Pellets at home
April 22, 2010
By Heather Hager
Don’t put all your eggs in one basket.” How many times have we each heard and recited this old adage? And yet, this is the situation confronting the Canadian wood pellet industry.
Don’t put all your eggs in one basket.” How many times have we each heard and recited this old adage? And yet, this is the situation confronting the Canadian wood pellet industry. The Wood Pellet Association of Canada indicates that we produce about 1.4 million tonnes of pellets. Of this, 1.3 million tonnes is exported, mainly to Europe. That’s a whopping 93% that’s exported, leaving a mere 7% that’s used domestically.
Without a magic crystal ball, we can’t know for sure what the future of wood pellet exports will look like. New pellet plants are springing up almost monthly, and more countries are expanding into the pellet business: Brazil and New Zealand, to name a couple. The majority of these new pellet plants are also aiming to supply Europe’s demand for pellets. Will competitive supply outstrip foreign demand? Will there be a surplus of pellet makers that can get pellets to the buyers cheaper than Canada can by decreasing the transport distance or the material and labour costs? Will coal plants be phased out altogether, making this pellet market obsolete, with energy generated more cheaply from raw biomass? What about losing market share to wind, solar, and geothermal energy, which are becoming ever more popular options?
Rather than relying so wholly on exports, the Canadian pellet industry needs to create new market diversity to increase its long-term stability. Our entire domestic pellet consumption is less than the total production from one of our larger plants. In the central Canadian provinces, however, there is little supply of local pellets because there are almost no pellet plants. This breeds reluctance for consumers and business owners to convert to pellets, even if it’s cheaper energy. In areas where pellets are readily available, there is often little incentive to switch to a pellet appliance because of the high installation cost, particularly if there’s already a functioning system in place.
Expanding the domestic markets for industrial, commercial, and household uses can only benefit our wood pellet industry. But, numerous challenges need addressing for domestic solid biomass markets to grow. Some of the requirements are:
- a strong lobby for policies that create incentives to use renewable pellet energy, including: tax credits and subsidies to install pellet appliances, an equitable share of the incentives that go to other forms of renewable energy, and fossil carbon penalties that make it both environmentally and economically responsible to decrease our reliance on fossil fuels;
- reliable, modern storage and bulk delivery infrastructure to increase the ease and efficiency of energy delivery;
- an established, well-marketed group of domestic and commercial heating professionals to install and service pellet appliances; and
- marketing and public education programs to get the average builder and consumer thinking about pellets.
All that’s needed is a strong group of entrepreneurs to step up and get the ball rolling. It only remains to be seen who that will be.
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