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domestic waste material as an energy source. Much of China’s current pellet production is based on agricultural products. Sources of wood biomass that can be used for fuel and/ or wood pellet production include the following, which are listed from the most readily available and lowest costs by North American standards: residual products created at the mill while manufacturing solid wood products (specifically lumber); woody material leftover from currently harvested areas including poor quality trees, small stems, and tree species with no market; intensively-managed, short rotation energy plantations; and material generated from thinning of established forest stands. Given the low labor costs in China, cost and availability may change, but the sources with respect to available wood biomass should be similar.
Based on a trip to China in the fall of 2008, the authors of this report made several observations. The first is that most, if not all of, existing saw log residues in visited mills were utilized as fuel to support kiln drying. At several mills, additional biomass was being purchased to augment fuel supply. One of the visited plants imported lumber from North America and Europe for production of laminated panel products, and all scrap waste was used to supply energy for kiln drying. This may be the situation throughout China. When residual products are considered, reports indicate that most material within China is currently being used as solid wood fuel, and that unauthorized harvesting and removal of material from natural forests and plantations for energy is a problem in some areas.
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Additionally, two major sources of logs imported into China are Russian Siberia and various tropical nations; it’s possible that an amount of material for pellet production could be generated from these sources. While the ultimate market form that will exist in China is uncertain, it must be recognized that a global competitive market for wood pellets is in the formative stage, and China is a part of this market. As of Feb. 6, there were 180 opportunities listed on this site to sell wood pellets in the Global Market, including a number from China. Few of the requests for quotes list a price, however, an essential component of a competitive market system. Given the scarcity of resources in China and the ownership structure of the electrical generating facilities, it is logical to assume that there will be some form of an oligopsony type market. The main focus of this market segment will be negotiation and contracting with suppliers of raw material and transportation. The potential need for wood pellets for cofiring in China is so great that it is doubtful that any one market form will satisfy the total demand. With increased markets, all indications are that higher demand will have an upward impact on price. The upward impact, however, will be free of the influence resulting from the cartel associated with petroleum suppliers. The upward pressure will be limited in North America, however, by the existing infrastructure to move pellets from North America to the Asian nations. In concert with the development of infrastructure, we must also become more aware of the true sustainable levels of biomass production that each nation can contribute to the global market. When considering the total consequences of increased use of renewable biomass energy on a global basis, price is important, but it is a small issue when compared to biologically-sustainable supply and ecological sustainability. Authors: Allen M. Brackley Research Forester and Supervisor USDA Forest Service, Pacific Northwest Research Station, Alaska Wood Utilization and Marketing Center abrackley@fs.fed.us.