Lignetics: Manufacturer of Premium Wood Pellets, Pres-to-Logs® Fire Logs, and Fire Starters

Welcome to Lignetics' blog where we will be posting current information about the wood pellet, fire log, and fire starter industry. We welcome your comments and additions as we develop what we hope will be an up-to-date information center on all developments concerning wood pellets and fire logs.

From Biomass Magazine

By Katie Fletcher


Collocated with the 2015 International Biomass Conference & Expo being held in Minneapolis, Minnesota, the Heating the Midwest conference began on April 20 with a discussion on overcoming obstacles to speed up the deployment of biomass thermal solutions.
Tony “T.J.” Morice, the newly appointed chair of HTM and vice president of marketing, operations and business development of Marth Companies, kicked off the conference by congratulating Brian Brashaw, director of the Wood Materials and Manufacturing Program, on his leadership as the former HTM chairman. HTM began in 2011, focusing on thermal energy and opportunities within the Midwest, especially locations without access to the natural gas grid. “We want to increase growth in biomass heating in the Midwest, but there are obstacles to overcome,” Morice said. “Biomass heating projects need to be on the radar and the rural economic development focus needs to be understood.”

The first panel of the day began with some Austrian advice from Christiane Egger, deputy manager of OO Energiesparverband. Egger described how biomass thermal installations became Austria’s leading residential heat source by sharing activity that has taken place in Upper Austria, Oberosterreich. OO Energiesparverband was founded in 1991, and is mostly funded by the state to promote energy efficiency and renewable energy. Egger also manages Oekoenergie-Cluster in Upper Austria. This is a network of more than 170 renewable energy and energy efficiency partner companies in Europe. Egger drew attention to the dramatic increases in the OEC and the industry in general over the last 15 years. The number of partner companies has doubled from 74 to 170, combined revenues from these companies has jumped ten times from $250 million to $2.5 billion and exporting companies have increased from 12 to 108.

The state of Upper Austria, similar in geographical size to the state of Connecticut, has a population of 1.4 million, with biomass covering about 40 percent of heating in homes. Overall, renewable energy accounts for 35 percent of the total, primary energy demand in Austria; 16 percent clean biomass, 14 percent hydro, 5 percent solar and other renewables. Because of this, Egger said that Austria has avoided import expenses of fossil fuels by around $1.5 billion per year. The state has 50,000 automatic biomass systems installed—26,000 pellet systems, 24,000 wood chip systems and 330 biomass district heating plants. The main options for biomass heating installations in Upper Austria include modern stoves, automatic pellet heating, modern firewood boilers, automatic wood chip boilers, district heating and combined-heat-and-power (CHP) systems.

Egger also provided economic statistics by indicating that 4,500 jobs have been brought to the biomass boiler and stove industry in Austria across production, sales and installations, resulting in approximately $730 million in annual revenue.

All of these numbers contribute to Austria’s renewable energy goal of having all electricity and space heating needs met with renewables by 2030. Egger shared that Austria was able to create a successful biomass thermal energy market to work towards this goal with carrots, sticks and tambourines. Carrots represent financial incentives, sticks stand as regulatory measures and tambourines represent information and training.

The main market drivers Egger identified are outreach training, standards for fuel and equipment and cooperation across the value chain at an industry level. On the state and local government front, drivers include setting targets, removing administrative barriers and developing good incentive programs. Lastly, Egger believes the general public must be aware of the benefits, have the right combination of sticks, carrots and tambourines and maintain a long-term perspective.

Egger concluded by acknowledging Austria has made great progress over the past few years, but that 1.6 million households, or 45 percent, are still heating with oil and gas, so the opportunity remains to increase biomass’ place in Austria’s energy market.

Joe Seymour, executive director of the Biomass Thermal and Energy Council, spoke of big policy activities in the United States at the state and federal levels. The Biomass Thermal Utilization Act was amongst the federal activities Seymour highlighted. The act provides a 30 percent investment tax credit for industrial and residential biomass thermal heating systems, helping put biomass on a level playing field with solar and geothermal technology. Another federal tax initiative mentioned was the CHP and waste-heat-and-power (WHP) investment tax credits. The CHP initiative provides a 30 percent investment tax credit for CHP units. Seymour said a separate 10 percent WHP tax credit is moving along as well. Besides these tax initiatives, Seymour made mention of thermal energy’s inclusion in the White House Executive Order.

Department pressure is also occurring at the federal level and BTEC is encouraging pledges of support. The Energy Information Administration updated its data collection pertaining to densified biomass fuels—how much is being produced, and for what price and market. EPA’s New Source Performance Standards on heater regulations made the list of federal activities as well. Next, how the government will create carbon and 111(d) was mentioned. Farm bill revisions passed in 2014 and the work of the Rural Energy for America Program rounded off the list.

Statewise, renewable portfolio standard (RPS) programs and thermal inclusion in utility goals were first mentioned. New Hampshire and Maine’s generous rebate programs were also discussed by Seymour. He stressed the importance of state wood energy teams as well, referring to them as laboratories for democracy.

Seymour concluded by saying critical messaging is finally being built. “We’re finally building that momentum,” he said. “It’s the boots on the ground that’s going to help move this market, until those in Washington can get their act together."

William Strauss, founder and president of FutureMetrics, was the last of the speakers during the opening panel at HTM. Strauss said in the next 20 years pellets are expected to grow by about 20 million metric tons per year, heating markets are expected to grow about 5 million metric tons per year and an estimated 1.8 million tons of new, annual U.S. pellet demand for domestic heating is expected.
Strauss shared that 22.1 million tons of pellets were produced worldwide in 2013, and that North America has the capacity to produce nearly 16 million tons. The U.K. has the biggest end-use consumption of pellets, followed by Italy.

One obstacle with continuing pellet market growth is because it is partly driven by the market for heating oil. Strauss said it may be difficult for the pellet stove market to see growth this year because, as of March, pellet and crude oil prices hit close to a break even.
Strauss also shared his case to convert a home heating device to pellet fuel before home installation upgrades are made. Biomass Magazine reported on this subject earlier in April.

The resounding attitude amongst the panelists was that developing biomass thermal markets takes time and is challenging. “Developing a biomass thermal market is hard,” Egger said. “It takes passion and lifetime commitment.”

Adee Athiyaman, professor of marketing at Illinois Institute for Rural Affairs at Western Illinois University, was unable to present as originally planned on the panel. A white paper entitled “Tapping Unstructured Data to Gain Insights into Consumer Purchases of Biomass Residential Heating Appliances: An Exercise in Big Data Analytics”, which his presentation was based on, can be found here.

Read the original here.

From Biomass Magazine


By Erin Voegele

The U.S. EPA has posted a notice to its website announcing that the volume requirements for the 2014, 2015 and 2016 renewable fuel standard (RFS), along with the 2017 volume requirement for biomass-based diesel, will be finalized by Nov. 30. A portion of the new compliance schedule is the result of a proposed consent decree in litigation brought against EPA by the American Petrochemical Institute and American Fuel and Petrochemical Manufacturers.

Under the proposed consent decree, the EPA said that it will propose 2015 RFS volume requirements by June 1 and finalize volume requirements for 2014 and 2015 by Nov. 30. Also under the decree, the EPA will resolve a pending waiver petition for 2014.
Outside the scope of the decree, the EPA has committed to propose RFS volume requirements for 2016 by June 1 and finalize them by Nov. 30. The agency also said it will finalize the RFS biomass-based diesel volume requirements for 2017 on the same schedule. Regarding the 2014 standard, the EPA said it will re-propose 2014 volume requirements by June 1 that reflect the volumes of renewable fuel that were actually used in 2014.

The consent decree relates to a lawsuit filed against the EPA by the API and AFPM on March 18 in the U.S. District Court for the District of Columbia. In the compliant, the oil groups allege the EPA has violated a nondiscretionary duty under the Clean Air Act to establish renewable fuels obligations for 2014 and 2015 and to approve or disapprove a petition filed by the API and AFPM to waive, in part, the 2014 RFS. That waiver petition was submitted to the EPA in August 2013.

Documents published by the EPA explain that the consent decree is not yet final. While it has been signed by the API and AFPM and lodged with the court, it has not been signed by EPA and has not been signed or entered by the court at this time. According to a notice filed by the EPA with the court, the consent decree is not final and cannot be entered by the court until the EPA administrator provides a reasonable opportunity by notice in the Federal Register for members of the public to comment in writing. Following the public comment period, if none of the comments disclose facts or considerations which indicate that the decree is inappropriate, improper, inadequate, or inconsistent with the CCA requirements, the administrator will request that the court enter the decree.

The Renewable Fuels Association has spoken out in support of the EPA rulemaking timeline. “We applaud EPA and API for reaching an agreement that will provide all stakeholders some certainty with regard to the renewable fuel standard,” said Bob Dinneen, president and CEO of the RFA. “No one has benefited from the delays in setting annual renewable volume obligations; and while we are sympathetic to the difficulty EPA faces in promulgating annual targets, the statute is clear about the volumes required and the agency simply has to do a better job moving forward. This consent agreement is a good start. We are particularly pleased that the agency has committed to addressing the 2016 RVO in the same timeframe even though that is outside the scope of the consent agreement. More important than EPA meeting its statutory deadlines, however, is that the agency recognize the market transforming purpose of the RFS and allow the RIN mechanism to drive investment in infrastructure and compel consumer choice at the pump.”

The American Coalition of Ethanol also supports the agreement between the EPA, API and AFPM. “The scheduling agreement between the oil industry and EPA is actually a good signal for the advanced biofuels industry because it lays out a time frame and a reasonable market expectation for resolving the regulatory uncertainty around the RFS,” said Brooke Coleman, executive director of the AEC. “Now that we have a better idea of when it will happen, we look forward to working with EPA to make sure that the new RFS proposal supports the commercial deployment of advanced biofuels as called for by Congress. We were encouraged by EPA’s decision late last year to pull a problematic 2014 proposal, and we are optimistic that EPA will make the necessary adjustments and put the RFS back on track going forward.”
Growth Energy said the EPA’s timeline will provide the industry with some certainty. “I am pleased to hear that the EPA has finally put a process in place to establish some certainty for biofuel producers with the recent announcement of the timeline for the proposed 2015 RVO rule by June 1st as well as the final 2014 and 2015 volume obligations by Nov. 30, 2015,” Tom Buis, CEO of Growth Energy, said. “Our producers have faced ambiguity for too long and today is welcome news that they are establishing a level of certainty with this announcement. However, far more important than timing is that that the EPA establishes a final rule that moves our industry forward, and reflects the bipartisan vision Congress intended for the RFS. Additionally, while not part of the consent decree, we are pleased to see that the EPA has committed to finalizing the 2016 RFS RVO numbers this year as well. By taking this action, they are ensuring that the RFS is back on a path to certainty for the biofuels industry, providing the necessary guidance for the industry to continue to thrive and advance alternative fuel options for American consumers.”
The American Coalition for Ethanol is also pleased with the EPA’s newly announced timeline. “ACE has consistently said it is much more important for EPA to get the RFS done right than it is for them to get the RFS done quickly, and that bears repeating given today’s announcement that the RFS will be getting back on track for implementation,” said Brian Jennings, executive vice president of ACE. “Last year Big Oil came close to bullying EPA to completely re-write the RFS so they could escape their legal responsibility to blend E15 and flex fuels into gasoline.  But thanks to comments from ACE members and other biofuel supporters, EPA wisely chose to abandon their proposal to set the 2014 RFS on the E10 blend wall.  It appears EPA is going to get the RFS back on track for implementation.  Our priority will continue to be to ensure EPA holds oil companies legally responsible under the RFS for making cleaner and less expensive fuel choices, such as E15 and E85, available to consumers.”

The National Biodiesel Board said it is supportive of the EPA’s announcement. “We are pleased to see the EPA make these further commitments toward ending these delays,” said Anne Steckel, vice president of federal affairs at the NBB. “Biodiesel is the most successful EPA-designated Advanced Biofuel under the RFS to date, and the Obama Administration should be doing everything it can to promote biodiesel so we can show that Advanced Biofuels are here today, cutting greenhouse gas emissions by more than 50 percent, creating jobs and reducing our dependence on global petroleum markets that wreak havoc on our economy. The RFS is the most successful policy we have for reducing emissions in the transportation sector, and it is working. We applaud the EPA for taking this step and look forward to working with the Administration in the coming weeks to get this program back on track.”

Read the original here.


From Biomass Magazine

By Katie Fletcher

Last month, Portucel Sporcel Group broke ground on its Colombo Energy pellet plant in Greenwood County, South Carolina. This estimated $110 million global investment represents an important development in the company’s expanding bioenergy business.
Portucel is an integrated forest, pulp, paper and energy company, with its activities based at three large-scale production mills in Portugal.  According to a Portucel spokesperson, the opportunity to expand the company’s biomass business in the U.S. was presented on special conditions for pellet manufacturing, including raw material availability, energy costs and good infrastructure. The spokesperson added that the plant will be equipped with advanced abatement equipment for environmental emission control, and its environmental performance will rival similar plants in the U.S.
The company’s first U.S. pellet plant will be located in Greenwood County’s Emerald Road Industrial Corridor. The location in Greenwood allows the facility access to the surrounding forested area. “Colombo Energy will benefit from the very favorable conditions in terms of Greenwood County’s forestry raw materials and available energy,” Portucel spokesperson said.
In return, the facility is expected to create 70 new, local jobs. “The Portucel Group is very pleased to announce the construction of its new, state-of-the-art wood pellet facility in Greenwood, South Carolina,” said Diogo da Silveria, Portucel CEO. “Our facility will provide a renewable, sustainable source of energy for many thousands of electricity consumers for years to come, as well as jobs to many South Carolinians.”
Secretary of Commerce, Bobby Hitt, adds, “Recruiting foreign-based firms, like Portucel S.A., to South Carolina is a critical part of our economic development strategy. Portucel’s decision to establish manufacturing operations in Greenwood County is great news for the local community and state as a whole.”
Once fully operational, the facility will have the manufacturing capacity to produce 460,000 tons of pellets annually with the Colombo Energy Inc. brand. Scheduled completion is in the third quarter of 2016. A Portucel spokesperson said the company has already secured sales of 70 percent of its production through the signing of 10-year, fixed-price supply contracts, with most of the targeted sales for the European industrial market.
Overseas, the Portucel Group accounts for more than 3 percent of Portugal’s tangible exports. As of September 2014, the company achieved record paper output, as its year-over-year sales volume saw an increase of 3 percent, to 1.147 million tons. “The company has sales in 123 countries, on the five continents—with particular mention of the European and American markets,” the company spokesperson said. “Portucel is one of the most prominent Portuguese companies on the international stage.”

Read the original here.

From Biomass Magazine

By Anna Simet

With an improving economy comes a strengthened dollar, and that’s good news to U.S. consumers—we’re getting more for our dollar, and we have more dollars to spend elsewhere. It is not, however, good for trade and foreign U.S. investment.

With an improving economy comes a strengthened dollar, and that’s good news to U.S. consumers—we’re getting more for our dollar, and we have more dollars to spend elsewhere.

It is not, however, good for trade and foreign U.S. investment.

One year ago, the U.S. dollar was trading at 80 cents. This month, it was (briefly) trading for 100, a 12-year high against the euro. It recently slipped to just over 97 cents, but nonetheless, its high value has U.S. businesses with international interests cringing. Here is a graph that illustrates how the dollar has soared over the past year:



So what does that mean for the biomass industry?

Let’s start with U.S. pellet exports. Since I’m terrible at math—hence my career choice in words—I asked my friend Bill Strauss over at FutureMetrics if he would be willing to juggle the numbers for me, and he was extremely helpful, as always. He made it seem pretty easy—here’s what Bill said:

If the U.S. price of delivered pellets is $200 per metric ton, the cost to the EU buyer when the Euro was at 1.36 euros per dollar in early October 2013, was 147.06 per metric ton. So, 200/1.36.

Keeping the price in dollars the same and converting to euros at today's exchange rate of 1.09 euros per dollar, the price in euros is 183.49 per metric ton. So, 200/1.09.

 Today, the cost to a buyer in the Euro zone is 30.49 more euros for the same metric ton than it was about 18 month ago, a 21 percent increase in cost for the same pellets.

Bill pointed out that the Canadian dollar has not strengthened against the euro and British pound nearly as much at the dollar, which leads me to believe Canadian producers must have a competitive edge right now.  “Where the markets are most competitive, on the spot markets for heating pellets, some U.S. producers are seeing their margins shrink to remain competitive,” Bill added.

I imagine that U.S. producers focused on exporting are working hard to minimize costs wherever possible, from the woods to the port.  And new and developing projects must absolutely do the same. Weaker foreign currency means more money out of the pockets of overseas customers, money they will not or cannot spend, and the pressure is likely already on to lower the price per ton.

FutureMetrics has a cool dashboard that illustrates the cost scenario on both ends and takes into account all of the metrics involved—you can play around with the numbers and get a better idea of costs and profit involved on both ends.

Moving on to investments on U.S. soil, here’s an interesting point that I read in a Financial Time article—some are viewing this situation as sort of a blessing in disguise.

When Drax was questioned as to whether this was hurting its business, the answer was…not really. Surprising, but it makes sense: while the utility is spending more to invest in the U.S. market (hundreds of millions in its facilities in Mississippi and Louisiana,  and, as we reported in November,  is still scoping out the Northeast for other projects) these investments are long-term, and will likely pay off in a strong economy.

The situation isn’t a whole lot different for providers of any kind of bioenergy-related equipment that  export or are engaged in projects outside of the U.S.—while talking with Craig O’ Connor,  director of Office of Renewable Energy & Environmental Exports at the Export-Import Bank of the U.S., he said exporters are indeed taking a hit. While U.S. products are generally considered high-quality and are well-liked, customers will be forced to look elsewhere if they can’t make the numbers pencil out. Therefore, lowering prices may be the only option in the near-term.

Talk about a double-edged sword—stronger dollar, stronger economy=weakened financial models, shrinking profit margins.

Read the original here.