The EU is boosting pellet capacity to meet surging demand, with the war in Ukraine pushing the Europen industry to open 55 new production sites across the continent.
Europe is the world’s largest pellet market, with the EU consuming 52% of the pellet supply. Before the conflict, it relied heavily on imported pellets and renewable energy sources from Ukraine, Russia and Belarus.
In a new report published by Bioenergy Europe, Jean-Marc Jossart outlines the challenges European supply chains face in meeting the challenges “head on.”
The conflict, he said, has forced organisations to build resilience in supply chains, with Poland, Germany and the Dutch capitalising on a push to secure pellet supply from within the EU.
After the EU imposed sanctions on Russia and Belarus, Mr Jossar said pellet pools reduced exports and increased internal production “from 19.83 million tons in 2021 to over 20.5 million tons in 2022.”
“This represents 44% of the world’s pellet production,” Mr Jossart said, with more investment needed “to enhance our resilience to external disruptions and ensure a stable and consistent energy supply for our citizens.”
According to Mongabay, the EU has reportedly replaced its Russian supplies of woody biomass by importing wood pellets from Eastern Europe and, to a lesser extent, the United States.
According to Mr Jossar, pellets are essential to the EU’s Green Deal to drive decarbonisation across the continent.
“Considering the demand in the residential and industrial sectors, there is still significant room for expansion of sustainable pellet production in Europe,” he said.
The EU, like the UK, Japan, and South Korea, are shifting their energy generation from coal to wood pellets in line with an environmental policy which puts biomass on par with zero-carbon wind and solar.
Wood, biogas, biowaste, and residues comprise 50-60% of the EU’s renewable mix.
“Government incentives and subsidies for renewable energy can stimulate pellet consumption, with some European countries already implementing policies to promote the use of biomass as part of their decarbonisation strategies,” he said.
In addition, advancements in pellet production technology, such as improved pelletising processes and higher-quality standards, can enhance the efficiency and competitiveness of the pellet industry and boost European production.
Are Russian pellets getting through?
Online reports in late December documented how the EU appears to offset its loss of Russian wood pellets due to sanctions by increasing pellet imports from the U.S. and Eastern Europe.
But other reports posit that illicit Russian wood pellets may still get into the EU after possibly being laundered in countries such as Turkey, Kazakhstan and Kyrgyzstan.
Mondel, a European energy industry group, reported that the EU-wide ban on Russian pellets coincided with a seven-fold increase in EU imports from Turkey, which grew from 2,200 monthly last spring to 16,000 tons in September.
Russian monthly imports to the EU officially dropped from 153,000 tons before the July ban to zero by September.
Investigative journalists with Blitz reportedly uncovered paper trails indicating that tons of wood pellets from Kazakhstan and Kyrgyzstan flowed into EU countries, including Germany, Denmark, Latvia, Lithuania and Poland. The two Asian countries, formerly part of the USSR, have virtually no forest industry.
The revenue from selling wood pellets is significant for Russia: 3.1 billion euros (US $3.3 billion) earned from the EU in 2021, with 1.4 billion euros (US $1.5 billion) earned in 2022 before the ban.
News reports suggest that Russia — as it seeks more money to fund its stalled war effort against Ukraine — is still generating major revenue from wood pellet exports, either directly from South Korea or possibly indirectly through Asian countries bordering the EU.