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Pellet Mill Magazine
Advertisers' Index 31 Airoflex Equipment 2 Andritz Feed & Biofuel A/S 39 BBI Consulting Services 40 Biomass Industry Directory 30 Biomass Magazine 19 BRUKS Rockwood 10 Buhler Inc. 26 CPM Roskamp Champion 16 Dieffenbacher 25 Fike Corporation 33 Firelogic 11 Flamex Inc. 21 GreCon, Inc.
Contents » Q1 2013 | VOLUME 3 | ISSUE 1
FEATURES 20 Q&A A Yankee in King Arthur’s Court
U.S. Industrial Pellet Association Executive Director Seth Ginther discusses the effects of current and potential European renewable policies on the U.S. pellet export industry. By Tim Portz
22 FEEDSTOCK Raw Material Rationale
There are reasons and strategies behind pellet producers' decisions to use hardwood, softwood or blends. By Keith Loria
28 TORREFACTION Torrefied Pellet Pursuit
Despite heightened interest in replacing coal with torrefied pellets in the U.S., the market still isn’t mature. By Chris Hanson
CONTRIBUTIONS 34 MARKETS Asian Markets for Wood Pellets
Several Asian countries may provide opportunities to North American pellet exporters, but markets are limited. By Allen M. Brackley
27 MEGTEC Systems Inc. 37 Pellet Fuels Institute 14 Process Barron 24 RUF U.S., Inc. 13 SAMSON Materials Handling Ltd. 15 SCHADE Lagertechnik GmbH 32 Scheuch GmbH 36 Timber Products Inspection/Biomass Energy Laboratories 12 Vecoplan LLC 17 Vecoplan Midwest, LLC 35 Wolf Material Handling Systems
DEPARTMENTS 04 EDITOR’S NOTE
Living the Pellet Life in a Coal World By Tim Portz
05 INDUSTRY EVENTS 06 STANDARDS STEWARD
Verified Pellet Stove Efficiency Key to Industry Success By John Ackerly
07 TESTING GROUNDS
Specification Compliance for Expert Offtake Agreements By Chris Wiberg
08 PRODUCER PROSPECTIVE
Focus Must Remain on Industry Cornerstones By John Keppler
09 EU CONCEPTIONS
Safety on Top of the Agenda By Christian Rakos
10 BUSINESS BRIEFS 12 NEWS 18 MAPS & DATA
The Growing Atlantic Pellet Trade By Kolby Hoagland
Q1 2013 | PELLET MILL MAGAZINE 3
« Editor’s Note
Living the Pellet Life in a Coal World
Tim Portz
VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR tportz@bbiinternational.com
The team at Pellet Mill Magazine didn’t set out to create an issue with a focus on the relationship between coal and pellets, but we ended up with precisely that. This isn’t surprising, however, as pellets are renewables’ replacement for fossil fuels’ coal and heating oil offering. Any time pellets are purchased, coal and heating oil are likely being displaced, replaced or augmented. As a result, the potential of pellet markets, both local and global, is often calculated by examining the coal consumption in the region or country of interest. This is most clearly articulated in “Asian Markets for Wood Pellets,” (page 34) a contribution from Allen M. Brackley, research forester and supervisor at the U.S. Forest Service Alaska Wood Utilization and Marketing Center. In the datarich contribution, Brackley derives the potential demand in the Asian marketplace for pellets from coal consumption data in Japan, South Korea and China. In our Q & A with Seth Ginther, executive director of the U.S. Industrial Pellet Association (page 20), Ginther further defines the coal/pellet relationship, drawing attention to an the important market that’s driving Renewables Obligation Certificate banding scheme in the growing U.K. pellet market, noting that it “allows U.K. utilities to keep a number of coal-operated power plants online, while cofiring industrial wood pellets alongside coal.” In the situation that Ginther points to, the augmentation of coal with pellets actually prolongs the lives of a number of coal assets, rather than hastening their closure or full conversion. Still, incumbents benefit from infrastructure that was built precisely for them, and anyone vying to take real market share from an incumbent has to deliver a product with very similar handling and performance characteristics to compete. Conventionally produced wood pellets can and are gaining market share as a coal replacement, but efforts continue to produce a wood pellet that is an even closer facsimile to coal. In feature “Torrefied Pellet Pursuit,” (page 29) staff writer Chris Hanson examines the progress and unique challenges to perfect and bring to commercial scale torrefied pellet production in the U.S. Coal’s ubiquity can simultaneously be considered a blessing and a curse for the pellet industry. The assets installed, and the capacity being delivered by this fossil fuel giant, have demonstrated incredible growth potential for pellet producers, but this potential will require continued technical innovation and aggressive policy advocacy.
4 PELLET MILL MAGAZINE | Q1 2013
Industry Events » Pellet Fuels Institute Annual Conference
Editorial PRESIDENT & EDITOR IN CHIEF Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR Tim Portz tportz@bbiinternational.com MANAGING EDITOR Anna Simet asimet@bbiinternational.com ASSOCIATE EDITORS Erin Vogele evoegele@bbiinternational.com Chris Hanson chanson@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com
Art ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNER Elizabeth Burslie bburslie@bbiinternational.com
Publishing & Sales CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com ACCOUNT MANAGERS Marty Steen msteen@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Kelsi Brorby kbrorby@bbiinternational.com Tami Pearson tpearson@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com SENIOR MARKETING MANAGER John Nelson jnelson@bbiinternational.com Subscriptions to Pellet Mill Magazine are free of charge—distributed twice a year—to Biomass Power & Thermal subscribers.To subscribe, visit www.BiomassMagazine.com or you can send your mailing address to Pellet Mill Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (866) 746-8385 or service@bbiinternational.com. Advertising Pellet Mill Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Pellet Mill Magazine advertising opportunities, please contact us at (866) 746-8385 or service@ bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Pellet Mill Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to lgibson@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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JULY 28-30, 2013
The Grove Park Inn Asheville, North Carolina The PFI Annual Conference is an annual opportunity for members of the densified biomass fuel industry to gather for three days of educational opportunities, vendor exhibits and networking. Attendees include manufacturers, retailers, industry suppliers, government officials, and more. If you would like to be added to the email distribution list for the PFI Conference, please send an email to pfimail@pelletheat.org 703-522-6778 | www.pelletheat.org
National Advanced Biofuels Conference & Expo SEPTEMBER 10-12, 2013
CenturyLink Center Omaha Omaha, Nebraska Proving Pathways. Building Capacity. With a vertically integrated program and audience, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleum-derived products. 866-746-8385 | www.advancedbiofuelsconference.com
Algae Biomass Summit
SEPTEMBER 30-OCTOBER 3, 2013 Hilton Orlando Orlando, Florida Organized by the Algae Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. Register today for the world’s premier educational and networking junction for all algae industries. 866-746-8385 | www.algaebiomasssummit.org
International Biomass Conference & Expo MARCH 24-26, 2014
Orlando, Florida Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. 866-746-8385 | www.biomassconference.com
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Q1 2013 | PELLET MILL MAGAZINE 5
« Standards Steward
Verified Pellet Stove Efficiency Key to Industry Success BY JOHN ACKERLY
The pellet industry has been developing certification standards to ensure that consumers know the quality of the pellets they are buying, but a similar issue is being overlooked when it comes to the equipment that uses the pellets—the efficiency of the stoves. There is virtually no credible information available to consumers that indicates which stoves are extremely efficient, and which are pellet guzzlers. The federal and state governments should be clamoring for this information, because pellet stoves and boilers are the biomass heating appliance that most deserves incentives, and incentives are almost always tied to efficiency. An efficient pellet stove should be receiving at least the same tax credits and rebates that solar panels receive, especially in the Northeast, Great Lakes states and Northwest. Federal and state governments have made a huge mistake by not incentivizing pellet stoves, because they are typically far cleaner than wood stoves in the real world, they help save consumers money and they are a great way to reduce fossil fuel. The only catch is that some stoves are very inefficient. The U.S. EPA does not require stove efficiencies to be reported, but it does endorse the Canadian B-415 standard, using higher heating values (HHV). The problem got worse when Congress provided a tax credit for stoves that were 75 percent efficient using the lower heating value (LHV), but neither Congress nor the IRS stipulated how efficiency was to be measured. The result is that manufacturers measure efficiency in various 6 PELLET MILL MAGAZINE | Q1 2013
ways to arrive at 75 percent LHV, leaving the consumer unable to compare more efficient and less efficient stoves. Virtually all manufacturers claim to meet the 75 percent LHV efficiency threshold that makes stoves eligible for the $300 tax credit, but it could be that only half the appliances on the market today are actually above 75 percent efficiency. LHV calculates efficiency as if the wood has no moisture, and is typically 6 to 8 percent higher than HHV. Pellet stove efficiencies vary widely, with some performing extremely well and others lagging far behind. There are stoves on the market that are only 40 to 50 percent efficient, and others that are up to 90 percent efficient, using LHV. Without standardized information available, consumers don’t know which one they are buying. For the residential pellet industry to succeed, it needs to provide reliable and accurate information about fuel and heating appliances. That way, consumers will save the money they expected to when they bought their appliances. The Pellet Fuels Institute has done a great job initiating the process to set standards for pellets, so the industry can stay ahead of government regulation and address the needs of consumers. For appliance efficiencies, the industry is staying well-behind government regulation, which is coming, but also behind the expectations and needs of consumers. Almost everyone who buys a pellet stove today does so to save money. What they don’t realize is pellet stove efficiencies used by the fuel calcula-
tors are an estimate based on an EPA default number, at best. At worst, they are far off the mark. The EPA default efficiency is 78 percent HHV, a full 10 percent higher than the 68 percent HHV many experts think the actual industry average is. Lots of calculators use 80 percent, and the U.S. Forest Service chose an even higher number, 83 percent. For now, the safest thing for consumers who want higher efficiencies is to buy pellet stoves that are EPA certified. A wide range of value and high-end stoves are EPA certified, from manufacturers such as Harman, United States Stove Company, Englander and Lennox. Our government has failed to do much at all to help incentivize residential pellet heating equipment, even though it has tested extremely clean in both the lab and the field. While European countries include pellet appliances along with solar and geothermal in their efforts to promote renewable energy, the federal government and most states have neglected a technology with huge benefits for the environment, consumers, energy independence and jobs. The industry needs to show that it’s willing to step up and provide the data and the quality control that other renewable energy sectors provide. That includes not only standards to provide transparency for fuel quality, but also for transparency of verified appliances efficiencies. Author: John Ackerly President, Alliance for Green Heat jackerly@forgreenheat.org 301-841-7755
Testing Grounds Âť
Specification Compliance for Export Off-take Agreements BY CHRIS WIBERG
For those pursuing pellet exporting opportunities, the first step is to secure a contract with an overseas buyer. As I am sure many of you have discovered, this can be a very time-consuming process. Lately, however, we have been hearing more and more about producers who have secured off-take agreements, and therefore announced plans to construct new plants, often times of massive scale. The blessing is that these contracts initiate large investments and trigger huge benefits to their regional economies, but the downside is that export contracts are often quite strict in their compliance language. Therefore, it is essential that the supplier fully understands the language of the contract to be certain that their product will comply with the product specifications. I am surprised at how often I review contract product specifications where test methods are improperly listed, parameter requirements unclear or, in some cases, not reasonably achievable. Fortunately, it is becoming more common for me to receive a copy of the contract product specification to review prior to the contract becoming final, but that is not always the case. By reviewing the product specifications up front, I am able to catch issues before they are permanently written into the contract. There are also a few other things one can do to better assure that complying with product specifications will not become an unnecessary burden. Another step that should be taken prior to signing a contract is evaluation of the intended feed-
stock materials. In some circumstances, feedstock materials are quite consistent, and it is easy to gain confidence that one will be able to satisfy the product specification. That's commonly the case with projects that are planning to use 100 percent green chipped and debarked Southern Yellow Pine. Conversely, when the project calls for multiple tree species, blends of hardwoods and softwoods or the use of residuals from various suppliers, the variations between these feedstock sources may be larger than realized. It is therefore highly advisable to develop a database of key contract parameters such as calorific value, ash content, ash fusion temperatures, chlorine, etc. These parameters can be evaluated by testing the raw feedstock materials and do not require finished product. The next step that I recommend is putting some real time and consideration into internal testing laboratories. This does not need to be done prior to signing the contract, but it should be included in the design phase. It is far easier for me to design a lab well-suited for the purpose when given a blank slate, as compared to when it is an afterthought. During the design phase, it is much easier to work in a suitable size, as well as to incorporate other design considerations such as electrical requirements, ventilation, compressed air, accessibility to water, and the right amount of bench space. This is also the time when one should be deciding which tests the lab will be set up for, and what equipment will be needed to perform these tests, as these
things obviously go hand-in-hand with how much overall lab space is needed, as well as other design considerations. Finally, set up lab space and train lab staff as early as possible during the construction phase. It generally only takes me a day or two to set up a lab and provide initial training to the lab staff, however, this should be done as early in the construction phase as possible, because one will want to be able to rely on the lab during the commissioning phase to assure that process equipment is achieving the intended performance. While the lab can be operational fairly quickly after setup, it generally takes a while for the lab staff to become proficient at running the tests. Additionally, there is usually a fair amount of work required in setting up laboratory standard operating procedures, managing data, defining sampling points, and defining the general laboratory flow (these will be the topic of my column next quarter). While export contract language is generally quite strict, taking the aforementioned steps can greatly reduce risk when it comes to assuring the production facility’s ability to deliver product that complies with the agreed upon specifications. Delaying this process does not necessarily mean that quality compliance will not be achieved, but starting early tends to be far less stressful. Author: Chris Wiberg Manager, Biomass Energy Laboratory 218-428-3583 cwiberg@tpinspection.com
Q1 2013 | PELLET MILL MAGAZINE 7
« Producer Perspective
Focus Must Remain on Industry Cornerstones BY JOHN KEPPLER
The U.S. exported 1.96 million metric tons of wood pellets in 2012, a 52 percent jump from 2011, according to RISI estimates. This compares to just a 4.2 percent growth in overall U.S. exports. Amid broader economic malaise, why are pellet sales growing at a rate an order of magnitude faster than the broader U.S. manufacturing base, and what can we do to unlock the market’s long-term potential? With wood pellet exports from the U.S. expected to surge to more than 11 million tons annually in 2017, the stunning 43 percent compound average growth rate expected over that six-year period is one that few industries in the world, emerging or established, can match. The reasons for our industry’s growth are powerful, and its benefits are real. Power generators can reduce their carbon footprint by combusting biomass in lieu of fossil fuels, as well as improve their overall emissions profile with reductions of mercury, nitrogen oxide, sulfur oxide, and the risks of trace metals, including arsenic and lead. Equally important, biomass can provide firm, baseload capacity and dispatchable power to meet the variable demand profile of the modern-day electricity grid. The benefits of biomass are also economic. Research firms like McKinsey cite that cofiring biomass alongside coal can cost as little as one-quarter of other renewable sources. Power generators can thus deploy combustion strategies without expensive conversion technologies or operational tradeoffs often associated with renewable energy. By utilizing existing assets and infrastructure, utilities can preserve both direct and indirect plant and supply chain jobs 8 PELLET MILL MAGAZINE | Q1 2013
that may have otherwise disappeared. From the supply chain perspective, biomass energy, and the thousands of direct and indirect jobs it offers, preserves an economic way of life in rural communities often decimated by the decline in traditional forest products industries. Timberland and other forest owners once again see a market for biomass sourced as a part of a sustainable forest management program. Finally, biomass energy gives policymakers the tools to deliver cost-effective energy, without defaulting on environmental commitments. As a result, governments have put in place solid regulatory frameworks for biomass that give power generators, forest owners, loggers, producers, terminal and storage operators, shippers and others the runway to invest in capacity to build and serve this growing industry. But even with real, tangible environmental and economic benefits, the potential of the biomass industry’s worldwide growth can only become reality if our industry can attract the financial capital to support the necessary supply chain and combustion infrastructure investment. Without it, additional capacity that doesn’t exist today never will. Here’s where we can learn a great deal from our conventional fossil fuelto-energy colleagues, distinguishing the biomass industry as its midstream renewable energy analog: • We need to be safe. The safety and welfare of the people who work every day to build this industry is paramount to all else and must be inherent in our culture. • We need to be stable. The early years have not been without challenge,
including interruptions in both demand and supply, and yet we must reach the necessary scale, operational excellence, and market liquidity to navigate interruptions and ensure that our customers’ customers keep the lights. • We need to be sustainable. Our industry is predicated on delivering the carbon benefits that biomass offers, and we must ensure that our raw material is managed and sourced sustainably, our commercial forests continue to thrive, and that we continue to reduce our carbon footprint. • We need to be successful. Our success in securing and delivering highquality biomass fuels safely and reliably under long-term contracts with electricity generators will ensure the success of every investor, industry stakeholder and participant throughout the supply chain. At every level, our focus must remain on the cornerstones of our industry: safety, reliability, sustainability and quality. We must continue to innovate, modernize and seek efficiencies, find new ways to lower our cost profile, reduce our environmental impact, increase reliability and improve quality so that our customers can do the same. Doing so, we hold the keys to immeasurable success, which perhaps will make that forecast of 43 percent compound average growth rate look like an understatement. I look forward to working together to realize our collective potential as the next chapter of our industry’s story unfolds. Author: John Keppler CEO, Enviva LP john.keppler@envivabiomass.com www.envivabiomass.com
EU CONCEPTIONS Âť
Safety on Top of the Agenda BY CHRISTIAN RAKOS
With the rapid expansion of pellet markets, safety concerns are becoming increasingly important. The high number of fires and explosions in pellet mills has let to a situation in Canada, for example, where it is becoming increasingly difficult to get a plant insured. The urgency of the issues became evident in the First International Workshop on Pellet Safety, which took place in FĂźgen, Austria, March 4-6. In this column, I will recap what took place at the event. More than 70 experts from 13 countries attended the workshop, which was convened by the European Pellet Council, the European Biomass Association and the Safe Pellets project. Participants included researchers, pellet producers, utilities, producers of pelleting and safety equipment and representatives of associations, inspection companies, investors and companies involved in pellet logistics. The two most intensely debated topics were safety issues related to pellet storage and pellet production, followed by human health and safety, safety in transport and handling of second-generation pellets. An issue most operators of large pellet storage silos deal with is self-heating, and most of the
discussion was centered on possible influencing factors, and ways of adequately monitoring storage conditions. Researchers from the Safe Pellets project presented their ongoing investigations on selfheating, and it was agreed upon that close industry cooperation regarding this issue is needed. Besides topics related to large industrial storage, safety issues concerning small-scale domestic pellet storage were also discussed. The second most hotly-debated issue was pellet production safety. A visit to the 100,000 metric-ton Binderholz pellet plant created an excellent opportunity to discuss safety issues right on the spot, and corresponding workshops focused on fire prevention and explosions in pellet production plants. Best practices for set-up and operation of pellet plants have not yet been established in Europe, but together with insurance companies, the Wood Pellet Association of Canada has developed a safety certification for pellet producers together, and is offering this certification scheme to Europe and the U.S. as a means of establishing a better level of general pellet production safety. Another topic of discussion was how to enable the industry to
share information about incidents, in order to enhance learning and speedy implementation of adequate safety measures for all potential risks. It was decided to begin work on a pellet safety handbook covering both production and issues along the diverse supply chains, and a working group was established to develop a guidance document that outlines occupational safety and health concerns related to pellet production and use. Additionally, a Web-based communication platform for the pellet safety community will be established by the EPC in cooperation with the Safe Pellets project team. This platform will also allow anonymous reporting of safety-relevant events. A follow-up event will be held in one year to learn about the results of ongoing research, report on results of activities and to debate what more needs to be done to improve safety in the pellet sector. Author: Christian Rakos President, European Pellet Council rakos@propellets.at +43 2233 70146
Q1 2013 | PELLET MILL MAGAZINE 9
Business Briefs
PEOPLE, PRODUCTS & PARTNERSHIPS
BTEC elects new executive officers The Biomass Thermal Energy Council has announced its newly elected executive officers for the 2013 board of directors. The executive Dan Arnett, biomass committee that will lead coordinator at Ernst Conservation Seeds organization in 2013 include Chairman Dan Wilson, vice president of Wilson Engineering Services; Vice Chair Dan Arnett, biomass coordinator for Ernst Conservation Seeds; Treasurer Robert Davis, Robert Davis, founder and CEO of founder and CEO of Forest Energy Corp.; and Forest Energy Corp. Secretary John Ackerly, president of the Alliance for Green Heat.
Georgia Southern University opens pilot pellet mill Georgia Southern University’s Herty Advanced Materials Development Center has opened the first fully-integrated pilot pellet mill in the U.S. The new production line includes a nearly $2 million investment in process equipment. The facility is designed to provide a much-needed platform for innovation in process technology and pellet design. With the new mill, Herty will work with technology providers and developers to help validate product development projects. The team will also support researchers working to enhance pellet design, and will support the development of methods to lower operating costs. Capabilities and services provided through the new pilot operation include biomass preparation and pretreatment, biomass testing and pellet analysis.
UK Biomass Heating Group forms as industry voice In response to the U.K. Department of Energy and Climate Change’s request for a single trade association with which to negotiate and act as a collective voice for companies in the biomass heating industry, the Energy and Utilities Alliance has launched the Biomass Heating Group. The group is led by the Heating and Hotwater Industry Council and the Industrial and Commercial Energy Association. The Biomass Heating Group is designed to be mutually beneficial to its members and the U.K. government. LC Energy acquires pellet business LC Energy, an England-based specialist in sustainable wood supply, has acquired Harvest Wood Fuels’ bulk pellet business. The company, based in Tilford, Surrey, England, is a top supplier of high-grade wood pellets. LC Energy operates in the southern
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Innovations for a better world.
and eastern regions of England with an established base of public, private and commercial customers. Harvest Wood Fuels’ founder Lance Trevellyan recently received planning permission to develop a wood chipfired combined-heat-and-power plant and wood pellet production facility at the Tilford location. Pellet producer makes third shipment to EU New Biomass Energy LLC has announced its third shipment of torrefied wood pellets to Europe. The shipment, announced in late January, consisted of 4,000 tons of product. To meet growing demand from Europe, the company is expanding its production facility in Quintmas, Miss. The expansion will increase capacity from 150,000 tons to 250,000 tons, and is expected to be complete later this year.
Maine hospital commissions biomass boiler Maine-based Millinocket Regional Hospital has celebrated the commissioning of its wood pellet-powered steam boiler. The project is part of the Wood 2 Energy Grants Program awarded under the American Reinvestment and Recovery Act of 2009 and distributed by the U.S. Forest Service to the Maine Forest Service. Statewide, there are approximately 22 similar projects receiving a total of $10.5 million in recovery funds. The hospital received a $258,978 grant to support the $475,000 project. The project is expected to result in $2 million in savings over the next 10 years. The hospital partnered with NorthLine Energy of Edmond, Wash., to complete the project. Finalists announced for wood stove design competition The Alliance for Green Heat has an-
nounced 14 finalists for the first-ever Wood Stove Design Challenge. The competition challenges participants to design affordable, cleaner-burning wood stoves for use in residential heating applications. In selecting the finalists, judges looked for designs that could produce ultra-low emissions and operate in a highly efficient manner. Innovation, affordability and marketability were also considerations. Among the stoves selected are those controlled by microprocessors and connected to smartphones, as well as those based on 17th century Scandinavian designs. The finalists’ stoves will be tested and judged on the National Mall in Washington, D.C., in November. The winner will receive a $25,000 award. SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Industry Briefs, Pellet Mill Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also e-mail information to evoegele@bbiinternational.com. Please include your name and telephone number in all correspondence.
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Pellet News Benelux (in thousand tons)
2010 (official)
2011 (estimate)
2012 (forecast)
2013
2014
2015
2020
Production
654
660
660
660
660
660
660
Import
1,341
1,569
2,600
2,997
3,485
3,812
5,455
Import U.S.
431
626
1,250
n/a
n/a
n/a
n/a
Export
173
138
230
250
250
250
250
Biomass hub proposed in Vermont
SOURCE: USDA FAS GAIN REPORT, "THE MARKET FOR WOOD PELLETS IN THE BENELUX"
Benelux pellet market to double by 2020 The U.S. is expected to be the main supplier of wood pellets to the Benelux market this year. The region consists of Belgium, the Netherlands and Luxembourg. A report published through the USDA Foreign Agricultural Service Global Agricultural Information Network estimates that the U.S. exported approximately 1.25 million metric tons of pellets to the region in 2012, worth an estimated $225 million. According to the report, the Benelux imports more than 95 percent of
the wood pellets it consumes, and U.S. producers could supply at least half of that market. However, to meet demand, U.S. exports must comply with sustainability targets. The Hague estimates wood pellet consumption in the region will more than double between 2012 and 2020, reaching a volume of 5.7 million metric tons. By the end of the decade, the Benelux is expected to require the import of 5.5 million metric tons of pellets.
Beaver Wood Energy and Vermont Hydroponic Produce have announced plans to build a biomass hub in Fair Haven, Vt. The proposed hub will include a biomass power plant, pellet manufacturing facility and a 10acre greenhouse complex. The pellet manufacturing facility will have a capacity of 110,000 tons per year. The plant will manufacture wood pellets for residential and commercial use in pellet boilers and heaters. Beaver Wood Energy estimates the pellets produced at the hub will offset 13 million gallons of heating oil each year. The 30 MW power plant will be fueled with wood residues. The heat and steam generated at the facility will be used to produce pellets and grow vegetables in the adjacent greenhouse complex. According to Thomas Emero, managing direct of the Beaver Wood Energy, the project’s completion data has not been determined. The company is in the final stages of securing permits and is currently seeking power purchase agreements.
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12 PELLET MILL MAGAZINE | Q1 2013
Pellet News Âť Canadian company plans plant in La.
Number of households heating with wood (U.S. total) Winter of
Number of households
Forecast
2006'07
2007'08
2008'09
2009'10
2010'11
Avg. 2006'11
2011'12
2012'13
% change
2.1 million
2.191 million
2.37 million
2.44 million
2.5 million
2.32 million
2.56 million
2.64 million
3%
EIA predicts increased use of wood fuel In the January issue of its Short-Term Energy Outlook, the U.S. Energy and Information Administration made forecasts for the coming year, noting that the use of biomass fuel is expected to increase in both the power and thermal sectors. The number of households using woody biomass as a primary winter heating fuel is expected to increase. During the 2012-’13 winter, 598,000 households in the Northeast are expected to heat with the fuel, a 7.7 percent increase. An additional 662,000 homes are expected to heat with
wood biomass in the Midwest, representing a 3.4 percent increase. In the southern region of the country, 620,000 homes are expected to heat with woody biomass, a 1.7 percent increase. In the western portion of the nation, the EIA expects 752,000 homes to be heated with biomass this winter, a 0.3 percent increase. Overall, a total of 2.64 million homes are expected to employ woody biomass as their primary heating fuel this winter, which is a 3 percent increase over last year.
Biomass Power Louisiana, a subsidiary of Abbotsford, British Columbia-based Biomass Secure Power Inc., has secured a six-month option to lease a site near Baton Rouge, La., where it plans to build a pellet plant. The company plans to develop the project in four phases over the course of several years. Phase one of the proposed development would include the establishment of three production lines, each capable of producing 340,000 tons of wood pellets each per year from both whole trees and chipped fiber. Construction is expected to begin this summer. During the second phase of development, the company will incorporate torrefaction into the production process. Biomass Secure Power has also proposed to develop a storage and chipping facility at the Port of Natchitoches, approximately 175 miles northwest of Baton Rouge.
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Q1 2013 | PELLET MILL MAGAZINE 13
« Pellet News Pellet-fueled power plants of 100 MW capacity or greater in the EU Plant name
Country
Fuel
Operator
Electric capacity
Status/ operational since
Tilbury (B Power station)
U.K.
Pellet/CHP
nPower (RWE)
750 MW
2012
Rodenhuize
Belgium
Wood pellets
Electrabel/ GDF Suez
180
2011
European report addresses biomass, pellet markets Near the close of 2012, EurObserb’ER Barometer released its Solid Biomass Barometer report, outlining demand for woody biomass, waste wood, pellets and other plant- and animal-based biofuels. According to the report, biomass use in district heating within Sweden has increased fivefold since 1990, with soaring pellet consumption making the country the leading consumer of the fuel. While recent warm winters have reduced woody biomass demand for heating applications in Germany, the report notes that wood pellet demand in the country has remained relatively unscathed. Consumption of wood pellets within Germany increased 17 percent from 2010 to 2011. While many small-scale projects utilize pellets, the Barometer lists only two biomass energy projects of 100 MW capacity or higher that take in the fuel.
Construction of pellet-fueled plant begins in France NEREA, a subsidiary of Akuo Energy, began construction of a 13 MW biomass cogeneration facility in Estrées-Mons, France. The Cogénération Biomasse d’Estrées-Mons represents an investment of €65 ($85 million). The facility is expected to be operational by the end of 2014. Once complete, the plant will produce 100,000 MW hours of electricity per year, as well as 25 tons of steam per hour, which will be utilized in the Bonduelle Europe Long Life canning and frozen vegetable factory in EstréesMons. NEREA recently finished construction of another biomass cogeneration facility in Nesle, France. That project is a 16 MW plant that will produce 60 tons of steam per hour for use in a food processing facility. That plant is expected to be operational in April. Société Biomasse Energie des Hauts de France, a NEREA subsidiary, will supply the two plants with pellets.
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14 PELLET MILL MAGAZINE | Q1 2013
Pellet News » Chemical composition of mixed-feedstock pellets before and after ionic liquid pretreatment Glucan (%)
Xylan (%)
Arabinan (%)
Galactan (%)
Mannan (%)
Untreated
34.7 ± 0.2
15.9 ± 0.2
1.9 ± 0.3
1.9 ± 0.6
2.3 ± 0.4
Iconic liquid pretreated
49.7 ± 1.6
8.9 ± 1.3
1.0 ± 0.2
1.0 ± 0.2
1.5 ± 0.1
% reduced
9.5 ± 1.0
64.7 ± 0.8
66.8 ± 0.1
66.8 ± 0.1
57.7 ± 0.0
Researchers find success in pretreating mixed feedstock pellets Researchers from the U.S. DOE’s Joint BioEnergy Institute led by Berkeley National Laboratory and the Idaho National Laboratory have demonstrated that iconic liquid is an effective method for pretreating a mix of biofuel feedstock that has been densified into pellets. “Our results show that an ionic liquid pre-treatment can efficiently handle mixed feedstocks that have been milled and densified into pellets, and can generate high yields of fermentable sugars regardless of upstream processing,” says Blake Simmons, a chemical engineer who heads JBEI’s Deconstruction Division. “This indicates that blending and densifying a wide range of feedstocks has significant potential for helping to make biofuels a cost-competitive transportation fuel technology.”
Drax announces pellet, port projects Drax Biomass International Inc. has announced plans for three projects in the southern U.S., near the Gulf of Mexico. During the first half of this year, the company is expected to begin construction of two pellet plants, one in Louisiana and the other in Mississippi. In addition, Drax is planning to develop a port storage and loading facility at the Port of Greater Baton Rouge. The proposed Amite BioEnergy plant in Gloster, Miss., and the Morehouse BioEnergy in Morehouse Parish, La., are scheduled to begin operations in 2014. The plants have a planned combined capacity of 900,000 metric tons, and will take in fiber from actively and sustainably managed forests. Economic development agencies in both states have provided financial incentives to Drax. The port facility is expected to have a storage capacity of 80,000 metric tons. The location will be designed to accommodate the delivery of pellet rail and truck. The port project is also expected to be operational next year.
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Q1 2013 | PELLET MILL MAGAZINE 15
ÂŤ Pellet News UK port plans pellet handling expansion
North American wood pellet exports up in 2012 A report published by the North American Wood Fiber Review shows that wood pellet exports in North America were up 70 percent during the third quarter of 2012. The increase is largely attributed to increased pellet production in British Columbia and the southern region of the U.S. According to the report, production reached a record high of 860,000 during the quarter. North American production is expected to continue to grow, particularly in the southern U.S., where several companies have announced plans to developed additional pellet production capacity. The report also points out that while exports grew in both the U.S. and Canada, the U.S. experienced more substantial growth.
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The U.K.-based Port of Tyne has announced an expansion of facilities for handling, storing and transporting wood pellet imports. The port is already the largest handler of wood pellets in Europe, and plans call for the enhancement and expansion of existing wood pellet storage facilities and associated quay and rail infrastructure. According to the port, it is currently in talks with new and existing customers about the expansion. The process to find an investment partner to assist with the funding is well-underway, with discussions being held with a number of interested parties. The improvements will represent the biggest investment ever made by the port. "It is in renewable energy where we see the next major area of growth for us," said Andrew Moffat, Port of Tyne CEO. "That is why we are working with major companies in the power generation industry to identify their future requirements and making sure we will be ready to meet their needs.�
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Pellet News Âť Georgia to get pellet export terminal
SOURCE: EIA, INNOVATIVE NATURAL RESOURCE SOLUTIONS, ANALYSIS BY FUTUREMETRICS
Low-cost natural gas to benefit bioenergy A white paper released by FutureMetrics Inc. finds that wood-to-energy projects will significantly benefit from low-cost natural gas. This includes European wood pellet export operations, as well as the domestic wood pellet boiler sector. FutureMetrics based its assertion on the prediction that the U.S. will see a rapid transition from gasoline and diesel to compressed natural gas (CNG) transportation fuel, resulting in lower operation and transportation costs. This could potentially reduce woody feedstock costs, making them cost-competitive with pipeline natural gas and CNG. The paper suggests that because natural gas equates to roughly 40 percent of the price of diesel when used as a diesel replacement, the impact on wood prices could be significant. The paper also assumes that the price of CNG will be less volatile than diesel, as it is not exposed to geopolitical risk.
An export terminal once used for kaolin clay is being repurposed to provide Enova Wood Pellet Group LLC with 1.35 million metric tons of annual wood pellet export capacity at a single location. The group, a subsidiary of Enova Energy Group LLC, formed a long-term agreement with the port’s ownership group, Georgia Kaolin Terminals Inc., which is a subsidiary of Colonia Group Inc. Enova will use the port location for storage and shipment of wood pellets sourced from its production plants located in Georgia and South Carolina. The pellets will arrive at the port via rail. The Savannah terminal features 26 concrete silos, a railcar storage yard capable of handling 125 cars, a modern material handling system, and a 600 ton-per-hour railcar receiving system. The export portion of the facility also features duel ship loaders to minimize vessel shifting, an 800 ton-perhour continuous vessel loading rate, and a dust control system.
Q1 2013 | PELLET MILL MAGAZINE 17
///////////////////////////////////////////////////////////////////////////////////
THE GROWING ATLANTIC PELLET TRADE
///////////////////////////////////////////////////////////////////////////////////
2012 U.S. exports to Europe
$192
million
SOURCE: FAS, USDA-PELLET EXPORT TO EUROPE, 2012
$906
million
projected
North America current export capacity SOURCE: BBI INTERNATIONAL
0
North America developing export capacity
5
SOURCE: BBI INTERNATIONAL
European Coal Consumption Million metric tons/yr SOURCE: EIA-COAL CONSUPTION BY COUNTRY, 2011
LEGEND Major pellet export port Existing pellet plant Developing pellet plant
Existing capacity Metric tons/yr
8-79
80-399
400+
138.8
Developing capacity* Metric tons/yr
232.8 8-79
80-399
400+
*Plants that are moving towards construction or are actively under construction
18 PELLET MILL MAGAZINE | Q1 2013 SOURCE: BBI INTERNATIONAL
Š2013 CALIPER
250
200
150
100 Million metric tons/yr
5
Progress Toward a $1 Billion Industry Europe’s ambitious renewable energy and greenhouse gas emissions targets have triggered significant growth in North America’s pellet export markets. European policy measures are creating opportunities for North American pellet producers who are positioned, or are positioning, pellet facilities near port facilities. Exporting producers in North America have the capacity to export 6.6 million metric tons of pellets, which, if fully utilized, would generate $900 million in trade revenue. The pellet export market in 2012 topped 1.4 million metric tons, indicating that only one-third of existing export capacity in North America was utilized. Many European countries are seeking relationships with North American producers for a steady supply of pellets to replace coal at their existing power and industrial facilities. The future demand from Europe drives significant development in export capacity, with 29 plants currently under development, which would add 8.9 million metric tons to existing export capacity. Fully realized, the addition of these 29 plants would bring total export capacity in North America to 15.5 million metric tons of pellets, or $2.1 billion dollars in potential trade revenue with European pellet buyers. $2.1 billion
projected
10 Million Metric Tons/yr
50
15
Sweden 3.1
Belgium
4.0
Denmark
5.5 11.9 15.6
Netherlands France
22.9
Italy
23.1
Spain
49.8
United Kingdom Poland 0
Germany
Q&A A Yankee in King Arthur’s Court Seth Ginther, executive director of the U.S. Industrial Pellet Association, discusses how European policy environment is driving impressive growth for his constituency. While traveling overseas for his work nearly half of each month, Seth Ginther has conversations with customers and policymakers in places including the U.K., The Hague, Belgium and Denmark. His work as executive director of the U.S. Industrial Pellet Association has placed him on the leading edge of a historic market opportunity for U.S. based-pellet producers. It seems the worm has turned with anticipated European demand for U.S. pellets. What has contributed to this change from market potential to market reality? Without a doubt, it has been policy certainty, or a market signal toward policy certainty, in various member states of the EU. This past summer, the U.K. indicated it will extend subsidy for the use of solid biomass for energy in the U.K. through the ROC (Renewable Obligation Certificate) scheme. Belgium has made similar moves in the past few months. I just returned from a meeting at The Hague in the Netherlands with the Ministries of Energy and Economics, and they’ve indicated that the prospects are good that the Netherlands will extend their co-firing subsidy as well. Denmark also has policy framework in place for our product. All of these policy developments move us toward market certainty, as our industry, after all, is based on policy created by the EU and its member states. Moreover, each of these countries has made significant capital investment in the supply chain infrastructure that efficiently supports the industry, including ports and storage facilities. The combination of all of these factors has created an enormous market demand for industrial wood pellets manufactured in the U.S. Where in Europe are you spending the majority of your time? 20 PELLET MILL MAGAZINE | Q1 2013
The majority of my work in Europe takes place in the U.K., Belgium, the Netherlands and Denmark. This isn’t surprising, as those places are where markets have developed for our industry. Also, Asian markets are currently developing, and we have done some work in Seoul, South Korea, trying to further develop those markets. You are unique among association leaders, as you’ve had to develop policy fluency in foreign countries. How have you worked through what must be a steep learning curve? It is actually fascinating work that I enjoy immensely. The old saying “Do what you love and it won’t seem like work” definitely applies here. It is fascinating because the general policies are driven by and set at the EU level in Brussels. Accordingly, there needs to be a deep working knowledge of Brussels, the institution of EU Parliament, and all of it players, as well as the international treaties and laws that come out of Brussels. Within that backdrop, you have each EU member state that sets its own national laws, and those regulations must comply with EU law. This sets up a working landscape where you have to be fluent in international law at the EU level, and also at the member state level. I’ve been practicing law for 15 years now, and by far, this has been the most fascinating work of my career to date. U.S. bioenergy industry professionals often look to European bioenergy policy with envy as it seems to create more fertile landscape for development. Is their envy justified? I think so. The Europeans are so far ahead of the U.S. when it comes to bioenergy policy development that it is
Seth Ginther
Q&A Âť
INTERVIEW BY TIM PORTZ
mind-boggling. The reality of climate change is no longer debated in the EU; it is simply part of their DNA. Accordingly, they have the support for, and enacted the policies necessary to meet their collective goal of having significant positive impact on climate change. This naturally sets up a very favorable environment for investment in and development of the assets necessary for them to meet their goals. Is U.S. capacity and port infrastructure ready to fulfill European demand, or are continued investments necessary? There is still a need for significant investment in the U.S., in the form of capital for new facilities. As the European policy certainty continues to develop, I think we will see more capital come off the sidelines to fund new projects and infrastructure, both private equity and debt capital. Additionally, there are numerous players in the supply chain making the infrastructure investments required for the U.S. to meet European demand—for example, ports and railroads.
Where does the sustainability question of U.S. pellets lie with European customers? Are these requirements consistent across the subcontinent, or do they vary from country to country? At the current time, there is no harmonized EU sustainability criteria for solid biomass in Europe. The current state of play is that each EU member state is left to interpret the Renewable Energy Directive 17, which is actually a criteria designed for liquid biofuels. As industry members know, liquid biofuels and solid biofuels are two completely different animals. Accordingly, it has led to much confusion across member states, and our producers are meeting sustainability requirements on a member state-by-member state basis. This is terribly inefficient; we are strong advocates of harmonized EU sustainability criteria for solid biofuels. We expect a further consultation out of the EU on this issue later this spring.
Are there other global markets that your constituents are eyeing for even greater opportunity? There is clearly a market development opportunity in Asia, namely South Korea and Japan. Conservative estimates for industrial wood pellet demand for Asia hovers around 5 million metric tons per year over the next several years. The key for the U.S. to be able to supply that demand will be for the Asian utilities to get comfortable with signing longterm contracts. A long-term contract is the key to getting a new plant financed, so Asian utilities need to supply those contracts if they expect U.S. financiers and others to back U.S. projects. I think that Asian utilities are beginning to recognize this concept, and they understand that they will not be able to meet their demands with spot trades. If that market develops, it will be very exciting for the U.S. industry.
How important is the ROC program in the U.K. to the demand for U.S. produced pellets? Where does biomass stand relative to satisfying requirements of this program? The U.K. ROC scheme and the U.K. tax policy on carbon are the policies that create the foundation for the economics of the industrial wood pellet business work between the U.S. and the U.K. It is extremely important, and USIPA has done an incredible amount of work interacting with U.K. policy makers and other stakeholders to ensure that they can sustainably source solid biomass fuel from the US. While solid biomass fuel is not the only solution to the U.K. meeting its renewable energy goals, it is certainly a key part of the solution. The ROC banding scheme and tax policy on carbon allow U.K. utilities to keep a number of coal operated power plants online while cofiring industrial wood pellets alongside coal. This keeps assets that have years of life left in them operating, which means jobs for U.K. citizens not only at the plant, but also in the supply chain getting the pellets from the ships to the plant. Q1 2013 | PELLET MILL MAGAZINE 21
« Feedstock
22 PELLET MILL MAGAZINE | Q1 2013
Feedstock Âť
Raw Material Rationale
Pellet producers share conceptions regarding hardwood, softwood and blended fuel pellets. BY KEITH LORIA
Q1 2013 | PELLET MILL MAGAZINE 23
« Feedstock Top quality pellets can be made from hardwood, softwood or a blending of the two, and every pellet plant has a reason for the raw material it chooses. On the other hand, consumers may not have concrete reasons for their pellet of choice, and it seems to vary by region. In the Northeast, consumers prefer hardwoods for their heating needs, but in the Pacific Northwest, softwood seems to be the fuel pellet choice. One is not necessarily better than another, however, because it all has to do with perception and tradition, according to Michael Scanlon, national account sales manager of American Wood Fibers, which has plants in Circleville, Ohio, and Marion, Va. “Plus, the performance of a brand of pellet has a lot to do with the appliance you are heating with,” says Scanlon. “There are some very good quality hardwoods on the market, and some very good quality softwoods. People will swear by whatever it is they burn, and there’s no real hard and fast rules about what’s the better choice.” When choosing one option over the other, not all species are the same. Softwoods like Southern Yellow Pine don’t yield the same quality as a White Pine, and a Western Spruce and Douglas-fir both have better ash content than other softwoods. For hardwoods, maple and birch are much different when comparing Btu and ash content as well. According to Chris Sharron, president of West Oregon Wood Products Inc. in Colombia City, Ore., making quality comparisons in terms of hardwood versus softwood isn’t the best scientific approach, as quality is more relative to specific species. Furthermore, quality is also relative to the cleanliness of the wood fiber being used
and the quality of the manufacturer’s process, regardless of the quality of species. “Some hardwoods contain more heat (Btu) value per pound than some softwoods, likewise, some softwoods contain more heat value per pound than some hardwoods. So, heat value truly is species specific,” says Sharron. “Some hardwoods have higher ash content per pound than some softwoods, and vice-versa. So, ash content truly is species specific.” West Oregon Wood Products uses primarily Douglas-fir for its pellets, and while it’s known as one of the best softwoods, it wasn’t entirely a conscious choice. “We’re somewhat blessed that Douglasfir is indigenous to the Pacific Northwest and abundant around the sawmills in our area, as it’s one of the highest breeds of species for making pellets,” says Sharron. “It creates an extremely high heat and extremely low ash content. Ash that doesn’t want to fuse or form any type of clinker in the fire part of a pellet stove.” American Wood Fibers uses both hardwood and softwood for its pellets, producing 80,000 tons of hardwood in its two plants and 10,000 tons of softwood in only its Marion plant. “The availability of raw materials is a primary factor, but the perception that hardwood is better still creeps into some psyche,” says Scanlon. “I think it’s based on the fact that everyone was always told in wood stoves not to burn pine and softwood, but when you pelletize the wood, it doesn’t matter. Hardwood and softwood offer the same density, and there’s no sap to worry about.” Truth be told, softwood usually does burn hotter and creates a lot less ash, almost half as much. At American Wood Fibers, its hardwood comes in at under 0.5 percent of ash, while its softwood is
C AT C H T H E
MARKET SHARE YO U ’ V E B E E N M I SS I N G
Versati wood and biomass briquettes are quickly becoming Versatile a go g go-to -to biofuel for consumers all over the U.S. They are cclean, leaan, n af affordable, and can be used in any wood-burning device ffrom fr rom om fi fireplaces and stoves to fire pits. Briquettes will open doors to new fireplace markets and d growth oppo opportunities for your business, and because they can be made from materials you already process (and then some), it’s simple to get started. Plus, with substantial savings on energy, maintenance, and labor, briquettes are cheaper to make per ton than pellets! What are you waiting for? For more information call 440-779-2747 or visit www.ruf-briquetter.com and catch the market share you’ve been missing! *Source: Hearth, Patio, & Barbecue Association – based on appliance shipments from 1998-2011.
24 PELLET MILL MAGAZINE | Q1 2013
The Total U.S. Wood-Burning Appliance Market (including fireplaces, freestanding stoves, and inserts)
13% Market Share Pellet Appliances*
87% Market Share Briquette-Friendly Appliances*
PHOTO: WESTERN OREGON WOOD PELLETS
Feedstock »
BAGGING BTUS: Western Oregon Wood Pellets' softwood pellet bagging operation in Banks, Ore.
0.25. Meanwhile, its hardwood pellets are around 8,200 Btu, and softwood pellets are around 8,700 Btu. “Both products perform perfectly well as a fuel pellet, as long as you have a clean stream of raw materials,” says Scanlon. “The raw materials are a little higher for softwood, and some people think the extra cost for more heat and less work is fine.” New England Wood Pellet operates three manufacturing plants, in Jaffrey, N.H., and Schuyler and Deposit, N.Y., and turned out over 204,000 tons of wood pellets last year. The company uses an 85-15 hardwood-softwood blend, including a combination of hardwoods from oak, maple, beech, birch, cherry and other species common to the Northeast, and softwoods including white pine, hemlock, and occasionally some spruce and fir. “This blend recipe is what we found works best for us,” says Charlie Niebling, the company’s general manager. “It is a reflection of the range of species and wood available to us to some extent, but we’ve also found that having a softwood component in our pellet optimizes the performance of our pellet mills. We have everything dialed in around this blend, and it’s become synonymous with our brand identity and consumer familiarity.” By blending in softwoods, Niebling reveals it creates a better performance at the mills themselves and helps for a longer die life. Matt O’Malley, president of O’Malley Timber Products in Tappahannock Va., says his company uses sawmill residue as a feedstock for its pellet mills to produce a 100 percent hardwood pellet. “We generate over 60,000 U.S. tons of hardwood chips and sawdust a year as a byproduct from our sawmills,” he says. “We
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« Feedstock we are not paying any freight on our raw material.” The hardwood pellets O’Malley Timber Products produces has 5 to 8 percent moisture content, 350,000 Btu per cubic foot, and an ash content that runs between 0.5 and 0.7 percent.
The Chemistry
PHOTO: WIKIPEDIA
While hardwood logs are drier than softwood logs, and the low-moisture content result in a cleaner, hotter burn, once in the manufacturing process, the moisture content for both will be reduced 3 to 4 percent leaving only cellulose, lignin and resins. “It should be realized that in the process of manufacturing pellets, extreme heat and pressure completely change the structure of the wood fiber and a density of approximately 40 pounds per cubic foot is achieved, using either hardwoods or softwoods,” says Sharron. “Therefore, if the relative densities of hardwood and softwood pellets are comparable, they will experience equal burn time, assuming equal amounts of combustion air.” Once pelletized, the difference between softwood and hardwood fiber is minimal. In fact, it’s the density of the pellet that makes a bigger difference than the species of wood does. According to Niebling, cellulose has the same heating value regardless of whether it originated SELECTING SOFTWOOD: Douglas-fir, a desirable pellet feedstock, is a softwood indigenous to the Pacific Northwest. from hardwood or softwood, but because resin has a higher heating value than cellulose, and softwood has a higher percentage of resin content than harddecided to put in our pellet mills in an ef- wood, softwood pellets will burn hotter and fort to become more vertically integrated. faster in most cases. By having our own feedstock for our pellet The main factor that impacts the qualmills, we can control the quality of our pel- ity of a wood pellet is the ash content. Low lets very closely. By not having to purchase ash is a result of using clean wood—no bark outside raw materials, we feel we gain a sig- or dirt—and a quality manufacturing pronificant advantage over other mills because cess, not the type of wood used.
26 PELLET MILL MAGAZINE | Q1 2013
Feedstock » And while it’s true that more softwood species have a lower absolute mineral content so they offer a lower ash content—the Lodgepole Pine is especially known for this—total ash content is still dependent on the quality of the wood coming in. “It’s not so much an issue of what percentage of hardwood or softwood, but more than anything, it has to do with bark content and the amount of dirt that gets into a feedstock supply,” says Niebling. “Any company that’s focused on the quality of the pellet is working to eliminate contamination and reduce bark content and generally work for the cleanest and best wood supply that they can.”
“Alder pelletizes kind of roughly, doesn’t get good production relative to horse power and doesn’t make that good of a fuel, but would we blend it? Possibly,” says Sharron. He admits it doesn’t make a bad fuel, and if the economics and sawmill operation make sense, it might be a recipe worth trying. There are so many variables that have to be closely evaluated, according to Sharron. “It starts with a good supply. If you don’t have a good sustainable supply, it doesn’t really matter. If you’re confident that you will for years to come, roll up your sleeves and really evaluate the product and whether or
not it will make a good pellet. Evaluate the species. Inspect the cleanliness and contamination, because it doesn’t matter how well it pelletizes, if it’s contaminated. It’s not rocket science. It all makes sense, but you can’t just wish it to happen.” Author: Keith Loria Pellet Mill Magazine freelance writer 703-691-3607
In Production The difference between hardwood and softwood from a production standpoint is that softwoods are pelletized at a higher rate than dense hardwoods. This is why many manufacturers inject or blend in softwoods to its hardwoods, because it helps lubricate the dyes and make the production run smoother. Pellet plants in the Northeast are more commonly turning to blends, adding little softwood injections into its hardwood pellets. White Pine is one softwood that is indigenous in the area, and pellet manufacturers are seeing the positive effects a blend can offer, raising the heat value and lowering the ash content. “It actually runs through the mill better because the pine helps grease the skids so to speak in the manufacturing process,” says Sharron. “It helps oak pelletize easier, has better production per horse power and improves the quality of the finished product.” Not all blends work, however. While a certain species of softwood might make a great pellet and another species of hardwood might equally make a great pellet, they can be a disaster when combined. There are certain chemical reactions that can occur in the combustion process relative to the blend based on the chemical and elemental makeup of both, so tests need to be done on any combination. As an example, Sharron uses the hardwood Alder, which is indigenous to Oregon and might be blended with its Douglas-fir softwood. A test of 100 percent Alder comes back at 7,900 Btu and 0.75 percent ash content. Comparably, the Douglas-fir results in 8,400 Btu and 0.25 percent ash content.
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« Torrefaction
PLANT PREVIEW: A rendering of Thermogen Industries’ completed plant in Millinocket, Maine PHOTO: Thermogen
28 PELLET MILL MAGAZINE | Q1 2013
Torrefaction »
Torrefied Pellet Pursuit
In the U.S., commercial supplies of torrefied wood pellets are difficult to secure. What’s holding up market development? BY CHRIS HANSON
Q1 2013 | PELLET MILL MAGAZINE 29
« Torrefaction
Barner are in pursuit of torrefied pellets. But unlike the lost cities and ancient relics, torrefied pellets exist. Finding a domestic, commercial-scale supply, however, has become a crusade among consumers. “I’ve become exasperated after multiple different phone calls with people who have these huge biomass plants, finding out they are in benchtop scale right now, and won’t be able to supply until they get more grant funding—or something similar—to build their plant,” says Mahoney, CEO of SEA Biofuels, which is looking to use torrefied pellets for its cook stoves for developing countries. Barner’s experiences, as director STOCKING UP: A supply of torrefied pellets at New Biomass Energy. of energy services at the University of North Carolina, have been similar. percent easier to crush, weigh less, and have similar caloric values “It’s been a series of hopeful-that-we-get-something, and then it goes to coal, but with fewer emissions. Additionally, in a pelletized form, away,” he says. He has been investigating on behalf of UNC, working shipping costs are lower because they are less bulky than biomass to secure test samples large enough to burn in the campus boilers. feedstocks, such as wood chips. Considering the numerous benefits Currently, torrefied pellets seem to be the most suitable option torrefied biomass offers, it doesn’t come as a surprise that some for coal-based operations, as they have more benefits than regular forestry consulting agencies, such as Hawkins Wright, have prewood pellets, according to those working with the technology. Tor- dicted the global demand for torrefied biomass to reach more than refied pellets are hydrophobic, do not decompose, are more than 70 70 million tons a year by 2020.
30 PELLET MILL MAGAZINE | Q1 2013
PHOTO: NEW BIOMASS ENERGY
Francisco Pizarro explored South America for the golden city of El Dorado. Juan Ponce DeLeon journeyed Florida for the Fountain of Youth. Patrick Mohney and Philip
Torrefaction » But with so much potential for the torrefied market, why does it seem there is still little supply for domestic consumers? Hiroshi Morihara, CEO of HM3 Energy, said four main factors have slowed growth of the domestic market: a lack of commercial-sized torrefaction projects, additional startup expenditures, a lack of consensus on best practices, and lack of government support. With many new products, there comes the standard chicken-or-the-egg scenario that creates a cumbersome beginning for the market. While demand is growing and is present on a small scale, it isn't enough to give many producers confidence to invest in commercial-scale facilities. As Morihara says, there currently are no commercial-sized producers of torrefied pellets in the U.S. There are large operations in the country such as New Biomass in Quitman, Miss., and WHERE THE MAGIC HAPPENS: Pelletizing machinery at New Biomass Energy the planned Thermogen Industries in Millinocket, Maine, but they are producing only enough for test burns or selling new torrefied pellet producers from entering the market. “Thermogen has tackled all of those issues with our first facility strategically them overseas. New Biomass Energy’s plant currently has a capacity of 80,000 located in the heart of Maine’s wood basket, utilizing inexpensive tons of torrefied wood pellets, which are only for sale for test burns hydroelectric power,” he says. “Transportation is also not an issue or lab analysis. Alison Hunt, vice president of development for for us with deepwater ports easily accessible by rail to ship our New Biomass Energy, says of the biggest issue, companies have product overseas.” Thermogen projects it will produce 110,000 tons of torrefied difficulty financing large plants without offtake contracts from credit-worthy buyers. “Buyers generally will not issue a firm off- wood per year, but its supply isn’t aimed at U.S. consumers—the take agreement without having a burn sample, generally more than company plans to ship the torrefied wood to power plants through1,000 tons,” she says. “Until recently, there were no ways to get that out Europe. Financial risk is another reason why new and growing torrefied quantity of torrefied wood.” Richard Cyr, president and CEO of Thermogen Industries, producers are taking longer to meet demand. Morihara says that says that supply, power costs and existing infrastructure can deter since the market is so new, it’s hard for companies to secure invest-
Q1 2013 | PELLET MILL MAGAZINE 31
PHOTO: NEW BIOMASS ENERGY
Market Inhibitors
ments. According to international power consultant Poyry, torrefied pellet plants are 25 to 30 percent more expensive than a traditional pellet plant, and torrefied pellet production costs are 15 percent higher than standard pellets. And without larger, more successful industry leaders to serve as an example, existing and new torrefied pellet producers will have a more difficult time trying to build trust among investors. To address this, Morihara says some companies are looking into partnerships with more established organizations to foster profitable relationships and reputations. Although torrefaction method and feedstock diversification are crucial in fostering ingenuity to create the perfect torrefied pellet, a lack of consensus hampers the market. Without an industry-wide agreement on the best torrefied material and process, investors and creditors hesitate to provide financial support to existing and emerging operations. Like coffee, torrefied pellets are diverse in types of “roasts” and “flavors.” Heating
PHOTO: NEW BIOMASS ENERGY
« Torrefaction
READY TO ROLL: Completed and bagged torrefied pellets in storage at New Biomass Energy.
pellets to various temperatures for various lengths of time produces different types of light to dark roasts. Darker roasts are more preferable for coal replacements and co-firing, as they are much easier to grind than standard pellets. The problem with the
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darker roasts of torrefied pellets is they begin to lose their natural glue that holds standard pellets together during the extended roasting process, forcing producers to find binders, such as corn products and even carpet fibers.
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Torrefaction » On the other hand, lighter roasts of torrefied pellets are not as hydrophobic as the darker roasts, thus more care and energy is needed to store and grind. “You have to reach the point where you do not destroy lignin too much,” Morihara says. “But at the same time, you have to roast it enough so that it grinds easily. You have to find the sweet spot” Politics is perhaps the most significant factor that is affecting the domestic torrefied market. International markets, such as the European Union and China, have mandates and programs that are driving demand overseas for both torrefied and regular pellets. Morihara says the issue may lie with the varying distinctions of biomass’s environmental footprint. In Europe and China, for example, power from biomass is considered carbon neutral because the carbon dioxide released is absorbed later in trees. The U.S.’s philosophy on biomass carbon profile is vague, however. “The U.S. has not effectively defined regulations, at least not as well as Europe,” Cyr remarks. “So it’s difficult to project domestic market growth.” Without incentives from federal and state governments to influence coal power plants to utilize torrefied pellets, foreign markets become a more lucrative business environment. Therefore, more producers are shipping their torrefied pellets overseas, to countries in Asia and Europe, where larger profits can be made. “Domestic power plants are insufficiently incentivized to reduce coal consumption,” says Hunt.
From Morihara’s perspective, the future torrefied market looks promising. He feels more coal plants will be shut down due to special interest group involvement in emission concerns, and more states, especially those in the West, will be or are passing laws requiring certain percentages of energy to come from renewable sources. Since solar and wind energy costs are still high, torrefied biomass stands to be a very viable replacement. Cyr believes that adequate demand for torrefied wood pellets in the U.S. still isn’t there, but when it is, the market will grow to meet it. “Right now, there is little to no domestic demand for torrefied pellets, and there isn’t a product that’s been proven to consistently perform,” he says. “When there is a demand, driven by [U.S.] EPA regula-
tions, the biggest problem will be lack of supply.” It still appears to be a few years out, but when the U.S. torrefied market finally becomes established, domestic consumers will likely be able to secure plentiful supplies of affordable torrefied pellets for everything from woodstove fuel to heating an entire university. Author: Chris Hanson Staff Writer Pellet Mill Magazine 701-738-4970 chanson@bbiinternational.com
Market Future Until newer and larger torrefied facilities come online, buyers have been adapting their needs to cope with the lack of supply. Mohney says after spending lots of time contacting producers, SEA Biofuels is considering buying the equipment and producing torrefied pellets itself. Until torrefied pellets become more available, Barner says UNC is looking at other forms of feedstock such as dry wood pellets. He noted torrefied pellets might still be the preferred fuel source, as the campus would still be able to utilize their coal silos instead of building special housing for wood pellet storage.
Q1 2013 | PELLET MILL MAGAZINE 33
ÂŤ Standards CONTRIBUTION
Asian Markets for Wood Pellets Wood pellets may play a limited but significant role in the renewable portfolios of Japan, South Korea and China. BY ALLEN M. BRACKLEY
During the past several years, most reports about wood pellet export markets have focused on European nations. A logical question, especially for businesses in western North America, concerns the status of potential export markets in Asia. In 2011, the Alaska Wood Utilization and Marketing Center and the Center for International Trade in Forest Products conducted a project to review recent regulations and policies in South Korea, Japan, and China that could potentially increase the use of renewable wood energy products, specifically wood pellets. A brief summary of findings is that all three nations have legislation and policies in place that mandate conversion to renewable sources of energy, and the major use for woody biomass is for industrial wood pellets that are to be cofired with coal.
On Markets In Japan, South Korea and China, the total market is composed of wood pellets designed for two different uses. The first part of the market is for domestic use as a source of energy for space heating; the second component is a wood pellet for industrial use, mainly cofiring with coal to produce electricity. The major market objectives in the aforementioned nations will be for reducing carbon emission through cofiring. Table 1 reports the current levels of coal they consume. When discussing reductions in fossil fuel usage through cofiring, conversion benefits are often reported in terms of the amount of coal replaced, or the amount of wood pellets required as a substitute for 1 ton of coal. In reality, wood pellet/coal replacement rates are dependent upon coal properties. The coal imported into Japan and South Korea is classified as lignite, the heat content of which is not vastly different than wood pel-
34 PELLET MILL MAGAZINE | Q1 2013
Table 1
Estimated quantity of wood pellets/cubic feet of biomass required to convert one percent of coal consumption to wood pellets (2011/2012 sources) Coal source
Japan (MM short tons)
South Korea (MM short tons)
China (MM short tons)
Domestic
0.000
2.297
3,844.942
Imported
207.000
138.165
174.334
Total
207.000
140.462
4,019.276
Coal replaced
1%
1%
1%
One percent of current consumption (MM tons)
2.070
1.405
40.193
Pellet-coal substitution rate (ton/pellet per ton/ coal)
1.000
1.000
1.250
Volume wood pellets to replace one percent MM tons
2.070
1.405
50.241
Cubic feet of biomass required to produce above quantity of wood pellets 10^6
10^6
10^6
Cubic feet of biomass (assuming 35lbs/f^3)
72.45
49.16
1,758.43
Cubic feet biomass used to dry green biomass
14.49
9.83
351.69
Total biomass volume
86.94
58.99
2,110.12
lets, whereas it appears that the coal mined in China is of higher energy content and greater volumes of wood pellets will be required for replacement. Table 1 conveys an idea of the amounts of wood pellets required to replace 1 percent of the coal consumed by each of the three Asian nations. Mills procuring biomass for production of pellets purchase raw material by weight or cubic content. The table also provides a basic understanding of the magnitude of the difference between the nation with the
greatest level of energy consumption, and two other nations. Replacement of 10 percent of the coal in China by cofiring would approximately require a staggering 500 million tons of wood pellets annually. Comparatively, in the pulp and paper industry, the minimum economic plant size for a new pulp mill is reported to be 1 million-plus cords of wood annually. If a cord has a cubic content of 85 cubic feet, the amount of wood required to support construction of a mill of economic desirable size is 85 million cubic feet.
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Pellet Mill Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
Standards »
Replacing 1 percent of the coal consumption in Japan requires an annual resource supply roughly equivalent to starting a new pulp mill. In South Korea, it is equivalent to two-thirds of the material required for the pulp mill, and in China, replacement of 1 percent of coal requires the raw material equivalent to the startup 25 new pulp mills. These numbers are approximate, but they start to define amount of resource and infrastructure required to convert to biomass energy. A very common question asked when discussing markets is, “Whom do I contact?” In Japan, based on existing legislation and early market development, the answer appears to be “the major power companies.” The market for industrial wood pellets in Japan seems to be taking the form of an oligopsony (small number of buyers, large number of sellers). Future developments will further define the market as one that is open. It is also possible, depending upon how contracts are negotiated, that participation will be by invitation only. In South Korea, the answer is not as clear. The Korean Electrical Power Company produces 93 percent of the electrical power used in the nation, and 51 percent of the KEPCO is owned by the Korean government. The South Korean Forest Service is promoting wood energy research, and is jointly developing wood energy technology and resources with other countries. In March 2009, the Korean For-
est Service and the Indonesia Forest Ministry signed a pact to put aside 200,000 hectares (494,000 acres) of forest land in Indonesia to produce wood pellets starting in 2010. It may be too early to define the market type that will exist in South Korea, but initially, it has many characteristics that point to a monopsony (one buyer is a government agency). As with the market in Japan, participation in the South Korean market may be invitation only. Given this approach, it is possible that a South Korea market for North American firms will never develop. It is difficult to predict the future market type that will exist for wood pellets in China. The immediate response of some individuals would be monopsony, but this may not be reality. A recent report noted that generating facilities in China are classified as state-owned and directly under government control or as “independent plants” owned by provincial governments and private investors. Given this fact, and reported information about the resources of the country, a number of scenarios are possible.
Reviewing Resources China does not have an extensive forest resource. The natural forest is poorly distributed over the country, and supports stands are of marginal quality. Since the mid-1960s, an area in excess of 115 million acres (an area equiva-
lent to 20 percent of total commercial forestland in the U.S.) has been planted to softwood and hardwood plantations. While the effort is impressive, little attention was paid to wood quality of the planted material, which will not meet the quality standards for many solid wood products. It will, however, provide some fiber for pulp and paper and energy use. Given the lack forest resources, the solid forest products industry is dependent upon imports of both hardwood and softwood logs. Hardwoods logs are purchased from throughout the world, with major amounts coming from tropical sources. Softwood logs are imported from Pacific Rim nations and Russian Siberia. As we build scenarios for the future market for wood pellets in China, all of the various forms of renewable energy that can replace coal must be considered. These include hydro, wind, wave, solar and geothermal power. Nuclear power was once viewed as a major solution, but a string of technical and operational problems and natural disasters has dimmed the potential of this source. China is just completing the construction of the largest hydro-electric and flood control efforts ever undertaken by man, the Three Gorges dam, which is reported to reduce coal consumption by 31 million tons annually, or less than one percent of the total demand. The country is also using agricultural and
« Standards
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.
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