Wood pellets demand is still huge in Europe

EU's renewable energy policies have led to major changes in the European wood industry. The conversion of major power plants from coal to biomass, as well as the intensive promotion of using biomass in the heating sector, have generated a huge wood pellets demand in Europe.

European companies have largely invested in building pellet plants in the United States to satisfy the increasingly domestic demand. Of course, there are some environmental issues: NGO's, industry analysts or US government officials have complained that the US is destroying its forests to ''fuel'' the European Union renewable energy projects.

Nevertheless, the booming demand is still ongoing: from the latest statistics released by Eurostat we can notice that from January to November 2013, EU's pellet imports have surged, in quantity, by 36 percent. In value, the increase is almost the same (37%), reaching EUR 1,52 billion in the first eleven months of 2013. In the same period mentioned, imports of pellets from the US grew by no more than 65%, while those from Canada by 54%.

In terms of market shares, the situation is quite surprising, as imports from North America are now just close to those from the EU (intra-EU trade): of the overall EU wood pellets imports, in January-November 2013, 43,8% came from the Member countries and 42,6% from N. America.

As for major European importers, UK is clearly leading the way, with an overall 31,2 percent from the total EU demand. Moreover, from January to November 2013, the UK imports rose 175% yoy, up to 3,16 million tons of pellets, from which 2,82 million tons came from N. America.

On the other hand, for 2014, the UK imports of wood pellets are projected to drastically decrease. The RWE-Innogy closure of its power plant at Tilbury will probably reduce UK's total demand by more than one third. The Tilbury power plant had an annual pellet consumption of 1,3 million tons. However, this can be compensated by Drax's coal-biomass conversion plans: the company successfully converted one unit of its power plant in April and aims to become a predominantly biomass generator by 2016.