NEWS ROUNDUP

Pellet News Roundup

Following a public consultation, on Oct. 25, the U.K. Department for Business, Energy and Industrial Strategy announced it will implement a 12-month suspension of certain fuel quality requirements for domestic and nondomestic Renewable Heat Incentive scheme participants using wood pellets, in order to help ensure adequate fuel supplies this winter

The BEIS estimates that up to 40% of the ENplus pellets used in the U.K are imported from Russia and Belarus. The agency said that the ban of wood pellets imported from these countries is likely to impact the availability and price of wood pellets in the coming months and through the winter of 2022-’23. Most consultation respondents expressed overall support for a temporary suspension of the fuel quality requirement for RHI participants using wood pellets, the BEIS said, and while the use of non-ENplus pellets could have short-term negative impact on fuel efficiency and air quality in some cases, those impacts have been deemed as acceptable so that homes heated by biomass do not experience significant price rises or a lack of fuel supply this winter. The BEIS noted the 12-month suspension could be extended in the future.

Drax Group plc released financial and operational results for the first half of 2022, reporting significant increases in both operating profit and wood pellet production when compared to the same six-month period of 2021. Drax produced approximately 2 million metric tons (MT) of wood pellets during the first half of this year and shipped 2.4 million MT. The company produced and shipped 1.3 million MT of pellets during the same period of 2021. An estimated 1 million MT of wood pellets were sold to third parties during the first half of 2022, up from 400,000 MT during the same period of last year. According to Drax, its cost to produce wood pellets and transfer them to a port in North America for onward transit was at $146 per ton during the first half of 2022, up 2% when compared to last year. The company primarily attributed the increase to the inflationary impact on utilities and bunker fuel.

The U.S. exported 880,876 MT of wood pellets in August, up from 649,185 MT the previous month and 647,922 MT in August 2021, according to data released by the USDA Foreign Agricultural Service on Oct. 5. The U.S. exported wood pellets to approximately 20 countries in August. The U.K. was the top destination for U.S. wood pellet exports at 484,637 MT, followed by the Netherlands at 243,397 MT and Belgium-Luxembourg at 49,500 MT. The value of U.S. wood pellet exports reached $150.74 million in August, up from both $119.89 million in July and $90.43 million in August of last year.

Total U.S. wood pellet exports for the first eight months of 2022 reached 5.85 million MT at a value of $1 billion, compared to 4.77 million MT exported during the same period of 2021 at a value of $687.13 million.

The U.S. Energy Information Administration recently released the September edition of its Monthly Densified Biomass Fuels Report, which indicates 80 operating manufacturers produced approximately 930,000 tons of densified biomass fuel in June, with sales reaching 1.07 million tons. Combined production capacity was approximately 13.27 million tons per year. Collectively, producers had the equivalent of 2,479 full-time employees.

Respondents purchased 2.16 million tons of raw biomass feedstock in June, produced 930,000 tons of densified biomass fuel and sold 1.07 million tons of densified biomass fuel. Production included 138,544 tons of heating pellets and 800,845 tons of utility pellets. Domestic sales of densified biomass fuel in June reached 140,340 tons at an average price of $203.48 per ton. Exports in June reached 933,554 tons at an average price of $192.49 per ton. Inventories of premium/standard pellets increased to 310,998 tons in June, up from 300,511 tons in May. Inventories of utility pellets fell to 352,243 tons in June, down from 393,803 tons in May.

In late October, FutureMetrics published a new white paper that focuses on how reduced pellet supplies in Western Europe and the U.K.—resulting from sanctions on Russia—has produced a supply shock that has vastly increased prices. According to the consulting firm, global pellet supply has historically been, on average, sufficient to meet demand. Local seasonal shortages have occurred during unusually long, cold winters, but aggregate supply has been sufficient to meet aggregate demand. With Russian sanctions now in place, a significant portion of the 3.5 million metric tons of wood pellets exported from these regions last year are no longer entering European markets. As a result, prices for pellet fuel have risen to previously unseen levels in every country that uses pellet fuels for heat and power generation. The white paper cites data indicating that industrial pellets are trading on the spot market at more than $453 per metric ton. The price for heating pellets has risen even higher in many European markets in recent months, with the German bulk price surpassing $760 per ton earlier this fall.

‘Na Aksa Gyilak’yoo School in Terrace, British Columbia, received a boost to its educational initiatives with a $2,000 contribution from the Wood Pellet Association of Canada, Skeena Bioenergy and the Prince Rupert Port Authority. The announcement was made at a luncheon hosted by the Kitsumkalum Economic Development Group. It was the last stop in a series of events that began with WPAC’s annual conference in Vancouver, then onto Prince Rupert and ending in Terrace, with a tour of the Nation’s local forest operations and logistics park.

An independent analysis by Oxford Economics shows that last year, renewable energy leader Drax contributed approximately $744.6 million toward the Canadian economy and supported 10,400 jobs across the U.K. The analysis measured the economic impact of Drax Group’s Canadian operations, which includes 10 wood pellet plants across British Columbia and Alberta. Drax spent $548 million with Canadian suppliers last year, with more than half of this total (58%) spent with businesses located in British Columbia. A further 13% was spent with businesses in Alberta and 12% with firms in Montreal.

PHOTO: ENVIVA INC.

Enviva Inc. held a ceremonial ribbon cutting at its recently constructed wood pellet manufacturing facility in George County, Mississippi. The Lucedale plant is Enviva’s second operating plant in the state, and the first plant in its newly formed Pascagoula cluster. The Lucedale plant began its production ramp-up at the beginning of 2022, with a goal of reaching an annual permitted production capacity of 750,000 metric tons per year. Construction of the plant represented an investment of more than $215 million in the county, according to Enviva. The company said now that the plant is fully operational, it has hired approximately 90 full-time employees for the facility, which supports nearly 300 jobs across the George County community.