UK Power Producer Increases Stake in BC Wood Pellet Industry

The Drax Group seeks to strengthen the security of supply from its own power plant and its sales to supply a growing market for biomass energy, which is still considered a renewable energy.

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UK-based power producer Drax Group Plc is strengthening its grip on BC’s wood pellet industry with a deal to buy its eighth production plant in the province.

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The company said this week it will buy Princeton Standard Pellet Corp. and, assuming that happens, will add 90,000 tonnes per year of capacity to its existing production capacity of 1.57 million tonnes in British Columbia.

That will bring its total to 78% of BC’s total capacity, according to industry figures from the Wood Pellet Association of Canada.

And it helps put Drax in a favorable position in the global market for pellets, the fuel for power generation from biomass, which gets credit as renewable energy on the theory that reforestation offsets carbon emissions. its boilers, said industry consultant Russ Taylor.

“It’s not a growing business, that’s for sure,” Taylor said in British Columbia, as declining lumber harvests that saw sawmills and pulp mills close leave less factory waste for pellet producers.

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“But it’s certainly a growing sector around the world and more and more countries are investing in biomass power generation,” Taylor said.

In his press release, Drax CEO Will Gardiner said the acquisition will help the company “expand our global pellet production and sales business”, both to secure the supply of its own power station in the north of England, which it converted from burning coal to biomass, and supplying a growing market in Asia and Europe.

Drax took its biggest stake in British Columbia last year when it bought the dominant producer, Pinnacle Renewable Energy, which owned and operated plants in Armstrong, Burns Lake, Strathnaver and Williams Lake and had partial stakes in plants in Houston, Smithers and Lavington.

Drax’s goal is to accumulate eight million tons of annual pellet production by 2030. Company documents indicate that its capacity currently stands at five million tons.

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Taylor said Japan and South Korea have become B.C.’s top woodchip buyers, though the UK isn’t far behind.

And the southern United States was more attractive and "tThat’s where the real growth for Drax has been,” Taylor said.

However, the amount of production in British Columbia that Drax has accumulated prompted a complaint from the Canadian Center for Policy Alternatives in February that it had too much of a monopoly on wood pellet production in British Columbia.

He appealed to Canada’s Competition Bureau to intervene after Drax bought sales contracts from another producer, Pacific Bioenergy in Prince George. A few days later, this company announced that it would close this factory.

It cost the Public and Private Workers of Canada 55 jobs and gave Drax a “strike in BC’s wood pellet industry,” union president Gary Fiege said.

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The Center for Policy Alternatives also argued that there was evidence that provincial forestry permits gave Drax mills too much leeway to take whole sawlogs to be ground into pellets.

However, while bioenergy is renewable in theory, its use on the scale where it is used to replace coal in power generation in Europe and Asia worries some.

“At the end of the day, a molecule of carbon is a molecule of carbon,” said climatologist Werner Kurz. “One of the problems with using wood for bioenergy is that the carbon is quickly released into the atmosphere.”

Kurz said it’s best to maximize the amount of long-lived products that can be made from wood, such as engineered wood products, which sequester carbon for longer periods of time, and not only use wood waste or residues from logging sites to produce wood pellets.

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From this perspective, biomass harvesting has a role to play in helping to thin forests at high risk of wildfires, said Kurz, lead scientist for the Forest Fire and Carbon Research Project undertaken by the Pacific Institute for Climate Solutions.

In this case, the ideal would be that this biofuel could be used locally to power remote communities that are now served by diesel-generated electricity rather than shipping it to power stations around the world.

“If we were to start increasing that to the point where we’re diverting wood that would otherwise have gone to sawmills or we have to increase harvest rates (to meet contracts), that would be a very different situation and a less desirable outcome,” Kurz said.

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Joan J. Holland