As a full time tree guy, I've had a look at a lot of different ways of using trees, chip, sawdust and other waste products. I've been involved with some of the 'transition town' movements also, and initiatives for reducing waste and increasing efficiency. The short end of the stick for developed countries is that we are cursed by having too many blessings, so this sort of stuff doesn't work for us in most cases.
I've had a go at a few types of the pellets. Both the smaller round/square pellets, and the larger 'hole in the middle' type bricks for rocket stoves. This sort of technology is a godsend for developing nations who have no fossil fuels, no trees, endless amounts of garbage, and a labor cost of a bowl of rice a day. It solves so many problems simultaneously. It gets rid of the waste, while providing cheap cooking fuel and most people can make it at home with basic wooden presses. Smoke/CO2 etc has been a big health hazzard for people cooking at home with twigs, but the rocket stove and fuels have gone a long way to improving people's lives. People can put time into geting the right mix of waste materials and binders to make it work. For developed nations, we have an excess of cheap fuels like propane at the turn of a knob, electricity, efficient waste collection and a high cost of labour. Do you want to spend an hour or two to cook some pasta, when you could get the same result for about 10c worth of energy in?
Pellets for heating have been very hit and miss, but mostly miss. There are a lot of machines available to buy that produce them, some can produce commercial quantities and are reasonably cheap to get into. You do need the right ingredients, and the right combination of a slasher/crusher/binder/crusher depending on what your ingredients are. Some of the commercial machines combine this process in a single machine. There are a lot of websites out there with successful formulas if you are interested. It needs experimentation, but no matter how good it gets it still isn't very good. By the time you add in labour and transport it also isn't very cheap. Sells well to environmentalists though. We have a couple bags for sale at gas stations next to the firewood for people who want that warm fuzzy feeling in aus. The bags sit there a long time. You can make a half decent product with the right input - but that means mostly good quality dry wood. With the more basic stuff like waste paper products, sawdust etc, the best you can say is that it's better than throwing it away. But not by much.
We had a big market for woodchip as a heating/fuel source in australia a few years back. We were exporting a lot to Japan and some other countries. There was a lot of investment at the time, and experimentation to use it as a clean source for generating heat and electricity at commercial level. It all came to nought, everyone who invested lost money, and the market is gone. There's something similar going on in the UK recently with commercial wood chip boilers for hotels and similar which provide heating, hot water and some electricity, and are self feeding from a large hopper. Most of what I've read has been a failure though, so it seems to be headed the same way.
The trouble is that it's a difficult product to regulate/deal with. You can go 2 ways as a supplier of chip; buy whole logs, or receive chip. Buying whole logs gives you good quality control, but it's expensive. Plus, you then have to chip them which adds further to the cost. You then have to dry them, which is complicated and involves things like storage, revolving air floors (more cost) or other quick drying methods (more cost). Why not just supply it as wood? Chipping a log doesnt make it magically have more BTU's. If you are receiving chip for free, it's impossible to control what you are receiving. Chip is no different than firewood, things you wouldn't want to burn as wood, won't burn any better as chip. But guys are going to bring you every conceivable bit of crap they can. Then you still need to dry, store and deliver. The end product is low quality, and inconsistent in burn rate, BTUs, moisture and chip size.... so it doesn't do too well in the boilers. It doesn't help that the chip suppliers, much like unscrupulous firewood sellers, also supply chip at a higher moisture content, and material of lower BTU than specified, but still charge the same per cubic yard. End users get sick of it quick, and abandon their new troublesome gadget to go back to something simple and easy. The buyers are rich people/greenies mostly, and they don't have time to fuss with stuff.
Shaun