Global Market for Wood Pellets

and Price Development

15. November 2012
Danish Technological Institute
In cooperation with
IEA - Bioenergy Task 40
Outline
IEA Bioenergy
IEA Task 40
Market for wood pellets
Denmark
International
Price development for wood pellets
Price Indices
Factors influencing Price
Projection of wood pellet market and price development
Until 2020
Until 2035/2050
IEA Bioenergy
International Energy Agency
Intergovernmental organization
Policy advisor for member and non-member countries
Organized in 12 Sub tasks
Biomass Resources
- Conventional Forestry
- Short rotation forestry
- Agricultural crops and residues
- Oil-bearing plants
- Municipal solid waste
- Industrial waste
Supply Systems
- Harvesting
- Collection
- Handling
- Storage
Conversion
- Biochemical
- Thermochemical
- Physical & Chemical
processes
Integrating research themes across the value chain:
- Environmental and economic sustainability
- System studies
- Fuel standards
IEA Bioenergy
Tasks of IEA Bioenergy
Task 29 : Socio-Economic Drivers in Implementing Bioenergy Projects
Task 32 : Biomass Combustion and Co-firing
Task 33 : Thermal Gasification of Biomass
Task 34 : Pyrolysis of Biomass
Task 36 : Integrating Energy Recovery into Solid Waste Management
Task 37 : Energy from Biogas
Task 38 : Greenhouse Gas Balances of Biomass and Bioenergy Systems
Task 39 : Commercializing Liquid Biofuels from Biomass
Task 40 : Sustainable International Bioenergy Trade - Securing Supply and Demand
Task 41 : Project 3 - Joint project with the Advanced Motor Fuels Implementing Agreement
Task 42 : Biorefineries: Co-production of Fuels, Chemicals, Power and Materials from Biomass
Task 43 : Biomass Feedstocks for Energy Markets
IEA Bioenergy : Task 40
Sustainable International Bioenergy Trade
Contribution to:
Development of sustainable biomass markets
Short and long-term perspective
Regional to global perspective
Vision:
Task will develop into a real commodity market
Secure of sustainable demand and supply
14 Member countries (EU, North America, Asia)
Denmark: Teknologisk Institut & Verdo
Pellet market
Denmark
Calculated based on data from Danish Energy Agency, Energy statistics 2011.
17.5 GJ / t wood pellets
Pellet market
Denmark
Pellet production in DK mainly for the domestic market
Major Customers: private households, small scale
application
2.4 PJ (ca. 140.000 tons)
Pellet import to DK from Baltics, Russia, USA, Canada,
Nordics, EU
Major Customers: CHP plants, District heating
27.7 PJ (ca. 1.600.000 tons)
Total pellet consumption: 30.1 PJ (ca. 1.740.000 tons)
Pellet market
Denmark
Danish Energy Agency: Energy statistics 2011
Total consumption: 30.1 PJ (ca. 1.740.000 tons)
Import: 27.7 PJ (1.600.000 tons)
Production in DK: 2.4 PJ (140.000 tons)
Pellet consumption Denmark 2011
Sectors in %
Global Pellet production
International
Pellet market
P. Lamers et al. / Renewable and Sustainable Energy Reviews 16 (2012) 3176-3199
Industrial pellets
Residential pellets
European market
Oversea (US, Canada)
Data from 2010
Global trade of pellets
Streams in kilo tons
Pellet market
Import into the EU in 2010
Wood pellet import into the EU in tons
Data from Eurostat
Price and marked development
Current prices in Denmark
Price Indices and trade
Factors affecting the pellet price and marked barriers
Projection of wood pellet market and prices
Until 2020
2020-2050
Price and marked development
Current price for wood pellets in Denmark
Wood pellets: 235.6 DKK/MWh (33.0 EUR/MWh) ca. 160 EUR /ton
Large scale consumers (CHPs) get better prices (long term contracts and
buy large amounts)
Price Indices
Industrial wood pellets - APX ENDEX (CIF ARA)
Price in Rotterdam port: (CIF Cost-insurance-freigth)
131.76 EUR/t (27.92 EUR/MWh) (OCT-2012)
Index PIX (Pellet Nordic Index) (CIF Baltic/N.Sea )
Price in Nordic ports: (CIF Cost-insurance-freigth)
144 EUR/t (30,55 EUR/MWh) (SEPT-2012)
Danish District Heating Association. "Heating fuel price statistics", Report No. 164, 2nd quarter 2011.
Price and marked development
Price and marked development
Examples of factors affecting the wood pellet market and price
Demand
Political decisions significant impact on demand
Taxation and subsidies
Regulations and law
Renewable Energy Action plans (EU-27)
National Initiatives:
Renewable Energy Obligation Certificates (UK)
i.e. 40 GBP/t CO
2
in UK (boost of pellet firing
expected 20 million tons/y for 2017, UK only)
Technological developments
Alternative technologies for renewable energy
Price and marked development
Example of how political decision can influence the demand
Renewable Energy Obligation Certificates (UK)
i.e. 40 GBP/t CO
2
in UK (boost of pellet firing expected 20 million tons/y
for 2017, UK only)
Global demand
2017: UK demand only
Hawkins Wright, USIPA 2
nd
annual pellets conference, New Orleans 2012
Price and marked development
Examples of factors affecting the wood pellet market and price
Supply
Alternative use of raw materials (e.g. paper industry)
Potential limits for sustainable production of biomass
Competitive use of biomass and land
Indirect land use change (ILUC) (sustainability issue)
Global Economy
Food price
Ecological aspects
Price and marked development
Potential Barriers affecting the supply
Large investments
Feedstock harvest and collection
Pellet mill
Infrastructure
Storage facilities (silo)
Power plant modification (mill, conveyors, burners etc)
Logistics (oversea transport, storage and handling)
Feedstock collection (difficult to access, long distance, bulk)
Oversea transport (shipping cost)
Storage (pellet silos)
Handling (dust, risk of fire)
Price and marked development
Demand forecast 2020
M
i
l
l
i
o
n

t
o
n
s
IEA Bioenergy, M. Junginger
Price and marked development
Demand forecast 2020
Source: Pyry, Management Consulting, 2011
Price and marked development
Production forecast 2020
Source: Pyry, Management Consulting, 2011
Price and marked development
Price forecast
Data from: APX-ENDEX, November 2012
Price and marked development
Price forecast
New Technologies will affect the market volume and price
for wood pellets
Torrefaction technology black pellets
Demand is likely to increase a lot over the coming years
National Renewable Energy Action plans EU-27
National initiatives (i.e. Japan, South Korea, UK)
Overcapacity in pellet production might turn into shortage?
High sustainability standards taking into consideration
indirect land use change may increase the price for biomass
Price and marked development
Demand forecast until 2050
Use of biomass in heat sector is expected to grow
CHP will become more important for supplying heat (the
demand may triple before 2020)
Importance of residential sector may decline while industry
sector may increase
Opportunities exist in public sector
Solid biomass expected to become most important energy
carrier
EU-project: Biomass Futures
Price and marked development
Demand forecast until 2050
Electricity sector: After 2025 a decline in bio-electricity
production is seen. Main reasons: Competition with other
options for energy production
Biofuels: 2G technologies will play an important role in 2030,
but depends a lot on 1G imports
Increasing pellet consumption Asia and Americas
Market growth is sure but high uncertainty of biomass
availability and prices
EU-project: Biomass Futures
Thank you for your attention!
For more information please contact:
Wolfgang Stelte
Consultant, Ph.D.
Biomass & Bioenergy
Danish Technological Institute
Energy and Climate
Renewable Energy and Transport
Mobile: +45 7220 1072
wst@teknologisk.dk
Gregersensvej 2
DK- 2630 Taastrup
Denmark
Tel. + 45 7220
2000
Fax + 45 7220
2019
www.teknologisk.d
k