On a crisp North Carolina morning, an eastern pine forest is being clear cut in a precisely choreographed hydraulic ballet. Pincers grab 500-pound, 30-foot tree trunks, run them through trimmers and auto-cutters and then stack the nearly uniform logs onto flatbed trucks which take them to mills to be cut into construction boards. Grappling claws scoop up the remains of the harvest—branches, limbs and scraps—and drop them into open-topped dump trucks headed for one of 10 plants run by Enviva, to be chopped, dried, pulverized and pressed into two-inch wood pellets.
You could burn those pellets in your backyard grill—if you could buy them, which you can’t. “We’re already sold out,” boasts John Keppler, Enviva’s cofounder and CEO. Earlier this year, the Bethesda, Maryland-based company locked in take-or-pay contracts to sell German and other European customers millions of tons of pellets over the next 15 years at upwards of $250 a ton, a record price that now yields gross margins of $43 a ton, up 14% over last year. The pellets fuel plants that might have previously relied on Russian coal or natural gas. In Europe, natural gas prices have jumped ten-fold in two years to the equivalent of $60 per thousand cubic feet (versus $8.25/mcf in America). “There’s never been a better time to be in the pellet business,” Keppler says.
While Vladimir Putin’s invasion of Ukraine has produced a windfall for Enviva, it’s no overnight success. Keppler, 50, has spent 15 years building it into the world’s largest producer of industrial grade pellets, with US$1 billion in annual sales and a current stock market cap of US$4.65 billion. The company still runs a net loss after depreciation and interest but expects EBITDA to more than double this year to US$250 million. Keppler is aiming to build ten more plants over the next five years, doubling current annual output of 6.2 million tons of pellets. “Every ton we produce is a ton of coal that stays in the ground,’’ he says.