“Initiative Wood Pellets Buyers” works to smooth supply chain disruptions

As the industrial pellet market in Europe absorbed excess supply caused by the fire at RWE’s Tilbury plant, new questions have arisen about pellet quality. According to Montel’s Weekly Biomass Report, “market chatter [during the week of April 2] is being dominated by a spat over the agreed specifications of industrial wood pellets between US suppliers and European buyers.”

As events like the fire at the Tilbury plant illustrate, in order for the industrial pellet market to absorb excess supply caused by disruptions in the supply chain, consistent standards are required for both the physical specifications and the sustainability criteria.

As a way of managing supply chain risk, major European utilities firing wood pellets in large power plants formed the Initiative Wood Pellets Buyers (IWPB): “All biomass-fired power plants rely on long-term contracts. When one of them needs to shut down unexpectedly, it is in the plant’s best interest to trade its wood pellet supply. Hence, contract forms and legal conditions must be harmonized to ensure appropriate trading conditions. In addition, technical specifications and sustainability requirements for wood pellets need to be standardized. The IWPB achieves all this in complete transparency.” Members include GDF Suez, RWE Essent, Dong, E.ON, Drax and Vattenfall among others; since June 2010, representatives from these companies and other affected parties have been meeting in working groups to discuss a uniform approach to the following issues:

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