European elections and Enviva bankruptcy might shape the market in 2024

April 10, 2024
  • text size

In the well-attended Wels town hall, Dr. Gerhard Dell, Managing Director of the Upper Austrian Energy Saving Association, and Mayor Dr. Andreas Rabl welcomed the expert audience to the European Pellets Conference 2024. Dell emphasized the increasing relevance of renewable energies in Austria and Europe, before Rabl used the example of Wels to show how cities and municipalities can become pioneers. Wels is already exceeding the Austrian energy saving goals and is currently taking further steps towards the desired energy self-sufficiency - for example with the construction of an S-Bahn.

Dr. Biljana Kulišić from the European Commission discussed the new European Renewable Energy Directive. She explained that legislation is a key driver of the mobilization of bioenergy. However, the right level of regulation and informed formulation are essential to achieve the desired steering effect. For example, it no longer makes sense to set higher requirements for the efficiency of pellets and pellet stoves, since the energy use should not be intended for the purest ranges that can be better used otherwise.

Pellet markets at a glance

Irene di Padua from Bioenergy Europe illuminated the bioenergy market. Bioenergy only accounts for 1% of the EU's energy imports, while it covers 12% of consumption. Pellet production is continuously increasing worldwide. While North America took second place (33%) as a manufacturing region in 2022 with an increase from 13.1 to 14.3 million t, the USA was the largest producer worldwide and the EU was the most producing region (47%) with 20.6 million t (2021: 19.8). There were increases in other European countries, South America and Asia in 2022 - primarily Japan and South Korea. In North America and Asia, pellets were mainly produced for industrial use, while in the EU they were produced for the private sector. Consumption in Asia (excluding China) rose from 6.9 to 9.5 million t, while that in the EU decreased from 24.5 to 24.2 million t. Mild weather and stalled deliveries or installations of stoves did not bring any major improvements to the EU in the past heating season.

European elections likely to determine the future

Di Padua sees 2024 as a pivotal year in terms of the political framework for bioenergy - also due to the European elections in June. Bioenergy Europe expects a slight shift to the right, which could have both positive and negative effects on the industry, as the greenest energy solution will probably not be given top priority - but local energy provision might. Until then and beyond, it is important to participate in various regulatory formulations and not to lose sight of them, for example with the EUDR, the planned update of the energy label and the eco-design regulation.

Communicate pellets correctly

The following session focused on suitable narratives with which the advantages of wood energy and, in particular, pellet heating can be brought closer to society. Prof. Dr. Tim Weitzel from the University of Bamberg is convinced that companies with good stories will dominate the markets in the 21st century. Mag. Christiane Egger from the Upper Austrian Energy Saving Association addressed the challenge that decisions are mostly made by city dwellers, which is why they have to find trustworthy contacts within the industry. Prof. Dr. Hubert Röder from the Weihenstephan-Triesdorf University emphasized in his lecture that when it comes to climate protection, the EU must understand that in some countries - due to the forest structure - it is better to reduce stocks, while in others it can certainly make sense to build them up. DI (FH) Stefan Ortner from ÖkoFEN had a few examples with him, such as a heating system for an indigenous village community that ensures an independent heat supply while creating jobs at the same time.

Research findings on quality and delivery

In the Pellet Innovation Session, Dr. Michael Finell from the Swedish University of Agricultural Sciences esplained the influence of raw material properties on pellet quality. In his study, he found that small wood chips result in higher quality and that the self-heating of stored pellets can be solved with a slightly increased humidity. Phil Spatz, MSc from the Ruhr University Bochum dealt with the size reduction and fines formation in pellet delivery vehicles and showed, among other things, that experienced operators can make a significant difference.

Pellet market Spain

In the country session, various individual markets were examined. DI Pablo Rodero Masdemont from AVEBIOM informed about falling pellet prices in Spain due to the third warm winter in a row, stalled stove installations and correspondingly high inventories and stopped production. For 2024, the industry only has hope that the circumstances will improve.

Pellet market Vietnam

Dr. Kenneth Tran from Ayo Biomass explained Vietnam's second place in global pellet exports and the associated increasing focus on certified pellets - especially for Japan. Tran sees enormous potential in the country's growth-promoting climate and large forest and plantation area, even if there is still a lack of certification and the price competition from Indonesia and Malaysia should not be underestimated. But especially after the American manufacturer Enviva Biomass filed for bankruptcy, the industry is expecting gaps to be filled due to delivery problems on Enviva's part.

Pellet market Canada

Gordon Murray, BSc, from the Wood Pellet Association of Canada shed light on the Canadian pellet market. He reports a slight decline in exports last year (3.5 to 3.3 million t), which focused less on Great Britain than before and much more on Japan, but also generally diversified. His association currently sees great opportunities in the domestic market, which is increasingly receiving political support. Pellets are also now receiving more attention for pre- and post-fire prevention purposes in relation to forest fires.

Progetto Fuoco: Pellet market Italy

The pellet market was also a hot topic at the Italian Progetto Fuoco trade fair in Verona. The Fordaq team on site noticed decreases in exhibitor and visitor numbers, as well as reports of low demand and raw material supplies. Fluctuating prices and a fragmented landscape of importers and dealers are currently making business difficult for the Italian industry. As the largest pellet importer in Europe with around 2 million t/y, the sector receives deliveries from Europe, Brazil, the USA and Canada and, in addition to the rising transport costs, now also has to bear the increased tax burden.