Current trends of the Wood Pellet Market
Burning wood pellets for heat and power has become common across central and northern Europe and yields considerable environmental, and economic, benefits. Wood pellets are a clean, CO2-neutral and convenient fuel, mostly produced from sawdust and wood shavings, compressed under high pressure using no glue or other additives. They are cylindrical in shape and usually 6-10 mm in diameter and 10-30 mm in length. As a highly standardized and high-density fuel, pellets allow cost-efficient transportation and automatic operation for heat and power, from private homes to large-scale plants.
With a rapidly growing share of the market, they are a key technology for increasing biomass utilization in Europe and beyond, especially in the heating sector. Pellets are also an excellent way of using local resources, a concrete contribution to CO2 reduction. Developments in the European pellet market are once again very positive. Growth of about 25%-30% is expected in countries such as in Germany and Austria during 2009.
The European Policy Context
The policy framework in the European Union is supportive to the market development of biomass, both in the heating and electricity sector, as it contributes to climate and environment objectives, reduces import dependency and supports local economies.
The 27 Member States of the European Union have set themselves ambitious policy objectives to increase the share of renewable energy sources in electricity and heat production, with a target for 21% electricity and 20% heat from renewables in the total energy mix by 2020.
In December 2008, a new European Directive on the promotion of renewable energy was adopted by the European Parliament. The commitment is to achieve at least a 20% share from renewables in the EU's gross final energy consumption in 2020. This Directive also specifies targets for each Member State - varying between 10% and 49%.
Other important policy initiatives are the European Biomass Action Plan - COM(2005) 628 final - and the planned recast of the Directive on the energy performance of buildings.
Biomass has a strategic role to play in achieving EU renewables targets, and wood pellets are key to making this happen.
Production and Consumption of Wood Pellets
In the last few years, pellet production facilities have boomed all over the world, especially in Europe and North America. Important pellet exporters are Canada and Russia, while large pellet importers are Denmark, Italy, Belgium and the Netherlands.
The production capacity in all EU 27 states is estimated at about 9 million tonnes (2007). Globally it might be as much as 12-14 million tonnes capacity.
Leading pellet producing countries in the EU are Sweden (1.7 million tonnes), Germany (900,000 tonnes) and Austria (800,000 tonnes). Both Sweden and Austria have been leading pellet countries since the earliest days of market development in Europe, in the 1990s. Growing production capacities can also be found, for example, in France, Spain, Latvia, Estonia and Poland. Meanwhile, Russia has significantly increased its production capacities - from 50,000 tonnes in 2005 to 550,000 tonnes in 2007 - nearly all of it for export. Canada's plants produced about 1.3 million tonnes in 2008.
In terms of pellet consumption, Sweden, Germany and Austria lead the way in Europe, closely followed by France, where rapid market development has taken place in recent years. Italy has become one of the most important pellet consumers due to the increasing number of installed pellet stoves (about 800,000 stoves to date). Total annual pellet consumption in Europe presently amounts to about 6 million tonnes. On the North American market, about 2.3 million tonnes of pellets were consumed in 2008, with about 2 million tonnes of this in the USA.
