Emerging importance of North American wood pellets in the global economy
Besides the well-established use for auxiliary home heating, wood pellets are emerging as an alternative fuel of choice for industrial applications. The multiple applications for pellets is fueling export demand that is likely to grow over the next decade. Over the last decade, there has been a flurry of new activity in the export segment of North America’s forestry products industry. Prior to this time, the usual activities of both U.S. and Canadian forestry companies had been the harvesting of wood with a concentration on both domestic distribution and the export of measured and cut lumber, logs and wood chips. While the importance of these activities to the wood products industry remains today, a new product has emerged. Wood pellets, long considered an afterthought in the forestry industry, have risen to a level of international importance. The manufacturing, domestic use and exporting of wood pellets in North America is not new. For years, pellets could be found in homes providing an auxiliary heating source often, supplementing electric or fuel oil heating. This use continues, however, the level of activity surrounding wood pellets now offers new opportunities to the forest industry. The increasing role of wood pellets over the last seven to ten years in combating global warming has been dynamic. As a product considered to be a rising source of not only industrial power but domestic heating, wood pellets can be utilized without the noxious by products of today’s standard industrial power sources. Not only has the use of wood pellets to heat individual homes increased in importance, they have been proven to reduce or in fact eliminate industrial dependence upon oil and coal as primary power sources. In many countries in Europe, Scandinavia, and the Far East, wood pellets are in fact considered the replacement for the traditional industrial power sources in the generation of both industrial and domestic heating and electricity. Countries actively converting to wood pellets in both domestic and industrial applications include the United Kingdom, Belgium, Italy, Japan, and South Korea. The manufacturing and exporting of wood pellets by companies in both Canada and the United States have taken on a significant importance. The wood pellet logistics chain includes the harvesting of the wood, the transport to manufacturing plants, manufacturing, domestic transportation to export facilities, transfer to special storage points at deep water ports and loading of the commodity aboard ocean-going bulk carriers. The process must be carried out with delicate precision so as to maintain the integrity of the pellets and the volatility of large volumes of the product. Canadian Dominance The Canadian wood pellet industry manufactures and exports more pellets than any other country in the world, however, the United States is challenging that distinction. Canada’s major wood pellet export activities take place at ports on both the Canadian East and West coasts, with ultimate destinations to the Far East, Europe and Scandinavia. On the East Coast, the Ports of Halifax, Belledune and Quebec City maintain specialized facilities to receive the product from domestic carriers and store it until the vessels arrive for loading. The Quebec City facility is the largest wood pellet marine terminal in Eastern Canada. Primary destinations from these ports include the United Kingdom, Europe and Scandinavia. On the West Coast of Canada, the Port of Prince Rupert’s Westview Terminal, owned and operated by pellet giant, Pinnacle Pellets, is the site for receipt and storage of Pinnacle’s wood pellets and subsequent loading for export. Shipping destinations via ocean carrier from Prince Rupert can be in either to the Far East or the United Kingdom, Europe or Scandinavia. Utilizing Panamax vessels for ocean transport, Canada’s Pinnacle Renewable Energy loaded 60,000 tons of wood pellets at their Westview Terminal in Prince Rupert, B.C., in 2015, at that time, establishing a transport record. Total wood pellet exports from Canada alone have increased almost 100% from 2014 to 2016. Total world volumes shipped by Canadian producers in 2014 were reported as 1.6 million tons. In 2016, the volume had increased to 2.37 million tons. Based upon the reported totals for the three-year volumes, the two largest importers of Canadian pellets were the United Kingdom and the United States. The United Kingdom’s volumes continued to rise from 2014 to 2016 as power plant conversions to wood pellets increased. The decrease in imports of Canadian pellets by the United States declined. This decline in U.S. volumes of Canadian product can be attributed to an increase in activity in the U.S. by wood pellet manufacturers such as Enviva. While Canadian dominance of wood pellet production and the export market may be challenged in the future, their present position will be difficult to overtake. The largest export volumes of U.S. produced wood pellets are transported via seaports along the South Atlantic. Wood pellet manufacturer Enviva operates wood pellet manufacturing facilities in Mississippi, Florida, Virginia, and North Carolina. As recently reported, by AJOT, Enviva’s newest deep water export facility at the Port of Wilmington, North Carolina provides interchange from rail transport to domed storage and ship loading facilities at the Port’s main marine terminal. The two domes erected by Enviva, are capable of handling 45,000 metric tons of pellets. Enviva plans to ship more than one million tons of pellets per year from this facility which includes exclusive berthing and on-dock discharge of rail delivered product directly into the domes. Enviva also has export facilities in Virginia, Mobile, Alabama and Panama City, Florida. The Chesapeake, Virginia site will handle volumes comparable to those in North Carolina. Product delivered to Wilmington will be produced by Enviva’s manufacturing facility in Sampson County, North Carolina. This facility has a production capability of over 500,000 metric tons per year. Product shipped through Chesapeake, Virginia will come from manufacturing facilities in Southampton County, Virginia, Northampton County, North Carolina and Ahoskie, North Carolina. Enviva, founded in 2004, stresses the importance of its goal to position U.S. produced wood pellets in the world market. Although the export market is an important segment of their vision, it is not their exclusive goal. Enviva’s website enforces domestic goals including working to lower greenhouse gases, developing healthy forests and building strong communities.