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Wood pellet market is growing worldwide: up to 15% increase by 2023

Pellet market is growing worldwide: up to

According to various sources, wood pellets have become a competitive fuel option on the global scale due to their numerous advantages. Winning streaks for wood pellet energy sector are anticipated to run on within the next decade.

Background of wood pellet consumption development

Wood pellet production in the United States and in Europe began in the late 70s. The reason for that was an intense oil crisis of 1973, when the OAPEC countries proclaimed an oil embargo, resulting in several-fold oil prices rise. This so-called first oil shock was followed by the second one, in 1979; together the two crises influenced the global economy and brought about the need to develop more stable energy sources. Wood pellets drew people's attention as an adequate substitute for oil. One of the first steps to pellet promotion in Europe was construction of the pelletizing plant in Mora, Sweden. It was put into operation in 1982, but the production expenses appeared to be much higher than expected, so the plant immediately ran into problems, and eventually was closed in 1986. There were special technologies neither for pellet production, nor for their efficient usage. Thus, because of such difficulties and lack of experience for pellet manufacturing most of the pioneering plants then had hard times running their business.

As soon as the oil prices stabilized, wood pellets considerably rose in prices and became unprofitable to use. It wasn't until 90's, when wood pellets regained their popularity. The world community became aware of climate changes caused by the GHG emissions; so many countries introduced taxes on fossil fuels and started renewable energy promotion. Wood pellet production started to gain momentum due to its green image in the first place, and consequently it proved to be a very attractive type of renewable energy.

A significant increase in pellets development pace was observed after the European Union had announced their 2020 renewable energy targets. The enhanced demand in the EU member states, where total pellet share is currently about three quarters of the global consumption, influenced the volumes of pellet production not only in Europe but also in other leading pellet-manufacturing countries, such as Canada, the United State, Russia etc. Consequently, the global wood pellet production increased 15-fold in the period from 2001 till 2014.

Wood pellet advancement driving factors

Wood pellets have numerous advantages over other fuels, such as oil, natural gas, coal and alike. The first advantage to be mentioned is the environmental sustainability of pellets. This renewable energy source leaves a considerably lower carbon dioxide footprint, which is eventually neutralized by new plantings. This feature in currently a crucial one in choosing of the fuel type.

Wood pellets are convenient type of fuel both for industrial engines and also for domestic use in heating purposes. Low prices, as compared to other heating fuels are drawing more and more attention to them as to commodity for residential heating.

As solid fuel, pellets are quite convenient for transportation, though they are to be prevented from getting wet, and thus special covered railcars are to be applied for their transportation. Because of that the requirements for storage accommodations are strict.

Cost competitiveness is also a point of great importance in this matter. Pellets are more affordable than other fossil fuels and, furthermore, their prices proved to be stable at the times when oil price fluctuations are constantly observed.

The industrial needs for wood pellets are provided globally and the main difficulty here is transportation logistics, while pellet supplies for domestic heating are ensured locally, with distinct price seasonality.

However, wood pellets are not as energy dense as coal. These two fuel types correlate in the matter of prices, but the GHG emissions are of enormous difference.

Recently some companies have been announcing about new technologies of wood pellet manufacturing, such as torrefied wood pellet production. Another technology is being developed, so that to create water resistant or waterproof pellets. Such tendencies suggest promising prospects for future development.

Wood pellets forecasts for future

The global wood pellet market is constantly reviewed in order to promote its sustainable development. According to the latest market researchers, wood pellet industry is going to grow steadily. The analysts of Ukrainian Biofuel Portal suggest a production growth of 15 percent by 2023. They have carried out a detailed review of the market and gave their estimation of €20,073 million value of the wood pellet returns by 2023. The figures comply with the data reports, conducted by other companies, e.g. German Biofuel Portal The average figures amount up to 15 percent boosting for global pellet market and total value of more than $20 billion.

In terms of the largest producers, Canada, the United States and Europe are to remain their positions, while Russia, South Africa are expected to be the new large-scale wood pellet producers and exporters.

Reference information

Ukrainian Biofuel Portal is a specialized online resource on renewable energy sources, more specifically biomass and biofuel. The analysts of the portal provide consultations and researches on biofuel issues, collect information and compile bases of the companies involved in biofuel sector and also carry out projects on economic investment analysis and on biomass and biofuel logistics.

German Biofuel Portal is an international resource for bioenergy, biofuel and biomass, which provides information about the fresh product offers and the modern technology achievements. The portal aims at providing people with an opportunity to get high quality energy both for heating purposes and industrial consumption.

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Wood pellet market is growing worldwide: up to 15% increase by 2023


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