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Global Wood Pellet Market Analysis - part 2 (Results)

Date: 07/02/2020 08:30:52 From: wood-pellet-plant.com Clicks:

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Global consumption reached more than 25 Tg in 2015, with trade dominating within Europe and between Europe and the USA.11 Figure 1 gives an overview of the consumption, import, and export of individual countries in 2015. The USA is by far the largest pellet producer, with 7.4 Tg in 2015 (Food and Agriculture Organization estimate) and 6.3 Tg in 2016. Canada shows the most dynamic development with an increase in exports from 1.6 Tg in 2015 to 2.4 Tg in 2016. Germany (2.2 Tg) and Sweden (1.5 Tg) are further substantial pellet producers. On the consumption side, the United Kingdom stands out with 6.7 Tg pellets in 2015, followed by the USA with 2.9 Tg, Denmark (2.8 Tg), and Italy (2.1 Tg). New countries have entered the scene as fast‐growing consumers in recent years, such as countries in South‐East Europe and South‐East Asia, especially Japan and South Korea.

Domestic production and import/export per country for chosen countries in 2015

Domestic production and import/export per country for chosen countries in 2015

Development of production and production capacities

Production capacities have been reported for 27 of the 40 countries in this study, with figures ranging from 2012 to 2016. The 27 countries cover 90% of global production quantity. Within this group, the top five account for 63% of the production capacity.

The USA shows the highest installed capacity with 13.9 Tg a−1 (2016), representing 32% of the total reported capacities. The other top five countries are Canada with 4 Tg a−1 (2015, 9%), the Russian Federation with 3.5 Tg a−1 (2016, 8%), Germany with 3.2 Tg a−1 (2016, 7%) and Sweden with 2.4 Tg a−1 (2015, 6%) (Fig. 2). The USA also dominated in terms of produced quantities, with 7.4 Tg a−1 (2015), representing 28% of the reported quantities from all 40 countries. Due to higher utilization rates, Germany follows in second place with 2.2 Tg a−1 (2016, 8%), even though Canada and Russia feature the greater capacities. Latvia, showing exceptional utilization rates, enters the list as fifth largest producer with 1.4 Tg a−1 (2015, 5%). The third and fourth largest producers are Canada with 1.9 Tg a−1 (2015, 7%) and Sweden with 1.5 Tg a−1 (2015, 6%), respectively (Fig. 2).

Development of pellet production capacities (upper graph) and production (lower graph) 2005–2016 of the global top five in production capacity; the top six are included for comparative reasons.

Development of pellet production capacities (upper graph) and production (lower graph) 2005–2016 of the global top five in production capacity; the top six are included for comparative reasons.

From 2008 to 2016 the USA showed the highest capacity growth by a factor of 6.5. Production increased by a factor of 4.1 (2015). The main driver of this development was the demand for wood pellets in the European Union (EU) as well as several strategic factors aligning especially in the south‐east of the USA, such as proximity to EU markets and the availability of biomass resources, labour, infrastructure and knowhow. A minor growth factor has been the residential heating market. Comparable frameworks account for the steady growth of capacities in Canada and in Russia. The main market driver has also been the demand from the EU but also from new markets in Asia, including Japan and South Korea. In Canada, 60% of the capacities are located in British Colombia, supporting trade with Asia. The domestic consumption is minor. In Russia, production is completely focused on export. In both countries, the residential heating market has so far not been supported by policy and shows marginal development. Between 2008 and 2016, production capacity in Canada grew by a factor of 2.0 and actual production increased by a factor of 1.4. Capacity in Russia grew by a factor of 3.5 and actual production increased by a factor of 1.9.

In Germany, the policy framework supported investment in residential heating systems for wood pellets. The resulting constant growth was only interrupted by a temporary sawmill industry crisis in 2014. Production capacity grew by a factor of 1.3 between 2008 and 2016, and the produced quantities increased by a factor of 1.5. Unlike the other countries analysed above, Germany supplies mainly the internal market, which it created through its policy framework.

Like Germany, Sweden has a long tradition of government support for wood pellet utilization in small‐scale heating but also in industrial application and combined heat and power (CHP) provision, and it produces mostly for the domestic market. Between 2008 and 2016, its production capacity increased by a factor of 1.1 and actual production was almost equal.

Latvia has entered the top five producers, showing a growth rate between 2008 and 2015 by a factor of 3.7. Even though there are national support schemes to promote domestic use, the pellet industry is export oriented towards other EU countries. Only 7% of the quantity produced is used domestically (2015).14 The main drivers for the export are low production costs, large biomass potentials and large, accessible ports (Liepaya, Vetspils).

Development of consumption

The global top five countries in wood pellet consumption are the UK with 6.8 Tg a−1 (2015), representing 25% of global consumption, the USA with 2.9 Tg a−1 (2015, 11%), Denmark with 2.8 Tg a−1 (2016, 10%), Italy with 2.2 Tg a−1 (2016, 8%), and Germany with 2.0 Tg a−1 (2016, 8%). Together, they represent 62% of the global market share (Fig. 3).

evelopment of total wood pellet consumption for the top five countries, 2005–2016

evelopment of total wood pellet consumption for the top five countries, 2005–2016

During the last 10 years, the consumption in the UK showed exceptional growth, by a factor of 9.1 (2008 to 2015). The UK has established several support mechanisms including Renewable Obligation (RO), the country's main support scheme to incentivize the deployment of large‐scale renewable electricity generation in the past. From 2017 this was succeeded by the Contracts for Difference (CfD) scheme., 15 By the means of these regulations, the use of pellets in large‐scale electricity generators dominates in the UK; 56% of the supply originates from the US.

The US is the second largest consumer but have shown only a moderate growth in consumption in the last years (by a factor of 1.7, 2008 to 2015); 37% of its production is being used domestically. Residential heating (wood heaters) accounts for almost all of the domestic consumption. Drivers have been regional price competitiveness with heating oil and propane, and advantages in comfort and automatic feed‐in. Some support schemes have partially addressed wood pellet use but were not effective.

Denmark's policy toward renewable energy, aiming at fossil fuel independency in 2050,16 led to a steady increase in wood pellet consumption (by a factor of 2.5, 2008 to 2016), and increasing imports. Units of all sizes are using wood pellets, yet the majority (70%, 2015) were processed by large‐scale utilities for combined heat and power. All market segments (small, medium and large scale) show a continuous growth.

Italy also achieved a constant growth in consumption (by a factor of 2.9, 2008 to 2015), but focused on the residential heating sector. The figures are based on surveys as well as estimates and carry an associated uncertainty, especially for data before 2011. The main drivers for the increasing consumption are government schemes providing tax incentives, grants (Conto Termico) and so‐called white certificates which are tradeable securities certifying energy savings.

Germany also features a continuous increase in consumption (by a factor of 2.3, 2008 to 2016) of mainly domestic pellets. One temporary obstacle to a further extension of consumption has been the mandatory standard ENplus. Foreign suppliers had difficulties adapting to this standard after its first enforcement. This led to stronger production within Germany. The subsequent certification of foreign producers strengthened imports again.

Development of import and export

The largest exporter globally is the USA with 4.7 Tg a−1 representing a share of 29% of the wood pellets traded between countries (in 2015). The other countries in the list of top five exporters are Canada (1.6 Tg a−1, 10%, 2015), Latvia (1.6 Tg a−1, 10%, 2015), Vietnam (1.2 Tg a−1, 7%, 2015), and the Russian Federation (1.0 Tg a−1, 6%, 2016). Together, these countries represent 63% of global exports (Fig. 4).

Development of the top five countries in wood pellet export (upper graph) and import (lower graph).

Development of the top five countries in wood pellet export (upper graph) and import (lower graph).

Besides the UK with 6.5 Tg a−1 (2015), the top consumers Denmark and Italy are also top importers with 2.4 Tg a−1, (15%, 2016) and 1.6 Tg a−1, (10%, 2016), respectively. South Korea, with almost no wood pellet production, and Belgium, with marginal production, enter the list of top five importers with 1.5 Tg a−1 (9%, 2015) and 1.0 Tg a−1 (6%, 2015), respectively. These countries are responsible for 83% of globally effected imports (Fig. 4).

The five countries with a balanced import/export ratio, indicating a levelled domestic supply and demand relation, are Finland (ratio of 1), Spain and The Netherlands (each with a ratio of 0.9) as well as France and Austria (each with a ratio of 0.7).

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