Wood Pellets

A little while back we noted how North American wood pellets are in demand in Europe and Asia as a substitute for coal to generate electricity.  Now we are finding out that what started out as a fledgling idea in the first years of this century is expanding into a burgeoning industry.

Pellets are popular in electricity production because they are extremely dense and have a low moisture content. They also have a regular shape and small size which makes it easy to transport and store them and to feed them into power stations. They are made either from wood waste like wood chips or sawdust or from whole trees or branches which are especially grown and logged for pellet production.

The demand for wood pellets is being driven by national policies to limit carbon emissions at coal-fired plants. Europe, for example, wants a limit of 500 grammes of CO2 per kilowatt-hour on all new coal plants built after 2015. This effectively rules out unabated coal after this date. (See Carbon Capture Journal, EU vote makes CCS ‘mandatory’ for coal power plants)  The Dutch have already mandated that some biomass must be used at its coal-fired plants.  It is likely that demand for pellets will increase not only in Europe, but also in Asia and North America, which will generate new opportunities for pellet producers, particularly in Western Canada and the Eastern US. We also expect to see more pellet producers emerging in South America.

Pöyry Management Consulting Ltd., a Finnish energy consulting company, predicts that by 2020, we could see global consumption of wood pellets hit 45 million metric tons. This is three times the 2010 production of 16 million metric tons and way beyond a mere 2 million metric tons in 2000.  Pellets are being used for mixing with coal to produce electricity as well as for heating in homes and businesses.

A number of new wood pellet plants in the US and Canada commenced operations this year and more plants are planned for the coming years. Many of these plants are being funded by European energy producers and users.  The focus of the new plants is on achieving economies of scale and ensuring that the output of these plants can easily be exported.  As we have seen, this has led to efforts to construct new railway lines in the Eastern US to link these plants to coastal waters and to improve seaport facilities both in the US and in Europe.

Europe has been the largest export market for North American pellet producers for a number of years, shipping nearly 1.5 million metric tons in 2010, as reported in the North American Wood Fiber Review.  Europe will continue to be the primary market in the medium term as the European Union’s 27 member countries have set a target of sourcing 20% of the EU’s total energy requirement with renewable sources by 2020. In 2008, biomass used in the EU provided 80 million tons of oil equivalents (mtoe), and the European Commission estimates that this consumption may increase to 140 mtoe by 2020.

In addition, Germany will need alternative fuels now that it has decided to phase out its nuclear plants by 2022.

Asian demand for biomass energy is finally beginning to emerge. South Korea recently announced policies to increase the portion of energy consumption from renewable sources, including woody biomass. The country’s new Renewable Portfolio Standard calls for reducing green house gases by 30% by 2020, while concurrently increasing its use of wood pellets to five million tons in ten years. Currently, Malaysia, Canada and Chile export biomass pellets to Korea.

As Japan moves away from nuclear energy, it is expected its demand for woody biomass will also increase as part of a larger demand for renewable energy.

Pöyry predicts an increasing international trade in pellets and, to facilitate this trade, this month Amsterdam set up the world’s first wood pellet exchange.

Earth’s Energy will continue to keep an eye on this industry to see how signficant it becomes in addressing our energy demands.

References

Pöyry  Pellets – Becoming a Global Commodity? – Perspectives on the global pellet market to 2020, April 2011

pelletsforum.de  11th Pellets Industry Forum: The industry focuses on market growth and technology development

The BioenergySite  Global Markets Increase US Wood Pellet Production

Bioenergy Insight  Korea to become key market for pellet producers

Canadian Biomass  Global pellet market study

The Bioenergy Site  Port of Amsterdam prepares for growth in biomass

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4 Comments on Replacing Coal….One Pellet at a Time

  1. […] A wood pellet plant may be opening soon in Nova Scotia, Canada according to the Chronicle Herald. Viridis Energy Inc. of Vancouver is in the process of acquiring the former wood pellet operations of Enligna Canada Inc. and expects to have them in full operation by mid-2012.  The company will export its pellets to European electric utilities. The Middle Musquodoboit plant has the capacity to produce 110,000 tonnes annually. Viridis Energy operates a pellet production plant in Kelowna, B.C. For more information on wood pellets read our earlier post, Replacing Coal….One Pellet at a Time. […]

  2. […] also came across a few more posts about the wood pellet industry. Wood pellets are in demand in Europe and Asia as a substitute for coal to produce electricity. The […]

  3. Elroy Jetson says:

    Down at the micro level, a home-owner considering a pellet stove instead of a conventional wood stove needs electricity to drive the pellet delivery mechanism which means a pellet stove in your livign room may not be much value in an extended blackout. Micro stuff aside, a burgeoning pellet market might cause North American governments to reconsider certain restrictions on crops (e.g. hemp) that could contribute to the fuel stream. Possibilities are everywhere, we just need to see and take advantage of them.

  4. Al Fin says:

    Good points.

    Further, when wood pellets or briquettes are torrefied — roasted like coffee beans — they become an even better coal substitute (pulverise more easily), have a higher energy density, and resist water during transport and storage.

    Locating the pelletiser complex near the wood source saves transportation costs.