Good news for biomass Lower oil prices bring upside to renewables. BIOMASS CANADIAN Volume 15 No. 1 Editor -Amie Silverwood (289) 221-8946 [email protected] Editor -Andrew Macklin (905) 713-4358 [email protected] Contributors -Gordon Murray, Treena Hein, Carroll McCormack, CRFA Editorial Director/Group Publisher -Scott Jamieson (519) 429-3966 ext 244 [email protected] Market Production Manager Josée Crevier Ph: (514) 425-0025 Fax: (514) 425-0068 [email protected] National Sales Manager Ross Anderson Ph: (519) 429-5188 Fax: (519) 429-3094 [email protected] Quebec Sales Josée Crevier Ph: (514) 425-0025 Fax: (514) 425-0068 [email protected] Western Sales Manager Tim Shaddick [email protected] Ph: (604) 264-1158 Fax: (604) 264-1367 Media Designer -Emily Sun Canadian Biomass is published six times a year: February, April, June, August, October, and December. Published and printed by Annex Business Media. Printed in Canada ISSN 2290-3097 Circulation Carol Nixon e-mail: [email protected] P.O. Box 51058 Pincourt, QC J7V 9T3 Subscription Rates: Canada -1 Yr $49.50; 2 Yr $87.50; 3 Yr $118.50 Single Copy -$9.00 (Canadian prices do not include applicable taxes) USA – 1 Yr $60 US; Foreign – 1 Yr $77 US Occasionally, Canadian Biomass magazine will mail information on behalf of industry-related groups whose products and services we believe may be of interest to you. If you prefer not to receive this information, please contact our circulation department in any of the four ways listed above. No part of the editorial content of this publication may be reprinted without the publisher’ s written permission ©2015 Annex Business Media, All rights reserved. Opinions expressed in this magazine are not necessarily those of the editor or publisher. No liability is assumed for errors or omissions. All advertising is subject to the publisher’ s approval. Such approval does not imply any endorsement of the products or services advertised. Publisher reserves the right to refuse advertising that does not meet the standards of the publication. www.canadianbiomassmagazine.ca T his year’s big story has been the plunge in oil prices followed quickly by a fall in the Canadian dollar. As analysts watch to see how low prices will go, there has been a flurry of prediction about who will be the win-ners and who will be the ul-timate losers in this altered economy. The energy sector looks glum while manufac-turers are predicted to find some relief. When the manufacturer makes renewable energy products, however, the story is not as easy to predict. Manufacturing will benefit from lower transportation costs that will make remote feedstocks more affordable. Mills that use oil or natural gas for energy will see some relief, though many in the forest industry have shifted to use more residuals. There are some specific advantages to different biomass products. Since the majority of Canadian pellets are sold into the U.K. on long-term con-tract, they aren’t subject to the volatility of oil prices. The U.S. dollar is strengthening against the British pound and the euro, which is making U.S. pellets more expen-sive. A recent study released by Future-Metrics predicts American pellet produc-ers will have to find efficiencies to remain competitive in light of their strong dollar. In this scenario, Canadian pellet producers have the competitive advantage. The U.S. isn’t just a competitor in the pellet business: in 2014 Canadian pellet producers sold 150,000 tonnes of pellets to our southern neighbour. They’ll benefit from the lower loonie. And though it may be cheaper to buy oil to heat the average American home than pellets, dropping oil prices won’t convince consumers to abandon pellet stoves. But they may take away any incentive to invest in new ones, cautions RISI’s bioenergy economist Seth Walker. The lower cost of Canadian-made pellets may lessen the sting for those who have already made the switch to green fuel. It isn’t as easy to predict where Italy will get its wood pellets this winter, however. Walker points out that with the temporary upheaval in Belgium and the Nether-lands (see page 10 for de-tails), Italy was the second biggest market for Canadian wood pellets. “It’s going to be interesting to see how the Italian market plays out because the Euro has dropped so much. Their purchasing power for importing pel-lets is down quite a bit,” Walker notes. The story is different for biofuels that are mandated for blending, like ethanol. As prices at the pump drop, consumers are more likely to plan that extra road trip. Since the Canadian Biofuels Mandate calls for five per cent renewables in gasoline and two per cent in diesel, the demand for eth-anol will rise with the demand for gas. Another benefit ethanol producers in Canada will notice is that ethanol prices rise as oil prices fall. “I think there is a little bit of an inverse relationship in that when the price of gas drops, the demand for gas increases and therefore the demand for ethanol increases.” For updates on how the markets wax and wane in 2015, keep an eye on cana-dianbiomassmagazine.ca as we continue to monitor the situation. • 4 Canadian BIOMASS JANUARY/FEBRUARY 2015
Canadian Biomass January-February 2015: Page 4
