Canada's wood pellet industry examines rapid growth

By Kolby Hoagland | November 19, 2013

The Wood Pellet Association of Canada’s annual general meeting is ongoing in Vancouver, British Columbia, Nov.18-20.The meeting is offering attendees panel discussions on market trends, an expo hall of pellet industry vendors, an industry tour of Fiberco’s export terminal at Vancouver Harbor, and numerous networking sessions where attendees are able to meet potential clients, share strategies, and build partnerships.

Presenters in the six panels, which are covering export logistics to sustainability, offer attendees insight on current and future market growth for the Canadian pellet industry. Along with Biomass Magazine, over 300 industry professionals are taking part in this year’s annual meeting.

Robert Tarcon, general manager of Premium Pellet and current president of WPAC, began the annual meeting by noting that attendance to this year’s meeting has more than tripled from previous year’s annual meeting. Gordon Murray, executive director of WPAC, followed Tarcon and likened the growth of the WPAC’s annual meeting to the growth of the pellet sector.  According to Murray, the world pellet industry has grown by a compound annual growth rate of 23 percent since 2000. A considerable amount of this growth is due the voracious demand from Europe.

In 2012, Canada exported 1.6 million metric ton of pellets to Europe, most of that going to the United Kingdom. The increase in demand has put a strain on producers meet this demand. This “capacity gap,” or inability to meet current and future demand from existing capacity, has generated significant excitement in the Canadian pellet industry.

Along with the WPAC leadership, pellet producers, consumers, and market analyst comprise the twenty seven speaking roles in WPAC annual meeting agenda. Andre Bebard from Granules LG Wood Products, which operates 200,000 metric tons of pellet capacity in Quebec, emphasized that the company has had to quickly learn how to run pellet export business. Bebard joked, “I called it a boat at first and not a vessel.”

Bebard and his colleagues at Granules LG Wood Products have learned quickly, he said, and have navigated investment into building holding capacity at their export facility in Quebec.

Beyond the steep learning curve that Canadian pellet producers and exporters face, presenters at WPAC indicated that securing consistent feedstock is currently the biggest challenge to pellet producers in Canada. The majority of the fiber used in Canadian pellet production is made up by the residual fraction that is produced by saw mills and wood products facilities. As a result, pellet producer are highly dependent on the lumber and wood products industry for feedstock. Gordon Murray suggested that industry growth should look at forest residuals as feedstock. Forest residuals, as opposed to mill residuals, largely go unused and are burned in slash piles in the forests.

Murray emphasized the opportunity and reasoning behind looking to forest residue as a feedstock. “Do we want to burn the forest slash in the forest and burn coal in a power plant?,” he said. “Or, should we burn that slash in place of the coal in the power plant? Seems like a clear answer to me.”