North American Bioenergy Outlook...Title: Microsoft PowerPoint - afx SanFran 2018 Bioenergy_Sarah Martin Author: kcarr Created Date: 10/1/2018 4:15:08 PM

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North American Bioenergy OutlookWood Pellets & Biomass Power 2018 Update

Sarah MartinAssociate Economist, Wood Products and Bioenergy

North American ConferenceOctober 2018

2© Copyright 2018 RISI, Inc. | Proprietary Information

• 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

Agenda

1 Market ConditionsCurrent



Wood Fiber Consumption: Biomass Power Remains the Largest Bioenergy Market in 2017Million Dry Short Tons

0

5

10

15

20

25

30

35

2012 2013 2014 2015 2016 2017 2018 2019 2020

Electricity Generation Wood Pellets Wood Biofuels


0

50

100

150

200

250

300

350

2012 2013 2014 2015 2016 2017 2018 YTD

Renewable CNG Renewable LNG Cellulosic Ethanol RFS Projected Volume

North American Biofuels Continue to StagnateUS Cellulosic D3 RINS by Type, Millions RINS

2 Domestic Pellet DemandNorth American


Weather and Energy Will Continue to Act as Headwinds in the Long‐Term

400

500

600

700

800

900

1,000

1,100

Heating Degree Days by CountryAverage Annual Degree Days

United StatesCanadaLinear (United States)Linear (Canada)

0

20

40

60

80

100

120

140

160

56789

101112131415

US Pellet Stove Shipments and Retail Natural Gas Prices in New EnglandThousand Units and US Dollars (2018$) per MCF

Retail Natural Gas Prices

Pellet Stove Shipments



Northeastern Pellet Inventory Declines after Colder Winter, Short‐Term Uptick in DemandTotal Heating Degree Days, Thousand Tons (R)

050

100150200250300350400450

Jan-2016 May-2016 Sep-2016 Jan-2017 May-2017 Sep-2017 Jan-2018 May-20180

500

1,000

1,500

2,000

2,500

3,000

UNE Inventory UNE HDDSource: Energy Information Administration.


50%

55%

60%

65%

70%

75%

80%

0.00.51.01.52.02.53.03.54.04.5

2012 2014 2016 2018 2020Capacity Demand D/C Ratio

US Continues to Face Overcapacity Issues;Colder Winters May Push D/C Ratios HigherUnited States, Million Short Tons

3 Biomass Power DemandNorth American



Policy Update: EPA Proposes Affordable Clean Energy (ACE) Rule• Proposed August 2018• Main goals Replace 2015 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


60%

65%

70%

75%

80%

85%

90%

2012 2014 2016 2018 2020

Canada USA

Biomass Power Capacity Utilization Remains Unchanged as Policies Restrain Potential Percentage


-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

2

4

6

8

10

12

14

16

2012 2014 2016 2018 2020

Canada USA US % Change CA % Change

Biomass Power Generation: Slow Growth AheadMillion MWh

4 Industrial Export DemandNorth American



0

2

4

6

8

10

12

2012 2013 2014 2015 2016 2017 2018 2019 2020

US South and BC Production

US Overseas Exports

CA Overseas Exports

Export Production Continues to Grow Alongside Expansion in Offshore MarketsMillion Tonnes

Shifts in Offshore Markets Will Directly Impact North American Pellet Producers


Source: GTA* Annualized YTD through July 2018

‐200

0

200

400

600

800

1,000

2012 2013 2014 2015 2016 2017 2018*

Japanese World TradeThousand Tonnes

CanadaVietnamMalaysiaChinaOtherTotal Japanese Exports

United Kingdom

73%

Belgium7%

Japan8%

Denmark6%

Italy1%

Korea1% Other

4%

North American Pellet Export Destinations, 2018*

Source: GTA* Annualized YTD through May 2018

5 Wood Fiber SupplyNorth American


Pulpwood Roundwood

Residual Chips

Fine Mill Residues

Hogfuel Forest Biomass

Urban Wood Waste

Pellets Electricity Generation OSB

PB/MDF Pulp

Pulp and Panels Consistently Have Higher Ability to Pay for Fiber

020406080

100120140160180200

2012 2013 2014 2015 2016 2017 2018

Fiber Paying CapabilityUS South, Pulpwood Users

US Dollars per GST

BSKPOSBExport Pellets

0

10

20

30

40

50

60

70

2012 2013 2014 2015 2016 2017 2018

Fiber Paying CapabilityUS South, Mill Residual Users

US Dollars per GST

ParticleboardWood PelletsElectricity Generation



5%

7%

9%

11%

13%

15%

0

5

10

15

20

25

30

2012 2013 2014 2015 2016 2017 2018 2019 2020US South US Northeast US West US North Central BC All CA Except BC % Total

Wood Biomass Consumed for Bioenergy Will Tick Up as Demand IncreasesMillion Dry Short Tons

Roundwood Harvest Demand: British Columbia Likely to Have Fiber Constraints in Medium Term

• 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?


0

20

40

60

80

100

120

2000 2005 2010 2015 2020

British Columbia Roundwood Harvest DemandMillion Cubic Meters, All Species

Total Harvest Allowable Annual Cut


• 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

Key Takeaways

Global Pellet Demand Study

22

Special Market Analysis Study

• 10‐year forecasts for industrial & domestic pellet demand

• Europe, Asia, N. America• Energy price forecasts, policy commentary, trade data

www.risi.com/globalpelletdemand

© Copyright 2018 RISI, Inc. | Proprietary Information

NEW!NEW!

Thank you for your attention!For more information:


North American Bioenergy 5-Year Forecastwww.risi.com/bio5year

RISI Special Study:Global Pellet Demand Outlookwww.risi.com/globalpelletdemand

North American Woodfiber & Biomass Marketshttps://www.risiinfo.com/product/north-american-woodfiber-biomass-markets/

Documents

North American Bioenergy Outlook...Title: Microsoft PowerPoint - afx SanFran 2018 Bioenergy_Sarah Martin Author: kcarr Created Date: 10/1/2018 4:15:08 PM