The Market for Wood Pellets in European Power Plants

A colleague in the southeastern part of the US has a huge and rock-solid fuel supply of wood to make into pellets, and, on the basis of that feedstock agreement, I’m trying to help him raise a significant amount (nine figures) of investment capital to build a plant. Having said that, I’m concerned with what’s going to happen in due diligence.

I wrote:

This is bound to work for a while. Your supplier grows trees, you pelletize the biomass locally, and ship it across the Atlantic to the UK and Europe, a region of the world that happens to have a huge financial incentive for the stuff. You need to do that, because it appears that we here in the U.S. will happily burn coal until our planet is in ruins. Yet there are important questions for you to consider:

• What happens when/if those incentives in the EU go away?

• What happens when burning hydrocarbons generally gives way to something cleaner that’s cost-effective?

It’s hard to answer these questions, but it’s possible that the date might not be too far in the future.

Investors