Averill H. Cook - Pellet fuels institute

BOIS ENERGIE 2000 March 30-April 2, 2000 Lons-le-Saunier, France Averill H. Cook President Pellet Fuels Institute Thank you for the opportunity to speak to you today on behalf of the Pellet Fuels Institute.

Twenty years ago, I had the opportunity to work in a small fishing village in the far northern reaches of Canada. Back then, it was only accessible by boat and cod and salmon were the community’s only industry. I lived with Jimmy Fitzpatrick, a disabled fisherman who had really only ventured by water from his town. He believed the reports of paved roads, trains, skyscrapers, and other modern day technologies. The one thing he did not believe was that mankind had landed on the moon.

Much of the same is true today about the potential opportunities that lie ahead for the biomass industry in North America. Over the founding 15 years of the pellet industry, little progress has been made to attract the needed technologies and confidence that can elevate its capacity to make an impact in the energy picture. Today, 750,000 tons of fuel pellets are produced in North America and there are 680,000 tons produced for the residential stove market with the balance going towards the industrial sector.

For the residential pellet sector, the industry is currently dependent on retail stove shops that provide other products to the rapidly growing hearth industry. These shops also sell wood, natural gas, LP gas, coal and oil space heating stoves. Even though the roots of the industry originated with wood, all indications are that any form of biomass including pellets currently represents no more than 12% of all solid fueled appliances. The number of manufacturers selling pellet appliances has decreased in the last number of years, some due to company merging. It is also clear that of this declining group of manufacturers, many are developing some advanced technologies that can help make a further impact in the energy world.

The recent dramatic increase in energy prices in North American has strengthened manufacturers confidence in pellet heating appliances. Consumers are once again returning to the stove shops asking for an alternative fuel that is different than fossil fuels. The retailers that have been skeptics of pellet-fueled appliances are now being forced to once again offer pellet appliances to consumers. At the industry’s recent trade show, many manufacturers reported a tremendous increase in orders for the new models being offered there.

Page Two In the commercial and industrial sector, little growth has taken place over the past ten years. The successful ventures have included cost avoidance benefits that have allowed an operation to continue. Examples of this operation are paper mills that are processing their waste into pellets to use as fuel. In some cases, companies are densifying their waste to reduce their transportation costs or disposal costs simply by reducing the volume going into the land fills. More companies have gone out of business trying to get into the business than have been successful. Up until now, knowledgeable people and technology have been the largest obstacle.

The Pellet Fuels Institute was formed in the United States 16 years ago as a trade association to promote the industry. It has survived largely through the dedication of some key industry individuals. Each year it initiates a promotional campaign throughout the U.S. and Canada that educates the general public. Magazines, newspapers, federal and local government agencies and officials are all targets. The Institute also provides promotional materials to its members and has a web site. All of this information is available to any members throughout the world. Because PFI’s annual budget for the campaign is so small, it is often difficult to determine what impact it has. In this year’s case, when energy prices skyrocketed the impact of the campaign is more visible across the industry as consumers pour into the stove shops looking for pellet appliances.

Throughout the world, the pellet industry is young. The people entering the market have been largely associated with the forest products and agricultural industries. So far it has not attracted large companies that see significant financial rewards. I believe over the coming years this situation will change. It takes time for any young industry to get a foothold and to attract new technologies. There are many skills required to be successful in this business. An understanding of the raw materials, the process required to break them down, the characteristics when they are densified are all essential ingredients for success.

We all can learn from the industry’s 16 years of experience in North America. Energy has been inexpensive and therefore appliance manufacturers have not been able to afford a dedicated effort on the pellet stoves. This has resulted in slow growth. The major avenue to get stoves into the marketplace has been stove shops and the percentage of stove shop owners that provided all aspects required to support the pellet-stove category has been very small. With energy being cheap and abundant in North America, stove shops have sought out the quickest sales without examining the long-term impact of that sale. Now with the current upswing in energy costs, the quick sale of a gas appliance is questioned.

My feeling is that as long as pellets are presented as an option with other biomass, the industry has a tremendous opportunity. It is my experience that through the continuing collaborative effort with the Pellet Fuels Institute, we can bring people together to support and grow the industry.

Today, we live in an international community and each one of us in the industry has to take it upon themselves to properly research any available technology that will lead to a successful venture. My friend Jimmy Fitzpatrick refused to believe that man had landed on the moon because he could not see beyond his isolated community. I am confident that our industry has a tremendous potential in the energy field, but it is critical that we

Page Three look beyond our immediate surroundings to utilize technologies that will ensure our industry’s success. Much of that success lies in the relationships we must develop in pursuing that success.

Again, thank you for the opportunity to speak to you today and I look forward to strengthening our relationship with ITEBE and other European organizations.