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Posted by on in Lignetics

Lignetics Inc. has announced the acquisition of the assets of GF Funding LLC (whose facility was formerly known as Geneva Wood Fuels), expanding its footprint into Maine and upper New England.

Lignetics is the largest residential wood pellet manufacturing company in the U.S. which now has a production capacity of approximately 550,000 tons of wood pellets per year. The company is the only pellet manufacturing company that has wood pellet manufacturing plants on both the East Coast and the West Coast in six plant locations in the states of Maine, Oregon, Idaho, West Virginia and Virginia.

 Ken Tucker, CEO of Lignetics stated, "Completing this acquisition is in line with our strategy to continue to expand our geographic footprint in the U.S. and remain the market leader in the residential wood pellet industry.” Tucker added, “Geneva has great customers which we look forward to continuing to support with the help of Jeff and Lucinda Allen and the rest of the team in Strong, Maine, whose goal is to continue to provide a superior product and excellent customer service.”

Financing for the transaction was provided by Taglich Private Equity LLC, management and Gladstone Capital Corporation, who provided subordinated debt and equity financing, along with Texas Capital Bank, who provided senior debt in support of the transaction. Will Morris, Managing Director of Taglich Private Equity noted that Lignetics continues to be interested in exploring additional add-on acquisitions. “We are excited about this acquisition and the growth opportunities in our business to support us in our goal of being the largest and highest quality residential wood pellet manufacturing company in the U.S.”, stated Morris.

Lignetics was founded in 1983 and is one of the founding pioneers of manufacturing premium wood pellets and Pres-to-Logs® fire logs for home heating. Lignetics offers a broad array of products that include wood fuel pellets in bagged and bulk form, animal bedding pellets and shavings, BBQ pellets in a variety of flavors and compressed wood bricks and logs. For more information on Lignetics and all its products, visit http://www.lignetics.com.

Lignetics acquired the wood pellet manufacturing facility of GF Funding LLC, based in Strong, Maine, which produces hardwood pellet fuel for residential and commercial use. The facility produces Maine's Choice and Geneva Wood Pellets brands of residential hardwood pellet fuel which can be found at independent retailers and select chains throughout the Northeast.

Taglich Private Equity LLC is a financial sponsor which has been investing since 2001 in lower middle market manufacturing, business service and consumer product companies. Taglich has completed transactions totaling over $500 million funded primarily with capital provided by Taglich Brothers, Inc., a full service brokerage firm managing capital in both public and private investments. Taglich focuses on finding sound investment opportunities with capable management and delivering significant growth resources and capital to portfolio investments. For more information on Taglich Private Equity LLC please visit http://www.taglichpe.com.

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From Biomass Magazine

By Katie Fletcher

Three biomass boilers are being shipped to Haines, Alaska, with the potential to heat a variety of buildings throughout town. The boilers are expected to arrive next month and utilize either wood pellets or locally produced wood chips as a feedstock.

Upon arrival in Haines, the boilers manufactured by Unilux will remain in storage for the next year or so. Twelve to 24 months later they are expected to be up and running, displacing around 80,000 gallons of heating oil. “We are either going to be installing biomass heat in eight or nine municipal buildings, or creating a district heating system,” said Darsie Culbeck, contractor for the borough to help facilitate the biomass project. “In either case, the Coast Guard boilers will be useful.”

The boilers could be used to heat the school, the pool and Chilkat Performing Art Center. Culbeck said hopefully the district heating system will heat the wastewater treatment plant (WWTP), the school, the pool, the vocational technology building, the library, the administration building, the public safety building and maybe the city shop.

Culbeck said the feedstock could be pellets from British Columbia or Seattle, but that they are looking at locally produced wood chips as well. The boiler specifications are 1.5 MMBtu, 1.7 MMBtu and 500,000 Btu.

Haines borough officials recently approved the $60,000 purchase of the used boilers. The purchase includes the three boilers, 60-ton storage silos and an accumulator tank. Funding for the installation is provided through the $1.2-million Haines Borough Municipal Buildings Biomass Project grant. A resolution was voted upon at a recent borough assembly meeting, allowing borough manager, Dave Sosa, to make the purchase—five of six voted in favor. “The $60,000 was over the manager’s spending authority so it had to go to the assembly for approval,” Culbeck said.

Overall, the system was originally valued at over $450,000. The boilers were previously used in Sitka for heat by the U.S. Coast Guard, but a mishap occurred and the project was abandoned. “The combustion chamber of one of the two new pellet boilers in the AIRSTA Hanger suffered an explosion due to the buildup of the explosive gases hydrogen and carbon monoxide during testing by the installation contractor,” Culbeck said. “The building’s HVAC control system also played a role in this. This system was designed in-house by an engineer unfamiliar with biomass boiler systems.”

According to Culbeck, the result of the explosion caused some blowout plugs on the boiler to pop (as designed), some deformation of exterior non-structural panels and the chamber door to forcefully blow open (as designed) to avoid a much more catastrophic pressure buildup. The water pressure vessel side of the boiler remained undamaged.    

He added that the boiler design itself was not without some blame. “The control system should have had more checks in it to detect that combustion was not happening,” Culbeck said. “The components were in place, but the boiler control logic did not take advantage of them. These have since been addressed by Unilux.”

These boilers joins five other biomass systems in town, one in a municipal building. “The success of these boilers caused me to write the original grant and pursue biomass funding,” Culbeck said.

Cost savings, a lower carbon footprint and the chance to become more energy independent top the list of potential benefits of the biomass system, according to Culbeck. “If we can source local wood chips, we are less impacted by global events and interruptions in the supply chain,” he said. “Currently, the municipality spends about $300,000 annually on heating oil. Most of this money leaves town immediately. The same amount spent on local biomass could have a multiplier of four to six times. This creates jobs and stimulates the local economy.”

Unilux will train the locals hired to operate the system. “I’m excited to be moving this forward,” Culbeck said. “Even with all the challenges and risks, I believe it is the right thing to do for our community. It’s good for the environment, it’s good for the economy and it shows the kids that it’s worth taking a chance to move a good idea forward.”

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From Biomass Magazine
By Sustainable Biomass Partnership

The Sustainable Biomass Partnership has today announced that NSF International (NSF) has become an ‘SBP-approved’ Certification Body. NSF has provided evidence that it meets the SBP requirements regarding its existing accreditations and has demonstrated sufficient resource and competence to manage the SBP certification programme under the SBP Framework.

The SBP Framework of standards and processes enables Biomass Producers, typically pellet and wood chip mills, to demonstrate that they source their feedstock responsibly and that it complies with the regulatory, including sustainability, requirements applicable to power generators burning woody biomass to produce energy.

NSF has been approved for the certification, in Canada and the United States of America, of Biomass Producers and the biomass supply chain, for example, Biomass Producers and components of the downstream supply chain, such as trade, transport and processing that require Chain of Custody certification.

Peter Wilson, Executive Director of SBP, commented, “On behalf of SBP I am pleased to confirm that NSF’s application is approved. NSF has been through a rigorous approval process, culminating in a final review and recommendation for approval by SBP’s independent Technical Committee.

“This is the second such approval of a Certification Body, and the first in North America. This progress provides a good foundation for implementation of the SBP Framework throughout the woody biomass supply chain”.

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Posted by on in Lignetics

From Biomass Magazine
By Ron Kotrba

Few events can sour the experience of domestic, residential pellet stove users more than being unable to buy product during a cold snap. “Frankly, not having enough products to meet demand is my major concern,” says Paul Stringer, vice president of sales and marketing for Somerset Pellet Fuel, a Kentucky-based pelleting operation with an annual capacity of 50,000 tons. Somerset’s raw material comes to the facility already kiln-dried from its hardwood flooring plant. The company’s pellet customers are big box stores such as Tractor Supply Co. and Lowe’s. “All of us in the pellet industry want the market to grow,” Stringer says. “If customers can’t get pellets, they won’t buy the stoves and it hampers growth in the industry.”

Supply shortages are part of any growing market, but the business of residential wood pellets is different than many other, more predictable industries. It’s an emerging market that is based on unpredictable events such as oil and natural gas prices, the housing market, weather, the economy and even politics.

“The past year has been difficult with supply and demand,” says James Mayer, salesman for PelletsNow LLC, a third-party distributor of pellets in the Northeast supplied by Maine Woods Pellet Co. LLC. “Demand is greater than supply and it’s hard to meet the needs of our customers the way they want to be met.” He says while demand usually slows down in spring and summer, this season it hasn’t.

PelletsNow has a retail network of 150-plus small businesses in the Northeast. According to data from a recent Pellet Mill Magazine distribution survey, less than 50 percent of respondents’ annual production is sold to big box stores, leaving a majority of domestic market sales to smaller retail outlets. “We don’t deal with big box stores, mostly just mom-and-pop stores,” Mayer says. “We have a couple of retailers that have five or six locations, some have four that do 10,000 tons out of one retail location.” He says the small retailers in his network really distinguish themselves by getting to know their customers and the product, and by delivering product to the customers’ homes—even bringing a pallet jack to the customers’ driveways or helping hand-stack product.

Dejno’s Inc. operates a 40,000-ton pellet facility in Kenosha, Wisconsin, and has a fleet of 35 trucks and 600 trailers to deliver its Dejno’s brands of hardwood blends and softwood blends. “We’ve been in business for 10 years and we’ve seen the ups and downs—the times of extra supply and then crisis management where everyone’s out,” Dejno says. Located between Milwaukee and Chicago, Dejno’s pellet facility doesn’t have a dryer, so the plant doesn’t process green product the way other facilities do. It receives sawdust directly from suppliers such as sawmills.

Dejno says pellet shortages in stores are oftentimes beyond the retailers’—and his—control. “Weather, propane and petroleum price spikes, or a housing market downturn where the raw material is not available—there’s always a reason,” he says. “But from my perspective, there’s no doubt it’s not a pellet production capacity issue. No one in the industry thinks that. It’s not a capacity issue—except when the market gets to crisis mode and then it’s a matter of playing catch-up.”

He says in times of tight supply the industry does tend to see pellet mills pop up to meet growing demand, but then there’s a glut and facilities that aren’t the lowest-cost producers shut down. “I do wish the market didn’t have the ups and downs it does,” Dejno says. “It could be a good, stable, dependable business model, but we have to contend with these factors that make it fluctuate wildly. But fundamentally, I don’t think it’s a production capacity issue.”

Stringer says it’s less about production capacity and more of a raw materials supply issue. “Having the raw material source, especially a quality supply of sawdust, is critical to efficient production and to making a quality product,” he says. “So, in my view, it’s all about raw material supply. I can build a plant, but without raw materials, it doesn’t operate.”

Sally Goossen owns Green Friendly Pellets LLC, a 17,000-ton mill in Plainview, Minnesota. The plant has moved several times since it opened in Balsam Lake, Minnesota, in 2008. From there it was relocated to New Richmond, Wisconsin, and then to Plainview, Minnesota, and it may soon be moving again to either a reservation in North Dakota or near Bemidji, Minnesota, to be closer to feedstock. Like Dejno’s and Somerset, Green Friendly Pellets doesn’t have a dryer so the facility takes in prepped sawdust. Goossen says in New Richmond, the company dealt more with retailers but since moving to Plainview, it does more wholesaling. In addition to its own production and labels of PennyWise and Green Friendly Pellets, her company buys product from Spearfish Pellet Co. LLC and bags and sells it under the Stall Pro brand. She wholesales product to a distributor, Industrial Builders, which sells to hometown retailers such as Ace Hardware stores. Goossen also notes the pine pellets from Spearfish, South Dakota, are used as an absorbent in the shale fracking industry on the completion side.

As to why the industry experiences shortages at times, Goossen says there’s “a lot of little things happening” that affect supply and demand. For starters, the growth in pellet stove users has been “dramatic,” she says. “A few years ago in my home town of Balsam Lake, no one had a pellet stove. Now everyone in my neighborhood has one.” She also says that additional outlets for pellets, such as the use in oil fields or even oak heating pellets for barbeques, increases demand and tightens supply. “The Lumberjack brand, instead of having 20 semiloads a month for heating pellets, they’re now being distributed as barbeque pellets,” Goossen says. She also mentions that a few plants have closed in Minnesota, which has affected supply. “Demand went up, but production didn’t,” Goossen says. Finally, Goossen notes that a lot of mills have been, or are being, developed in the Southeast to satisfy European demand. “That wood waste could be used for the U.S. market, but it’s used for pellets that are going to Europe,” she says.

The biggest variable, according to Mayer, is the price of oil and natural gas. “When it goes down, people are less apt to use wood pellets,” he says. “When it goes up, they’re more apt to use wood pellets. So what’s going on with the fuel market—and politics—is big.”

Alleviating the Pinch
So, with factors beyond anyone’s control such as energy markets, politics, the economy, housing and export markets, expanding uses and the weather, how can producers, distributors and retailers better predict the market to keep shelves stocked without holding too much inventory?

“You can never forecast to a tee,” Mayer says, “but if you look at last year’s numbers, including spring and summer sales, the mills that are online, supplies and oil prices last year, weather forecasts and the economy, then 50 to 75 percent of the time you can do a decent forecast.”

Capital and storage space are two major problems with keeping retailers adequately stocked, according to Mayer. “No one wants to sit on product for more than a month or two,” he says.

When weighing which situation is worse—not having enough product to meet demand or stocking too much inventory—Dejno says it depends on point of view. “It’s worse not to have product,” he says. “From our perspective, it’s worse to have retailers’ expectations of your capacity and inventory, and not being able to perform. Either their expectations were wrong or their numbers on what you can do are wrong. There’s not a shelf life on this stuff, it doesn’t expire. Sure it costs money to carry over inventory, but it’s not like it is spoiling.”

According to data gathered from Pellet Mill Magazine’s distribution survey, nearly 24 percent of producer-respondents offer storage for their customers’ off-season purchases at a fee, and nearly 22 percent offer storage at no fee. The remaining 55 percent offer no storage. Dejno says occasionally he stocks inventory for his customers if they don’t have the storage space. “They don’t want to be left shorthanded,” he says. “Sometimes if they do a prebuy we’ll stock more inventory for them.” Mayer says transportation and storage are the biggest variables and the largest cost. Using PelletsNow’s partner, Quest Transportation, the company drops product directly from Maine Woods Pellet Co. to retailers. “Storage has always been something we have looked at, but it’s a lot of cost,” Mayer says.

Buying early can help alleviate the supply crunch later in the season. “We’ve had more customers this year make an effort to put their orders in early,” Mayer says, adding that some of them have already ordered one-third to one-half of their predicted supply for the upcoming season. Goossen says for the pine pellets used as absorbents in oil fracking operations, orders have been put in six months ahead of time to ensure supply.

She says the issue with the local hardware stores comes down to risk of investment, noting that last year there were a few stores in Hudson and St. Croix Falls, Wisconsin, that were out of pellets for weeks, which surprised her considering natural gas prices were so low. “For them, they would have to buy through a distributor and purchase a semiload at a time, so the company is putting out this money up front hoping that the local customers come there to buy [versus going to a big box store],” Goossen says. “They’re putting up this investment and hoping they’ll buy at 25 cents more a bag or $1 more a bag from the local place, and now you’re housing 24 pallets outside and trying to keep them from the weather, or rodents. So the biggest complaint I hear is putting up $4,000 in August and maintaining a semiload of pellets, but come January they may be out, and if they order more and pay a premium for that, and have to turn that price over to the consumer, they will go to a big box store like Menards. I’ve seen it happen.” She says Menards has called her a few times in the past month. “They’re anxious for pellet purchasing in the upcoming season,” she says.

“This is a business that requires investment,” Stringer says. “Clearly, for the manufacturer, you are holding a lot of pellets in the summer so that you can meet the demand in the winter. It is a cash investment that you have to make, in my mind, to be a good supplier.” For retail, Stringer views it the same way. “The best suppliers can afford to invest in pellets when they get them in the summer months, or at least the months prior to winter and they stock up,” he says. “Otherwise, they are going to be caught up in the scramble that we see each year. I don’t think there is a magic solution for that. It is the business.”

A piece of advice Dejno offers retailers that want to alleviate the madness when demand is crazy and supplies are tight is to keep the good buyers employed. “That’s the reason we run into issues—when we’re dealing with a new buyer,” he says. “We don’t do a whole lot with big box stores, it’s mostly small retailers such as garden shops and independent businesses. There are only a few big box stores we regularly work with, but when they have a changeover in responsibilities it feels like we’re reeducating them all over again. When there’s a shortage, they scramble and buy stuff going into next year. When they’re comfortable and supplied well, they’re not interested in putting in inventory for the next season.”

Retailers carrying multiple brands might also help offset tight supplies in the heating season. Mayer says some of the retailers he services sell several brands. “That’s good—they need a diverse line of products,” he says. Dejno says many retailers have realized that more brands are better because it helps with fluctuation. “What we find is when a retailer is short on a brand and orders are way behind, we get a lot of calls in those times of shortages,” he says. “We don’t take on new customers at that time. We call them back in the off season so we don’t deplete our inventory.” Many of his customers have been with the company for five to 10 years, and Dejno says he doesn’t want to short loyal, long-term customers to satisfy new orders.

Ultimately, the best solution to tight supplies of pellets during the heating season may boil down to two simple, but very important, elements: communication and relationships. “We have strong relationships with loyal customers and we agree to target volumes to deliver to each customer,” Stringer says, adding that there is always more demand than he can deliver.

“Once we get into the season, like right about now, the best plan for me is to be in contact with my customers once a week to find out what their customers are saying—are they buying sand, are they buying salt, what’s the consensus,” Mayer says. “Then they ask me what’s going on with the mill and ask if there are any changes. That way the retailers know and they aren’t out of the loop.” Mayer says there needs to be better communication on all ends—between pellet manufacturers, wholesalers, retailers and home owners; and even between pellet producers, wholesalers and stove manufacturers. “I enjoy talking to retailers about trends and forecasts,” Mayer says, adding that he has seven or eight retailers in strategic locations throughout the Northeast that he distinguishes as superior based on their sales. “I give those guys more than one call a week and ask them more in-depth questions and tell them, ‘When you get to 50 or 100 calls a week, give me a call.’”

Dejno says, “If you have long-term relationships on both sides, you get used to a comfort level of what is in inventory and on-hand vs. what your customers’ expectations are. The more you communicate, the better it is for their situation.” He says at least three points during the year—preseason, in-season and end-of-season—his company has good conversations with its dealer-customers. “We just learn from each season, and find that comfort level on how to go forward,” he says. “Sometimes the solution is literally communication. The best thing is when there’s a buyer that understands the market risks of not building up inventory on their side. Everyone wants just-in-time delivery but with this product, it’s about building up inventory on both sides to be prepared for a run.”

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Posted by on in Lignetics

From Biomass Magazine

By Tim Portz

The Biomass Magazine and Pellet Mill Magazine team prides itself on nearly constant communication with industry professionals. We set goals. We track our progress towards those goals. We use that outreach to produce stories, webinars, conference panels and blogs. We do this because we recognize that the industry’s news is all “out there”, amongst all of you.

This point was reiterated and underscored during a conversation I had with Gordon Murray, executive director of the Wood Pellet Association of Canada. While writing a feature for the September/October issue of Pellet Mill Magazine I learned that the WPAC had successfully made a case to add wood pellets to a list of cargoes exempted from a rule that required the vessels carrying them to have inert gas fire protection system. For more on that, I urge you to read the feature when the issue shows up in your mailbox.

Whenever I’m interviewing someone like Gordon about something specific, I always end the conversation by asking a simple catch-all question. “What else has been going on?” Gordon’s response had me scribbling and shaking my head in disbelief that I had not yet heard about the issue he was outlining for me.

For now, the Canadian-Korea pellet trade is at a stand-still and really has been since this spring. The stoppage can be traced back by a decision by the Korean government to require a either FSC or PEFC chain-of-custody certification for all bids submitted to wood pellet tenders (basically an RFP). This caused a number of reactions including the issuance, Gordon tells me, of certificates that were later deemed to be fraudulent by some Vietnamese pellet producers (currently the largest supplier of wood pellets to Korea).

In reaction the Korean government, via the Korea Forest Service and the Korean Forest Promotion Institute eliminated this chain-of-custody requirement and replaced it with a require for government-issued and notarized documentation for all the fiber that went into the manufacturing of a given load of pellets. This documentation has to be completed for each load or container that contains pellets. While the administrative burden alone makes this situation untenable, the rotten cherry on top is that because Canada is not a member country of something called the Apostille Convention, they are not even legally able to provide this kind of documentation.

The bottom line, written in bold on a memorandum Murray sent to his members is this. This means that Canada presently has no way to legally ship wood pellets to South Korea.

More information about this situation can be gleaned from a PowerPoint presentation available on the WPAC website. The slides supported a presentation that Murray gave at the BC-Korea Trade and Investment Forum earlier this summer.

From what I gather, this issue is top of mind for Gordon. He’s been meeting with Korean officials this summer, getting the Canadian government as well as the Sustainable Biomass Partnership involved, and will be traveling there again this month. As the second largest export market for Canadian pellets, Murray’s urgency is understandable.

Serendipitously the final issue in the 2015 calendar for Pellet Mill Magazine focuses entirely on Asian production and consumption. I’d say we’ve found our cover story.

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From Biomass Magazine
By Renewable Energy Vermont

Through a generous opportunity, Vermonters now have a short-time frame before the new year to capitalize on a fantastic incentive offering that helps them save money, while supporting Vermont jobs and sustainable forests, while making sure they stay warm this winter.

Vermonters can get up to $5,500 to help switch from fossil fuel to local wood heating. Cash incentives are available from the Clean Energy Development Fund and Efficiency Vermont. Renewable Energy Vermont and the Renewable Energy Resource Center have partnered to help promote the incentives.

“We’ve been very happy with our decision to switch to a wood pellet boiler. Not only do we save money every year on our fuel bill, but we also love the fact that we’re helping to keep forests intact and logging jobs going,” says Mark Bushnell of Middlesex.

Vermonters who make the switch to wood pellet fuel typically save $1,500 annually when compared to oil and propane fuel heating options. And for those who are used to whole-home heating through their traditional boiler, the wood pellet boiler keeps it simple and complete. Advanced wood pellet boilers are fully automatic, so there’s no work for the home or business owner.

“I heated my home for years with a standard wood stove, but I’m happier with my wood pellet boiler. The new boiler is much more efficient and better for the environment because it is cleaner burning. And it feels great to be off fossil fuels,” says Susan Clark of Middlesex.

Wood pellet boilers, though not well known in the United States, are the primary way of heating in some parts of the world, including Upper Austria where more than 40,000 homes and businesses heat with wood from their background in an easy, seamless way. In fact, the State of Vermont and Upper Austria are involved in a Sister Statehood Agreement to help learning across both sides of the Atlantic to increase the uptake of this sustainable, local heating option.

“For many years, Vermont has been a national leader in the use of modern wood heating systems in large buildings like schools, office buildings, and apartment buildings. With pellets now available in bulk using specialized delivery trucks that conveniently blow pellets into a fuel bin and heating systems that are fully-automated, many homeowners and small businesses are also making the switch from oil and propane,” said Adam Sherman of the Biomass Energy Resource Center.

Read the original here. http://biomassmagazine.com/articles/12349/wood-pellet-boiler-rebates-available-in-vermont

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From Biomass Magazine
By USDA Farm Service Agency

On Aug. 19, USDA Farm Service Agency Administrator Val Dolcini announced that enrollment has begun for farmers and forest landowners seeking financial assistance for growing new sources of biomass for energy or biobased products within designated projects areas. The funds are available from the Biomass Crop Assistance Program, which was reauthorized by the 2014 Farm Bill.

Biomass energy facilities or groups of producers may submit proposals for new BCAP project areas. Proposals will be accepted on www.grants.gov through Nov. 6. USDA will also allocate $7.7 million towards four existing BCAP project areas in New York, North Carolina, Ohio/Pennsylvania and Kansas/Oklahoma, targeting the establishment of an additional 10,500 acres of shrub willow, giant miscanthus, and switchgrass for energy. Project area sponsors include Chemtex International, Aloterra Energy LLC, Abengoa Biomass LLC and ReEnergy Holdings LLC. Farmers and forest landowners may enroll for biomass establishment and maintenance payments for these four sites through Sept. 25.

In June, USDA began accepting applications from foresters and farmers seeking financial assistance for removing biomass residues from fields or national forests for delivery to energy generation facilities; the deadline for those applications is Sept. 4. The retrieval payments are provided at a cost-share match of $1 for $1 up to $20 per dry ton with eligible crops including corn residue, diseased or insect infested wood materials, or orchard waste. The energy facility must first be approved by USDA to accept the biomass crop, and deliveries to the facilities can continue until Dec. 11.

The 2014 Farm Bill authorizes funding each year for the program to assist with the establishment and delivery of biomass for energy or biobased products. To date, BCAP has provided incentives for producers across more than 48,000 acres in 71 counties and 11 different project areas. For more information on the program or to enroll in updates, visit www.fsa.usda.gov/bcap or contact your local FSA county office. To find your nearest FSA county office, visit http://offices.usda.gov.

The 2014 Farm Bill builds on historic economic gains in rural America over the past six years, while achieving meaningful reform and billions of dollars in savings for taxpayers. Since enactment, USDA has made significant progress to implement each provision of this critical legislation, including providing disaster relief to farmers and ranchers; strengthening risk management tools; expanding access to rural credit; funding critical research; establishing innovative public-private conservation partnerships; developing new markets for rural-made products; and investing in infrastructure, housing, and community facilities to help improve quality of life in rural America. For more information, visit www.usda.gov/farmbill.

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From Platts McGraw Hill Financial

Canada exported 781,083 mt of wood pellets in the first half of 2015, nudging up 1% on the year-earlier period, as increased deliveries to the UK offset declines in shipments from Italy and South Korea, according to Statistics Canada data Monday.

The country's H1 pellet exports to the UK -- Canada's largest customer for the fuel -- were 587,205 mt, up 26% on the year.

Exports to Italy in the six-month period declined 62% on the year to 42,799 while those to South Korea fell 47% to 33,221 mt.

Sources said weak demand in the residential heating pellet market explained the on-year fall in Italian deliveries, while the drop in Canadian shipments of industrial pellets to South Korea was attributed to stiffer competition from local Asian suppliers such as Vietnam and Malaysia.

The US remained the second-largest destination for Canadian pellets, taking delivery of 90,288 mt in H1, up from 87,945 mt in the corresponding 2014 period.

Total Canadian pellet exports in June were 128,403, 5% higher on the year but 8% lower than May. Of this amount, 97,326 mt were shipped to the UK, up 39% on a year earlier but 12% lower than May.

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Posted by on in Lignetics

From Biomass Magazine
By Anna Simet

To put together this survey, our team worked with Pellet Mill Magazine editorial board members—who are mainly pellet plant CEOs/operators—so we have a hunch the results will be of interest to you.

Are you a manufacturer of wood pellets? Or, do you work at a plant and can speak on its behalf or forward to the appropriate person?

If so, I have a quick favor to ask of you, and you’ll be rewarded for your time.

My colleagues have put together a survey that we would really appreciate you take. It’s short, and it’s easy, and doesn’t require any typing at all, just some clicking. It is aiming to gain insight as to how producers get their product to market, beginning with onsite storage and working its way to how they are currently managing the distribution of their product.

To put together this survey, our team worked with Pellet Mill Magazine editorial board members—who are mainly pellet plant CEOs/operators—so we have a hunch the results will be of interest to you.

We promise, survey responses will remain confidential and the information will be presented only in aggregate. The survey results will be featured in the September/October issue of Pellet Mill Magazine, which is focused on distribution and distribution infrastructure.

So as a reminder, the more responses we get, the more valuable the results will be. Since the survey was launched earlier this week, they’ve been coming in steady, we’re pushing 40 as of right now—here’s a little sneak peek at to the info we have received.

Question No. 3:

How much of your annual production is sold to Big Box retailers?

Less than 50%.................... 58.2% of respondents

Between 50 and 75%..........23.53% of respondents

Between 75 and 90%...........11.76% of respondents

Over 90%.............................5.88% of respondents

And one more:

Question No. 6:

How many orders during the 2014-15 heating season was your facility not able to

Immediately fill (back ordered)?

None………………………..42.86% of respondents

Between 1 and 30……..42.86% of respondents

Between 30 and 100…..8.57% of respondents

More than 100…………….5.71% of respondents

Those are the results of two of 12 questions, so if you're interested in seeing what the others are, go view/take the survey here,  and we’ll soon deliver the results, which we are confident will be interesting and helpful.

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On July 22, the U.S. Senate Committee on Energy & Natural Resources introduced a bipartisan energy bill, titled the “Energy Policy Modernization Act of 2015.” The committee was scheduled to hold business meetings on the bill on July 28 and July 30 to markup the legislation.

According to information released by the committee, the legislation includes five titles, including those focused on efficiency, infrastructure, supply, accountability, and conservation. The process to put the bill together included listening sessions with stakeholders held in Washington, D.C, and across the nation. The committee also held four legislative hearings on 114 pieces of legislation.
 A summary of the bill published by the committee indicates Title III of the bill, which focuses on supply, includes provisions aimed at providing an energy supply that is increasingly abundant, affordable, clean, diverse, and secure. The title focuses on renewable energy, traditional resources, and non-fuel minerals. In the summary, the committee said the responsible development of American resources, including hydropower, geothermal, bioenergy, and rare earth elements, will strengthen our economy, competitiveness and security for decades to come.

According to documents published by the committee, section 3017 of the bill focuses on biopower. It amends section 9008 of the Farm Security and Rural Investment Act of 2002 to provide research assistance for the development of biopower and bioheat projects. It also expands the authority of the Biomass Research and Development Board to consider biopower and bioheat projects and authorizes grants to support innovation and market development of biopower and bioheat systems. The bill would require the secretaries of agriculture and energy to set up two working groups to collaborate on project implementation and to share best practices. In addition, the legislation would establish a low-interest loan program in the USDA’s Rural Development Office to support the construction of residential, commercial or institutional and industrial bioheat systems. The bill would also permit loans for bioheat and biopower residential, commercial or institutional, and industrial wood energy systems to be made under the Energy Efficiency and Conservation Loan Program under Section 2 of the Rural Electrification Act of 1936.

The bill would also benefit algae research and development. According to the Algae Biomass Organization, the legislation includes language that would prioritize research and development of carbon utilization technologies under the U.S. Department of Energy’s Fossil Energy program. The bill would add “improving the conversion, use, and storage of carbon dioxide produced from fossil fuels” to the list of DOE Fossil Energy research and development objectives.

“We thank the committee for acknowledging the growing importance of carbon utilization technologies in addressing our nation’s energy future and economic health,” said Matt Carr, executive director of the ABO. “Innovators across the country are developing processes that can transform carbon dioxide into valuable products that range from plastics to fuels, and from feeds to fertilizers. This prioritization will hasten the day the algae industry can create thousands of jobs by using the waste gases from power plants to make valuable products we need, while giving those power plants a chance to reduce their emission for a profit rather than at a cost.”
Additional information on the bill can be downloaded from the committee’s website.

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Posted by on in Lignetics

The uptick of pellet production has spurred discussion in the U.S. and abroad of the strategies needed to piece together a sustainable position for pellet fuel in both the power and thermal marketplaces. Industry leaders say U.S. producers may find an assortment of policy areas and regulatory schemes laden with positive potential for the pellet sector. Some standouts include developments abroad, such as the U.K.’s Department of Energy and Climate Change Contract for Difference (CfD) subsidy program and the Sustainable Biomass Partnership, as well as developments on U.S. producers’ soil, such as the upcoming release of the U.S. EPA’s Clean Power Plan, the development of its associated accounting framework for biogenic carbon emissions and the EPA’s new source performance standards (NSPS) for residential wood heaters. Others include the U.S. Energy Information Administration’s densified biomass fuel survey and a number of pieces of legislation circulating through Congress, namely the Biomass Thermal Utilization Act or BTU Act. Industry advocates promote these capital activities and others in an effort to make pellet fuel more mainstream.

Pellet Potential Awaits
The U.S. EPA’s final ruling for the Clean Power Plan under section 111(d) of the Clean Air Act is scheduled for release in August. The plan was first proposed in June 2014 to reduce carbon emissions by 30 percent based on 2005 levels from existing, new, modified and reconstructed power plants. The CPP will set forth a calculation of emission-rate targets and give direction for states to implement plans to meet those targets. “This is a key component of the plan because every state has different energy portfolios and energy needs,” says Cody Kamrowski, policy and governmental affairs fellow with the Biomass Thermal Energy Council.
States will need to entertain all of the options they can to comply, and using biomass for compliance has many advantages, says Mike Jostrom, director of renewable resources with Plum Creek Timber Co. Inc. “For example, the opportunity to cofire pellets with coal-fired power plants could provide them with a great, short-term opportunity to meet their obligation with low capital costs and without sacrificing reliability,” Jostrom says. “It will be important for stakeholders to work with states on how this can be done, assuring sustainability without creating barriers.”

Seth Ginther, executive director of the U.S. Industrial Pellet Association, agrees that as the CPP moves forward, there could be opportunities for some U.S. utilities to cofire pellets in existing coal infrastructure, which “would help those utilities preserve investment in their supply chains as well as preserve jobs.”

In November, EPA acting assistant administrator of the Office of Air and Radiation Janet McCabe prepared a memorandum with guidance on how to include biomass in state carbon-reduction plans proposed by the CPP and Prevention of Significant Deterioration Program. Issued the same day was a revised version of the Accounting Framework for Biogenic CO2 Emissions from Stationary Sources. This framework is the result of ongoing research by the Scientific Advisory Board, which was tasked by the EPA to determine the biogenic CO2 emission and climate-policy benefits of biomass. The framework has the potential to apply to any stationary sources combusting biomass, which could have implications for power plants, industrial facilities and the heating sector. “With their biogenic carbon framework, the EPA is trying to establish the scientific foundation that supports what they have known all along—that you don't really need to count the carbon dioxide emitted from biomass because it is not being removed from permanent geologic storage, like a fossil fuel is,” Jostrom says. “This, of course, assumes that you are not depleting your biological carbon stocks, like forests, in the process. If the EPA gets it right and does not burden the process with too much complexity, it could provide some policy certainty that we haven't had for a long time.”

The SAB’s final advice to the EPA has no conclusive time line, and with a series of conference calls scheduled this summer, its findings will not be surmised by the CPP’s release. According to the Biomass Power Association, this could undermine the intentions of the EPA and the administration to ensure the role of biomass in reducing carbon emissions.

Even after the final framework’s release, it’s uncertain what policy weight it will carry. EPA may undertake some rulemaking efforts to include it in Clean Air Act regulations, but Emily McGlynn, manager for business development and policy for The Earth Partners, says it seems more likely that it will simply be used as an analytical tool that informs policy. “The decision around how to calculate net greenhouse gas emissions from biomass will be a major driver of how wood pellets are valued in the United States, as policies like the Clean Power Plan and other carbon-pricing schemes come online,” McGlynn says. “Being able to demonstrate lower net emissions should become a business strategy for anyone looking to gain more dollar value per ton of pellets.”

Wood Heater Happenings
EPA’s NSPS for residential wood heaters, governed under the Clean Air Act, was finalized in February, setting the first-ever federal standards for outdoor and indoor wood-fired hydronic heaters, forced-air furnaces, pellet stoves and the previously unregulated single-burn-rate stove. “Beyond regulating the amount of particulates each model of stove or boiler can emit, it deals with a dizzying array of other issues, from what needs to be in owner’s manuals to how appliances are tested and what kind of fuel can be used in wood and pellet stoves,” says John Ackerly, president of the Alliance for Green Heat.
Jennifer Hedrick, PFI’s executive director, says that while the association agrees with the intent of the NSPS rule and shares EPA’s goals of reducing emissions, they disagree with several components of the rule as they relate to pellet-fuel requirements. Though the EPA has attested they are not creating standards for pellet fuel, the PFI believes that is exactly what is occurring when the EPA outlines minimum requirements for pellet fuel in its NSPS. “We do not believe that the EPA has authority under the Clean Air Act, which governs the NSPS Rule, to set standards for pellet fuel.”

According to Ackerly, the regulation of the fuel—not the stoves—is one of the most controversial areas of the NSPS standards. “The NSPS says that pellet stoves must be tested with a pellet that is certified by either PFI, ENplus or CANplus,” Ackerly says. “Moreover, it says that pellets must be made of pure wood and cannot contain things such as construction and demolition debris, treated wood, plywood, plastic, manure, newspaper, cardboard, etc.”

Ackerly adds that by regulating pellet fuel, the EPA could take an enforcement action against pellet producers who use some of the banned ingredients. “A number of pellet producers use demolition debris and pallets, and these producers may see their business model upended,” he says.

Hedrick believes the minimum requirements for pellet fuel EPA is setting are problematic because several of the requirements are not in line with the best practices known to the industry. She gives several examples as the basis for this statement. For instance, in their ruling, EPA set a maximum pellet length of 1.5 inches with no regard for practical limitations. “We believe no more than 1 percent of pellet fuel should exceed 1.5 inches to ensure proper performance of the appliance, while also allowing for reasonable manufacturing limitations.”

In its minimum requirements, EPA specified that trace metals may not exceed 100 milligrams (mg) per kilogram (kg), but Hedrick says EPA does not define trace metals, nor state if it means that the combined total or individual amounts of these metals may not exceed the 100-mg-per-kg requirement. EPA’s 2 percent ash content limitation creates a third area of concern for PFI. “While the cap on ash will not cause concern for most if not all of the manufacturers of pellet fuel, it discourages innovation by pellet fuel and appliance manufacturers who could otherwise develop clean-burning appliances utilizing higher-ash pellet fuel,” Hedrick says.
PFI also believes EPA incorrectly classifies fines as inorganic rather than organic, and the agency does not provide an actual definition for fines. “This is significant as the PFI and ENplus standards have different definitions for what constitutes fines—PFI uses a one-eighth-inch-square-hole screen and ENplus uses a 3.15 mm-round-hole screen,” Hedrick says. “This is ultimately about a 30 percent difference in aperture size.”

Without some sort of assurance of a resolution to these concerns and others, PFI leadership determined a more formal challenge of the rule was necessary. PFI filed a petition for review with the District of Columbia Circuit Court on May 15. Hedrick clarifies that they do not oppose EPA’s inclusion of graded-fuel programs within the NSPS rule, but decided to take action because they object to the agency creating its own pellet fuel standards (e.g. minimum requirements for pellet fuel). “The leadership of PFI has given significant consideration to this course of action and believes it is the best path toward assurance that fuel manufacturers can continue their operations without unreasonable burden from EPA,” Hedrick says. “Concurrently, we will continue to work with EPA to attempt to address issues within the rule outside of the legal process.”

Congressional Callings
The BTU Act has been one of BTEC’s policy priorities for the past five years, packaging a 30 percent residential renewable energy tax credit with a 30 percent business investment tax credit (ITC) for commercial and industrial high-efficiency, biomass-thermal technologies. “The BTU Act adds high-efficiency, biomass-thermal technologies to the list of renewable energy technologies that currently benefit from the investment tax credits under section 25D—residential—and section 48—commercial/industrial—of the tax code,” Kamrowski says. “These tax credits will establish parity with other renewable technologies that have enjoyed substantial tax credits over many years, thus reducing market distortion and, in effect, increasing the return on investment (ROI) and financial viability of biomass technology.”

Equivalent treatment in the tax code should have been added back in 2005 when the Energy Policy Act codified all other renewable energy tax credits into section 48, says Charlie Niebling, partner of Innovative Natural Resource Solutions LLC. These credits are up for reauthorization in December and expire at the end of 2016. “If they are renewed, and there is going to be tremendous pressure to renew them, this 114th Congress has to act,” Niebling says.

The tax credits have proven valuable in other renewable energy sectors in helping consumers overcome high-investment costs, Niebling says. “It is creating a strong market pull, and if you have a strong market pull for pellets, manufacturers are going to step up to the plate and invest in capacity,” he says. “That’s what’s going to drive growth.”

The BTU Act would have the strongest, direct economic effect on the biomass-heating industry, according to BTEC. There are a few other pieces of legislation at different stages of consideration in the House of Representatives and Senate worth mentioning, however, including two others that could break open the market for biomass thermal technologies and fuels using the business ITC to incentivize thermal projects. The Power Efficiency and Resiliency Act or POWER Act  would provide a 30 percent business tax credit for qualifying waste-heat-to-power (WHP) property and combined-heat-and-power (CHP) property and extend the credit through 2018. “However, the bill’s proposed cutoff of 20 percent electrical efficiency for qualifying projects is in our view too high, as many technologies, such as backpressure steam and organic Rankine cycle engines, can produce a combined—electrical plus thermal—efficiency of over 60 percent with an electrical efficiency of less than 20 percent,” Kamrowski says. “It does not make sense to disqualify these projects with a myopic overemphasis on electrical efficiency.”

The WHP bill addresses this problem and provides a 30 percent business tax credit for qualifying WHP property, Kamrowski adds. Another big bill on BTEC’s radar is Sen. Ron Wyden’s Bioenergy Act of 2015, which would provide grants and R&D funding for biomass thermal and biopower project development, fund feedstock processing and logistics research and require USDA and DOE to coordinate bioenergy activities.

Tracking Transparency
At the end of last year, the U.S. DOE announced plans to conduct regular surveys of U.S. pellet producers that  will be published by the U.S. EIA. After collecting public comments from its first proposal, the DOE issued a request in June to the Office of Management and Budget for a three-year clearance of a new data-collection survey on densified biomass fuel on Form EIA-63C, Densified Biomass Fuels Report. Data collected on Form EIA-63C would be used to estimate densified biomass fuel consumption in the U.S., along with production, sales and inventory at state, regional and national levels.

“The information that the survey is going to be asking pellet manufacturers to provide will be extremely valuable to our industry going forward to help inform investment opportunities in new capacity, and also help inform policy makers,” Niebling says. “You can’t make a good public policy, as it relates to renewable energy, unless you’ve got the data to base it on, and our industry has suffered from a lack of good, real-time information about our size, capacity, production, inventory and the value of product produced every year.”

Data gathered via the form will be published on the EIA website and in various EIA publications, including the Monthly Energy Review. The survey goal is to collect a range of data from densified biomass manufacturers, including information on pellets, bricks, briquettes, etc. Producers with 10,000 tons or more of capacity will be targeted by the effort. Producers under the 10,000-tons-per-year cap only need to submit the form once annually. Approximately 200 densified-biomass producers are expected to respond to the initial survey, with 150 respondents expected to file regular reports. “I think if the pellet industry is to mature in this country and grow to a point where it becomes a true mainstream fuel option for residential, commercial and industrial feed, we have to be willing to provide shared information.”

Niebling says the fact that the EIA has determined that the domestic pellet industry is important enough to survey and publish data on is a good sign and something he hopes the industry will embrace. Ackerly agrees with Niebling, considering the survey an important recognition for the U.S. pellet industry, meaning that it is being taken more seriously as a mainstream fuel. “This will help show how much wood pellets are contributing to the renewable energy pie and give it credit for that contribution,” Ackerly says. “The survey will keep track of what percentage of pellets are being exported, what percent are PFI certified and where the fiber came from.”

The DOE’s second comment period on the proposed information collection closed July 6.

Push From Overseas
Europe’s climate policy is affecting all facets of pellet production. Reforestation and stewardship have grown as an industry focus, evidenced by the SBP. The partnership was formed in 2013 by major European power generators that use biomass, mostly wood pellets, and who saw a need in the marketplace for harmonized sustainability criteria for solid biomass. “They recognized that this was necessary to lower costs within the supply chain and ensure security of supply,” Ginther says. “The goal of the partnership is for their certificate to be accepted in all European markets. In order for wood pellets, or any renewable energy, to become a true energy commodity the market demands the consistency and uniformity that the SBP certificate can provide.”

The SBP fully recognizes the credibility of existing forest certification schemes like the Forest Stewardship Council and the Program for Endorsement of Forest Certification, and does not wish to compete with or replicate them. “As an industry, we have been advocating for a unified set of sustainability criteria for many years, and the SBP certificate could fill that gap for us,” Ginther says. “Consistent sustainability requirements across several markets creates efficiencies within the supply chain and make wood pellets an easily traded commodity. Overall, these efficiencies mean a lower cost for the end consumer.”

Ginther believes the crux of the pellet industry is that U.S. producers aim to provide a sustainable, low-carbon product at a low cost. “With one comprehensive set of sustainability criteria to follow, rather than different regulations and reporting requirements from each individual buyer, they can deliver on this promise more efficiently.”

Ten applicants have been accepted by the SBP as certification bodies and are progressing toward achieving SBP-approved status. Before receiving this status, a certification body must demonstrate its competence to undertake an audit of a biomass producer against the SBP standards in a real-life situation. Under the SBP framework, the biomass producer, typically a pellet mill, is certified by the SBP-approved certification body.

Another European-based program with the potential to support U.S. pellet production is the U.K.’s CfD program, which provides government support to power generators for using renewable energy sources in place of coal. The program is designed to help renewables compete with the low cost of fossil fuels, and to protect consumers from bearing the burden of costs associated with newer energy technologies. According to Ginther, it is important to note that the CfD is a private contract between the government and the generator over a fixed period, which makes it a preferred method of subsidy over Europe’s Renewables Obligation. “The CfD offers more certainty to generators and often leads to lower financing costs for converting projects,” he says.

Many U.K. power generators use this subsidy scheme to help finance conversions, which helps U.S. pellet producers compete with the low cost of coal and other fossil fuels in the energy marketplace. Although the CfD program affects the U.K. market directly, all member states have similar programs to assist with the costs of bringing renewable energy technologies to the grid, Ginther says.
Whether on native or foreign soil, there are opportunities on the horizon with the potential to bolster the U.S. pellet industry. Only time can tell, but these capital activities look like promising drivers to sustainably bring pellet fuel from minority to mainstream. 

Author: Katie Fletcher
Associate Editor, Pellet Mill Magazine

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By Associated British Ports | July 15, 2015
Associated British Ports’ continuous ship unloaders discharge around 60,000 metric tons of biomass from the POPI S at the Port of Immingham.
Associated British Ports

The world’s largest ever single shipment of biomass has been discharged on the quayside at Associated British Ports’ Humber International Terminal at the Port of Immingham ready for onward transit to Drax power station.

Almost 60,000 metric tons of wood pellets were unloaded from the POPI S—the first time such cargo has been carried by a Panamax-class vessel. The ship was loaded at the Westview Terminal in Prince Rupert, British Columbia on June 2, before making the 34-day journey to Immingham.

The pellets have been discharged using ABP’s bespoke continuous ship unloaders, which feed the product onto a conveyor system connected to Immingham Renewable Fuels Terminal, where it will be stored in eight silos, each capable of holding 25,000 metric tons of biomass, before being loaded onto trains for the final part of its journey.

IRFT is the world’s largest dedicated biomass handling facility.

The world-beating shipment forms part of ABP’s Humber-wide agreement with Drax Power Ltd., which will see it supply up to 6 million metric tons of biomass per year to the power station as part of its conversion to low carbon electricity generation.
ABP Director Humber John Fitzgerald said, “This shipment marks a significant milestone not only in our partnership with Drax, but in the development of the biomass and renewable energy sectors globally.

“This is a very exciting time for our ‘Energy Estuary’ and we’re extremely proud to be at the forefront of the renewables industry on the Humber, working closely with partners including Drax, to drive innovation, boost the regional and national economy and fuel the Northern Economic Powerhouse.”

Drax Head of Supply Chain and Logistics Graham Backhouse said, “This shipment provides further evidence of our new supply chain supporting the transition from coal to sustainable biomass at Drax. We are transforming the U.K.’s largest Power Station into one of Europe’s largest generators of renewable electricity and this shipment is another example of how we provide the U.K. with sustainable, reliable and affordable energy.”

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From Biomass Magazine

By Drax Group

A three-year partnership between Lloyds Register Rail, U.K. manufacturer WH Davis and Drax has reached a significant milestone as Drax takes delivery of its 200th specially designed biomass rail freight wagon.

The partnership, which has pushed the boundaries of rail engineering and lead to the design and manufacturing of the largest ever rail freight wagons in the U.K., has played a major role in ongoing developments in Drax’s supply chain as part of its conversion to burning sustainable biomass in place of coal—a process which has seen Drax transform from the U.K.’s largest emitter of CO2 to Europe’s largest decarbonization project.

Since entering operations in 2013, the wagons, designed by Lloyd’s Register Rail and manufactured by WH Davis, have collectively travelled over 12 million miles between the Ports of Tyne, Hull and Immingham and Drax. Over the course of these journeys they have transported around 4.5 million metric tons of sustainable biomass—enough to power 2.5 million homes with low carbon, affordable and reliable renewable electricity. The wagons are 30 percent larger than any other rail freight wagon currently used in the U.K., and are able to carry a biomass load weighing 71.6 metric tons.

Peter Emery, group operations director of Drax Group plc, said, “This milestone demonstrates the sheer scale of our decarbonization project as we replace coal with sustainable biomass providing a reliable and affordable source of electricity.
“Lloyds Register Rail and WH Davis have been important partners in the development of our biomass operations. The delivery of our 200th wagon marks a major stage in a process which has been a huge success both in terms of modifications to Drax’s supply chain and for UK engineering as a whole.”

Mark Jackson, managing director of WH Davis, said, “We’re proud of what we’ve achieved for Drax, providing U.K. manufactured wagons which set the standard for wagon manufacture and enable Drax to receive volumes of biomass which would be impracticable by road.

 “Our subsidiary, Davis Wagon Services, is supporting Drax with maintenance of the wagons and is working with Drax to establish a dedicated maintenance facility, ensuring maximum fleet availability.”

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From Biomass Magazine

By Erin Voegele

On July 2, the White House issued a memo on modernizing the regulatory system for biotechnology products to heads of the U.S. EPA, USDA and U.S. Food and Drug Administration.

The memo defines “biotechnology products” as those developed through engineering of the targeted or in vitro manipulation of genetic information of organisms, including plants, animals, and microbes. It also covers some of the products produced by such plants, animals, and microbes, or their derived products. The memo does not target products such as human drugs and medical devices.

The memo explains that in 1986, the Office of Science and Technology Policy issued the Coordinated Framework for the Regulation of Biotechnology (CF), which describes the comprehensive federal regulatory policy for ensuring the safety of biotechnology products. An update of the CF was issued in 1992 that sets forth a risk-based, scientifically sound basis for the oversight of activities that introduce biotechnology products into the environment. According to the memo, the update affirmed that federal oversight would focus on the characteristics of the product and the environment into which it is being introduced, rather than the process by which the product is created.

The memo notes that each federal regulatory agency with jurisdiction over the products of biotechnology has developed regulations and guidance documents to implement its authority under existing laws. This has resulted in a complex system for assessing and managing health and environmental risks of the products of biotechnology. “While the current regulatory system for the products of biotechnology effectively protects health and the environment, in some cases unnecessary costs and burdens associated with uncertainty about agency jurisdiction, lack of predictability of timeframes for review, and other processes have arisen,” said the White House in the memo. “These costs and burdens have limited the ability of small and mid-sized companies to navigate the regulatory process and of the public to understand easily how the safety of these products is assured; and, accordingly, they have the potential to reduce economic growth, innovation, and competitiveness.”  

According to the memo, advances in technology have also dramatically altered the biotechnology landscape since the CF update was released in 1992. “A further update of the CF is needed to facilitate the appropriate federal oversight by the regulatory system and increase transparency, while continuing to provide a framework for advancing innovation,” said White House in the memo.

The document outlines several one-year objectives, including the development of an updated CF to clarify the roles and responsibilities of the agencies that regulate the products of biotechnology. The memo also calls for the formulation of a long-term strategy to ensure that the federal regulatory system is equipped to efficiently assess the risks, if any, associated with future products of biotechnology while supporting innovation, protecting health and the environment, promoting public confidence in the regulatory process, increasing transparency and predictability, and reducing unnecessary costs and burdens. In addition, the memo call for commissioning an external, independent analysis of the future landscape of biotechnology products.

To support those objectives, the memo establishes a new Biotechnology Working Group under the Emerging Technologies Interagency Policy Coordination Committee. Within one year, the working group is tasked with updating the CF and developing a long-term strategy to ensure that the federal regulatory system is equipped to efficiently assess any risks associated with future products of biotechnology while supporting innovation, protecting health and the environment, maintaining public confidence in the regulatory process, increasing transparency and predictability, and reducing unnecessary costs and burdens. For at least five years after the release of the long-term strategy, the working group is directed to produce an annual report on specific steps that agencies are taking to implement the strategy and any other steps the agencies are taking to improve the transparency, coordination, predictability and efficiency of the regulation of biotechnology products. The memo also directs the EPA, FDA and USDA to commission an external, independent analysis of the future landscape of biotechnology products and directs the three agencies to work with the OSTM and Office of Management and Budget to develop a plan for supporting the implementation of the memo in agency fiscal year 2017 budget requests and in future budget submissions, as appropriate.

The Biotechnology Industry Organization has spoken out in support of the memo. “BIO commends the White House for recognizing that coordination between the agencies that oversee the approval of biotech products – the U.S. Departments of Agriculture, the U.S. Food and Drug Administration and the U.S. Environmental Protection Agency – must be a priority to encourage innovation by improving transparency, timeliness and predictability of the regulatory system,” said Matt O’Mara, acting vice president of BIO’s Food & Agriculture Section.

“BIO supports a regulatory system that is timely, predictable, based upon the best available science, and incorporates 20+ years of experience with the technology,” O’Mara continued. “We look forward to reviewing the proposal in more detail and working with the administration on this moving forward.”
A full copy of the memo can be downloaded from the White House website.

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By Gus Trompiz, Edited by Mark Heinrich

(Reuters) - Euronext is to launch its first derivatives focused on the energy sector by introducing wood pellet futures later this year, tapping into demand for wood pellets as a renewable source for heating, the exchange said on Monday.
Set for introduction this autumn, the scheme will be backed by physical delivery to offer price hedging for producers and distributors in a European market that consumes 80 percent of global production of wood pellets for heating, it said.
"This is our first contract dedicated exclusively to renewable energy," Ulrich von Furstenberg, commodities product manager at Euronext, told Reuters.

"There is significant volatility on this market. Operators can also choose between fuel, gas and wood pellets so they are exposed to volatility on all three products."

Euronext would apply the ENplus A1 standard of the European Pellet Council to target the residential and institutional heating market, as opposed to the power plant segment, he said.

Physical delivery at the expiry of futures would be in a zone encompassing the ports of Amsterdam, Rotterdam, Antwerp and Ghent and be on a free-on-barge basis.

The euro-denominated futures would trade in 25-tonne lots with four positions - March, June, September, December - listed per year. Options will not be offered initially.

Euronext, best known for its equities markets, runs commodity derivatives spanning cereals, oilseeds and dairy products.

It has cited energy along with metals as potential areas of development in commodities. Euronext's rapeseed oil contract launched last year is aimed partly at the biofuel sector that uses the edible oil as a feedstock in biodiesel.

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Posted by on in Lignetics

In 2011, we noticed a glaring omission in an annual U.S. government publication.  The annual Winter Fuel Report failed to mention wood and pellets, one of the most common heating fuels in America. Members of Congress were also appalled. The next year, the report began covering wood and pellet heat, not just fossil fuel heat.

Now we find the same parent agency, the U.S. DOE, omitting any mention of wood and pellet heating in a major, consumer-oriented publication and inserting the word solar where wood and pellets should be. The publication, Energy Saver: Tips on Saving Money & Energy at Home, is one of the DOE’s main consumer-oriented energy efficiency     publications. The glossy, 41-page booklet is distributed free of charge and contains scores of excellent suggestions on how to save on your utility bills.

The section on renewable energy tells consumers they have many options for using renewable energy at home, including solar and small wind turbines. The booklet also discusses geothermal and solar thermal.  It states: “Solar panels are the most popular form of renewable energy today.”

There are not even half a million homes with solar panels and about 10 million homes with wood or pellet stoves. On an annual basis, wood and pellet stoves still outsell solar panels. By 2020, there still be less than one million homes with solar. Even if the high estimates are correct, the number of homes using solar is still less than half the number of those with installed stoves. So why does the DOE say solar panels are the most popular form of residential energy, and why does it not even mention wood or pellet stoves in the renewable energy section?

It’s understandable that wood stoves aren’t being endorsed as an energy pathway that should rapidly expand (particularly in western states where inversions often trap particulates). But pellet stoves and boilers provide an excellent option for homeowners in most of the country to reduce fossil fuels and affordably heat their homes without producing excessive emissions. 

About 10 states offer rebates or tax incentives to install pellet stoves or boilers. There are liberal leading states that are trying to expand residential renewable energy deployment, such as Maryland, Massachusetts, New York, Oregon and Vermont. Then there are more conservative states, like Idaho, Maine, Montana and New Hampshire, which also see the benefits of helping households use a local renewable resource to affordably heat their homes. Why is the DOE so out of touch with what is happening around the country?

As the Obama administration and much of the country is increasingly focused on reducing fossil fuel use, the main federal agency in charge does not even see fit to mention a powerful HVAC device that drastically reduces or eliminates fossil heating fuels in more than 10 million U.S. homes. 
A $2,000 or $3,000 dollar pellet stove can easily provide 40 to 100 percent of most homes’ space heating needs.  A typical 5-kW array of solar panels can provide about the same amount of energy in a year as a pellet stove can provide in four to five months. 

The DOE should initiate more programmatic work on wood heat.  Short of that, it should at least acknowledge the existence of wood and pellets in booklets like this and help educate homeowners about how they can best use them.  For instance, this booklet could urge homeowners to upgrade from an old, uncertified wood stove to a cleaner, more efficient pellet stove.  It could also explain how modern, automated pellet boilers, like the ones that are so popular now in Europe, can provide both space and water heating and are a great complement to solar panels.

Accuracy and honesty are above all important, and ignoring the efforts of more than 10 million homes does not advance our common efforts to reduce fossil fuel use. The DOE should be striving to reach diverse constituencies, not just the urban, affluent people who can afford more expensive energy upgrades like solar panels or wind turbines.  The booklet even suggests small wind turbines are good to charge a sailboat battery.  A sailboat battery?  What audience is DOE trying to reach? 

The demographic who could install small wind turbines is relatively small, and those who would use them to charge a sailboat battery is miniscule, but the demographic that could benefit from pellet stoves is huge.

It would help if there were an Energy Star label for wood and pellet stoves, so that federal and state agencies could better guide the deployment of these technologies as they do for all other major HVAC appliances. However, the development of such a label may be years away. For now, simply acknowledging the existence of wood and pellet stoves as a popular renewable energy option and educating the public about how and where to best use them is a good start.

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From Biomass Magazine

By Erin Voegele

The USDA has announced its intent to prepare a programmatic environmental impact statement (PEIS) to assess the potential environmental consequences associated with proposed discretionary changes to the Biomass Crop Assistance Program. A public comment period on the matter is now open.

According to a notice posted in the Federal Register, the USDA’s Farm Service Agency will prepare the PEIS on behalf of the Commodity Credit Corp. The notice informs the public of FSA’s intent to seek public comment on potential changes being considered for BCAP and on environmental concerns related to the proposed changes. Preparation of the PEIS is required by the National Environmental Policy Act of 1969. The USDA indicated the input it receives as part of the notice will enable the development of alternatives for implementing the proposed changes to BCAP and begin to evaluate the impacts of those alternatives, as required by NEPA.  

The notice explains that the purpose of the PEIS process is to provide FSA decision makers, other agencies, tribes and the public with an analysis of the potential beneficial, adverse, and cumulative environmental impacts associated with proposed discretionary changes to BCAP.

In 2010, a final PEIS for BCAP was published by the FSA.  According to the notice, that PEIS evaluated environmental consequences of establishing and administering the BCAP as specified in the 2008 Farm Bill. Since 2010, environmental assessments have been prepared for various project areas and for specific feedstocks.

The 2014 Farm Bill amended and reauthorized BCAP through 2018. According to the notice, the 2014 Farm Bill included a number of non-discretionary changes to the program. Those changes are primarily administrative in nature, do not alter the general scope of the program, and have already been implemented through rulemaking.

The notice explains the FSA is currently considering discretionary changes to the way BCAP is implemented. Those discretionary changes define the scope for the new PEIS.

According to the notice, the proposed discretionary changes aim to improve the functionality and flexibility of the establishment and annual payments as part of BCAP. No discretionary changes are being proposed for the matching payments part of BCAP.

The proposed changes include consideration and review of additional crops, such as pongamia pinnata, giant miscanthus seeded and rhizome clones, giant reed, pennycress, energy cane, biomass sorghum, sweet sorghum, yellowhorned fruit tree, eastern cottonwood, kenaf, jatropha, eucalyptus (fast growing), castor beans, short-rotation pine, tropical maze, hybrid willow, sweetgum, black locust, loblolly pine, aspen, rubber rabbitbrush, and guayule.

A separate proposed change would add requirements or additional practices for conservation plans on expiring conservation reserve program (CRP) or agricultural conservation easement program (ACEP) land acres that would be enrolled in BCAP project areas.

In addition, the notice includes the potential for enrolling annual crops in BCAP project areas for contracts of less than five years.

Additional proposed changes would establish program management processes that could help offset the lack of crop insurance for biomass crops or provide sufficient information for the Noninsured Crop Disaster Assistance Program to establish coverage, and would address treatment of the required FSA annual rental reductions in the event of no bioenergy market and use for the harvested or collected biomass crops.
According to information published in the notice, the FSA plans to hold a series of scoping meetings to provide information on the proposed changes to BCAP and solicit input from program participants, the public and other stakeholders on the environmental impacts of the proposed changes and alternatives to the proposed changes. Meetings are scheduled to be held July 14 in Sacramento, California; July 15 in Honolulu; Aug. 3 in Raleigh, North Carolina; Aug. 4 in Orlando, Florida; and Aug. 5 in Sioux City, Iowa.
Comments on the proposed discretionary changes are due July 13. An additional opportunities for public comment will be available on the PEIS when it is developed.

Additional information is available in the Federal Register notice.

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From Biomass Magazine

By Katie Fletcher

Type and location define pellet fuel's quality and prospective markets. These realities differ for Western producers compared to their Eastern peers in the quest to run a successful plant.

Location, location, location, is real estate’s greatest determining factor in value, and if that real estate is a pellet plant, it also determines  the product it produces. A series of forested mountain ranges-the Sierra Nevada, the Rockies and the temperate rainforests of the Pacific Northwest-span the Western United States. Many of these and other forested lands in the region are publically owned. The opposite is true for the other half of the country. Privately owned land occupies the Eastern seaboard, the largely forested highlands in the Northeast, including the Piedmont and the Appalachian Mountains, ranging down to the Southeastern coniferous forests that occupy the Gulf coastal plain to the south. Land ownership and forest type are two components that play into what sets pellet production and distribution in the West apart from that which occurs in the East.

Successful producers across the country have learned how to sustainably source the fiber their location provides and, in turn, tap the surrounding markets to distribute the pellets they produce. The markets currently gaining the most momentum are those accessed in the Southeast and Northeast. For example, in April, Portucel Sporcel Group broke ground on a pellet plant in South Carolina, and Northeast Wood Products is retrofitting its third pellet manufacturing plant in Tennessee. Another big player coming onboard in the South is Drax Biomass. The company recently spent 15 months building port infrastructure to handle and ship pellets to Europe from the company’s two 450,000-metric-ton-per-year plants: Amite BioEnergy in Mississippi and Morehouse BioEnergy in Louisiana.

While many of these plants gear up for the expanding market in Europe, further up the East Coast, spikes in demand and supply disruptions have created periods of shortages. On the other hand, an oversupply is occurring in the West, with mild weather and competing inexpensive natural gas. Some Western producers have even funneled excess pellets to the Northeast when requested and customers willing to pay a higher premium for shipping.

As for new Western plants, Centennial Renewable Energy announced plans to build a 160,000-metric-ton wood pellet plant in northern Idaho. Other than this announcement, Western producers agree new production capacity is not likely with an oversupply on the domestic side, and a lack of lucrative export market opportunities. However, as in most energy markets, the volatility makes the future unclear. As the East Coast has had success in Europe, the West may hold promise with their neighbors across the pond. Three producers, from locations in the West, share their decades of experience running successful pellet operations to provide a glimpse at what makes the region's industry tick. 

A Southwest Example
Rob Davis, president of Forest Energy Corp. with the help of Gary Moore, director of operations, and 33 employees, runs a 60,000-ton-per-year plant in Show Low, Arizona, serving primarily residential customers in the surrounding Southwestern region. Whereas most Western producers buy sawmill byproduct for their feedstock, Davis’ mill obtains its feedstock differently. “We’re a little unique in the Southwest,” Davis says. “We bring a lot of our wood directly from the forest to the plant—small diameter trees that need to be removed for forest restoration and fire hazard mitigation.”

FEC was the first mill to take material directly out of the forest and make pellets from it in the late ‘90s due to the lack of sawmill operations in the area. Even today, not many producers in the country do, because historically it’s been more economical to purchase byproduct from a sawmill or similar operation when available. Over the past decade, the plant’s feedstock had been guaranteed through the White Mountain Stewardship Project, a 10-year stewardship contract that ended in August. Davis is a founding partner of Future Forest LLC, the prime contractor for the project, which had the aim to thin 150,000 acres of forest to protect communities from wildfire and stimulate the wood industry. Although this helped Davis guarantee feedstock for the plant, stewardship contracts are not common in the West, and the high volume of public land ownership makes a huge difference when obtaining feedstock. “We’re relying on forest management plans by the BLM (Bureau of Land Management) or the U.S. Forest Service to be consistent and reliable so we can have some idea of what is going to happen in the future,” Davis says. “Whereas in the East, you would probably buy a lot more from private land owners, it’s harder to obtain longer term assurances on public lands.”

Although FEC has been able to sustainably source feedstock to churn out pellets and restore forestland, growing the market for pellets has been a challenge in the Southwest. Davis says, in general, the market is spread out much more in the West than in the East. High consumption areas, paired with the region’s population densities, are vastly distributed.  FEC can only serve customers located within an economical transportation radius from the plant to make commerce work.
Another impact on market growth is competing heating fuels. “In the West, we have pockets of propane, but we also have, in the past several years, had very inexpensive natural gas, which has made it difficult for the Western markets to grow,” Davis says. “If you look at New England, they’ve had pretty high-priced fuel oil, which has caused more stove sales because it’s very competitive.”

FEC primarily uses ponderosa pine, with a small amount of the Douglas fir species to make its Heat’rs, TerrAmigo and Green Tree product lines. Within the past year, the pellets are now qualified under the Pellet Fuels Institute standards program. When it comes to hardwood species versus softwood, Davis says they don’t see it having a significant impact on the marketplace. He adds that for the most part pellets consumed in a region are produced there. “We shipped more to New England this year because they had a short-term demand and we had some extra product, but that’s not typical,” Davis says.
FEC went into business in 1992, and has experienced consistent, gradual market growth since. Ultimately though, “I don’t see a huge change in the market, or demand for pellets in the West unless outside influences create an impact,” Davis says.

Producing Coast To Coast
Ken Tucker, CEO of Lignetics Inc., agrees with Davis’ outlook. “I think the West is going to be pretty flat and the growth is going to be in the East,” he says.

Lignetics has plants on both sides of the country. The company’s flagship plant, built in 1979, is located in Sandpoint, Idaho. Its East Coast plants are located in Linn, West Virginia, and Kenbridge, Virginia. This February, Lignetics merged with Western pellet producer Bear Mountain Forest Products, adding two facilities in Oregon to the mix, one in Brownsville and the other in Cascade Locks. “We wanted to expand our footprint in the West,” Tucker says. “We wanted to expand our shipping corridors; freight has become a big part of our business lately. There is only so far you can truck our product and still be competitive.”
Lignetics is also in the midst of some expansion projects and upgrades. “At our Cascade Locks plant in Oregon we’re putting in a complete new dryer line, upgrading the pellet equipment and automating the bagging operation,” Tucker says. “We’re upgrading our Virginia facility right now to include additional production capability, and we have just finished an upgrade in our West Virginia plant allowing us to process chips more efficiently than we were before.”

The recent merger and upgrades have increased Lignetics capacity. Its facility in Idaho is designed to produce about 80,000 tons per year with about 5,000 of the tonnage going into log production. The recent Cascade Locks acquisition has the capability now to produce between 30,000 and 40,000 tons of pellets per year, but will soon be raised to 60,000 or more. The company’s Virginia plant will also be ramped up from its current operating capacity of 65,000 tons to 75,000 or more per year. Finally, both the Brownsville plant and the West Virginia facility are permitted at 125,000 tons per year.

Lignetics produces pellets qualified under the PFI standards program at its Idaho plant from premium quality Western conifer sawdust, and has changed the product’s distribution pattern over the years. “We started out supplying 100 percent of our production as bulk pellets as a replacement for industrial and commercial users to displace coal,” Tucker says. “The first pellet stoves became available in 1984, and the Lignetics Idaho plant was the first plant in the U.S. to bag fuel for residential use. We have gradually gone from 100 percent bulk to right now we’re at about 2 percent bulk.”

Now, although almost exclusively residential, Tucker sees tentative potential to export from the Cascade Locks plant located on the Columbia River. “At some point we’d like to be able to think we can export to Asia, but we’re frankly not holding our breath on that happening anytime soon,” Tucker says. “We’re certainly in a good position to do that on the river, which leads us right out to the Pacific Ocean.”

Overall domestically, Eastern and Western producers have access to a similar, diverse retail base. “Hearth product dealers are the people who really brought us to the dance 25 years ago,” Tucker says.

He adds that it’s a mix of the independent dealers who sell hearth products, hardware chains, big box retailers and farm supply stores amongst others. While the markets are similar across the country, pricing varies slightly. “One of the things that keeps the Western pricing down is, quite honestly, there is more supply of pellets in the West than there is demand, which is just the opposite in the East,” he says.

Due to the oversupply, Tucker doesn’t see a lot of expansion opportunity in the West, especially in the domestic market. He believes, “Before you are going to see too much growth it will have to come from offshore opportunities.”

Exploring Any, All Markets
Chris Sharron, CEO of West Oregon Wood Products, echoes Davis’ and Tucker’s thoughts on the status of the current market. “We see pellet plants not running to capacity out here and/or trying to find some other markets,” Sharron says. “The pie stays the same size, yet the slices are getting smaller and smaller.”

WOWP creates pellets predominantly from Douglas fir at its two plants in Oregon; a 30,000-ton-per-year facility in Banks and a 50,000-ton-per-year facility in Columbia City. Like Davis, WOWP has shipped some pellets to the Northeast at a higher freight cost. Sharron attributes their success in selling across the country to the customer base they’ve built who prefer a Douglas fir pellet. “We hope to hang on to at least some of that market looking for a super high-quality pellet,” he says.

Besides the Northeast, Sharron says they continue to look at any and every market. For now, the domestic, residential West Coast is the most suitable with the highest return. WOWP has also sold its bagged fuel into the residential market in Italy. However, over the past few months with the return of the dollar, the increased tax on pellets in Italy, along with port issues, and mild heating seasons in Europe that export business is no longer there. Recently, Sharron has also taken his business to Asia. “We’ve been getting excited because at least we’re on the right beach to service that market,” he says. “We shipped some pretty good tonnage into Asia in  2014, they don’t have a very big thermal market as of yet, so a majority of the pellets are being used to make electricity.”

One of the advantages of shipping to this market was that it helped keep the two Oregon plants running during the spring and summer offseason. Now, with oil prices down and the strength of the dollar back, Sharron says they are debating whether to continue with that business as well. There has been some talk about aggregating pellets together from other plants to get volume up, but the market potential in Asia remains uncertain.

As most Western producers, WOWP uses sawmill residuals as its feedstock. Sharron says in the Pacific Northwest there is a lot of biomass to be used for pellet production, but due to the terrain and often wet conditions it is expensive to harvest the material. “Unlike the Southeast U.S. where whole logs are being harvested in more of a plantation type scenario—flatter ground, large plots—that model just doesn’t work out here in the Pacific Northwest,” he says.

Sharron adds that with the market for the finished product and the pricing where it’s at in the West, it just doesn’t pencil out for his business to use anything but sawmill residuals. Currently, market pricing in the West for residential pellets freight on board (FOB) the mill is less than in the East. West Oregon is in the $150 to $160 per ton FOB mill range. Whereas in the Northeast, the plants there are in the upper 100s, some reaching over $200 per ton FOB the plant. “That’s why you see some people chipping whole logs in the East to use for pellet production,” Sharron says.

Running a successful Western pellet operation parallels in almost all aspects among these three producers. The tale is told of little market growth due in part to the West’s ample natural gas infrastructure, consecutive mild heating seasons and widely distributed markets and population density. These realities differ from the other half of the country, with the Northeast’s intermittently high fuel oil prices spiking pellet stove and boiler sales. The increasing demand for pellets in Europe gives way to increased pellet production along the Eastern seaboard. While, these three Western producers see potential opportunity on their opposing side of the beach, little can be said on how quickly the demand will come, and whether it might rival  the growing volumes in Europe. Also, the current oversupply deters future plant construction, and with the exception of Centennial Renewable Energy, little talk of new capacity has occurred.

Sharron says you need all three legs of the stool when assessing whether to build: source of fiber, know-how to construct and operate a plant and a market for the product. “All three legs are an issue right now,” he says. “Maybe not so much with the actual manufacturing, but the biggest issues are raw material supply and probably the biggest, lack of market, at least at the right price.”

A few tough years following the recession slowed down Western sawmills, which drove the price up for the fiber, and pellet prices haven’t followed. Even so, producers in the West have learned how to get creative to find market opportunity, and the variability in the marketplace could soon change the current landscape. In the meantime, with an occupation sometimes based on predicting the unpredictable, producers focus on the present. “I’m dealing with the day-to-day, keeping things running and keeping things going until hopefully some things do change in the future, which helps make things a little bit brighter,” Sharron says. “We celebrated our 30-year anniversary this May, and we're looking forward to the next 30.”

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Posted by on in Lignetics

From Biomass Magazine

By Tim Portz

Seven major European utilities, working to help producers satisfy a blend of varying sustainability requirements, establish the Sustainable Biomass Partnership.

European Union member states are united in their commitment to growing their share of renewable energy as a means of driving down carbon emissions across the continent. The Renewable Energy Directive, established by the European parliament in 2009, set a binding target of 20 percent of final energy consumption in aggregate coming from renewable sources by 2020. The levels of in-place renewable production varies from country to country so each received their own goal, which achieved, will deliver the EU to its total goal. The goals vary widely and Sweden’s goal is the largest at 49 percent. This directive has been a boon for renewable energy producers and technologies in all categories, wood pellets included. The United Kingdom’s goal is 15 percent by 2020, an ambitious undertaking considering the U.K. had among the lowest percentages of renewable energy deployments in Europe when the directive was established at 1.5 percent. It didn’t take long for utilities, regulators and policy makers to realize that if those targets were to be met, transitioning large base load power stations from nonrenewable inputs to renewable inputs like wood pellets was going to have to be a part of the plan. The concept gained momentum, taking root in other countries, some with a well-established history of cofiring and global pellet production took off. As conversion plans began to take shape, regulators, NGOs and the general public began to ask for assurances that these conversions would, in fact, deliver the intended results and drive down overall carbon emissions. Sustainability requirements soon followed and it is here that the EU’s unified approach ends. What emerged was a patchwork of varying certification requirements and schemes that utilities and producers alike say inhibit efficient trade.

Development Time Line
In 2013, seven of the leading utilities in Europe took action forming the Sustainable Biomass Partnership with the stated goal of working to “enable an economically, environmentally and socially sustainable solid biomass supply chain that contributes to a low-carbon economy.” The end game for the SBP is to develop a certification scheme recognized within all pellet-buying countries in the EU, and potentially beyond, which reduces the drag the industry is already feeling, the multiple definitions of sustainability that have already emerged in the marketplace.
Working with a small group of stakeholders, the SBP developed a first draft of the scheme in March 2014 that it called the Biomass Assurance Framework Consultation Draft which was made public and open for public comment.
“We had a public consultation, a stakeholder consultation, which was open to all,” says Peter Wilson, SBP executive director.  “We had lots of responses, over 110 pages worth once we consolidated all of them. We did have a coordinated, combined response from the environmental NGOs and that was hugely valuable. So that has helped us get to where we are, which is this robust set of standards.”
After closing the comment period, the SBP refined the consultation draft and in September of 2014 published the Biomass Assurance Frameworks Standards version 0.0, meant to be a working beta version that could be introduced to a wider group of stakeholders and solicit further comments. “In this first version of the SBP framework, we involved and engaged with a lot more stakeholders,” Wilson says. “Most notably we included other supply chain operators like resource managers, forest owners and biomass producers. All of them have been invited to our development meetings to ensure that we are developing a standard which is practicable, which can be implemented while being as robust as possible.”
This further refinement resulted in the first working framework, the SBP Framework version 1.0, which was released at an event in Brussels in late March. This version will serve as a working version which biomass producers will be encouraged to participate in and member state policy makers will be asked to accept as a means of satisfying their sustainability and carbon reduction requirements. At the event, SBP chairman and Drax Group CEO Dorothy Thompson said, “We are encouraged by the interest that representatives of the EU Institutions have shown in the SBP and its Framework, and we look forward to working with them and other interested parties to make this a truly multistakeholder approach."

How It Works
From its outset, the SBP has been clear that it is not seeking to replace existing forest certification schemes like the Forest Steward Council, the Sustainable Forestry Initiative and others. In fact, the SBP has been built to leverage these existing certification schemes whenever possible. Still, these existing certification schemes fell short of the emerging requirements regulators in Europe were asking utilities, and by extension their biomass suppliers, to comply with.
Simply put the SBP Framework is a certification scheme that contains 38 indicators of sustainability that an independent third-party auditor will verify are being successfully met. Where the SBP differs from other schemes is in its ability to recognize that for producers within a given region, the risk of not meeting one or even many of the indicators is quite low. In these situations, the indicator is recognized as low-risk and the third-party verifier moves on. To illustrate, SBP technical director Simon Armstrong points to the indicator that prohibits child labor. “There is no risk of that in the United States or Canada because of existing employment laws, so you could just assess that as low risk on a regional scale,” he says.  “You can simply say there are extensive regulations around child labor. So for operators in Canada or the United States, there is no need to go and check their employment records.” The risks that will be deemed low-risk are likely to vary from region to region. In early pilots conducted in the Baltics, 35 of 38 indicators were deemed low-risk. The SBP hopes this ability to hone in specifically on only those areas where there is a specified risk will result in the more efficient uptake of the scheme and reduced costs for producers.
The SBP is clear that one of the goals of the certification process is to provide producers with a platform to raise the transparency of what they do and how they do it with an occasionally wary and suspicious public. “Someone said recently that biomass doesn’t have a sustainability problem, its got a transparency problem. That’s quite an interesting concept,” Armstrong says.
The SBP process concludes with producers making a summary of their third-party assessment publicly available. “One aspect of this is that when you’ve performed your risk assessment correctly, you’ve engaged enough stakeholders you should be confident you haven’t missed any big risks,” says Armstrong. “You want to be in a position that when you are making the summary publicly available, you don’t have a stakeholder saying you never gave us an opportunity to comment on this process. Finally, you certainly don’t want to be in a position where a stakeholder says we made you aware of a particular risk and you never did anything about it. This is about stakeholders having the opportunity to comment.”
Recognizing that producers may see this as simply a means to give their biggest opponents a platform to interrupt their business, the SBP is quick to point out the framework has been built to deflect these criticisms and provide a pathway for producers to put unfounded allegations to rest. “You don’t have to reach a consensus with these critics, you don’t have to reach an agreement,” says Armstrong. “But you have to demonstrate that you’ve taken aboard their comment and if it falls within the scope of the SBP requirements, the 38 indicators, that you’ve done something about it.”

Getting Certified
To participate in the SBP Framework and get certified, producers will need to engage a third party verifier to conduct an audit. Thus far, the SBP has accepted nine third-party certifiers as applicants that are actively progressing towards SBP approval. Ann Arbor, Michigan-based NSF International was the first North American certification body to be granted applicant status by the SPB.  NSF International will leverage deep experience in certifying both primary and secondary manufacturers in the forest sector and strong institutional experience with greenhouse gas verification to win certification contracts in the pellet sector.
“NSF International has completed its first SBP audit of a major biomass producer located in the southeast,” reports Norman Boatwright, manager of NSF International’s forestry programs. “The witness audit report is in the process of being completed and will be sent to SBP for approval. Once this is complete and SBP finds the audit and the audit report compliant with its standards and expectations, SBP will be able to approve NSF International as an official certification body.”
It is the hope of the SBP that existing momentum and progress with certification schemes and certifiers can speed the rate of uptake and approvals throughout the industry. “The standards have been deliberately structured to align with FSC and PEFC and other certification schemes,” says Wilson.  “If an auditor is coming to do an audit for FSC, PEFC, SFI etc., they will come with their checklist and then there will be additional questions on top for SBP. So the intent is an auditing team can come and they can tick off multiple schemes at one time. It was deliberately designed like that not only for the biomass producer but also for the certification body.”
This certainly aligns with NSF International’s thinking and, Boatwright adds, “NSF International currently certifies several biomass producers, all of which will likely require SBP certification. We are in the planning stages with several other biomass producers to determine the best way for them to become certified. Ideally, SBP audits should be conducted in conjunction with the other Forestry Program audits to reduce disruption to their operations as well as save time and costs.”
Finally, the SBP is quick to point out a major distinction between their program and other certification programs. The SBP certification does not bring with it a licensing fee or a production-based fee. Producers will have to pay third-party verifiers like NSF International, of course, and Armstrong allows that other nonsubscription costs should be expected but that the design of the SBP framework should keep those to a minimum. “The costs of certification schemes don’t come from the audits so much as they do in the changes to their management system,” he says.  “I think that is the crux of why this scheme is quite smart. Because we don’t go down the route of requiring the same level of effort for each indicator irrespective of risk.

Path Forward
The plan now is to let producers, certifiers and regulators get familiar and comfortable with  SBP Framework version 1.0 over the course of the next 18 to 24 months, enabling all parties as the SBP website puts it “to learn by doing.” The SBP is planning on robust engagement with a broad swath of stakeholders and anticipates releasing a more informed and refined version of the framework, version 2.0, in 2016.
The biggest question left to answer is whether SBP certification will satisfy European regulators. These efforts are ongoing and, by necessity, are happening at a country-by-country level. Knowing that without regulatory buy-in the Framework would fail, the SBP built it with an eye to the requirements already put forward by the regulatory bodies. “The standards have been built around the U.K. and the Dutch requirements,” says Armstrong. “The U.K. are currently benchmarking SBP to determine if it meets the sustainability requirement.” The SBP Framework may be experiencing the greatest regulatory approval momentum in Denmark. “The Danes have a voluntary agreement between industry and government which was negotiated with industry, government and NGOs and the conclusion that they came to was that if the generators in Denmark are using SBP certified material, then that means that they are meeting their sustainability requirements,” says Armstrong.
Ultimately, if biomass feedstocks are going to make a lasting contribution to the renewable energy targets of not only European countries, but other industrialized nations just beginning their journeys towards reducing greenhouse gas emissions, a system that reduces drag on the market must emerge. Sustainability requirements continue to be a moving target throughout Europe with prospective pellet-buying nations still working to build requirements that satisfy their citizens and policy makers but are also practicable for utilities and their feedstock partners. A harmonized, singular set of requirements seems unlikely and this market reality gave rise to the SBP Framework. The hope now of the SBP, its utility founders and the pellet producers counting on the European market is that regulators will see the logic in one certification scheme with the flexibility to satisfy multiple notions of sustainability.

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From Biomass Magazine

By Erin Voegele

On May 19, the U.S. Senate Committee on Energy and Natural Resources held a hearing to receive testimony on 26 pieces of legislation related to energy supply, including the recently introduced S. 1264 bill, which aims to establish a national renewable energy standard (RES). Bioenergy was among the topics discussed during the more than two hour event.

S. 1264 was introduced by Sen. Tom Udall, D-N.M, on May 11. The bill aims to create the first national threshold for utilities to provide a certain percentage of their electricity from renewable resources, including wind, solar, biomass, landfill gas, ocean, tidal, geothermal, incremental hydropower or hydrokinetic. The RES requirement would phase in, starting at 7.5 percent in 2015 and gradually increase to 30 percent in 2030 and thereafter, through 2039.

During the hearing, Franz Matzner, director of the Beyond Oil Initiative at the Natural Resources Defense Council, submitted testimony in favor of the RES legislation. “The 30x30 RES will promote clean energy source that cut carbon pollution, further expand our powerful clean energy economy which currently employs hundreds of thousands of American workers, drive innovation, and provide a strong market signal that the future lies in renewable energy developed here in America,” he said in written testimony.

Matzner added that 29 states and Washington, D.C., have mandatory renewable energy targets, while seven more have set nonbinding goals. “Between 1998 and 2013, approximately 68 percent (51 GW) of non-hydrorenewable capacity additions have occurred in states with binding renewable portfolio standards. A recent analysis by the Lawrence-Berkeley National Laboratory (LBNL) found that many states are on track to successfully meet their 2035 requirements within the next few years,” Matzner continued.

“Implementing a federal renewable electricity standard would expand on the success of state-level policies across the country and ensure that our entire nation reaps the benefits of a clean energy economy. A strong federal RES would also secure America’s place as a global leader in clean energy, providing policy certainty and a transparent market signal to drive investment in American companies and manufacturers,” he said.
Matzner also cited recent analysis completed by the Union of Concerned Scientists that found a federal RES would increase renewable energy by more than 265 percent over current levels, driving $294 billion in cumulative new capital investments and decreasing electricity sector carbon dioxide emissions by 10.8 percent below business-as-usual levels in 2030. He stressed these achievements could be accomplished with little impact on electricity prices when compared to business-as-usual, with the maximum average incremental increase in electricity prices in any given year being only 0.2 percent.

In her written testimony, Susan Kelly, president and CEO of the American Public Power Association, objected to the creation of a national RES, noting that 28 states already have RES programs and eight have voluntary RES targets. She also cited the impact of cumulative U.S. EPA proposed regulations. “State and local policies promoting the greater use of renewables, along with EPA regulations to reduce CO2 emissions are sufficient drivers for the increased use of renewable resources. A federal RES is unnecessary,” Kelly said.

“Furthermore, the creation of a federal RES could create a host of issues for utilities that are already subject to state RESs and are also trying to comply with state plans issued under EPA’s final Section 111(d) rule that will be released in the summer of 2015,” she added, noting Udall’s legislation could have the unintended consequence of forcing public power, rural electric cooperative, and investor-owned utilities located in the same state to compete against one another for in-state renewable energy resources to meet state goals set by EPA in its final Section 111(d) rule.
Brent Sheets, deputy director of the Alaska Center for Energy and Power at the University of Alaska Fairbanks, addressed biomass energy during his testimony. “The heat requirement for Alaska far surpasses the electricity requirement, and while a majority of the state’s communities use diesel fuel to meet their heat demand, woody biomass is often a more economical solution, especially in communities separated from the road/rail connected system,” he said.

During the hearing, Sen. Al Franken, D-Minn., highlighted District Energy St. Paul’s biomass district heating operation, noting the organization was recently recognized for its leadership in using wood waste to generate heat and electricity for downtown St. Paul while providing customers with stable and competitive energy prices and reducing carbon dioxide emissions.

Responding to a question posed by Franken regarding Alaska’s use of biomass, Sheets noted more than 29 Alaskan communities have invested in biomass projects. Some have been successful and some have not, he said. “The successful ones demonstrate a commitment to the increased manpower that is associated with that, and then within the local communities it provides jobs, cutting down the trees, delivering them, stacking them,” Sheets continued. “In many of the rural communities, unemployment is huge, so any cash you can keep in the local economy is good. So, we have found that augmenting our other sources of power with heat from wood keeps cash in the community a little bit longer and circulating.”
Additional information on the hearing is available on the committee website.

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