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Correspondence to: Richard Sikkema, Utrecht University, Science, Technology and Society, Budapestlaan 6; NL-3584 CD Utrecht, the Netherlands.
E-mail: r.sikkema@uu.nl
250 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd
Modeling and Analysis
The European wood pellet
markets: current status
and prospects for 2020
Richard Sikkema, Utrecht University, Science, Technology and Society, the Netherlands
Monika Steiner, Holzforschung, Pellet Standardization, Austria
Martin Junginger, Utrecht University, Science, Technology and Society, the Netherlands
Wolfgang Hiegl, WIP Renewables Energies, Munich, Germany
Morten Tony Hansen, FORCE Technology, Biomass and Waste, Denmark
Andre Faaij, Utrecht University, Science, Technology and Society, the Netherlands
Received November 2, 2010; revised December 6, 2010; accepted December 9, 2010
View online February 17, 2011 at Wiley Online Library (wileyonlinelibrary.com); DOI: 10.1002/bbb.277;
Biofuels, Bioprod. Bioref. 5:250–278 (2011)
Abstract: The wood pellet market is booming in Europe. The EU 2020 policy targets for renewable energy sources
and greenhouse gas (GHG) emissions reduction are among the main drivers. The aim of this analysis is to map cur-
rent European national wood pellet demand and supplies, to provide a comprehensive overview of major market
types and prices, and to discuss the future outlook in light of raw material supply. Approximately 650 pellet plants
produced more than 10 million tonnes of pellets in 2009 in Europe. Total European consumption was about 9.8 mil-
lion tonnes, of which some 9.2 million tonnes is within the EU-27, representing a modest 0.2% of Gross Energy
Consumption (75 EJ level in 2008). The prices of most pellet types are increasing. While most markets of non-indus-
trial pellets are largely self-suffi cient, industrial pellet markets depend on the import of wood pellets from outside the
EU-27. Industrial pellet markets are relatively mature, compared to non-industrial ones, because of their advanced
storage facilities and long-term price-setting. However, industrial pellet markets are unstable, depending mainly on
the establishment or the abolishment of public support schemes.
Following our scenarios, additional 2020 demand for woody biomass varies from 105 million tonnes, based on mar-
ket forecasts for pellets in the energy sector and a reference growth of the forest sector, to 305 million tonnes, based
on maximum demand in energy and transport sectors and a rapid growth of the forest sector. Additional supply of
woody biomass may vary from 45 million tonnes from increased harvest levels to 400 million tonnes after the recovery
of slash via altered forest management, the recovery of waste wood via recycling, and the establishment of woody
energy plantations in the future. Any short-term shortages within the EU-27 may be bridged via imports from nearby
regions such as north west Russia or overseas. © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd
Supporting information may be found in the online version of this article.
Keywords: EU-27; Renewable Energy Directive; wood pellet; international trade; NREAP 2020; forest sector
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 251
Modeling and Analysis: Wood pellet markets R Sikkema et al.
Introduction
T
oday, wood pellets are one of the largest internation-
ally traded solid biomass commodities used speci -
cally for energy purposes. In terms of traded volume–
about 4 million tonnes – they can be compared to biodiesel
or bioethanol.1 While the handling of wood pellets requires
care, the advantages over other types of solid biomass such
as wood chips or agricultural residues are their storability
and relative easy handling. Wood pellets also have a low
moisture content and relatively high energy density (about
17.5 GJLHV/tonne), interesting properties for long-distance
transport. It is economically more feasible to transport wood
pellets instead of wood chips above 5000 nautic miles2
(9300 km). e rst truly long-distance transport of wood
pellets was in 1998 from Canada to Sweden.3 Ever since, the
international trade in wood pellets by truck and boat and,
to a lesser extent, by train, has been growing rapidly. e
overall rationale behind long-distance trade is an abundant
availability of cheap feedstock in some world regions, high
demand in other, resource-scarce regions, and the presence
of cost- and energy-e cient logistics.
In January 2007, the European Commission launched
a plan for a more ambitious and integrated policy for
Europe in order to tackle the issues of climate change and
energy supply. New objectives were embedded in a legisla-
tive Directive for Renewable Energy Sources (RES),4 which
would ensure the equitable participation of all EU member
states.5 A rst objective concerns the share of energy from
renewable sources in gross nal consumption of energy in
2020, set at 20%. For comparison: the 2008 share of renewa-
bles sources is 8.4%, of which 3.9% is from wood and wood
waste materials,6 including wood pellets (0.2%).
e EU Directive de nes three options to reach the ‘20%
renewable goal’ in 2020:
1. e use of renewable electricity.
2. e use of renewable energy for heating and cooling.
3. e use of renewable transportation fuels (e.g. liquid
biofuels).
Wood pellets can contribute to the rst two goals (electric-
ity and heating). In the (near) future wood pellets could, in
principle, also be used as a lignocellulose feedstock for the
production of second-generation biofuels. e use of wood
pellets (replacing fossil fuels) also leads to the reduction of
greenhouse gas (GHG) emissions and therefore contributes
to another objective of the EU Directive: 20% of reduction
in GHG emissions. Sikkema et al.7 showed that the use of
pellets in the Netherlands, Sweden, and Italy, respectively
can result in signi cant avoided GHG emissions. An esti-
mated 12.6 million tonnes of CO eq emissions were avoided
in 2008 in EU-27 countries plus Norway and Switzerland,
based on a consumption of 8.2 million tonnes of wood pel-
lets and the substitution of coal and heating oil.
Despite the rapid growth of wood pellets production
and consumption, and the high GHG emission reduction
potential, a comprehensive market analysis has so far been
lacking. e aim of this analysis is to map major European
wood pellet ows (production, trade, and consumption), to
provide the main drivers for dedicated pellet markets for
heating and power production (trading prices, national pol-
icy support), and to discuss future projections. e focus of
this analysis is on EU-27 markets for pellet production and
use in 2009, but the analysis also includes trade ows from
non-EU-27 countries, a major source of supply for the EU-27.
Main questions for our future projections are: how much
can wood pellets contribute to the EU’s 20% RES policy in
2020 and what is the self supply of raw material needed for
the expected 2020 consumption levels of pellets and other
woody biomass?
Following this introduction, we brie y present the meth-
odology used for data collection, followed by a description of
the input of country data and volumes. We continue with a
discussion of wood pellet price developments and an outlook
of future consumption of pellets and raw material availabil-
ity. Methodological constraints and actual market develop-
ments are reviewed in the Discussion section. We end with
conclusions and recommendations.
Methodology
ree main sources are used to map the European pel-
let ows. First of all, gures for the 27 EU countries, plus
Norway and Switzerland are extracted from the European
Pellets@las-project.8 ese Pelletsatlas data are used as a
main source for tables and graphs. Second, Rakitova and
Ovsyanko9 inventoried pellet markets in Russia, Belarus,
and Ukraine. ird, data lacking from the Balkan countries
252 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
have been derived from a workshop, organized by the United
Nations Economic Commission for Europe (UNECE)
Timber Section.10 e pellet markets in Europe for produc-
tion, international trade, and consumption ows are evalu-
ated as follows:
1. Production: Volume data was collected once a year for
the previous year via national pellets associations, the
Internet or direct contact with pellet manufacturing
companies. In the exceptional case of incomplete country
gures, alternative data were derived from a survey by
Bioenergy International (BI)11, 12 on individual produc-
tion plant capacities and realized production for pellet-
producing countries in 2008 and 2009. Unlike our own
inventory, the BI survey did not include all small pellet
plants (<10,000 tonne). e BI survey also lacked real
production data for some, larger, pellet plants. Where
possible, additional production data was estimated via an
average utilization rate of the other (aggregated) produc-
tion capacities in a country. Two di erent methods exist
for specifying the production capacity. While some pro-
ducers name the ‘technical production capacity’ (calcu-
lated out of possible tonnes per hour for the whole year),
others name the ‘real production capacity’ (which takes
into account reduced working hours, repair times, and
raw material supply).
2. Trade: Since January 1, 2009, export and import gures
on pellets are published by Eurostat13 using a new prod-
uct code (44.01.3020), de ned as ‘sawdust and wood
waste and scrap, agglomerated in pellets’. Before that
time, only global estimations could be made based on
expert opinions and more generic statistics for sawdust
(old code 44.01.3010) or wood waste and scrap (old code
44.01.3090), both codes stating ‘whether or not agglom-
erated in pellets’. For export, the trading partner is in
principle the country (or member state) which is the nal
destination of the goods. For imports (external EU trade)
the trading partner is the country of origin of the goods.
For arrivals (intra-EU trade), the trading partner is the
member state that consigns the goods.14 Further embed-
ding of the speci ed pellet code in the Harmonised Sys-
tem nomenclature of the World Customs Organisation
will take place no earlier than 2012,15 thus the pellet trade
is not yet o cially monitored outside the EU-27.
3. Consumption: Before doing an inventory of pellet con-
sumption by all types of nal consumers, the ‘apparent
consumption’ was determined per country, using for-
mula A. Note that minor amounts of wood pellets may
also be used as stable bedding for horses, cattle, etc. We
assumed that those volumes were negligible and thus
100% of wood pellet production and trade was used for
energy purposes.
(formula A)
Apparent consumption = Production + import +/– stock
changes – export
For a detailed analysis of trade ows, both domestic des-
tinations and export are investigated. e breakdown of
data for apparent national pellet consumption for separate
markets was collected via national pellet associations, the
Internet or direct contact with pellet consumers. Based on
our inventories, the following markets are distinguished in
Europe:
• Industrial bulk pellets for large-scale users. Public data
on pellet consumption by power utilities is not yet avail-
able. IEA, Eurostat, and UNECE will start distributing
a joint questionnaire for collecting new data on renew-
able energy via the national statistical o ces in 2010.16
So far, Dutch pellet consumption, for example, had to
be estimated from annual reports of power companies,
phone enquiries of power companies or other available
sources (e.g. environmental reports of public authorities).
e following variables are useful: capacity of the power
companies (MW), annual full-load hours of dedicated
biomass co ring units, amount of electricity annually
produced (GWh), average e ciency rates of co ring and
the speci c shares of pellets in total fuel feedstock.17 In
case utilities use other types of biomass, like wood chips,
dairy waste, and liquid palm oil, these are excluded from
our inventories.
• Industrial bulk pellets for medium-scale users. Market
studies of district heating and other medium-scale users
provide direct inventories of pellet use. For example,
in Denmark the consumption is surveyed every second
year by the wood pellet survey from the Danish Energy
Agency. e survey is based on mandatory annual reg-
istration from all energy producers in combination with
other questionnaires to all pellet producers and traders.18
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 253
Modeling and Analysis: Wood pellet markets R Sikkema et al.
• Bulk pellets and bagged pellets for small-scale users. As
quantitative data for this market segment are not avail-
able, the consumption was estimated via general trend
analyses, such as the amount of heating appliances, aver-
age temperature, amount of winter days, etc. In Austria,
for example, the previous year’s sales of pellet boilers
and stoves, including heating capacities, are surveyed
each year by a representative farmers’ organization.19
e number of boilers (bulk pellets) have been surveyed
in Austria since 1996, and the number of pellets stoves
(bagged pellets) since 2006.
• In addition to the national market types, there are also a
number of countries that display a relatively low domestic
demand for wood pellets in the period 2007–2009, and
mainly produced wood pellets for export. Corresponding
export volumes for 2009 have been extracted from Eurostat.13
As a second part of the market analysis, an overview was
compiled of price developments in recent years, based on the
major market types per country. Price developments were
collected from producers, traders, retailers, and large-scale
consumers (see Box 1 for de nitions). Since wholesale prices
of pellets depend largely on individual agreements between
two companies, the focus of the price data inventory was on
end-consumer prices. ree di erent categories exist:
Box 1: List of acronyms and main
conversation factors.
ARA. Amsterdam, Rotterdam, and Antwerp, the
major harbors in Europe for international pellet
transhipments.
CIF. Cost, insurance, and freight. Title and risk pass to
the buyer when delivered on board the ship by the
seller who pays transportation and insurance cost
to destination port. Used for sea or inland waterway
transportation35 and focusing on import harbors.
VAT is not applicable at this stage.
Exchange rates. e amount of foreign currency in €
(euro). Currency rates are derived both from www.
oanda.com56 and from www.ecb.int.111
FOB. Free on board. Title and risk pass to buyer includ-
ing payment of all transportation and insurance cost
once delivered on board the ship by the seller. Used
for sea or inland waterway transportation35 and focus-
ing on export harbors. e FOB price plus costs for
insurance freight results into CIF prices. Freight costs
are are calculated by means of charter rates, bunker
fuel prices and unloading costs.112 VAT is not applica-
ble at this stage.
GEC. Gross Energy Consumption. In 2008, the GEC in
the EU-27 was about 75 EJ or 1800 million tonne of oil
equivalents (MTOE). 1 MTOE = 2.38 million tonnes
of pellets.
GJth: Gigajoules. 1 GJth = 0,067 tonne of bagged pellets
(e ciency η = 0.85) for residential heating or 0,062
tonne of bulk pellets (ή = 0.92) for district heating.
GJ(p): Primary GJ. 1 primary GJ = 278 kWh(p).
Retailers. A retail merchant or retailer sells pellets to end-
consumers (including businesses). A shop owner is a
retail merchant. If a producer sells to end consumers,
he is also a retailer.
Tonne pellet equivalent (TPE). One TPE has a solid vol-
ume113 of 2 m3, a moisture content of about 10 to 20%
and a primary energy content of 17.6 GJ per tonne.
Solid m3 industrial roundwood is excluding bark
(underbark). One m3 sawdust = 0.35 TPE. One metric
tonne is 1.10 short dry ton (US unit).
Traders. A wholesale merchant or trader operates in the
chain between producer and retail merchant. Some
wholesale merchants only organize the movement
of goods rather than move the goods themselves. If
a producer is selling to traders or retailers, he is also
considered to be a trader.
Transportation fuel. Average conversion e ciency of
woody biomass into liquid biofuels is about 50%.
TWh(p). Terra Watt hours primary. 1 TWh(p) = 0.205
million tonnes of pellets (moisture content 10%),
based on a primary energy content of 17.6 GJ per
tonne pellet. 1 MWh(p) = 0.205 tonne of pellet.
TWh(e). Terra Watt hours electric. 1 TWh(e) = 0.51 mil-
lion tonnes of pellets (moisture content 10%), based on
a primary energy content of 17.6 GJ per tonne pellet
and an e ciency rate (η) of 40.1% for Dutch electricity
production based on 10% wood pellet co ring
(η = 41% for 100% coal).7
254 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
1. A purchase of a maximum of 1 tonne of non-industrial,
bagged pellets (15 to 25 kg bags) at retailer shops by resi-
dential users (in € per tonne, including VAT). Transport
costs between retailer and households are therefore not
included.
2. A delivery of about 5 tonnes of non-industrial bulk pel-
lets for residential markets (in € per tonne, including
VAT) and a single maximum transport distance of 50 km
to households.
3. Sales of industrial bulk pellets to large-scale consumers (in
€ per tonne), when delivered and unloaded at the harbor of
destination (CIF ARA, excluding VAT). Delivered volumes
had to be at least 5000 tonnes. CIF ARA means wood pel-
lets delivered to the Rotterdam, Amsterdam, or Antwerp
area, and costs, insurance and (sea) freight are paid by the
(overseas) seller of wood pellets. Inland transport by road
or river ways and power plant handling are excluded.
Four times a year, we collected either quarterly or monthly
pellet prices, depending on responses and data availability.
From the rst quarter of 2007 to the third quarter of 2009,
we collected pellet prices for 25 European countries plus
Norway and Switzerland either on a monthly or quarterly
basis, depending on responses and data availability.20 For
each of the three price categories outlined, the preferred
method was to calculate a weighted average price, based
on the individual respondent’s volumes, according to
formulaB. However, respondents and volumes could be
double-counted, when more than one actor is involved in
a tonne of pellets. For example, a producer sells to a trader,
who then re-sells to another buyer.
(for mu la B)
Average price =
Price_actor1*Volume1 + Price_actor2*
Volume2+ … +price_Actori* Volumei
∑ Volume
e introduction of non-industrial pellet enquiries di ered
from country to country. Whereas some countries already
had existing price statistics, like Austria,21 Germany,22
and Ireland,23 other countries had to start from scratch. In
that case, we started to collect prices ourselves, or waited
for external price surveys to be developed. For example,
Sweden24 and Switzerland25 started in July 2007, Belgium26
and Finland27 started in 2008. In France, an index of pellet
prices exists since 2006, with all indexes related to pellet
price in rst quarter of 2008.28 Consequently, the continuity
of prices may vary because the response rate in most coun-
tries was quite low in the beginning. For some countries
(Czech Republic, Latvia, Lithuania, Slovakia, Slovenia, and
Portugal) it was more or less impossible to collect price data,
due to the limited number of actors or the lack of coopera-
tion. Figure 1 shows the responses of actors involved in non-
industrial pellets for heating. e external surveyed coun-
tries are generally based on non-weighted average prices
(arithmetic mean), i.e. dividing the sum of all prices by the
total number of respondents. In that case, only respondents
are shown.
e survey of industrial consumers started in the
Amsterdam, Rotterdam and Antwerp (ARA) area, com-
monly used for coal transportation. Pellets are mostly traded
via the main hub of Rotterdam harbor, a er which pellets
are transhipped (redistributed to smaller vessels) to other
destinations, such as the United Kingdom. Between 2007
and 2009, only one large trader and two to three small trad-
ers participated in the Dutch price surveys. eir aggregated
trading volume was between 350 and 400 Ktonne. From
November 2008 onwards, the average weighted prices for
these bulk pellets (CIF ARA) were replaced by index prices
published by APXEndex.29 e Endex pellet prices are com-
piled by an expert panel of about 10 pellet actors (producers,
traders, and consumers) and are calculated by the sum of
all prices divided by the number of experts. Two prices (the
maximum and minimum price submitted) are le out of the
Endex price settlements. By the end of each month (since
November 2008), we extracted Endex’s short-term prices,
one month ahead of delivery. ese prices came closest to
the collected prices in Pelletsatlas. However, daily prices
from the real spot markets (in time delivery) do not realy
re ect purchases by large-scale power plants, because the
spot market cannot immediately deliver the large volumes
needed (see Discussion). During our surveys in Sweden and
Denmark, the share of bulk pellets for medium-scale users
got larger than those for residential heating. erefore, we
incorporated new price statistics for industrial bulk pellets
for medium-scale district heating and for (larger) combined
heat power (CHP) plants. Based on real invoiced pellet deliv-
eries, FOEX30 publishes monthly average weighted pellet
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 255
Modeling and Analysis: Wood pellet markets R Sikkema et al.
prices for the Nordic market, derived from about 10 to 20
Scandinavian pellet actors (with an aggregated volume of
about 600 Ktonne of pellets). e lowest and highest prices
(20% of submitted data) are omitted from their average
weighted price overview.
e price section is completed with data for major pel-
let export harbors in Latvia, Russia, the USA, and Canada,
derived from expert resources and commercial bulletins.31–34
ese prices are generally registered free alongside ship
(FAS) without the costs of loading or free on board (FOB)
with loading costs. In our analysis, we used FOB prices for
dry bulk ships in export harbors, connected either by sea or
inland rivers. Under FOB conditions, title and risk passes to
the buyer once the freight is loaded on board the seller’s or
international trader’s ship35 (Box 1).
Major pellet markets and characteristics
Based on formula A, this section is divided into production,
trade, and apparent consumption. Possible e ects of stock
changes are incorporated in the consumption section. Figure2
shows the demand (below the x-axis) and supply (above the
x-axis) situation in the major European pellet markets in 2009.
Only markets larger than 500 000 tonnes are illustrated. In
the case of Russia,*) the export is limited to the total recorded
imports from Russia by all EU-27 member states.
Aggregated European production
Approximately 670 pellet plants in Europe produced about
10.1 million tonnes of pellets (Appendix A), an increase of
about 1.8 million tonnes compared to an earlier study of
production in 2008.20 A large number of these plants, 28%,
are small production plants with capacity of less than 10
000 tonnes per annum. Bioenergy International11,1 2 listed
about 480 large pellet plants in Europe. e EU-27 produced
about 8.75 million tonnes. e largest ones are Sweden and
Germany, both producing about 1.6 million tonnes. Most
of the feedstock needed is purchased from external saw-
mills. Italy on the other hand, Europe’s third largest pellet
producer (0.77 million tonnes), has a lot of integrated pellet
plants. Integrated pellet plants are built within or nearby
sawmills. is way the feedstock is fully sourced within a
short distance.
A er Europe, North America has the largest pellet pro-
duction facilities.11 North American production capacity
has grown from 1.1 million tonnes in 2003 to 4.2 million
tonnes in 200836 and 6.2 million tonnes in 2009.37 In 2009,
a number of new plants were built in the United States to
process chipped roundwood for bulk pellets designated for
export. ose plants have 3 to 4 times the production capac-
ity of the older plants, which are limited to 100 000 tonnes
or less.36 As of June 2009, about 110 US and Canadian wood
pellet plants were in operation or were about to become
Figure 1. Responding actors (non industrial pellets) by the 3rd Quarter of 2009.
256 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
operational. Wood pellet production in the United States
in 2008 amounted to 1.8 million tonnes, which was 66%
of capacity. In Canada, the estimated production was 1.4
million tonnes, about 81% of capacity. e lower capacity
utilization in the United States is a result of the more recent
start-up of the plants. In both countries limitations on
feedstock availability occurred because the economic crisis
constrained sawmill operations and reduced the output of
sawdust and shavings in 2008.36
e utilization rates of pellet plants of Europe’s largest
producers Sweden, Germany, and Italy in 2008 were 64%,
56%, and 87%, respectively. In other words, if the capacity
in these three countries was fully utilized, production could
hypothetically rise by almost 2 million tonnes. Also, other
European countries have not fully utilized their production
capacities: the average Europe utilization rate of pellet pro-
duction capacity in 2008 was about 54%.20
European trade volumes
While some markets such as Germany or Austria are largely
self-su cient, other markets, such as the Netherlands,
Belgium, Denmark and Italy, depend to a very large extent
on the import of wood pellets. On the other hand, in many
producing countries (Canada being the prime example,
but also other areas such as the Baltic countries and north
west Russia), the pellet production sector largely depends
on export opportunities. A rather new actor in the market
is the USA, which has started in 2008/2009 to export wood
pellets by train to and by ship from south-east US harbors.
ese pellets originate from pellet producers using sawmill
residues and chipped trees from so wood plantations.38
Hintz37 estimated about 500 000 tonnes of pellet export
from the USA to Europe in 2009, which is twice the 2008
exports.39
For 2009, about 3.3 million tonnes of pellet export was
registered,13 of which 98% was traded within the EU. e
EU import was about 3.8 million tonnes, of which about
53% was covered by intra-trade. e biggest trade volumes
are recorded by the Netherlands, Belgium, and Sweden; see
Table 1 for export or import volumes about or above 100 000
tonnes per annum. e main trade routes are from North
America to the Netherlands and Belgium with average over-
seas (Panamax) shipments of 20 000 to 30 000 tonnes per
freight, and from the Baltic States and Russia to Scandinavia
by coast liners with average loads from 4000 to 6000
tonnes.40 Another important route is by truck from Austria
to Italy, with average loads of 24tonnes.7
According to Eurostat statistics,13 total EU intra-export
is not equal to total EU intra-import volumes – the export
of pellets is about 1.2 million tonnes more than import.
Bilateral comparisons have revealed persistent discrepan-
cies15 in various member states on intra trade statistics,
called asymmetries. Main de ciencies occur:
• Within the new pellet code (44.01.3020). Most com-
monly, the export is registered rst, followed by a reg-
istration of the import. Countries are obliged to report
their intra-EU export and import ows within 10 weeks.
Figure 2. Balance of pellet vo lumes for the major European country markets in 2009.
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 257
Modeling and Analysis: Wood pellet markets R Sikkema et al.
For trade with non-EU countries, the administration
must happen within 6 weeks. According to Eurostat,14
there should be no time lag between the date or registra-
tion of a transaction in one member state and the date
on which the same transaction is recorded as an arrival
in another. In practice, the administration occurs in the
reference month, in which the goods are exchanged or
otherwise the following month. Delays in data process-
ing can have a non-negligible impact on monthly sta-
tistics but are more or less negligible for the annual
statistics. In case of non-response, the pellet trade is not
registered, but the National O ces will make adjust-
ments on a Chapter level, in our case Chapter 44 Wood
Products.
• Within the total category of ‘pellet, sawdust and other
residues’. As shown in Table 1, recorded exports (on
a country level) are usually larger than recorded
imports. Misapplication of the rules may occur due to
the implementation of the new pellet code by Eurostat.
Discrepancies may occur by registering the exports as
pellets, but the import either like sawdust (new code
44.01.3040) or like ‘wood waste and scrap’ (new code
44.01.3080).
• Within the total wood products trade section
(Chapter44). The system of thresholds for small actors
makes it possible to exempt a number of pellet actors
from statistical formalities. For a given transaction,
a large trader company may be required to provide
statistical information about export in one member
state, whereas the receiving smaller customers in
another member state may be exempted. According
to Eurostat,14 the principle of full coverage has been
in force since January 2005. The principle implies
that member states should estimate undeclared trade,
including trade below threshold at least at Chapter level
and by partner country.
Table 1. Overview of major pellet trade flows in 2009, about or above 100 Ktonnes.13
Trade volum es (K tonne)
Country of o rigin
(extra-EU trade) or
country of consign-
ment (intra-EU trade)
Destination of export
(both intra- and extra-
EU trade)
Volumes record ed by
exporting country
Volumes recorde d by
importing country
Extra EU Total volumes 64 1769
Canada Netherlands No offi cial custom records
available
413
USA Netherlands 313
USA Belgium 185
Russia Sweden 163
Canada Belgium 87
Russia Denmark 87
EU-27 Switzerland 46 No records available
Intra EU Total volumes 3313 2135
Austria Italy 292 142
Estonia Denmark 256 215
Lithuania Denmark 167 36
Germany Spain 167 1
Latvia Denmark 152 71
Latvia Sweden 137 74
Germany Denmark 98 30
Latvia Estonia 95 40
Portugal Netherlands 86 70
258 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
In the Discussion section, we take more discrepancies
on a country level into consideration, like Lithuania and
Luxembourg with a negative apparent consumption.
Apparent consumption, storage facilities, and other
market char acteristics.
e apparent consumption in Europe is estimated at about
9.8million tonnes in 2009, of which 9.2 million tonnes is
within EU-27 member states. Sweden is by far the largest
user of pellets (2.0 million tonnes), followed by Italy (1.1
million tonnes), the Netherlands (0.95 million tonnes),
Germany (0.94 million tonnes), and Denmark (0.89 million
tonnes). For comparison, about 80% of US-produced pel-
lets (1.5 million tonne) are put in small bags and consumed
domestically for residential heating.41 By contrast, most
Canadian pellets (90%) are transported as bulk and shipped
overseas for power production in Europe.36 Asia could
also become an important consumer as the rst large-scale
industrial project to co re coal with (Canadian) wood pel-
lets took place in Japan by the end 2008.39 e wood pel-
let association of Canada42 estimated that Japan imported
around 110 000 tonnes of wood pellets in 2009.
On the basis of nal pellet consumption, the European
countries are further classi ed by their major markets
(Fig.3), as de ned in the section on Methodology.
Markets in Belgium and the Netherlands are dominated
by the utilization of pellets in large-scale power plants. e
UK43 and Poland8 are also classi ed as large-scale industrial
pellets markets, based on their 2009 consumption and plans
for further wood pellet replacement at coal- red plants.
According to BAPE,8 Poland promotes the use of agricul-
tural biomass, including pellets made from agro residues
(mixed biomass pellets). Medium-scale consumers using
bulk wood pellets for district heating and also for (larger)
CHP plants are found in Sweden, Denmark, and Norway.
Alongside the industrial pellets users, the Scandinavian
countries make considerable use of bulk pellets for house-
holds. Whereas the rst (industrial) pellet market partly
relies on imported pellets, the second (non-industrial)
market gets its supplies solely from domestic resources. In
Austria and Germany, pellets are predominantly delivered in
bulk and used in small-scale private residential and indus-
trial boilers for heating. Another group of countries exists
of small-scale consumers that use bagged wood pellets in
stoves. Such residential markets are found in Italy, France,
Bulgaria, and Hungary. Finally, major export markets are
found in Finland, Portugal, Spain, Russia, the Baltic States,
and most other East European countries.
From available data in Austria, Germany, and Italy
(Table2) we learn that the average storage capacity at pel-
let production plants varies from 2300 to 3700 tonnes. For
comparison, Hoglund44 indicated average stored volumes in
2007 of between 3100 and 4300 for Swedish pellet plants, and
an average storage capacity of 14 000 tonnes per plant. By
multiplying the storage capacity per plant and the number
of pellet plants, the total storage capacity on a country level
is estimated. In Austria, even an o cial strategic stock on a
country level was proposed but not introduced.45 Large pel-
let producers have more storage facilities compared to small
ones, due to a higher uctuation in their real production
volumes. e average storage time is probably no more than
one week’s production for large pellet plants. Storage times
at harbors could be even higher. e storage of pellets is
not without risk, due to the moulding of pellets. Damp pel-
lets can swell up and are no longer usable. Even worse, dust
explosion may occur during storage. Consequently, inter-
mediate harbor companies (stevedores) have restrictions
when storing industrial pellets. In Canadian harbor silos,
the moisture content is limited to 8% and the weight fraction
of nes to 5% (Verkerk B, 2010, pers. comm.), whereas in
Figure 3. Overview of European pellet market and main market types
per country in 2009.
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 259
Modeling and Analysis: Wood pellet markets R Sikkema et al.
Dutch silos, the moisture content is limited to 5% for white
pellets or 9% for bark pellets, and 2% for nes. e tempera-
ture is also limited to a range between 40oC and 50oC.46
Pellet actors may also incorporate the new European stand-
ards: EN 14961-1 for industrial (a framework with exible
requirements) and EN 14961-2 for non industrial pellets47
(more or less replacing country-speci c standards). One of
the di erences between both EN-categories is related to the
kind of feedstock (Table 3). Whereas the feedstock of non-
industrial pellets is limited to woody biomass (from forests,
plantations, industrial residues, or waste wood), feedstock of
industrial pellets may also be sourced from herbaceous and
fruit biomass or from blends and mixtures. Non-industrial
pellets are further split into subcategories: A1, A2, and B,
each having detailed speci cations for feedstock but also for
others. One distinctive element is the allowed ash content:
0.7%, 1.5%, and 3.0% (weight fraction) for respectively A1,
A2, and B.
Since 2008, power companies in the Netherlands no longer
purchase their pellets on a single-utility basis. Instead they
have moved their trading activities to dedicated European
head trading o ces for strategic reasons and they have cre-
ated a well-developed market. Most large-scale consumers
have long-term contracts with their suppliers, but in case of
low prices, they are eager to buy from short-term delivery
markets. For that reason they have created strategic stor-
age facilities at the harbors. e individual power units use
these stored pellets for co ring or the central trade o ce
will re-trade them to other users within or outside the
country. Whereas the storage facilities at production and
at conversion sites (power plants) are mostly dependent on
the season (high in summer at production; high in winter at
conversion), the storage at intermediate distribution stages
(harbors) shows market dependent uctuations (low storage
at high price level; high storage at low price level). From the
few responses from large-scale consumers, it is known that
their storage volumes may be quite large. e intermediate
storage in Rotterdam harbor reached about 200 000 tonnes
in 2007, whereas the storage at the individual power utili-
ties could reach about 20 000 tonnes. Bulk pellets used for
district heating also rely on intermediate storage facilities.
For example, Pelletsindustrins Riksförbund (PiR) coordi-
nates about 80% of Swedish pellet purchases toward district
heating and therefore has accumulated storage facilities in
Swedish harbors up to 10 000 tonnes.33 Non-industrial pel-
lets have almost no intermediate storage facilities in the sup-
ply chain, but boilers are relative large and have extra space
for pellet feed-in.48
Price developments
Indus trial pellet prices (CIF)
e pellet prices for Dutch power plants are volatile,52 ,53
because the ARA market has a limited amount of actors,
up to ve large power companies and three international
traders. e pellet prices have increased from around €115
per tonne in July 2007 to €140 per tonne at the beginning of
2009. Since then, prices have steadily been declining towards
€125 per tonne at the end of 2010 (Fig. 4). Between 2003 and
2006, the Dutch government granted long-term subsidies
for co ring biomass of up to €0.06 and €0.07 per kWhe, a
scheme ending between 2012 and 2015. is is equal to about
€120–135 per tonne of pellets and has given an enormous
boost to the co ring of pellets in coal power plants. is
feed-in tari is meant for bridging the gap between total
production costs (fuel, operation and maintenance, capital)
of pellets and coal.7 Another pellet price index for north-
west Europe was created in May 2009,31, 32 based on submis-
sions from about 15 pellet actors in UK harbors as well as in
Dutch and Belgium harbors for deliveries within 90 days.
Table 2. Stored volumes of pellets in Austria, Germany, and Italy in 2008 (in tonnes).
Total capacity
o n country level
Real production
o n country level
(Appendix A)
Number of pellet
plants responding
to storage facilities
Average storage
capacity per
plant
Corresponding
storage capacity
on country level
Austria 1 006 000 626 000 25 2600 65 000
Germany 2 400 000 1 460 000 46 3700 168 000
Italy 750 000 650 000 75 2270 170 000
260 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
Table 3. Characteristics of Europe’s major pellet market types.
Large-scale users
(bulk)
Medium-scale users
(bulk)
Small-scale users
(bulk)
Small-scale users
(small bags)
Suppliers International pellet
production plants.
European pellet production
plants.
Domestic production
plants.
Domestic production
plants.
Storage at pellet
plants
Average 2500 to 5000 tonnes of actual storage per pellet production plant.
Intermediate
companies
International operating
traders (with one main
European offi ce)
Predominantly domestic
traders
Domestic traders Retailers
Typical way of
transport
(Inter-) continental shipping
(in Panamax or Handymax
vessels, freights: 10 000
to 100 000 tonnes).
European short sea ship-
ping (average 5000 tonne)
or lorry transport (max
volumes 40 tonnes).
Lorry transport (delivery of
1 to 6 tonnes per house-
hold per year).
Both lorry transport to
retailers and private cars
to households.
Contracts Both long-term contracts
(up to 3 years) and pur-
chase from short-term
markets, e.g. within one
month deliveries.
Predominantly long-term
contracts (up to 3 years),
plus short-term delivery
from daily spot markets.
Annual deliveries upon
request.
Infrequent purchase at
retailers (15 to 25 kg
bags).
Number of
demand players
per country
Few, internationally operat-
ing utilities. For example,
in 2009, the Netherlands
had four power compa-
nies that cofi red wood
pellets in six existing
units.
For example, Sweden has
about 100 district heat-
ing plants, using pellet
boilers. In Denmark larger
CHP plants use pellets,
too.
Used in pellet boilers, both
in households and in
small industry. For exam-
ple, between 1997 and
2009, about 71 000 boil-
ers were sold in Austria.19
Dedicated stoves, mainly
in households. A range
of pellet stoves is cited.
In Italy the range is
estimated between
525 00049 and
801 000.50
Actual storage at
end users
Both at harbor (up to
200 000 tonnes) and
on-site (up to 10 000
tonnes per plant).
Annual stock changes at
a country level may be
considerable.
Storage in harbors could
be large, up to 10 000
tonnes (like in Sweden).
On site less stock vol-
umes needed: up to 500
tonnes.
Average use for boilers in
Austria & Germany about
6.5 tonnes per year; stor-
age capacity from 1.5 to
15 tonnes.51 Proposed
national strategic Austrian
pellet stock is not
honoured.45
Low, due to the small size
of the bags (15 to 25 kg)
and ad hoc purchase of
these bags.
Quality
requirements
Company-specifi c criteria, like in harbors.46
Implementation of a fl exible, pan European EN 14961-1
standard for industrial pellets47 since April 2010.
Feedstock may exist of woody biomass, herbaceous
biomass, fruit biomass or blends and mixtures.
Predominantly country specifi c standards. Implementation
of pan European standard EN 14961-2 for non industrial
pellets47 from 2011. Three subcategories A1, A2, and B,
each consisting of detailed specifi cations for woody bio-
mass feedstock, ash content and others.
Sweden has a major market for bulk pellets for medium-
scale consumers and (larger) CHP plants. e price of
industrial pellets in Scandinavia increased since January
2007 to about €138 per tonne in October 2010. Remarkably,
pellet prices in Scandinavia are moving in the opposite
direction, compared to those in the Netherlands, prob-
ably due to a di erent methodology of price setting (see
Discussion). Also, in the current Swedish tax system, heat
generation and power production from fossil fuels is taxed
(about €10 per GJth) for CO and sulfur emissions.7 e
Swedish tax is equal to about €160 per tonne of pellets.
Obviously, the Swedish subsidy for pellet use allows dis-
trict heating plants to pay higher prices for wood pellets,
compared to power utilities in the Netherlands. Next to
feed-in tari s and taxation measures, an extra incentive is
applicable for all industrial pellet markets via revenues from
CO emission rights. e price of CO rights were between
€10 and €20 in the period 2007 to 2009,54 or on average
€0.012 per kWhe.7 is is equal to about €24 per tonne of
pellets (Box 1).
Residential pellet p rices
According to another European study,49 a surge in sales of
solid fuel appliances (boilers for bulk and stoves for bagged
pellets) in Europe has occurred since the mid- 2000s a er
a long period of declining solid fuel appliance sales during
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 261
Modeling and Analysis: Wood pellet markets R Sikkema et al.
the 1990s. e increase accelerated in 2005, notably in
Austria, the Czech Republic, France, Germany, Poland,
and Scandinavia. e growth can be explained by three key
elements: the image of high-performing, environmentally
friendly heating appliances; increasing prices of natural gas
and heating oil; and government subsidies for pellet boiler
investments.
Non-industrial pellets for households are generally more
expensive than their industrial counterparts. e former
include VAT both for bulk and bagged pellets. ey also
have higher quality standards (ash content, dust, etc). e
extremely high pellet prices in Austria and Germany, early
in 2007, were exceptional and were mainly caused by a fast
increase in Italian pellet demand and a cold winter the year
before. German and Austrian seasonal developments are
very similar. ey have both their market structures in raw
material supply, and pellet distribution in common. Until
now, they have been more or less self-su cient. e non-
industrial pellets price in Northern Europe does not seem to
follow any seasonal pattern. Rising prices in Finland are due
to the rising price of the raw material. Swedish prices used to
be quite stable. Due to a changing rate of the Swedish krona
against the euro, market prices in euro went up on average
a er October 2008 (Fig. 5). Note that Danish and Norwegian
inventories had a low response rate and are therefore not
incorporated. Like the Swedish krona, the Swiss franc has
gone up in value against the euro, resulting in higher pel-
let prices in euro. Obviously, Switzerland started to import
relatively cheap pellets from its ‘euro neighbors’. Switzerland
imported one-third of its apparent consumption from
France, Germany, and Austria.13
e market price for pellet in bags (at retailer’s shops)
were quite varied during 2007 and 2008, but they tended to
stabilize between €200 and €220 per tonne in 2009 (Fig.6).
Neighboring countries Italy and France show a similar price
development. Bulgaria and Hungary have only recently
started pellet production and are largely exporting, due to
a lack of domestic demand. Pellets for the marginal domes-
tic demand are usually sold ‘explant’, due to a missing
pellets distribution system, and are thus relatively cheap.
Whereas Bulgaria has a xed exchange rate against the uuro,
Hungarian changing rate led to increasing pellet prices in
euro.
Transport costs
Distribution costs are a key factor in total costs.7 e main
means of transport within Europe is road transport. e
global road transport prices for wood pellets varied between
Figure 4. CIF prices of bulk pellets for large scale power production in the Netherlands, United
Kingdom and for medium scale district heating & CHP in Scandinavia.8,31–34
262 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
€12 per tonne and €18 per tonne in 2009, depending on
distance and truck load. For comparison, a large pellet
trader55 cited €16 per tonne for a 25-tonne pellet truck and a
distance of 200 km. However, in the case of pellet transpor-
tation from the Baltic States and Russia, pellet traders prefer
short sea shipping (with freights from 4000 to 5000 tonnes),
which are equipped with on board cranes and can unload
themselves.33 e main means of transport used for dry bulk
freights from North America are Panamax ocean vessels
(60 000 to 80 000 tonnes).
Figure 6. Prices of pellets in small bags (<25 kg) for residential heating (at retailer’s shops,
including VAT).
Figure 5. Prices of bulk pellets for residential heating in Europe (including delivery and VAT).
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 263
Modeling and Analysis: Wood pellet markets R Sikkema et al.
e industrial bulk pellet price is closely linked to the size
and the length of a contract. Next to short-term contracts,
both APX Endex29 and Argus Biomass31 started to publish
longer-term contracts (for deliveries up to three years ahead)
in the fourth quarter of 2010. e latter could be more than
€10 per tonne pellet more expensive, because buyers pay a
premium to secure their feedstock supplies. According to the
Forest Energy Monitor,52,53 most wood pellets are shipped
under long-term contracts, made in dollars. e exchange
rate of the dollar against the euro is thus a key factor for
European customers. Figure 7 shows the possible correla-
tion of the dollar exchange rate with CIF ARA prices for
wood pellets from one month to three years ahead ahead of
delivery.
Another relevant factor is the cost for freight. Figure 8
shows the ocean freight costs since 2002 between North
America and Europe ranging from €27 to €69 per tonne of
pellets.57–59 e dry bulk market, which was high since 2003,
collapsed in 2008 as a result of decreased trading activity
and overcapacity of dry bulk ships in this sector60 and costs
went back to the level they were before the price peak. Price
di erences also occur between European destinations.52
Long-term contracts for shipping, signed early 2009, settled
at below US$25 per tonne for Rotterdam, and were US$28 to
US$29 for the UK and US$42 for Scandinavia. For compari-
son, a Canadian pellet study61 assumed that sea transport to
Sweden is on average US$7 per tonne more than shipping to
the Netherlands.
Pellet export prices (FOB)
e USA and Canada are the largest exporters of wood pel-
lets to Europe.13 e major export harbors in North America
are located in the south-east USA (Mobile in Alabama;
Panama City in Florida) and Vancouver in west Canada
(Verkerk B, 2010, pers. comm.).38 e wood pellet prices
for export (FOB)31,32 rose from €85 in July 2009 to €112 per
tonne of pellets by November 2010 in south-east USA and in
the same period from €78 to €112 per tonne in west Canada
(Figure 9). e tightness of feedstock supplies pushed up pel-
let production costs in North America and Europe in 2009.52
e major export ows from Eastern Europe originate
from Russia and the Baltic States. Most pellets are delivered
to Europe through St Petersburg harbor in north-west Russia
and via Riga harbor in Latvia. e remainder are transported
by truck. e prices of pellets exported from St Petersburg
to Scandinavia and Western European countries were early
2010 at a level between €105 and €115 per tonne FOB.9,34
Average export prices in Riga have gone up on an annual
basis to about €119 per tonne by the end of 2009. Continuous
supply has been di cult in both Riga and St Petersburg har-
bors. Most of the suppliers are relatively small– in terms of
production less than 25 000 tonnes per annum – so it takes
Figure 7. US Dollar exchange rate versus CIF ARA pellet prices.8,29,56
264 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
time for them to supply a full vessel. To have reliable delivery
and uniform quality, Scandinavian customers are willing to
pay a premium on top of daily pellet spot prices.33 By the end
of 2009, the average shipping costs from Riga to Denmark,
as estimated by involved pellet actors,33, 59 were about €20
per tonne and about €25 per tonne for loads from both St
Petersburg harbors. e latter have higher costs due to a
longer period of ice coverage around the harbors and water-
ways, which leads to additional costs for icebreakers.
Main pellet market trends
Table 4 summarizes the price developments for the major
pellet market types as described in the previous sections.
e pellet market is quite dynamic due to economic develop-
ments and recently released government biomass support
plans. Public support is needed to cover the additional costs
of capital investment, operation and maintenance of renew-
able energy equipment, and pellet fuel feedstock, in com-
parison with their fossil fuel alternatives.7 From the market
Figure 8. Historic ocean freight costs between North America and Europe.57–59
Figure 9. FOB pellet prices in North American harbors.31,32
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 265
Modeling and Analysis: Wood pellet markets R Sikkema et al.
Table 4. Major trends & proposals in Europe’s major pellet markets. Possible effects on pellet prices are
converted to € per tonne pellet (Box 1).
All impacts in €
per tonne pellet
Large-scale users
(bulk)
Medium-scale users
(bulk)
Small-scale users
(bulk)
Small-scale users
(small bags)
Feedstock costs Topic W. USA: upward
price in 2010 for delivered
sawdust: €45/tonne pel-
let. Proposal USA: BCAP
programme subsidy for
feedstock (equal to €13 per
tonne62).
Topic Latvia: Since 2008:
low quality logs (and
chips) are also used.33
Higher feedstock costs
and primary energy
input.7
Topic Germany: upward prices
for sawdust: price 2009:
€85 per tonne delivered.72
Remarkably: next to a basic
increase of ex mill prices,
sawdust transport is increas-
ing (fuel costs; distance).
Topic Italy: relatively
high share of integrated
sawmills and small
pellet plants. External
share of feedstocks
low, thus limited trans-
port of sawdust, etc.
Pelletization costs Topic Canada: larger-scale
plants are constructed for
lower costs per tonne of
pellets.61
Topic Sweden: higher
costs for power con-
sumption per tonne of
pellet produced7
Topic Austria: Higher pel-
let drying costs.71 Topic
Switzerland: extra import
from €-countries, due to
relatively low price.
Topic Hungary and
Bulgarian: bagged pel-
lets have lower prices,
with sales at the pellet
plant (rather than from
the retailer) due to a
lacking distribution
system.8
FOB prices Topic USA & Canada:
upward prices in 2010: level
€110-115 per tonne.31
Topic Russia & Latvia:
upward prices 2009
between €105–115
tonne.34
Not applicable Not applicable
International pellet
transport
Ocean shipping prices
are fl uctuating: between
€30 and €70 per tonne in
2007–2010.57–59
Short sea shipping: in
2009 about €20 per
tonne from Riga and €25
from St Petersburg.33,59
Truck transport between €16 and €18 per tonne in
2008-2010 for pellet transport.7,55
Some future options. First a CO2 levy on international ship-
ping fuels:65 a levy of €15 per tonne CO2 results in €4 per
tonne pellet extra costs, based on 16 500 km distance and
15.9 g CO2 emissions per tonnekm.66 Second, torrefi ed
wood pellets (TWP) are developed for long distance ship-
ping. TWP are assumed to have 40% lower transportation
costs per unit.61
CIF prices Topic Netherlands: Fluctuating
APX-Endex prices, currently
above €130 per tonne.29
Topic Sweden: upward
2010 Foex price level of
about €135 per tonne
pellet.30
Not applicable Not applicable
Note: Long-term (instead of
short-term) contracts are most
common, with purchases up
to 3 years ahead of delivery.
Note: reported FOB
prices Russia,9,34
plus sea freight and
handling33,59 are just
below CIF prices.30
Final use (energy
conversion) of
wood pellets
Topic Netherlands: Public sup-
ported feed-in tariffs, €0.05 to
€0.07 per kWhe (€120 to135),
will gradually disappear after
2012.
Topic Sweden: €10
per GJth tax on CO2
and sulphur emissions,
equal to about €160 per
tonne.7
Topic EU-27: new certifi cation standards (EN 14.961-2)
for non industrial use. Possible certifi cates are DIN+,
EN+, etc. Example: basic certifi cation costs for EN+
(excl. surveillance visits) are €0.06 to 0.13 per tonne pel-
let. EN+ partly relies on existing certifi cates for sustain-
able forest resources.70
Government
subsidies
Topic Netherlands: new
options proposed (e.g. min.
biomass share cofi ring).67
Topic Poland: share of
agro residues of 100%
in 2015 for >5 MW
plants.8
Topic Germany: MAP
subsidies (€36 per kW)
for purchase of boilers for
households are continued
again, after a temporary
stop.73
Topic France: incen-
tives for pellet stoves
and boilers leads to
replacement of old log
boilers.74
Topic UK: reduced ROC sub-
sidies for cofi ring, down to
£45 per MWhe,31,68 equal to
€100 per tonne pellet.
Topic UK: RHI for dedi-
cated biomass use in
heating plants. Tariff for
large plants (>0.5 MW)
are £16 to £25 per MWth,
equal to €85-€135 per
tonne pellet.69
Topic Italy: support
of local biomass for
energy plants is
delayed by administra-
tive procedures.32,75
266 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
types incorporated in the summary, we have seen the follow-
ing trends occurring in recent years:
• Large-scale bulk for power production. One topic from the
start of the pellet supply chain is the BCAP programme
in the USA. e US government announced nancial
support for all kinds feedstock for bioenergy:62 US$17.5
per tonne, possibly lowering pellet production costs by
about €13 per tonne. In order to prevent unwanted shi s
from the forest industry to the energy sector, the BCAP
focuses on forest residues (low-quality logs) rather than
sawmill residues (chips, sawdust). In Canada, as another
example, newly constructed pellet plants are larger61 to
comply with the growing needs of the European power
plants. CIF market prices for pellets are increasing; the
dollar rate has a major stake in this trend. Remarkably
FOB prices in North America31 plus the reported
freight57–59 seems to overtake the CIF prices (in case of
short-term delivery time) by 2010. Concluding, published
short-term CIF prices29,31 do not re ect the real market,
because pellets are more and more frequently purchased
on longer-term contracts up to three years.63,64 A near
future impact for sea transport is a possible implementa-
tion of a carbon levy on shipping fuels a er 2012.65 To
illustrate the relatively low impact: a tax of €15 per tonne
CO is equal to €4 per tonne of pellets.* A larger e ect
may be expected from a future introduction of torri ed
wood pellets. Transport costs are expected61 to decrease
by 40% due to a higher energy density per m3. At the
other end of the pellet supply chain, public support is
much stronger on the European continent; public sup-
port by Dutch feed-in tari s (€120 to €135 per tonne) will
be gradually phased out a er 2012 and maybe replaced
by another regulation, like for example an obligatory
proportion of biomass co ring.67 For comparison, the
Renewable Obligation Certi cates system68 in United
Kingdom supports the use of biomass with about €100
per tonne of pellets (derived from £45 per MWhe for
large-scale power production).
• Medium-scale bulk for district heating and CHP. Pellets
for medium-scale heating in Scandinavia show an
increased price trend, through the increased cost of
domestic pellet production. e number of pellet plants
is increasing: traditional forest industries are investing
in pellet plants resulting in extra feedstock competi-
tion.53 On the other hand, the prices of imported pellets
also went up. Latvian pellets, for example, increased
from €95 to almost €120 per tonne FOB Riga. Amongst
others, Latvian prices have increased by introducing
new feedstocks such as low quality pulpwood, which is
more expensive than traditional sawdust (Fig. 10). e
distribution of pellets, by means of short sea shipping
remains quite stable: between €20 and €25 per tonne.
At the end of the supply chain, Swedish consumers of
industrial pellets generally pay higher pellet prices, due
to a high tax system for CO and sulfur emissions of
competing fossil fuels: €10 per GJth. is tax, equal to
€160 per tonne of pellets has the largest impact of all
trends. A minimum obligation is already in place in
Poland, where for larger (>5 MW) energy plants a share
of 100% is valid for biomass from agricultural resources
(like mixed biomass pellets) in 2015.8 e UK focuses
on the heating market in its renewable action plan. e
UK public subsidies are designed for the use of all kinds
of biomass, including pellets. e proposed subsidies
(Renewable Heat Incentive) range between €85 and €135
per tonne pellet, converted from a tari of £16–25 per
MWhth for (district heating) plants larger than
0.5 MW.53,69
• Small-scale bulk and bagged pellets for residential
heating. Where bulk pellets for residential heating are
delivered at home, bagged pellets have to be purchased
from retail shops, or in case a distribution network
is lacking (as in Hungary and Bulgaria), from pellet
production plants. Italy has the largest bagged-pellet
market and most of its production integrated in small
sawmills. In France, the support for pellet stoves has
led to the replacement of older log boilers and fire
places.74 A particular trend break for pellets occurred
in Germany: public subsidies on the purchase of resi-
dential boilers were set on hold and later decreased to
€36 perkW installed kW.73 Bagged pellets and bulk
*Average CO2 emissions of international shipping are about 15.9 g CO2 per
tonne km66 and the shipping distance between Vancouver, Canada and
Rotterdam, the Netherlands is 16 500 km7.
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 267
Modeling and Analysis: Wood pellet markets R Sikkema et al.
pellets for households have most characteristics in
common: their supplies have become more expensive,
due to larger production costs71 and slightly increas-
ing prices for sawdust.72 Bulk and bagged pellets for
households are also going to face one pan-European
standard in 2011 (Table 3). The accompanying costs
for optional ‘EN-14961’ certification are assumed to
be relative low. According to DEPI,70 the certifica-
tion costs are about €0.10 per tonne, excluding any
additional costs for regulatory audits. The certifica-
tion will partly rely on existing certification systems
for sustainable forest resources (FSC; PEFC). Finally,
both market types show a predominant use of domes-
tic pellets instead of imported ones. However, this
market situation seems to change soon. Related to
the attractive euro exchange rate, European countries
with another currency, like Switzerland, may wish
to import a larger part of their domestic needs from
‘cheap neighbouring euro countries’. Accross Europe,
the distribution of residential pellets relies on truck
transport, which costs vary from €16 to €18 per tonne
of pellets.7, 55
Current and future feedstock supplies
To which extent can pellet plants get enough raw material
supply now and in the near future? In our scenarios, forest
industries and the growing bioenergy sector compete for tra-
ditional feedstocks, like sawdust, shavings, logs, and sawmill
chips, and also newer feedstocks, like forest slash and forest
chips. Biomass needed for drying during wood and pellet
production processes is taken into account in our Discussion
section.
Current supplies
e feedstock supply for the pellet sector used to be quite
speci c: until 2008 the sector used largely le over feedstocks
like wet sawdust (mainly produced during the process-
ing of logs) and shavings (processing of sawn wood). In
addition to the pellet industry, sawdust and shavings are
used by forest industries for the production of wood-based
panels. Worldwide, there is little market information avail-
able on sawdust and shavings. Only WRI,62 EUWID,72
Latvianwood,76 and Metla77 regularly publish prices on saw-
dust. Figure 10 shows the historic developments, uctuating,
but also slightly increasing since 2001 in selected regions,
Figure 10. Historic prices of sawdust ex sawmill and delivered62,72,76,77 and of pulpwood delivered76
(in € per tonne).
268 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
western USA, Germany, Latvia, and Finland. Remarkably,
German prices for sawdust delivered to consumers increased
relatively more than for sawdust produced at the saw mill
(ex-mill). e increase is probably caused by increasing
transport costs, and higher local demand. Sawn-timber
production decreased across North America and Europe in
2008/200939 and led to less available feedstock for the grow-
ing needs of the pellet sector. At the same time, the pulp
and paper sector, and also the panelboard sector (especially
oriented strand board) cut their needs, leading to alternative
feedstock for the pellet sector from low-quality logs (pulp-
wood) and sawmill chips. According to RISI,78 the down-
turn in demand for pulpwood was partially compensated
for by the growing needs of the pellet sector. Information
about pulpwood and chip prices is abundantly available.79,80
However, they show a large variety by including di erent
wood species. To illustrate one trend, we have added an aver-
age price for Latvian pulpwood (assuming equal shares of
pine, spruce, birch, and aspen),76 which are used for Latvian
pellet production since 2008.33
In the near future, forest chips and whole branches and
tops (forest slash) from existing forests and new energy
plantations will become technically feasible. ey can be
pelletized alongside traditional feedstocks such as sawdust,
shavings, and pulpwood chips. New production steps prior
to drying will then have to be integrated into the proc-
ess of pelletization. e bark must be removed from the
green chips or slash, which is then reduced to chips. ese
chips are further pulverized prior to drying, by wet milling
instead of dry milling.81 Bark and other rejects can be used
for the drying process.
Future demand
e EU’s gross nal energy consumption is increasing.6,82
Simultaneously, the demand from the energy sector (heat-
ing, cooling, power production) and from the transport
sector (biofuel), related to the input of biomass and waste,
has gone up from 150 million tonnes to 250 million tonnes
(Fig.11; Box 1). e EU 2020 policy target, 20% renewable
energy sources in gross energy consumption (GEC), is a
predominant driver for future biomass and waste demand.
Based on the World Energy Outlook (WEO),83 the future
trends for consumption of biomass and waste for energy are
derived for the EU-27. e WEO reference scenario includes
EU-27 goals for achieving a 20% share from renewable
energy sources and 20% GHG emission reduction. e WEO
‘450 scenario’ is aiming for a long-term limitation of green-
house gases in the atmosphere (concentration of 450 ppm),
via more stringent measures, like 37% emission reduction
goals in power production and transport.83
Wood and wood waste have a major share in the category
‘biomass and waste’. According to Eurostat,6 the gross
energy consumption of wood and wood waste has increased
from 125 million tonnes in 2000 (83% of total biomass and
waste consumption) to 175 million tonnes (67%) in 2009.
Wood and waste wood is primarily used by the energy sector
(heating, cooling, electricity).6 e current use of woody bio-
mass by the transport sector (transportation fuels) is limited.
Actually, mainly non-woody rst-generation biomass, such
as cereals and corn, is used for the production of transporta-
tion fuels. In near future also second-generation biomass
(woody or herbaceous feedstocks) is likely to be used for
transportation fuels.84,85
e EU’s forest sector is also a major player in the woody
biomass arena with an industrial round wood (logs) con-
sumption of 324 million m3, equal to about 160 million
(air dry) tonnes.86,87 e sector expected an industrial log
consumption in the EU-27 in 2020† of between 481 and
576 million m3, starting from 366 million m3 in 2000.88
Compared to the lower 2009 level, the future increase is
between 160 and 250 million m3, equal to between 80 and
125 million tonnes. e lowest increase occurs in UNECE’s
reference scenario; the highest increase is supposed to occur
via a quick integration of new EU member states a er 2004
(UNECE’s rapid growth scenario).
e expected growing needs for wood and wood waste
(including pellets), by the transport, energy and forest sec-
tors, are shown in Fig. 11. In the following sections, we have
elaborated some considerations for future feedstock avail-
ability of woody biomass, in relation with the magnitude of
future pellet markets.
To explore the future needs of woody feedstock for forest,
energy and transportation sectors between 2010 and 2020,
we compiled two scenarios:
†EU-27 has an average share of 73% in total 2020 European industrial wood
use, based on 2000–2009 data.86,87
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 269
Modeling and Analysis: Wood pellet markets R Sikkema et al.
(A) Traditional competing arena with tight supplies. Scenario
A does re ect the current competition between forest
sector and the energy sector (assuming a growth pat-
tern limited to wood pellet markets) and their respective
growing demands for existing feedstocks like sawdust,
shavings, pulpwood, and chips.
(B) Extended competing arena with a maximum demand for
woody biomass and broad supplies. Scenario B re ects
an extended competition arena, in which again both
the forest sector and the energy sector take part plus the
entrance of the transport sector. ey are now using all
kinds of wood and wood waste (including pellets). e
future feedstock supply is enlarged with new energy
plantations and with the recovery of slash in EU-27 for-
ests from altered forest management and of waste wood
from post-consumer waste disposal.
Scenario A: Traditional competing arena
e growth in demand for feedstocks a er 2009 is about
105 million tonnes of pellet equivalents (Fig. 12; Box 1),
consisting of logs (80 million tonnes) for a reference growth
of forest industries88 and extra future feedstock needs (25
million tonnes) for pellet consumption by the energy sector.
Figure 11. Consumption patterns of industrial round wood in the EU-27 and primary energy demand of
wood and other biomass sources in EU-27 (in million air dry tonnes).33,82,83,86–92
270 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
e future pellet consumption trend is derived from our his-
toric 2001–2009 Pelletsatlas data and four future projections:
Jaakko Poyry,89 Ekman & Co.,33 AEBIOM,90,91 and New
Energy Finance.92 All projections are based on Europe,‡ but
estimated for di erent years. Ekman reckons on 18 million
tonnes in 2013; Pöyry estimates 16.5 million tonnes in 2015;
AEBIOM expects between 50 and 80 million tonnes in 2020;
and New Energy Finance expects about 28 million tonnes
in 2025. Most projections foresee the largest growth in the
electricity sector, ranging from a modest 3% share for co r-
ing of pellets92 to even 20% co ring90 shares in some utili-
ties. A er an exponential t (Fig. 11), a consumption level
just lower than 35 million tonne could be reached in 2020,
starting from 9.2 million tonnes in 2009. Information on
speci c shares for the major pellet market types (as de ned
in our Methodology section) is extremely scarce. To distin-
guish between pellet use for small-scale residential heat-
ing (bulk and bags), medium-scale district heating and for
large-scale power production (including CHP), we assumed
the following shares for the EU-27: 40%, 20%, and 40% in
2009 respectively 33%, 22%, and 44% in 2020.33
e EU-27 forest supply is derived from the good practice
guidance for sustainable wood mobilization by UNECE
and FAO,93,94 more speci cally from the ‘socio-economic
potential’. is potential exists of additional tree fellings
for forest maintenance, and unused wood residues from
forest industry. e UNECE options ‘forest expansion’
(plantation chips), ‘forest slash’ (branches and tops includ-
ing bark, le a er current and future harvests) and ‘waste
wood’ (post-consumer recovered wood) are not regarded
like traditional feedstock, but are included in scenario B.
e UNECE option ‘ bers from agricultural residues’ is
not applicable for our analysis, because we focus on woody
feedstocks.
Resuming: e total extra demand for pellets and indus-
trial round wood in the EU-27 can only be partially (45%)
supplied by EU-27 forests, leaving a shortage of 60 million
tonnes. Any shortage must be ‘bridged’ via imports from
other European countries and overseas. A main source just
outside the EU-27 is additional fellings from north-west
Russian forests. According to recent studies,95,96 between
17.5 million and 50 million tonnes of forest residues can be
sustainability harvested in this region. Finally, the potential
of pellets as a renewable energy source could increase from
0.2% to 0.8%, based on a gross nal energy consumption in
the EU-27 in 2008 (75 EJ).
Scenario B: Extended competing arena
e maximum needs are compiled for three sectors as fol-
lows. First, the rapid growth scenario (125 million tonnes)
of the forest industry88 is incorporated. Secondly, we
have anticipated the additional need of 30 million tonne
of second-generation biomass for the expected output of
transportation fuels in 2020.85 erefore, we used an e -
ciency factor of about 50% to 52% for extracting liquid
Figure 12. Additional annual forest feedstock supplies in 2020.33,87–93
‡The EU-27 share in total European pellet consumption was 94% in 2009 and is
expected to reach 99% in 2020.33
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 271
Modeling and Analysis: Wood pellet markets R Sikkema et al.
fuels (biodiesel) from short rotation crops.97,98 irdly, we
considered a maximum use of woody biomass by the energy
sector (Appendix B), which is built of two parts: biomass
for heating (growth of about 100 million tonnes) and for
electricity production (50 million tonnes). e increased
demand for heating is based on a substitution of 50% of
the most recent (2004) data for heating oil consumption.99
When assuming an average lifetime of 20 years for heating
boilers in general, about 50% of heating oil boilers could
be replaced by biomass boilers between 2010 and 2020. e
maximum future demand for biomass co ring (based on
an EU-wide average co ring rate of 10% biomass and 90%
coal or lignite) in EU-27 power plants is estimated at about
50 million tonnes. Data are derived from Hansson et al.,100
more speci cally the substitution case for power plants up
to 40 years old. e current input of biomass for co ring
(4 million tonnes of wood pellets) is subtracted from the
2020 potential, leaving the increase in annual biomass
demand until 2020.
About 400 million tonnes of woody biomass is avail-
able in scenario B (Fig. 13). First, substantial areas can be
released through sustainable gains in yield in the food and
feed sectors.84 According to this analysis of future land
use and biomass supply in the EU-27+ (REFUEL project),
second-generation biomass will be largely grown on avail-
able cultivated land in Eastern Europe. e possible future
supply from second- generation woody energy plantations
(with Salix, Populus, and Eucalyptus species) is estimated
at about 300 million tonnes in the EU-27. Secondly, altered
forest management may lead to a sustainable recovery of
forest slash (30 million tonnes). irdly, about 20 million
tonnes of additional waste wood can be recovered a er
waste collection.
Resuming: the maximum demand of woody biomass in the
extended scenario (305 million tonnes in 2020) can be met,
provided that these three additional sources are used in the
near future, next to the existing EU-27 forest potential in sce-
nario A (45 million tonnes). e use of wood and wood waste
as a renewable energy source could more than double from
3.9% in 2008 to 8.2% in 2020, both based on GEC level of 75 EJ.
Discussion
Our forecasts for the growth of industrial round wood
(80 to 125 million tonnes) are based on older estimations
by UNECE88 in 2005 and will be updated by UNECE in
2008–2013. Meanwhile, a preparatory study101 shows that the
expected increase of demand in the EU-27 (with a 73% share
in total European consumption) between 2010 and 2020 will
be lower: 19 to 31 million tonnes. Our other forecasts for the
use of woody biomass for energy and transport purposes,
range from a minimum growth of 25 million tonnes of
pellets in our traditional competing arena (scenario A),
to a maximum growth of 180 million tonnes of wood and
wood waste in our extended competing arena (scenario B).
For comparison we have checked the National Renewable
Figure 13. Additional annual biomass feedstock supplies in 2020.84,85,87,88,93,99,100
272 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
Energy Action Plans (NREAP’s) of the EU-27. Per December
2010, all member states§ have submitted their biomass
needs for a renewable energy production in 2020: total 136
MTOE.102 is means that the use of biomass needed for the
nal production of electricity, heating & cooling and trans-
portation fuels (plus the respective conversion losses accord-
ing to Appendix B and Box 1) will grow by about 220 million
tonnes pellet equivalents, compared with the 2010 use of
biomass for renewable energy production.82
Our forecasts exclude feedstock for drying of nal prod-
ucts, like sawn wood, wood-based panels, and pellets.
Note that here are large potential GHG savings possible
when drying processes with fossil fuels are replaced with
bark or other woody residues. In case of pellet production,
about 0.33 to 0.66 tonnes of wet feedstock per tonne pellet
is needed for separate (kiln) drying processes7 and 0.33 to
0.73 tonne per tonne sawn wood, respectively wood-based
panel (OSB).103 All calculations are based on an average pri-
mary energy value of 7.5 GJ per tonne of low-quality drying
feedstock (with a range between 6 and 9 GJ per tonne104 ,105).
Assuming a 100% pellet share in the woody biomass growth
of the energy sector, 100% production of sawn wood from
industrial round wood in scenario A and 100% OSB produc-
tion in scenario B, the need for drying feedstock could vary
between 20 million tonnes and 140 million tonnes for sepa-
rate (kiln) drying systems. New developments are heading
toward more integrated systems, in which residual heat of
CHPs is used for the drying processes and in that case, less
woody feedstock for drying is needed.
Future pellet markets for energy
Concluding from our detailed overview in Appendix B, the
EU member states with the most potential for additional
wood and wood waste use for heating and electricity produc-
tion are: Germany (43 million tonnes), France (19 million
tonnes), UK (14 million tonnes), Spain (13 million tonnes),
Poland (7 million tonnes), Belgium (7 million tonnes), Greece
(6 million tonnes) and Italy (6 million tonnes). It is uncertain
to what extent the demand for woody biomass will be cov-
ered by wood pellets. National subsidy schemes for biomass
use will be determining for the use of wood pellets or other
types of biomass. In Poland for example, the use of residues
from agriculture and agro industry is supported.8 In the
UK, the feed-in subsidies for biomass for energy production
are more favorable for medium-scale heating plants than for
large-scale co ring units.53,69 In order to meet the forecasted
increasing biomass demands, it is most likely that in the near
term, the current import from outside the EU-27 and over-
seas will increase, next to more supplies from the EU-27 for-
est sector. January through June 2010 showed53 an increased
volume of imports from outside the EU-27: 1.1 million tonnes
(same period 2009: 0.85 million tonnes). In the long term, the
possible establishment of new woody plantations for energy
may relieve further pressure, not only in EU-27 (a potential
of 300 million tonnes is included in our extended scenario),
but also in Ukraine. e potential extra supply of woody bio-
mass from Ukraine is estimated at about 135 million tones.84
Technological changes are also relevant for the EU’s future
pellet markets, especially those for coal power plants. For
our future demands, we assumed a relative conservative pel-
let co ring share between 3% and 20%. Nowadays, shares
of up to 35% are already possible 106 ,107 or above 50% in the
future with more advanced systems.10 8 With regard to future
supply, torri ed wood pellets and other torri ed biomass
are being developed for co ring, next to traditional wood
pellets. When ready for commercial production, their char-
acteristics of high energy density and weather durability,
will facilitate long-distance transport and storage, and be
comparable with those of coal.
Methodological constraints
In two small pellet European markets (Luxembourg and
Lithuania), the apparent consumption turned out to be
negative in 2009, while net export was larger than domes-
tic production (formula A). When compiling the apparent
consumption for all European countries, the applied data
for real production, trade, respectively stock changes, show
serious de ciencies. According to the widely used pellet
production data of Bioenergy International (BI),11,12 less
than 500 plants in Europe are listed with capacities between
10000 and 250 000 tonne. BI does not include smaller plants
(<10000 tonnes), and therefore BI’s total pellet production is
underestimated. e number of smaller pellet plants is about
19020. In return, an overestimation of pellet production
occurs when full utilization (100%) of capacity is assumed
§Data for renewable energy production processes in Hungary are separately
covered via the Hungarian NREAP.
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 273
Modeling and Analysis: Wood pellet markets R Sikkema et al.
by BI, where real production gures per plant are lacking.
In 2008, the capacity utilization was on average 54% for all
European pellet plants20. Secondly, o cially registered pellet
import and export ows by Eurostat13 show a large discrep-
ancy in total EU intra-trade levels and also at individual
EU member state level. On the EU-27 level, the di erence
is about 1.2 million tonnes, compared to a consumption of
about 9.2 million tonnes in the EU-27. On a bilateral level,
the highest discrepancy was between Germany and Spain:
German export of wood pellets to Spain was reported to be
about 167 000 tonnes, whereas registered Spanish imports
from Germany only amounted to 1000 tonnes. irdly,
we assumed the stock changes of pellets to be negligible.
However, stock changes (within one year) may be consider-
able, especially those for industrial pellet stocks. e storage
capacity in Rotterdam harbor was reported by one utility to
reach 200 000 tonnes in 2009, which is large compared to
Dutch annual consumption (950 000 tonnes).
Representation of pellet price surveys
With regard to pellet price surveys, the number of responding
pellet actors and their corresponding volumes are rather low
compared to the total number of actors. In the case of markets
with a few large consumers, prices are volatile and even the risk
of price setting exists. An extra check has to be incorporated
to prevent the idea of price setting. For example, FOEX has its
index approved by the European Commission and audited by
an independent body.109 Where FOEX incorporates historic
prices (from a certain date) in its index, APX Endex uses a
forecasting method (from one month up to three years ahead of
delivery). e respective price curves are di erent, although a
similar pattern of uctuations occurs. Apparently, FOEX seems
to follow the future price trend such as that set by APX Endex.
Conclusions
e EU is aiming at a 20% contribution of renewable sources
in 2020 to the gross nal energy consumption (GEC). Pellets
and other types of woody biomass could signi cantly con-
tribute to this goal. Current EU pellet consumption for
energy is about 10 million tonnes (0.2% of GEC) and total
wood and wood waste consumption (including pellets) is at
about 170 million tonnes (3.9%). Market volumes of pellets
and other woody biomass for energy are expected to increase
further. Energy market experts expect the wood pellet mar-
ket to grow by about 25 million tonnes in 2020, equal to an
increasing share of 0.6% toward our current GEC (shown in
scenario A). In scenario B, a maximum growth of 180 mil-
lion tonnes of wood and wood waste for energy consumption
is compiled (8.2% of GEC), i.e. doubling the current share.
A er including the growing demand by the forest sector,
additional 2020 demand for woody biomass varies from 105
million tonnes, in scenario A (including reference growth of the
forest sector), to 305 million tonnes, in scenario B (rapid growth
of the forest sector). Additional supply of woody biomass may
vary from 45 million tonnes from increased harvest levels to
400 million tonnes a er the recovery of slash via altered forest
management, the recovery of waste wood via recycling, and the
establishment of woody plantations (with Salix, Populus and
Eucalyptus species) in future. Any short-term shortages within
the EU-27 may be bridged via imports from nearby regions like
north-west Russia or overseas. Next to the EU-27 potential of
wood energy plantations, Ukrainian woody plantations may be
interesting from a long-term perspective, too.
Current prices of pellets are under pressure. e prices
of most pellet markets have steadily increased in the
EU-27 since 2007. Pellet demand is growing across Europe,
whereas pellet production capacities are still largely unused.
Industrial pellets are also sourced from regions outside the
EU, mainly from North America and north-west Russia,
and their volumes have steadily grown. Nevertheless, future
demand is highly uncertain, while the EU-27 markets are
subsidy-driven. From all trends, the impact of public sup-
port for energy conversion is the largest. e two largest
markets for industrial pellets, the Netherlands and Sweden,
mainly rely on feed-in tari s (equivalent to about €120–135
per tonne of pellets), and on combined carbon-sulfur taxes
(equivalent to about €160 per tonne of pellets), respectivelty,
but both systems may not last until 2020. Apart from fossil
fuel price developments, new renewable energy obligations4
will determine future pellet markets, in combination with
the abolishment of existing public support schemes and/
or the establishment of new ones. New global production
capacities are still being constructed around the world, both
the number of plants and the average plant size will grow,
and the respective pellet producers are obviously counteract-
ing further future growth of pellet demand.
274 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
As a rst step, UNECE and FAO have introduced a good prac-
tice guidance on sustainable wood mobilization.94
Acknowledgements
e aim of the Pellets@las (www.Pelletsatlas.info) is to provide
technical and marketing information on pellets across Europe.
Volumes, market prices, and quality standards of both wood
pellets and other biomass pellets were inventoried in 27 EU
countries, Norway, and Switzerland. e project was supported
by the European Commission (EIE programme). Next to the
project partners, the authors would like to thank the following
for their contributions: Arnold Dale (Ekman International),
Olga Rakitova (Bioenergy International), Håkan Ekström
(WRI), Sandra Hayes (NEF), Agnĕse Nikolajeva (Meza Funds
SIA), Brody Govan (Argus Biomass), Jussi Heinimö (IEA
Bioenergy Task 40), Reinoud Segers (CBS), Jussi Ala-Kihniä
(Eurostat), Hans Jansen (UNECE Timber Section), Matti
Sihvonen (FOEX), Bas Verkerk (Control Union), Sipke Veer
(APX Endex), Frank van der Stoep (EBS), Eija Alakangas
(Eubionet III), John Bingham (Hawkins Wright), and UU col-
leagues Ric Hoefnagels, Hans Smit, and Hans Meerman.
References
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Recommendations
e data quality of pellet surveys can be further improved.
e methodology of apparent consumption shows serious
de ciencies through incomplete production data, inconsist-
ent trade data, and the lack of inventories for national pel-
let stocks. Real production data should include small pellet
plants, too. To get consistent trade data, it would certainly
help if Eurostat introduced a double-entry bookkeeping
system for intra-European trade import and exports. When
exporting one tonne of pellets from country A to country B,
country A should register this volume as an exported com-
modity on behalf of country A, and have the same volume
automatically registered as an imported commodity on
behalf of country B. Finally, we recommend the monitor-
ing of national pellet stocks by the end of each year and a
crosscheck of the resulting apparent national consumption
through enquiries with nal pellet users in the case of indus-
trial pellets, or advanced estimation methods, in case of
non-industrial pellets.
Pellet price indexes need further development. So far, most
mature pellet markets have introduced price indexes, like
that for small-scale users of bulk pellets in Austria21 and
Germany,22 medium-scale in Scandinavia,30 and large-scale in
the Netherlands29 and the UK.31 In the case of forecasted price
indexes for industrial pellets, long-term prices better re ect
market conditions than short-term prices, due to general con-
tract conditions with deliveries up to three years in advance. In
the case of non-industrial pellets in small bags, there is currently
no real price indication for major markets in Europe. Preferably,
a collection of prices for bagged pellets needs to re-established
a er a trial period in the Pelletsatlas project (2007–2009).8
An early impact analysis of feedstock competition between
di erent sectors is recommended. More attention is needed
for the complex relationship between feedstock use for the
bioenergy sectors (heating, cooling, electricity, and transport
fuels) on the one hand, and for forest industries, like the pan-
elboard industry and pulp mills, on the other. More historic
price data on common shared feedstock, such as sawdust and
pulpwood, should be published to make the mutual relation-
ship more understandable. Beyond immediate issues related to
market e ects of subsidies, the question was raised as to how
traditional forest industries will fare over the long term with
increased worldwide competition for the same raw materials.
© 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb 275
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Richard Sikkema
In 2007, Richard started working at the
Copernicus Institute, Utrecht University, in
the Netherlands. His (PhD) research project
focuses on bio-energy, international biomass
trade and sustainable forest resources. He
graduated as a forester from Wageningen
University and then worked for Probos Foun-
dation (forest product market research), Finnforest Oy (wood trade
logistics), FORM International (forest finance), SGS Agrocontrol
(certification) and the Ministry of Economics, Agriculture and In-
novation. Richard advised both the European Commission and the
IPCC during Climate Change about the role of forests and wood
products under the Kyoto Protocol.
Monika Steiner
Monika Steiner works in the Department for
Bioenergy at Holzforschung Austria (HFA),
a private R&D company in the forest-based
sector in Vienna. Working for the Pellets@
las project was one of her main tasks when
she started in 2007. She also inspects pellet
productions and works on projects in the field
of forest chips and the upgrade of biomass.
Wolfgang Hiegl
Wolfgang Hiegl is a coordinator of European
projects at WIP Renewable Energies where
he mainly works on solid and liquid biofuels.
He graduated in Biology with a focus on
environmental and agricultural subjects. He
is experienced in industry-related research
in the field of agricultural sciences and in the
field of renewable energies where he specialized in the biotechnol-
ogy and microbiology of biomass utilization. At WIP, he coordi-
nates the Pellets@las project.
Martin Junginger
Martin Junginger is an assistant professor at
the Copernicus Institute, Utrecht University.
He has a background in chemistry and envi-
ronmental science and obtained his PhD in
2005. He is coordinator of IEA Bioenergy Task
40 on Sustainable International Bioenergy
Trade (see www.bioenergytrade.org), and
leads or supports the organization of several bioenergy-trade-re-
lated workshops per year. He works on charting international trade
in biomass and biofuels, and identifying barriers and opportunities
for bioenergy trade. He also works on sustainability criteria and
certification systems for biomass and biofuels. He is contributing
author to the forthcoming IPCC Special Report on Renewable
Energy Sources (SR-RES).
278 © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 5:250–278 (2011); DOI: 10.1002/bbb
R Sikkema et al. Modeling and Analysis: Wood pellet markets
Morten Tony Hansen
Morten Tony Hansen holds an MSc in Engi-
neering and is employed as a senior project
manager in FORCE Technology in Denmark -
a private non-profit technology consulting
company. As a biomass specialist he has
considerable knowledge and experience with
technical, environmental and economical
issues on combustion of solid biomass. Morten has worked with
biomass in FORCE Technology for nine years and has managed
the Danish Centre for Biomass Technology disseminating techni-
cal biomass knowledge for public and private stakeholders. He
has been involved with numerous international projects, and is
currently managing the website www.pelletsatlas.info
André Faaij
André Faaij, with a background in chemistry
and environmental science, is Professor of
Energy System Analysis at the Copernicus In-
stitute, Faculty of Science, Utrecht University.
His main research experience and inter-
ests concern energy system sustainability,
scenario analysis and modeling, bio-energy
and other renewables, land use and land-use change, alterna-
tive transport fuels, CCS, waste treatment, material and energy
efficiency, technological learning and innovation in energy systems
and related policies. He advises the European Commission, IEA,
UN, GEF, OECD, WEF, energy sector, industry and NGOs. He is
convening Lead Author for the IPCC, Young Global Leader for
the World Economic Forum, and Task Leader for IEA’s Task 40 on
sustainable international bioenergy trade.
