Pellet demand likely to grow by 30-40%

Friday 16 Apr 2021

 
The forecasted growth in wood pellet production in Europe will increase competition for wood fibre and require new feedstock sources

Europe’s pellet industry is the largest in the world and is expected to continue to grow strongly, at least until 2025. The key factors driving this increase include:

- EU has ambitious and rising targets for renewable energy supply,
- Biomass will play an important role in meeting those targets,
- Pellets offer several advantages over other forms of biomass in many applications.

Pellet demand is likely to grow by 30-40% over the next five years, and depending on how imports develop, European production might need to increase by up to ten million tons. Europe represents about 75% of global pellet demand and is more diverse in its pellet usage than are other regions. In Europe pellets are used for residential heating (40%), power plants (36%), commercial heating (14%), and combined heat and power plants (10%).

Demand is strong in both the industrial and residential sectors and is likely to continue even beyond 2025. According to a just-released study, European Wood Pellets – Where will the raw-material come from? the rise in wood pellet consumption will put significant pressure on raw material markets in Europe and require new sources such as forest residues, recovered wood, and energy crops. Raw material prices and availability vary widely by geography but increased competition for wood fibre, including sawmill by-products, will impact pulp and wood panel industries throughout Europe.

The most crucial feedstock for the wood pellet sector is currently sawmill residues (85% of the mix), roundwood (13%), and recovered wood (2%). This mix is likely to change in the coming years with the forecasted expansion of the wood pellet industry.

Although wood residues will remain an important feedstock, especially in northern and western Europe, they will not be sufficient to meet the future fibre demand from the growing wood pellet sector. New fibre sources are needed, and the greatest potential for increased supply is forest residues and energy crops.

Wood Resources International, info@WoodPrices.com

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