Biomass Market Slows Amid Low Gas And Oil Prices

Analysis of the woody biomass energy sector given the low oil and gas prices suppressing the market. There are some positives though with Japan growing as a market and new programs being proposed in the U.S. While specific biomass opportunities, such as pellets, remain strong, the overall biomass market remains soft, according to Tim Gammell, […]

Analysis of the woody biomass energy sector given the low oil and gas prices suppressing the market. There are some positives though with Japan growing as a market and new programs being proposed in the U.S.

While specific biomass opportunities, such as pellets, remain strong, the overall biomass market remains soft, according to Tim Gammell, editor of the North American Wood Fiber Review (NAWFR). A few bright spots on the horizon include the anticipated growth of the Japanese market in the next few years and proposed legislation in the United States which would provide grants for the wood heating systems in public institutions. Overall, however, the biomass market in the United States has been hindered by the low price of gas.

Gammell said that to understand the biomass market you have to follow the price of oil. “As it dropped off from $100 per barrel to $45 now maybe $55 or $60, that has driven a lot of the market away from using woody biomass,” he said. “A lot of pulp mills and even sawmills have said, good grief, we can’t ignore the fact we can get natural gas as a way to fire our dry kilns as opposed to investing more money in woody biomass.”

“Oil for me is the key thing that has happened, along with natural gas,” Gammell continued. “A lot of that comes back to the fracking boom that has been going on in the United States. Ever since then, woody biomass usage, which was growing nicely, has stalled, broadly speaking, and declined.”

NAWFR has tracked wood fiber markets in all major regions of the United States and Canada for almost 30 years. “Everywhere you look, mill residues or material right out of the woods, there is an abundance of it, and prices have fallen significantly,” Gammell noted. In 2015, biomass prices started dropping dramatically, following gas and oil prices that began to trend downward in 2014.

From Pallet Enterprise: http://palletenterprise.com/view_article/5055/Biomass-Market-Suffers-from-Low-Gas-&-Oil-Prices,-But-a-Few-Bright-Spots-Reported

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