Canadian Wood Pellet Industry Update
Canadian
Wood
Pellet
Industry
Update
UNB
Fredericton,
NB
Gordon
Murray,
Execu6ve
Director
Miles
Wright
President
February
22,
2011
Outline
• • • • • • •
Wood Pellets Canadian pellet produc6on Exis6ng markets Distribu6on North American market situa6on New market focus areas What’s next Wood Pellet Associa6on of Canada
2
Fuel Pellets • Made from compressed wood or plant fibre. • Lignin binds wood fibre. No adhesives needed. • Made from sawdust, shavings, round wood, dead wood, crops etc. Wood Pellet Associa6on of Canada
3
Pellet Manufacturing Process
Wood Pellet Associa6on of Canada
4
Pellets used for: • • • •
Fuel for heat, cooling, electricity Residen6al – stoves and furnaces Commercial buildings, district hea6ng/cooling Large scale power produc6on – co‐fired with coal or in biomass power plants
Avedore Power Plant Copenhagen
Wood Pellet Associa6on of Canada
5
Es6mated Canadian pellet mill capacity as of January 1, 2011 – m/tonnes
Western Canada Eastern Canada All of Canada
Plants 16
Average Largest Total 118,000 400,000 1,889,000
% 71%
18
43,000
120,000
29%
34
78,000
400,000 2,663,000
Wood Pellet Associa6on of Canada
774,000
100%
6
Global pellet produc6on growth since 2000
Source: FAO & UNECE
Wood Pellet Associa6on of Canada
7
Canadian pellet shipments – m/tonnes 2010 Europe
1,350,000 1,750,000
North America Japan
2011F
90,000
90,000
60,000 100,000 1,500,000 1,990,000
*es6mates only – Sta6s6cs Canada does not track wood pellets as a separate product and producers are reluctant to share data
Wood Pellet Associa6on of Canada
8
Current overseas Pellet Distribu6on Chain • • • • • •
Pellets loaded on rail cars or truck at plant site West: Rail to Ports of Vancouver or Prince Rupert Central: Several ports on St. Lawrence Seaway East: Truck to Ports of Belledune NB, or Halifax NS Unloading and temporary storage at terminals. Pellets loaded on bulk carrier’s or containers.
Wood Pellet Associa6on of Canada
9
Canadian pellet shipping routes
Wood Pellet Associa6on of Canada
10
European markets for Canadian pellets • • • • • •
Belgium – power genera6on The Netherlands – power genera6on United Kingdom – power genera6on Denmark – power/district hea6ng Italy – residen6al hea6ng Canadian market share in Europe ~ 15%
Wood Pellet Associa6on of Canada
11
European Pellet Consump6on
1000 tonnes
Source: proPellets Austria Wood Pellet Associa6on of Canada
12
North American Market Situa6on • GHG reduc6on is not a top poli6cal priority • Lifle poli6cal or industry support for biomass energy in US or Canada • Pellets can’t compete with low natural gas and coal prices as a direct replacement for these fuels • Pellets are most cost compe66ve in areas not served by natural gas
Wood Pellet Associa6on of Canada
13
Market focus Republic of Korea • • • • •
Rapid economic growth World’s 10th largest energy consumer 5th largest crude oil importer 2nd largest coal importer 64% of electricity is thermal Wood Pellet Associa6on of Canada
14
Electricity genera6on by type
Wood Pellet Associa6on of Canada
15
Korean Coal Consump6on is Growing
Wood Pellet Associa6on of Canada
16
Korean coal consump6on (2008) Power genera6on: 64 million tons Steel mills: 58 million tons Total: 122 million tons Co‐firing 5% with wood pellets would require 6 million tons of wood pellets (assuming 1.5 tons pellets per ton of coal) • Equals 3 6mes Canada’s current capacity • • • •
Wood Pellet Associa6on of Canada
17
Korean GHG strategy • Nov 2009: announced 30% reduc6on from projected level by 2020 • Sep 2010: announced 374 companies must meet government GHG reduc6on targets • RPS for power genera6on: 2012 – 2% • Increase ½% annually un6l 2020 – 10% Wood Pellet Associa6on of Canada
18
Other new markets • • • • •
India Africa Middle East Mexico China
Wood Pellet Associa6on of Canada
19
Next stages of pellet development Global standards for pellet quality. Indexing of fuel pellets. Torrefied pellet development Development of the North American Industrial Market. • Domes6c bulk market expansion, and consumer home delivery. • • • •
Wood Pellet Associa6on of Canada
20
Thank you!
Wood Pellet Associa6on of Canada
21
Outline
• • • • • • •
Wood Pellets Canadian pellet produc6on Exis6ng markets Distribu6on North American market situa6on New market focus areas What’s next Wood Pellet Associa6on of Canada
2
Fuel Pellets • Made from compressed wood or plant fibre. • Lignin binds wood fibre. No adhesives needed. • Made from sawdust, shavings, round wood, dead wood, crops etc. Wood Pellet Associa6on of Canada
3
Pellet Manufacturing Process
Wood Pellet Associa6on of Canada
4
Pellets used for: • • • •
Fuel for heat, cooling, electricity Residen6al – stoves and furnaces Commercial buildings, district hea6ng/cooling Large scale power produc6on – co‐fired with coal or in biomass power plants
Avedore Power Plant Copenhagen
Wood Pellet Associa6on of Canada
5
Es6mated Canadian pellet mill capacity as of January 1, 2011 – m/tonnes
Western Canada Eastern Canada All of Canada
Plants 16
Average Largest Total 118,000 400,000 1,889,000
% 71%
18
43,000
120,000
29%
34
78,000
400,000 2,663,000
Wood Pellet Associa6on of Canada
774,000
100%
6
Global pellet produc6on growth since 2000
Source: FAO & UNECE
Wood Pellet Associa6on of Canada
7
Canadian pellet shipments – m/tonnes 2010 Europe
1,350,000 1,750,000
North America Japan
2011F
90,000
90,000
60,000 100,000 1,500,000 1,990,000
*es6mates only – Sta6s6cs Canada does not track wood pellets as a separate product and producers are reluctant to share data
Wood Pellet Associa6on of Canada
8
Current overseas Pellet Distribu6on Chain • • • • • •
Pellets loaded on rail cars or truck at plant site West: Rail to Ports of Vancouver or Prince Rupert Central: Several ports on St. Lawrence Seaway East: Truck to Ports of Belledune NB, or Halifax NS Unloading and temporary storage at terminals. Pellets loaded on bulk carrier’s or containers.
Wood Pellet Associa6on of Canada
9
Canadian pellet shipping routes
Wood Pellet Associa6on of Canada
10
European markets for Canadian pellets • • • • • •
Belgium – power genera6on The Netherlands – power genera6on United Kingdom – power genera6on Denmark – power/district hea6ng Italy – residen6al hea6ng Canadian market share in Europe ~ 15%
Wood Pellet Associa6on of Canada
11
European Pellet Consump6on
1000 tonnes
Source: proPellets Austria Wood Pellet Associa6on of Canada
12
North American Market Situa6on • GHG reduc6on is not a top poli6cal priority • Lifle poli6cal or industry support for biomass energy in US or Canada • Pellets can’t compete with low natural gas and coal prices as a direct replacement for these fuels • Pellets are most cost compe66ve in areas not served by natural gas
Wood Pellet Associa6on of Canada
13
Market focus Republic of Korea • • • • •
Rapid economic growth World’s 10th largest energy consumer 5th largest crude oil importer 2nd largest coal importer 64% of electricity is thermal Wood Pellet Associa6on of Canada
14
Electricity genera6on by type
Wood Pellet Associa6on of Canada
15
Korean Coal Consump6on is Growing
Wood Pellet Associa6on of Canada
16
Korean coal consump6on (2008) Power genera6on: 64 million tons Steel mills: 58 million tons Total: 122 million tons Co‐firing 5% with wood pellets would require 6 million tons of wood pellets (assuming 1.5 tons pellets per ton of coal) • Equals 3 6mes Canada’s current capacity • • • •
Wood Pellet Associa6on of Canada
17
Korean GHG strategy • Nov 2009: announced 30% reduc6on from projected level by 2020 • Sep 2010: announced 374 companies must meet government GHG reduc6on targets • RPS for power genera6on: 2012 – 2% • Increase ½% annually un6l 2020 – 10% Wood Pellet Associa6on of Canada
18
Other new markets • • • • •
India Africa Middle East Mexico China
Wood Pellet Associa6on of Canada
19
Next stages of pellet development Global standards for pellet quality. Indexing of fuel pellets. Torrefied pellet development Development of the North American Industrial Market. • Domes6c bulk market expansion, and consumer home delivery. • • • •
Wood Pellet Associa6on of Canada
20
Thank you!
Wood Pellet Associa6on of Canada
21
