Supply and Demand
Published 10:55 am Friday, July 8, 2011
(Editor’s Note: This is the second in a six-part series that focuses on the growing wood pellet industry in northeastern North Carolina and southeastern Virginia.)
AHOSKIE – Burning wood to produce heat has been practiced since the very first caveman figured out the ignition process.
Now, thousands of years later, this simple practice has resulted in an explosion, figuratively, of the need for wood-based products.
Fueling that need is an overseas market that has upped its demand for wood, especially clean-burning pellets. The global wood pellets market has experienced a dramatic increase, from nearly 8 million tons per year in 2007 to more than 13 million tons in 2009. In 2009, the European countries alone consumed more than 8 million tons. In that same year, North American mills produced about 7 million tons of pellets in 2009, of which almost 5 million tons were intended for exports to Europe.
Leading countries in the consumption of pellets in Europe are Sweden, Austria and Finland, while Germany, France and Italy are experiencing the largest market growth in both capacity and consumption of pellets. In addition, countries such as Denmark, Belgium and Norway are experiencing the most significant increase of the region in pellet consumption.
So, with the increased demand, the European countries are noting a lack of production capacity to satisfy the internal needs, mainly due to the scarce availability of sustainable sources of raw material.
Seizing the opportunity to meet the needs of a growing demand, several companies have announced plans to open wood-pellet manufacturing facilities within the local region, including the old Georgia-Pacific plant in Ahoskie and the former International Paper mill in Franklin, Va.
“The short term and long term projections for wood pellet demand are varied, but all call for significant growth,” said Elizabeth Woodworth, a spokesperson for Enviva Biomass, a Richmond-based company that is currently building the Ahoskie plant, one capable of producing 350 million tons of wood pellets per year.
“The demand in Europe is primarily driven by the commitment on the part of the EU (European Union) to reduce GHG (Greenhouse Gas) emissions by 2020 by using renewables to generate 20 percent of their energy,” Woodworth added.
Additionally, Wood Fuel Developers of Chester, VA have plans for two, wood pellet mills (one in Greensville County, Va. and the other in Sussex County, Va.). Franklin Pellets, a newly formed partnership between Multifuels and CMI, is eyeing the possibility of opening a wood pellet shop within a portion of the now closed International Paper Mill in Franklin, Va.
According to a trio of wood products experts at NC State University in Raleigh, conditions are ripe for a massive increase in the production of wood pellets in the United States, particularly in the South due to favorable manufacturing conditions and the availability of raw materials.
In an article penned by Adrian Pirraglia, Ronalds Gonzalez and Daniel Saloni for the Biomass Power and Thermal Magazine (www.bbiinternational.com), with the opening of several new facilities in the Southern U.S, the capacity for exports has expanded and European countries with demand for pellets, such as Sweden, Italy, Denmark and Norway, may take advantage of their better prices, faster shipping and a steady availability and supply of pellets from these U.S. mills. These countries may switch from their traditional Canadian supplier, depending on delivered prices and long-term supply agreements.
According to Enviva’s Glenn Gray, who is overseeing the construction of the Ahoskie mill, there are 96 pellet mills currently operating in North America. To date, six of those produce more than 100,000 tons a year. Enviva is starting up three new plants, including Ahoskie, each capable of producing in excess of 100,000 tons annually.
“We’re not investing money in this plant in Ahoskie because we believe the market for our product will develop; that we’re hoping someone will buy this product…we are doing this because we at Enviva believe in long-term relationships with our customers, who allow us to invest heavily in manufacturing infrastructure, and raw material supply chains who allow us to deliver wood fiber to that customer,” said Enviva President and CEO John Keppler during a “meet-and-greet” held in Hertford County earlier this year. “We’re not here just for today, we’re here for this generation and the next.”
The U.S South has the ability to supply pellets for the European market at a competitive price because of enhanced production capacity due to a sustainable wood source from plantations. In addition, it may become a better alternative for European buyers than Canada because of the locations of important ports, better road infrastructure and year-round harvesting.
Enviva has already invested in the shipping of its product by purchasing the Giant Cement Co. port terminal on the Elizabeth River in Chesapeake, VA for $11.7 million to export its wood biomass products, including those made in Ahoskie.
The NC State researchers said it is important to emphasize that wood pellets are not a new product, they have been utilized for decades, but it is only now that the world is experiencing a large demand increase and wood pellet potential is still underestimated.
Wood pellets represent an alternative to the use of coal, gas and even traditional wood logs and chips. Wood pellets are cylindrical, compressed wood particles used as burning fuel. Pellet size varies from one-fourth to one-third inches (6 to 8 millimeters) diameter and 1 to 1.5 inches (38 millimeters) in length, with a bulk density that is usually about 40 pounds per cubic feet (about two to three times the wood density of softwood).
Pellets offer better and more uniform heating properties per unit volume due to their low moisture content. Pellets burn cleaner, have reduced particulate emissions compared with coal, are more economical to transport due to increased bulk density and can be easily produced from wood waste and byproducts.
(Portions of this story were reprinted, with permission, from the Biomass Power and Thermal Magazine.)