I put a presentation together, but unfortunately I didn't get it translated into French in time so I'm not going to be able to have many visuals to show you. And I apologize in advance; I have a bit of asthma, so I have a tendency to cough a bit.
I am just going to give you an overview of the wood pellet sector. I'll tell you a little bit about what wood pellets are, give you some of the Canadian and global statistics, and talk about repurposing coal power plants and some opportunities in Canada with domestic heating.
Wood pellets are basically a renewable fuel made from pure compressed wood fibre. They use the lignin in the wood. It's heated up when the wood fibre is compressed, and then when the pellets are cooled they form into a solid pellet. There is no other external binding or adhesive or anything. It's just absolutely pure wood.
As our raw material, we use wood that's unwanted by the other forest sectors. We pretty much started in the mid-1990s, when British Columbia started to close its beehive burners and there was no other use for the wood residue, particularly when they were a long distance from pulp mills. We started using sawdust and shavings, and then moved into the forests and started using logging residues. This is material that would formerly have been burned in beehive burners or just simply slash-burned in the forest.
Unfortunately, there is still a lot of slash burning that's going on. We've been advocating with provincial governments to stop the slash burning. We're not having any success there.
We use a limited amount of the harvest residuals, but there is a real struggle between us and the primary forest tenure holders, who still prefer to burn their fibre in a lot of cases.
About 5% of wood pellets are used as absorbent, but the bulk of wood pellets are used for power generation, split roughly evenly between being used purely as a fuel and being used to replace coal in pulverized coal power plants. We will convert existing power plants that have often been operating for many years, and we can convert them with very little capital upgrades. Essentially, pellets are turned into a powder and blown into a boiler. Water is heated, and then the hot water creates steam, which creates pressure and turns a turbine, and you get electricity.
We're selling those all over the world for that purpose. Ironically, we have a lot of coal power here in Canada, but we can't get any of the power companies here in Canada interested in what we're doing.
Just to put our industry in perspective, within the entire forest industry, total log harvest is somewhere in the order of 130 million tonnes a year in Canada, and our whole industry uses perhaps five million tonnes, so around 4% of the total harvest. Again, it's just the waste portion. If you look at the total revenue from the forest product sector—pulp and paper, boards, lumber, everything—it's around $60 billion a year. Our industry, depending on the price of pellets, is somewhere between $300 million and $500 million a year, so less than 0.5% of the total forest revenue.
We have pellet plants across the country, in pretty well every province except in the Northwest Territories, the Yukon and Nunavut. About 77% of the production capacity is in the west, mainly in British Columbia and Alberta. About 15% of the capacity is in central Canada, and 8% of the capacity is in Atlantic Canada. Altogether, Canada produces around four million tonnes a year.
If you look at the growth of the pellet market globally, we started at zero in the 1990s, and it's grown at about 14% per year. It's pretty remarkable for any industry to maintain that level of growth. We're up over 32 million tonnes a year now in total, globally. Canada accounts for somewhere around three million tonnes.
If you look at world production, Europe produces about 56%, more than half of global pellets, followed by the U.S., which is about a quarter, and Canada is just a little less than 10% of global wood pellet production. One of the big importing countries is the U.K., where pellets are used to generate power. In fact, the Canadian pellets produce about 6% of U.K. power. If you think about that figure, it's pretty remarkable: 6% of all the electricity in the U.K. comes from Canadian wood pellets. Denmark would be next. Again, it's power and industrial-scale CHP. They take the heat from power plants, run it through pipes in the streets and put it through heat exchangers. They heat the homes with wood pellets in cities like Copenhagen. South Korea is another huge consumer of power. Italy has a large domestic heating market, and Belgium is another huge power market.
Since 2014, Canadian exports have increased by 50%. Our market is growing very rapidly. We ship both to Asia and Europe. Our main markets are the U.K., Japan, the United States, Belgium, South Korea and Italy.
In Canada, the domestic market, unfortunately, is very tiny for a number of reasons. The first would be that we can't seem to get the attention of the Canadian coal power utilities. Another large barrier to using wood pellets in the heating sector in Canada is the incompatibility between European and Canadian boiler pressure standards. In Europe, there's very advanced technology. You can fill up a bunker maybe once or twice a year, and these devices run completely automatically with very little maintenance, just like a gas boiler or an oil boiler. But the pressure standards in Canada are incompatible, and we're working to try to get that situation changed. There are no North American biomass boiler manufacturers.
The beauty of wood pellets in the power sector is that you can use these large power stations. Globally, all countries want to get off coal, and so you're left with these large power stations with billions of dollars of capital investment that are potentially stranded assets. The countries we're dealing with have converted them. All you need to do is put a bit of covered storage at the front end so your pellets don't get wet, and then you have to connect them with some conveyors, and essentially all the rest of the power plant can be used as is. We do have that ability here in Canada, but unfortunately not the willingness to do it.
You have a product that reacts very much like coal, but it's clean, renewable and sustainable, and it produces much less greenhouse gas than coal.
In Canada, we're set to phase out coal in Alberta, Saskatchewan, New Brunswick and Nova Scotia by 2030. The whole country is going to phase out coal power, but those are the four provinces that are using it. In Alberta, 55% of the power comes from coal; in Saskatchewan it's 44%. New Brunswick is 13% and Nova Scotia is 60%. All those coal power plants, when they're done, will be stranded assets unless they're converted to another purpose.
So far, we haven't been able to convince any of the power companies to use wood pellets. There is a notable exception, which is Ontario Power Generation—
Okay, I'm done.