Leftovers

Finding value in lumber mill leftovers
Demand for sawdust has grown tremendously, with prices in some parts of the country doubling. But the housing slump means there's less of this unlikely commodity to go around. Nina Keck reports.
Listen at http://marketplace.publicradio.org/www_publicradio/tools/media_player/popup.php?name=marketplace/pm/2008/08/06/marketplace_cast1_20080806_64&starttime=00:23:17.0&endtime=00:27:00.0
TEXT OF STORY
Kai Ryssdal: Even if you don't read the financial news all that closely, you can probably name at least a couple of commodities right off the top of your head, right?
I bet sawdust didn't come to mind. Most of us probably think of it as something to sweep into the garbage after the sawing's done, but demand has grown enormously.
As Vermont Public Radio's Nina Keck reports with wood manufacturing and construction down due to the housing slump, sawdust is at a premium.
Nina Keck: Gagnon Lumber in Pittsford, Vermont produces between 25 to 30 tons of sawdust a week. Underneath the saws, a conveyor belt carries a steady stream of the sweet smelling remnants to a huge pile.
Owner Ken Gagnon says he sells most of it to area farmers.
Ken Gagnon: The sawmill business and agricultural farming have been hand in hand through history, so there's always been a market for a certain amount of sawdust, whatever the farmers could use for his cows.
But sawdust has come a long way from its use as a cushy barn bed. Landscapers and gardeners like it for mulch while meat smokers use it as an aromatic flavoring. Finely ground sawdust is a lightweight filler in many plastic products. It's used to make particle and fiberboard and it's become a valuable renewable fuel source in the form of wood pellets.
Charlie Niebling runs a wood pellet plant in Jaffrey, New Hampshire.
Charlie Niebling: With heating oil approaching $5 a gallon, people are genuinely concerned and anxious. A lot of people are thinking seriously about alternatives now.
Niebling says he can't make wood pellets fast enough. But while demand for wood byproducts is at an all-time high, supplies are down.
Ken Gagnon and mill owners across the country blame the drop in construction.
Gagnon: We've been going through a correction for pretty near two years here on our level, so we're actually not producing as much lumber as we could, which has an indirect effect on how much sawdust we make.
But if sawdust is so precious, I asked Gagnon why not make more of it? For now, he says, even in the middle of a housing slump, it's still more profitable to mill lumber.
Gagnon: It may come to a time where the byproducts are going to be the saving grace of the lumber industry. I think the housing market will come back, but I really see the byproducts, primarily the biofuels, whether it's sawdust or chips, will be a big part of things to come.
Chris Recchia thinks that's already happening. Recchia is Executive Director of the Biomas Energy Research Center.
Chris Recchia: This has transitioned from a waste product, a byproduct, to a real commodity. That is the turning point that we're at right now, which we think is a very good thing.
Because, Recchia says, it's encouraging better use of resources. Typically when loggers finish a job, they'll leave behind a lot of low grade cuttings not suitable for lumber. Now that wood byproducts are fetching a higher price, loggers can process and sell what they used to consider waste wood to people like Charlie Niebling of New England Wood Pellet.
Niebling: We are purchasing material from logging contractors who harvest this low grade material that otherwise has little value, take the bark off of it for us, chip it and send the chips to us and that simply wasn't possible three or four years ago.
Niebling says in their company, the term "waste wood" no longer exists.
For Marketplace, I'm Nina Keck in Chittenden, Vermont.

Allocation

Here we go again... The demand for pellet stoves and fuel has again reached record breaking levels- at least in the NorthEast. On the one hand I get very excited when pellet receives the support and enthusiasm I feel it should get every year but, I do worry about the long term effects of such out of the ordinary demand.
The hearth industry, and the pellet sector are coming off one or two of the worst years on record. Dealers, distributors, and manufacturer's were sitting on warehouses full of goods and banging their heads on the wall trying to figure out what happened? and how to get things moving again. Then during this spring there were hints. Sales promotions yielded much better than average results, calls started coming in early for pre-buy stove orders. By the time the pellet early buy order letters went out there was no stopping it. Orders poured in via the phone, fax, and e-mail. Just when you thought it would slow down a bit it would double.
The first month or two were o.k. Mills were just ramping up for the year and were able to keep up. Then we started losing ground- FAST! Mills could not keep up. Some of it due to the sheer volume requested, some due to trucking logistics.
The old saying is that the mills have the most product in the spring, but actually the opposite is true. During the winter their sawdust supplies actually decrease because suppliers generally use a good portion of it to heat their own buildings. Put that on top of late winter demand for pellets and you end up with the leanest supply of fuel in the spring. Larger mills are able to produce about the same amount of product throughout the year due to larger numbers of raw material contracts, and mill capacity but they certainly don't come out of the heating season with a larger than normal supply.
The word got out early this year somehow and everyone was ordering their fuel early, and in amounts often exceeding what they usually use in a heating season. This alone has created an unprecedented bottleneck! Then the hoarding. This is about as close to an attempted death blow our industry can face at this point. People hoard one year and we can't keep up causing rumors and speculation about the viability, then the next year no one is buying fuel, leaving dealers, and manufacturer's sitting on excess inventory barely surviving... Vicious cycle!
By the end of June most manufacturer's have a pile of massive speculation orders on their desk, and dealers are sold out as far as they dared to sell. Then the inevitable price increases come. The demand is so high the mills are running seven days a week, and up to 24 hours a day. Overtime costs. If a machine goes down it needs to be fixed NOW! Overnight costs on parts, and higher maintenance costs. We need more raw material. Highest bidder, and higher costs for product NOW! Add to that increasing trucking costs, and the weakening US dollar...
Now the dealers, who generally work on a tight margin anyway are taking it on the chin. We absorbed the first price increase, then a second. By the time the third increase comes around you have to send out a letter or make a dreaded phone call to soon angry consumers who don't want to pay a higher price... Allocations kick in. You can have 110% of what you purchased in year's past, or I can only get you X amount of fuel this month. Then loads don't show up because of production glitches, or trucking issues. In many years this inability to get more fuel has slowed sales. Not this year... I really suspect that this may be the last year pellet manufacturer's offer early buy programs at least as we have seen them in the past. The need to distribute fuel year round (as it is made) will need to happen. The mad rush we are getting in the spring is no longer managable.
The back side of this is stoves. You can't get a Harman stove in New England until next year. Most other manufacturer's are back ordered until October, November, or December at this point. In the past the manufacturer's have ramped up their facilities, added shifts and production lines to try to meet the demand. This year Hearth and Home Technologies, owner of the largest pellet stove manufacturer Harman, as well as Quadrafire decided to change the game. In an attempt to control the beast they made the decision to NOT double, triple... production to meet the demand. They are setting allocation levels so as not to flood the market with stoves that may not be able to get fuel. While this may be frustrating in the short term I am hopeful that it will help control the wild swings this industry has been going through. To a consumer I say that these stoves last fifteen to twenty years if you take care of them, and Europe has already proven that it is a viable alternative fuel source, so even if you have to wait until next spring it is worth it!

Room to Grow!

In 2005 120,000 stoves and fireplace inserts were sold throughout the United States. That number has not grown as many think it could have or should have. As a matter of fact the number actually went down last year. Pellet stoves (as opposed to whole house systems) were new to the European market around 2005. They sold somewhere in the neighborhood of 16,000 stoves that year. Last year in Europe over 360,000 pellet stoves were sold. What a difference! and Why? Government incentive is still the number one reason in my opinion. Gas and oil prices are much less subsidized and Europeans are encouraged to look to other fuel sources. Then there is the Kyoto protocal and green movement, two areas where we are gravely lacking.
Yet there is hope, and time to change. At the Pellet Forum in Wels, Austria last week the US was declared a country with large growth potential in the pellet market. Of course, Americans in the crowd had to endure a little bit of a beating on why we are so far behind, but the end message is, I believe, a positive one.
Pellet use in the US was estimated between one and one and a half million tons of pellets last year. A source in the pellet industry said there is about 90 million ton of unused wood waste available in the US right now. That is one of the strongest assets we could have. As more pellet mills come on line each year our supply grows, and costs, as always, have remained stable relative to other energy's such as oil.
There is a large commercial and industrial sector that is untapped in this country, and the Europeans have noticed. Some Americans as well. Growth in this sector may open up doors to government support and incentive, as well as push the industry into bulk distribution, and whole house systems that are sparsely available, and still manually demanding with the fuel loading.
Wood pellets have actually had an impressive ride when you consider that we are the only fuel with no government incentive or support. Ethanol is subsidized at $.51 a gallon for example. Even wind and solar energy's have rebates, and incentives in place. The PFI seems to be waking up and taking action, FINALLY. They have had a growing relationship with a lobbying firm, and there are now several people in the industry who are focusing on creating, introducing, and getting bills brought to the attention of our congressmen and senator's. While we have not yet successfully had a bill move through to active status we are gaining ground, and attention in Washington.
I am excited for the future of wood pellets. It is a fuel that is local, renewable- at this point still made from waste products otherwise destined for landfills, carbon neutral, and affordable!

Energiesparverband

Last week in Wels Austria the World Sustainable Energy Days and Pellet Conference was held ending with the Energiesparmesse industry trade show. I was not able to attend this year, but wanted to share a little from my past visits. Many countries converge on the friendly town of Wels located near the German border. It is easily accessible by car as we drove in from Munich one year, or the ever-popular train. My last visit I stayed in Salzburg and enjoyed the countryside during the one hour train ride into Wels each day.
The invitation began with site visits. We all loaded on to motor coaches for visits to various pellet projects. The first stop was at a district heating facility that provided biomass heat for the neighborhood below. The boiler was housed in a modest building with supplies out back. This seemed a practical solution compared to each home having an appliance and independent fuel supply. One appliance maintained by a few people as opposed to 3500 appliances.

As we were driving to our next destination we saw what looked like a small grain truck going down the road past us. We were delighted to see that it was a bulk pellet fuel delivery truck from a local mill.

Our next stop was a local pellet mill. It was built adjacent to the lumber portion of the business with conveyors to move the raw material from one section to the other. Pellets were made with similar equipment to US mills. The difference was after the production. As most fuel in Europe is bulk the fuel is conveyed to a holding tank, and there was a drive through section of the building with a loading hose for the bulk trucks. They did have a small bagging section that was new to them. The price was higher for the ~15 kg bags, but the bags were unique. They were a biodegradable corn fiber bag as opposed to the plastic bags we use in the US.

We then headed off to Guntamatic, a pellet appliance manufacturer. They showed a wide variety of pellet boiler, and furnace systems. Again, most biomass appliances in Europe are whole house systems. They let us tour their efficient and clean factory that uses laser welders, cutters, and a state of the art cad design system. Then they did a product seminar explaining the various components and boiler systems. I was most impressed by their ability to accept a much higher ash pellet, their ash handling system, and the bulk containment systems that pneumatically transferred pellets from the tank to the boiler.
Our last stop was a consumers home. They had created a bin for the fuel in their basement with a convenient fill port on the outside. It was conveyed using an auger to their boiler system. They had received tax incentive from their government to help offset the cost of purchasing and installing the biomass system.

The conference itself began the next day with many government officials making presentations about their countries plans, success, and future goals. There were also conferences on new technologies, and cooperative projects to further technology and distribution. Each country had and shared their various incentive programs. This is a far cry from the US Hearth Show that is run by people tend to merely dismiss pellet on a good day...
The first year I attended they had invited all of the US pellet manufacturers. They were trying to secure additional supplies as their expansion was rapid, and supplies thin. Last year European biomass pellet consumption surpassed 10 million tons. The US doesn't have an accurate figure but estimates put it at 1 to 1/5 million.
The end of the week brought the Energiesparmesse. The equivalent of our hearth show, but so much more. It was a venue with four halls, booths inside and out. We saw everything from the beautiful tiled stoves that are so prevalent over there, to solar systems, pellet-solar systems, boiler manufacturers, builders with pex and insulation systems, bulk feed material supply, stove manufacturers, fireplaces, pipe companies.
The stand-outs in my mind were the BP biomass booth, Okofen's bulk feed bins, Froling's boilers, a company that made pex panels for wall use, and a kitchen stove manufacturer that had a wood pellet kitchen stove that was as elegant as a cast iron wood cook stove, but with the ease of pellet!
We also saw some familiar names like Enviro-fire which started in Europe and sells in the US.
The biggest impression I walked away with was how the government embraced, encouraged, and provided incentive for wood pellet products, and projects. Sweden uses pellet power for schools, government buildings, commercial buildings, district heating, electrical generation, and residential home heating. Italy, Bavaria, and France were not far behind.
What can you do to help encourage wood pellet use in the US? Write your congressmen, and senators. There have been a few bills that have been introduced but have not made it all the way through to fruition. Get both groups on board. You can visit the PFI's web page at http://www.pelletheat.org for more information. Here is a link to the Energiesparverband web site http://www.energiesparverband.com/esv/index.php?id=8&L=1

How much fuel do I use?

When I first began using a pellet stove to heat my home there was a sharp learning curve. Not just in lighting the stove (as self-igniting systems were not common), or cleaning the stove, but in learning about the fuel to heat ratio. How much fuel does it take to heat my home, and how differently will I heat my home with this fuel?
I grew up with natural gas heat in my home. I could not have told you what natural gas looked like, how much space it took up, or how much volume of gas it took to heat my home in a day/week/year. It was piped directly into my home, and was supplied as my demand required. I'd get a bill each month for what I used. I would set my thermostat at 73 and be done with it. Pay the piper later.
I once lived in an apartment that had electric heat. So the same concept applied but I was able to tune each room to my desired temperature. Absolutely no concept of how much or what type of fuel was used to create the energy to heat my space with this fuel source.
When I moved to New England, I found that oil was the predominant heat source. With oil heat you pre-buy fuel in the spring using their guidelines and past usage history to determine how much fuel to buy for the year. For example, an early buy of 1,500 gallons is common for an average three bedroom home. But how much fuel is used each day? What kind of space does that much fuel take up? How much will I use in January? I really never focused on that because the oil company comes to fill a large storage container which then feeds directly into my furnace/boiler. So on a day to day basis, I had no quantification for, or need to quantify, how much fuel it takes to heat my home. I would set the thermostat on about 70, then as winter wore on if I had a lot of fuel I would turn it up, or if it was getting down to the wire I would turn the thermostat down and put on a sweater. How warm it was became a factor of how much I had left, not how warm I wanted my home.
Then we got the pellet stove. "How many bags will I use each day?" was my first question. Never mind how subjective and virtually impossible it is for someone to speculate how warm it will be outside, how warm I want it inside, what my rate of heat loss is, and what the winter's weather will bring. To me it seemed a fair question. Our friend struggled to explain some averages, show some examples, but would not give me a concrete answer. I was frustrated at this. How could someone not know? I pushed a little further, and was told the minimum and maximum fuel intake of my stove based on how many btu's I would need. This was starting to sound complicated. What happened to just setting the thermostat? I like being green, and using an alternative energy source to heat my home, but now I have to think?!? We bought three tons based on what the previous owner told us they used and off we went. Wow, those bags are heavy. We loaded all three tons, one bag at a time, into the garage. Then came the tradition of loading the stove each day. We thought it would be once a day, but that only kept my house at about 60 degrees. I like it warmer than that! So a bag and a half or two bags a day became the norm. In the coldest months we would turn on the electric heat to supplement. The stove was running on high (almost three bags a day) and the house was still not as warm as I was accustomed to. Wow, that's a lot of pellets! It seemed like so much! Why is my stove eating so much fuel? It must be eating it, because that is a lot of fuel and my house is just warm, right?
Then I started thinking about it. Is it so much? Do I have enough knowledge and experience to determine this? How much fuel did my furnace used to eat? I had no idea. No. I don't have anything to relate it to. Is it possible that my stove "eat" fuel without equivalent heat output? The flame looked fine, the heat was blowing off, so no, not likely that it is merely eating the fuel. I realized that I just never knew how much fuel it takes to keep me and my home comfortable. How much fuel I burn isn't really a function of the stove at all, other than a stove can produce up to a maximum heat (amount of btu's per hour).
How much fuel I burn is relative to how warm I want it to be in my home, how big my home is, how well my house holds heat, and how much it takes to heat it as related to how cold it is outside.
What a learning curve, though. The bag a day that many people touted was not true for me. Sure, they were using their stove as a supplementary system in addition to their oil furnace, but why would my situation be that different? Actually if you do the math burning a bag a day in your pellet stove (only) is like using a little electric box heater to heat your house. Would that work for your home? Certainly not mine. I want it comfortable!
So, I try to remember that when I am putting two to three bags of pellet fuel in my stove each day, I am actually saving five to seven and a half gallons of oil. That is a lot of oil. Imagine how heavy and messy that would be if you had to pour it in to your furnace/boiler each day! Yuck! What if you spilled a little? At least the pellets are easy to pour and if I spill a little a dust pan and broom are all that are needed to scoop them back up and I can put them right into the hopper.
After using my stove for years, I had a wood pellet boiler with a bulk bin installed. I find that I am slipping back into the pattern of just setting the thermostat, since I don't have daily contact or concept of fuel used. I do appreciate that I was able to learn how much fuel it does take to heat my space. It gives me an appreciation for how many resources I use, and makes me appreciate even more that I use a renewable, local, alternative energy source like wood pellets.

New Pellet Mill Opened in Schuyler, NY

New England Wood Pellet, which started producing pellets in the early 1990's, has opened a new pellet manufacturing facility in Schuyler, New York. New England Wood Pellet moved to New Hampshire from Massachusetts in the late 1990's. Since then they have added a sawdust dryer to expand their raw material options, a truck dump, and an on-site warehouse which has helped them ramp up production and accommodate 150,000 ton annually. The new mill will have the capacity to run 100,000 ton per year although it is unlikely that it will start with maximum production. The company also has a contract with a Canadian company that ships unbagged product into Massachusetts, where New England Wood Pellet has a processing facility to bag and distribute product in a New England Canadian branded bag.
The Jaffrey, NH plant services most of the New England states, and the New York plant will primarily focus on serving New York state. “There is opportunity here in the region for raw materials, a work base and a place for the market to grow,” Plant Manager Paul McCarthy said Friday at the grand opening of the facility at the Schuyler Business Park.
The new mill will employ around 20 people, and cost almost 11 million to build. The plant had it's grand opening on December 7, 2007.