Changes in the Fuel Pellet Industry in the Lake States, 2005 to 2008

Abstract

Abstract Fuel pellets are becoming popular for home heating and electrical generation. Although wood residues such as sawdust, chips, and shavings have been a significant fiber feed stock pellet production, paper waste, agricultural residue, and roundwood also can be used. In 2005, 41% of the fiber feed stock used to produce pellets in the Lake States was wood residue, 27% was wastepaper or agricultural residue, and 32% was multiple or unspecified fiber feed stocks. Between 2005 and 2008, the number of wood pellet processing facilities in the Lake States region nearly doubled, and the volume of products manufactured increased by 300%. Facility expansion required an additional 592,000 dry tons of fiber feed stock. Forty-three percent of the additional feed stock was wood residue, 25% was roundwood, 18% was agricultural residue, and 13% was undefined or multiple feed stocks. In 2008, two facilities producing 67,000 tons of pellets were under construction, and four plants slated to produce an additional 600,000 tons of product were in the planning stage. The primary product manufactured in these new or planned facilities will be commercial fuel pellets, and the primary feed stock will be roundwood, harvest residues, and paper and agriculture waste. The potential increase in the demand for lower quality roundwood by these new facilities could replace the declining demand for this material by the paper industry. If the pellet industry continues to expand, it could compete for roundwood used by the fuel chips and pulpwood industries.