The European Pellets Conference 2022 on April 6 in Wels, Upper Austria, as well as online, showed the more than 650 participants from 60 countries the current developments on the markets, in technology and politics. Speakers and audience discussed ways of optimal positioning in times of energy transition as well as technical possibilities in production as well as financing tricks.
After being welcomed by Dr. Andreas Rabl, Mayor of the city of Wels, and Dr. Gerhard Dell, Upper Austria Energy Saving Association, Dr. Johannes Baur explained the ambitious goals of the European Commission formulated in the "Fit for 55" package to those present online and offline. Among other things, the renewed revision of the Renewable Energy Directive (RED III) is currently in the development phase and will probably provide for a share of renewable energies in total consumption of at least 40% by 2030 – instead of the previous 32%. The role of renewables will thus continue to increase and bioenergy already holds the main share in this area with 60%. Wood as an energy source makes up 70% of this. The advantages of the regional and weather-independent as well as reliable generation are obvious, but critics should be forestalled. Biomass and in particular wood only have a chance if pellets and others are accepted by the population. To do this, it is essential to emphasize their advantages but also to refute alleged disadvantages - for example through very high standards in terms of sustainability and emission certificates.
Europe's pellet markets currently have a lot of potential
Irene di Padua from Bioenergy Europe brought news from the European pellet markets. While in Europe the main consumption of biomass for energy production takes place in private households, industry currently accounts for only 25%, she informed. On the other hand, the proportion of bioenergy within the renewable energies in private households is 84% - lower than in industry (99%). Added to this is the enormous growth potential in the industrial sector. However, replacement installations for old heating systems also have great potential in almost all of Europe, but especially in Poland, Germany, Austria, the Netherlands and Greece.
Global pellet production is likely to exceed the 40 million t mark by 2023. Recently, the EU, South America and Asia have been the main contributors to this. Europe's production in 2020 was 23 million t, of which 18 million t in the EU. The largest producers were Germany (+9.9% to 3.1 million t), Russia (+7.3% to 2.2 million t), Latvia (+12% to 1.8 million t), France (+6.3% to 1.7 million t) and Austria (+6.9% to 1.5 million t)
In 2020, Europe's pellet consumption was again 30.1 million t, of which 19.3 million t in the EU. The EU consumption of pellets consisted of 61% industrial use, 31% private household use and 8% commercial use. The main consumption markets were UK (+3.3% to 9.4 million t), Italy (+0.1% to 3.4 million t), Denmark (+2.9% to 2.9 million t), Germany (+1.3% to 2.3 million t) and the Netherlands (+113.6% to 2.2 million t). While the bulk of consumption in the UK and the Netherlands is in the industrial sector, in Italy it is private households that consume the most. In Denmark, district heating plants largely determine consumption.
Europe's industry consumed 14.3 million t of pellets in 2020, the EU 5.5 million t. The main consumers were Great Britain's industry (+3.6% to 8.7 million t), that of the Netherlands (+150% to 2 million t), Denmark (-1.8% to 2 million t), Belgium (- 8% to 0.9 million t) and Sweden (-31% to 0.4 million t).
The type of new purchase for heating with pellets also differed from country to country in 2021. In 2021, the stove dominated in France, Spain and Belgium and gained enormous popularity. In Germany, France and Austria, boiler sales doubled in some cases.
Padua advised: “Although Europe imports comparatively little biomass (4.9 million t, i.e. 1% of net energy imports), it should still focus more on local sources and diversify the import sources that are undoubtedly necessary as much as possible, since one cannot foresee how, for example in the medium to long term, deliveries from Russia will continue, for example, from where – in addition to Canada, the USA and Brazil – a not inconsiderable quantity of pellets comes.”
Demand is no longer an uncertain factor – political framework conditions are
In the panel of experts that followed, Thomas Meth from Enviva emphasized that the demand situation no longer represents an element of uncertainty. After all, the urge of the global industry to switch to renewables rises. Accordingly, his company is planning to expand production to more than 8 million t/y. Enviva's export business currently consists of half contracts with Asia and half with Europe. However, most of the additional capacity is likely to go to Europe. It is important to use everything that can be mobilized in the long term. And Meth also emphasized how important communication is – for example that only residual wood ends up in pellets, but the construction of solar farms is increasingly causing deforestation in some parts of the world.
Stefan Ortner from ÖkoFEN added the importance of emission management, where innovations are still needed to increase acceptance among the population. It must also be a priority to be a good partner for the installers - in other words, to offer uncomplicated systems and reliable cooperation.
Michael Hjorth Christensen from CM Biomass was of the opinion that massive investments in production capacities are still needed and that these – also to communicate security of supply to the population – must become more visible.
Christiane Egger from the Upper Austrian Energy Saving Association also called for speed and capacity building in view of the high number of old heating systems to be replaced in the coming years.
Francisco Puente Salve from Escan Energy Consulting paid attention to the security of supply for the raw material, which should probably go hand in hand with the increasing production volumes in Europe's wood industry to compensate for the lack of imports from Russia in the short to medium term. But both require the most stable possible political framework. For the latter, however, it is also important to seek dialogue themselves and to radiate transparency and security, and to be able to respond to critical questions with answers and high, verifiable standards. And when it comes to the shortage of skilled workers, only communication can help to actively shape the image of the sector - there is potential. Finally, Egger pleaded for joint growth of the entire industry and for a united voice.
There are already positive examples of political impetus in the dynamically growing Japanese market. Pellet imports from the USA are guaranteed there for several years thanks to an energy offensive, which strengthens the willingness to invest. In the US market itself, the Biomass Thermal Energy Council (BTEC), after years of work, has now been able to obtain increased tax credits for pellet boilers - if not yet for industry, then at least for the private sector so far, as Emanuel Wagner reported. Afonso Bertucci from Braspell Bioenergia also reported on a project that is investigating the use of pellets in the cement industry and promised additional production capacities - potentially also for export - from 2024 on.
In Germany, Martin Bentele from the German Energy Wood and Pellet Association (DEPV) sees this year's security of supply in question given the rapid increase in demand. Imports should generally increase in the future. Bentele also emphasized that the reasoning behind the price advantage over other energy sources had so far benefited pellets. In principle, however, the pellet price must be set as high as possible so that additional capacities are worthwhile for manufacturers. In order to be able to continue to meet the demand - especially from industry - he also considers an expansion of production and the import of lower qualities.