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Wood Pellet Industry Heats Up

Pile of wood pellets

Industrial wood pellets from the United States are a sustainable, cheap, and clean alternative to coal for European utilities. Europe is required to burn 20 percent renewables by 2020.


Wood pellets are made out of low-value wood fiber. It is otherwise unusable after a harvest because it does not meet the standards required to make high-value products such as lumber and furniture. This includes material left over from pre-commercial and commercial thinnings, treetops and limbs, pulpwood, and sawdust and chips from sawmills. Sourced responsibly, these by-products will always be sustainable.


This is a win-win, because wood pellet manufacturers put waste products to good use, while landowners have an extra incentive to maintain their forests instead of converting them to them to other uses, such as commercial development or agriculture.


The woods pellets are a source of renewable energy used for co-firing alongside coal at large power generators, providing an inexpensive way for utilities to meet European Union rules. By displacing coal, wood pellets help lower carbon emissions. In fact, switching from coal reduces carbon emissions by 74 to 90 percent, according to the U.K. Environment Agency.


In 2012, the U.S. and Canada exported 4.36 million metric tons of industrial wood pellets – a record year for pellet exports. The largest percentage went to the U.K., with significant amounts going to the Netherlands and Belgium. And 2013 looks like another excellent year for pellet markets across North America. In just the first quarter, more than one million tons of wood pellets were exported from the U.S. and Canada.


In addition, the U.K. Department of Energy & Climate Change released long-term sustainability criteria for biomass, demonstrating its commitment to using biomass to reduce carbon emissions and providing certainty in the market. Denmark and The Netherlands have also shown their support for using biomass to reduce carbon emissions, and their demand for wood pellets is increasing. Other new markets are developing all the time.


The U.S. industrial wood pellet industry as a whole is growing at a rapid pace. Last year, the U.S. surpassed Canada as the largest exporter of industrial wood pellets, providing almost 35 percent of Europe's supply. New wood pellet manufacturing facilities and port shipping facilities are coming online all the time, especially in the Southeast.

Wood pellets are helping to invigorate the forest industry in the Southeastern U.S., especially in rural areas, creating jobs and a larger tax base. Wood pellets are also helping increase exports. In 2012 Virginia announced that wood pellets accounted for $35 million in exports, to give just one example.