From the Editor: Future pellet markets

The WPAC Conference and AGM in Vancouver provided an incredible amount of optimism for a Canadian pellet market looking to further establish itself as a global producer.

The strongest market for Canadian pellets remains the United Kingdom. The U.K. Back Biomass Program, which was supported by both WPAC and the U.S. Industrial Pellet Association (USIPA), has helped to establish a strong demand for biomass power. England’s expansion plans could see its demand increase upwards of 20 million tonnes of pellets, including an expected 10 million tonne demand from Drax and Eggborough alone, part or all of which could be provided by Canadian producers if they are able to compete with the U.S. southeast.

The Netherlands and Denmark are key European markets to watch. Like the Danish government, which is currently revising its energy plan, the Netherlands has worked with both WPAC and USIPA to explore adding wood pellets to its energy mix.

Wood pellet demands may continue to expand in southern European countries, particularly in Italy. Canada has already seen solid exports to that country, but speakers at the WPAC Conference suggested there is an appetite for increased exports to supply the pellet market for residential heating.

There remains the possibility of expansion of pellet markets to countries in southeast Asia. Japan is the third-highest import market for Canadian wood pellets, and there have been limited exports to Korea. Although both countries look to regional producers of wood pellets before importing from Canada, significant growth in demand in either market could mean a boom for Canadian producers.

That would be a welcome sight as the European Union works out its sustainability criteria and Canada continues the slow expansion of the domestic market. If the EU is successful in making wood pellets a strong factor in sustainable energy initiatives moving forward, then the demand from European countries could cause a need for exponential growth of wood pellet supply in North America. Also, it is tough to predict if the Canadian pellet demand will continue its snail-like pace, or if demand can be pushed higher, faster.

The continuing challenge for pellet producers in Canada, regardless of international demand for wood pellets, is fibre. Fibre access continues to be a struggle nationwide as forest residues often remain in the forest and fibre supply from sawmills isn’t enough to meet demand. In B.C. alone, it is estimated that there could be as much as eight billion cubic metres of unutilized biomass. Capitalizing on a portion of that volume would allow for significant industry growth for the wood pellet industry.

There is no question that a series of challenges could interfere with the expansion of Canada’s wood pellet market. But now more than ever it seems there is no short supply of potential export markets for anyone that can supply wood pellets at today’s prices. That’s one good sign for the continued development of the wood pellet industry.

Andrew Macklin, associate editor
amacklin@annexweb.com