Despite September 2024 thus far being unprecedently warm, nay hot in Northern Europe, the region is heading nonetheless into the 2024/2025 heating season. With European gas storage inventories almost fully replenished, no end in sight for Russia's war in Ukraine, and EU legislation in effect mid-season, the song remains pretty much the same in terms of issues facing the solid biomass value chains compared to the previous heating season.
Although energy prices and inflation rates have come down over the last twelve months, and European gas reserves are almost fully replenished, industry and consumers alike are bracing themselves for continued geopolitical upheaval, EU and national policy uncertainty, and price volatility compounded by increasingly extreme weather events.
Russia’s relentless war of attrition in Ukraine closes on its thirtieth consecutive month of criminal carnage. In the meantime, Gaza has been almost reduced to rubble in the ongoing Israeli effort to retrieve hostages and destroy terrorist-classified Hamas.
In both cases, the cost in terms of deaths, human suffering – and misery is incalculable.
While the former has had a direct impact on European energy utilities – the physical destruction of the NordStream gas pipelines in the Baltic Sea and continued trade sanctions on energy products including woodchips and pellets from Belarus and Russia – the latter conflict too has energy and trade implications.
Missle- and drone attacks on international shipping in the Red Sea by Houthi militia sympathetic to Hamas as well as vessel hijacking by Somali pirates cause delays and vessel rerouting pushing up costs and uncertainties.
Energy poverty, be it for heating or even for cooling, is already a stark reality for millions of European households.
Europe’s bioenergy heavyweights
According to Bioenergy Europe, bioenergy is a vital component of the EU’s energy system and economy, producing 85 percent of the EU’s renewable heat, representing alone one-third of renewable energy sector jobs, and saving enough carbon dioxide (CO2) emissions to cover the annual emissions of Spain.
Bioenergy in general and forest-derived biomass, in particular, is even more important in the Baltic and Nordic countries as evidenced by Bioenergy Europe’s European Bioenergy Day campaign – the top six countries are Latvia, Finland, Sweden, Estonia, Denmark, and Lithuania respectively of the 2024 edition of European Bioenergy Day campaign, with double or more the EU average.
Fewer heating degree days?
The first week of September 2024 has thermometers breaching the +30 degrees Celcius record across southern Sweden, and fewer heating degree days ought to translate into lower fuel demand.
So, what can we expect about the upcoming heating fuel season – will there be enough affordable biomass fuels? Can the bioenergy sector increase production, muster new sources, and gain market acceptance for further expansion? What with the new EU Parliament and Commission? How will the transposed EU legislation impact biomass supply and logistic chains?
It is against this dynamic backdrop that the 7th edition of the Swedish Bioenergy Association’s (Svebio) annual Fuel Market Day conference will be held.
To be held as an “on-site and online” event on September 30, 2024, at the prestigious Royal Academy of Sciences (IVA) conference venue in Stockholm, Sweden, it is an ideal opportunity to get an initiated insight from buyers, sellers, and traders into the current biomass market situation in Northern Europe, and where it might be headed for the coming 2024/2025 heat and power season.
Prominent bioenergy players, experts, and biomass traders will focus on forest fuels, waste wood, and pellets sourcing and production, to handle the coming power and heating season.
For instance, Hannes Tuohiniitty, Sector Manager, Bioenergy Association of Finland (Bioenergia) will outline how bioenergy has responded to fast energy market changes in Finland.
Finland is arguably the country that has been most directly affected by EU sanctions on Russia given its physical border and well-developed pre-Ukraine invasion trade relations. Not least fossil gas and industrial roundwood.
Providing perspectives from one of the larger solid biomass fuel buyers in the Nordics, Stockholm Exergi’s Per Ytterberg, VP of Business Development- and Monica Lundgren, Head of Fuel Supply, will share insights into navigating constant market changes and challenges ahead.
Impacts of EUDR
One major legislative challenge that could slow if not potentially derail the Nordic forest industry is the EU Regulation on deforestation-free products (EUDR). This entered into force on June 29, 2023, and aims to stymie a major driver of deforestation – the expansion of agricultural land for the production of commodities like cattle, wood, cocoa, soy, palm oil, coffee, rubber, and some of their derived products.
Under the Regulation, any operator or trader who places these commodities on the EU market, or exports from it, must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation.
The extent of the additional administrative burden and the associated transactional costs remains to be seen but a clear risk is that for some biomass supply chains, it will be too onerous.
Leaving aside ethanol biorefineries, anaerobic digestion (AD) plants, and biochar production, it is worth keeping in mind that most large-scale bioenergy with carbon capture and storage (BECCS) and Power-to-X (PtX) projects build on capturing and using or storing the biogenic CO2 from the flue gas of biomass-fired heat and/or power plants.
Along with energy utilities, it is the Nordic pulp and paper industry that has the largest BECCS and BECCU potential.
It remains to be seen if Svebio’s Fuel Market Day 2024 is when biomass moves from the situation room to the board room, and that the board room outcome is a glass-half-full rather than a glass-half-empty affair.
