The UK Marketplace

And We Were Feeling Good

We love statistics. Maybe that’s why we love baseball. There’s nothing better than talking baseball in the language of statistics.

At the recent U.S. Industrial Pellet Assn. annual exporting pellets conference in Miami, the statistics were flying. Two forecast groups provided global and European industrial wood pellet demand figures for 10 years down the road, and it caused a stir. One group’s forecast for global demand was higher than the other, but the other’s was still pretty high. We’re not sure if those who criticized both forecasts really looked at them closely (you have to look at statistics very closely, particularly when they include those stacked bar graphs, when the total of something in a vertical bar is broken into its parts and you have to really concentrate to figure out the total of each part. We’re smiling, but we’re not kidding).

For about a half hour, two representatives of the United Kingdom (one an officer for power generator Drax, and the other a member of Parliament), speaking one after the other, basically said the forecasts were totally unrealistic; that the UK has about had its fill of government supported biomass power projects (even though the Brits say they enjoy biomass but, hey, the funding program in place for such projects is too difficult to figure out); and that the U.S. Southeast, home to the new generation of industrial wood pellet mills that have been and still are popping up like weeds in order, initially, to supply the UK and European market and, now, Asian market, is in danger of getting in over its head. In other words, beware of too many industrial wood pellet plants, and not enough industrial wood pellet market. Throw in the potential scenario of a tight woody raw material supply situation in the Southern U.S. and escalating woody raw material prices (due to the competitive nature of all of these wood pellet plants and all of the other wood products plants competing for the same raw material) and it could become a little sticky.

Biomass Resource Image 001
From Left: Rich Donnell, Editor-in-Chief; Jay Donnell, Associate Editor; Dan Shell, Western Editor; Jessica Johnson, Associate Editor; David Abbott, Senior Associate Editor; David (DK) Knight, Co-Publisher/Executive Editor

Of course Drax itself could lessen the load if it were to not build the two wood pellet plants it is currently building in the Southeast. So it could be that the Drax official was sounding the alarm in order to dissuade potential wood pellet competitors. Who knows?

The two Brits also made similar statements about how these outrageous forecasts invite too much scrutiny from opposition groups. We don’t know if they were referring to zealous environmentalists or staunch coal industry lobbyists, but at least from a U.S. perspective we found these comments to be somewhat elementary. Hiding an industrial plant from the public behind a cluster of trees a mile off the highway doesn’t work anymore.

And anyway, why run from progress? This wouldn’t be the first time in history that forecasts have over-shot the moon, if indeed they’re proven to be off target. They could be right on the money. After all, the respective firms that provided the forecasts are in the business of providing forecasts. They don’t miss very often.

Everybody in the conference audience who has recently built a wood pellet plant, or is about to, or is thinking real hard about it, is well aware of the potential uncertainties in an overseas marketplace. As for the warnings from the UK gentlemen: Okay, noted.