North American Bioenergy Outlook

Transcription

1 North American Bioenergy Outlook Wood Pellets & Biomass Power 218 Update North American Conference October 218 Sarah Martin Associate Economist, Wood Products and Bioenergy

2 Agenda Current market conditions North American pellet & biomass power demand Energy and weather limit growth in residential pellet demand Biomass power demand undermined by policies in the USA and Canada Offshore markets continue to drive export pellet production in North America North American wood fiber supply North American wood fiber supply limitations will determine major players in offshore markets 2

3 1 Current Market Conditions 3

4 Wood Fiber Consumption: Biomass Power Remains the Largest Bioenergy Market in 217 Million Dry Short Tons Electricity Generation Wood Pellets Wood Biofuels

5 North American Biofuels Continue to Stagnate US Cellulosic D3 RINS by Type, Millions RINS 35 3 Renewable CNG Renewable LNG Cellulosic Ethanol RFS Projected Volume YTD 5

6 2 North American Domestic Pellet Demand 6

7 Weather and Energy Will Continue to Act as Headwinds in the Long Term 1,1 Heating Degree Days by Country Average Annual Degree Days 15 US Pellet Stove Shipments and Retail Natural Gas Prices in New England Thousand Units and US Dollars (218$) per MCF 16 1, United States Canada Linear (United States) Linear (Canada) Retail Natural Gas Prices Pellet Stove Shipments

8 Northeastern Pellet Inventory Declines after Colder Winter, Short Term Uptick in Demand Total Heating Degree Days, Thousand Tons (R) Jan-216 May-216 Sep-216 Jan-217 May-217 Sep-217 Jan-218 May-218 Source: Energy Information Administration. UNE Inventory UNE HDD 3, 2,5 2, 1,5 1, 5 8

9 US Continues to Face Overcapacity Issues; Colder Winters May Push D/C Ratios Higher United States, Million Short Tons Capacity Demand D/C Ratio 8% 75% 7% 65% 6% 55% 5% 9

10 3 North American Biomass Power Demand 1

11 Policy Update: EPA Proposes Affordable Clean Energy (ACE) Rule Proposed August 218 Main goals Replace 215 Clean Power Plan (CPP) Establish state level emission guidelines for coal fired power plants BSER recommends energy efficiency improvements Unlikely to incentivize large scale co firing or biomass conversions Still makes sense to phase out coal and invest in natural gas 11

12 Biomass Power Capacity Utilization Remains Unchanged as Policies Restrain Potential Percentage 9% 85% Canada USA 8% 75% 7% 65% 6%

13 Biomass Power Generation: Slow Growth Ahead Million MWh Canada USA US % Change CA % Change 25% 2% 15% 1% 5% % -5% -1% -15% -2% -25% 13

14 4 North American Industrial Export Demand 14

15 Export Production Continues to Grow Alongside Expansion in Offshore Markets Million Tonnes US South and BC Production US Overseas Exports CA Overseas Exports

16 Shifts in Offshore Markets Will Directly Impact North American Pellet Producers North American Pellet Export Destinations, 218* Denmark 6% Italy 1% Japan 8% Belgium 7% Korea 1% Other 4% Source: GTA * Annualized YTD through July 218 United Kingdom 73% 1, Japanese World Trade Thousand Tonnes Canada Vietnam Malaysia China Other Total Japanese Exports * Source: GTA * Annualized YTD through May

17 5 North American Wood Fiber Supply Pulpwood Roundwood Residual Chips Fine Mill Residues Pellets Electricity Generation OSB Hogfuel Forest Biomass Urban Wood Waste PB/MDF Pulp 17

18 Pulp and Panels Consistently Have Higher Ability to Pay for Fiber Fiber Paying Capability US South, Pulpwood Users US Dollars per GST Fiber Paying Capability US South, Mill Residual Users US Dollars per GST BSKP OSB Export Pellets Particleboard Wood Pellets Electricity Generation

19 Wood Biomass Consumed for Bioenergy Will Tick Up as Demand Increases Million Dry Short Tons US South US Northeast US West US North Central BC All CA Except BC % Total 15% 13% 11% 9% 7% 5% 19

20 Roundwood Harvest Demand: British Columbia Likely to Have Fiber Constraints in Medium Term British Columbia Roundwood Harvest Demand Million Cubic Meters, All Species Total Harvest Allowable Annual Cut With total fiber declining, will British Columbia be able to maintain its market share in offshore markets? How will the US South and other world players respond? 2

21 Key Takeaways Domestic demand is likely to be flat, with potential upsides if weather and energy prices are favorable Biomass power faces headwinds from lackluster policies Demand in Europe will continue to drive North American industrial exports 21

22 Special Market Analysis Study Global Pellet Demand Study NEW! 1 year forecasts for industrial & domestic pellet demand Europe, Asia, N. America Energy price forecasts, policy commentary, trade data 22

23 Thank you for your attention! For more information: RISI Special Study: Global Pellet Demand Outlook North American Bioenergy 5-Year Forecast North American Woodfiber & Biomass Markets 23