Energy firm seeks to tap the market for wood pellets here and abroad

A relatively young alternative energy method has started hooking the attention of some Costa Rican businesses. Wood pellets, which can act as a bio fuel that burns cleaner than coal, make up an international energy industry that has boomed since 2008’s economic collapse.

Representatives from green technology company Grupo Con Brio said that they are currently looking for an avenue from which to join the bustling market.

“We’re trying to put together a nice looking Costa Rican pellet that can be exported,” said partner Nestor Zúñiga Arias. “Eventually we believe we can scale up, maybe go into bigger markets like Brazil.”

From within Costa Rica, possible advantages in the wood pellet industry are met with sizable handicaps. According to U.S. businessman Richard Sims, because of the nation’s size, it could never compete as a major player in the exporting scene. However there is one tree species, the gmelina arborea, that grows fast enough under the Costa Rican rain for businesses to have a consistent supply of pellets at the ready for any potential buyers.

“Today the demand is much more than the supply,” said Sims, who is working as an adviser for Grupo Con Brio. “And the wood pellet technology is now much better than it was ten years ago.”

In addition to the abundance of gmelina trees, Costa Rica also has two well-established shipping ports in Limón and Caldera. As the company searches for buyers and lays down the foundation needed for infrastructure, Zúñiga estimated the potential markets for pellets should be around and thriving for the next 20 years.

Wood pellets are being used primarily for heating residences and for supplying commercial energy uses. The residential end of business is where Grupo Con Brio intends to concentrate its efforts, and this sector can pay up to 20 percent more than the industrial side, according to Sims.

Studies from Europe, where the pellet is becoming a major import, show a pellet-using factory can generate a carbon footprint five times smaller than a an equivalent coal-burning plant.

Sims said that any factory in Costa Rica would need at least 5,000 hectares of land to churn out an adequate energy supply. He proposed Limón as a perfect location because of its proximity to shipping and its space for production. The ideal result for the country would be a joint production that can also serve domestic markets with saw wood or leftover supply, he said.

“The best case scenario is a mixed plantation that would service the wood sector for additional saw wood for local needs and also provide new energy source in speed-stock for wood pellets,” Sims said.

Grupo Con Brio is considering building a green industrial park in San José to begin production. Zúñiga said they have been in contract talks with a big buyer from Europe and some sellers from the United States.

There are some players locally, like the Bridgestone factory in Belén, that can allow for steady business. But both Sims and Zúñiga agreed that the wood pellet industry in Costa Rica would depend on exporting to flourish.

Pelletics in San Carlos is the only current wood pellet factory in the country, and its business stays in-country through Costa Rican cement production clients like Cemex and Holcim.

Zúñiga said it could be beneficial for any wood pellet producer to make a deal with the local municipalities, who don’t have the necessary services or funding to keep up with most alternative energies. The son of former finance minister Guillermo Zúñiga said so much of the energy in Costa Rica is filtered through illegal means, so a more privatized approach could benefit the nation’s energy stability.

“In Costa Rica it’s hard to believe anywhere from 40 to 60 percent of water and energy costs are stolen,” he said. “There’s a big gap between what we’re actually collecting and what we can actually give to the people. Municipalities would love to have these services.”

The future of this alternative bio fuel presents a chance for any energy business, and Costa Rica comes equipped with the resources and infrastructure to help define that future. Though rocketing demand in European countries like Italy and England is too much for the country to fulfill alone, it still provides a big opportunity for a small country.

“Can Costa Rica cover all of that? Absolutely not. We’re just too little. But we can make a difference,” Zúñiga said.

By Michael Krumholtz
of the A.M. Costa Rica staff

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