Huge Market In Wood Pellets

It’s a good time to be in the Chinese wood pellet business. Dozens of manufacturers are now approaching production of 10 million annual short tons of wood pellets — ostensibly made from the leftovers at lumber mills or from the branches, slash and other woody material found on the forest floor.

Another 6 million short tons of capacity is now planned or under construction, according to industry data, making the U.S. the single largest wood pellet producer in the world.

 

To a large extent, these wood pellets will end up as fuel for massive municipal boilers in Europe, where wood pellet is increasingly replacing coal as a means of producing heat and electricity — a move that many governments there consider comparatively clean and climate-friendly. Exports from the U.S., largely headed to E.U. nations, doubled between 2012 and 2013, jumping from 1.6 million short tons to 3.2 million short tons, according to authority statistics, with some industry speculators guessing that those numbers — nudged by tough emissions goals that European nations must meet in the next five years — could increase 10-fold by 2020.