WPAC Update New Pellet Markets By Gordon Murray With the search on for new markets for Canadian pellets, South Korea holds potential. W ho knew that being executive di-rector of the Wood Pellet Associa-tion of Canada could be such a hazardous job? On the afternoon of No-vember 23, 2010, I flew from Bejing over Yeonpyeong Island en route to Incheon City, South Korea, just 80 km to the east. Imagine my surprise when I arrived at my hotel and tur ned on the news to discover that, while I was in the air, North Korea had been firing dozens of artillery shells at the island and South Korea was returning fire! T h e p u r p o s e o f m y t r i p w a s t o p ro m o t e C a n a d i a n w o o d p e l l e t s t o S o u t h K o re a a n d t o g i v e a p re s e n t a t i o n a t a b i o m a s s e n e rg y s e m i n a r h o s t e d b y I n c h e o n M e t ro -politan City. The South Koreans wanted t o l e a r n a b o u t E u ro p e a n e x p e r i e n c e s w i t h biomass energy, particularly co-firing, a n d a b o u t C a n a d a a s a p o t e n t i a l s o u rc e o f wood pellets. A l t h o u g h S o u t h K o re a i s a t i n y c o u n -tr y, just slightly larger than the province of New Brunswick, it is the world’s tenth largest energy consumer, fifth largest oil importer, and second largest coal import-er. It produces about 64% of its electricity f ro m f o s s i l f u e l s . S o u t h K o re a p re s e n t s a g re a t o p p o r t u -n i t y f o r C a n a d i a n p e l l e t p ro d u c e r s . T h e c o u n t r y h a s b e c o m e s e r i o u s a b o u t re d u c -i n g g re e n h o u s e g a s e m i s s i o n s a n d h a s c o m m i t t e d t o a 3 0 % re d u c t i o n i n C O 2 e m i s s i o n s f ro m p ro j e c t e d l e v e l s b y 2 0 2 0 . T h e g o v e r n m e n t h a s d i re c t e d 3 7 4 o f t h e countr y’s largest companies to reduce emissions by 30% by 2020. The compa-n i e s , w h i c h i n c l u d e 7 8 p e t ro c h e m i c a l p ro -d u c e r s , 5 7 p a p e r a n d w o o d m a n u f a c t u re r s , 36 power generators, 34 steel manufactur-e r s , a n d 3 1 e l e c t ro n i c c h i p m a n u f a c t u r e r s , a re re q u i re d t o s u b m i t a c t i o n p l a n s t o t h e gover nment by mid-2011 and must begin m a k i n g m e a n i n g f u l e m i s s i o n s re d u c t i o n s s t a r t i n g i n 2 0 1 2 . I n a d d i t i o n , t h e K o re a n g o v e r n m e n t h a s i n t ro d u c e d r e n e w a b l e p o r t f o l i o s t a n d a rd s t h a t r e q u i r e c o a l -f i r e d p o w e r g e n e r a t o r s t o b e g i n p ro d u c -i n g a m i n i m u m o f 2 % r e n e w a b l e e n e rg y b y 2 0 1 2 , i n c re a s i n g b y 0 . 5 % / y e a r u n t i l 2 0 2 0 , a t w h i c h t i m e t h e y w i l l b e re q u i re d t o p ro d u c e a m i n i m u m o f 1 0 % r e n e w a b l e energy. At least 60% of renewable energy i s e x p e c t e d t o c o m e f ro m b i o m a s s , i . e . , wood pellets, leaving about 40% for other sources such as wind, solar, and tidal. T h e p o w e r s e c t o r p re s e n t l y c o n s u m e s 75 million tons/year of coal. With eco-n o m i c g ro w t h , i t w i l l l i k e l y c o n s u m e m o r e than 100 million tons/year of coal by 2020. For 2012, wood pellet con-sumption by the power sector will likely be at least 1.4 million tons/year (calculated as 75 million tons of coal t i m e s 2 % re n e w -a b l e e n e rg y t i m e s 6 0 % b i o m a s s t i m e s 1 . 5 tons of wood pellets per ton of coal). By 2020, wood pellet consumption should i n c re a s e t o a t l e a s t 9 m i l l i o n t o n s ( c a l -culated as 100 million tons of coal times 1 0 % r e n e w a b l e e n e rg y t i m e s 6 0 % b i o -mass times 1.5 tons of wood pellets per ton of coal). To put this in perspective, t h e E u ro p e a n U n i o n p r e s e n t l y c o n s u m e s about 9 million tonnes/year (9.9 million tons/year) of pellets. A l t h o u g h S o u t h K o re a h a s a s m a l l d o -mestic wood pellet industr y, the countr y i s t o o s m a l l t o b e a b l e t o m e e t m o re t h a n a small fraction of its own pellet needs. I t s c u r r e n t d o m e s t i c p ro d u c t i o n c a p a c i t y is about 20,000 tons/year. Canada is seen a s a p o t e n t i a l l y a b u n d a n t s o u rc e o f w o o d p e l l e t s f o r K o re a , b u t i t w i l l h a v e t o c o m -p e t e w i t h c o u n t r i e s t h a t a re l o c a t e d c l o s e r to the final destination, including South-e a s t A s i a ( i . e . , Vi e t n a m , C a m b o d i a , L a o s , Malaysia and Indonesia), New Zealand and Australia. Nevertheless, the distance from Vancouver to Incheon is just 8,000 km, which is less than half of the 16,500 km from Vancouver to Rotterdam— Canada’s current largest market. C a n a d i a n p e l l e t p ro d u c e r s w i l l n e e d t o f o c u s o n S o u t h K o re a i n 2 0 1 1 . T h e S o u t h K o r e a n c o a l -f i r e d p o w e r p ro d u c e r s a n d t h e 3 7 4 l a rg e c o m p a n i e s t a rg e t e d b y t h e gover nment will all be scrambling to put “Although South Korea has a small domestic wood pellet industry, the country is too small to be able to meet more than a small fraction of its own pellet needs.” p l a n s i n p l a c e t o m e e t t h e re q u i re m e n t s for 2012. Canadians need to establish re l a t i o n s h i p s w i t h p o t e n t i a l b u y e r s , w o r k on transportation logistics, send test ship-m e n t s , w o r k o u t o ff -t a k e a g r e e m e n t s , a n d e s t a b l i s h m a r k e t s h a re . I n t h e m o n t h s i n c e m y v i s i t , t h e K o re a n P e n i n s u l a t e e t e re d p re c a r i o u s l y o n t h e brink of militar y conflict, but for now at least, tensions have eased and the parties are talking. Let’s hope that the North and S o u t h c a n re s t o re t h e i r a r m i s t i c e a n d t h a t S o u t h K o re a c a n f o c u s o n b u y i n g C a n a d i -a n p e l l e t s a n d re d u c i n g g l o b a l w a r m i n g ! • G o r d o n M u r r a y i s e xe c u t i v e d i r e c t o r o f t h e Wo o d P e l -let Association of Canada (www.pellet.or g) and can be reached at 250-837-8821 or gor [email protected] g. Canadian BIOMASS 29
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