quarter 1 2013 pellet mill magazine

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Q1 2013 | PELLET MILL MAGAZINE 3

Contents »Q1 2013 | VOLUME 3 | ISSUE 1

FEATURES

CONTRIBUTIONS

DEPARTMENTS04 EDITOR’S NOTE

Living the Pellet Life in a Coal World By Tim Portz

05 INDUSTRY EVENTS

06 STANDARDS STEWARDVerifi ed Pellet Stove Effi ciency Key to Industry SuccessBy John Ackerly

07 TESTING GROUNDSSpecifi cation Compliance for Expert Offtake Agreements By Chris Wiberg

08 PRODUCER PROSPECTIVEFocus Must Remain on Industry Cornerstones By John Keppler

09 EU CONCEPTIONSSafety on Top of the AgendaBy Christian Rakos

10 BUSINESS BRIEFS

12 NEWS

18 MAPS & DATA The Growing Atlantic Pellet Trade By Kolby Hoagland

Q&A A Yankee in King Arthur’s CourtU.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

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

34

28

22

20

FEEDSTOCK Raw Material Rationale There are reasons and strategies behind pellet producers' decisions to use hardwood, softwood or blends.By Keith Loria

TORREFACTIONTorrefi ed Pellet PursuitDespite heightened interest in replacing coal with torrefi ed pellets in the U.S., the market still isn’t mature.By Chris Hanson

Pellet Mill MagazineAdvertisers' Index

31

2

39

40

30

19

10

26

16

25

33

11

21

27

37

14

24

13

15

32

36

12

17

35

Airofl ex Equipment

Andritz Feed & Biofuel A/S

BBI Consulting Services

Biomass Industry Directory

Biomass Magazine

BRUKS Rockwood

Buhler Inc.

CPM Roskamp Champion

Dieffenbacher

Fike Corporation

Firelogic

Flamex Inc.

GreCon, Inc.

MEGTEC Systems Inc.

Pellet Fuels Institute

Process Barron

RUF U.S., Inc.

SAMSON Materials Handling Ltd.

SCHADE Lagertechnik GmbH

Scheuch GmbH

Timber Products Inspection/Biomass Energy Laboratories

Vecoplan LLC

Vecoplan Midwest, LLC

Wolf Material Handling Systems

4 PELLET MILL MAGAZINE | Q1 2013

Living the Pellet Life in a Coal World

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 heat-ing 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 data-rich 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 defi nes the coal/pellet relationship, drawing attention to an the important market that’s driving Renewables Obliga-tion Certifi cate 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 cofi ring industrial wood pellets alongside coal.” In the situation that Gin-ther 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 benefi t 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 “Torrefi ed Pellet Pursuit,” (page 29) staff writer Chris Hanson examines the progress and unique challenges to perfect and bring to commercial scale torrefi ed 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 produc-ers, but this potential will require continued technical innovation and aggressive policy advocacy.

Tim PortzVICE PRESIDENT OF CONTENT & EXECUTIVE [email protected]

« Editor’s Note


Editorial

PRESIDENT & EDITOR IN CHIEFTom Bryan [email protected]

VICE PRESIDENT OF CONTENT & EXECUTIVE EDITORTim Portz [email protected]

MANAGING EDITORAnna Simet [email protected]

ASSOCIATE EDITORSErin Vogele [email protected] Hanson [email protected]

COPY EDITOR Jan Tellmann [email protected]

ArtART DIRECTOR

Jaci Satterlund [email protected]

GRAPHIC DESIGNERElizabeth Burslie [email protected]

Publishing & SalesCHAIRMAN

Mike Bryan [email protected]

CEOJoe Bryan [email protected]

VICE PRESIDENT, SALES & MARKETINGMatthew Spoor [email protected]

EXECUTIVE ACCOUNT MANAGERHoward Brockhouse [email protected]

ACCOUNT MANAGERSMarty Steen [email protected]

Andrea Anderson [email protected] Brorby [email protected]

Tami Pearson [email protected]

CIRCULATION MANAGER Jessica Beaudry [email protected]

ADVERTISING COORDINATORMarla DeFoe [email protected]

SENIOR MARKETING MANAGERJohn Nelson [email protected]

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 [email protected]. Advertising Pellet Mill Magazine provides a specifi c topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To fi nd out more about Pellet Mill Magazine advertising opportunities, please contact us at (866) 746-8385 or [email protected]. 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 [email protected]. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

TM

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COPYRIGHT © 2012 by BBI International

Industry Events »

Pellet Fuels Institute Annual ConferenceJULY 28-30, 2013The Grove Park InnAsheville, North CarolinaThe PFI Annual Conference is an annual opportunity for members of the densifi ed biomass fuel industry to gather for three days of educational opportunities, vendor exhibits and networking. Attendees include manufacturers, retail-ers, industry suppliers, government offi cials, and more. If you would like to be added to the email distribution list for the PFI Conference, please send an email to pfi [email protected] 703-522-6778 | www.pelletheat.org

National Advanced Biofuels Conference & ExpoSEPTEMBER 10-12, 2013CenturyLink Center OmahaOmaha, NebraskaProving Pathways. Building Capacity.With a vertically integrated program and audience, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, develop-ing 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 SummitSEPTEMBER 30-OCTOBER 3, 2013Hilton OrlandoOrlando, FloridaOrganized by the Algae Biomass Organization and copro-duced 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 & ExpoMARCH 24-26, 2014Orlando, FloridaOrganized 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 manufactur-ers, project developers, investors and policy makers. 866-746-8385 | www.biomassconference.com


The pellet industry has been developing certifi cation 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 effi ciency of the stoves.

There is virtually no credible in-formation available to consumers that indicates which stoves are extremely effi cient, and which are pellet guzzlers. The federal and state governments should be clamoring for this informa-tion, because pellet stoves and boilers are the biomass heating appliance that most deserves incentives, and incentives are almost always tied to effi ciency.

An effi cient 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 incen-tivizing 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 ineffi cient.

The U.S. EPA does not require stove effi ciencies 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 effi cient using the lower heating value (LHV), but neither Congress nor the IRS stipulated how effi ciency was to be measured. The result is that manufac-turers measure effi ciency in various

ways to arrive at 75 percent LHV, leaving the consumer unable to com-pare more effi cient and less effi cient stoves.

Virtually all manufacturers claim to meet the 75 percent LHV ef-fi ciency 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 effi ciency. LHV calculates effi ciency as if the wood has no mois-ture, and is typically 6 to 8 percent higher than HHV.

Pellet stove effi ciencies 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 effi cient, and others that are up to 90 percent effi cient, 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 in-dustry can stay ahead of government regulation and address the needs of consumers. For appliance effi ciencies, the industry is staying well-behind government regulation, which is com-ing, but also behind the expectations and needs of consumers.

Almost everyone who buys a pel-let stove today does so to save money. What they don’t realize is pellet stove effi ciencies 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 effi ciency is 78 percent HHV, a full 10 percent higher than the 68 percent HHV many experts think the actual industry average is. Lots of calcula-tors 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 effi cien-cies is to buy pellet stoves that are EPA certifi ed. A wide range of value and high-end stoves are EPA certifi ed, from manufacturers such as Har-man, 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 fi eld. While European countries include pellet appliances along with solar and geothermal in their efforts to promote renewable energy, the federal govern-ment and most states have neglected a technology with huge benefi ts 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 verifi ed appliances effi ciencies.

Author: John Ackerly President, Alliance for Green Heat

[email protected]

Verified Pellet Stove Efficiency Key to Industry Success

« Standards Steward

BY JOHN ACKERLY


For those pursuing pellet exporting opportunities, the fi rst 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 hear-ing more and more about producers who have secured off-take agree-ments, and therefore announced plans to construct new plants, often times of massive scale. The bless-ing is that these contracts initiate large investments and trigger huge benefi ts to their regional economies, but the downside is that export contracts are often quite strict in their compliance language. There-fore, it is essential that the supplier fully understands the language of the contract to be certain that their product will comply with the prod-uct specifi cations.

I am surprised at how often I review contract product speci-fi cations where test methods are improperly listed, parameter require-ments unclear or, in some cases, not reasonably achievable. Fortunately, it is becoming more common for me to receive a copy of the contract product specifi cation to review prior to the contract becoming fi nal, but that is not always the case. By reviewing the product specifi ca-tions 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 specifi cations 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 circum-stances, feedstock materials are quite consistent, and it is easy to gain confi dence that one will be able to satisfy the product specifi ca-tion. 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 re-siduals 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 calorifi c value, ash content, ash fusion tempera-tures, chlorine, etc. These param-eters can be evaluated by testing the raw feedstock materials and do not require fi nished product.

The next step that I recom-mend 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 incor-porate other design considerations such as electrical requirements, ventilation, compressed air, accessi-bility 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 commis-sioning 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 profi cient at running the tests. Additionally, there is usually a fair amount of work required in setting up labora-tory standard operating procedures, managing data, defi ning sampling points, and defi ning the general laboratory fl ow (these will be the topic of my column next quarter).

While export contract language is generally quite strict, taking the aforementioned steps can greatly re-duce risk when it comes to assuring the production facility’s ability to de-liver product that complies with the agreed upon specifi cations. 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 WibergManager, Biomass Energy Laboratory

[email protected]

Specification Compliance forExport Off-take Agreements

Testing Grounds »

BY CHRIS WIBERG


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. ex-ports. 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 com-pound average growth rate expected over that six-year period is one that few industries in the world, emerging or es-tablished, can match.

The reasons for our industry’s growth are powerful, and its benefi ts are real. Power generators can reduce their carbon footprint by combusting biomass in lieu of fossil fuels, as well as improve their overall emissions profi le with reductions of mercury, nitrogen oxide, sulfur oxide, and the risks of trace metals, including arsenic and lead. Equally important, biomass can provide fi rm, baseload capacity and dispatch-able power to meet the variable demand profi le of the modern-day electricity grid.

The benefi ts of biomass are also economic. Research fi rms like McKin-sey cite that cofi ring biomass alongside coal can cost as little as one-quarter of other renewable sources. Power genera-tors can thus deploy combustion strate-gies without expensive conversion tech-nologies or operational tradeoffs often associated with renewable energy. By utilizing existing assets and infrastruc-ture, utilities can preserve both direct and indirect plant and supply chain jobs

that may have otherwise disappeared. From the supply chain perspective, bio-mass energy, and the thousands of di-rect and indirect jobs it offers, preserves an economic way of life in rural com-munities 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 poli-cymakers the tools to deliver cost-effec-tive energy, without defaulting on envi-ronmental commitments. As a result, governments have put in place solid regulatory frameworks for biomass that give power generators, forest owners, loggers, producers, terminal and stor-age operators, shippers and others the runway to invest in capacity to build and serve this growing industry.

But even with real, tangible en-vironmental and economic benefi ts, the potential of the biomass industry’s worldwide growth can only become reality if our industry can attract the fi nancial capital to support the neces-sary supply chain and combustion in-frastructure investment. Without it, ad-ditional capacity that doesn’t exist today never will.

Here’s where we can learn a great deal from our conventional fossil fuel-to-energy colleagues, distinguishing the biomass industry as its midstream re-newable energy analog:

• We need to be safe. The safety and welfare of the people who work every day to build this industry is para-mount 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 inter-ruptions and ensure that our customers’ customers keep the lights.

• We need to be sustainable. Our industry is predicated on delivering the carbon benefi ts 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 car-bon footprint.

• We need to be successful. Our success in securing and delivering high-quality biomass fuels safely and reliably under long-term contracts with electric-ity 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 in-dustry: safety, reliability, sustainability and quality. We must continue to in-novate, modernize and seek effi cien-cies, fi nd new ways to lower our cost profi le, reduce our environmental im-pact, 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 col-lective potential as the next chapter of our industry’s story unfolds.

Author: John KepplerCEO, Enviva LP

[email protected]

Focus Must Remain on Industry Cornerstones BY JOHN KEPPLER

« Producer Perspective


With the rapid expansion of pellet markets, safety concerns are becoming increasingly important. The high number of fi res and explosions in pellet mills has let to a situation in Canada, for example, where it is becoming increasingly diffi cult to get a plant insured.

The urgency of the issues became evident in the First Inter-national Workshop on Pellet Safety, which took place in Fügen, 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 Euro-pean Pellet Council, the European Biomass Association and the Safe Pellets project. Participants in-cluded researchers, pellet producers, utilities, producers of pelleting and safety equipment and representa-tives 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 safe-ty, 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 pos-sible infl uencing factors, and ways of adequately monitoring storage conditions. Researchers from the Safe Pellets project presented their ongoing investigations on self-heating, 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 fi re 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 certifi cation for pellet producers together, and is offering this certifi cation 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 cover-ing 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 com-munication 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 im-prove safety in the pellet sector.

Author: Christian RakosPresident, European Pellet Council

[email protected]+43 2233 70146

Safety on Top of the AgendaBY CHRISTIAN RAKOS

EU CONCEPTIONS »

BTEC elects new executive officers

The Biomass Thermal Energy Council has announced its newly elected executive offi cers for the 2013 board of directors. The executive committee that will lead organization in 2013 include Chairman Dan Wilson, vice president of Wilson Engineer-ing Services; Vice Chair Dan Arnett, biomass coordinator for Ernst Conservation Seeds; Treasurer Robert Davis, founder and CEO of Forest Energy Corp.; and Secretary John Ackerly, president of the Alliance for Green Heat.

Georgia Southern Universityopens pilot pellet mill Georgia Southern University’s Herty Ad-vanced Materials Development Center has opened the fi rst 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 proj-ects. The team will also support research-ers 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 Groupforms 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 negoti-ate and act as a collective voice for com-panies 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 benefi cial to its members and the U.K. government.

LC Energy acquires pellet business LC Energy, an England-based special-

ist in sustainable wood supply, has acquired Harvest Wood Fuels’ bulk pellet business. The company, based in Tilford, Surrey, Eng-land, is a top supplier of high-grade wood pellets. LC Energy operates in the southern

PEOPLE, PRODUCTS & PARTNERSHIPSBusiness Briefs

Dan Arnett, biomass coordinator at Ernst Conservation Seeds

Robert Davis, founder and CEO of Forest Energy Corp.

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and eastern regions of England with an established base of public, private and com-mercial customers. Harvest Wood Fuels’ founder Lance Trevellyan recently received planning permission to develop a wood chip-fi red 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 an-nounced its third shipment of torrefi ed 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 Hos-pital 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 mil-lion 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 fi nalists for the fi rst-ever Wood Stove Design Challenge. The competition challenges participants to design afford-able, cleaner-burning wood stoves for use in residential heating applications. In selecting the fi nalists, judges looked for designs that could produce ultra-low emissions and operate in a highly effi cient manner. Innovation, afford-ability and marketability were also consider-ations. Among the stoves selected are those controlled by microprocessors and connected to smartphones, as well as those based on 17th century Scandinavian designs. The fi nalists’ stoves will be tested and judged on the Na-tional 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 avail-able) to Industry Briefs, Pellet Mill Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also e-mail in-formation to [email protected]. Please include your name and telephone number in all correspondence.

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Pellet News

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 Luxem-bourg. A report published through the USDA Foreign Agricultural Service Global Agricultural Information Network estimates that the U.S. exported approxi-mately 1.25 million metric tons of pellets to the region in 2012, worth an estimated $225 million.

According to the report, the Ben-elux 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 sustain-ability targets.

The Hague estimates wood pellet consumption in the region will more than double between 2012 and 2020, reach-ing 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.

Biomass hub proposed in Vermont

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 10-acre 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 fi nal stages of securing permits and is currently seeking power purchase agreements.

Benelux (in thousand tons)

2010 (offi cial)

2011 (estimate)

2012 (forecast)

2013 2014 2015 2020

Production 654 660 660 660 660 660 660Import 1,341 1,569 2,600 2,997 3,485 3,812 5,455Import U.S. 431 626 1,250 n/a n/a n/a n/aExport 173 138 230 250 250 250 250SOURCE: USDA FAS GAIN REPORT, "THE MARKET FOR WOOD PELLETS IN THE BENELUX"

Benelux pellet market to double by 2020


Canadian company plans plant in La.

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 fi ber. 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.

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.

Pellet News »

EIA predicts increased use of wood fuel

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Number of households heating with wood (U.S. total)Winter of Forecast

2006-'07

2007-'08

2008-'09

2009-'10

2010-'11

Avg. 2006-

'11

2011-'12

2012-'13

% change

Number of households

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%


European report addressesbiomass, 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 fi vefold 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 Estrées- Mons.

NEREA recently fi nished 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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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 densifi ed into pellets.

“Our results show that an ionic liquid pre-treatment can effi ciently handle mixed feedstocks that have been milled and densifi ed 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 signifi cant 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 fi rst 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 fi ber from actively and sustainably managed forests. Economic development agencies in both states have provided fi nancial 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.

Pellet News »

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North American wood pellet exports up in 2012A 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.

UK port plans pellet handling expansion

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 fi nd 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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Low-cost natural gas to benefit bioenergy A white paper released by FutureMetrics Inc. fi nds that wood-to-energy projects will

signifi cantly benefi t 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 signifi cant. The paper also assumes that the price of CNG will be less volatile than diesel, as it is not exposed to geopolitical risk.

Georgia to get pellet export terminal

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-per-hour continuous vessel loading rate, and a dust control system.

Pellet News »

SOURCE: EIA, INNOVATIVE NATURAL RESOURCE SOLUTIONS, ANALYSIS BY FUTUREMETRICS


European Coal ConsumptionMillion metric tons/yrSOURCE: EIA-COAL CONSUPTION BY COUNTRY, 2011

THE GROWING ATLANTIC PELLET TRADE

///////////////////////////////////////////////////////////////////////////////////

///////////////////////////////////////////////////////////////////////////////////

2012 U.S. exportsto Europe

North America currentexport capacity

North America developing export capacity

$192 million

$906millionprojected

138.8

232.8

0 5

LEGENDMajor pellet export port

Existing pellet plant

Developing pellet plant

Existing capacity Metric tons/yr

Developing capacity* Metric tons/yr

8-79 80-399 400+

8-79 80-399 400+

Million metric tons/yr©2013 CALIPER

SOURCE: FAS, USDA-PELLET EXPORT TO EUROPE, 2012

250 200 150 100 5

SOURCE: BBI INTERNATIONAL



*Plants that are moving towards construction or are actively under construction

Poland

Denmark5.5

4.0

3.1

Germany

United Kingdom

$2.1billionprojected

Spain

Italy

France

Netherlands

Belgium

Sweden

11.9

15.6

22.9

23.1

49.8

Progress Toward a $1 Billion IndustryEurope’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.

10 15Million Metric Tons/yr

50 0

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 Certifi cate) 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-fi ring 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 signifi cant capital investment in the supply chain infrastructure that effi ciently 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?

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 fl uency 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”

defi nitely 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 fl uent 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 justifi ed?

I think so. The Europeans are so far ahead of the U.S. when it comes to bioenergy policy development that it is

Q&AA 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.



Q&A »

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 signifi cant 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 fulfi ll European demand, or are continued investments necessary?

There is still a need for signifi cant 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.

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 cofi ring 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.

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 ineffi cient; 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 long-term contracts. A long-term contract is the key to getting a new plant fi nanced, so Asian utilities need to supply those contracts if they expect U.S. fi nanciers 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.

Seth Ginther INTERVIEW BY TIM PORTZ


« Feedstock


Pellet producers share conceptions regarding hardwood, softwood and blended fuel pellets.BY KEITH LORIA

Feedstock »

Raw Material Rationale


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 Pacifi c 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 per-formance 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-fi r 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 scientifi c ap-proach, as quality is more relative to specifi c species. Furthermore, quality is also relative to the cleanliness of the wood fi ber being used

and the quality of the manufacturer’s process, regardless of the qual-ity 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 specifi c,” says Sharron. “Some hardwoods have higher ash content per pound than some softwoods, and vice-versa. So, ash con-tent truly is species specifi c.”

West Oregon Wood Products uses primarily Douglas-fi r 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 Douglas-fi r is indigenous to the Pacifi c 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 fi re 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 mat-ter. 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

« Feedstock

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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 fi ne.”

New England Wood Pellet operates three manufactur-ing plants, in Jaffrey, N.H., and Schuyler and Deposit, N.Y., and turned out over 204,000 tons of wood pellets last year. The com-pany uses an 85-15 hardwood-softwood blend, including a com-bination 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 fi r. “This blend recipe is what we found works best for us,” says Charlie Niebling, the company’s general manager. “It is a refl ection 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

Feedstock »

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BAGGING BTUS: Western Oregon Wood Pellets' softwood pellet bagging operation in Banks, Ore.

PH

OTO

: WE

STE

RN

OR

EG

ON

WO

OD

PE

LLE

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decided to put in our pellet mills in an ef-fort to become more vertically integrated. By having our own feedstock for our pellet mills, we can control the quality of our pel-lets very closely. By not having to purchase outside raw materials, we feel we gain a sig-nifi cant advantage over other mills because

we are not paying any freight on our raw material.”

The hardwood pellets O’Malley Timber Products pro-duces has 5 to 8 percent mois-ture content, 350,000 Btu per cubic foot, and an ash content that runs between 0.5 and 0.7 percent.

The ChemistryWhile 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 pel-lets, extreme heat and pressure completely change the structure of the wood fi ber and a density of approximately 40 pounds per cubic foot is achieved, using ei-ther hardwoods or softwoods,” says Sharron. “Therefore, if the relative densities of hardwood and softwood pellets are com-parable, they will experience equal burn time, assuming equal amounts of combustion air.”

Once pelletized, the dif-ference between softwood and hardwood fi ber 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 re-gardless of whether it originated from hardwood or softwood, but because resin has a higher heating value than cellulose, and softwood has a higher percent-age of resin content than hard-

wood, softwood pellets will burn hotter and faster in most cases.

The main factor that impacts the qual-ity of a wood pellet is the ash content. Low ash is a result of using clean wood—no bark or dirt—and a quality manufacturing pro-cess, not the type of wood used.

« Feedstock

SELECTING SOFTWOOD: Douglas-fi r, a desirable pellet feedstock, is a softwood indigenous to the Pacifi c Northwest.

PH

OTO

: WIK

IPE

DIA


Feedstock »

“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 re-ally matter. If you’re confi dent 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 contami-nation, 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 LoriaPellet Mill Magazine freelance writer

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And while it’s true that more softwood species have a lower absolute mineral con-tent 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 any-thing, it has to do with bark content and the amount of dirt that gets into a feedstock sup-ply,” says Niebling. “Any company that’s fo-cused 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.”

In ProductionThe 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 lubri-cate 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 manufac-turers are seeing the positive effects a blend can offer, raising the heat value and lower-ing 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 pow-er and improves the quality of the fi nished 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 com-bustion 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-fi r soft-wood. A test of 100 percent Alder comes back at 7,900 Btu and 0.75 percent ash con-tent. Comparably, the Douglas-fi r results in 8,400 Btu and 0.25 percent ash content.


« Torrefaction

PLANT PREVIEW: A rendering of Thermogen Industries’ completed plant in Millinocket, MainePHOTO: Thermogen


In the U.S., commercial supplies of torrefi ed wood pellets are diffi cult to secure. What’s holding up market development? BY CHRIS HANSON

Torrefaction »

Torrefied Pellet Pursuit


Francisco Pizarro explored South America for the gold-en city of El Dorado. Juan Ponce DeLeon journeyed Florida for the Fountain of Youth. Patrick Mohney and Philip Barner are in pursuit of torrefi ed pellets. But unlike the lost cities and ancient relics, torrefi ed pellets exist. Finding a domestic, commercial-scale supply, however, has become a cru-sade among consumers.

“I’ve become exasperated after multiple different phone calls with people who have these huge biomass plants, fi nding out they are in bench-top 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 torrefi ed pellets for its cook stoves for developing countries.

Barner’s experiences, as director of energy services at the University of North Carolina, have been similar. “It’s been a series of hopeful-that-we-get-something, and then it goes away,” he says. He has been investigating on behalf of UNC, working to secure test samples large enough to burn in the campus boilers.

Currently, torrefi ed pellets seem to be the most suitable option for coal-based operations, as they have more benefi ts than regular wood pellets, according to those working with the technology. Tor-refi ed pellets are hydrophobic, do not decompose, are more than 70

percent easier to crush, weigh less, and have similar caloric values to coal, but with fewer emissions. Additionally, in a pelletized form, shipping costs are lower because they are less bulky than biomass feedstocks, such as wood chips. Considering the numerous benefi ts torrefi ed biomass offers, it doesn’t come as a surprise that some forestry consulting agencies, such as Hawkins Wright, have pre-dicted the global demand for torrefi ed biomass to reach more than 70 million tons a year by 2020.

« Torrefaction

STOCKING UP: A supply of torrefi ed pellets at New Biomass Energy.

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Torrefaction »

But with so much potential for the torrefi ed market, why does it seem there is still little sup-ply 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.

Market Inhibitors 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 confi dence to invest in commercial-scale facilities.

As Morihara says, there currently are no commercial-sized producers of torrefi ed pellets in the U.S. There are large operations in the coun-try such as New Biomass in Quitman, Miss., and the planned Thermogen Industries in Millinocket, Maine, but they are producing only enough for test burns or selling them overseas.

New Biomass Energy’s plant currently has a capacity of 80,000 tons of torrefi ed wood pellets, which are only for sale for test burns or lab analysis. Alison Hunt, vice president of development for New Biomass Energy, says of the biggest issue, companies have diffi culty fi nancing large plants without offtake contracts from credit-worthy buyers. “Buyers generally will not issue a fi rm off-take agreement without having a burn sample, generally more than 1,000 tons,” she says. “Until recently, there were no ways to get that quantity of torrefi ed wood.”

Richard Cyr, president and CEO of Thermogen Industries, says that supply, power costs and existing infrastructure can deter

new torrefi ed pellet producers from entering the market. “Thermo-gen has tackled all of those issues with our fi rst facility strategically located in the heart of Maine’s wood basket, utilizing inexpensive hydroelectric power,” he says. “Transportation is also not an issue for us with deepwater ports easily accessible by rail to ship our product overseas.”

Thermogen projects it will produce 110,000 tons of torrefi ed wood per year, but its supply isn’t aimed at U.S. consumers—the company plans to ship the torrefi ed wood to power plants through-out Europe.

Financial risk is another reason why new and growing torrefi ed producers are taking longer to meet demand. Morihara says that since the market is so new, it’s hard for companies to secure invest-

WHERE THE MAGIC HAPPENS: Pelletizing machinery at New Biomass Energy

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ments. According to international power consultant Poyry, torrefi ed pellet plants are 25 to 30 percent more expensive than a traditional pellet plant, and torrefi ed 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 torrefi ed pellet produc-ers will have a more diffi cult time trying to build trust among investors. To address this, Morihara says some companies are looking into partnerships with more established organizations to foster profi table relation-ships and reputations.

Although torrefaction method and feedstock diversifi cation are crucial in fos-tering ingenuity to create the perfect torre-fi ed pellet, a lack of consensus hampers the market. Without an industry-wide agree-ment on the best torrefi ed material and process, investors and creditors hesitate to provide fi nancial support to existing and emerging operations.

Like coffee, torrefi ed pellets are diverse in types of “roasts” and “fl avors.” Heating

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-fi ring, as they are much easier to grind than standard pellets. The problem with the

darker roasts of torrefi ed pellets is they be-gin to lose their natural glue that holds stan-dard pellets together during the extended roasting process, forcing producers to fi nd binders, such as corn products and even carpet fi bers.

« Torrefaction

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READY TO ROLL: Completed and bagged torrefi ed pellets in storage at New Biomass Energy.

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Torrefaction »

From Morihara’s perspective, the future torrefi ed market looks promising. He feels more coal plants will be shut down due to special interest group involvement in emis-sion 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, torre-fi ed biomass stands to be a very viable re-placement.

Cyr believes that adequate demand for torrefi ed 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 torrefi ed 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. torrefi ed market fi nally becomes established, domestic consumers will likely be able to secure plentiful supplies of affordable torrefi ed pellets for everything from woodstove fuel to heating an entire university.

Author: Chris HansonStaff Writer

Pellet Mill Magazine 701-738-4970

[email protected]

On the other hand, lighter roasts of torrefi ed pellets are not as hydrophobic as the darker roasts, thus more care and ener-gy 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 fi nd the sweet spot”

Politics is perhaps the most signifi cant factor that is affecting the domestic torre-fi ed market. International markets, such as the European Union and China, have man-dates and programs that are driving demand overseas for both torrefi ed and regular pel-lets.

Morihara says the issue may lie with the varying distinctions of biomass’s envi-ronmental footprint. In Europe and China, for example, power from biomass is con-sidered carbon neutral because the carbon dioxide released is absorbed later in trees. The U.S.’s philosophy on biomass carbon profi le is vague, however. “The U.S. has not effectively defi ned regulations, at least not as well as Europe,” Cyr remarks. “So it’s dif-fi cult to project domestic market growth.”

Without incentives from federal and state governments to infl uence coal power plants to utilize torrefi ed pellets, foreign markets become a more lucrative business environment. Therefore, more producers are shipping their torrefi ed pellets overseas, to countries in Asia and Europe, where larger profi ts can be made. “Domestic pow-er plants are insuffi ciently incentivized to reduce coal consumption,” says Hunt.

Market FutureUntil newer and larger torrefi ed facili-

ties 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 con-sidering buying the equipment and produc-ing torrefi ed pellets itself.

Until torrefi ed pellets become more available, Barner says UNC is looking at other forms of feedstock such as dry wood pellets. He noted torrefi ed pellets might still be the preferred fuel source, as the campus would still be able to utilize their coal si-los instead of building special housing for wood pellet storage.


Asian Markets for Wood PelletsWood 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 ex-port markets in Asia. In 2011, the Alaska Wood Utilization and Marketing Center and the Cen-ter for International Trade in Forest Products conducted a project to review recent regula-tions and policies in South Korea, Japan, and China that could potentially increase the use of renewable wood energy products, specifi cally wood pellets.

A brief summary of fi ndings 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 cofi red with coal.

On MarketsIn Japan, South Korea and China, the total

market is composed of wood pellets designed for two different uses. The fi rst part of the market is for domestic use as a source of en-ergy for space heating; the second component is a wood pellet for industrial use, mainly cofi r-ing with coal to produce electricity.

The major market objectives in the afore-mentioned nations will be for reducing carbon emission through cofi ring. Table 1 reports the current levels of coal they consume. When dis-cussing reductions in fossil fuel usage through cofi ring, conversion benefi ts 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 re-placement rates are dependent upon coal prop-erties. The coal imported into Japan and South Korea is classifi ed as lignite, the heat content of which is not vastly different than wood pel-

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 pro-vides 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 cofi ring would approxi-mately require a staggering 500 million tons of wood pellets annually.

Comparatively, in the pulp and paper in-dustry, 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 refl ect the views of Pellet Mill Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

« Standards

CONTRIBUTION

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 10^6Cubic 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

Table 1

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 re-quires the raw material equivalent to the startup 25 new pulp mills. These numbers are ap-proximate, but they start to defi ne 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 num-ber of buyers, large number of sellers). Future developments will further defi ne the market as one that is open. It is also possible, depending upon how contracts are negotiated, that partici-pation will be by invitation only.

In South Korea, the answer is not as clear. The Korean Electrical Power Company pro-duces 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 en-ergy 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 defi ne 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 fi rms will never develop.

It is diffi cult 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 real-ity. A recent report noted that generating facili-ties in China are classifi ed as state-owned and directly under government control or as “inde-pendent plants” owned by provincial govern-ments and private investors. Given this fact, and reported information about the resources of the country, a number of scenarios are pos-sible.

Reviewing Resources China does not have an extensive forest

resource. The natural forest is poorly distribut-ed 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 forest-land 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 fi ber 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 through-out the world, with major amounts coming from tropical sources. Softwood logs are im-ported from Pacifi c Rim nations and Russian Siberia.

As we build scenarios for the future mar-ket 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. Nu-clear power was once viewed as a major solu-tion, 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 fl ood 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 »


« 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 fol-lowing, 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 (spe-cifi cally lumber); woody material leftover from currently harvested areas including poor quality trees, small stems, and tree species with no mar-ket; intensively-managed, short rotation energy plantations; and material generated from thin-ning 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 fi rst 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 lami-nated 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 recog-nized 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 opportuni-ties 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 struc-ture 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 cofi ring 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 im-pact on price. The upward impact, however, will be free of the infl uence resulting from the cartel associated with petroleum suppliers. The upward pressure will be limited in North America, however, by the existing infrastruc-ture to move pellets from North America to the Asian nations. In concert with the develop-ment of infrastructure, we must also become more aware of the true sustainable levels of biomass production that each nation can con-tribute to the global market. When consider-ing 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, Pacifi c Northwest Research Station, Alaska Wood Utilization

and Marketing [email protected].

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