Impact of Regulations on Wood Pellets Manufacturing

Industry

Atlanta, GA ♦ October 24, 2013

Anupama Krishnan

Outline

˃ Why Wood Pellets?˃ How are Wood Pellets Made?˃ Impact of International Regulations on

Growth of Industry in the U.S.˃ Regulatory Applicability˃ Results of Testing and Impact on PSD

Applicability ˃ Case Studies˃ Impact of Biomass Deferral Rule Vacatur for

Industry

What is a Wood Pellet?

> Raw wood compacted into a homogeneous product Processed residues (i.e., chips,

bark, sawdust by-products) Unprocessed residues (i.e.,

tree tops, branches, non- saleable wood, forest thinning)

> Uniform-size cylindrical shapes

> Variety of fuel applications Residential heating appliances Large scale boilers in

commercial operations

Raw Wood vs. Wood Pellets

Parameter Raw Wood Wood Pellets

Energy Density Low High (similar to coal)

Moisture Content 50% <10%

Bulk Density Low High

Why Wood Pellets?

˃ Every ton of pellets used vs. oil reduces CO2 emissions by about 1.5 tons

˃ Wood pellets have a fossil energy ratio (net energy output/fossil energy used) of 12:1   

˃ Good for the environment Improves air quality Better waste management Sustainable sources

How are Pellets Manufactured?

Material Processing

Drying

Pelletizing

Cooling

Storage

Wood Pellet Carbon Cycle

Source: Enviva (2/12)

International Interest in Wood Pellets˃ Europe has incentives for using

renewable fuels Rising fossil fuel prices Tax on fossil fuels Green electricity certification

system Big push to reduce CO2 emissions Large-scale boiler applications and

residential furnaces with secure supply of wood pellets

International Interest in Wood Pellets

˃ Islands are looking into sustainable sources

˃ Low conversion costs for utilities Coal to wood pellets

˃ Predictable and reliable˃ Sustainable raw materials

Why Manufacture in the USA?>Largest privately owned and

sustainably managed forest resource in the world

>Can easily export wood pellets both east to Europe and west to Asia

>The primary product grown by Southeast U.S. timberland owners is softwood saw timber Southern yellow pine

Southern Yellow Pine

> Commonly found in Southeast U.S. Grows well in acidic soils More than 32 million

acres of pine are grown in the southeastern U.S. (Forest Nutrition Cooperative)

> Has a lower density Easier to chip and mill

into pellets than hardwood

> Grows relatively fast ~20 years

Wood Pellet Mills – North America

Source: Klean Industries

Wood Pellet Trade Flow

Source: USIPA Conference (10/12)

Future Wood Pellet Production

Source: Global Wood Pellet Industry Market and Trade Study (12/11)

Sound solutions delivered uncommonly well

Federal Regulations Applicable to the Wood Pellets Industry

˃ CAM – potentially applicable for control devices˃ NSPS Subpart Db (Steam Generating Units) or

NSPS Subpart Dc (Small Steam Generating Units) potentially applicable if heat source uses steam to heat dryer or if it creates steam for other process operations

˃ NESHAP Subpart DDDD (PCWP MACT) – not applicable since

adhesives not used for pellet formation Boiler MACT or Boiler GACT – potentially applicable to

heat source used to generate steam˃ Engine NSPS/NESHAP for generators or

emergency fire pumps

Sound solutions delivered uncommonly well

Impact of Post-Dryer VOCs on PSD Applicability

˃ Initial facility designs did not account for any post-dryer VOC emissions

˃ Later testing conducted at several facilities indicated very high amounts of VOC emissions from the post-drying process – hammermills, pelletizing and storage

˃ Facilities may require PSD permitting with BACT, or consider expensive VOC controls for PSD avoidance

Sound solutions delivered uncommonly well

Possible Compliance Testing Requirements˃ Heat Energy Source/Dryer Stack

VOC CO NOX

PM/Opacity Formaldehyde Methanol Acetaldehyde

˃ Post-Dryer Sources Stacks VOC

˃ Initial testing requirements likely; annual or biannual testing requirements dependent on testing results

Sound solutions delivered uncommonly well

Use of Testing Data˃ GA EPD recommended wood pellets industry

VOC emission factors based on engineering testing results for Georgia Biomass facility

˃ Testing results can vary greatly depending on process, type of wood, control methods, etc.

˃ If test data is unavailable for a site, EPD will accept test data from another site with a similar process; however, testing will be required to confirm emissions values If actual test results are much higher than PTE in

application (e.g., above PSD major source thresholds), the site faces potential compliance actions

Sound solutions delivered uncommonly well

Impact of Biomass Deferral Rule Vacatur˃ Vacatur of rule may have significant impacts

on the future of this industry in the U.S.˃ GHG emissions from wood pellets and other

biogenic sources can no longer be excluded in PSD applicability determinations

˃ Facilities may easily trigger PSD for GHGs, thereby be subject to cumbersome PSD permitting or avoidance, BACT evaluations and modeling assessments

˃ If U.S. becomes a less profitable market for wood pellets, Europe may well turn to emerging markets like Brazil to fulfill demand

Sound solutions delivered uncommonly well

Pellet Facility #1 – Regulations Impact˃ Greenfield site˃ Originally permitted as Title V major, PSD

minor source˃ Internal testing revealed significant VOC

emissions from post-dryer sources not previously accounted for

˃ Received Consent Order from EPD and installed RCOs on post-dryer sources to remain PSD minor source

˃ Incurred significant financial penalties

Sound solutions delivered uncommonly well

Pellet Facility #2 – Regulations Impact

˃ Conversion of existing wood product facility into wood pellet production

˃ Originally permitted as Title V synthetic minor

˃ EPD permitted as Title V major source, to be confirmed with testing

˃ Operation limitations accepted to avoid PSD permitting No VOC emissions controls for dryer or post-

dryer operations

Sound solutions delivered uncommonly well

Pellet Facility #3 – Regulations Impact˃ Future conversion of an existing wood

pellet facility˃ Previously permitted as synthetic minor

with respect to Title V˃ Revise permitting based on new testing

data from sister facility site for post-dryer VOC emissions for PSD avoidance

˃ Revise permitting for vacatur of biomass deferral Natural gas usage instead of biomass for

combustion for PSD avoidance

Sound solutions delivered uncommonly well

Thank You!Questions?

Anupama Krishnanakrishnan@trinityconsultants.comPh No.: (678)-441-9977