On August 21, 2023, the European Union (EU) achieved a significant milestone in wood pellet production, reaching a record-breaking 24.8 million metric tons (MMT) in 2022. This surge was largely driven by an upswing in residential consumption, as revealed by an EU-commissioned report. Anticipating continued growth, the EU projected demand to escalate further to 25.6 MMT this year, facilitated by expanded residential markets and the implementation of the third Renewable Energy Directive (REDIII) along with Member State (MS) incentives.
Over the past decade, the EU’s demand for wood pellets has outpaced domestic production, resulting in substantial imports from nations including the United States, Russia, Belarus, and Ukraine. A recent import ban on Russian and Belarusian wood pellets prompted the emergence of transatlantic trade opportunities.
In 2022, EU wood pellet imports reached an all-time high of 5.89 MMT, valued at $1.32 billion (€121.2 billion). The EU stands as the world’s largest wood pellet market, primarily due to surging residential demand fueled by escalating fossil fuel prices, further exacerbated by Russia’s conflict with Ukraine.
Residential consumption, including domestic stoves and heat boilers, as well as small-to-medium-scale commercial use, constituted around 50% of the EU’s pellet consumption. The remaining half was attributed to large-scale industrial use. Notably, major EU users included Italy, Germany, the Netherlands, Denmark, France, Sweden, Austria, and Belgium.
The COVID-19 pandemic minimally impacted the overall EU pellet consumption between 2020 and 2022. Lockdown measures in Member States predominantly affected transportation, leading to a shift from liquid biofuel to solid biomass applications.
Industrially, the Netherlands, Denmark, and Belgium primarily relied on large-scale power plants for wood pellet consumption to meet their renewable energy obligations. The Netherlands stood out as the primary EU industrial market for wood pellets, importing substantial amounts from the United States.
In terms of domestic production, Germany, France, Austria, and Poland experienced significant expansion since 2017. Germany ranked third in wood pellet production globally after the United States and Canada. The Baltic Region also observed a surge in production, driven by both residential and industrial markets. However, Baltic exports decreased in 2022 due to heightened domestic demand resulting from the Russian gas ban.
Croatia exhibited potential in wood pellet production, capitalizing on abundant biomass resources. With local shortages, alternative feedstocks like sawdust, wood industry residues, and shavings played a crucial role. Almost 85% of raw materials used for pellet production were secondary feedstocks, emphasizing the need for sustainable alternatives.
In conclusion, the EU’s wood pellet production and consumption saw remarkable growth, with increasing residential demand, industrial market dominance, and a shifting focus toward sustainable feedstocks. Anticipated expansions in production, driven by demand and enhanced domestic markets, set the stage for further advancements in the wood pellet industry.
