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Industry News USDA GAIN report highlights EU pellet, biogas markets

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USDA GAIN report highlights EU pellet, biogas markets

    USDA GAIN report highlights EU pellet, biogas markets
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A report recently filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network provides an overview of the European Union’s bioenergy sector, including data on the use of wood pellets and biogas.

According to the report, the EU is the world’s largest wood pellet market, with a consumption level of approximately 18.7 million metric tons of wood pellets last year. Demand is expected to grow to nearly 21 million metric tons by next year, with equal shares expected to go to industrial and household use. The GAIN report indicates the residential heating sector is a relatively stable growth market when compared to the use pellets for power generation, as the industrial market is highly dependent on government funding.

The industrial use of pellets in the U.K. is estimated to currently be about 6 million metric tons per year. In Denmark and Belgium, industrial use is currently a respective 2 million metric tons and 1 million metric tons per year. The report also notes that pellet use for cofiring is expected to resume in the Netherlands next year.

The report states that Italy and France are the most notable growth markets for residential heating, with relative consumption levels at 3 million metric tons and 1 million metric tons.

Imports from North America are expected to expand. In fact, the report notes that if trade flows remain consistent, the U.S. has the potential to supply at least half of the import demand. This could represent a trade value of more than $1 billion in 2020. “These third country imports could, however, be affected by the implementation of sustainability requirements by the individual Member State governments. Harmonization of the standards would benefit the commoditization and thus international trade of the biomass,” states the report.

According to the report, the EU produced 12.5 million metric tons of pellets last year, with production expected to expand to 12.8 million metric tons this year and 13 million metric tons next year. Imports reached 6.55 million metric tons last year and are expected to growth to 7 million metric tons this year and 8 million metric tons next year. Consumption was 18.7 million metric tons in 2014, and is projected to grow to 20 million metric tons this year and 21 million metric tons in 2016.

Germany is expected to be the EU’s top pellet producer this year, with 2.3 million metric tons of production, followed by Sweden, France, Lavtiva and Austria. The U.K is expected to be the top European pellet consumer this year, with 6 million metric tons. Italy, Denmark, Germany and Sweden are expected to round out the top five European pellet consuming countries. The U.K. is also the main importer of wood pellets, followed by Denmark, Italy, Belgium and Sweden. The U.S. was the main supplier of wood pellet imports last year, with 3.89 million metric tons, followed by Canada, Russia, Ukraine, and Belarus.

In addition to pellets, the EU currently consumes an estimated 15 million metric tons of wood chips. That volume is expected to grow to 28 million tons in 2020. While most chips are sourced locally, the report notes Scandinavia is regarded as a potential growth market for imports from non-EU destinations.

The report also addresses the EU biogas market, noting the sector is very diverse. Germany and the U.K. are the two largest biogas producers. While Germany generates 92 percent of its biogas from fermentation of agricultural crops and residue, the U.K. relies mostly on landfill and sewage sludge gas.

Approximately 14 million tons of oil equivalent (toe) of biogas is expected to be used for heat and electricity in the EU this year, with 9.7 million toe of that coming from anaerobic digestion, 2.85 million ton coming from landfill gas and 1.4 million toe from sewage sludge.

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