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Seizing Opportunity in South Korea

By Anna Simet | August 22, 2014

As my colleague Tim Portz pointed out in his blog earlier this week, there’s been a lot of activity in the North American wood pellet sector over the last couple of weeks. We’ve done our best to stay on top of things, but frankly, our entire staff would be writing 24/7 if we were to cover it all.

Amongst the stories I wrote and read during that time—and in conversations had with various industry members—one thing stuck out, and that is repeated mentions of opportunities in South Korea.

Examples?

A producer who, at one point, said exports wouldn’t pencil out for his company, said he’s now shipping product to South Korea.

In Viridis Energy’s quarterly earnings call, CEO Chris Robertson said sales to South Korea are reducing its dependence on U.K. consumption—the company actually invested in bulk container loading equipment specifically for South Korean customers—and that demand is continuing to build in the country. 

Another colleague of mine, news editor Erin Voegele, reported that Kleangas Energy Technologies Inc. announced a definitive stock purchase agreement to acquire a company in Wisconsin that owns a 15,000 metric ton pellet production facility, and the company’s CEO said the company has been primarily active in the South Korean market.

The operations manager of a 160,000-ton wood pellet plant under development near Mission, British Columbia, said the company will produce wood pellets for export into industrial markets in South Korea and other Asian markets. 

Those examples just occurred in the past two weeks.

So what’s driving this? South Korea’s renewable portfolio standard for South Korea became effective in 2012 with a beginning renewable electricity quota of two percent of total generation for larger generators, rising to 10 percent in 2022, and most are looking at cofiring with wood pellets to satisfy their renewable quotas. Recently, the compliance date was pushed back to 2024, as utilities are, reportedly, already behind in meeting goals.

Of course, it isn’t just South Korea that is drawing increasing imports from North America—opportunities in several other Asian countries are continuing to grow as cofiring expands to meeting renewable requirements and improve air quality.

It will be very interesting to see what results from completion of our annual North American pellet production map this spring, for which we check in directly with every producer to update a variety of different data points, including if and where they are planning to export.

My guess is that this round, we’ll be hearing a lot more about South Korea and Asia.

Stay tuned.

 

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