In early October, the U.S. Industrial Pellet Association&rsquo;s annual Exporting Pellets Conference returned to Miami after a pandemic-induced, two-year hiatus. This year was different than years past, with topics of discussion broadening to much more than wood pellets for heat and power. In fact, I moderated a panel that focused on sustainably sourcing and transporting all kinds of biomass for the very fast-growing renewable transportation fuels market, and what was discussed during that hour was just the tip of the iceberg. The global wood pellet industry is evolving and is poised to play a critical role in global decarbonization efforts. Find a summary of the event&rsquo;s opening session, as well as photos, on our page-12 event review, &ldquo;Mission Biomass Mobilization.&rdquo;
 Appropriately, sustainability was an underlining theme at the conference, and on that note, be sure to check out &ldquo;Affirming Sustainability,&rdquo; on page 18. In the story, staff writer Katie Schroeder details the results of a British Columbia fiber-sourcing study commissioned by the Wood Pellet Association of Canada. The province is home to roughly 65% of the country&rsquo;s wood pellet production, with producers there manufacturing upward of 2 million metric tons annually.&nbsp; One of the main findings of the study was that 85% of the biomass material used for wood pellet production is mill residue, with 15% being forest residue. Not only do these plants provide an outlet for this waste material, but the wood pellet industry has a huge impact on the provincial economy&mdash;check out the story to learn more. Jumping to our contribution articles, both are focused on one of the subthemes of this issue, which is project management. There is some solid, real world experience-based advice in these stories, which emphasize just how crucial good planning and project oversight are. A good summarizing point for page-22 &ldquo;Start Well, End Well,&rdquo; by Joel Dulin, Biomass Engineering &amp; Equipment: &ldquo;Getting a project done right, on budget, and on time requires the project managers to develop it fully from the outset, a feat that requires good development even before the project starts.&rdquo; &nbsp;
 On a different note, we have been closely following what&rsquo;s happening in Europe (on top of the evolving renewable energy directive) in regard to an anticipated pellet shortage. Recently, the U.K. Department of Business, Energy and Industrial Strategy announced it would temporarily suspend ENplus requirements for one year, as of now. The intentions behind this are to help ease challenges stemming from Russia&rsquo;s invasion of Ukraine, and this temporary rule change applies to both the domestic and nondomestic RHI schemes. While it won&rsquo;t eliminate the shortfall and surging prices (Europe imported more than 2 million tons of Russian wood pellets in 2021), it will allow for some producers that do not traditionally serve these markets to get a foot in the door and contribute to Europe&rsquo;s supply&mdash;at least for now. Adding insult to injury, there are widespread reports of wood pellet, firewood and other fuel scams occurring right now. Not only are consumers getting duped online, being enticed by much lower-than-average prices for product they never end up receiving, but scammers are impersonating wood pellet manufacturers and even copying websites. Buyers and sellers beware.
 Finally, we just closed the abstract submission portal for the International Biomass Conference &amp; Expo, which will be in Atlanta, Georgia, Feb. 28-March 2. The agenda is shaping up nicely, so be sure to be on the lookout. Pellet manufacturers get into the event for free&mdash;I hope to see you there. Author: Anna Simet Editor asimet@bbiinternational.com

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A Mashup of Industry Elements

As we close out November with producing the final Pellet Mill Magazine of 2021, I decided to look back to see what we were reporting in the same edition in 2020. One of the features reviewed the virtual Pellet Fuels Institute Annal Conference, which had quite a bit of focus on initial implications of the pandemic. One of the main challenges at the time was simply sustaining operations, and most pellet producers were able to do so with minimal interruptions, though staffing challenges have persisted. One year later and those same challenges remain, on top of inflation and ballooning commodity prices, as well as supply chain interruptions. As such, I decided to conduct a survey to gauge the degree to which producers were being affected, and provide some kind of basis for comparison. While I didn&rsquo;t get quite as many respondents as I had hoped to, I think the sampling is a good representation of where things are at&mdash;10 different heating pellet producer companies responded to questions about the prices of commodities essential to their operations, including pallets, grease and fiber, as well as other issues that are presenting challenges for some. &ldquo;Surveying Costs,&rdquo; page 12, shares the results of the survey. A sincere thank you to those who took the time to answer these questions. While the aforementioned feature is focused on the domestic wood pellet industry, our page-16 feature, &ldquo;Assessing the Global Supply Landscape,&rdquo; pivots to global markets. In it, you&rsquo;ll find commentary from two biomass consultants at Hawkins Wright who share insight about spot market prices and buying trends, soaring natural gas, carbon and power prices and implications on pellet consumers, as well as policy developments and other interesting market influences. Overall, it is expected to be a pretty tight market through the winter, especially so if the cold comes early or persists into spring. That said, as noted by Rachel Levinson, biomass research manager, lessons were learned during the last &ldquo;shortage&rdquo; that occurred a few years ago, so it is unlikely that utilities will find themselves in the same positions. Finally, we just sent the 2022 North American Pellet Producer Map to print. While there were considerably fewer projects under construction this year than last, it&rsquo;s not surprising given the circumstances. It will certainly be interesting to see what happens a year from now. Our goal is to ensure that data on the map is as accurate as possible, so please reach out with any additions, modifications or other changes. Author: Anna Simet Editor asimet@bbiinternational.com

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Commodities, Inflation and the Upcoming Heating Season

Wood pellet fuel produced from perpetually renewing sources is, and will be in the future, an essential component in the transition to a decarbonized future. This article primarily focuses on the power generation sector, but the role of pellet fuel in the heating markets should not be ignored. As Figure 1 shows, the heating pellet markets were larger than the industrial pellet markets until 2018. The use of pellet fuel for heating will continue to grow in many jurisdictions as coal, heating oil and eventually natural gas become disallowed carbon-emitting energy sources.&nbsp; But the wood pellet industry has sustainability boundaries that cannot be crossed.&nbsp; If it is to be recognized as a renewable energy source, it has to renew. &nbsp; Decarbonizing the Power Sector A pragmatic policy for lowering the CO2 intensity of the power generation sector with a transition to renewable energy must be tempered with the need to maintain reliability and stability in the delivery of electricity.&nbsp; Moving to increased renewable generation is more complicated than simply building lots of wind turbines and solar farms.&nbsp; But that is often the offered solution, with a reference to solving the intermittency and variability of wind and solar with battery or hydrogen storage. The future for power generation relying heavily on electricity generated from wind turbines and solar farms is a worthy goal that should define the destination.&nbsp; But deploying more wind turbines and solar farms will require massive energy storage at a scale that is orders of magnitude from where we are today.&nbsp; Grid-level energy storage sufficient to support the reliable supply of electricity in a decarbonized power sector without on-demand, so-called thermal generation is at least decades away.&nbsp; The transition to that goal will take a long time and require continued improvements in storage technology and density, and massive investments in capacity.&nbsp; A cornerstone strategy for maintaining grid reliability and on-demand, load-following, frequency-stabilizing generation during this long transition from where we are today to a generation portfolio that may not be dependent on the combustion of fuel is to do what is already being done in many nations. And that is using sustainably produced wood pellet fuel produced from renewing working forests to replace coal in utility power boilers. &nbsp; Figure 2 shows a recent week&rsquo;s generation mix in the United Kingdom. Note that the power produced in four 650-MW units at the Drax power station and the 420-MW Lynemouth station, which were converted to use 100% pellet fuel, satisfied nearly 9% of the total U.K. demand.&nbsp; Where the arrow is pointing, solar was not generating (nighttime) and there was very little wind. During that period, the Drax and Lynemouth stations produced nearly 14% of all the electricity used in the U.K., with carbon emissions nearly 90% lower than what would have been produced from coal. Using solid pellet fuel made from sustainable sources of woody biomass is not a novel idea. In 2021, about 23 million metric tons of industrial pellet fuel will be used as a highly carbon-beneficial substitute for coal in power generation. &nbsp; The strategy is proven as effective and economical in several nations. It is deployable now in existing coal-fueled power stations. There is no need to invest in new generation infrastructure, new interconnection infrastructure, or wait for continued improvements in energy storage capacity, efficiency and density.&nbsp; To be carbon beneficial, sustainability must be the foundation of the industrial pellet fuel sector. When it comes to management of the sources of woody biomass, there are sustainability boundaries that cannot be crossed. The foundational and absolutely necessary condition is that the net stock of carbon held in the forest landscape cannot be depleted by the harvesting rate exceeding the growth rate, by deforestation or improper land use change. &nbsp; &ldquo;Working forests&rdquo; is a term for those that are managed and grown to produce the raw materials for many industries. The primary industries are lumber and other building materials, furniture, flooring, paper, packaging and tissue. The production of these commodities and the management of the working forests for optimal productivity produces byproducts that are used in pellet manufacturing. Proving that the feedstock sources are sustainable, and thus, that the net carbon stocks in the forests are not being depleted, is the foundation of policy and rules in nations that use pellet fuel in place of coal for power generation, and is a simple but necessary condition. &nbsp; The Role of Policy Policy can protect the forest resources and their carbon stocks, supporting the energy transition to a decarbonized future. Strategies dependent on a constant supply of pellet fuel cannot be allowed to result in the depletion of forests. But neither can misinformation be allowed to bias policymaking. &nbsp; The harvest of a single mature or high-graded stand within a large, managed forest may allow for an emotionally compelling and narrowly focused photo implying that the forest is being wantonly destroyed.&nbsp; But that viewpoint is not supported by basic business sense.&nbsp; And it is not supported by the well-established and well-respected rigorous independent auditing that is necessary if the industrial wood pellet producers want to sell their 23 million metric tons of pellet fuel in 2021 into their markets. And it is also not supported by data showing that managed working forests have increasing stocks of sequestered carbon. If the goal of policy is to transition to a future in which CO2&nbsp; emissions are eliminated, then a key near- and medium-term component in that strategic, offramp plan should be to support the replacement of coal with highly carbon-beneficial pellet fuel.&nbsp; The strategy is elevated by carbon capture and storage combined with bioenergy (BECCS) from pellet fuel, which opens a pathway to significant negative CO2&nbsp; emissions while simultaneously generating the baseload or load-following power needed to compensate for the intermittency and variability of wind and solar power. BECCS also gives long and valuable life to coal power stations if they are converted to use pellet fuel, and subtracts CO2&nbsp; from the atmosphere. The only pathway to negative carbon emissions while producing electricity at utility scale is by replacing coal with pellet fuel and deploying BECCS.&nbsp; A rational, pragmatic and environmentally responsible strategy should ensure that the final regulations are supportive of the essential role that sustainably produced industrial wood pellets play on the off-ramp to a decarbonized future. Author: William Strauss President, FutureMetrics Williamstrauss@futuremetrics.com www.futuremetrics.com

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Using sustainably sourced wood pellet fuel in place of coal is an essential part of the low-carbon energy transition.

A Rational, Pragmatic Off-Ramp to Decarbonization

Higher production demands across all bulk handling segments require increased efficiency at the lowest cost of operation, in the safest and most effective manner possible. As conveyor systems become wider, faster and longer, more energy output and more controlled throughput will be needed. Add an increasingly stringent regulatory environment, and cost-conscious plant managers must closely review which new equipment and design options align with their long-term goals for the best return on investment. Safety at Higher Belt Speeds Safety is likely to become a new source of cost reduction. The percentage of processing facilities with a robust safety culture are likely to increase over the next 30 years to the point where it is the norm, not the exception. In most cases, with only a marginal adjustment to the belt speed, operators quickly discover unanticipated problems in existing equipment and workplace safety. These problems are commonly indicated by the larger volume of spillage, increased dust emissions, belt misalignment and more frequent equipment wear and failures. Higher volumes of cargo on the belt can produce more spillage and fugitive material around the system, which can pose a tripping hazard. According to the U.S. Occupational Safety and Health Administration, slips, trips and falls account for 15% of all workplace deaths and 25% of all workplace injury claims.&nbsp; Moreover, higher belt speeds make pinch and sheer points in the conveyor more deadly, as reaction times are drastically reduced when a worker gets clothing, a tool or a limb caught from incidental contact. The faster the belt, the quicker the belt wanders and the harder it is for a belt tracker to compensate, leading to spillage along the entire belt path. Caused by uncentered cargo, seized idlers or other reasons, the belt can rapidly come in contact with the mainframe, shredding the edge and potentially causing a friction fire. Beyond workplace safety consequences, the belt can convey a fire throughout the facility at extremely high speed. Another workplace hazard&mdash;one that is becoming progressively more regulated&mdash;is dust emissions. An increase in the volume of cargo means greater weight at higher belt speeds, causing more vibration on the system and leading to reduced air quality from dust. In addition, cleaning blade efficiency declines as volumes rise, causing more fugitive emissions during the belt&rsquo;s return. Abrasive particulates can foul rolling components and cause them to seize, raising the possibility of a friction fire and increasing maintenance costs and downtime. Further, lower air quality can result in fines and forced stoppages by inspectors. Modern Chute Design Wider and faster conveyors are being deployed to drive down the per-ton cost of conveyed material. Traditional troughed designs will likely remain a standard, but the push toward wider and higher-speed belts will require substantial development in more reliable components, such as idlers, impact beds and chutes. A major issue with most standard chute designs is that they are not engineered to manage escalating production demands. Bulk material unloading from a transfer chute onto a fast-moving belt can shift the flow of material in the chute, resulting in off-center loading, increasing fugitive material spillage and emitting dust well after leaving the settling zone. The result of off-center loading is mistracking and spillage around the system and walkways. Newer transfer chute designs aid in centering material onto the belt in a well-sealed environment that maximizes throughput, limits spillage, reduces fugitive dust and minimizes common workplace injury hazards. Rather than material falling with high impact directly onto the belt, the cargo&rsquo;s descent is controlled to promote belt health and extend the life of the impact bed and idlers by limiting the force of the cargo at the loading zone. Reduced turbulence is easier on the wear liner and skirting, and lowers the chance of fugitive material being caught between the skirt and belt, which can cause friction damage and belt fraying. Longer and taller than previous designs, modular stilling zones allow cargo time to settle, providing more space and time for air to slow down, so dust settles more completely. Modular designs easily accommodate future capacity modifications. An external wear liner can be changed from outside of the chute, rather than requiring dangerous chute entry as in previous designs. Chute covers with internal dust curtains control airflow down the length of the chute, allowing dust to agglomerate on the curtains and eventually fall back onto the belt in larger clumps. And dual skirt sealing systems have a primary and secondary sealing strip in a two-sided elastomer strip that helps prevent spillage and dust from escaping from the sides of the chute. Rethinking Belt Cleaning Faster belt speeds can also cause higher operating temperatures and increased degradation of cleaner blades. Larger volumes of cargo approaching at a high velocity hit primary blades with greater force, causing some designs to wear quickly, leading to more carryback and increased spillage and dust. In attempt to compensate for lower equipment life, manufacturers may reduce the cost of belt cleaners, but this is an unsustainable solution that doesn&rsquo;t eliminate the additional downtime associated with cleaner servicing and regular blade changes. As some blade manufacturers struggle to keep up with changing production demands, industry leaders in conveyor solutions have reinvented the cleaner industry by offering heavy-duty, engineered polyurethane blades made to order and cut on-site to ensure the freshest and longest-lasting product. Using a twist, spring or pneumatic tensioner, the primary cleaners are forgiving to the belt and splice but are still highly effective for dislodging carryback. For the heaviest applications, one primary cleaner design features a matrix of tungsten carbide scrapers installed diagonally to form a 3-dimensional curve around the head pulley.&nbsp; Field service has determined that it typically delivers up to four times the service life of urethane primary cleaners, without ever needing retensioning. Taking belt cleaner technology into the future, an automated system increases blade life and belt health by removing blade contact with the belt any time the conveyor is running empty. Additionally, it reduces labor for the constant monitoring and tensioning of blades to ensure peak performance. Connected to a compressed air system, pneumatic tensioners are equipped with sensors that detect when the belt no longer has cargo and automatically backs the blade away, minimizing unnecessary wear to both the belt and cleaner.&nbsp; The result is consistently correct blade tension, reliable cleaning performance and longer blade life, all managed without operator intervention. Bulk Handling, Safety and Automation in the Future Automation is the way of the future, but as experienced maintenance personnel retire, younger workers entering the market will face unique challenges, with safety and maintenance skills becoming more sophisticated and essential. While still requiring basic mechanical knowledge, new maintenance personnel will also need more advanced technical understanding. This division of work requirements will make it difficult to find people with multiple skill sets, driving operators to outsource some specialized services and making maintenance contracts more common. Ultimately, conveyor monitoring tied to safety and predictive maintenance will become increasingly reliable and widespread, allowing conveyors to autonomously operate and predict maintenance needs. Author: Todd Swinderman CEO Emeritus, Martin Engineering info@martin-eng.com www.martin-eng.com

Bulk material unloading from a transfer chute onto a fast-moving belt can shift the flow of material in the chute, resulting in off-center loading.

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Bulk handling is evolving when it comes to safety, efficiency and automation.

Conveyor Technology:Designing for the Future by Innovating the Present 

Outages happen frequently in wood pelleting, and the reasons are manifold. Depending on the production strategy, pellet producers can increase the production rate&mdash;even above nameplate capacity of the pellet mill&mdash;or prolong maintenance intervals with a low wear strategy. Some Canadian pellet mill plants operate their 3.5-ton-per-hour pellet mills at a production rate of approximately 5 tons per hour. The result is a production volume matching the nameplate capacity of the pellet plant, but also planned, biweekly, 12-hour downtimes for maintenance, as well as a shell service life of sometimes only a few hundred operating hours. Another extreme is a Swiss wood pellet plant with bearings service life of 10,000 operating hours and close to zero unplanned downtimes. The shell service life is approximately 1,000 operating hours. Many factors influence the production rate and service life of equipment, beginning with the initial raw material. Clean, homogenous softwood fiber is the ideal raw material for a long shell service life and high production rates. The load on the rollers is low and the throughput high, due to the soft fiber. Depending on the sourcing area, however, a mix with hardwood, recovered industrial wood or storm debris changes the raw material mix. Besides the tree species, bark and dirt have a huge effect. In the growth phase of a tree, the bark absorbs particles from the ground, such as stones, sand and soil. In some cases, the forests are contaminated with metal scrap that ends up in the woody biomass. Bike parts, brass, cans and drums are some common contaminants. The first step in wood preparation for pellet production is often the wet hammermill, followed by the dryer. Worn hammers and sifters, weak magnets and an uneven material distribution in the dryer cause uneven prepared material for the dry hammermill and the mixer. With new approaches to drying, such as steam explosion, costs decrease significantly, while the quality of the material mix improves. The efficiency of pelletization is highly dependent on the preceding steps. A pellet mill&rsquo;s spare part service life, production rate and power consumption are influenced by the material mix and preparation. The downstream processes in wood pelleting are affected by pellet quality. Density, moisture, length and bonding influence fines in the bagging process or bulk handling. There are ways to improve overall performance with the help of third parties. An original equipment manufacturer (OEM) independent pellet plant audit overcomes blindness to operational flaws and can assist with new ideas, innovation and to provide plant management with some food for thought. A Door Upside Down Sometimes, even the best advice is wasted, as breakdowns are not always related to raw material, production rate, maintenance and operations. The wood pellet industry is used to all kinds of breakdowns&mdash;roller bearings break due to shocks, dirt, wear or lack of lubrication; main bearings corrode or absorb too many shocks and break; roller shells wear off and crack due to the material mix and load. Additionally, shells cause trouble when the measurements are off-spec. Even dies break from time to time, often causing longer outages. All these are glitches, as mending is often brief. But nowadays, disrupted supply chains affect delivery times, and thus, downtimes. Some breakdowns are less frequent, but they cause much bigger damages. One example is a major breakdown that occurred at an Austrian wood pellet plant&mdash;the flange broke due to fatigue. As a result, the die was unguided and also broke. With the broken flange and die, the pellet mill door turned upside down. The mixer, lifting equipment, door and door clamp were also damaged beyond repair due to the movement of the door. The motor went into overload and shut off. The shear pins were also intact, as the broken flange was rotating freely. Luckily, there was no one injured. The pellet mill had just underwent service shortly before the malfunction. This underlines the lack of traceability of material fatigue. The wood pellet producer is facing a damage of approximately 68,000 euros (nearly $70,000) in parts, plus installation. The company decided to replace the pellet mill. Main Bearing Breakdown Main bearings rarely break. When they do, it is often due to corrosion, massive shocks or dirt particle entry. There has been a case of main bearing failures due to interrupted production in a U.S.-based wood pellet plant. The available raw material was not sufficient for the continuous operation of all pellet mills. As a result, a different pellet mill was shut off every two weeks. Condensed water entered the main bearing and caused corrosion, finally leading to a bearing failure with all pellet mills. Coming back to the initial operation decision, a plant manager can either decide to increase production rate and accept a higher degree of wear on the equipment, or go easy on the equipment and improve maintenance. A high load strategy requires more frequent planned maintenance days, whereas a low load strategy requires good planning, special care and experienced workforce. Neither of the strategies will prevent fatigue, and nor is one strategy more likely to cause major malfunctions when willingly chosen and consequences accepted. Author: Holger Streetz COO and Board Member, Bathan AG h.streetz@bathan.ch

Fragments of failure at a major pellet plant breakdown. 

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A breakdown due to fatigueâ€”the pellet mill door turned upside down as a result of a broken flange and die.

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Fatigue is a slow, often undetected damaging process of material under iterating mechanical loads, temperatures and other impacts.

Consequences of Load Strategy

The long 2020-&rsquo;21 heating season, higher energy prices, pandemic implications and policy will all play a role in what is expected to be a tight biomass market for the duration of the impending winter. That&rsquo;s according to global consulting firm Hawkins Wright, which in mid-October conducted a webinar to discuss biomass market trends and implications, and&nbsp; what might be in store for industry stakeholders. To begin, Rachael Levinson, Hawkins Wright Biomass Research Manager, discussed spot market prices and the company&rsquo;s monthly report on developments in the wood chip and pellet markets. Spot Prices The Forest Energy Monitor publishes a range of biomass prices on a monthly basis, including estimates of industrial European spot pellet prices. Numbers are based on information provided from a range of contacts, brokers, trades, utilities and producers, Levinson says. &ldquo;We don&rsquo;t just plug numbers into a spreadsheet. The industrial wood pellet market is still relatively illiquid compared to other commodities, so we find it&rsquo;s important that we use our own years of experience, and those of our contacts to establish what&rsquo;s really happening in the market, and ensure that price represents the spot market at that time.&rdquo; Heating pellet prices are based on data from local trade associations and a range of wood fiber prices from a number of the company&rsquo;s sources. &ldquo;It has been being quite an interesting year, we&rsquo;ve seen a huge shift in the market from the oversupply we saw in 2020 to right now, a period of tightening in Europe&rsquo;s spot market, which has rapidly raised prices,&rdquo; she says. &ldquo;One of the major reasons for that shift in the market was that the 2020-&rsquo;21 winter was a lot longer than in previous years&mdash;the low temperatures lasted later into spring than usual, and that helped extend the operating period for some of the industrial heating plants.&rdquo; &nbsp;In addition, this past spring saw a surge in European power prices, and some utilities are positioned to benefit. For example, Orsted A/S based in Denmark. &ldquo;Orsted operates several combined-heat-and-power (CHP) plants and sells heat to local district heating networks, and the power they produce is almost a byproduct of the heat sales,&rdquo; Levinson explains. In spring 2021, we saw these increased power prices in Europe, and some of the more efficient CHP plants could profit primarily on power sales rather than heat sales. That further extended their operating period, and of course, increased their pellet demand.&rdquo; The unexpected flurry of spring spot activity cleared out much the pellet stocks that resulted from the oversupply of 2020, and it continued during the summer months when activity normally dies down. There are two reasons for that, Levinson says. &ldquo;That activity prompted a lot of other European utilities to think ahead to this coming winter, expecting demand to pick up quite a bit, so some started preparing early to ensure they were well covered going into this winter ... those high power prices in Europe, in combination with the bullish sentiment in the wider energy complex&mdash;higher carbon prices and higher coal and gas prices&mdash;really increased profitability for many of the power-producing wood pellet users in Europe. Demand for pellets was strong throughout the summer, as they were operating as much as they could outside of any planned maintenance.&rdquo; As winter approaches, demand is expected to pick up considerably, with many plants returning to service in the next several weeks. Levinson again referenced Orsted, which has already brought its Avedore unit back online from its usual summer maintenance, with the second unit expected to return to service in November. &ldquo;Also, Drax has had an extended, planned outage at one of its units since August, and that will be back online in November.&rdquo; &nbsp;MGT Power, the new U.K. power plant that industry has been waiting to commence operations for a couple of years, is expected to begin operations in the next month or two. &ldquo;Of course, wood pellet consumption will [initially] be low, but we do expect it to ramp up over the winter period, and that will help lift demand significantly,&rdquo; Levinson says. As for the supply side of the market, there have not been too many hindrances, she says, other than some wild fires in British Columbia during the summer, and a hurricane in the U.S. South, both of which delayed some shipments but did not have a material effect on the spot market. The most concerning issue at present is the spot market and very low stocks going into the winter, Levinson reiterates. &ldquo;The last time the spot market in Europe was really tested like this was the 2018-&rsquo;19 winter, but the situation now is fairly different, so I&rsquo;m not sure we can draw too many conclusions from what happened then&mdash;this time around we don&rsquo;t have the supply issues that we did ahead of that winter,&rdquo; she says. &ldquo;Also slightly different is the high-paying capabilities of some European utilities right now, meaning the price that utilities can pay for the wood pellets and still be profitable. Because power and carbon prices are very high at the moment, that means paying capabilities are at levels that we&rsquo;ve never seen before, so it will certainly be an interesting winter.&rdquo; &nbsp;Moving onto the European residential market, the tightening in the industrial market is being mirrored in the residential market. Levinson said just this year has seen huge boiler sales in countries including France, Austria and Germany, a trend that will inevitably increase wood pellet demand this winter. &ldquo;In addition, high fossil fuel prices will lift demand in some countries&mdash;for example, in Italy, a lot of the users there have wood pellet stoves as well as a gas or oil heating system,&rdquo; she says. &ldquo;If fossil prices are high, those homeowners are more likely to rely more on their pellet stoves for heat than in years during which gas and oil were relatively low-priced. We do have very low stocks for this time of year going into this winter, so if it comes early or is particularly cold or long, that could come as quite a shock to the market.&rdquo; Meanwhile across the world, Asian spot prices have shown quite a bit of recovery this year, Levinson says. &ldquo;The Asian market had a few more supply issues than we&rsquo;ve experienced in the European market&mdash;for example, in Vietnam, the lockdown impacted furniture production, which is a major source of fiber for pellet producers there, and high freight prices and container shortages have added to producers&rsquo; problems.&rdquo; In the past couple of months, there have been more tenders from state-owned power generation companies (GENCOs), including tenders seeking 315,000 metric tons of domestic and imported pellets for delivery by the end of the year, a tight deadline that Levinson says will really test the market. &ldquo;This winter is certainly going to be interesting&mdash;it&rsquo;s something to keep an eye on,&rdquo; she says. Following Levinson, Fiona Matthews, Hawkins Wright associate director of bioenergy, discussed trends in the wider global energy markets that have implications on the biomass market, beginning with the natural gas market. Other Market Trends, Influences &ldquo;Recently in the U.K., gas price surges and supply issues have been in headlines&mdash;in September, the tightness in the global gas market led to a rise by 29% month on month, to around 56 euros per megawatt-hour,&rdquo; Matthew says. &ldquo;Drivers are pretty complex, with a key one being the post-covid rebound, with stronger economic activity driving higher gas demand. European consumption is the highest it has been in five years, but demand is also very high in Asia.&rdquo; &nbsp;The European market has struggled to compete with Asia for LNG cargoes, Matthews continues. &ldquo;Politics is a factor&mdash;it&rsquo;s clear that Russia has been exerting its power, and Putin has been toying with flows of gas into European gas market. Russia is also rebuilding its own inventories ahead of the upcoming winter season. Low inventories and high prices of LNG have limited the volumes that can been injected into storage. The consequence for the biomass market is the resulting surge of power prices that follow, from the gas price rise. Higher power prices have significantly improved the profitability of biomass power plants.&rdquo; Matthews also pointed out the attention higher gas prices have brought to decarbonization and the need to rely on other technologies beyond natural gas to provide grid stability and grid balancing services. &ldquo;Recent events have very much helped the case of large-scale bioenergy carbon capture and storage projects (BECCS), such as the one being developed by Drax.&rdquo; Drax Power Station, located in North Yorkshire, uses wood pellets for fuel in four of its six units. A pilot BECCS project began operations at the site in 2019, with a second demonstration unit installed in 2020. Fiber costs have major influence on pellet producer profitability, Matthew says, and there are a range of issues that may have an impact. As mentioned by Levinson, in August, the Forest Energy Monitor evaluated COVID-19 lockdowns in Vietnam and its implications on furniture production. &ldquo;Waste is the main source of raw material for pellet producers in Vietnam, which can have a huge impact on the pellet market in Asia,&rdquo; she says. &ldquo;Chip availability in Latvia is important to chip-fired boilers in the Baltics and pellet producers in the region, and in 2020, we experienced a period oversupply of chips in the Baltics region and across Europe. This was largely due to the excess of bark beetle-damaged wood in the markets. In 2021, we started to see a slight tightening of this market, which is starting to shift for a number of reasons.&rdquo; &nbsp;One of those reasons is harvesting rates in the Baltics, mostly drive by high-value saw log demand. &ldquo;Any sort of dip in demand for saw log shave has an impact on harvesting rates in the region,&rdquo; she says. &ldquo;The longer, colder, wetter conditions that we experienced this past winter was actually detrimental to the bark beetle and reduced the number of reproductive life cycles, so we&rsquo;re seeing that infestation levels are not as high, and less damaged wood is in the market.&rdquo; Another point Matthews makes is the reduced supply of wood chips from Belarus to Latvia, the result of some regulation changes. &ldquo;Latvia introduced radiation testing for wood products and Belarus introduced an export tax on wood products, and both reduced the flow of chips from Belarus to Latvia,&rdquo; she says. &ldquo;The political situation in Belarus and the introduction of EU sanctions has persuaded many chip buyers in Europe to look elsewhere, scared off a bit from buying from Belarus, which has had an impact on that flow.&rdquo; As the European economy begins to recover from the pandemic, there is more demand for chips from competing industries such as panel board manufacturers, which has an impact on energy chip buyers. Finally, Moving on, Matthews discussed the interplay between biomass energy fiber supply and other forest product industries, such as sustainable aviation fuel (SAF). &ldquo;The U.S. has proposed an SAF target of 3 billion gallons by 2030, and currently produces around 45 million gallons,&rdquo; she says. &ldquo;This is a significant uplift in production ... it is much more costly to produce than fossil jet fuel, and so the federal government has said it will provide funding to meet targets, and has introduced a new tax credit for SAF.&rdquo; While most SAF is produced using waste and vegetable oils, animal fats, and more recently, MSW, other feedstocks will be needed if industry is going to scale up to displace a noteworthy percentage of fossil jet fuel, according to Matthews. &ldquo;As a result, there is growing interest in producing SAF from woody biomass, and this is the angle relevant to wider biomass industry&mdash;the prospect of having to compete with another user of some types of wood feedstocks in certain regions,&rdquo; she says. &ldquo;There are few projects of interest, including Velocys&rsquo;s SAF biorefinery in Mississippi, not too far from Drax&rsquo;s pellet mill, which would require about 1 million tons of chips and roundwood, and has a goal to come online in 2025. Other companies operating in this field, including Lanzajet and Nova Pangaea in the U.K., both of which plan to produce SAF from waste wood.&rdquo; The EU has proposed an SAF mandate of 2% aviation fuel in 2025, increasing to 5% in 2030, 32% in 2040 and 63% in 2025 with additional subtargets in other categories, Matthews adds. &ldquo;Based on forecasted demand of the mandate, it would mean 1 million (metric) tons of SAF in 2005, 3.5 million in 2030 and 30 million in 2050. This potential scale makes it so interesting as a competitor for some feedstocks of biomass.&rdquo; Author: Anna Simet Editor, Pellet Mill Magazine asimet@bbiinternational.com 701-738-4961

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Hawkins Wright weighs in on what might be in store for the broader wood pellet industry.

Assessing the Global Supply Landscape

Most consumers have been impacted in one way or another by surging commodity costs as a result of the pandemic. From the price of food, fertilizer, energy, lumber, wages and the extensive list goes on, it has been no different for pellet manufacturers. In October, Pellet Mill Magazine conducted a survey to gain some perspective on what kind of cost increases domestic producers have experienced over the past 18 months. Respondents included 10 production facilities representing different companies located across the U.S, in all regions. The results are as follows. Some questions have been condensed for easier reading. Question 1. During the past 18 months, how much of an increase in the price of packaging have you experienced? Approximately 67% of respondents reported an increase of greater than 20%, with the remaining 33% indicating an uptick between 10 and 20%. Zero respondents saw an increase of less than 10%. For context, a 40,000-ton facility using approximately 2 million residential bags annually, at a cost of 22 cents per bag, equates to $440,000 in bag costs. A 20% price increase would result in an additional annual expenditure of $88,000 for bags alone. Question 2. During the past 18 months, how much have labor costs increased at your operation? As in nearly every industry, labor shortages have been a thorn in the side of many pellet manufacturers, though it appears to be a case-by-case basis. The majority of respondents&mdash;nearly 56%&mdash;said labor costs have risen 10 to 20%. However, 33% reported little or no increase at 0 to 5%, and 11% said between 5 and 10%. As a follow up question, respondents were asked whether they operate with the same, fewer or more employees as compared to prior to the pandemic. Respondents were split at just above 40% for both less and the same, with the remaining 11% reporting more. More employees may seem encouraging; however, one respondent&rsquo;s remarks indicated lack of skill being the primary reason. &ldquo;We actually have more employees, but less experience and less efficiency because of the ability to retain and hire experienced help,&rdquo; they said. The majority of respondents who reported a smaller workforce&mdash;nearly 67%&mdash;said the inability to hire and retain employees was the reason, with higher labor costs coming in at about 17%. Question 3. In the past 18 months, how much an increase in the price of pallets have you experienced? Respondents experienced a variety of percentage increases, with roughly 33% reporting an increase of greater than 40%. It was an even split for the remaining three price ranges, with about 22% of respondents choosing between 30 and 40%, 22% between 20 and 30%, as well as 22% for between 10 and 20%. A likely ripple effect of rocketing lumber prices, the price of wood pallets began a steady climb in January, according to U.S. Bureau of Labor Statistics data (Figure 1), reaching what appears to be a peak in July. Prices fell in August and September, with October data not yet available at press time. With lumber prices having come down this summer, it appears likely that pallet prices may also continue their descent. Question 4. During the past 18 months, has the cost of fiber increased, decreased or remained stable? Well over half of respondents&mdash;nearly 56%&mdash;said fiber costs haven&rsquo;t changed. Approximately 22% reported modest increases but subsequent stabilizing, and 11% reported decreases in fiber costs. The U.S. EIA Monthly Densified Biomass Fuel Report tracks fiber consumption and costs, with the July report (released in October) not suggesting any significant price variations. Residual categories, however, varied substantially from 2020 to 2021. For example, in July 2020, producers reported using approximately 432,000 tons of wood product manufacturing residue. In July 2021, that number sunk to about 90,500 tons. At the same time, the &ldquo;other residuals&rdquo; category jumped from 514,000 in 2020 to 703,500 in 2021, sawmill residue use increased from about 248,000 tons in 2020 to 457,000 tons in 2021, and roundwood rose from 172,000 tons to 198,000 tons. &nbsp; Question 5. During past 18 months, how much have grease prices increased? Most respondents reported modest increases, with just under 78% reporting between 5 and 10%. The remaining 22% of respondents were an even split between 10 and 20% and greater than 25%. Many factors come into play with increased lubricant costs, and include rising base-oil and additive prices, the cost of packaging including pails, drums, pallets and freight. One grease/lubricant manufacturer told Pellet Mill Magazine there was a price increase with almost every step in the value chain of producing companies. &ldquo;Lubricants are no exception, due to globally increased prices for fuel, chaos at harbors and resulting delays, as well as shortages of raw materials,&rdquo; the company executive said. &ldquo;We feel the pressure, especially with ingredients for our food grade lubricants and risen logistic costs. However, we have kept our prices stable so far, and did not raise prices for most of our customers. When thinking a bit further back than 18 months, especially large lubricant companies benefitted from very low base oil prices in 2019 and 2020.&rdquo; &nbsp; Question 6. Has availability of trucking affected your operation? Approximately 44% of respondents said trucking is, and continues to, affect their operation. Another 44% said it has not, and 11% answered that it had at one point, but was no longer. A late October report, &ldquo;Driver Shortage Update 2021,&rdquo; conducted by the American Trucking Association, estimated that in 2021, the national truck driver shortage will hit a history high of more than 80,000 drivers and could surpass 160,000 by 2030. A multitude of factors are playing a role, according to the report, which include, but are not limited to, the pandemic causing some drivers to leave the industry; truck driver schools trained far fewer drivers in 2020; a high average age of current drivers and retirements; federally mandated minimum age of 21 to drive commercially across state lines; barriers to entry such as inability to meet hiring standards, and more. The report notes that driver pay and earnings have risen substantially, but some drivers choose to work less at the higher pay rate, negating the impact of the increase. Question 7. How often are you making price adjustments? In the Wild West of commodity prices, product price adjustments are perhaps being made more frequently than ever for some operations. While about 33% of respondents have continued to make annual adjustments, most respondents are evaluating and making changes every three to four months. While average per-ton prices were about six dollars less in July 2021 than in July 2020&mdash;$162.50 compared to $168.75 (per U.S. EIA data), the difference from January 2020 to January 2021 was more substantial at about $15 more per ton&mdash;from $173.27 to $188.60, respectively. Data beyond July 2021 was not available at press time. Finally, one question surveyees were not asked but was addressed by one respondent, was related to the challenges of insurance. They remarked, &ldquo;All of our operational costs, other than fiber, are up significantly. Our plant insurance premium went from $85,000 annually to over $350,000 ... only a handful of carriers are willing to even consider insuring wood products manufacturers.&rdquo; While pandemic has brought on a series of challenges, the industry could be poised to have a strong season if the weather cooperates. With fossil heating fuels projected to increase the cost of home heating exponentially, consumers may increasingly be seeking stable, cost-effective alternatives. Author: Anna Simet Editor, Pellet Mill Magazine asimet@bbiinternational.com 701-738-4961

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Pellet Mill Magazine shares the results of a producer survey evaluating inflation and increased commodity prices in the wake of the pandemic.

Surveying Costs

Strategic location is a critical component for wood pellet operations, especially those with business models based solely or primarily on wood pellet production. The more accessible fiber, the better&mdash;more options, less risk. But what if that risk could be reduced even further via the ability to relocate if fiber streams dissipated? That&rsquo;s precisely the idea behind PelletBox, Prodesa&rsquo;s containerized pellet plant concept. Debuting in in 2019, the compact, modular pellet plant is being deployed in numerous U.S. locations, according to Mike Curci, Prodesa capital equipment sales manager. This includes Drax&rsquo;s three 40,000-ton-per-year satellite plants under development in Arkansas, two of which have undergone assembly. The journey from fabrication to arrival on-site demonstrates the mobile nature of the units, with the origin being the company&rsquo;s headquarters in Zaragoza, Spain. &ldquo;We manufacture them in our production facility there, using certified sea containers,&rdquo; Curci says. &ldquo;We then test run them, from running all the cabling to ensuring motors are running properly. Once that&rsquo;s done, we spool wires back up, uncouple conveyors, replace panels removed as part of assembly, and then we truck them out to the port.&rdquo; From there, they are loaded on to a boat and shipped to the customer. Meanwhile, that customer is laying out civil work&mdash;a 60-square-meter concrete platform is required. &ldquo;Once delivered, we can stack up the complete units in a single day and assemble rather quickly,&rdquo; Curci says. &ldquo;It drastically reduces the cost of a single pellet mill type of facility.&rdquo; It also reduces the number of companies and contractors on-site. &ldquo;We or the owner will hire a local millwright group, but they&rsquo;re just reconnecting wires and conveyors,&rdquo; Curci says. &ldquo;From there, we really only need to determine how material will enter the system, and then what will be done with the pellets when they come out. We handle everything from the inlet to discharge, and can engineer a frontloading system or silo to handle the finished pellets at the site.&rdquo; Compact Components A Pelletbox unit consists of five shipping containers&mdash;four 40-foot containers, and one 20-foot container for the electrical components. The five-ton-per-hour system is compatible with dry material including chips, sawdust and shavings and includes stages of grinding and pelletizing. Inside the containerized units, major components include a destoner, filtration system, hammer mill, pellet mill and feeding hopper, pellet screen, screw conveyor and cooling system. Electrical installed power is 745 kilowatts.&nbsp; Curci notes that Prodesa does have the ability to make some design changes&mdash;for example, a customer with material that doesn&rsquo;t require grinding. &lsquo;We can reduce or remove the hammermill portion,&rdquo; he says. &ldquo;So that would reduce cost. We have a couple different configurations in terms of layout and where we put the MCC (motor control center) building with platforms.&rdquo; In the example of Drax, all three facilities will be the same, thus reducing engineering cost and simplifying manufacturing. &ldquo;For groups that have multiple installations, we also have the commonality of spare parts&mdash;this reduces the amount of inventory that they or we keep on the shelf,&rdquo; Curci says. He emphasizes that though the compact design is meant to be part of the allure, the systems are by no means limited to small-scale operations. &ldquo;We have one commercial-scale plant with 18 in its facility. It&rsquo;s the same machinery used in large-scale units&mdash;it&rsquo;s not a small production. It&rsquo;s an industrial-sized, 500-horsepower pellet mill that we&rsquo;ve been able to containerize to reduce the cost of entry into the marketplace for those looking to get into the pellet industry.&rdquo; &nbsp; Boxed Benefits Out of PelletBox&rsquo;s intended benefits, Curci emphasizes the ease of transport. &ldquo;They are very easy to move and install,&rdquo; he says. &ldquo;For example, if one is colocated with a sawmill but then later the sawmill shuts down, it can be picked up and relocated to take advantage of other residuals or fiber. It minimizes the risk, particularly in emerging markets in other countries. And even here in North America at sawmills and pallet recycling facilities&mdash;many are getting into the pellet space, if they are leasing the building and need to relocate, we can do that.&rdquo; And for those new to the industry, Prodesa provides the education necessary to run these facilities. &ldquo;We start at the theory of size reduction, and we walk through the startup operations, the maintenance troubleshooting, all the way through the entire process,&rdquo; he says. &ldquo;By time we&rsquo;re done with the training program, they&rsquo;re able to operate that facility and have knowledge for other facilities as well. We&rsquo;re really trying to drive education, especially ensuring the safety aspect is hit on hard during training programs&mdash;not only with PelletBox, but other facilities, too. For these sawmills waiting to get into this, we want to provide them with a very safe and reliable operation. This system already has fire protection in it and is heavily engineered with safety in mind.&rdquo; The COVID-19 epidemic has not had an impact on business, Curci adds. &ldquo;There has been a lot of activity&mdash;especially a flurry in the North American market. It&rsquo;s very exciting.&rdquo; Author: Anna Simet Editor, Pellet Mill Magazine asimet@bbiinternational.com 701-738-4961

Housed in certified sea containers, the PelletBox can produce up to five tons of pellets per hour.

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Once PelletBox units have been fully tested and reassembled, they are loaded onto trucks and shipped to customers. 

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Prodesa's mobile pellet plant technology is aimed at minimizing investment risk.

Thinking Inside the Box

Japan proposes standards for nonindustrial wood pellets The government of Japan has proposed new Japanese agricultural standards (JAS) for wood pellet fuel used in nonindustrial applications, such as residential stoves and commercial boilers. The proposed JAS would apply only to nonindustrial use of wood pellets manufactured from &ldquo;unutilized wood from forests, plantation, and others; byproducts and residues from the wood processing industry; and chemically untreated reclaimed lumber.&rdquo;&nbsp; A report filed with the USDA Foreign Agricultural Service&rsquo;s Global Agricultural Information Network states that Japan&rsquo;s Ministry of Agriculture, Forestry and Fisheries aims to classify wood pellets for nonindustrial uses into three grades based on technical specifications and origin of feedstock. The proposed standards are based on ISO 17255-2, which was published in 2014. US wood pellet exports up in September The U.S. exported 690,515.4 metric tons of wood pellets in September, up from both 647,901.5 metric tons in August and 608,099.7 metric tons in September 2020, according to data released by the USDA Foreign Agricultural Service on Nov. 4. The U.S. exported wood pellets to more than a dozen countries in September. The U.K. was the top destination at 454,114.8 metric tons, followed by the Netherlands at 110,843.4 metric tons and Denmark at 88,322.8 metric tons. The value of U.S. wood pellet exports reached $101.9 million in September, up from $90.43 million in August and $85.75 million in September 2020. Total U.S. wood pellet exports for the first nine months of this year reached 5.56 million metric tons at a value of $799.03 million, compared to 5.41 million metric tons exported during the same period of last year at a value of $734.09 million. Enviva, GreenGasUSA announce 10-year RNG offtake agreement Enviva Partners LP and GreenGasUSA announced a 10-year RNG offtake agreement to decarbonize natural gas-related emissions in Enviva&rsquo;s operations. The agreement is expected to eliminate more than 64,000 metric tons of carbon dioxide (CO2) equivalent from the atmosphere every year, which equates to 14,000 passenger cars being removed from the road. Enviva&rsquo;s commitment underwrites a standalone GreenGasUSA project to install equipment that captures and treats methane currently being released directly into the atmosphere at a food processing facility in rural South Carolina. As part of the agreement, in the third quarter of 2022, GreenGasUSA will transport the RNG to Enviva&rsquo;s Hamlet plant to be utilized in its emissions control equipment in place of fossil natural gas. The methane captured and emissions eliminated are expected to offset approximately 75% of all Enviva&rsquo;s direct emissions from its manufacturing operations, or Scope 1 emissions, on an annual basis for the duration of the 10-year agreement. Louisiana governor visits Drax Power station Louisiana Gov. John Bel Edwards visited Drax Power Station, the U.K.&rsquo;s largest renewable power generator, prior to attending the COP 26 climate summit that was held in Glasgow, Scotland, Oct. 23-Nov. 12. During his tour of the power station, Edwards learned more about Drax&rsquo;s plans to deploy groundbreaking bioenergy with carbon capture and storage technology. Drax&rsquo;s operations in Louisiana and Mississippi indirectly support more than 1,200 jobs. Louisiana is home to Drax Biomass headquarters, located in Monroe, as well as the company&rsquo;s LaSalle and Morehouse pellet plants. Drax also operates an export facility in the Port of Baton Rouge.

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Business Briefs

As this issue of Pellet Mill Magazine is delivered to pellet producers around the country, it will find them wrapping up their 2021 fiscal year, but squarely in the middle of the 2021-&rsquo;22 heating season. One of the unique aspects of our industry is how prime selling season lands astride two calendar years, evenly split by New Year&rsquo;s. The fourth quarter finds pellet-burning consumers finally heeding their thermostats and building their inventory for winter. In every year since at least 2016, the highest-grossing month for pellet sales has been either October or November. The first quarter of the fiscal year coincides neatly with the back half of the pellet-buying season, and in years with an early onset to winter, consumers with pellet appliances realize they&rsquo;ll have to augment their inventories to make it through the season. Conversely, for years with relatively mild winters, pellet sales in January and February can really tail off. As a result, first quarter sales numbers can fluctuate wildly from year to year. A lackluster back half of the 2020-&rsquo;21 home heating season resulted in the slowest start for wood pellet sales since 2016. In Q1 of 2021, wood pellet producers sold 373,916 tons of product, a significant departure from the 500,000-ton first quarters of both 2019 and 2020. With that kind of a start to the year, pellet producers could be forgiven for some pessimism. Why, then, are producers across the country generally bullish on what remains of 2021 and the 2021-&rsquo;22 heating season? Participating in a market that is so impacted by variables beyond their control, pellet producers luxuriate in those variables that are available to them particularly when they are favorable. In October, the U.S. EIA projected American homeowners could expect significantly higher heating fuel prices. Natural gas heating was projected to rise 30%, with heating oil prices forecast to be as much as 50% higher. One of the hallmarks of wood pellet heating has always been the discount on overall heating costs it offers to consumers, but in the recent past, these savings were all but erased by historically low competing fuel prices. This year, with fossil fuel prices ramping back up to pre-pandemic levels, the economic argument for burning wood pellets has returned. The impact of higher fossil fuel prices has always been difficult to measure, as the data on consumers who retain both fossil fuel and wood pellet appliances is vague at best. It makes sense that a consumer with both a heating oil appliance and a wood pellet appliance is more likely to choose the lower-cost option, but at what level of a discount? And how many consumers out there have maintained both appliances and regularly toggle back and forth based on fuel pricing? These are significant variables that are informed by anecdotal reports from retailers, at best. If wood pellet producers get the kind of winter that only heating professionals can cheer, then the industry is well positioned from an inventory perspective. Producers build inventory through spring, peaking in July. This summer found the sector with over 300,000 tons of product on the ground, the strongest inventory position since 2018. If competing fuel prices remain high and Old Man Winter hangs around until April, these inventories will be gobbled up. Admittedly, that is a big &ldquo;if.&rdquo; So far, winter has been slow to come. Heating degree days (HDD) across most of the pellet-burning parts of this country are lagging well behind historical averages. The Northeast, Mid-Atlantic, Great Lakes, Mountain West and Pacific Northwest are all at least double-digit percentages off their normal HDD pace, with some locales off historical averages by 50%. If this mild winter persists, the industry will likely exit the 2021-&rsquo;22 heating season with carryover inventory. Still, the last time producers had over 300,000 tons of inventory in July (2018), the sector experienced a massive drawdown bottoming out, at just 47,000 tons in February. There were some nervous moments in the early spring of 2019, and it has taken until July of this summer to push inventory levels back over 300,000 tons. Three variables impact the strength of any home heating seasons, and two of three are already favorable for producers, inventory and competing fuel prices. The third, winter&rsquo;s chill and it&rsquo;s staying power, will determine whether this year&rsquo;s home heating season will be a boom or a bust. Author: Tim Portz Executive Director, Pellet Fuels Institute tim@pelletheat.org www.pelletheat.org

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Winter's chill and it's staying power will determine whether this year's home heating season will be a boom or a bust.


The Table is Set

In a previous edition edition of Project Talk, I caught up with Ugo Santone, a project management aficionado and partner at PTAG, a project management services firm. We explored the wise concept of &ldquo;Inspect what you expect,&rdquo; which Ronald Regan fans may remember as &ldquo;Trust, but verify.&rdquo; Whatever you call it, nothing should be taken for granted when dealing with large capital projects. Proper project controls should be in place to alert you if things are going off the rails, but one problem is that project controls and their associated metrics provide largely high-level lagging indicators. These are fantastic for many purposes and very useful for keeping a project steered in the right direction, but they don&rsquo;t tell you what&rsquo;s going on in real time. For some issues, by the time you see it in feedback from project controls, you may not be able to prevent going off the rails. For real time feedback and intelligence to protect a project from issues that may be difficult or impossible to recover from, eyes in the field are needed. Those eyes are called oversight. This article will delve a bit deeper into &ldquo;Inspect what you expect,&rdquo; and include input from Herb Marshall, the man who literally wrote the book on project oversight. The book is called The Project Oversight Guide, and his company is Oversight Advantage. Marshall would argue that, just like project controls, which can provide a 10% overall cost improvement for a 3% investment, good oversight is something that costs hard cash in the project budget. But it more than pays for itself by keeping the project on the rails and improving the predictability of the project&rsquo;s outcome. Experience in Oversight I caught up with Marshall virtually from his fortress of solitude in an undisclosed location, and we discussed how he got to be such an expert on oversight. He offered that he went through many years of on-the-job training in Naval Reactors, an organization that spent the past 75 years developing a culture of oversight. Oversight was just something done because it provided for well-informed&mdash;and thus, well-run&mdash;projects. As for me, I started directly out of college as a yardbird at Mare Island Naval Shipyard, and was introduced to the culture of oversight from the beginning of my career. (A yardbird is one of the more euphemistic terms for a civilian shipyard worker.)&nbsp; Marshall rose from the ranks to lead the reactor servicing team at Puget Sound Naval Shipyard, which, at the time, was doing more refueling and reactor servicing work than any other facility in the world. This team included dozens of oversight personnel digging into not only the typical complement of four or five vessels from the nuclear fleet undergoing overhaul, but also the shipyard itself, including the dry docks and other equipment and systems used to perform the work. When he was asked to help a private utility with a large project that was failing (which he did with great success), Marshall recognized that there was simply no legitimate information available regarding how to oversee a large complex capital project&mdash;thus, the book. The concept may seem simple: Eyes in the field providing feedback and intelligence to the owner allows for self-correction. The execution, however, can have interesting results if not approached with the right mentality. Marshall recognizes the need for emotional intelligence, and likes to use an example of building an extension on your house. If you&rsquo;re paying someone to do it, everyone who&rsquo;s been down that path knows that you have to watch the contractor &ldquo;a little bit.&rdquo; You can&rsquo;t just sit back and drink pi&ntilde;a coladas, waiting for the contractor to tell you it&rsquo;s done. At the same time, if you&rsquo;re out there in the contractor&rsquo;s business, redirecting his workers and interfering with his self-governance, you can end up in litigation. Good project oversight advocates for the owner&rsquo;s interests for a win-win, identifying underperforming contractors or hidden issues sooner than later, while at the same time allowing the project team to do its job unencumbered. Underperforming contractors can improve performance based upon this feedback, and the now-revealed issues can be corrected in the field before horribly impacting downstream activities. And this is all done without telling anyone what to do. Rather, it simply exposes these issues to light. Another important takeaway is that oversight does not direct. Oversight&rsquo;s role is to step back, look at the big picture and recognize things that those who are too close to the action may not, and also delve deep into issues to ensure records support quality completion. Failing to recognize that the foundation the addition is built upon is substandard until after it is complete and starts cracking is not happy times. Oversight can and often does look at the concrete mix records for just that reason, as well as weld records, examination and testing results, and other important documentation that may be available. For important equipment, they can also perform receipt inspection or site surveillance to ensure what was ordered is made the way that is expected. So, oversight needs to step back and look closely, which is why Marshall&rsquo;s company logo is a combination of a telescope and a magnifying glass. It&rsquo;s all about seeing what&rsquo;s coming down the pike, assessing risks and how they are being mitigated, and whether or not the contractor gets it. It&rsquo;s also digging into critical details in a way that cannot be provided by standard project controls. Even things like body language at the production meeting, or scuttlebutt about the latest people to drag up and leave the project, provide good inputs to oversight, painting a picture long before an issue becomes evident by other means. Oversight is a two-way process, though, and how one approaches oversight and the results can be ineffective if social intelligence is not in play. This is why Marshall trains all his oversight people. If he was king for a day, Marshall says that he would create an oversight credential similar to the project management professional certification, providing initial training and certification followed by periodic refresher training. As that does not exist, Marshall created it for his projects. Personality, as well as social and emotional intelligence, are certainly included. Influence of Personality Because human interaction is really where the rubber meets the road, Marshall dedicated two chapters in his book to oversight behaviors. He offers that oftentimes&mdash;far too often&mdash;large capital projects result in litigation, and a lot of it boils down to personalities. When some organizations assign the typical alpha-personality project manager to oversight, it initially seems like a good fit (you want someone intelligent, who understands the project). Project managers usually fit that bill nicely, but in reality, it doesn&rsquo;t always work out, since the interface is likely with the contractor&rsquo;s own alpha-personality project manager. As issues arise, so does conflict, typically, as those alpha-personalities battle each other to the detriment of the message. To counteract this tendency, Marshall uses a five-rung ladder to describe the methods and overall tone of providing feedback. The most organic and pleasant is the lowest rung: referent power, where one is able to get people to follow them based upon their personality and charisma. The highest rung is coercive power: &ldquo;I&rsquo;m not going to pay you unless you do it my way.&rdquo; The second rung is &ldquo;expert power,&rdquo; where a book is cracked open to get technical. Reward power is the third rung, where the contractor has a chance to save face if he&rsquo;s not exactly right, and show empathy when he runs into issues beyond his control. The goal is to stay in those first three rungs. Oftentimes, improperly performed oversight jumps right to the top two rungs: legitimate authority (I&rsquo;m the owner, do what I say), and coercive power (I&rsquo;m not going to pay you, unless you do what I say). There are a host of subtleties with great oversight, and although Marshall and I had a lengthy discussion, we just scratched the surface. Keep in mind that the goal of oversight is for everybody to win, especially the owner. Author: Sven Swenson Senior Vice President of Technical Services Delta Energy Services LLC sven@workdelta.com 352-201-984

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Project oversight is a two-way process, though, and how one approaches oversight and the results can be ineffective if social intelligence is not in play. 

Project Talk

We could cite a dozen tropes about the importance of starting well, from getting off on the right foot to getting up on the wrong side of the bed. And we&rsquo;ve all heard about (or been involved in) projects that have gone awry because someone failed to plan (and thus, planned to fail). Unfortunately, people mismanage projects regularly. The resulting delays, out-of-control expenses, lost production time and angry contractors are all too familiar. So it goes, when you work with humans. Yet, it is possible to avoid gross mistakes when managing a project. It simply takes good preparation during the project&rsquo;s development. First, understand that the earlier missteps occur in a project&rsquo;s development, the more extensive the damage. A tool for understanding this relationship is the 1-10-100 rule, which states that a dollar&rsquo;s worth of time spent preparing is worth $10 in time processing change orders and $100 in fixing a problem after equipment has been installed. Such exponential costs are how $150 million greenfield plants end up costing $2 billion by the time the lights turn on, as what happened at the former Katerra CLT plant in Washington state. Getting a project done right, on budget, and on time requires project managers to develop it fully from the outset, a feat that requires good development even before the project starts. This primary development comes in the form of a business case. Business Case Basics A business case is a document that lays out a project&rsquo;s objectives, benefits and costs, explaining why the project should take place and providing an overarching scope. Too many projects go forward without the clear picture a business case provides. While there are many reasons this may happen, it&rsquo;s usually because those driving the project believe they have a developed case, when in reality, they&rsquo;re ignorant of critical challenges. For example, someone has an asset like a forest, and they&rsquo;re trying to monetize the timber coming off the land. They know they can make lumber, so they plan to build a sawmill and move forward with the project. However, they&rsquo;ve failed to consider how they&rsquo;ll dispose of the residuals. For this reason, managers working on front-end endeavors must first help their customers think through the challenges to them to the point of knowing what questions to ask for an accurate picture of what it will take to fulfill their ambition. The landowner, for example, needs to ask, &ldquo;What will I do with the residuals? Is there a market for green chips in my area? For shavings? What are the consequences of piling up the waste on site?&rdquo; Those asking such questions often need help answering them, too, as they tend to think there are too many options or that none exist for their situation. In such cases, the stakeholders must complete more high-level development work before the project can proceed. Of course, many projects revolve around specific problems at brownfield sites, such as poor uptime or too many pellets crumbling into fines. The project is at a particular facility with specific operational challenges that the team there is looking to address. In these scenarios, the business case isn&rsquo;t the issue; it&rsquo;s how well the manager organizes the nuts and bolts of the project as it gets underway. The effort should begin with a process flow diagram (PFD). The PFD is a critical document, as it describes the flow of inputs through a system and the relationships between subsystems. It also ensures there&rsquo;s an energy balance, and it dictates the size of components like conveyors. Being such an important document, the manager overseeing the PFD should not base it on guesswork (though informed guesswork must sometimes occur). Yet, this does happen. BE&amp;E recently had a customer provide a PFD for a pellet plant devoid of tenable engineering. The project manager tried to pull together the elements of his customer&rsquo;s process from a patchwork of information and what he knew about pelleting systems. Fortunately, our team recognized this and was unwilling to perform work until the project manager had gathered accurate data. Any engineering completed using the PFD would have been wasted. Worse, it could have resulted in purchase orders worth tens to hundreds of thousands of dollars for equipment built to incorrect specifications. Only from an accurate PFD and defined scope can project managers establish dependencies that allow the management team to drive a schedule. Depending on how much the client has done, this step may require managers to start way back in the process. Say the landowner we referenced decides to make pellets from his sawmill residuals. He aims to produce 36,000 tons of white pellets annually, which will require 72,000 tons of fiber. The project manager, in turn, will start by identifying fiber sources, only one of which is the landowner&rsquo;s sawmill. Once the project manager has defined the PFD, they can create a work breakdown document, which maps out who is in charge of what tasks and provides a timeline. Completing such a document is yet another critical step that can prove detrimental to the project if mismanaged. For example, the landowner&rsquo;s project calls for a silo, for which there are mechanical, civil, structural and electrical components. The manager&rsquo;s breakdown document will divide the responsibilities related to the silo into these manageable pieces, as shown in Figure 1. Only after the business case is compiled and the project manager has created the PFD and breakdown documents should they specify components and issue purchase orders for equipment. Without these controlling documents, the project will inevitably blunder. Imagine that the project manager overseeing the landowner&rsquo;s pellet mill forgets to delineate who is responsible for the conveyors&rsquo; structural supports. The oversight results in a months-long delay and adds thousands of dollars of costs related to change orders and rush fees. But such blunders aren&rsquo;t inevitable. Just as people regularly mismanage projects, people regularly manage projects well. Careful planning and well-thought-out documentation are what make it happen. Author: Joel Dulin Director of Marketing &amp; Sales Coordinator Biomass Engineering &amp; Equipment jdulin@biomass-equipment.com

A stainless steel SMART Conveyor delivers pellets to a cooler at LJR Forest Products in Swainsboro, Georgia.

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A material handling system supplied by BE&E awaits its first delivery of shavings at a pellet plant in the U.S. Southeast.

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Successfully managing a project successfully requires an organized start.

Start Well, End Well

The pellet industry is no stranger to accusations from environmentalists that the fiber it uses is not sustainable or is handled irresponsibly. Recently, the Wood Pellet Association of Canada took action to prove these claims are false and combat misinformation with the facts. Gordon Murray, executive director of WPAC, explains that organization commissioned the study in response to articles in environmental publications with photos of logs at pellet plants, accusing the industry of turning whole logs into fuel. &ldquo;They were also accusing us of doing dedicated harvesting on a large scale of forests in order to make wood pellets,&rdquo; he says. &ldquo;And both of those were false, but we knew that people would suspect whatever the industry would say. So, we wanted to get an independent group to report on what we are actually doing.&rdquo; Bull &amp; Bull Consultants performed the study, which entailed a combination of examining and cross-checking data as well as conducting interviews. &ldquo;They examined log scaling data from all across British Columbia, essentially looking at every load that had been taken into pellet plants over a period of time, and then analyzed and compared it with audit reports from the Sustainable Biomass Program. They did a bunch of cross-checking and then came to report conclusions,&rdquo; Murray says. The study analyzed the feedstock source of sawmills in British Columbia for a few reasons, Murray explains. British Columbia has the highest concentration of pellet mill plants in all of Canada, containing 60 to 70% of the country&rsquo;s production capacity. The second reason was that the accusations were targeted at plants in that area. And finally, the data in that province was all in the same format and was easily accessible. The researchers found that 85% of the biomass material was mill residue and 15% was forest residue, with the forest residue breaking down into 11% low-quality roundwood and 4% bush grind. &ldquo;Essentially, we confirmed that all the fiber being consumed by the province comes from residues produced by either other mills or from leftover wood from forests,&rdquo; Murray says. &ldquo;It confirmed that we work in cooperation with indigenous and other communities to improve forest health and support the local economy, and that our fiber sourcing creates an extra revenue stream for sawmills, so it helps the viability of the sawmill industry.&rdquo; Demonstrating that everything harvested from the forest is important for sawmills, he explains. The pellet industry also provides economic opportunities and employment, contributes to fossil fuel substitution and helps manage fire and wildfire risk. &ldquo;As an industry, we want to be responsible using the low-end, what&rsquo;s left behind material, that no other industry can use,&rdquo; Murray says. &ldquo;And if by doing that we can create a renewable product, lower greenhouse gas emissions and offset the use of fossil fuels by replacing coal, for example, then we think we&rsquo;re being an environmentally responsible sector.&rdquo; Gary Bull, forestry professor and one of the study&rsquo;s lead authors, explains that one of the study&rsquo;s surprising findings was the amount of dead biomass in the forest that accumulates due to natural disasters such as fire and insect disease. &ldquo;While you leave some on the ground for biodiversity reasons &hellip; there is still this huge surplus of biomass on the landscape, and if you don&rsquo;t find an industrial way to use it and generate economic activity, the current regulations force you to burn it on-site and create a lot of emissions,&rdquo; Bull says. &ldquo;So, these emissions are a huge problem from a societal point of view in terms of dealing with the climate change problem.&rdquo; The researchers did three case studies throughout the province, Bull explains. One plant was a Drax facility located near Burns Lake, which has a community forest partially owned by First Nations communities that receive a share in the revenue from harvesting the forest. &ldquo;The community had no option to try and get that wood or forest residue to a pulp mill. It&rsquo;s just too far away, so the economics don&rsquo;t work,&rdquo; he explains. &ldquo;So, the community was very supportive of installing a pellet plant.&rdquo; The second case study was a smaller operation&mdash;Skeena Bioenergy near Terrace, British Columbia, where the study found that First Nations communities worked with the sawmills to dispose of residues in the remote location. The third case study was of Drax Meadowbank, a larger facility. Utilization of sustainable biomass provides remote and indigenous communities with a way to decarbonize, Bull explains. &ldquo;Frankly, I&rsquo;ve been in conversations with several indigenous communities that want more, rather than less, use of pellets or chips&mdash;biomass used&mdash;because in remote communities, they&rsquo;re most interested in getting off diesel. Biomass is the most logical way for them to get off diesel power plants in these northern remote communities,&rdquo; he says. One challenge he believes the pellet industry must work through is engaging civil society, especially indigenous people, in conversations about complex problems. &ldquo;I&rsquo;m particularly concerned about the role of indigenous people and how that plays into their land ethic,&rdquo; Bull says. Murray believes the main takeaway from this study is that the wood pellet industry is responsible and concerned about forest health, ensuring complete utilization by turning previously difficult-to-get-rid-of forest and mill residues into a renewable energy product that helps lower GHG emissions around the world. &ldquo;All in all, I think [for] the pellet industry, it&rsquo;s a good news story,&rdquo; he adds. &ldquo;By doing this study, we&rsquo;ve had third parties verify that we&rsquo;re sourcing responsibly.&rdquo; Author: Katie Schroeder Staff Writer, Pellet Mill Magazine kschroeder@bbiinternational.com

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A new study demonstrates the British Columbia wood pellet sector's responsible care for forests and communities. 

Affirming Sustainability

The 2022 Exporting Pellets Conference returned to Miami Beach in October, drawing a diverse mix of bioenergy industry stakeholders from all over the world. At the famous Fontainebleau resort, attendees convened in the afternoon on Oct. 2. The World Bioenergy Association&rsquo;s Christian Rakos, master of ceremonies, opened the event, describing the present as &ldquo;a decisive time in this sector. I think it&rsquo;s a time to keep our eyes and ears wide open to be well connected, and to hear any different views of the world in this respect,&rdquo; he said. After a brief welcome, Rakos introduced Thomas Meth, chairman of USIPA and president of Enviva, for a state-of-the-industry discussion that emphasized how some of the most significant current events&mdash;whether directly are indirectly&mdash;are related to critical discussion topics at the conference. &ldquo;I have been doing this for 20 years, but until two or three years ago, this was really about manufacturing wood pellets for the power and heat sector,&rdquo; Meth said. &ldquo;And now, it&rsquo;s an entirely different world. We&rsquo;ve had the pandemic, we&rsquo;ve had supply disruptions, we&rsquo;ve had regulatory confusion, we have the war in Ukraine&mdash;which of course is unbelievably sad&mdash;and we had a hurricane just a few days ago, on the outside of Florida. You have to stop and think about the devastation; it&rsquo;s deeply troubling and saddening. And at the same time, it reminds us that we are really here to fight for a better outcome for climate change. And that has motivated and been a great passion for me &hellip; and I know that&rsquo;s why all of you have come back here, to this conference, in 2022.&rdquo; At the annual event&mdash;which took a hiatus in 2020 and 2021, due to the pandemic&mdash;one of USIPA&rsquo;s goals is to create a snapshot of where the industry is, Meth said. &ldquo;Of course, that means we&rsquo;ll talk about the elements that have allowed us to grow to what we&rsquo;ve become so far, but we&rsquo;re also going to have all sorts of variables&mdash;liquid [biofuels] and other industries that we historically haven&rsquo;t dealt with.&rdquo; But whatever the technology or end product, it always comes down to one point, Meth emphasized. &ldquo;And that is, where will the feedstock come from, and how do we ensure it&rsquo;s sustainable, that it will be there tomorrow? How can we scale it in a way that matters? How do we bring it from place A to place B? [Place] A being where it available in large quantities in a sustainable manner, to B, where it&rsquo;s most useful. Those places are typically not in the same spot. That&rsquo;s the basis of why we exist.&rdquo; For the past 10 years, USIPA has been a successful, true force when it comes to educating stakeholders and ensuring that a backbone is in place for the industry to do business, Meth said. &ldquo;And the role of USIPA has never been more important,&rdquo; he added. &ldquo;When you think about the discussions in Europe and the European parliament, if we don&rsquo;t make our case&mdash;particularly the noise of ideology versus national security driven by energy&mdash;the case will be made for us. It has never been more important that we support industry associations like USIPA, to allow them to put our best foot forward.&rdquo; Meth reiterated how imperative it is that as much sustainable biomass as possible is mobilized for the many different potential applications available today. &ldquo;It&rsquo;s not only sustainability&mdash;though without it, the rest doesn&rsquo;t matter&mdash;we also have to make the case for the good outcomes it creates &hellip; for the concepts of national security and energy shortages&mdash;this has never been more prominent in our industry than it is today. When we think about the discussion in the U.S., how the government can help Europe more quickly decrease its dependence on Russian gas, wood pellets do play a role. This isn&rsquo;t just about gas&mdash;this is about biomass mobilization.&rdquo;&nbsp; From biochemicals to green hydrogen, energy from woody biomass isn&rsquo;t something of the past, from Meth&rsquo;s perspective. &ldquo;In fact, it&rsquo;s quite the opposite.&rdquo; Author: Anna Simet Editor, Pellet Mill Magazine asimet@bbiinternational.com 701-738-4961
Photos by Tim Portz

Thomas Meth, president of Enviva, delivered the keynote address at the U.S. Industrial Pellet Association's Exporting Pellet Conference. 

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Jonathan Scott, Lynemouth Power; Rick Taylor, Drax Biomass; Soren Alsing, Orsted; Fabien Mehu, Engie; Alf van Weereld, Uniper; and Martin DeWolff, RWE, participated in biomass procurer panel, discussing market trends, developments and future industry

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Christian Rakos, president of the World Bioenergy Association, and William Strauss, president of FutureMetrics Inc. Strauss presented on the potential for carbon capture and storage, as well as biomass supply and demand in the Asia-Pacific market. 

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Meth presents a lifetime achievement award to Seth Ginther, former executive director of USIPA. Ginther spent over a decade in the role.

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Fiona Matthews, associate director at Hawkins Wright, provided a global wood pellet market overview with a focus on demand and how it has evolved over the past 18 months. Fossil fuel pricesâ€”coal and gasâ€”are at levels that were previously unimagin

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Joseph Kennelly, Oldendorff Carriers USA; Aki Onoue, Enviva; Gordon Lugsdin, Enviva; and Thomas Hansen, Oldendorff Carriers USA

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Christian Rakos was the Exporting Pellets Conference master of ceremonies. Rakos, a physicist, has been involved in renewable energy for the duration of his career and was the founding president of the European Pellet Association.

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Amandine Muskus was introduced as USIPA's new executive director. Muskus will draw on 18 years of experience in multilingual public policy, lobbying and international strategy. Prior to USIPA, Muskus led global government affairs for StreetLight.

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Mark Lyman, West Salem Machinery; Ken Upchurch, Bruks Siwertell; and Theresa Weiler, Brucks Siwertell

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Cate Barber Moran, Chartering NYK, participated on a panel discussing the transportation sector's drive to decarbonize. "Getting to zero carbon is the most important thing to us, and we will try it all," Moran said. "Everything is on the table."  

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Holger Streetz, Bathan AG; Timo MÃ¼ller, Salmatec; Scott Bax, Peak Renewables; and Anna Simet, Biomass Magazine.

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The annual Exporting Pellets Conference left no stone unturned in discussions about the ever-expanding applications for sustainable biomass.

Mission Biomass Mobilization

Scott Bax, CEO at Peak Renewables, was the guest on Season 1, Episode 9 of the Biomass Magazine/Pellet Mill Magazine podcast. Most recent to joining Peak Renewables, Bax served as chief operating officer at Pinnacle Renewable Energy (now Drax), where he grew the business threefold, to over 2.5 million metric tons of annual wood pellet production. Bax exudes passion for sustainable forestry, the environment and giving back, and he gave us all the details about Peak&rsquo;s business model and developing projects. PMM: Tell us a little about your background. &nbsp; Bax: Early on in my life, I had the opportunity to work in the forest products industry, and during those experiences, it became clear that I wanted to channel my passion for trees into a career. That led me to the University of Alberta, where I got my master&rsquo;s in business administration and master&rsquo;s in forestry. From that point forward, I focused on trying to work in as many aspects of the forest industry as possible. So, over the next two decades, I worked in areas from reforestation and forest management to harvesting, to continuous improvement and consulting in the forest products industry, for sawmills and value-added products, and then finally to wood pellets. Those opportunities had me working and living both across Canada and the U.S., and I&rsquo;m incredibly grateful for them. PMM: You&rsquo;re at Peak Renewables now. Can you give our listeners a high-level rundown of what your company is all about? Bax: Fundamentally, Peak is a renewables company focused on partnering with other companies, organizations and indigenous groups, to make sustainable, renewable products that reduce the carbon footprint of today through the utilization of marginalized trees, forest and mill residuals, as well as other biomass that would typically go to waste. Today, we&rsquo;re working on various projects including industrial pellets, black pellets, biocoal, biochemicals, as well as carbon sequestration and hydrogen. We have a very broad sphere of potential products, with a number of projects in the que. And we have been very fortunate that we have a chairman and individual who is an exceptionally visionary leader, by the name of Brian Fehr. Brian spent many decades effectively revolutionizing the sawmill industry with his company, the BID Group, which he sold a number of years ago. In that transition, he started a new series of companies with a vision of making a difference&mdash;reinvesting in communities, and partnering with First Nations and likeminded organizations trying to make the world a better place. That vison inspired me and brought me to Peak, and really, it&rsquo;s an exciting time to grow an organization &hellip; PMM: You have been in the wood pellet business for a decade. What are a couple of key takeaways &nbsp;for someone considering starting a new company? Bax: That&rsquo;s a great question. I would have to say &hellip; one is that you don&rsquo;t know what you don&rsquo;t know. Wood pellet production, by many standards, is a young industry&mdash;decades younger than the internet &hellip; Collectively, we&rsquo;re still evolving. I would say that industry experts are rare, and there have been many good companies that have failed. So engage and partner with organizations and people in ways that can ultimately reduce your risk. Another takeaway is&hellip; Tune in for the rest of the podcast at www.biomassmagazine.com/pages/podcasts Don't Miss an Episode: Biomass Magazine's recent podcasts: S1 E12 Surveying Momentum in the Biomass Economy Featuring Ben Hubbard, Nexus PMG S1 E11 Analyzing and Promoting Renewable Wood Heat in Maryland Featuring Maura Ross, Wood Energy Coordinator at Maryland Clean Energy Center Interested in being a guest? Contact Danielle Piekarski at dpiekarski@bbiinternational.com

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Scott Bax, CEO at Peak Renewables, was the guest on Season 1, Episode 9 of the Biomass Magazine/Pellet Mill Magazine podcast. 

Podcast Preview with Scott Bax, Peak Renewables

Following a public consultation, on Oct. 25, the U.K. Department for Business, Energy and Industrial Strategy announced it will implement a 12-month suspension of certain fuel quality requirements for domestic and nondomestic Renewable Heat Incentive scheme participants using wood pellets, in order to help ensure adequate fuel supplies this winter The BEIS estimates that up to 40% of the ENplus pellets used in the U.K are imported from Russia and Belarus. The agency said that the ban of wood pellets imported from these countries is likely to impact the availability and price of wood pellets in the coming months and through the winter of 2022-&rsquo;23. Most consultation respondents expressed overall support for a temporary suspension of the fuel quality requirement for RHI participants using wood pellets, the BEIS said, and while the use of non-ENplus pellets could have short-term negative impact on fuel efficiency and air quality in some cases, those impacts have been deemed as acceptable so that homes heated by biomass do not experience significant price rises or a lack of fuel supply this winter. The BEIS noted the 12-month suspension could be extended in the future. Drax Group plc released financial and operational results for the first half of 2022, reporting significant increases in both operating profit and wood pellet production when compared to the same six-month period of 2021. Drax produced approximately 2 million metric tons (MT) of wood pellets during the first half of this year and shipped 2.4 million MT. The company produced and shipped 1.3 million MT of pellets during the same period of 2021. An estimated 1 million MT of wood pellets were sold to third parties during the first half of 2022, up from 400,000 MT during the same period of last year. According to Drax, its cost to produce wood pellets and transfer them to a port in North America for onward transit was at $146 per ton during the first half of 2022, up 2% when compared to last year. The company primarily attributed the increase to the inflationary impact on utilities and bunker fuel. The U.S. exported 880,876 MT of wood pellets in August, up from 649,185 MT the previous month and 647,922 MT in August 2021, according to data released by the USDA Foreign Agricultural Service on Oct. 5. The U.S. exported wood pellets to approximately 20 countries in August. The U.K. was the top destination for U.S. wood pellet exports at 484,637 MT, followed by the Netherlands at 243,397 MT and Belgium-Luxembourg at 49,500 MT. The value of U.S. wood pellet exports reached $150.74 million in August, up from both $119.89 million in July and $90.43 million in August of last year. Total U.S. wood pellet exports for the first eight months of 2022 reached 5.85 million MT at a value of $1 billion, compared to 4.77 million MT exported during the same period of 2021 at a value of $687.13 million. The U.S. Energy Information Administration recently released the September edition of its Monthly Densified Biomass Fuels Report, which indicates 80 operating manufacturers produced approximately 930,000 tons of densified biomass fuel in June, with sales reaching 1.07 million tons. Combined production capacity was approximately 13.27 million tons per year. Collectively, producers had the equivalent of 2,479 full-time employees. Respondents purchased 2.16 million tons of raw biomass feedstock in June, produced 930,000 tons of densified biomass fuel and sold 1.07 million tons of densified biomass fuel. Production included 138,544 tons of heating pellets and 800,845 tons of utility pellets. Domestic sales of densified biomass fuel in June reached 140,340 tons at an average price of $203.48 per ton. Exports in June reached 933,554 tons at an average price of $192.49 per ton. Inventories of premium/standard pellets increased to 310,998 tons in June, up from 300,511 tons in May. Inventories of utility pellets fell to 352,243 tons in June, down from 393,803 tons in May. In late October, FutureMetrics published a new white paper that focuses on how reduced pellet supplies in Western Europe and the U.K.&mdash;resulting from sanctions on Russia&mdash;has produced a supply shock that has vastly increased prices. According to the consulting firm, global pellet supply has historically been, on average, sufficient to meet demand. Local seasonal shortages have occurred during unusually long, cold winters, but aggregate supply has been sufficient to meet aggregate demand.&nbsp; With Russian sanctions now in place, a significant portion of the 3.5 million metric tons of wood pellets exported from these regions last year are no longer entering European markets. As a result, prices for pellet fuel have risen to previously unseen levels in every country that uses pellet fuels for heat and power generation. The white paper cites data indicating that industrial pellets are trading on the spot market at more than $453 per metric ton. The price for heating pellets has risen even higher in many European markets in recent months, with the German bulk price surpassing $760 per ton earlier this fall. &lsquo;Na Aksa Gyilak&rsquo;yoo School in Terrace, British Columbia, received a boost to its educational initiatives with a $2,000 contribution from the Wood Pellet Association of Canada, Skeena Bioenergy and the Prince Rupert Port Authority. The announcement was made at a luncheon hosted by the Kitsumkalum Economic Development Group. It was the last stop in a series of events that began with WPAC&rsquo;s annual conference in Vancouver, then onto Prince Rupert and ending in Terrace, with a tour of the Nation&rsquo;s local forest operations and logistics park. An independent analysis by Oxford Economics shows that last year, renewable energy leader Drax contributed approximately $744.6 million toward the Canadian economy and supported 10,400 jobs across the U.K. The analysis measured the economic impact of Drax Group&rsquo;s Canadian operations, which includes 10 wood pellet plants across British Columbia and Alberta. Drax spent $548 million with Canadian suppliers last year, with more than half of this total (58%) spent with businesses located in British Columbia. A further 13% was spent with businesses in Alberta and 12% with firms in Montreal. Enviva Inc. held a ceremonial ribbon cutting at its recently constructed wood pellet manufacturing facility in George County, Mississippi. The Lucedale plant is Enviva&rsquo;s second operating plant in the state, and the first plant in its newly formed Pascagoula cluster. The Lucedale plant began its production ramp-up at the beginning of 2022, with a goal of reaching an annual permitted production capacity of 750,000 metric tons per year. Construction of the plant represented an investment of more than $215 million in the county, according to Enviva. The company said now that the plant is fully operational, it has hired approximately 90 full-time employees for the facility, which supports nearly 300 jobs across the George County community.

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Pellet News Roundup 

Earlier this year, in Issue 2 of Pellet Mill Magazine, I authored a column titled &ldquo;Filling a 2-Million Ton Hole.&rdquo; In the article, I offered some back-of-the-envelope calculations to frame up how North American wood pellet producers who serve the domestic heating and BBQ market might contribute to easing the European supply shock created by the Russian invasion of Ukraine, and the resulting sanctions on Russian goods&mdash;wood pellets included. I closed the column by noting that stateside producers would have to perform some tricky calculus and make some bets on the length and depth of winter when making decisions about how much, if any, of their production they would be willing to commit to opportunities overseas. As the industry plunges headlong into the heart of the home heating season and consumers fire up their pellet appliances, we are being reminded that despite the year&rsquo;s unique marketplace dynamics, it is the weather that drives demand. The industry has successfully increased early pellet buying with its end users. By the end of summer, most pellet users have purchased some, but likely not all, the pellets they will need for the season. Instead, consumers delay the purchase of the remainder of their supply until later in heating season, buying as necessary. It is this late season &ldquo;top off&rdquo; that separates the years with strong sales numbers from those with disappointing results. The back half of the 2021- &lsquo;22 heating season offers a stark illustration of the impact of mild temperatures on pellet demand. U.S. heating pellet sales for February through April were just 250,000 tons, well off the February through April average of 345,000 tons. Consumers with one eye on their remaining pellets and the other on unseasonably warm forecasts simply skipped or significantly curtailed their late season top off. Compare those numbers to the second half of the 2018- &lsquo;19 heating season, when the February through April top off yielded pellet sales of 437,000 tons, nearly 75% more than the lackluster top off the industry just experienced. Interestingly, pellet sales in the first half of the following heating season were brisk as well. The reason for that, retailers have shared with me, is pellet buyers remember running short the prior year, and beefed up their first purchase the following year. In October 2019, pellet sales were an eye-popping 283,000 tons, just short of the 289,000 highwater mark for pellet sales in any month since the U.S. Energy Information Administration started collecting the sales data in 2016. Last year, the Pellet Fuels Institute launched its PFI Heating Degree Day Index to provide producers and retailers alike with an at-a-glance snapshot of how the winter is shaping up when compared to the year prior and long-term averages. This year, the PFI HDD Index reveals that winter got off to a colder start than last year in all pellet-burning regions, with the exception of the Pacific Northwest. That said, pellet-burning regions are lagging long-term, accumulated HDD averages, all by more than 20%. Lackluster heating seasons impact the sales totals of two calendar years. Last heating season&rsquo;s soft sales resulted in annualized pellet sales of just 1.7 million tons for 2021, the lowest annual total in the report&rsquo;s history. The back half of the 2021- &lsquo;22 heating season was slower than the front half. Through July, pellet sales total just 774,000 tons, well off an average of 915,000 tons through the same period. While the heating season will be all but over before a clear picture of how the year unfolded emerges, I suspect that producers&mdash;hoping to avoid two consecutive years where sales fizzled&mdash;are taking opportunities to move pellet volume overseas when and where they can. The industry exited July with an inventory position of over 300,000 tons, the most since 2018. Paired with a trend toward warmer winters, it isn&rsquo;t surprising that the question for producers with access to ocean freight egress has moved beyond &ldquo;Should we take opportunities in the export market?,&rdquo; and toward &ldquo;How much volume should we commit to export opportunities?&rdquo; Author: Tim Portz Executive Director, Pellet Fuels Institute tim@pelletheat.org www.pelletheat.org

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As the industry plunges headlong into the heart of the home heating season and consumers fire up their pellet appliances, we are being reminded that despite the year's unique marketplace dynamics, it is the weather that drives demand.

Pellet Mill Magazine Issue 4

Business Briefs

Business Briefs

Columns

A Mashup of Industry Elements

Commodities, Inflation and the Upcoming Heating Season

The Table is Set

It's the Weather, Silly

Featured

Assessing the Global Supply Landscape

Surveying Costs

Affirming Sustainability

Mission Biomass Mobilization

Contributions

A Rational, Pragmatic Off-Ramp to Decarbonization

Conveyor Technology:Designing for the Future by Innovating the Present

Consequences of Load Strategy

Project Talk

Start Well, End Well

Departments

Thinking Inside the Box

Podcast Preview with Scott Bax, Peak Renewables

Pellet Mill Magazine Issue 4.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Business Briefs

Columns

A Mashup of Industry Elements

Commodities, Inflation and the Upcoming Heating Season

The Table is Set

It's the Weather, Silly

Featured

Assessing the Global Supply Landscape

Surveying Costs

Affirming Sustainability

Mission Biomass Mobilization

Contributions

A Rational, Pragmatic Off-Ramp to Decarbonization

Conveyor Technology:Designing for the Future by Innovating the Present

Consequences of Load Strategy

Project Talk

Start Well, End Well

Departments

Thinking Inside the Box

Podcast Preview with Scott Bax, Peak Renewables

Pellet Mill Magazine Issue 4