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Fossil fuel reliance stalls EU pellet market growth

Fossil fuel reliance stalls EU pellet market growth
The EU consumes only slightly more wood pellets than it produces; in 2023 it produced 20.7 million tonnes and consumed 21.9 million tonnes. Although Russia was a significant exporter of wood pellets to Europe, following the sanctions imposed in 2022, Russian imports have stopped, and the European wood pellet consumers have found alternative sources of supply, either through increased local production or imports from primarily the United States (US) and Brazil (graphic courtesy Bioenergy Europe).

Bioenergy Europe has released its 2024 Statistical Report Pellets and accompanying Policy Brief. The report analyses the development of the world’s pellet market over the past year with a deep dive into the European market. It finds that higher input prices, falling industrial demand, and a record-warm winter are challenges facing the European pellet industry.

After two remarkable years, marked by record consumption and production, as well as record sales of pellet-based appliances, the global pellet industry in 2023 has been facing significant challenges.

The production and consumption of pellets stagnated worldwide, breaking a two-decade-long trend of uninterrupted growth.

After years of continued growth, 2023 marks the first instance in which the global pellet market underwent a slight contraction. These are not happy news for the sector, said Pablo Rodero, President of the European Pellet Council (EPC) adding that the report “helps market actors understand the underlying causes, allowing them to adapt.”

Europe remains the largest producer and consumer

An A-frame pellets storage hall.

Despite slight contractions in the market, the European Union (EU) remains the world’s largest pellet producer and consumer. It produces 44 percent of the world’s pellets and consumes 50 percent.

The report finds that the challenges facing the European pellet industry are threefold: higher input prices, falling industrial demand, and a record-warm winter.

Electricity, a key cost for pellet production, remains more expensive following the energy crisis leading to elevated pellet prices.

Higher pellet prices and a volatile energy market have caused power-only producers to significantly scale back on production.

Finally, record-high temperatures during the winter reduced the need for heating, decreasing the demand for pellets.

Growth in residential- and commercial heating

Loading pallets of bagged ENplus-certified pellets at an Austrian pellet plant.

Despite the challenges, the use of pellets for heating in the residential market remained strong.

In 2023 the share of residential and commercial consumption of pellets reached 59 percent, the highest in a decade.

Pellet heating is a good option for households, especially in rural areas rich in biomass with lower connections to the energy system.

Biomass heating reduces heat-related electricity demand at the time of year when renewable electricity production is often lower and less efficient.

By reducing the load on the electricity grid, bioenergy can complement electrification, lower electricity needs, increase energy efficiency, and safeguard the EU’s energy future.

For us as an association, it is now particularly important to reaffirm the image of pellet heating as a reliable, clean, sustainable, and especially price-stable source of heat and to work towards a secure regulatory environment, said Doris Stiksl, CEO of Propellet Austria commenting on the report.

Call for “wise implementation” of the Green Deal

Jean-Marc Jossart, Secretary General of Bioenergy Europe, here seen at the 2nd European Pellet Forum in Nantes, France at the end of May 2024.

Bioenergy Europe highlights that to fight climate change and increase Europe’s energy autonomy, “the new EU leadership needs to ensure a wise implementation of the Green Deal while continuing to replace fossil fuel with renewables such as bioenergy from wood pellets.”

To that end, Bioenergy Europe has put together three proposals for the new EU leadership “3 Steps Towards the Energy Transition”. The European bioenergy sector is ready to scale up and push forward for a more sustainable, affordable, and innovative EU.

Despite significant progress, our industry’s growth is being stunted by the EU’s continued dependence on fossil fuels. It is imperative that we accelerate the transition to renewable energy sources to stabilize energy prices and combat climate change effectively, commented Jean-Marc Jossart, Secretary General of Bioenergy Europe.

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