"These projects will help to reduce America's dependence on imported oil by accelerating the development and commercialization of cleaner, alternative fuels that can power our vehicles and our industry," said U.S Energy Secretary Steven Chu. "Producing renewable fuels from biomass right here in the United States will improve our nation's energy security and give us an innovative edge in the global market for clean energy technologies."
For fiscal year 2011, applicants seeking BRDI funding must propose projects that integrate science and engineering research in the following three technical areas that are critical to the broader success of alternative biofuels production:
- Feedstock Development
- Biofuels and Biobased Products Development
- Biofuels Development Analysis
Integrating multiple technical areas in each project will encourage collaborative problem-solving approaches, enable grantees to identify and address knowledge gaps, and facilitate the formation of research consortia. The agencies are also seeking projects that demonstrate the use of biodiesel in farming equipment and processing facility operations that are used to produce grain and/or cellulosic ethanol.
Subject to annual appropriations, USDA plans to invest up to $25 million with DOE contributing up to $5 million for this year's Biomass Research and Development Initiative. This funding is expected to support five to ten projects over three to four years. A description of the solicitation, eligibility requirements, and application instructions can be found on the FedConnect website, and the Grants.gov website at http://www.grants.gov/%20 under Reference Number DE-FOA-0000510. Pre-applications are due on May 31 and must be submitted electronically. It is anticipated that applicants who are encouraged to submit full applications will be notified by Aug. 3.
Through federal funding and leadership for research, education and extension programs, USDA's National Institute of Food and Agriculture focuses on investing in science and solving critical issues impacting people's daily lives and the nation's future.
DOE's Biomass Program works with industry, academia, and national laboratory partners on a balanced portfolio of research in biomass feedstocks and conversion technologies.
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