Future Glowing BRIGHT
The pellet industry is slated to at least double in size over the next few years, and WPAC is ready to grow with it.
by Bill Tice
Bioenergy is a hot topic these days. And as carbon-based fuels climb in cost, it may be a subject that continues to consume space in newspapers and journals, along with airtime on television news and public affairs programming. For John Swan, that's a good scenario.
As the executive director of the Wood Pellet Association of Canada, Swan will take any publicity he can get to promote his association and its mission, which is "To advance the Canadian Pellet Industry in its work to grow the bioenergy field and wood pellet industry into the most economically viable, sustainable option to generate power."
Wood pellets, he says, are ideally suited environmentally when it comes to generating heat without contributing particulate to the environment. "The pellets are composed of waste wood materials, including sawmill residue, municipal landfill waste and even grain crops."
The wood pellet industry has grown substantially in Canada over the past 20 years. What was once a handful of back yard businesses producing a few pellets for local use in wood stoves, is now a $250 million industry when you add in the shipping costs of getting the product to market. "Even at the mill gate, it's a $150 million business and we employ almost 400 people across Canada and contribute $35 million annually in wages," Swan adds.
And it continues to grow. At the recent Council of Forest Industries (COFI) annual meeting in Prince George, Don Roberts of CIBC World Markets predicted pellet production would rocket from 1.2 million tons per year to over 5 million by 2010 (details at www.canadianwoodproducts.ca).
When it comes to markets for wood pellets, 80% of Canada's production is bulk shipped overseas, primarily to Europe, where it is used for industrial and commercial purposes such as power production. The balance goes mainly to the US with a small amount staying in Canada for the residential side of the business.
Swan, who is based in Prince George, BC, notes that membership in the Association has grown with the industry. He says the Association started off about a decade ago with four member companies. Today, they have a membership of 10 companies and an associate member list that numbers a dozen suppliers such as transportation companies, equipment manufacturers and consultants.
"When we started out, all of the initial member companies worked independently, so we really didn't do much with the organization until almost two years ago. At that time, we decided that we could serve ourselves better if we had an association that could tell the world, including politicians and media, the impact we have economically and environmentally. We recognized that we needed to do a better job of managing our communications and of letting vendors such as CN Rail and the offshore shipping companies know what we are about so they could prepare themselves to supply better service. That takes up half of our time. The other half is what really brought us together in the fist place - issues that need attention and research to get answers that benefit all member companies."
Having a Gas
One of the biggest issues being addressed by the Association right now is off gassing. "When anything biological is in storage, you have off gassing," explains Swan. "To address this issue, we have created a lab at the University of BC where they can duplicate the activity levels we would experience in real life. Right now, they are completing measurements so that we can put together precautionary data."
The other major issue the Association addresses is fibre supply, both short and long term. "Basically, for fibre we work with sawmills to use whatever falls to the sawbox floor and there is still an abundance of this material that is not used today," says Swan. "The primary mills have always been aware of us, but have only started looking more seriously at our industry in the past few years. Many of these companies are doing their own evaluations to determine whether they should get into the pellet industry themselves, or work with other organizations like Canfor did in Houston, BC, when they opened a pellet plant in partnership with Pinnacle Pellet Inc. of Quesnel, BC, and the Moricetown First Nation. In my opinion, partnerships and joint ventures are the way to go. Our forest industry has evolved to the point where the major producers do what they do best and should let someone else do the same."
According to Swan, the fibre supply for pellet production could be unlimited. "In addition to what is left at the sawmill, we have this silver lining in BC called beetle kill," he adds. "This will provide us with significant opportunities to grow the bioenergy business. At the end of the day, I think it is going to supply us with the catalyst to not only jump start the pellet industry, but the bioenergy business in general."
Swan would like to see the pellet or bioenergy business' fibre market called AAB for Annual Allowable Biomass, instead of the forest industry's AAC, or Annual Allowable Cut. "We need a system where you start at the top of the value chart and work down," he explains. "At some point on that chart, you cross a line where you go from cubic metres to megawatts. Canada has an extremely green advantage when it comes to biomass, but we are too focused on what is under the ground and what is above the ground. We only see oil and gas and 2x4s, not the bioenergy."
He also says the provincial governments need to be on side with this. "The Ministry of Forests has to understand that this fibre is not going to produce cubic metres. It is going to produce megawatts, and that has to be factored into the cost of the fibre. If they want us to use this as energy they have to give us access and capture the real value of this resource."
If the pellet industry can work out the fibre supply and cost issues, Swan sees endless growth for his member companies. "Because of the carbon neutrality of our products, we are helping with the commitment of reducing dependency on fossil fuels, which we are replacing with dependable, sustainable, carbon neutral products. Also, if we can maximize our use of bioenergy, it will go a long way in reducing our CO2 levels."
