Creative Destruction – Carbon Neutral fuel – Wood Pellets

Creative Destruction – Carbon Neutral fuel – Wood Pellets

Everyone uses fuel. Gas, oil, electricity or even wood.

In the UK institutions and organisations such as The Centre for Alternative Technology have been researching alternative fuels that take less resource and cause less harm to the environment for many years.

The uptake of alternatives has been slow despite government incentives such as grants, support in the form of government bodies, legislation, pressure on government organisations to lead the way, and interest from the media.

During 2007 there has been some increased uptake, particularly of solar power. Thoughts have also been that the wood pellet market would take off, but what statistics show is that this has been slow, particularly amongst consumers.

Factors that suggest that wood pellets will increase eventually are based on the fuel supply, prices of alternatives, and quality of solutions available.

There are a number of organisations who now produce consistently good quality wood pellets. There are a number more that are getting ready to enter the market. These tend to be established businesses, or organisations with support.

Gas and oil prices have increased, meaning that it is possible to also consider the wood pellet market to be cost efficient now and in the future as well as providing a sustainable and carbon neutral source of fuel.

As with any new or emerging market the question of creative destruction arises, and with it the “entrepreneur” and their role.

Having spent some time doing research this year I can make some observations.

There are one or two firms that are emerging with good solutions, good service, and now a growing income. This can give the consumer some confidence.

However there are many more that continue to provide either an “expensive” solution, or simply cannot supply the required service. This makes it difficult for the consumer to choose. (Hence if you are interested in a stove or a boiler it really is best to seek advice).

Therefore these early market entrants spoil (as in rugby) the market and its chances for growth.

At some stage there will be a shake out, larger players in the heating market may enter, but at the moment there is not enough “information” from the market – or the entrepreneurs. This could be:

• It has to be simple for the consumer to purchase and install.
• They must feel confident that the company can service the stoves in the future.
• The fuel must be readily available.
• The cost of installation and running should be comparable to at least oil and preferably gas.
• The environmental benefits (and therefore the government induced benefits for installing in an organisation or home) need to be clear.

For some reason government bodies do provide accurate and sometimes good information. They don't however make the option attractive for the consumer. This is the job of the companies concerned.

For wood pellets to emerge as a real alternative one of the key things that is needed is a company (or companies) that are able to present this to the market place effectively. This may then see the creative destruction process in action, and the result would have an impact on society.

As mentioned above there are a couple of projects that I have been involved with in this space over the last year. I will write later this week and give some more “micro” examples.