U.S. Wood Energy and Pellet Markets: Update to the 2010 Resources Planning Act (RPA)Assessment Karen Abt USDA Forest Service Southern Research Station With Christopher Galik and Robert Abt, NCSU and Ken Skog, USFS (retired)

Outline US wood energy consumption and production Pellets Future of wood energy markets Take Home Messages 2020 RPA Assessment

Wood Energy Consumption and Production Data Wood energy consumption—from US Dept. of Energy, Energy Information Administration (EIA) Production of wood to be used for energy from USFS-FIA and Timber Product Output (TPO) Residential data questions Export data from US International Trade Commission (USTIC) Monthly Energy Review, Table 10.2 EIA-63C—the Densified Biomass Report. Monthly since Jan 2016. about 4 month lag.

Consumption of Wood for Energy 1990-2016 US per capita consumption is about 0.7 cm per person, declining as paper declines and costs of other energy sources fall (including both other renewables and fossil fuels) Low end of developed countries—finland is 7cm/person, Canada and Austria at 2.5cm/person

Pellets Exported from the US, 2012 to 2016 (USITC) But the big story is not US wood energy consumption, it’s US wood energy exports. In the form of pellets. UK increasing over time, others all declining over time Still no Asian market

Why Pellets? Why now? EU Renewable Energy Directives (2020 and 2030) require increases in renewable and low GHG emitting energy. Some countries, UK in particular, have chosen to use wood pellets to cofire or direct fire in converted coal power plants. Pelletizing makes shipping easier and safer, and makes the performance more consistent in power production.

Pellet Mill Capacity, Jobs, Mills, and Production, 2016 (EIA63C) Num. of Mills Export Quantity Domestic Quantity East 563 2,229,947 35 738,012 South 1,179 7,904,184 33 4,827,647 419,995 West 234 893,367 18 771,062 US 1,976 11,027,497 86 2,280,136 Small changes from jan to dec. 2 mills added Cap ute is 64%

Wood sources for pellet production, 2016 by month (EIA 63C) ‘Other residuals’ is a catch-all, and includes “wood that is too poor in quality or too small to convert to industrial use”. This includes anything for which there is no other market—hickory trees; crooked or damaged trees; pulpwood material where there is no pulp mill.

Type of Densified Biomass being produced, 2016 (EIA 63C) All of compressed bricks and logs are coming from the west. All of the utility pellets are being produced in the south

Operating, planned, and temporarily shutdown pellet mills, 2016 (EIA63C)

How Important Are These New Pellet Mills to Wood Products Markets? Wood used for pellets nationally is 1% of total 2% of southern harvest 4% of less-than-sawtimber-grade removals Well within the normal range of market variation across the nation and across the south In procurement basins Could be a higher percent Could be harvesting differently than in the past

Future of wood energy and pellet markets New pellet mills are planned and under construction, so exports are expected to increase Capacity utilization expected to rise Longer term, much will depend on EU and UK policies on renewable energy and sustainable forestry Prices for fossil fuels and other renewable energy sources, as well as paper production will influence US wood energy consumption

Take Home Messages (1) Domestic wood energy consumption is low and declining Pellets are the topic du jour—5 mm metric tons exported (from 11mm short tons green wood) New mill openings in 2017 and 2018 Within the range of historic market variation (national and regional)

Take Home Messages (2) Could create unwanted competition and forest changes, especially in local markets and basins Provides local jobs and income to landowners Future demand is uncertain (policies affecting biomass use) Sustainability policies could influence supply and thus exports (forest land area, biodiversity, ecosystem services, GHG emissions)

Looking Ahead to the 2020 RPA Assessment Wood energy will be included as a forest product in each of the scenarios If possible, a subset of these scenarios will be run also including higher demands for domestic wood energy and/or wood energy exports Carbon implications of increased domestic and exported wood energy will be considered. Overall effect on harvesting and forestland needs further analysis