CN's Wood Pellet Traffic at Double-Digit Rates, Expected to Grow

CN has experienced 16 percent compounded annual growth in its wood pellet traffic and is on track to haul more than 800,000 tons of wood pellets this year. Moving forward, the company sees growth opportunities in domestic and international markets for wood pellets, a “green” source of heating energy.

Canada's 29 wood pellet plants have a combined production capacity of approximately 2.2 million tons. Most producers are located in British Columbia, with some in Alberta and a few in Quebec. CN says that facilities are also opening on its lines in Wisconsin and Mississippi this year, and the first major Ontario producers are expected to start production in 2010. The railroad notes that one producer, Granules LG, is building a rail connection into its plant that will allow direct rail loading instead of trucking to a nearby reload facility.

Wood pellets are one of CN’s expanding sustainable energy business segments, which include biodiesel, ethanol and wind turbine components. Major power plants and residential consumers in North America, Europe and Asia are turning to wood pellets as an alternative to fuel oil, gas or electricity to heat homes. In addition, wood pellets are being used increasingly in industrial applications such as district heating plants, greenhouses, and cement and aluminum production facilities.

The U.S. Environmental Protection Agency has endorsed wood pellet heat as one of the cleanest burning, most renewable energy sources on the planet.

Global wood pellet production in 2008 was almost 11 million tons, and some analysts believe worldwide production could double by 2014. North American consumption is expected to exceed 3.3 million tons in 2010.