At The European Pellets Conference (The European Pellets Conference), which took place on 6 April 2022 in Wels, Upper Austria (Wels, Upper Austria), as well as online, over 650 participants from 60 countries were shown the latest developments in the market, technology, and policy. Speakers and attendees discussed optimal positioning opportunities during the energy transition, as well as technical production capabilities and financing 'tricks'.
Following speeches by the Mayor of Wels, Dr. Andreas Rabl (Andreas Rabl), and Dr. Gerhard Dell (Gerhard Dell) from the OÖ Energiesparverband (Upper Austrian Energy Savings Association), Dr. Johannes Baur (Johannes Baur) explained the ambitious European Commission objectives formulated in the “Fit for 55” package to those present and online viewers. Among other things, the revised version of the Renewable Energy Directive (RED III) is currently in the development stage and will likely provide for a 40% share of renewable energy in total consumption by 2030, instead of the current 32%. Thus, the role of renewable energy sources will continue to grow, and bioenergy already plays a key role in this area with a 60% share. Wood as an energy source accounts for 70% of that. The advantages of regional, weather-independent, and reliable production are obvious, but criticism must be refuted. Biomass, and especially wood, only has a future if the public accepts pellets and other similar products. To do this, it is important to emphasise the advantages of these products, as well as to refute potential shortcomings, for example by using very high standards for sustainability and emission certificates.
Irene di Padua (Irene di Padua) from the European Biomass Association (Bioenergy Europe) presented updates on European pellet markets. She informed that in Europe, the main consumption of biomass for energy production occurs in private households, while this consumption in industry is currently at 25%. In private households, however, the share of bioenergy in the context of renewable energy sources is 84% – lower than in industry (99%). This is in addition to the huge growth potential in the industrial sector. Furthermore, there is great potential for replacement equipment for old heating systems almost everywhere in Europe, but especially in Poland, Germany, Austria, the Netherlands, and Greece.
It is likely that global pellet production will exceed the 40 million tonne mark by 2023. Recently, the EU, South America, and Asia have been the main drivers. European production volume in 2020 was 23 million tonnes, of which 18 million tonnes were in the EU.
The largest producers were Germany (+9.9% to 3.1 million tonnes), Russia (+7.3% to 2.2 million tonnes), Latvia (+12% to 1.8 million tonnes), France (+6.3% to 1.7 million tonnes), and Austria (+6.9% to 1.5 million tonnes).
In 2020, pellet consumption in Europe was again 30.1 million tonnes, of which 19.3 million tonnes were in the EU. Of the EU's pellet consumption, 61% was used in industry, 31% in private households, and 8% for commercial use. The main consumer markets were the United Kingdom (+3.3% to 9.4 million tonnes), Italy (+0.1% to 3.4 million tonnes), Denmark (+2.9% to 2.9 million tonnes), Germany (+1.3% to 2.3 million tonnes), and the Netherlands (+113.6% to 2.2 million tonnes). Although in the United Kingdom and the Netherlands the majority of consumption occurs in the industrial sector, in Italy the most is consumed by private households. In Denmark, consumption is largely determined by district heating stations.
The European industry consumed 14.3 million tonnes of pellets in 2020, with the EU accounting for 5.5 million tonnes. The main consumers were the United Kingdom (+3.6% to 8.7 million tonnes), the Netherlands (+150% to 2 million tonnes), Denmark (+1.8% to 2 million tonnes), Belgium (+8% to 0.9 million tonnes), and Sweden (+31% to 0.4 million tonnes).
The new type of procurement for pellet heating in 2021 also varied across different countries. In 2021, stove use dominated in France, Spain, and Belgium and gained huge popularity. In Germany, France, and Austria, boiler sales volumes doubled in certain cases.
Di Padua reported: “Although Europe imports a relatively small volume of biomass (4.9 million tonnes, i.e., 1% of net energy imports), it must nevertheless focus more on local sources and diversify the absolutely necessary import sources as much as possible, because it is impossible to predict how supplies, for example, will continue in the medium to long term from Russia, from where—in addition to Canada, the USA, and Brazil—a sufficiently large volume of pellets arrives.”
Demand is no longer an uncertain factor, but the political framework conditions can be considered one
In the expert group formed afterwards, Thomas Meth (Thomas Meth) from the company Enviva emphasised that the demand situation can no longer be considered an element of uncertainty. After all, the global industry's desire to transition to renewable energy sources is growing. Accordingly, his company plans to expand production to more than 8 million tonnes per year. In Enviva's export business, half of the contracts are currently concluded with Asia and half with Europe. However, most of the additional capacity will likely end up in Europe. It is important to use everything that can be mobilised in the long term. And Meth also emphasised how important communication is—for example, only wood residues end up in pellets, whereas the creation of solar energy parks in some parts of the world increasingly causes deforestation.
Stefan Ortner (Stefan Ortner) from the company ÖkoFEN added how important emission management is, where innovations are still needed to increase public acceptance. It is also crucial to be a good partner to installers—in other words, to offer simple systems and reliable cooperation.
Michael Hjorth Christensen (Michael Hjorth Christensen) from the company CM Biomass considered that large investments in production capacity are still needed and that they must become more visible—also to inform the public about security of supply.
Christiane Egger (Christiane Egger) from the OÖ Energiesparverband (Upper Austrian Energy Savings Association) also called for an increase in speed and capacity, given the large number of old heating systems that will be replaced in the coming years.
Francisco Puente Salve (Francisco Puente Salve) from the company Escan Energy Consulting drew attention to the security of raw material supply, which should perhaps go hand in hand with increasing production volumes in the European timber industry to compensate for the lack of imports from Russia in the short and medium term. However, both require as stable a political framework as possible. Nevertheless, regarding the second of the two factors mentioned, it is also important to seek dialogue ourselves and to demonstrate transparency and reliability, as well as to be able to provide answers to important questions and ensure high, verifiable standards. And, speaking of the shortage of qualified personnel, only communication can help to actively shape the industry's image—the potential is there. In conclusion, C. Egger called for joining forces to ensure the joint growth and a unified voice of the entire industry.
The dynamically growing Japanese market is already seeing positive examples of political stimulus. Pellet imports from the USA are guaranteed there for several years thanks to an energy offensive that strengthens the willingness to invest. As Emanuel Wagner (Emanuel Wagner) pointed out, in the US market itself, the Biomass Thermal Energy Council (BTEC) has, after years of work, finally managed to secure larger tax credits for pellet boilers—if not for industry yet, then at least for the private sector so far. Afonso Bertucci (Afonso Bertucci) from the company Braspel Bioenergia also reported on a project that is exploring the use of pellets in the cement industry and promised additional production capacity from 2024—potentially for export as well.
In Germany, Martin Bentele from the German Energy Wood and Pellet Association (DEPV) believes that this year's security of supply is questionable, given the rapid increase in demand. In the future, imports should increase overall. Bentele also emphasised that the argument about price advantages compared to other energy sources has so far favoured pellets. In principle, however, the price of pellets must be set as high as possible so that additional capacity pays off for producers. In order to be able to continue to meet demand—especially in the industrial sector—he is also considering expanding production and importing lower-quality pellets.