Fears the Export Pellet Industry Harms Forests Unfounded

In 2014, industrial grade pellet producers shipped roughly 3.6 million tons of wood pellets to the EU. To manufacture those pellets, mills in the US South consumed 6 million short green tons of pulpwood. That 6 million tons of pulpwood represents:

 

• Less than 4% of all the pulpwood harvested in the region

• Less than 2.5% of all the timber harvested in the region

 

Though these numbers are small, the export pellet industry has come under fire as environmental organizations criticized the industry on the grounds that it will decimate forests. A new study commissioned by the US Endowment for Forestry and Communities, US Industrial Pellet Association and National Alliance of Forest Owners, Wood Supply Market Trends: 1995-2015, indicates the real impacts of the pellet industry in the South are minimal.

 

The only credible way to measure the effect the export pellet industry is having on forests in the US South is to compare the amount of forest inventory that is removed every year for pellet production to the total inventory in the forest. 

 

As Table 1 shows, 250 million tons were harvested to supply all wood consuming industries in 2014; these removals represented just 3.3% of total forest inventory. The bulk of this total was consumed by pulp/paper and Oriented Strand Board (OSB) manufacturers; they consumed 151.3 million tons of pulpwood, which represents 1.99% of total forest inventory.  Lumber and plywood manufacturers consumed 92.9 million tons, or 1.22% of forest inventory. 

 

Pellet manufacturers consumed 6 million tons or 0.08% of total forest inventory.  Compared to other wood consuming industries, the amount of wood fiber consumed by the export pellet industry is minimal. The industry, it turns out, is not the voracious consumer of US South forest resources that many would have the public and policy makers believe.

In fact, a deeper look at forest inventory data suggests that not only is the export pellet market not a threat to US South forests, but the entire forest products industry consumes wood in a way that ensures both our forests and forest products industries (pellets included) are sustainable.

 

Table 2 shows annual inventory growth in 2014 exceeded harvest levels by 143.6 million tons. In effect, forests accumulated an additional 393.8 million tons of new growth in 2014, 250.2 million tons of which was harvested, leaving a net increase of 143.6 million tons of forest inventory for the year. In fact, since 2000, US South forests have accumulated an average of 85 million tons of additional inventory (after harvests) every year. 

 

By comparing these statistics to the same ones from 2005 (the height of the market between 2000 and 2015), an even clearer story of the health and sustainability of US South forests emerges. In 2005, 278.1 million tons of timber were harvested, or just over 4% of forest inventory. After removals, annual inventory growth totaled 50.5 million tons in 2005. By 2014, that number had nearly tripled. In fact, annual inventory growth after removals increased by 184% between 2005 and 2014. Even though part of that increase can be explained by the lower harvest levels, it should be noted that if 2014 removals had been equivalent to harvest levels in 2005, annual inventory growth would have been 129% higher than 2005 levels.

As for the overall sustainability of the forest, even after 10 years of annual removals that ranged from 220 to 278 million tons, forest inventory in the US South increased by 15% or 972.8 million tons.

 

To understand how these same numbers might look in the future, it is necessary to make some educated guesses. 

 

The Housing Market: If housing starts once again reach the 2 million mark, something that most industry analysts think improbable, harvest levels will likely approach 2005’s 278 million tons. 

 

Export Pellet Market Expansion: In 2014, the European Union’s 28 countries consumed roughly 9 million metric tons of industrial wood pellets. The US South exported 3.6 million metric tons to these countries, which is a market share of 40%. The majority of current and near-term incremental EU demand will be supplied from existing and under-construction pellet mills, which have a production capacity of 7.4 million metric tons. Beyond that, growth in demand is likely to come from three UK projects—Drax Unit #3, RWE Lynemouth, and MGT Teesside—which have been awarded Investment Contracts under the Contract for Difference support scheme and will require 5 million metric tons of pellets. If the demand from the Netherlands rises to the government-imposed cap on biomass co-firing, 3.5 million metric tons of additional production capacity will be required. 

 

When the current market share rate of 40% is applied to this additional 8.5 million metric tons of demand (5 million from the UK and 3.5 million from the Netherlands), an additional 3.4 million metric tons of pellets could potentially be sourced from the US South. To meet the US South share of EU demand for wood pellets in the future—7.4 million metric tons of current production plus 3.4 million metric tons of future production, for a total of 10.8 million metric tons—a total of 25 million short green tons of wood fiber would need to be harvested, an increase of 19 million tons over 2014’s rate.

 

In total, to support rising demand for an improving housing market, increased global demand for containerboard, fluff pulp and performance fibers, and additional coal-to-biomass conversions, total removals for all wood consuming industries would be less than 300 million tons. Using the 2014 inventory growth rate, roughly 100 million tons of annual growth would still accumulate in forests in the US South annually, even after removals. 

 

Examining inventory, inventory growth, and harvest data is the only fact-based methodology for proving or disproving claims the export pellet industry, even forest products industries as a whole, are not endangering US South forests. The data definitively proves they are not.

 

Tracy Leslie is the director of Forest2Market’s Biomaterials and Sustainability Practice. With a background in renewable energy project development, Leslie provides decision support services to biofuels and biochemicals producers during project development and operations.

 

Forest2Market, Inc. | www.forest2market.com