A report recently published by the USDA Foreign Agriculture Service’s Global Agricultural Information Network provides an overview of the European Union’s biofuel, wood pellet market and biogas production. Without any doubts, the EU is the world’s largest wood pellet market.
Wood pellet market in the EU
While the EU produces about fifty percent of world production, EU demand represents about 75 percent of the market. Therefore, the EU is the world’s largest wood pellet market, with approximately 20.5 million metric tons of pellets consumed in 2015, with approximately 65 percent of that volume used for heat and 35 percent for power. It is expected that demand for pellets will increase up to 22.5 million metric tons in 2017.
Residential use for heating is a relatively stable market compared to industrial use for power generation. About 60 percent of the pellet demand is estimated to be for household use. However, the past three winters have been relatively mild and coupled with the low prices for fossil inputs, has tempered the use of pellets for residential heating. Medium-size use of pellets for energy use by industries or public buildings such as hospitals and swimming pools is generally less dependent on weather conditions.
Demand for industrial pellets depends primarily on EU Member State mandates and incentives, which accessibility in some Member States, such as the Netherlands, has been uncertain or put on hold. The major users of wood pellets in the EU are the United Kingdom, Italy, Denmark, Germany, Sweden, Belgium, France and Austria.
The table below shows main pellet consumers between 2010 and 2016.
Wood pellet market trade
Despite their significant domestic production, the Scandinavian countries, mainly Denmark and Sweden, partly depend on imports from the Baltic Region and Russia. The port restrictions in Scandinavia are favoring the Baltic Sea supply, which generally ship with smaller vessels than used in the Atlantic trade. In Denmark, one plant is located at a deep seaport and is supplied from North America. Improved flexibility in the infrastructure is expected to further increase the sourcing from North America. The market for pellets in Germany, Austria and lesser extent France and Italy is more isolated and depends mostly on the production in this region itself. Since 2008, EU demand for pellets has significantly outpaced domestic production.
This has resulted in increased imports from the United States. In 2015, U.S. exports totaled 4.3 MMT, representing a value of US$ 825 million. If trade flows remain consistent with current patterns, the United States has the potential to supply at least half of the import demand, which would represent a trade value of potentially over US$ 1 billion in 2020. Other significant exporters of pellets to the EU are Canada and Russia.
In response to the EU demand for industrial pellets, capacity has expanded in the supplying regions. These third country imports could, however, be affected by the implementation of sustainability requirements by the individual Member State governments, in particular by the Dutch, Danish and Belgian Governments.
You can find more about sustainable use of forest resources, on the example of USA here:
Source: USDA Foreign Agricultural Service. 2016. EU-28. Biofuels Annual. EU Biofuel Annual 2016.
Main photo credit: www.energyload.eu