Canada: Regulation hamper pellets production in British Columbia


Business.conbio,info /2016-08-15  The Canadian province of British Columbia (BC) is a large wood basket but a combination of market change and government regulation creates problem for pellet production. This is a bit of a surprise though the province is otherwise eager to promote its growing pellets industry and has e.g. for export purposes made great effort to show the sustainability of BC forests business including pellets production.

The problem is that most forest in BC is publicly owned and licenses to use them are not open for everyone. The government has distinguished fibre users in two groups primary users and secondary users. A saw mill or pulp mill are examples from the first group and a pellets mill is an example of the second.

The reason is that most pellet mills use residues from sawmills for their production. The regulation says that secondary users are no aloud to get a license to harvest wood unless primary users says this is okey. This mean that the pellet producer has to depend on the good will of the other business. This of course is not something that attracts investment capital.

The second problem is that a number of sawmills in BC have closed because of market reasons. For Pinnacle pellets this ha resulted in the an unfortunately closure of it’s 90 000 t/y production in Quesnel, a plant that pelletized sawdust etc from the local sawmill owned and closed by Canfor as did also other sawmills in the region. Canfor is also a competitor to Pinnacle and have their own pellets production. Also their plant in Meadowland, close to Quesnel, suffering for shortage of fibre supply.

Pinnacle Pellet production plant in Meadowbrook, BC

Pinnacle Pellet production plant in Meadowbrook, BC

Now when Pinnacle is unable to find raw material for their pellets production they have to options. To close or to invest in chipping and drying facilities and buy unprocessed wood. This would not be a big problem especially when there are huge amount of Mountain Pine Beetle destroyed forests in the region. Those forests are not possible to use for sawmills. Of course this will increase costs for Pinnacle, but anyhow be a possible way, if not for the regulations.

If Pinnacle can secure a stable supply of fibre at a competitive price, the company believes it can make the necessary upgrades to the mill and be operational within 10 months.

On top of this today primary users still burn slash and other wood residues on the fields. To be able to give fibre recovery tenures to secondary users primary users must first to the government declare the volume and quality of fibre they are not using in the forest. This is something they rather not want to discuss.

According to the online magazine Forest2market, the BC Minister of Forest, Lands and Natural Resource Operations issued a directive in 2014 to increase fibre access for secondary forest users in the province. This has resulted in a number of working groups and policies designed to implement the directive, including a 13-point action plan in 2015 to increase fibre access to pellet producers and biomass power producers. However, there has reportedly been little or no implementation of these policies, and no additional fibre has been made available to pellet producers in the region.

Business.conbio,info /Lennart Ljungblom/2016-08-15