The European Union’s new deforestation regulation, which is due to take effect later this year, will fundamentally change transatlantic pellet supply chains. That is according to a new modelling analysis by Jinggang Guo of Louisiana State University, alongside Jeffrey P. Prestemon and Jesse D. Henderson of the U.S. Forest Service, which projects that European and UK pellet mills will gain ground whilst Southern producers absorb most of the compliance costs.
Wood Central understands that the regulation, dubbed the EUDR, requires wood and pellet imports into the EU to be traceable to deforestation-free land, with a scheduled start date of 30 December 2026 for large and medium operators, following two successive one-year delays to ease the compliance ramp-up.
The model reveals a clear split between winners and losers, with European pellet output lifting 2.62 per cent above baseline by 2030 and UK producers gaining 4.56 per cent, as buyers on both sides of the Channel tilt toward domestic mills that face lower compliance friction than distant suppliers.
The U.S. South wears the adjustment, with Southeast production falling 7.16 per cent below baseline by 2030 and South Central production falling 6.71 per cent, whilst Southern producer prices drop roughly US$23 per metric ton as European buyers walk away from volumes they once absorbed without question.
Trade flows carry more of the adjustment than production does, according to the model, with pellets being redirected between markets rather than left unmade. UK buyers absorb much of the Southern tonnage displaced from the EU under an EU-only scenario, though that relief disappears once the UK applies its own deforestation rules and both regulated markets close in.
Other exporters are already routing around the regulation in the model, with Vietnam redirecting hundreds of thousands of tonnes away from Japan, where EU-aligned procurement preferences tighten, toward what the model classifies as Rest-of-World destinations, a pattern likely to repeat across other Asian and Latin American pellet suppliers once the rules bite.
Supply chains do adapt over time in the model, however, with compliance costs rising through the 2026-to-2030 window as traceability infrastructure matures and global pellet production holding roughly flat against the no-rules baseline, suggesting the regulation’s bite falls mostly on who ships what to whom rather than on total output.
The findings build on Wood Central’s earlier reporting on the authors’ companion study of the EUDR’s reach across the global forest sector, with Australian timber and biomass exporters now weighing compliance costs as Australia–EU Free Trade Agreement negotiations progress and as non-EU producers adjust supply chains to retain premium market access.
Guo, Prestemon and Henderson point to the US$23-per-metric-ton price gap between U.S. Southeast and EU producers by 2030 as the single sharpest divergence in the model, with Southern mills absorbing the biggest absolute price cut, whilst UK producers book the largest absolute gain at US$16 per metric ton above baseline.
