From Capitol Hill to Charleston, the PFI is Focused and Engaged Page 12
The European Pellet Market and the Deforestation Regulation Page 18
Optimizing Plant Efficiency Page 22
Stakeholders at the Pellet Fuels Institute Annual Conference in Charleston, South Carolina, discussed the past year’s policy wins and priorities, opportunities, challenges and more.
By Anna Simet
After a challenging year, the European wood pellet industry and its participants face new deforestation prevention regulations that pose major compliance difficulties.
By Anna Simet
CONTRIBUTIONS
and Listen: Your Plant is Telling You How to
Plant efficiency is coming to the fore in maintaining and improving many legacy and recently developed pellet mills in the United States.
By Evergreen Engineering
Established in 2011, the ENPlus platform could pass 14.5 million metric tons in 2024, with Germany leading the way for the most certified production.
By Dobromir Yankov
Anna Simet EDITOR asimet@bbiinternational.com
Reuniting in South Carolina
In June, I took a quick trip to Charleston, South Carolina, to attend the Pellet Fuels Institute Annual Conference. Catching up with old industry friends and making new acquaintances were highlights, but the program content really made the trip well worth it. One particular aspect that I appreciated was the involvement of downstream and upstream supply chain partners, from wood pallet manufacturers to appliance retailers, who participated in panels to discuss their businesses and relationships relative to the pellet industry. In my page-18 feature, “Wood Pellets in the Holy City,” (the skyline is adorned with hundreds of church steeples) I recap some of the panels, focusing on topics including the U.S. and European wood pellet sectors over the past year, such as producer challenges and strategies to overcome them. One current hurdle mentioned in the story—particularly for producers participating in the export market—is the EU Deforestation Regulation, which I’ve been busy educating myself on. In short, the EUDR’s geolocation data collection requirements are being deemed as nearly impossible or extremely difficult to comply with, and the forest products industry in general—including wood pellet importers as well as domestic EU commodities operators—are facing a fast-approaching compliance deadline while still awaiting clarity and critical guidance on some aspects of the regulation. In “Navigating Uncertainty” on page 18, I review the EU wood pellet market over the past couple of years, segueing into a broader overview of the EUDR and the particularly difficult aspects to stakeholders in our industry.
On that note, we’ve also included a contribution from Bioenergy Europe that discusses the ENplus certification program and its achievements over the past decade. Spoiler alert: As of May 2024, the country with the most ENplus-certified pellet producers is Poland, where the market seems to embrace the certification more than ever.
Finally, I have handed the bulk of my U.S. and Canada Pellet Production Map duties to our new Map Data & Content Coordinator, Chloe Piekkola. You may be hearing from her to ensure the data we have for your plant is still current. If you’ve had any changes this past year or plan to soon—expansions, proposals to build new plants, acquisitions, etc.—she would love to hear from you at chloe.piekkola@bbiinternational.com. Subscriptions to Pellet Mill Magazine are free of charge distributed 4 times/year to Biomass Magazine 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. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Pellet Mill Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Pellet Mill Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Pellet Mill Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to asimet@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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This summer finds wood pellet producers in the United States calculating the quantity of product they will have on hand as the calendar flips to September and October, two of the largest pellet-buying months in the calendar year. After two consecutive mild winters across most of the pelletburning locales in the country, inventories of consumers, retailers and producers are all high. At the end of April, wood pellet inventories were over 350,000 tons, a level the sector hasn’t reached since 2018. Interestingly, in 2018, standing inventory eclipsed 370,000 tons in July before being drawn down to under 50,000 tons of inventory just six months later in early 2019. Sales took off in August, and producers logged four 200,000-ton months between August and February, with two other months posting 190,000-ton months.
While producers navigate these here-and-now inventory and production decisions, national and global policy winds whirl about them as policymakers continue in their quest to decarbonize global energy systems and eliminate deforestation. Both are noble ambitions, but each have become case studies in how pervasive and manufactured narratives can trump science and derail the intended outcomes originally set out for the policy in the first place. That’s the polite take. A franker assessment would be to suggest these policies have been weaponized to dramatically reduce the use of wood for energy certainly, and likely for other uses as well. In both instances, the notion that wood use is a consumptive, nonrenewable exercise is stoked and propelled, despite a mountain of evidence to the contrary.
The European Union Deforestation Regulation (generally referred to as EUDR) is a policy with global reach set to take effect December 30, 2024. The regulation requires producers of seven different commodities (palm oil, cattle, soy, coffee, cocoa, timber and rubber) and products derived from them to perform due diligence to guarantee the manufacture of their goods did not contribute to deforestation (coming from land that was not deforested after December 31, 2020). The practical reality of this requires wood product manufacturers to geolocate the origin of every log that comes into their operation, a practice that advocates from every corner of the wood products sector say is impractical, if not impossible. Producers unable to deliver the requisite data will not be able to export their products into Europe—products like stationery, toilet tissue, diapers and other personal hygiene products. For now, producers around the world and regulators in Europe are locked in a game of chicken, each side waiting for the other to blink.
Forest inventories in the United States have been stable or growing for over a century. Growth versus drain ratios are positive for nearly every species of merchantable timber in the U.S., and yet European regulators are ready to turn away essential forest products imports like fluff, a key ingredient in diapers, unless the required geodata is delivered? Like it or not, European policymakers assure producers stateside that the regulation is coming, and forest products advocates are seeking support and pressure from the highest levels of government to secure a delay in implementation, if not a full blown reconsideration for timber baskets with low (or no) risk of deforestation.
More disturbing and more germane for wood pellet manufacturers in the U.S. is the news coming out of Massachusetts that heating with wood or wood pellets would not qualify for the Commonwealth’s Clean Heat Standard. The standard was conceived as a means of decarbonizing the energy required to heat buildings within the commonwealth. On its surface and to those unacquainted with energy policy in Massachusetts, the CHS could be viewed as a tailwind for wood pellet heating, considering the carbon benefit. Regrettably, policymakers in Massachusetts have shown little interest in the lifecycle assessments offered by wood heat advocates that demonstrate a reduction in the carbon intensity of space heating of up to 65%. Instead, regulators want to limit the carbon math to the point source, effectively turning the CHS into a mandate for heat pumps and the widespread electrification of space heating in the Commonwealth. A very good effort spearheaded by the Massachusetts Forest Alliance to bring some common sense and science to bear on the policy was unsuccessful, and now the industry and the citizens of the Commonwealth wait to see what happens with electricity prices, heating fuel availability and grid stability.
While vastly different in their global impact, both the European Union Deforestation Regulation and the Massachusetts Clean Heat Standard are reminders of the fallout that can occur when inaccurate narratives are allowed to persist and grow.
Author: Tim Portz Executive Director, Pellet Fuels Institute tim@pelletheat.org
www.pelletheat.org
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Pellet News Roundup
Japan-based Renova Inc. on July 8 announced that startup of its 75-megawatt (MW) Omaezakikou Biomass Power Plant will face additional delays. The facility is now expected to begin operations in October. Commissioning is continuing at the Omaezakikou plant, which was originally scheduled to begin operations in December 2023. In an announce-
ment made that month, Renova said that additional time was needed to make final adjustments to the boiler and turbine facilities to ensure long-term, stable operation at the facility. At that time, the company expected operations to commence in March. A subsequent announcement made in February pushed the estimated startup date to July. Renova then announced on
July 8 that additional time is required to make final adjustments to the boiler and turbine facilities, with startup now expected in October. The company also indicated the delay will not affect the feedin-tariff (FIT) period of the project. Once operational, the Omaezakikou plant will be fueled by wood pellets and palm kernel shells.
A rendering of the Omaezakikou Biomass Power Plant
Maine Gov. Janet Mills on July 2 announced the award of a $100,000 grant to the Maine Pellet Fuels Association. The funding will support efforts to expand domestic markets for wood pellet fuel manufactured within the state.
The Maine Pellet Fuels Association is one of 46 businesses within the state selected to share in $2.9 million in grant funding awarded under the Maine Jobs and Recovery Plan, which is designed to increase sales of Maine-made products across the U.S.
The European Commission on July 2 approved, under EU State Aid rules, Sweden’s plans to provide up to 3 billion euros in subsidies to support carbon capture and storage (CCS) projects focused on biogenic CO2. Such projects would sequester biogenic CO2 released during the combustion or processing of biomass, known as bioenergy with carbon capture and storage (BECCS).
Under Sweden’s subsidy scheme, aid will be awarded through a competitive bidding process, with the first auction expected to take place this year. The auctions will be open to companies that carry out an activity in Sweden that emits biogenic CO2
and implement projects with a capacity to capture and store at least 50,000 metric tons of carbon dioxide per year.
Selected projects will receive 15-year contracts, with beneficiaries receiving a grant per metric ton of biogenic CO2 that is permanently stored. The aid received by the selected parties will be adjusted by taking into account possible revenues that might stem from the projects, such as voluntary carbon removal certificates, as well as other public support received for the same project. According to the European Commission, the scheme will run through the end of 2028.
Valmet announced it has been selected to supply a 50-megawatt (MW) pellet-fired heating plant to a district heating facility in Mölndal, Sweden . The new heating plant is expected to begin operations in late 2026.
The company was selected via a public procurement process by Göteborg Energi AB to delivery the 50-MW plant to Mölndal Energi’s Riskulla site, where it will be integrated into the existing district heating plant and operated by Mölndal Energi.
Valmet’s turnkey delivery will include a boiler with a fuel receiving pocket, pellet
storage, as well as milling and wood dust dosing to the boiler. Valmet will also supply a flue gas cleaning system consisting of a bag house filter and a selective catalytic reduction system. Spare parts and Valmet Industrial Internet solutions are included in the delivery, according to the company.
Revelyst, a segment of Vista Outdoor Inc., has sold the assets of Fiber Energy Products, the company’s wood pellet manufacturer, to Lignetics Inc. Fiber Energy, which is located in Mountain View, Arkansas, began producing wood pellet fuel in 2006. Over time, the company has become a manufacturer of BBQ and grilling pellets and premium hardwood and softwood heating pellets throughout the midwestern and southern United States.
In late June, the Alliance for Green Heat released the results of a pellet stove owner survey that it launched earlier this year, reporting that the overwhelming majority respondents are very happy with the performance of their pellet stoves.
According to the Alliance for Green Heat, 486 people responded to the survey, with 85% reporting they would buy anoth-
er pellet stove if theirs broke, and 90% of respondents calling their stoves reliable or very reliable.
Survey results indicated that 62% of respondents use their pellet stoves as a primary source of household heat, while 33% use their stoves as a secondary source of heat. When asked the main reason they heat with wood pellets, nearly 43% of respondents cited money savings, with 23% citing avoidance of fossil fuels.
Denmark-based wood pellet producer and trader CM Biomass released results for the company’s 2023-’24 fiscal year, reporting record earnings despite significant challenges experienced by the biomass industry.
According to CM Biomass, the biomass industry faced significant challenges during 2023-’24, including a mild and late winter season, which reduced demand for wood pellets and caused prices to drop. Despite those challenges, CM Biomass reported earnings before taxes of $43.7 million, the best results achieved in the company’s 15 years of operations.
According to CM Biomass, the company trades approximately 3.6 million metric tons of biomass annually. It also owns,
directly or through joint ventures, 11 production facilities in the U.S. and Denmark.
The U.S. Department of Energy Bioenergy Technologies Office has released a request for information (RFI) to provide industry and government with information to guide further innovation of cleaner and more efficient wood stoves and the best use of renewable wood feedstocks. Specifically, the Residential Wood Heater In-Situ Testing RFI seeks feedback from industry, academia, research laboratories, government agencies and other stakeholders to define the goals and objectives for a planned effort to collect wood heater performance data in the field. The planned in-situ field data collection effort will monitor wood heater performance in operation by the homeowner, rather than in a laboratory environment, with the goal of quantifying actual performance and guiding the development of wood heater technology. Responses to the RFI must be submitted by Sept. 6.
U.S. manufacturers produced approximately 850,000 tons of densified biomass fuels in April, according to
the July edition of the U.S. Energy Information Administration’s Monthly Densified Biomass Fuel Report. Sales of densified biomass fuel reached 780,000 tons during the month. The EIA collected data from 76 operating manufacturers of densified biomass fuel to complete the report. For the month of April, those manufacturers had a total combined production capacity of 13.17 million tons per year and collectively had the equivalent of 2,527 full-time employees.
Respondents purchased 1.53 million tons of raw biomass feedstock in April, produced 850,000 tons of densified biomass fuel and sold 780,000 tons of densified biomass fuel. Production included 124,324 tons of heating pellets and 731,467 tons of utility pellets.
Domestic sales of densified biomass fuel in April reached 73,179 tons at an average price of $220.21 per ton. Exports in April reached 714,829 tons at an average price of $193.58 per ton. Inventories of premium/standard pellets expanded to 359,841 tons in April, up from 313,066 tons in March. Inventories of utility pellets fell to 522,635 tons in April, down from 544,217 tons in March.
The White House Office of Management and Budget on July 5 published its 2024 Unified Agenda and Regulatory Plan, which outlines rulemakings and other actions under development by various federal agencies related to the Renewable Fuel Standard, biofuel infrastructure, CO2 pipeline safety and wood heating. The agenda outlines the EPA’s plans to conduct a Section 610 review of new source performance standards (NSPS) for residential wood heaters. The review of Section 610 aims to determine if provisions of a rule that are related to small entities should be continued without change, rescinded or amended to minimize adverse economic impacts on small entities. The review began in July and will focus on the 2015 NSPS for residential wood heaters, as finalized in March 2015. The review is expected to be complete by this November.
Drax Group plc on July 26 reported wood pellet production volumes and margins were both up during the first half of 2024. The company also reported progress on bioenergy with carbon capture and storage (BECSS) projects in both the United Kingdom and abroad.
Drax’s pellet division produced 2 million metric tons (mmt) of wood pellets during the first half of this year, up from 1.9 mmt during the same period of 2023. Margins were also improved, with adjusted EBITDA of $82.6 million, up from $54.6 million during the first half of last year. The company said increased production supported both U.K. power generation and sales to third parties.
Work continues to develop new wood pellet production capacity, with a 130,000-metric-ton-per-year expansion project at the Drax’s pellet plant in Aliceville, Alabama, commissioned during the first half of this year. Drax is also working to progress plans for the proposed 450,000-metric-ton-per-year pellet plant in Longview, Washington. The company said permitting efforts are underway.
The pellet fuel-fired Drax Power Station generates 11% of the United Kingdom's renewable power. IMAGE: DRAX
WOOD PELLETS IN THE HOLY CITY
The Pellet Fuels Institute’s Annual Conference convened in Charleston, South Carolina, to discuss the past year’s policy wins and priorities, industry stakeholder opportunities and challenges, and more.
BY ANNA SIMET
Ablistering hot late June in Charleston saw the uniting of members and supply chain partners of the United States domestic wood pellet heating market to discuss the state of the industry, with policy, inflation and the challenges brought by a historically warm winter being the most-discussed topics.
Tim Portz, executive director of the Pellet Fuels Institute, opened the conference by providing an overview of the organization’s activities since last year’s event, which included two fly-ins to Capitol Hill—one in the fall and another in early spring that saw visits to 28 congressional member offices. “We met with several members themselves and had productive conversations—this is a pretty important mark of what we do an as organization,” Portz said. “It can be difficult to measure the impact of any singular fly-in ... if you’ve been on one,
you know that you drop into someone’s office and there are people coming and going, and it can be tough to engage someone’s attention ... I’m very pleased with the strong fly-in ... Reality is that the steady drumbeat of telling our story is absolutely vital—if we don’t tell our story, someone else will on our behalf, and not necessarily in the most positive light.”
Following Portz, Connor Murphy, operations lead specialist at the U.S. Energy Information Administration, discussed the U.S. Monthly Densified Biomass Fuel Report data and how the most recent heating season sized up to previous years.
Crunching the Numbers
Murphy highlighted several key takeaways from the report, which has been published monthly for the past eight years. Overall, he said, 2023 was a below average year for
the domestic pellet market. Though production was up, domestic sales total quantities were down, and revenue only saw a marginal inflationary gain. As for the export industry, 2023 was another above average year for that market.
Another takeaway Murphy highlighted was that 2023 saw the second-largest feedstock purchase total in the survey’s history, at just over 21 million tons. “A slight decrease from last year, but still a strong year,” he said. Murphy added that the EIA has received feedback about devising a more effective way to differentiate feedstock value—i.e., green tons vs. bone dry tons—and that his team at the EIA is working on it.
As for production, total premium/standard pellet output for 2023 was 1.849 million tons. “The production of total premium/ standard pellets was up when compared to
Tim Portz, executive director of the Pellet Fuels Institute, discusses the organization’s activities over the past year.
IMAGE: BBI INTERNATIONAL / ANNA SIMET
the past two years, but did not outpace the record year that we saw in 2019,” Murphy said. “2023 was a pretty strong year when it came to production. It was steady across the year with increased production across all regions, and this is mainly because we ended last heating season with pretty low inventories, so producers ramped up production ... there were some news stories out there saying we were going to have a cold winter—extreme cold—and unfortunately, that didn’t come to fruition. The large production total has caused a bit more inventory left over after what was a mild winter.”
On the export market, Murphy said utility pellet production for 2023 was 8.976 million tons. “We saw the largest year for utility production in the history of our survey,” he said. “2024 is currently trending to outpace 2023 as well. For the first quarter of 2023, there was just over 2 million tons of production ... in the first quarter
Connor Murphy, operations lead specialist at the U.S. EIA, discussed the agency’s U.S. Monthly Densified Biomass Fuel Report.
of 2024, we’ve already seen 2.2 million tons of utility pellet production.”
Moving to domestic sales, quantities were slightly down from 2022 at about 1.78 million tons. March 2023 set a record for lowest total sales during that month since the report’s inception. “Sales revenue looks nicer—the values are higher compared to previous years—but a lot of that can be explained away to inflationary influences,” Murphy said. Total domestic sales revenue for 2023 was $399.9 million.
Export sales saw record-breaking months for five of the 12 months, according to Murphy. Approximately 8.58 million tons of industrial pellets were exported in 2023, with total revenue of $1.642 million. “Export sales in 2023, for quantity and revenue, were just below what we saw last year,” he said.
Segueing into heating degree days (HDDs), the 2023-’24 heating season saw “an extremely warm beginning,” Murphy said. “This period was the third warmest in the 129 years of NOAA’s [National Oceanic and Atmospheric Administration] data collection.” Overall, he said, it was the warmest winter on record. “For this industry, the critical regions of the domestic wood pellet market ... those
northern states had anywhere from 5 to 7 degree anomalies from average, and in some places, we saw 9-plus degrees. A few degrees can really be the difference whether people use the pellets they bought.”
Murphy explained the basis of heating degree day (HDD) rankings, defining an HDD as a measurement designed to quantify the demand for energy needed to heat a building or home, based on the assumption that when the outside temperature is 65 degrees Fahrenheit, homes don’t need heating or cooling to be comfortable.
Finally, Murphy said there are some line items the EIA is working on, including redefining regional boundaries and potentially getting barbeque pellets added to the survey. “There’s a bit of disagreement—we are talking about trying to include them and it hasn’t gained a lot of traction—but we continue to advocate for that.”
Murphy closed by thanking the producers who compile and submit their data to the EIA every month, on time. “If you’re someone who doesn’t submit it ... let’s get you added. It matters more if everyone in the industry participates.”
Global Markets
Via a video presentation, Gilles Gauthier, research and business development manager at Hawkins Wright, provided an update on European Union pellet markets. As for global market growth, it stalled from 2021 to 2023, he said.
For the EU industrial market, the situation wasn’t optimal to produce electricity from pellets in 2022 and 2023, for a number of reasons. In 2022, he said, an energy crisis was prompted by the Russian invasion of the Ukraine, causing high natural gas and power prices, thus making wood pellets more economical. However, there was an undersupply of wood pellets, he said. “In 2023, the situation was different. The energy markets began to normalize over the course of the year, so electricity from biomass decreased in 2023.” On top of that, he said, some units in the United Kingdom faced disruptive market conditions due to some incentive scheme changes.
As for the residential market, pellet use has been lower-paced than usual, Gauthier said, with the main reason being energy demand— as was the case in the U.S., a warmer winter and fewer HDDs. “From 2020-’21, there was
a high demand for heat, but for the past two heating seasons, the need for heating houses was lower than usual,” he said. A mild and wet winter was the case for most of Europe, he said, aside from Sweden, which experienced a much colder-than-usual heating season.
The residential market also saw the aforementioned “shortage” experienced by the industrial market, with very high energy prices leading to dramatic demand and price increases for pellets, in October 2022. “The reaction was basically to use as little energy as possible, including pellets, because of prices,” Gauthier said.
When the situation improved, “producers in Europe were sitting on a big pile of pellets, and price drops and allowed people to reorder,” Gauthier said. Sales were strong from February 2023 through April, depending on the country. “Then we saw something surprising and different—sales, orders of pellets, were maintained for spring and summer for most of the market. So not only did people buy at the end of the heating season, they continued after. It’s likely they bought too many for storage ... as a consequence, when we were heading for 2023-‘24, people entered the heat
ing season with a lot pellets ... a very high level of stock.”
The past two seasons have seen unusual purchasing patterns by consumers, he added. Rather than buying pellets in August and September to store and use as needed during the first part of the heating season and restocking midway through, the market hasn’t seen the initial surge of buying. Rather, he said, consumers are buying what they need in small quantities. “They didn’t need to buy pellets in the beginning of the heating season, like they usually do ... the end user is changing [habits], buying what they need in small quantities ... they now have confidence there won’t be a shortage, and in low prices.”
For appliance purchases, the strong pellet boiler and stove sales seen in recent years have slowed down. “We have seen a big change in that market element recently,” Gauthier said. Numbers for Italy were not available by the time of the conference, but Gauthier said the country was no longer “the star of the market. There [used to be] significant sales—130,000 [units] a year—but the market has very much
doesn’t create additional demand. France has been a dynamic market in recent years with more than 200,000 stove sales in 2022—new installations—but dropped to 70,000 units during the past heating season. Other countries, including Germany, Austria and Spain, had strong sales in 2022 for boilers and stoves, but markets crashed in most of these countries due to pellet market prices. “Unfortunately, those markets haven’t normalized; it takes a while for the trust to come back,” Gauthier said, adding that some recent changes in the support schemes in different countries also had an impact. “If I would speak about recovery, Austria and Poland have seen nice recoveries, but for the rest ... 2024 will be of levels 2020 or 2021, and 2022 will remain a record year for sales.”
The market has experienced considerable turbulence from the shortage to oversupply, but prices and the overall situation are normalizing, Gauthier added. He concluded his presentation by touching on supply markets, stating that there is currently less incentive than there was before for the European
look at the trade, on the industrial level, we see a shift from the U.S. and Canada to Asia,” he said. “Italy is strongly relying on the South American supply, mainly Brazil, for some of cheapest pellets they can find for their markets, on top of the European market supply.”
Producer Panel
The final session of the conference included a panel of pellet manufacturers discussing the past season, challenges, priorities and strategy. Panelists were first asked how producers have managed or adapted to challenging conditions, including soft sales and a surplus of inventory, warm weather and inflation. “It puts a lot of stress on our business calibrations,” said Brett Jordan, CEO of Lignetics Inc. “…One of the benefits of the EIA [Monthly Densified Biomass Fuel] report is that as an industry, I think we have so much better visibility and can be smarter about our inventory planning, and make better decisions. On a longer-term basis, I think the answer is to continue to diversify into new product opportunities—there are a lot of them out there, I’m a true believer that there are many that we haven’t even touched yet ... Now coming off of two of the warmest winters in 125 years, that’s tough. You keep telling yourself, we’re due, we just want to have one average winter, but in the meantime, you have to manage the business and deal with realities.”
Within this scenario, working to ensure the people and supply chain partners integral to the wood pellet business are taken care of year-round is another challenge, added Stephen Faehner, president of American Wood Fibers.
Harold Arnold, president of Fram Renewable Fuels, said that for the export market, 2023 was “not as good of a year as we would have liked to have seen. Many years ago, we made the conscious decision to be fully contracted, somewhere between 90% and 95% of our production capacity.” He said that overseas power generators’ electricity prices dropped and subsidy formulas changed for some, which has impacted consumption. “The warehouses in Europe are full,” he said. Arnold emphasized the challenges ahead regarding the EU’s Deforestation Regulation and its implications. “It’s going to impact all of us—export producers, anybody in the timber or forest products industry ... it has the potential to kill the industry, not only wood pellets but lumber and wood products in general,” he said. “It’s long, and it’s going to stay and not be repealed anytime soon—implementation is the question, how will it be implemented? EU bureaucrats move very slowly, so there is a good chance it’ll be delayed ... but it’s going to affect a lot of people.” He added that each EU member state may have its own interpretation of the meaning of deforestation, so a lack of cohesiveness could be a challenge on top of mandatory data collection and submission. “We have a lot of people working on it, including USIPA’s consulting group in Brussels ... we think there is a way to do it, it’s just going to take a lot of work.”
As for the BBQ pellet market, which saw a period of strong growth during COVID-19, it has leveled off, according to Jeff Theissen, president of Dansons. “It has returned to 2019 levels—stabilized after the covid boom that was good and bad at the same time—but it is
a stable business, more stable than the heating business.”
While labor availability has improved from post-covid conditions, Jordan said starting wages to attract talent are 20% to 25% higher than they were a couple of years ago. “That’s just to get application flow ... we have seen some retraction of pallet pricing, but every line item we have is still experiencing inflation today, so it’s not going away, and it hasn’t gone backward with the exception of pallets.”
Arnold said that Fram is “working our fingers to the bone trying to manage [inflation].”
Using the benchmark of the first quarter of 2021, by the end of that year, costs went up 31%, he said. While energy prices have come down, he said, inflation pressures remain for skilled labor positions—i.e., electricians and mechanics. “We’ve done a lot of things to reduce our internal costs—we use fewer outside contractors now ... we don’t rent heavy machinery from the outside; that paid for itself in the first four months,” Arnold said. “We’ve been doing a lot of things internally to bring costs down, and now we’re about 16% of where we were in the first quarter of 2021. We’re working everything to try to push it down.”
Though power prices have come down in many places, Faehner pointed out they still remain high in some areas—such as California— where American Wood Fibers has two wood fiber shavings mills. “Most of us use a lot of power—we all run facilities 24/6 or 24/7, they start up and don’t stop ... it’s not like we can pick the time of day we want to run to get off-peak power prices, so power, for us, is a problem.”
Portz moderated the producer panel, which included (from left) Harold Arnold, Fram Renewable Fuels; Stephen Faehner, American Wood Fibers; Jeff Theissen, Dansons; and Brett Jordan, Lignetics.
IMAGE: BBI INTERNATIONAL / ANNA SIMET
Jordan agreed, adding that Lignetics is “kind of petrified of what could happen in the power market—we’ve seen a taste of it ... we have seen some come back down ... the market is saying it’s going to get worse. The datacenters supporting the massive investments in AI, we don’t have that power on the grid, and we don’t have a plan as to how we’re going to generate it ... When I look at that dynamic with the future cost of electricity ... the comfortable, predictable electricity costs in the past, I don’t think that’s our future.”
Shifting gears to increasing widespread recognition of the benefits of wood pellets, Arnold said one key is getting people who support and understand the industry elected, as well as undermining the efforts of industry smear campaigners. “These professional protesters, they like doing this. They’re well educated and now they’re well funded, and they communicate well with the media,” he said.
Jordan added that a common mindset in the industry used to be that it was best to avoid getting involved in government affairs, stay under the radar and not attract attention, but that no longer works. “The past couple of years have proved that’s not a sustainable strategy,” he said. “We need to focus on efforts to ensure we understand what’s happening at federal and state levels, and at PFI, we’re just scratching the surface of what we can do proactively ... the freight train is coming our way, and we need to react. Organizations are out there doing a lot, and they aren’t necessarily aligned with us.”
The industry’s most important alliance, Faehner said, are those who represent the pellet space—retail in particular. “The power behind retail is probably way further reaching as we can get as manufacturing trade organization ... the ability for us to message together and promote the positive. The story that we have—sometimes we forget. I’m a fourth-generation sawdust kid and sometimes I forget ... we take stuff that is normally thrown away and do something good. The power of messaging, the power of partnerships, the power of our collaborators—it’s the feedstock folks to the end users. Every time we see one of those [anti-biomass] articles, it’s a reminder we’ve got to be on the offensive, rather than the defensive, all the time ... we have a great message.”
Author: Anna Simet asimet@bbiinternational.com
NAVIGATING UNCERTAINTY
After a multiyear period of record growth, the European wood pellet sector saw a turbulent couple of years. With a rebound on the horizon, stakeholders are counting down to the compliance deadline of new regulations that could continue to stymie the market.
BY ANNA SIMET
Europe is the world’s largest wood pellet market, producing just slightly more than it consumes.
According to Bioenergy Europe’s Statistical Report 2024, released in June, the EU alone produced 20.7 million metric tons in 2023 and consumed 21.9 million MT. That equates to producing 44% and consuming 50% of the world’s pellets.
But while production and consumption has steadily climbed in the EU and United Kingdom without interruption for nearly the past decade, last year saw a deviation from that trend. Wood pellet consumption actually declined by a collective 2 million tons from 2022 to 2023, from 32.1 million MT to 30.1 million MT, the culmination of a number of market forces.
Industry Disruptions
In the years leading up to 2023, the EU saw record production and consumption, as well as record pellet-based appliance sales, according to Bioenergy Europe’s report. While the residential market has managed to remain a bright spot—the share of residential and commercial consumption of pellets reached 59% in 2023, the highest in a decade—the recent decline was largely due to disruptions in the industrial market. This includes Russia’s invasion of the Ukraine and “resulting energy crisis in 2022,” causing “dramatic price fluctuations in many countries.”
Bioenergy Europe highlights the challenges the European pellet industry has faced as being threefold: higher input prices, falling industrial demand and a record warm winter.
The high cost of electricity for pellet manufacturers also contributed to inflated prices, which, when combined with volatile energy market conditions, has led to a ripple effect on power generators, prompting significant scalebacks. While pellet prices have fallen, they’re still “noticeably above their historical average,” the report says. “As such, it seems that the recovering economic landscape is largely responsible for the decisions by industrial users to reduce consumption.”
Regarding heating degree days (HDD)— based on the assumption that when the outside temperature is 65 degrees Fahrenheit, heating and cooling aren’t needed—like United States, Europe saw significantly fewer this season. For example, in Spain, according to Bioenergy Europe, HDD decreased by 10%. Austria saw a
decrease of nearly 22%, and Belgium saw 15% fewer HDD.
As for EU production, it has dropped but is projected to partially recover. However, production in the EU doesn’t mirror demand, and the EU’s Deforestation-Free Supply Chain Regulation—set to go into effect at the end of the year—could serve as a potential barrier to trade and imported wood pellets making up the difference. Its effects are not limited to imports, however, as it will also affect wood pellets and other commodities produced and sold within the EU.
Challenges of the EUDR
The European Commission on Energy, Climate and Environment states the main driver of the regulation is the expansion of ag-
ricultural land that is linked to the production of commodities including cattle, wood, cocoa, soy, palm oil, coffee, rubber and some of their derived products, which the commission describes as “commodities linked to deforestation and forest degradation.”
Under the regulation, operators and traders who place these commodities on the EU market or export from it, “must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation.”
As of June 29, the countdown for compliance began—operators and traders have 18 months to align with the new rules, leaving many in a precarious situation, mainly due to the traceability requirements that some stakeholders, particularly forest products manu-
facturers, have deemed as difficult or nearly impossible to meet. Under the regulation, operators must collect information, documents and data showing that the product is deforestation-free and legal, such as geolocation coordinates, quantity, country of production, etc. “One of the biggest challenges in the EUDR implementation is the geolocation requirement,” says Daniel Reinemann, senior policy officer at Bioenergy Europe. “In principle, one should be able to trace a specific batch of products to the specific plot of land from which the material is originating and confirm that this plot of land is not subject to forest degradation or deforestation. For bulk products like pellets that are made from mixed residues from sawmills, the geolocation exercise means that you need to connect every single
shipment with every possible origin. This creates huge datasets that are passed along the value chain, making the reporting extremely complicated, if not downright impossible.”
Further, Reinemann says, the mass balance principle that is typically used for biomass sustainability certification systems is not accepted by EUDR, meaning that if a single plot of land out of a huge sourcing area is found to be problematic in terms of forest degradation, the whole shipment could be deemed as noncompliant. “There are several other challenges as well—the definitions of ‘forest degradation’ differ from in each jurisdiction and do not necessarily follow the EU definition,” Reinemann says. “A country benchmarking system is to be adopted, which will affect the frequency of controls—but this has been delayed. More importantly, there have also been delays in the release of a guidance document from the European Commission. Although not legally binding, there is also supposed to be an updated version of an FAQ on EUDR to clarify some of the pending issues, but this has been delayed for several months now.”
With the implementation deadline at the end of the year approaching fast, Reinemann adds, “almost everyone in the market is unsure of what they will need to do to comply.”
U.S. stakeholders importing forest products to Europe—valued at $944.24 million in 2023, according to trade data—have expressed the same concerns. The American Forest & Paper Association issued statements saying the rule “presents severe compliance challenges, would disrupt sustainable supply chains, and imposes unwarranted and costly requirements for doing business with the EU.”
In March, 27 U.S. Senators sent a letter to U.S. Trade Representative Katherine Tai expressing concerns about the regulation, and like others, pointed to the traceability requirements as being extremely problematic. “…the EUDR, as currently written, presents significant compliance issues due to its stringency and ambiguity,” the letter stated. “One specific concern is the traceability requirement. The EUDR imposes a geolocation traceability requirement that mandates sourcing to the individual plot of land for every shipment of timber product to the EU. In the U.S., 42% of the wood fiber used by pulp and paper mills comes from wood chips, forest residuals and sawmill manufacturing residues—wood sources that cannot be traced back to an individual forest plot. The EUDR traceability requirement will be nearly impossible for a significant segment of the U.S. paper and pulp industry to comply with.”
The senators also expressed concern regarding the requirement that for all timber and timber-derived products entering the EU, the originating landowners must be identified, and their contact information be made available. “This requirement risks disclosure of confidential information between business partners and could disrupt longstanding landowner-producer relationships,” the letter states. “Additionally, it is concerning that the regulation does not identify who would have access to this proprietary data or how the data would be used for enforcement.”
The U.S. Industrial Pellet Association and a consortium of seven other groups including the American Hardwood Export Council, National Alliance of Forest Owners and others, have asked Ursula von der Leyen, president of the European Commission, for a delay of the
compliance deadline by 24 months to provide adequate time for both regulators and producers to “understand, evaluate and prepare for substantial, sector-wide changes required to comply with the law.”
“Like many industries across the wider forestry sector, EUDR is a top issue for USIPA members,” said Elizabeth Woodworth, interim executive director at USIPA. “We have served primarily as a voice for our members with EU institutions and member state competent authorities, raising concerns and seeking clarity around the many outstanding questions. In doing this, we are working closely with likeminded associations in the U.S. and EU. The consensus across the industry—as well as among many national governments—is that a delay is needed so all parties have adequate time to address the issues and ensure implementation success. On a more practical level, we have given our members a forum within which they can share best practice and have been helping them breakdown and interpret the rules.”
There are inherent complexities in the production process of wood pellets that make it infeasible to have perfect traceability for all feedstocks, Woodworth adds. “It’s important that geolocation provisions are appropriately interpreted for secondary and tertiary fiber, so that the objectives of the EUDR can be met without disincentivizing its use and to ensure alignment with the Renewable Energy Directive.”
Reinemann notes that anyone who places wood pellets in the EU market, whether the pellets are produced domestically or in third countries, is within the scope of EUDR. “Theoretically, there should be no difference [for compliance]. However, it might be the case that there is an uneven launch of compliance monitoring,” he says. “The relevant authorities may not be aware of all the small-scale pellet producers that cater mostly to the local, residential market, especially within Members States that have provided limited guidance to the authorities. As a result, there could be some initial nonconformities. It is expected that large volumes of pellet shipments that go through customs would be prioritized by the competent authorities from day one. The implication is that the industrial pellet markets
may feel the effects of EUDR sooner than the premium markets.”
While the overall aim of the regulation is commendable and fully in line with the goals of Bioenergy Europe and its constituents, Reinemann adds, it is critical to limit administrative burdens and avoid a complicated bureaucratic environment that could undermine goals. “Given the uncertainty about many key provisions, it is difficult to say now what exactly the impact will be.”
Woodworth emphasizes that the broader forest sector is not contributing to commodity-
driven deforestation or degradation. “USIPA recently commissioned a report that found timberland acres and forest inventory in the U.S. South are at historical highs,” she adds. “EUDR will ultimately provide another important means for us to demonstrate the positive impact we have on managing and maintaining forests, but the extent of the administrative burden this will require is yet to be determined.”
Author: Anna Simet asimet@bbiinternational.com
Look and Listen: Your Plant is Telling You How to Optimize for Efficiency
BY EVERGREEN ENGINEERING INC.
Plant efficiency is coming to the fore in maintaining and improving many legacy and recently developed pellet mills in the United States. As we supply the world with compressed wood fuel, producers continue to look to efficiency and optimization to increase profit and production from mature plants. Evergreen has partnered with many leading wood pellet developers, production facilities and equipment manufacturers over
the years, developing a legacy of quality designed processes and plants. Part and parcel to this track record of production efficacy is a focus on the ability to identify areas of greatest impact for optimization.
The Vital Few
If process efficiency is the main goal, why would a maintenance or reliability department measure hundreds of different el-
ements? We’ve often steered plant staff to monitor and track a select few indicators that reflect their vision and goals. Evergreen has employed and worked with university and industry PhD types, and even employed these scientists. One particular project manager invoked the Pareto Principle as a useful rule in this way: Select the 20% of all possible indicators that help explain 80% or more of your impacted data. In this way, you will
CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Pellet Mill Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
reveal your top issues to address. So often, paralysis by analysis is found in a sea of data that soon obscures, instead of indicates, to address. Avoid obfuscation by focusing on the highest-value data.
Attend
Your plant’s most critical physical areas and sensors required to measure key performance indicators (KPIs) will best be indicated by the people who use them daily. We recommend working closely with production and automation teams to determine the proper setup of live production monitoring. Data collection in the form of information from sensors is key for understanding problematic areas, issues with equipment and current capacities. In turn, this historic data is used for measuring and tracking increased capabilities and status after repairs and modifications. Clearly, first determining and implementing the proper sensors and data collectors in appropriate areas ensures your data is indicating the actual status of process equipment.
Invest
Technology moves at the speed of light. Ensure your team is equipped with the tools to do the job well. Some legacy organizations still firmly believe that portable devices such as tablets and laptops are not needed for routine tasks performed by the maintenance team; perhaps there is concern of loss, as anything not nailed down tends to make its way offsite. This mindset turns out to be very short-sighted. Certainly, hardware items such as tablets might get misplaced; they’ll suffer abuse and damage and will need replacement, but they’re undoubtedly a key element in help ing maintenance teams accomplish daily rou tines. Today’s rugged outdoor-use tablets can take a beating, but the decision boils down to this question: How much will an hour, or even a minute, of downtime cost your mill? Can your maintenance supervisor look up the replacement part on the spot, check it out of the storeroom in advance and know exactly where the part is located? Or do they need to log in to a PC in the storeroom, look around for the part and manually sign it out, increas ing the repair time by two to five times the
original estimate? In most cases, the cost of one of these portable devices can be easily regained with one single downtime event.
Document
Take the time to write down every action. Take photos of the equipment being repaired, compile detailed notes, and even (use Evergreen for) drawings and exploded diagrams that can be pulled up on the spot. Your new tablets can provide valuable information that was not readily accessible before. The future is now—at trade shows and onsite demonstrations, you’ve likely been exposed to augmented reality. This technology will be a key feature in the near future for training new team members and diagnosing and troubleshooting issues. Soon, technicians will be able to “see” the exact location for a compounding issue, determine the best strat-
egies for fixing it, and bring up detailed instructions and even safety warnings mounted on live camera images, all helping minimize downtime.
Not sure where to start? Your production team has real-world experience to tell you, if you’ll listen. Enlisting outside expertise and a second set of eyes will lend valuable insight as well as a clear path forward, including leveraging the greater pellet ecosystem, as we’ve designed and implemented in many systems and seen work.
The ENplus certification platform could pass 14.5 million metric tons in 2024. BY DOBROMIR
YANKOV
The world-leading certification scheme for wood pellet quality, ENplus, has certified over 13.6 million metric tons (mmt) of wood pellets in 2023. The volume is similar to the previous two years, which is a direct result of the challenges in the pellet market for the period of 2021- '23. The increase of pellet price, supply chain disruptions and the sudden drop in the sales of pellet appliances shook confidence in the market.
Nonetheless, the uncertainty seems to be over, with current estimates foreseeing
growth to over 14.5 mmt of wood pellets to be certified by the certification scheme this year (as a result of the figures reported by the certified companies).
Germany remains the country with largest certified production of almost 3.7 mmt of ENplus-certified pellets produced in 2023. The runner-up is Austria, which increased its annual certified production by 100,000 mt to more than 1.6 mmt. France comes in third, followed closely by Spain in the fourth place. The top five list of countries with the largest
certified pellet output for 2023 is completed by Belgium, with almost 600,000 mt of certified pellets.
As of May 2024, the country with the most ENplus-certified pellet producers is Poland, where the market seems to embrace the certification more than ever. Despite the war in Ukraine, the country is another example of increasing numbers of newly issued certificates.
CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Pellet Mill Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
International Expansion
While the certification scheme continues to play a key role in Europe, it is expanding its impact worldwide. In the past few months, the number of pellet producers with an active certification in Brazil has increased to over 30. That led to the organization of the scheme’s first training in the country, dedicated to the quality managers of the certified companies.
Less than a year after joining the list of countries where the certification scheme is present, China already has eight certified pellet producers and one certified pellet trader, while Japan now has its first two certified pellet traders.
Appreciation from Pellet Consumers
To stay adapted to the market’s needs, the certification scheme regularly looks for feedback from pellet consumers. A recent survey analyzing the participation of over 200 stakeholders from 21 countries concluded that despite the challenges faced in past years, consumers plan to continue using pellets as their heating solution. That’s primarily because they are a cheaper heating option in comparison to solutions such as gas and electricity, but also because pellets are environmentally friendly.
Not surprisingly, the majority would choose a local producer or trader, as over 80% of the respondents value the proximity of the supplier to their home. The delivery service remains one of the important purchasing factors—three out of four consumers have their pellets delivered by the pellet trader or producer.
A total of 90% of the respondents who are aware of ENplus and what the scheme stands for share that they consider it important when purchasing pellets, which highlights its contribution to the development of the premium market.
Fraud Management Achievements
One of the scheme’s unique characteristics is the active fraud management that follows up on every misuse of the trademark. If consumers are misled about the
quality of their pellets, they might experience a severe negative impact on the maintenance and efficiency of their appliance; therefore, ENplus encourages anyone who suspects fraudulent use of the ENplus trademark to report it via our online form.
In 2023 alone, more than 150 fraud cases were solved, which led to a greater achievement—more than 1,100 fraud cases identified and solved in total. Additionally, the blacklist where all fraudulent entities are exposed to the public has also been updated and now includes over 320 companies that should not be trusted by pellet professionals and consumers.
The Good Examples
It’s not just bad market actors who receive special attention, but also those who lead by example. This year the scheme’s management put in the spotlight the companies
who were among the first to join, and have remained loyal for over a decade. Their inspirational stories, good practices and impact on the local economy are shared through a dedicated series that can be followed via the scheme’s website and digital communications channels. Among the participants are the first certified pellet producer in the Netherlands, Plospan Bio-Energy, who impress with their sustainability efforts; the first certified producer in Bulgaria, Pirin Pellet, who creates jobs for a local community in a rural area; and a Croatian pellet producer, Energy Pellets d.o.o., who puts extra effort in contributing to the Paris Agreement objectives.
Author: Dobromir Yankov Marketing Manager, Bioenergy Europe www.bioenergyeurope.org
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