IEA Bioenergy Task 40 (which operates within the IEA energy technology and R&D collaboration programme of the International Energy Agency) recently published a comprehensive report on the status of the global wood pellet trade. The report provides a detailed analysis that includes data from a number of different export and import countries and the regulatory, price, capacity, consumption and logistics trends that drive the global wood pellet market.
The report, titled “Global Wood Pellet Industry and Trade Study 2017,” also cites information published by Forest2Market in a separate report commissioned by National Alliance of Forest Owners (NAFO) in 2015. That report, titled “Wood Supply Market Trends in the US South: 1995 – 2015,” details the rise of the wood pellet industry in the US South and concludes that, contrary to the negative rhetoric used by some media outlets and environmental organizations, the industry is not a threat to Southern forests. Rather, it relies on the health of working forests and creates sustainable demand and profits for forest owners, who consequently ensure that their forested lands remain forests.
Specifically, the IEA report cites Forest2Market’s data by saying, “Wood pellet production has seen a steady growth since 2004, with an exponential increase across the U.S. South. In the U.S. South, 119 mills consuming pulpwood and residual chip fiber were operating by 2015; the same amount as in 2000 (Forest2Market 2015). However, there had been an internal shift in the sector from pulp and paper to wood pellet production. 16 new wood pellet facilities were built in the U.S. South since 2005. Between 1995-2015, 14 pulp and paper mills permanently closed across the U.S. South (Forest2Market 2015). The panelboard and oriented-strand-board (OSB) sector experienced both openings and closings across the same period with a net loss of three panelboard and a net growth of four OSB facilities (Forest2Market 2015).”
The IEA report also notes that the popularity of wood pellet use for industrial and small-scale heating is an “ongoing” trend and demand remains high. However, there are a number of complexities involved in the international wood pellet trade, as “more than one third of the overall consumed pellet amount of 26 Mt in 2015 has been intercontinentally traded, mainly from the Americas to Europe and Asia.” While the framework for such a massive global trade is still in development in many ways, the market will find supply routes if demand remains consistent. “Dynamics in frameworks can be observed in many countries and will be key for the further establishment of wood pellet industry and trade.”
The report concludes by highlighting the emerging Asian markets for biomass and wood pellets—a topic we have addressed in recent months. “The next couple of years are predestined to see an increase in short-term demand particularly from Japan and South Korea. This level of new demand is bound to swing the current conditions from a long (oversupply) to a short (undersupply) market. Overall, Asia is expected to provide the largest future growth opportunities in the medium- to long-term. China, e.g., is looking into replacing 30 Mt of coal as part of the 5-year plan – a part of which could be replaced with wood pellets. In the near term, the main growth markets in South East Asia include Japan and South Korea,” the report concludes.