Look East, Way East

More than 200 delegates attended the Pellet Fuels Institute (PFI) annual conference and expo held at the MGM Grand at Foxwoods over two days in Connecticut to take in a variety of presentations on the pellet industry.

Stephen Faehner of American Wood Fibers spoke at the PFI Conference about his pellet plant’s recent fire safety review.  Photo: Rashid Shakir

Day one was highlighted by a presentation by Seth Walker of RISI, who provided an outlook for the pellet fuels industry and told the audience that most of this growth will come from the growth of the industrial export market.

He predicted that by 2017 the North American wood pellet industry will be exporting more than 10 million tonnes, with nearly half of that coming from Canada.

Walker said that 1.2 million tonnes were exported from B.C. in 2011 and noted the industry is trying to figure out if it can utilize the beetle kill stands for production. Walker said many believe that it’s not cost-effective or sustainable in the long term and a lot will depend on demand from the Asian market.

Wood pellet exports from eastern Canada were 100,000 tonnes, according to WPAC, said Walker and they are expected to increase, especially to the European Union. Walker noted that the region has a fibre availability advantage, but not a price advantage.

When is comes to export costs, Walker said that B.C. has the advantage in terms of wood cost, but when is comes to ocean freight costs, the U.S. south pays significantly less.

He also noted that there is potential growth in the export market to Asia, specifically Japan and South Korea. The Japanese government is mandating an increase in the use of renewable energy and this could help increase the market for B.C. wood pellets. According to Walker, 5% of Japan’s coal capacity equals 6.5 million tonnes of wood pellets.

His predictions for the European export market were not so rosy and he said the continued weakening of the euro will further tighten margins for the pellet trade.

Speaking about inventories, Walker noted the fact that, according to their latest survey, inventory levels were 50% higher in June 2012 compared to June 2011. This was mostly due to a warm winter, but it is something to monitor down the line if it persists.

Social media
Promoting the wood pellet industry and reaching customers is about increasing value and letting people know about it, a group of experts told the audience in another highlight of the program.

In a session titled “Marketing Strategies for the promotion of the industry: determining and reaching target audiences” several speakers discussed how to use social media as well as getting value from the wood pellet product by increasing product performance during production, while at the same time decreasing production costs.

John Nelson, of BBI International, told the audience that social media is something “you need to be doing,” but added, “remember, it’s just one tool in your tool belt.”

However, according to an informal survey he conducted prior to the event, not everyone is there yet. A check of conference attendees by Nelson revealed that only 47% have a LinkedIn account.

That’s something that has to change, he said, as social media is trending up, while other means of marketing communication, such as e-mail, are headed in the other direction.

“Where are people online? I need to be there,” Nelson said.

He shared five social media tactics with conference attendees, including the need to combine content marketing with a social media strategy, using Q&A forums to get known as an expert in your field and leveraging your customers’ connections on LinkedIn by joining groups.

The use of video was also touched upon by Nelson, who emphasized its importance by noting that a video is 50 times more likely than a text page on the same topic to appear on Google’s first page of search results. Michael Holloway of Certified Labs told the conference that value comes from production and product – “they’re one and the same.”

He said high performance and low cost equals value. And for wood pellet producers that means they must remain consistent in performance or quality of their product, with things such as density, size and percentage of water content. Producers must also have “recognized value” in customers’ eyes, for such things as lower emissions.

Holloway also touted social media, telling attendees to “promote your value.”

“If you change your company, you can change your industry.”

Wood pellet exports
In his presentation on day two as part of a series on developments in international wood pellet markets, Gordon Murray, executive director of the Wood Pellet Association of Canada, said there is the potential for the wood pellet export market to the European Union to grow by 300% by 2020.

Murray noted that if just 15% of the coal currently used was replaced, it would mean a market of 200 million tonnes of wood pellets annually. This growth could come, he said, from the fact that only five of 27 member states are currently co-firing.

The main markets in Europe for North American pellets remain the U.K., along with Belgium and the Netherlands. Future growth outside of Europe will come from Asia, particularly Japan, which has recently introduced a generous feed-in tariff for renewable electricity generation.

Despite recent hype about the South Korean market, Murray told the audience that he’s not sure when it will open up, although he was optimistic that four million tonnes of wood pellets could be exported by 2020.

Interestingly, Murray noted that for the first time the U.S. has surpassed Canada in the export of pellets to Europe, according to data from the first six months of 2012.

Prices for wood pellets are currently higher in the U.S. than in Canada, said Murray, most likely due to higher shipping costs in this country.

Murray also updated attendees on the status of the Tilbury plant in the U.K., which suffered a devastating fire earlier this year, affecting the export market, since it was expected to have used 2.5 million tonnes over the last 18 months. Murray said it was hoped the plant would be back on line in August.

There are challenges ahead, particularly recent efforts to discredit biomass as being dirtier than coal.

“The wood pellet industry exists because bioenergy is carbon neutral,” said Murray, and “regardless of facts, if society comes to disbelieve that, then our industry will be in grave jeopardy.

“We need to counter misinformation and support positive information campaigns.”

Murray said WPAC is working on a project to research biomass emissions that will be scientifically peer reviewed and should be released later this year. Carbon Debt Project participants include: WPAC, USIPA, European Pellet Association, the Danish Energy Association, along with Drax, Electrabel, RWE, EON and Vattenfall.