USIPA kicks off with building optimism for US producers overseas

By Katie Fletcher | November 07, 2016

The 6th Annual U.S. Industrial Pellet Association conference kicked off in Miami Nov. 6 with a keynote panel moderated by chairman and CEO of Enviva John Keppler. Cross-Atlantic biomass perspectives were shared by Tom Tidwell, chief of the U.S. Forest Service; Bruce Westerman, U.S. Congressman; and Nigel Adams, U.K. Member of Parliament.

The keynote panel shared an overall positive outlook for the future of industrial wood pellets, with emerging themes of Asia market optimism and wood pellet's adaptability for use in the creation of a number of other products. “We're just getting started and never before has it been more true than right now,” Keppler stated to the audience on the onset of the conference.

Keppler noted that Asia, specifically Japan, is without a doubt the most interesting market right now for the industry, and how U.S. producers have the ability to deliver at cost parity, even in the Southeast. He shared a few positive biomass activities in the U.S. with the Boardman, Oregon, plant now cofiring, the MISO Midwest grid operator foreseeing coal plant closures and capacity squeeze by 2018, Maine approving incentives and policy makers starting to view biomass as a cost-efficient renewable strategy.

Before he turned the panel over, he spoke to the adaptability of wood pellets. Keppler said that as costs decline, wood pellets will transition from regulated to unregulated markets and new uses and applications can be enabled like combusted heat and power, chemicals, compost material and plastics.

Congressman Westerman, who represents the fourth district of Arkansas, echoed Keppler’s comments on diversifying the wood pellet supply chain for the future by utilizing wood to make products we use every day. He mentioned there is great potential with chemicals.

New demand is on the horizon and served as a point of optimism speakers offered the audience in their comments. Contracts for Difference (CfD) has been approved for Lynemouth’s power generation station, MGT Teeside has obtained its financing, and Drax now accounts for 20 percent of U.K.’s renewable energy generation. The panel agreed more customers in the supply chain are welcome to sell pellets to, and it’s a sign of a mature industry and one that can deliver on its potential.

Adams shared his Cross-Atlantic perspective from the U.K., by giving three key reasons to be optimistic about the future of the industry. The first is Brexit. Adams said that as the country has begun its journey out of the EU, he looks at this as a “huge opportunity that will reshape our economy and place in the world.”

He referenced his call to attendees at last year’s USIPA conference to bang the drum to win the industry the attention it deserves and how that task is even more pressing now. “The sector’s supply chain relies heavily on U.S., Canada relationships—that will become increasingly important as the U.K. exits the EU,” Adams said. “Our government should be looking to the biomass industry on how to do business in the post-Brexit era and ensuring that the trans-Atlantic biomass trade has a place in any future agreement.”

The second reason for optimism Adams offered is the new government’s focus on industrial strategy, including it's inclusion in the name of the Department for Business, Energy and Industrial Strategy. “Any future U.K. industrial strategy should include the energy sector with biomass at its center,” he said.

Each wood pellet project in the U.K. delivers jobs, Adams said. He referenced a report Drax published that estimated biomass business directly supports over 14,000 jobs in the U.K. directly, and generates an estimated 1.2 billion pounds for the entire country.

The final reason Adams gave is the unique properties of biomass generation. The increasing volume of intermittent wind and solar coming on the U.K. grid in recent years is only going to continue, he said. “This development is fundamentally changing the economics of U.K. energy sector,” Adams added. He mentioned how it’s running many coal stations of the system entirely, and that the stations running on biomass present real opportunity in helping balance the grid.

He closed his remarks by saying, “Despite what has clearly been a turbulent and mixed 12 months, we should be positive about the future that lies ahead for the biomass industry in the U.K., and embrace opportunities that lie ahead, particularly while exiting the EU.”

Tidwell spoke third sharing his perspective of how the wood pellet industry supports U.S. forestry. Forty-four percent of forests in the U.S. have some level of protection to show it’s managed sustainably, leaving 56 percent that’s privately owned from 11 million land owners. He said that wood pellets and other wood products create a market for private land owners to keep forested lands, forested. “We’ve increased forest acres since we started exporting pellets,” Tidwell said. He also shared that more biomass needs to be removed from U.S. landscapes than can be used in this country, so exports and EU bioenergy policy is welcomed and embraced.

Welcome remarks were provided the following day from Harold Arnold, president of Fram Renewable Fuels and USIPA chairman, as well as USIPA’s executive director Seth Ginther. On his recent visit to Japan, Ginther returned optimistic about what that market could hold for industrial pellet producers. “The week I spent there was fascinating,” Ginther said. “We did an event at the U.S. Embassy—the U.S. Department of Commerce does commodity events where they will invite buyers of U.S. goods, and they ended up with about 160 participants. They said that was the largest crowd they’d seen for a U.S. commodity, so I think that’s emblematic of the potential appetite that is coming out of the Japanese market.”

He shared from a membership perspective that a trade mission of U.S. producers and others in the supply chain will be taken to Japan in the first quarter of next year and they'll do a number of events there to try to get that market started.

Ginther also shared some thoughts on Europe. “The political situation in Europe as well as here in the U.S., depending on what happens tomorrow, presents us with a real opportunity to make a case for biomass for further support in European markets and other places,” he said. “It’s an exciting time.”

Like the keynote panel, he concluded his opening remarks by sharing new market opportunities beyond heat and power. “We’re working closely with USDA and U.S. government to establish a memorandum of understanding between the U.S. and the Dutch government looking at biorefineries and other uses of our product.”

The conference runs Nov. 6-8.