Wood pellet exports from the United States nearly doubled last year, from 1.6 million short tons (approximately 22 trillion Btu) in 2012 to 3.2 million short tons in 2013. More than 98% of these exports were delivered to Europe, and 99% originated from ports in the southeastern and lower Mid-Atlantic regions of the country.
Wood pellets are traditionally manufactured from wood waste (including sawdust, shavings, and wood chips) that results from wood processing activities, but they can also be produced from unprocessed harvested wood (generally at a higher cost). Wood pellets are primarily used as a residential heating fuel in the United States, but wood pellets can also be used for commercial heating and power generation applications. As recently as 2008, the U.S. Forest Service estimated that approximately 80% of U.S. wood pellet production was consumed domestically. However, because of strong demand growth in Europe, wood pellet exports have been the driving factor in the growth of domestic wood pellet production in recent years.
Growth of U.S. wood pellet exports has been concentrated in southeastern states, which have advantages in terms of abundant material supply and relatively low shipping costs to Europe. Transportation cost is a large part of the total cost of wood pellets; for example, according to Bloomberg New Energy Finance, transportation accounted for a quarter of the delivered price of wood pellets from the Southeast to the Netherlands in mid-2013. Shipping costs generally increase with distance, so the proximity of the United States to Europe compared to wood pellet manufacturers in Brazil and western Canada provides a pricing advantage for U.S. wood pellet exporters.
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