Wood pellet exports from the United States nearly doubled last year, from 1.6 million short tons (approximately 22 trillion Btu) in 2012 to 3.2 million short tons in 2013, said a new report by the Energy Information Administration (EIA) reprinted by Penn Energy Friday. More than 98 per cent of these exports were delivered to Europe, and 99 per cent originated from ports in the southeastern and lower Mid-Atlantic regions of the country.
Wood pellets are traditionally manufactured from residue that results from wood processing activities, but they can also be produced from unprocessed harvested wood. Wood pellets are used as a residential heating fuel and can also be used for commercial heating and power generation applications.
As recently as 2008, the US Forest Service estimated that approximately 80 per cent of US wood pellet production was consumed domestically. However, due to strong demand growth in Europe, wood pellet exports have been the driving factor in the growth of domestic wood pellet production in recent years.
Wood Pellets, US
Growth of US wood pellet exports has been concentrated in southeastern states, which have advantages in terms of abundant material supply and relatively low shipping costs to Europe. According to Bloomberg New Energy Finance, transportation accounted for a quarter of the delivered price of wood pellets from the Southeast to the Netherlands in mid-2013.
European countries, particularly the United Kingdom, are using wood pellets to replace coal for electricity generation and space heating.
In 2013, the top five importing countries of US wood pellets exports were all European: the United Kingdom, Belgium, Denmark, the Netherlands, and Italy, said the EIA. The United Kingdom accounted for the majority, at 59 per cent, of US wood pellet exports, and more than tripled its imports from the United States between 2012 and 2013.
The United Kingdom’s wood pellet imports from all sources have grown from near zero in 2009 to more than 3.5 million short tons in 2013, said Penn Energy. Due to the United Kingdom’s Renewables Obligation program, the operators of several large coal-fired power plants have either retrofitted existing units to cofire biomass wood pellets with coal or have converted to 100 per cent biomass.
The Drax power plant—rated at nearly 4,000 megawatts and the largest coal-fired power plant in the United Kingdom—is in the process of implementing plans to convert half of its six generating units to run solely on wood pellets. The first of these three units entered service in 2013, while the remaining two conversions are planned for completion in 2015.
According to Eurostat, the United Kingdom is also a major importer of wood pellets from Canada and, to a lesser extent, from other European sources. Until 2013, Canada was the primary source of the United Kingdom’s import supply.