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CN growing “green” wood pellet traffic at double-digit rates

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CN, North America's largest mover of forest products, is on track to haul more than 800,000 tons of wood pellets this year and sees more opportunities in the future for this "green" source of heating energy.

"Since 2005, we have
experienced a 16 per cent compounded annual growth in our wood pellet traffic,
and we see growing potential for this business in domestic and international
markets," said James Foote, executive vice-president, sales and marketing.

"Wood pellets are a
renewable resource, right in our backyard," Foote added. "Our network
has direct access to wood pellet production areas and reaches key consumption
markets in eastern Canada and the northeastern U.S., as well as key export
terminals on the Pacific, Atlantic and Gulf coasts."

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.

Wood pellets, made from
waste wood such as wood shavings and sawdust, are carbon neutral and do not
contribute to global warming because they emit the lowest greenhouses gases of
any fuel burned. 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.

Ontario Power Generation —
one of North America’s largest producers of electricity — is studying
conversion of some coal-fired generating units to agricultural and forest-based
biomass. OPG is targeting 2012 for the first conversion – the Atikokan station
in northwestern Ontario. CN serves the plant.

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. Facilities are also opening on CN lines in Wisconsin and Mississippi
this year, and the first major Ontario producers are expected to start
production in 2010.

Granules LG, located in
Saint-Felicien in Quebec’s Lac Saint-Jean region, is building a rail connection
into its plant, which will allow direct rail loading instead of trucking to a
nearby reload facility. Direct access to CN will lower the producer’s
transportation costs and improve its competitiveness in the market.

Pinnacle Pellet Inc.
operates five plants in British Columbia, all located on CN’s network. CN’s
network reach enables this producer to ship product for export via the ports of
Prince Rupert and Vancouver, and to reach domestic markets across Canada, the
U.S. Midwest and northeast.

Wood pellets are one of
CN’s expanding sustainable energy business segments, which include biodiesel,
ethanol and wind turbine components.

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