This week, I participated in the biomass industry association roundtable discussion at the International Biomass Conference & Expo in Nashville, Tennessee. The following are written answers to the questions compiled by Biomass Magazine editor Anna Simet.

1. The domestic wood pellet industry had a great year, and that momentum is still going. Tell us about it.

It really has, and I’ll point to the U.S. EIA’s Monthly Densified Biomass Report to better quantify and support the hearsay that I’ve been accumulating since our annual conference last June in Hershey, Pennsylvania. The Monthly Densified Biomass Fuel Report has really become an invaluable data set for our industry as it lays out in detail how much product we’re making, how much product we’re selling, what the average price per ton we’re seeing in regional marketplaces and how much inventory we have on hand. By nearly every measure, 2019 has been a record year. The available data only reaches back to 2016, so that must be considered. Additionally, the November and December data have yet to be published, but even a conservative projection would say that 2019 will come in somewhere in the 2.2 million to 2.3 million tons of pellet sold, delivering revenues of roughly $380 million. Both are high watermarks in the report's history, but the number that gets my attention is the total revenue number. When the report was launched in 2016 the sales volume was $280 million. Just last year, that number was $325 million. So, we’re talking $100 million in revenue that wasn’t there just four years ago. It’s significant, and I’m happy for our members as they enjoy this strong business environment.

2. Inventory levels have been very low. Though high pellet demand is a good thing, that comes with challenges—how are your members viewing and managing that situation, and what kind of strategies are they deploying to getter a better idea of demand?

This one is more difficult to get our arms around. The industry exited the 2018-‘19 heating season with virtually no inventory on the ground, and this was really the first point that Connor Murphy, the curator of the EIA data raised at our conference last summer. The bugaboo the entire supply chain is trying to avoid, of course, are local or regional shortages or outages. Our end users count on our product to heat their home through the winter, regardless of what Mother Nature cooks up for winter. What is less clear is the ideal inventory level. I haven’t heard anyone offer a number. What I do know is that production levels are at all-time highs, which has allowed the industry to avoid shortages—so far. Anecdotally, I’m hearing that the supply chain pipeline is filling up, but it’ll be some time before the data can support or reject that assertion.

As far as projecting demand, I’m afraid we’re still dealing with lower visibility than we would like as a sector. Calculating demand involves knowing the number of installed units out there and the number of home heating days that will be generated in a given winter. We really don’t have a good bead on either. With the soaring popularity of BBQ grills, the industry now has another demand center that isn’t well understood. As a sector, we need to figure out a way to at least measure what we can know (appliance sales) without revealing sensitive competitive information.

3. You have emphasized the value of the data in the U.S. EIA’s Monthly Densified Fuel Report. Can you tell our audience what that report entails, and why that information is so useful?

The report includes production, sales, price of feedstock, average sales price and even some quality metrics, all broken out into three separate regions. I remember covering the launch of this report when it debuted in 2016. Initially, folks were guarded about their data and skeptical of its overall value. I don’t know that anyone is skeptical of the value of the data now. For our sector, this is really our best measure of how we’re performing, and I think it will only grow in value as more and more months of data and trends pile up. I, like many of my members, review that data the day it’s published.

4.Speaking of the numbers, what’s the current average per-ton price of domestic pellets, how does it compare with the past couple of years, and how is the current price fairing with competing fuels right now?

In October, pellets averaged $184/ton in the East and $175 in the West. By comparison, October of last year found pellet prices at $171/ton and $169/ton respectively, so we’re up this year in the 7.5% range in the East and 3.5% in the West. These are wholesale numbers. At Wood Pellet Warehouse, a pellet delivery service I visited with our chairman John Utter, you can get a ton of Lignetics wood pellets delivered to your home for $279/ton. Current fuel oil prices in the area are coming in around $2.63 per gallon. At those prices, pellets offer a 10 to 11% discount per million BTU over our biggest competitor in the region. Without delivery charges, the savings start to look more like 20% per million BTU. While these modest savings may not have retailers seeing a flood of consumers interested in replacing an oil appliance with a wood pellet one, it likely is enough for folks who have both appliances to choose pellet heat, which we love.

5. How is the barbeque market going? Last year, you talked about its explosive growth—is that still ongoing?

Without a doubt, it’s the most exciting and most dynamic aspect of our business right now, but our visibility into appliance sales and pellet usage is lacking. Anecdotally, we’ve heard that 1 million units per year are a decent estimate and 100 pounds per user on average. Again, these are anecdotal numbers without any firm data set behind them. At those numbers, we’re adding 50,000 tons of demand each year. But as you know via Biomass Magazine’s ongoing coverage of this market, BBQ pellets inspire creativity and call on different fiber streams. Fruitwoods, bourbon barrel staves, mesquites, and hickories are all on the menu. It is an exciting time and the PFI and its members look forward to what comes next.

6. Since you became executive director of the PFI, you have really pushed for pellet producers and appliance manufacturers and retailers to work together. Can you explain the value in that, and talk about how that initiative has gone so far?

We welcomed two specialty hearth retailers to our board this summer, and our membership ranks include larger, multilocation retailers as well. Honestly, I think the biggest benefit of having retailers in the room is it is a constant reminder to our members that it is retailers who connect us to the end-user. Our best source of information regarding consumer attitudes about home heating, the competitive advantage or disadvantage of our product enjoys or suffers and the potential impact of the federal policies we are pursuing is our retail members. I don’t have to wonder what the impact of a $300 federal tax credit on wood pellet appliances might mean for pellet appliance demand—I can simply ask one of my two retail board members. It is hugely valuable.

7. Last year, you took a trip to Capitol Hill with some of your board members to advocate for the industry. Can you tell us about that trip, and what was accomplished?

I’ve called that the single best day in our calendar year and I don’t think it is hyperbole. That said, measuring progress in Washington, D.C., is so difficult. We packed a lot into two days. First, we invited likeminded and affiliated industry associations to talk to our board about their federal policy strategy and tactics. BTEC, the Hardwood Federation, the National Wood Pallet, and Container Association, the HPBA and the National Alliance of Forest Owners were all there. The next day, we broke up and performed a series of Hill visits eventually darkening the doors of 16 senators and 20 representatives. That same day, a small group of us met with Anne Idsal at the U.S. EPA’s office of air and radiation as we continue to attempt to resolve the minimum pellet fuel requirement issue inside of the NSPS. We were excited when some elements of the BTU Act were included in the green energy tax package that came out of the House Ways and Means Committee, but that tax package was ultimately shelved. So that’s a bunch of stuff, but for me, the most valuable thing that happened over that two days was the energy and enthusiasm for the PFI that we generated.

8. How has the sector faired under the Trump administration, and thinking about the upcoming election, what might be in the best interest for the industry?

One of the very few benefits of having little to no federal policy support for your sector is there is very little policy risk should things change dramatically in an election year. Good trade associations look to improve their position regardless of who ends up in the White House or which party controls the House or the Senate. Under a Trump administration we were hopeful that its deregulatory posture might bring a quicker resolution to the misguided pellet fuel regulation within the NSPS, but that hasn’t come to pass…yet. On the flip side, I remember thinking when Obama won the election that it would be a boon for the clean energy sector generally and bioenergy specifically. Hopes were high with the early buzz around the Clean Power Plan, but ultimately, the Obama administration chose health care reform as its legacy policy goal.

What I do think the PFI will do is work to amplify the support we enjoy from those elected officials who know and understand our industry. Longtime supporters like Maine Sens. Susan Collins and Angus King come to mind, as does a freshman representative from Maine we met during our Hill visit, Jared Golden. These champions are vital in continuing to advocate for our specific ask in larger tax packages like the one we saw come out of the House Ways and Means Committee in November.