USIPA event closes, producers eye flat year ahead

USIPA’s 5th Annual Exporting Pellets conference concluded with a more sober assessment of the global pellet market when compared with the optimism that largely marked the 2014 event. The conference’s final day was comprised of market outlooks offered by Enviva President & CEO John Keppler, Nigel Adams, a conservative Member of Parliament representing North Yorkshire and the conference’s traditional endcap panel built entirely of pellet producers.

Keppler began the morning by drawing attention to the incredible progress the industry has made in the five years since the conference began. He told the audience the industry’s progress could be traced directly back to their hard work and efforts. Keppler reported that the global pellet market now stands at 28 million tons of consumption annually, with 15 million tons flowing into the heat market meaning that for now the majority of pellets produced are used to produce heat. This 28 million-ton market is worth $5 billion annually. Keppler then offered a bullish forecast saying he “had no problem imagining a global pellet market worth five times that amount, a $25 billion worldwide market.”  While Keppler allowed that a newly installed conservative majority in the United Kingdom warranted keeping an eye on, he reiterated that biomass co-firing and conversions were the cheapest way for any government to achieve the environmental goals it sets relative to energy production.

Keppler then spent the remainder of his remarks talking about the work the industry has in front of it building a “license to operate.” Keppler started by reiterating what had become a common thread throughout the conference, the overall affordability of biomass. Keppler, like other presenters before him reminded the audience that biomass co-firing and conversion needed no distribution infrastructure built to support it, nor does it require the back-up capacity that solar and wind typically need. Keppler also talked about the benefits the industry offered to forests and forest landowners and urged the audience, “we have to talk more about that.” Keppler then moved on to the jobs the industry has created, reminding the audience that since 1995 demand for pulpwood for pulp and paper manufacturing had fallen by 100 million tons.  The jobs created in the forestry sector to support pellet production are welcome in timber baskets hit hard by the pulpwood market downturn. 

Keppler concluded by offering his thoughts on some steps he feels are vital for the industry to take to maintain its social license to operate. First, Keppler urged the producers in the room to dedicate themselves to plant safety. “There is nothing that will mess this industry up more than a poor safety record,” he said. Keppler concluded his remarks by suggesting that ultimately, forest level certification would be in the industry’s long term interest to satisfying European policy makers and rate payers. Forest level certification, thus far, has drawn criticism from landowner groups in the United States as being unnecessary, onerous and cost prohibitive. Keppler noted these objections and suggested that the industry and forestry groups were already working at driving down the cost and administrative burden for landowners.

The conference’s final panel was built entirely of pellet producers and moderated by Seth Ginther, the executive director of USIPA. The conversation ranged from the newly installed conservative government in the United Kingdom, the best way to articulate the industry’s value proposition with skeptical policymakers who are inundated with misinformation from non-governmental organizations and the progress towards operational excellence. Mike Williams of the Westervelt company energized the audience when he said, “we plant more seedlings in a year than these ‘environmentalists’ likely plant in their whole lifetime."

The conference adjourned with Ginther welcoming everyone back to Miami in early November of 2016.