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Report discusses future of European pellet, biogas markets

By Erin Voegele | July 25, 2014

The European Union has filed its annual biofuels report with the USDA Foreign Agricultural Service’s Global Agricultural Information Network, reporting the European Commission expects heat and power production from biomass to account for about 45 percent of the renewable use in 2020. Wood pellet demand is expected to grow from 17.5 million metric tons last year to 21 million metric tons in 2015. Assuming trade flows remain consistent with current patters, the report predicts the U.S. could supply half of EU pellet imports, representing a trade value of $600 million in 2015 and more than $1 billion in 2020. The report also discusses the biogas sector.

According to the GAIN report, biomass is expected to account for approximately 37 percent of renewable energy use in the heating and cooling sector by 2020. In addition, biomass is expected to comprise 8 percent of the renewable energy use in electricity production. Taken together, heat and power production from biomass is expected to account for about 45 percent of renewable energy use in 2020.

With regard to wood pellets, EU consumption is expected to reach 20 million metric tons this year, up from 17.5 million metric tons last year. By 2015, consumption is expected to grow to 21 million metric tons. EU wood pellet production is expected to reach 12.5 million metric tons this year, up from 11.5 million metric tons in 2013. Next year, production is expected to grow again, reaching 13 million metric tons. European pellet production capacity was an estimated 16.2 million metric tons last year, with 71 percent of capacity in use. This year, capacity is expected to increase to 16.4 million metric tons with 76 percent of capacity in use. Next year, capacity is forecast to increase slightly to 16.6 million metric tons, with 78 percent of capacity in use.

Pellet imports are expected to reach 7.5 million metric tons this year, up from 6.05 million metric tons last year. Next year, imports are expected to increase to 8.5 million metric tons. The U.S. was the top supplier of wood pellets to the EU last year, with 2.77 million metric tons supplied. Canada supplied an estimated 1.92 million metric tons, followed by Russia and the Ukraine, with 702,000 metric tons and 165,000 metric tons, respectively. Belarus supplied 116,000 metric tons, with an additional 375,000 metric tons imported from other areas of the world.

Germany is currently the EU’s top pellet producer, with 2.35 million metric tons expected to be manufactured this year. Sweden is expected to produce 1.35 million metric tons this year, with France, Latvia and Austria producing 1.2 million metric tons, 980,000 million metric tons and 900,000 million metric tons, respectively. Portugal is expected to produce 700 million metric tons this year, with Poland producing an estimated 600,000 million metric tons.

The U.K. remains Europe’s top pellet consumer, with 5 million metric tons expected to be consumed this year. Italy, Denmark, Germany and Sweden round out the top five European pellet consumers, with expected consumption of 2.6 million metric tons, 2.4 million metric tons, 2.2 million metric tons and 2 million metric tons respectively this year. Pellets are primarily used for heating in Italy, Germany and Austria. Use in the U.K., Belgium and Netherlands is dominated by large-scale power plants. Alternatively, the pellet market in Sweden and Denmark is diverse with pellets used in smaller heating applications and large-scale combined-heat-and-power plants.

Solid biomass demand, however, is not limited to wood pellets. The EU also currently consumes 14.5 million metric tons of wood chips annually, with demand expected to grow to 28 million metric tons in 2020.

Regarding biogas, the report notes that Germany and the U.K. are the EU’s top biogas producers. While Germany generates 90 percent of its biogas from agricultural crops, the U.K. relies almost entirely on landfill and sewage sludge gas.

Germany currently features more than 80 percent of the EU’s biogas production. However, policy changes are expected to slow growth in the sector.

Biogas was used to generate 4.4 percent of the EU’s electricity last year, with that percentage expected to increase to 4.5 percent this year and 4.6 percent next year.

While biogas is traditionally used to generate power and heat, the report indicates a growing number of large scale operations are purifying biogas for injection in the natural gas grid. However, the use of purified biogas as transportation fuel is still marginal in most countries, with the exception of Sweden and Germany.

A full copy of the report can be downloaded from the USDA FAS GAIN website.

 

 

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