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While Maine spins its wheels on wood pellet exports, our neighbors are eating our lunch

Posted June 10, 2014, at 1:03 p.m.
BDN

Maine lags behind its neighbors, even at what it does best.

In 2013, the port of Baltimore experienced significant growth in pulp and wood product exports, setting a record. Furthermore, the Canadian government and biomass giant Enviva, with manufacturing facilities located throughout the Southeastern U.S., are closely eyeing future opportunities with wood pellets, biomass and pulp — traditionally economic strong suits for Maine.

But what our neighbors to the north and south are doing is quite the opposite of what we in Maine are doing. They are investing in capacity in anticipation of large growth not just domestically but in a fast-growing European market for biomass products.

Countries such as Germany have created mandates to cut down on high-emission sources of energy such as coal. They have decided to fill the void with solar, wind and also biomass. According to many of the reports I’ve read, biomass in Europe is expected to grow at nearly 20 percent a year and by 2020, Europe will be consuming nearly 35 million to 40 million tons of wood pellets per year. Similarly, reports are predicting that after Europe, Asia will follow in similar trends toward biomass-based fuels.

To meet this overseas demand, companies like Enviva are investing in huge biomass and wood pellet plants, concentrated largely in Georgia and South Carolina. Once operational, these plants will provide a steady stream of pellets to ports such as the one in Baltimore, for a transatlantic ship routing to high-demand markets in Denmark, the Netherlands, the U.K. and Germany. In a similar fashion, New Brunswick and Western Canada are gearing up for their own expansions.

So where does this leave Maine?

Biomassmagazine.com, a credible industry publication, published an article in January 2012 explaining how Maine was in an advantaged position to send pellets to Europe. The article says that while raw materials are much more expensive in Maine, that cost is offset by much more favorable freight costs from the Northeast to Europe. Further, Maine’s ports have invested in recent years in better infrastructure to provide better transportation options to shippers. But still, Maine has yet to move any significant amount of pellets or biomass to the growing European market.

From what I can tell, the problem is capacity here in Maine to produce pellets. Maine does produce a significant amount of pellets. But at the same time, Maine is consuming almost as many as it is producing. This leaves a small margin for export. As a result, almost no Maine pellets reach the European market, which accounts for nearly 85 percent of global consumption.

How can Maine get a larger piece of the pie?

We must build or expand existing pellet plants. That is the goal of F.E. Wood & Sons, which proposed in 2011 to build a pellet plant in West Baldwin, Maine. The plant would use the dormant and state-owned Mountain Division rail line to ship pellets to the port in Portland for export to Europe. This plant would offer a boost to a new proposal by local entrepreneur David Schwanke to revitalize freight service on this line operated by the Golden Eagle Rail Corp.

But no funding has yet come forth for this plant, which was supposed to be completed in 2013. Further, a new proposal in the Prospect area by Maine Biomass Exports would use the newly formed Central Maine & Quebec Railway lines to bring biomass to Searsport for export to Europe.

So if there are viable proposals to meet this demand, where is the funding?

This is a question I cannot answer. Perhaps funding needs to be found outside of the state, something that is often criticized yet frequently seems to be one of the best options to fuel new growth in Maine. But what we know is the market in Europe is real, the market growth fueled by European Union policy is real, and competition from Canada and the Southeastern U.S. also is very real.

While Maine continues to spin its wheels with things such as wood pellet exports, an offshoot of the forestry industry that Maine pioneered, our neighbors will continue to eat our lunch.

Charles Hastings has an MBA from the University of Maine and a master’s degree in international security from the School of Policy and International Affairs at the University of Maine.

 

 

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