Fibre access is main issue at WPAC AGM

November 19, 2013, Vancouver, B.C. – The future of Canada’s
pellet industry looks very bright, but only if access to sustainable fibre can
be established.

That was the overall sentiment expressed by experts from
across the North American and European wood pellet markets at the sold-out Wood Pellet
Association of Canada’s (WPAC) conference and AGM in Vancouver.

WPAC executive director Gord Murray has been a long-time
advocate for creating a long-term plan for sustainable
fibre resources in B.C. During his opening presentation, he once again spoke to the
need fibre security for the wood pellet sector in the province, stating that it
was the number one priority of WPAC for the upcoming year.

That sentiment spread to presentations from other provinces,
starting with André Bédard of Granules LG in St-Félicien, Quebec. Owners of two
pellet plants in Quebec, the company has the capacity and desire to produce
200,000 tonnes of pellets per year. The company has worked hard in the past few
years to establish European markets for their pellets, but face an unsecure
fibre supply in that province as well. With pellet production in Ontario rapidly
expanding across the next few years, securing fibre in Quebec will be key if
Granules hopes to compete for contracts with European buyers looking to Eastern
Canada.Logistics is also a challenge for northern producers like Granules LG.

In Nova Scotia, the rise of Port Hawkesbury Power and a limited volume of sawmill residues make fibre security difficult for the recently re-started Scotia Atlantic Biomass. The former
Eligna site is now producing pellets for export to European companies, but its ability to grow from the current production capacity will depend primarily on
the availability of quality fibre from within the province.

According to Dr. William Strauss, president of FutureMetrics, fibre security and location will be
vital for the expansion of the pellet market in Canada in the wake of global
expansion of the industry. Strauss estimates that global pellet consumption is
expected to rise by 22 million tonnes by 2020. Two pellet power plants in the
U.K. alone, Drax and Eggsborough, represent a need for 10 million tonnes per
year alone, with expansion of the Drax capacity possible within that same
timeframe.

But Strauss reminded the crowd that one key to
sustainability in the pellet sector is the renewability of the fibre supply. That
means that annual harvest volumes cannot exceed annual growth volumes over the landscape, or else the industry loses its sustainability. "As long as we're living off the interest, we're fine," he said.

The future of the Canadian pellet industry, and the
expansion of the industry in the coming years, will depend on the work done in
the next few years in securing a reliable and sustainable fibre supply in Canada's pellet producing regions.