European Wood Pellets Market Report 2023 - EU Sustainability Initiatives and Potential Impacts on Wood Supply

DUBLIN, Dec. 4, 2023 /PRNewswire/ -- The "European Wood Pellets Market Outlook to 2030" report has been added to ResearchAndMarkets.com's offering.

European wood pellet markets are experiencing renewed growth with gas shortages, rising carbon prices, and EU energy policy. This study looks ahead to 2030 and considers how these market forces will drive tighter competition for raw materials and increased pellet imports. It also considers challenges and opportunities for players throughout the value chain, from developing new feedstocks and adapting manufacturing processes, to global pellet supply strategies.

Looking ahead to 2030 and beyond, EU renewable energy policies will continue to drive growth in pellet demand. The EU has recently increased its greenhouse gas emissions reduction targets to 55% by 2030 (compared to 1990 levels), previously set at 40%. It has also raised the target for renewable energy to 42.5% of energy supply by 2030, up from 32%. These targets will be translated into specific national targets for each member state, with each member responsible for meeting their targets through renewable energy subsidies, carbon taxes, and credits. This will ensure ongoing demand growth for biomass in general, and wood pellets in particular. Even as wind, solar, and heat pumps gain importance, biomass will play a central role in the clean energy transition until at least 2030. Modelling by the European Commission suggests that biomass will continue to grow until 2035 and remain the primary renewable energy source until 2050.

The latest forecast for European pellet demand anticipates a 3.6% annual growth from 2022 to 2030, compared to the 7.0% annual growth seen from 2014 to 2022 - with additional demand of more than 10 million tonnes across all market segments (power, CHP, residential and non-residential heating).

Currently, Europe imports approximately 12 million tonnes of wood pellets, primarily for the power sector, while the residential sector is mainly supplied by locally produced pellets. Europe's pellet imports could increase to between 18 and 22 million tonnes, depending on the success of efforts to expand domestic pellet production, which in turn largely hinges on raw material availability.

Over 80% of the raw materials used in European-produced pellets are sawmill residues, including sawdust and shavings. With weak demand for lumber expected to continue until at least 2025, residue supply will be constrained. Even when growth returns to the sawmill industry, it's unlikely to keep pace with pellet demand. This implies increased competition for residues, which may impact the wood panel industries, as they are increasingly turning to recycled wood. The competition can also extend to the pulp and paper industries, as pellet mills compete for pulpwood and chips. To prevent increased competition and higher raw material prices, it's essential to develop alternative raw material supplies for the pellet industry, including forest residues and purpose-grown energy crops. One challenge is that these raw materials are better suited for industrial pellets, a segment largely dominated by imported pellets. Much of the growth in Europe' pellet demand will be captured by pellet producers in the US and Canada - while many European producers continue to focus on the residential segment and traditional feedstocks.

Questions the report helps answer

• How will European wood pellet demand grow in 2023-2030?
• How will demand develop by market segment, and where will supply come from?
• What drives wood pellet prices?
• How much wood pellets will Europe need to import from other world regions?
• What is the raw material mix for European pellet production? How could that evolve?
• What is the cost and availability of alternative raw materials for pellets?
• How is the European pellet market likely to evolve to 2030?
• What implications will tighter raw material markets have for suppliers and buyers?

Key Topics Covered:

The importance of European pellets

Forces driving pellet demand growth

• Demand drivers for wood pellets in Europe - overview and discussion
• EU greenhouse gas emissions and renewable energy targets 1990-2050
• EU renewable energy targets by member state 2020, 2030
• EU GDP, energy demand, and energy efficiency 2000-30
• EU energy supply by source; renewable vs. other 2000-30
• EU renewable energy supply 2000-20 by source, including biomass
• EU forecast renewable energy by source to 2050, including biomass
• Wood pellet advantages / disadvantages vs. unprocessed biomass
• Wood pellet value proposition vs. alternatives in main applications
• Levelised cost of electricity for biomass vs. other renewables
• Breakeven price for coal and carbon vs. pellets in power plants 2023 Q1
• Residential heating costs, pellets vs. alternatives 2010-24
• Other advantages of pellets; geopolitical, safety, supply volatility

Demand outlook

Price dynamics

Supply potential and role of imports

Raw materials and sourcing

• European pellet raw materials; description and share in 2022e
• Pellet raw material mix by country, 2021
• Trends in pellet raw material mix, 2018-22e
• Impact of lumber (sawnwood) demand on pellet raw material supply
• Swedish bioenergy raw material prices 2000-23
• Raw material types; characteristics, value hierarchy, end-users
• Wood purchasing power of pellets vs. other key users
• Pulplogs vs. sawdust prices, Austria and Sweden 2010-23
• Sawdust supply and demand dynamics
• Sawdust prices in Sweden and Austria 2010-23
• Sawdust supply and demand in 2022, development of key drivers
• Alternative raw materials for European pellets; cost and supply potential
• European recycled wood supply and demand
• Recovered wood grades and uses
• European forest residue supply potential by type
• Forest residue generation and utilization (Sweden example)
• European energy crops supply potential and typical cost structure

Future scenarios and implications

• Key uncertainties for pellet markets to 2030, link to scenarios
• Carbon emissions prices on leading exchanges globally 2008-23
• EU sustainability initiatives and potential impacts on wood supply
• Forecast European softwood lumber demand to 2025
• US pellet production and export to EU, 2012-22
• Expected US pellet capacity expansion
• Scenarios for EU wood pellet market to 2030
• Implications for players throughout the pellet value chain
• Development of Sweden pulpwood vs. bioenergy prices 1995-2023
• Black pellets: advantages and examples of recent investments

For more information about this report visit https://www.researchandmarkets.com/r/1io781

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