Markets to Be Wild

Over 250 delegates gathered near Jacksonville, Florida, in late July 2011 for the Pellet Fuels Institute (PFI) annual conference and expo. They were treated to stifling humidity, market updates, some technical tips, and fire safety updates.

Future global markets will belong to large-scale plants, according to Fram president Harold Arnold. Photo: Fram Renewable Fuels

Setting the tone on market forecasts was Fram Renewable Fuels’ president Harold Arnold. The bioenergy pioneer warned delegates to hold onto their hats in the coming decade, as fantastic growth coupled with swings in biomass flow will be the norm.

“The industry will see wild growth in the next 10 years,” Arnold concluded. “We’ll see a tripling of global demand, new capacity to try to keep pace, changes in the way business is done that we can’t even imagine today, and dramatic changes in the flow of fibre around the globe. Bioenergy is the wild west.”

He sees growth in global demand from today’s 15 million tonnes to 27.5 million tonnes in 2015 and 45 million tonnes by 2020. While current production is only at 50% of capacity, much of that unused capacity is at smaller plants serving localized markets. As a result, larger, strategically located pellet plants will need to be built to meet that rising bulk demand from European and Asian power generators.

Asia, specifically Korea and Japan, will require massive imports to meet aggressive co-firing requirements. “Korea in particular shows the kind of sharp growth that can happen when a government decides to support renewable energy.” He added that 5 to 6 million tonnes will need to be imported into Korea alone.

Still on markets, RISI bioenergy economist Seth Walker switched the spotlight to the UK. He noted that biomass investment has surged in both eastern and western Canada during the past quarter, while growth in the United States stalled during that same period.

The economist also noted that consumption of biomass in Europe continues to grow at a healthy pace, being led by the UK. “I was surprised to find that some 75% of the new demand for biomass coming out of Europe was based in the UK. They have some aggressive renewable energy targets, and we can expect to see significant growth in co-firing there in the coming five years.”

News was less positive concerning the stalled U.S. housing and lumber markets. With lumber production currently at just 50% of the 2005 peak, Walker believes that the sector has levelled off. However, the continuing grind in the U.S. housing market has led RISI to change its recovery timeline. Walker now expects that sector to hit the magical one million starts level in 2014, rather than RISI’s original prediction of 2012.

“The good news is that we expect a significant and strong recovery from that point, with 2005 levels being hit around 2015. For pellet producers who have managed to cope with the current greatly reduced supply of sawmill residuals, that means things only get better from here as far as supply goes.”

Turning technical
The program also included a healthy dose of technical content. Pellet expert Clyde Stearns, a wood products efficiency veteran who is currently helping pellet start-up Zilkha Biomass Energy build greenfield mills in the United States and Canada, treated delegates to a shopping list of design and operating tips to get the most production and best quality from their plants. In particular, he extolled the virtues of microchips, created by stationary chippers or the new generation of mobile horizontal grinders, which give the consistent size distribution typically seen in pulp chips, with 100% sizing less than 3/8 inch. Benefits include the relative ease of adjusting and measuring moisture content (MC), more consistent MC within and between chips, increased grinding capacity and drying efficiency, and an overall boost in plant production using the same equipment.

Stearns also discussed the benefits of adding more surge capacity at two key points in the production process: after the dryer and between the grinder and pelletizers. “If you have eight hours’ surge capacity after the dryer, the moisture content in the chips will completely equalize, which will really enhance the downstream process. That’s not practical, but even an hour will make a significant difference,” he said. About 30 to 60 minutes of storage time after the fine grinders will have a similar effect, he added. “The result of focusing on raw material – size distribution, variability, moisture – is a more stable operation. Overall, your pelleting process should become routine if you can supply a more consistent raw material. Often when there is an issue at the pelletizer, you’ll see a lot of people standing around it trying to solve the problem. They would likely be better off going back to the raw material and trying to improve that.”

Several speakers, including Stearns, discussed fire safety. Gord Murray, executive director of the Wood Pellet Association of Canada (WPAC), and Stephen Chaplin, director of training and program development for the BC Forest Safety Council, gave attendees a sneak peek at a new system being developed to promote and improve pellet mill safety.

“We have members who have been denied insurance,” Murray explained. “We have insurance providers simply getting out of the pellet insurance market. We’ve seen WCB [Worker’s Compensation Board] rates increase by 54% in just three years. It’s not sustainable.”

To combat this disturbing trend, WPAC has joined forces with the BC Forest Safety Council, a non-profit, industry-funded organization that started tackling timber harvesting safety after the disastrous fatality numbers in 2005.

The pellet program is in the fact-finding and consultation phase, with the goal of rolling out a SAFE Certification system similar to that developed for harvesting operations. That system has been credited with a 45% drop in incident rates and a 25% drop in WCB rates in the harvesting sector. Look for pilot audits this fall. “Our desire is to improve safety for pellet manufacturers across the industry,” Murray said in response to a question from a U.S.-based pellet manufacturer. “The system is in its early days, and we’re basing it on the BC Forest Safety Council model used for logging. We think it will transfer well to the pellet process, and when we’re done, we’ll have an audit system that fits any pellet mill. Once we do, we’d be delighted to help roll it out in other areas.”