canadian wood pellet update · production exports 2018-2020 = forecast source: global trade atlas...

Gordon Murray, Executive Director

Canadian Wood Pellet Update

¡ Bioenergy has an essential role in the IEA’s 2°C Scenario.

¡ Bioenergy in 2015 - 4.5% of total energy.¡ IEA’s goal for 2060 – 17% (fourfold increase).¡ Current deployment rate is too low to meet

goal.

Wood Pellet Association of Canada 2

Wood Pellet Association of Canada 3Source: REN 21 Renewables 2018

1.7 2.2 2.64.0

5.27.6

9.711.7

14.515.7

18.3

22.423.6

26.1 27.028.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

20012002

20032004

20052006

20072008

20092010

20112012

20132014

20152016

Mill

ion

Tonn

es

Average 14% growth for past 10 yearsFigures are in millions of tonnes


Canada9%

USA25%

Europe56%

Asia8%

Rest of World2% Canada – 2.7 mn tonnes

USA – 7.6 mn tonnes

Sources: REN 21 2018 & IEA Bioenergy Task 40 Global Wood Pellet Study 2017


Country Imports (Mt) Main useUK 6.8 PowerDenmark 2.6 Industrial scale CHPSouth Korea 2.4 PowerItaly 1.8 Home heating with stovesBelgium 1.1 Power


Argus 90 day cif ARA spot prices

Copyright © 2018 Argus Media Ltd. All rights reserved.

80

100

120

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160

180

200

May

09

Aug

09No

v 09

Feb

10M

ay 1

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g 10

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b 11

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v 11

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ay 1

2Au

g 12

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b 13

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ay 1

4Au

g 14

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ay 1

6Au

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S/t


Region Plants # Plants % Regional Capacity tRegional

Capacity % Average Capacity t

West (1) 19 48% 3,140,000 77% 165,000

Central 13 33% 650,000 16% 50,000

Atlantic 8 20% 311,000 8% 39,000

Canada 40 100% 4,101,000 100% 103,000

(1) West includes Pinnacle’s new Entwistle and Smithers

plants. Entwistle is presently being commissioned. Smithers

is expected to be completed by the end of 2018.


2.0 2.1

2.6 2.7 3.1

3.5 3.9

1.8 1.9

2.4 2.4 2.8

3.2 3.6

0.00.51.01.52.02.53.03.54.04.5

2014 2015 2016 2017 2018 2019 2020

Mili

ons o

t ton

es

Production Exports

2018-2020 = forecast

Source: Global Trade Atlas export and import data & WPAC analysis


UK, 1,490 Japan, 360

USA, 210

Belgium, 169

South Korea, 152

Italy, 55

Source: Global Trade Atlas export and import data & WPAC analysis

Figures are expressed in thousands of tonnes


¡ 6.8 Mt imported in 2017, mainly for power.¡ Dominated by Drax Power.¡ Lynemouth Power is commissioning (+1.6 Mt).¡ MGT Power is under construction (+1.1 Mt).¡ Drax fourth boiler being converted.¡ Relies on UK’s RO and CFD support schemes.¡ Strict sustainability and GHG criteria.


¡ 2014: 91 Kt. 2017: 510 Kt.

¡ Co-firing and dedicated biomass power.

¡ Expected to reach 8.4 Mt by 2025.

¡ Most interesting new market for BC & AB.

¡ Supported by: (1) feed in tariff, (2) energy

conservation law, (3) GHG emission reduction

targets.

¡ Quality, reliability, and sustainability are

paramount.


¡ Heating market using ~ 2.4 Mt. Pellets used to replace heating oil. Mainly stoves.

¡ Market has been stagnant. No signs of growth.

¡ Canada has a little less than 10% market share.

¡ Canada has a foreign exchange advantage.


¡ Mainly a power market. Two large dedicated biomass power plants owned by Engie.

¡ Total market is 1.1 Mt with Canada contributing about 15%.

¡ Supported by a green certificate support scheme.

¡ Strict sustainability and GHG criteria.¡ No near-term growth is forseen.


¡ Mainly a power market supported by an escalating RPS and tradeable renewable energy certificates.

¡ Market is 2.4 Mt. Canada has ~ 5% share.¡ Almost all purchases through tendering.¡ Little regard for quality or sustainability to

date.¡ Government has withdrawn REC support for

new biomass projects. New market growth is unlikely.


¡ Entirely a heat market, mostly 15 KG bags.¡ Requires ENplus quality certification.¡ Total market is 2.5-3.0 Mt and growing.¡ Difficult to serve from Canada. Complicated

logistics, fragmented customer base.¡ 22% VAT resulted in a black market of 300 Kt.¡ Air quality concerns led to ban of A2 pellets.¡ Canada’s exports declined from a peak of 220

Kt to just 50 Kt annually.


¡ We have poor domestic statistics. Estimated market is 250-300 Kt annually.

¡ Pellets used for power generation in Ontario, and for residential and commercial heating, mainly in areas off the natural gas grid.

¡ Stoves dominate, but boiler installations are increasing slowly, especially in NWT and Atlantic Canada.

Wood Pellet Association of Canada 17Source: Stats Canada

916 PJ

766 PJ

183 PJ

60 PJ 12 PJ 12 PJ

Natural Gas

Electricity

Oil

Firewood

Wood Pellets

Propane & Other

Residential and Commercial Heat and Hot Water

Total: 2688 PJ

¡ Canadian annual non-gas commercial and residential heat and hot water energy consumption is 1,033,000,000 gigajoules

¡ 1,033,000,000 gigajoules is equivalent to 71 million tons of wood pellets.

¡ Canada currently produces about 2.7 million tons of wood pellets



Sources: Enbridge, National Energy Board, WPAC research

$8.52

$20.76

$27.55

$42.78

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

Natural Gas Wood Pellets Heating Oil Electricity

$/GJ, adjusted for efficiency


OPG’s240MWATkokanOntarioPlant

FullfiringonindustrialwoodpelletsOntario Power Generation uses about 100,000 tonnesof wood pellets annually for grid balancing

¡ Currently consuming 35 million tonnes of coal per year

¡ AB – 55% coal¡ SK – 44% coal¡ NB – 13% coal¡ NS – 60% coal¡ Stranded assets


So far, none of these provinces are willing to use Canadian wood pellets.

1) Positioning Canadian pellets: quality, reliability, sustainability & strong ethics.

2) SBP Certification:a) Governance – board and standards committeeb) Regional risk assessments, BC, AB, NB, NSc) Information for commingled inventoriesd) All western plants certified by March 31, 2019


3) Post 2020 EU Renewable Energy Directive:a) Mandatory sustainability criteria

b) Revised goals for 2030: -40% GHG; 27% RES; 30% energy efficiency

c) Rules regarding biomass power generation

d) Avoiding specific rules for EU member states

e) Final trilogue scheduled June 13


4) Implement joint government-industry working group in NB.

5) Implementation of 2018 safety work plan including collaboration with AEBIOM.

6) Participating in governance of ENplus quality scheme.

7) Project to harmonize EU and Canadian boiler safety standards.


8) Canadian Clean Fuel Standard Regulations –15% reduction in carbon intensity of fossil fuels.

9) Fibre supply in BCa) Burn-free zones around pellet plantsb) Implement fugitive emissions taxc) Mandatory biomass handling guidelinesd) Mandatory sharing of plans by forest licensees


26

Useable pellet fibre is still being burned and wasted by BC’s primary forest industry

For more information:Contact Gordon [email protected]+1 250 837-8821

Wood Pellet Association of Canada27

mailto:[email protected]

canadian wood pellet update · production exports 2018-2020 = forecast source: global trade atlas...

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