Conference panel addresses pellet export opportunities

There’s no question that tremendous potential exists in the Southeast U.S. to develop a robust wood pellet industry, according to Johnny Leggett, senior project manager of engineering firm Hunt, Guillot & Associates LLC. Leggett was one of four speakers on Southeast Biomass Conference & Trade Show plenary panel Awakening the Giant: Examining the Potential for the Pellet Industry in the American Southeast. Speakers leaned heavily on the potential for export from the region to Europe, as demand there is growing and the EU aims to source 20 percent of energy from renewables by 2020.

“It’s no surprise to anyone in this room that the world demand for renewable energy is increasing,” Leggett told attendees at the Atlanta, Ga., conference, which was held Nov. 2-4. The audience stayed silent when Leggett asked if anyone thinks there is not a demand for pellets. “Come on,” he prodded, still met with silence broken by a few chuckles. Satisfied, he went on to share that the keys to awakening that giant in the Southeast are harvest techniques, pellet plant location, plant operation costs and plant performance.

Fellow speaker Saritha Peruri, manager of business development for California-based energy crop company Ceres Inc., introduced the crowd to another opportunity for pellets, dedicated energy crops. “There are more opportunities than just wood,” she said. Energy crops are favorable to woody crops in many ways, she said, including moisture content, yield and carbon life cycle.

“Biomass has a massive identity crisis in the U.S.,” she said, citing currently-proposed unfavorable federal policies such as the U.S. EPA Tailoring Rule and IB MACT. But energy crops are forecast to be the most dominant type of biomass in the European Union by 2020, she cited. “So American growers can focus on European export opportunities,” she said.

The Southeast U.S. is the most attractive region to supply the European demand, with its export logistics, superior biomass yields and availability of contiguous acres. This could start soon, especially with the reinstatement of BCAP, which makes the economics of energy crops favorable again with matching payments to support growers. Eventually, the U.S. can “jump on the bandwagon” and fire up its own domestic pellet markets when it’s ready, Peruri said, with many lessons already learned from the involvement of the Southeast region in the EU’s markets.   

But the U.S. will not soon have a robust pellet market, so those European markets are crucial to any developing market in the Southeast, according to panelist Karl-Heinz Schulz, vice president of technology and engineering for North Carolina-based pellet manufacturing solution firm BiEnergy Group. Biomass encompasses a 65.8 percent share of the European renewables market, he said. “Biomass is clearly the way to accomplish those (renewables) goals,” Schulz said.

Pellet export from the Southeast will not come without its challenges, however, and Schulz named five: location; long-term off-take and feedstock agreements; management of currency and shipping risks; and optimization of plant design to match project-specific requirements.

Panelist Thomas Meth, executive vice president of sales and marketing for Virginia-based pellet manufacturer Enviva LP, discussed pellets themselves, along with the suppliers of today. He said Russia, South America and the Baltics will be competitors for North America in exports to Europe.

“There are 400 pellet plants in Europe,” Meth said. “We have a lot to learn.” But the potential is tremendous, he added, and solid biomass will be the answer to meeting Europe’s goals.

“Biomass and pellets will take a leading role in achieving the binding European 2020 renewable energy sources targets,” Schulz said. “”Europe will remain dependent on international pellet imports.”