Pair European space heating markets, sweating it out for the third consecutive season, with last season’s low fossil fuel prices. Add UK and Benelux power utilities facing continued policy “ifs, buts and maybes” egged on by voracious detractors hounding the industry back into the woods. Little wonder if stakeholders are feeling under the weather.
All was not pellet gloom and doom at the 5th annual Argus Biomass conference. Over 300 delegates with plenty of “hangman’s humour” to boot made their way to London, UK at the beginning of April to try and gleam some positive news. According to figures presented by Laura Tovey-Fall, Editor, Argus Biomass Markets, the EU consumed almost 22 million tonnes 2015 at a 49:51 split between industrial and residential. This is triple the 7 million tonnes used elsewhere 2015, illustrating the influence the EU market has.
– Growth in the EU heating market continued in 2015 but not to the levels forecasted due to mild winter, low oil prices and fewer stove installations, she said.
In her outlook Tovey-Fall noted that South Korea tendered for more to be delivered in Q1 this year compared to 2015 and that the Japanese demand seems set to grow. Furthermore she pointed out anticipated short-term woodchip demand growth in Europe to meet 1.3 GW of new capacity by end of 2018.
Bearish white outlook
Some, like Joao Rocha Paris, CEO of Portugal-based pellet producer Enerpar, were bracing in anticipation that the gloom will persist and get worse before getting better in 2018 at the earliest.
– We’re facing a dramatic situation right now in terms of consumption which is dropping drastically and will continue to do so until mid-2017 at least, said Paris during the producer panel discussion on challenges facing the industry. He cited announced UK utility closures, Dutch SDE+ co-firing tender delays, EU investigations into UK subsidy policy and uncertainties revolving around German Pellets Langerlo project.
Sustainability was another issue raised. Raul Kirjanen, CEO, Graanul Invest, Europe’s largest pellet producer, emphasised its fundamental importance and that part of it is local impact positives such as jobs that need to be promoted.
– It is the cornerstone of the wood pellet industry, without focus on sustainability we risk extinction, Kirjanen cautioned.
He added that ensuring sustainability “must be the common goal for market participants” and that “much more understanding and cooperation” is needed. To that end the Sustainable Biomass Partnership (SBP) is a commendable initiative though its new cost sharing structure was criticised by some producers for not being an April fool’s joke. Gaining momentum as a single sustainability criteria system for pan-European utilities, the SBP also drew fire for delays from approval to receiving the certificate. More worrying is that the Netherlands has already indicated that SBP will not be enough, raising concerns that varying national requirements will fragment the market, limit trade and raise costs.
Bullish black advances
In contrast proponents of so-called black pellets were upbeat. Thomas Balon, CTO for CEG revealed plans for a 200 000 tonne per annum torrefaction plant to be built ”somewhere in Scandinavia”. Håkan Knappskog, CEO for Norway-based white pellet producer Pemco Energi presented its ”Arbracore” black pellet brand, confirmed its 200 000 tonne per annum plant in Follum and revealed it had secured six licensees for its technology.