In January, Enviva announced a joint venture with a subsidiary of John Hancock Life Insurance Company called Enviva Joint Venture Development Company. The company will jointly acquire, develop and construct a wood pellet plant and a deepwater shipping terminal in the southeastern part of the country. The joint venture has announced its intention to acquire a wood pellet production facility in Greenwood, South Carolina.
Enviva has operations in Mississippi, Alabama, North Carolina, Virginia and Florida. For more than a decade, John Keppler, Enviva's co-founder, chairman and chief executive officer, has been managing the company's strategic direction. He led the company from the entrepreneurial stage to become the world's largest producer of industrial wood pellets. Its facilities include nearly 3 million tons of capacity and 600,000 tons of the plant under construction. The processing facilities export to European Union customers through wooden pellet ports in Chesapeake, Virginia and Wilmington, North Carolina, as well as deep-sea shipping terminals in Panama City, Florida and Mobile, Alabama.
- When did Enviva ship the first wood pellets to Europe? Can you describe this experience?
We shipped for the first time in November 2010 (10,000-tonnage vessel) and this is an exciting and significant accomplishment that is almost as loaded with our own deep-sea shipping terminal in Chesapeake Harbor in December of the following year (2011) Our first boat matched.
The facility was originally an alumina import terminal and we bought it in February 2011. Our goal is to be able to load a boat in the same year. The Daishin Maru delivered 30,000 tons of wood pellets to Europe demonstrating Enviva's superior capabilities: In just 10 months we built 45,000 tons of state-of-the-art storage capacity and converted a stocking terminal into An export terminal that can deliver high-quality wood pellets quickly, the vessel will sail to the customer's port at a given time.
How do you think about the development of the European wood pellet market in the next five or ten years? Demand is expected to remain stable - is Enviva looking at other markets? Has there been a recent acquisition of Greenwood and plans to build more factories and deepwater facilities to match future plans?
We see significant potential for industrial particle growth in Europe, both short-term and long-term. CHP and industrial heat in the Dutch market are on the rise, and we see Denmark, the United Kingdom and Belgium continuing to pursue new biomass cogeneration projects. Germany, Poland and Ireland also represent opportunities for large plant-level applications. Throughout Europe, we expect the combined thermal power and residential thermal markets to grow.
In the twenties of the twentieth century, we saw further growth brought by the EU Renewable Energy Directive II. The goal of RED II is to focus on efficient and scalable assets that provide essential system services to wind and solar energy at national, regional or city levels. We believe the US exports of wood pellets will continue to play a key role in achieving Europe's energy and climate goals while ensuring the reliability of the grid in the future (as enacted by the European Parliament on January 17 for RED II's Biomass Quota).
We also expect strong growth in the Japanese market as the demand for imported wood pellets will continue to grow as several utilities and trading houses announce new shared and dedicated biomass projects. Japan's goal is to generate between 6 and 7.5 GW of biomass power, meaning that demand will reach 15-20 million tons of biomass fuel a year, which is a projected part of 2030's electricity supply. In 2017, the volume of imported biomass fuels significantly exceeded expectations due to the submission of more than 15GW biomass power generation capacity.
This new joint venture, which we recently announced, will fully comply with our strategy of developing and constructing new plants and shipping terminals and will in the future increase our production capacity to better serve the growing markets of Asia and Europe.
- Are there any policy issues of particular interest to Enviva - such as the definition of a uniform sustainability for EU countries?
We pride ourselves on producing world-class pellets, which means we are committed to providing our customers with the highest quality products while ensuring that the forests we buy are becoming healthier. The forest folks at Enviva and the employees throughout the enterprise spend a great deal of time and energy on maintaining our various certifications, which demonstrate the sustainability of our sourcing and pellet production.
Certification provides our clients with an independent confirmation that Enviva is doing the right thing and can be held accountable.
Currently, Enviva maintains three types of certification:
Chain of Custody Certification certifying Enviva's compliance with the highest industry standards for responsible timber procurement, including provisions for the conservation of biodiversity, contractual requirements for the use of best forestry practices, legal and regulatory compliance, and regulatory oversight and participation in the sustainability process .
"Forest Management Certification," landowners manage their own land in accordance with generally accepted management principles. As Enviva enters more countries and markets, we must increase our customers' chances of getting certified wood.
The Sustainable Biomass Partnership Certification is more targeted and sets sustainability standards for the production of wood pellets and chips for industrial, large-scale energy production.
- What do you think of Enviva's success in the wood pellet business? We see the rise and fall of many companies over the past decade. What strategy do you have to differentiate your company from others?
We do not define ourselves as "wood pellets". We consider ourselves a key supply chain partner to major power generation companies seeking to improve the energy production environment. This means that nothing we do can stop them from delivering energy to their customers, nor can they stop us from supplying renewable resources as fuel. For entrepreneurs, this means tireless attention to safety, quality and reliability, as well as a culture of continuous improvement for each specialty.
However, our values promote our business practices. We care about the safety of our people, hiring and nurturing the best people, integrity, determination, responsibility and the promotion of the health of our forests in the areas where we operate. These values are very good. They enable us to build trust with all our stakeholders, from employees and suppliers, to local communities, to all who support our supply chain, to overseas clients and regulators.
The industry is maturing and we are helping to set standards for safety, sustainability, quality, efficiency and reliability.
- Can Enviva's Track & Trace program and its sustainability policies help your company sell its products in Europe? How does it work?
Absolutely helpful. Our clients rely on us to provide consistent and sustainable products and to contribute to the health of forest land. This started with a thorough understanding of our supply chain, for which reason we started the Track & Trace program.
Track & Trace is a proprietary and innovative system that tracks every truck material sourced from the forest or sawmill. It provides a detailed and easy understanding of wood properties. We know the specific conditions of the forest, the location of the harvesting site, the people who own the land, the type of forest, the way of harvesting, the number of years since the last harvest, the number of acres harvested, and the total harvest per channel. This allows us to make informed purchasing decisions and share that information openly.
Transparency is crucial to building trust - we are constantly reviewing and improving our practices and we are happy to work with our stakeholders to continue to improve and share information about our procurement systems. Our Track & Trace data is a pillar of our commitment to transparency and an integral part of Enviva's responsible timber supply program.
Enviva has operations in Mississippi, Alabama, North Carolina, Virginia and Florida. For more than a decade, John Keppler, Enviva's co-founder, chairman and chief executive officer, has been managing the company's strategic direction. He led the company from the entrepreneurial stage to become the world's largest producer of industrial wood pellets. Its facilities include nearly 3 million tons of capacity and 600,000 tons of the plant under construction. Processing - As a major player in the wood pellet industry, what can you say about the major challenges?
This is what we call a "juvenile" industry. We have to pass many engineering challenges and may take a century to figure out what constitutes the best solution. It takes a lot of perseverance to solve the problem. We are very proud of the culture of continuous improvement that allows us to continue to improve the productivity of each plant and to improve quality significantly while maintaining safety priorities.
Another challenge is to establish a reliable and scalable supply chain that connects landowners in the southeastern United States to customers around the world. This covers all the normal logistical challenges of moving goods while minimizing energy consumption and developing a comprehensive education, certification and transparency program to ensure that all wood we buy comes from sustainably managed forests.
The last thing I mentioned is an opportunity, not a challenge. As the company and industry evolve, we can speak in a more intense voice about our story. We have the opportunity to publicize the science we have built in this industry. The sustainable production of biomass energy in the southeastern United States plays an increasingly important role in improving the energy production environment and providing economic benefits to communities. With regard to the carbon benefits of replacing biomass with biomass, and the positive correlation between deforestation and regeneration, I believe it would be a very persuasive story.
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