BOSTON — Wood pellets are playing a key role in decarbonizing electric power generation, as the world works to replace fossil fuels. Global trade in pellets has doubled since 2012, with U.S., Canadian, and European producers all playing a roles, according to a new study by RISI.
European nations, in particular, have invested heavily in pellets for both heating and electricity generation. To supply this increased demand, the pellets supply stream is evolving, and is the focus of RISI's "European Pellet Supply and Cost Analysis" research report.
“Over the past five years, the wood pellet industry has expanded more than any other forest product industry, both in terms of wood consumed and dollars invested,” said Seth Walker, RISI Bioenergy Economist and author of the new study. “Pellet imports by power plants in England, Belgium, and Denmark are driving demand and investment for pellet-producing countries like the US, Canada, and European suppliers like Latvia, Estonia, and Portugal.”
While much of Europe’s appetite for pellets has been met by the U.S. South, the new study sees potential for this to change going forward.
“The strength of the US dollar means that its producers now have a higher cost structure than many competing European countries,” says study author Walker. “Our analysis looks at how exchange rates factor into competitiveness, along with production and shipping costs.”
The European Pellet Supply and Cost Analysis is the first fine-grained analysis of the regions supplying this large and growing market. For each major exporter of pellets to Europe, it provides details on pellet output, fiber furnish shares, production costs, facility ownership and market share, information on logistics and trade, and more, including:
- Cost models for major supply regions to Europe
- Supply curves featuring cash costs for pellets delivered to major centers of trade
- Sensitivity analysis of how shifts in exchange rates affect the competitiveness of key pellet-supplying regions and countries.
RISI is the leading information provider for the global forest products industry. The company works with clients in the pulp and paper, packaging, wood products, timber, biomass, tissue and nonwovens industries to help them make better decisions. For more information on the study, visit www.risi.com/europeanpellet
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