Industrial pellets are an interesting study. An article in a recent issue of Scientific American estimated global pellet output in 2010 at more than 11 million metric tons and indicated it would eclipse 12 million metric tons this year. The market is growing rapidly, with some observers predicting double-digit growth through 2020. Barring a major setback, at least one source believes global pellet production could quadruple within five years.

European demand, created by the European Union’s renewable energy mandates, continues to drive the market. A 2003 statute established a carbon trading system, followed by a 2009 renewable energy directive that called for EU members to collectively produce 20% of energy from renewable sources by 2020. Most major European electric utility companies now fuel boilers with a pellet-coal blend and some are gradually increasing the pellet ratio. Also, Germany has indicated it may move away from nuclear power plants, which could eventually increase coal/pellet demand.

Europe is the primary destination for pellet shipments from North America, which in 2011 will send at least 4 million metric tons across the Atlantic. If the U. S. doesn’t overtake Canada as the leader this year it will in 2012 as several new pellet plants come on line in the South, which is developing into a pellet hotbed. With pulp and paper capacity scaled back and several OSB plants closed, the region has a timber surplus that’s cheap by international standards. The region also enjoys a logistical advantage to European ports, yet it is limited in the number of deepwater terminals that can effectively handle outgoing chip and pellet cargo.

At the same time, industrial development groups on both sides of the St. Lawrence Seaway, which links several states and Canadian provinces to the Atlantic from the Great Lakes, have noticed the European pellet market and are maneuvering to attract manufacturers to sites convenient to the waterway. Meanwhile, the pellet-coal idea is said to be an attraction to utilities in both South Korea and Japan. South Korea’s new Renewable Portfolio Standard calls for reducing greenhouse gases by 30% by 2020. Canadian utilities reportedly are showing some interest in pellets as well. U. S. companies are considered a distant wild card.

Interestingly, the EU, whose actions ignited the latest biomass-to-energy craze, appears to be reevaluating the green status of wood biomass. Only weeks ago the European Environment Agency’s Scientific Committee issued a stern opinion concerning the contention that wood biomass is a zero-emission fuel. The EEA indicated it seeks to correct an “accounting error” in the current EU and international biomass policies. This was soothing to the ears of various doubtful environmental groups that continue to closely monitor the biomass-to-energy phenomenon. But for now, and perhaps the next decade, the pellets will keep flowing and flowing and flowing and flowing.