Demand from utilities in the European Union will be driving prices of pine pulpwood upward in parts of south Alabama, south Georgia and Florida’s panhandle, experts in the forest products industry said Wednesday.
New wood pellet facilities in the United States are being built to feed European markets, and much of the demand is for wood pellets and wood chips, said Scott Twillmann, a senior analyst for Charlotte, N.C.-based Forest2Market. Overseas utilities are purchasing wood pellets in order to reduce greenhouse gas emissions and help meet their obligations under the Kyoto protocol – an international agreement to limit the release of environmentally harmful gases.
New pellet facilities in Marianna, Fla. and Selma, Ala., are expected to come online by the end of the year. These facilities are expected to annually consume between 1 million and 1.5 million tons of pine pulpwood, which is typically grown to make products such as paper.
Pine pulpwood consumption is also increasing due to Louisiana-Pacific’s new oriented strand board mill in Thomasville, Ala., which produces engineered wood panels used in construction.
In addition, several mills in the area are increasing their pine consumption. International Paper is converting its mill in Pensacola, Fla. to be able to consume an additional 1 million tons of pine from the region.
“As production ramps up at the new pellet facilities and LP’s new mill, and IP’s conversion nears completion, I would expect pine pulpwood prices to increase dramatically in the short term,” Twillmann said.
As a result of the changing market conditions, the increased consumption of pine pulpwood in the region will eclipse 4 million tons by the end of 2008, Twillmann said.
Europe is turning to the southeastern U.S. because the wood is cheaper, the supply is plentiful and the currency exchange is favorable, he said.
In the United States, where Kyoto has not been ratified, the use of wood fuels as a major input to utilities is just beginning to take shape. Projects using woody biomass in new co-generation facilities that use this natural fuel source to produce heat and power have been announced in Florida, Texas, the Carolinas and Georgia.
Alabama Power is also exploring this option.
“Growing pressures from state mandates to cut carbon dioxide emissions are forcing utilities to explore alternative forms of energy, and woody biomass will be a significant part of the equation,” Twillmann said.
Forest2Market has developed sophisticated analytical tools to accurately forecast timber prices throughout the South.
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Suz-Anne Kinney: +1 980 233 4021 or email@example.com