or more than a decade John Keppler, Enviva co-founder, chairman and CEO, has managed the company’s strategic direction. He’s led the company’s growth from startup to becoming the world’s largest producer of industrial wood pellets. Enviva has operations in Mississippi, Alabama, North Carolina, Virginia and Florida. Its facilities include nearly 3 million metric tons of production capacity and a 600,000-ton plant under construction. Its processing facilities export to customers in the European Union through wood pellet port facilities in Chesapeake, Virginia, and Wilmington, North Carolina, as well as deep-water marine terminals in Panama City, Florida, and Mobile, Alabama. In January, Enviva announced the formation of a joint venture with affiliates of The John Hancock Life Insurance Co. called the Enviva JV Development Co. It will to acquire, develop and construct wood pellet production plants and deep-water marine terminals in the Southeastern United States. The joint venture announced its intent to acquire a wood pellet production plant in Greenwood, South Carolina. In an interview with Pellet Mill Magazine, Keppler answered questions on the challenges of breaking into the European wood pellet market and future opportunities for Enviva, not only in Europe, but also in Asia. What percentage of Enviva’s wood pellet production is exported to European markets? How were you able to gain such a foothold there? Was there a learning curve in successfully entering the European market? Today, our customers are mostly European electricity and heat/power producers seeking to decrease their dependence on traditional fossil fuels, such as coal, and reduce their emissions of carbon dioxide and other pollutants. European nations have adopted aggressive, mandatory renewable energy targets. Several countries, including the U.K., have put additional regulations in place that are designed to phase out many coal plants altogether. Since existing coalfired infrastructure can be converted to use wood biomass instead, Enviva provides a
reliable, cost-effective and environmentally beneficial means of meeting these objectives. I will say that although the preponderance of our production is delivered into Europe, the Asian market is growing very rapidly, and we have shipments scheduled for customers in Japan already this year. We entered the industrial wood pellet business in 2007, and have formed lasting relationships with a reliable customer base. At the start, these relationships were complementary to sales to heating customers. In 2009, however, the European Renewable Energy Directive provided a more substantial opportunity for utility-scale conversions, and we were asked by our customers to create a larger-scale operation that could provide a ratable supply at a predictable cost position. Shortly thereafter, we acquired our first pellet production facility in Amory, Mississippi, (2010) and built our first pellet production facility in Ahoskie, North Carolina, (2011). Our total production capacity is now almost 3 million metric tons per year (MTPY), with a 600,000 MTPY plant under construction and an announced, but not yet closed, acquisition of an additional plant that will add another 600,000 MTPY to our portfolio. Yes, there was a learning curve in successfully entering the European market. It was not merely a matter of successfully manufacturing wood pellets—we had to master the entire supply chain. I distinctively recall two key decisions: the first was vertically integrating our own deep-water marine terminal at the Port of Chesapeake, which allowed us to gain control of the supply chain. The second was when we innovated from purely a third-party certification focused approach to sustainability and sustainable forestry practices to an integrated approach of certification, conservation and transparency. In doing so, we developed and launched a proprietary data system, Track & Trace. T&T is a first-of-its-kind system that documents our forestry and supply chain activities on a tract-by-tract basis and allows us to track every ton of wood we buy back to its origin in the forest or sawmill. We publish the T&T data on our website to ensure that it is available publicly and accessible by all of our stakeholders.
These are a few of the early, key elements that ensured that were able to quickly and effectively serve the market and build a differentiated, leadership position in the industry. When did Enviva send its first shipment of wood pellets to Europe? Can you describe that experience? Our first shipment (a 10,000-ton ship) took place in November 2010. This was an exciting and significant achievement, one nearly matched by the loading of our first ship from our own deep-water marine terminal at the Port of Chesapeake, the following December (2011). The facility, originally an Alcoa-built alumina import terminal, was purchased in February 2011. Our goal was to load a ship the same year—which we did. The ship, the Daishin Maru, carried 30,000 metric tons of wood pellets to Europe and demonstrated the remarkable capabilities of Enviva: within 10 short months, we constructed 45,000 tons of state-of-the-art storage capacity and converted an import terminal to an export facility, loaded a full shipment with high-quality wood pellets from a production facility completed and commissioned contemporaneously with the port and sailed the vessel to a customer to arrive within the designated arrival window. How do you see the European wood pellet market evolving in the next five or 10 years? Demand is expected to plateau—are there other markets that Enviva is eyeing? How do the recent acquisition of the Greenwood plant and Enviva’s plans to build more plants and deep-water facilities align with future plans? We see significant industrial pellet growth potential in Europe, both in the short and long term. The Netherlands market is ramping up, both for cofiring and industrial heat, and we’re seeing that Denmark, the U.K. and Belgium continue to pursue new specific biomass electricity and CHP projects. Germany, Poland, and Ireland also represent utility-scale opportunities and across Europe, we also expect growth in combined-heat-and-power applications and in residential thermal markets.
JANUARY/FEBRUARY 2018 | PELLET MILL MAGAZINE 21
The European Production & Consumption issue