What the World Can Learn From Europe
The Paris Climate Conference marked the end of 2015 with one of the most significant forums in recent years. No event in the past decade has more effectively shone a spotlight on the importance of reducing greenhouse gas (GHG) emissions around the world. Almost 200 nations converged in a region that leads the way in the adoption of renewable energy. In particular, host country France is an exemplary citizen, as it is one of the few countries to generate over 90 percent of its electricity from zero-carbon sources without compromising standard of living. When the EU set its energy directive of 20 percent of energy from renewable sources, several years ago, each EU nation had a target that ranged from 10 to 49 percent. The advancements in Europe served as first-rate backdrop for countries such as China and the U.S.
Although the focus was not on wood pellets or any specific form of renewable energy, countries that have signed on can draw upon European experience. Wood pellets represents a considerable portion of the renewable energy sources in Europe, despite the fact that consumption of pellets exceeds production by almost 40 percent. This fact allows regions with limited forestry resources to comprehend a zero-carbon, baseload power from wood pellets.
Europe imports over 5 million tons a year of wood pellets, chips and other wood products such as firewood from North America. This is the highest import from any region in the world. According to the European Biomass Association (Aebiom) 2015 Report, demand last year was almost 19 million tons. Three countries exceeded 1 million tons per year of wood pellet consumption for heating, with Italy taking the lead. Although the USDA’s Global Agricultural Information Network estimates the Italian market higher than Aebiom, at 3.4 million tons compared with 2.9 million. The majority of Italian imports are from Austria, with Canada the second largest, as well as Germany and several eastern European countries.
Sweden is among the top five consumers of wood pellets, with more than half of the use for commercial heating rather than home heating. This is not the case in the majority of the top-tier pellet consumers. Germany has set a mandate to not allow any new homes to be built that rely on fossil fuels for heating. Despite lower oil prices, wood pellet heating remains the lowest cost option per kilowatt hour in countries such as Denmark, Austria and France. Although last year’s growth was lower than in the past, RISI reports compound annual growth rate of 16.5 percent in the 10 years prior.
While the heat market is significant, the real strides in GHG emission reduction will be in the zero-carbon power generation sector. Although most of the European industrial consumption has taken place in the U.K., 2015 was a year of change impacting the levy control framework and contracts for difference. However, the recent decision of the European Commission to approve state aid to Lynemouth is a positive development. The U.K. support for the conversion of this coal station to biomass has been confirmed by the EC, which sets the tone for subsequent conversions including potentially Drax’s fourth unit. The world needs to see more flagship conversions on the heels of this historic conference!
Author: Michele Rebiere
President, Wood Pellet Association of Canada
CFO, Viridis Energy Inc.