Wood Pellet Market

Contents:
- Worlds Feedstock - Pellet Production Stats - EU Policies - European Pellet Stats - European Markets - Pellet Price Index - Nations Targets on NREAPs - European Pellet Market Trend - Conclusions - Biography

22-Feb-12

Worlds Feedstock Availability

World wood pellet production has increased by about 33% pa over the past five years

The EU's Renewable Energy Directive (The 20-20-20 targets)

reduce EU greenhouse gas emissions by at least 20%compared to 1990 levels; i.e. unilaterally extending the EU's 8% Kyoto obligation 20% of the EU's final energy consumption to come from renewable sources by 2020 reduce primary energy use by 20% compared with projected levels; to be achieved by improving energy efficiency

Balance of Pellet Volumes - 2009

European Pellet Volumes - 2009

Biggest Producers

Germany (1.6 M); Sweden (1.6 M); Italy (750 K); Russia (750 K); Austria (630 K); Latvia (550 K)

Biggest Consumers Sweden (2.1 M); Italy (1.1 M); Netherlands (950 K); Germany (930 K); Denmark (850 K); Belgium (700 K)
Biggest Exporters Germany (600 K); Latvia (450 K); Russia (400 K); Austria, Portugal & Estonia (350 K)

Balance of Pellet Volumes - 2010

European Pellet Data (2010) Over 650 Plants in Europe, 480 > 10.000 mt per year
More than 10 M mt produced out of a 12-14 M mt installed capacity More than 15 M mt consumed (9.2 M on the industrial market), main imports from Canada, US and Oceania Represents a modest 0.2 % of Gross Energy Consumption (75 EJ level in 2008) in Europe Room for growth!

European Pellet Volumes - 2011 forecast

Biggest Producers

Germany (2 M); Sweden (1.8 M); Russia (1.1 M); Italy (900 K); Austria (800 K); Portugal (600 K)

Biggest Consumers Sweden (2.1 M); Italy (1.3 M); Netherlands (1.3 M); Germany (1 M); Denmark (1 M ); Belgium (900 K)

Biggest Exporters Russia (800 K); Germany (600 K); Portugal (500 K); Latvia & Austria (400 K); Estonia (300 K)

Main Market Types per Country

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Major European growth Market for Biomass Heat & Power

Biomass heating France (mainly domestic) Germany (mainly domestic) Italy UK Sweden Biomass power Germany (mainly domestic) UK Italy Sweden Netherlands Poland (mainly domestic)

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CIF prices of bulk pellet for large scale power production and for medium scale district heating & CHP

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The UK's 2020 renewable energy target

Meeting the UK's 15% Renewable Energy Target...
TWh All Energy Electricity Heat Transport Total Final Energy Consumption 387 711 598 1,695 2008 Renewable Energy % renewable 5.7% 1.0% 1.5% 2.3% All Energy 2020 Renewable Energy % renewable 30% 12% 8% 15% % pa growth of renewables 2008-20

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7 9 39

386 599 605 1,590

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72 49 239

15% 21% 15% 16%

The burden of meeting the UK's 15% renewable energy target will fall most heavily on electricity. By 2020, about 30% of UK electricity generation will need to come from renewable sources, up from 5.7% in 2008 and 8.5% in the first half of 2009
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How countries plan to meet their targets National Renewable Energy Action Plans (NREAPs)
Electricity generated from solid biomass - 2010 & 2020

Note: National biomass electricity targets have been expressed in the implied feedstock requirement expressed in million tonnes of dry wood equivalent. We have assumed an average 30% conversion efficiency.

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How countries plan to meet their targets National Renewable Energy Action Plans (NREAPs) Heating & cooling from biomass - 2010 & 2020

Note: Biomass heat demand has been converted from tonnes of oil equivalent (toe) to tonnes of dry wood equivalent, assuming that there is 0.45 toe/tonne of dry wood.

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European Pellet Market Trend

Favourable legislation for continuous growth of consumption particularly UK; Benelux; Scandinavia Announced fade out of existing nuclear plants: Belgium, Switzerland and Germany (? - to be confirmed)

Financial Sector crisis + Sharp rise in Raw Materials + Rise in Mwe Costs + Steady (but slow) Pellet Price increase = new projects stalled

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European Pellet Market Trend (2)

UK only will need about 15 M mt per year in 2015 and 24 M mt per year in 2020. If Germany moves ahead with no-nuclear plan, demand and prices in Europe will increase about 40 and 30%, respectively.
Consumer Market Vs Industrial Market sales strategy: more SPOT vessels; shorter term large volume contracts, appearance of medium-sized bagged Pellets distributors/traders;

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European Pellet Market Trend (3)

Russia & Portugal as new players in the export for industrial market Baltics to suffer from high cost of Raw Materials gold rush from Utilities to US, Canada & Brasil for security of long term, high Volume supplies IMPORTS NEEDED !!!

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CONCLUSIONS EU needs pellets!

EU imports of wood pellet from non-EU countries Imports supply a growing proportion of EU wood pellet consumption - about 25% in 2010

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CONCLUSIONS (2) US & Canada will supply them!

1 million t/y of new wood pellet capacity has been added in Canada in 2010-2011; more 1 million t/y expected in 2012-2013 more than 2.4 million t/y of new wood pellet capacity in the USA by end-2012

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Biography
The European Wood Pellet Market: current status and prospects for 2020
Argus Media

Sikkema et Al (Feb 2011)

Argus biomass Markets (Oct 2011)

Wood Pellet Market opportunities: production & brokerage activities in Europe, US, Canada & Brazil
Developments in the global market for Wood Pellets

Tiago Andrade (Sept 2011)

Hawkins & Wright (Nov 2011)

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