The wood pellet industry is navigating an unparalleled phase shaped by multiple competing forces: an unusually warm winter for the western United States, shifting state and federal regulations, and evolving global policy and subsidy structures. At this year’s International Biomass Conference & Expo, held March 31 to April 2 in Nashville, Tennessee, Tim Portz, executive director at Pellet Fuels Institute, and Darrell Smith, president of the Advanced Woody Biomass Alliance, offered insights on where the industry stands in domestic and industrial manufacturing, and what it’s going to take to keep it moving forward.

A Tale of Two Winters
Portz opened with his observations of the 2024-25 winter season. The eastern U.S. ran colder than average, which is good news for an industry whose sales track tightly to accumulated cooler temperatures. The top two states for domestic pellet use—Pennsylvania and New York—had strong winter seasons. However, the western half of the U.S. did not. Sales in the west fell roughly 10% through November and continued to drop, with the conditions that drive pellet demand failing to materialize. Portz noted that to reach the 2 million-ton annual threshold the industry hit in 2019, 2020 and 2021, both coasts must be cold during the winter season or manufacturing numbers will likely be lackluster. So, production came in a little off and inventory landed sharply below the five-year average level, he said. This forced producers to work harder during the spring and summer months to close that gap, anticipating strong consumer demand during next season.

Wood pellets have held a competitive edge in the Northeast as the more stable and predictable heating option that Portz illustrated with price-per-BTU data showing pellets holding steady through both the Iranian conflict and the 2022 Ukrainian invasion, each of which sent heating oil prices sharply higher. But unfortunately, that value proposition isn’t without flaws. “Higher fossil fuel prices help us at retail, but electricity and natural gas are both inputs on the production side,” Portz said. It’s a Goldilocks problem: The conditions that make pellets look good to consumers can quietly divert producers.

This dynamic is being further complicated by surging electricity demand from data centers and AI infrastructure. Portz pointed to New York’s All-Electric Buildings Act, which prohibits natural gas in new residential buildings starting in 2026. The law was passed with electrification as its primary motive, but the current governor is now looking for ways to ease back out of it as power prices climb. Portz explained that this is the kind of policy reversal that could potentially open conversations for fuel-choice advocacy.

Navigating Federal Policies
The Pellet Fuels Institute’s federal agendas are running on two tracks simultaneously. On one end, the U.S. EPA’s review of New Source Performance Standards has raised concerns about a potential shift in how appliance emissions are tested. Any move toward intermittent duty cycle testing would be unfavorable for pellet appliances, and the Pellet Fuels Institute is watching it closely alongside partners in the patio and barbecue industry, Portz said.

On the other end, the Energy Choice Act, out of the House Energy Committee—now sponsored in the Senate by Jim Justice, R-W.V., would prohibit states from banning fuel types solely based on what they are: a direct counter to the All-Electric Buildings Act. Portz argued the original statute was written broadly enough to cover renewable heating fuels, and the industry is actively working to make that case, even as the EPA’s recent cancellation of the e-RINs program signaled that the regulatory environment isn’t moving in a straight line. “Policymakers don’t want to hear from me,” Portz said. “They want to hear from the people generating economic activity in their districts. That’s all of you.”

He closed his presentation with a familiar but pointed reminder: Wood pellets heat about 1% of American households, but the industry consumes roughly 60% of wood residuals produced nationally. Its activity in the forest products economy is far larger than its retail market share suggests.

New Name, More Inclusive Affiliation
Darrell Smith brought news of a significant organizational shift. The U.S. Industrial Pellet Association is now renamed as the Advanced Woody Biomass Alliance. The rebrand took most of the year, generating over 500 name suggestions and ultimately required flying about 30 members to Atlanta to break the deadlock, Smith said. AWBA displayed ChatGPT during the session, using it to generate the word “Alliance” to convey unity and reinforce a carbon-forward framing. “Woody Biomass” came from members who wanted the forestry roots to stay visible in the name. The rename was not for aesthetics; Smith describes it as a deliberate effort to broaden the membership tent by bringing in the full carbon ecosystem from sequestration companies and direct air capture operators to carbon credit buyers like Microsoft, none of which had an obvious path into the organization when it was called the U.S. Industrial Pellet Association. Since the rebrand, membership has already doubled to more than 50 members, Smith said. The Advanced Woody Biomass Alliance’s first annual conference under the new name will be held in Houston in October, chosen specifically for its concentration of carbon and energy companies.

On the industrial market side, Smith described a dual-track concept: defend Europe, build domestically. Five lobbying firms are working in Europe on issues including RED III and the EUDR, protecting markets where U.K. and EU biomass subsidies are beginning to shift. Simultaneously, Smith has been doing outreach to cement, lime and steel industries, the sectors where industrial pellets could displace coal. He informed attendees that he is readying his third presentation to the cement industry’s full membership.

The White House has been receptive, too; Smith said he’s made trips there twice in his first year, and that the administration asked the Advanced Woody Biomass Alliance for language in a pending trade bill. “When somebody asks you for language,” he said, “you know they’re taking you seriously.”

The Crucial Carbon Question
The Q&A brought to light the industry’s most persistent communications challenge—explaining why burning wood isn’t worse for the climate than burning coal. A forester from the Federation of Southern Cooperatives put it plainly—his organization has been defunded by groups over its support of biomass, and he fields carbon intensity question constantly. The most useful answer came from the floor: Coal releases CO2 that was locked away millions of years ago, and trees are sequestering carbon right now. So, as long as the forest is managed sustainably, the net atmospheric impact is zero or negative. The combustion isn’t the whole story; the sequestration happening simultaneously is what makes the math work. Portz added a layer to the challenge: Photographs of whole logs at pellet facilities have a way of collapsing a complex system into a single, misleading image. What those photos don’t show is that forests are planted at around 450 stems per acre with a target harvest of 100 to 125 trees. The other 300 were always going to be removed. They used to go to pulp and paper mills, but those mills are closing. The pellet industry is absorbing what’s left. “As soon as someone sees a whole tree, they think they understand the entire story,” Portz said. “The reality is much bigger than that.”

Looking Ahead
Both speakers closed on cautious optimism. The eastern U.S. is heading into a strong rebuild season. New domestic markets are starting to open. The Advanced Woody Biomass Alliance and Pellet Fuel Institute’s first joint Capitol Hill fly-in was set for May 13, which will be the first time both organizations will go to the Hill together under a single message about what woody biomass contributes to the American economy. All in all, the industry has a strong story, but there is a shortage of people willing to tell it.

“I’ve been in a lot of industries,” Smith added in closing. “The number of issues you have to deal with, compared to the size of your industry, is just out of control. We need all the help we can get.”

Author: Emma Auch
Map Data & Content Coordinator, BBI International

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