Sweden consumes over 20% of world’s wood pellets

Sep.
3, 2009, Seattle, Washington – Demand for wood
pellets and investments in pellet plants continue to grow despite the
global financial crises and tight credit markets. In some countries, the
current slowdown in the economy has actually had a positive effect on the
biomass industry because politicians have often favored bioenergy and
pellet-based heating projects in governmentally funded economic stimulus
packages.

The
bioenergy sector is attracting a lot of attention from the forest industry,
timberland owners, and increasingly from interests with limited past
participation in the forest resources sector. Many of these companies have
historically have been in the business of oil exploitation and fossil
fuel-based energy generation.

The biggest expansion in the use of forest-based biomass has
occurred in Europe. This is mainly as a result of the decision by the European
Union to reduce dependence on fossil fuels and use a minimum of 20% renewable
energy by 2020.

Sweden is currently the biggest consumer of wood pellets in
the world, consuming over 20% of the world’s production. To meet the demand
from a fast growing market, the country produced almost 1.6 million tons in 2008
and imported another 300,000 tons, mainly from other countries in Europe, but
also from Canada. There are no signs of a slowdown in demand for wood pellets,
and the annual growth is expected to be between 8 and 10% in the coming years.

There are currently more than 450 pellet-producing plants in
Europe, with many new projects planned over the next few years. The United
Kingdom, Denmark, Sweden, and Germany are some of the countries that are
expected to have the fastest growth in forest biomass consumption, both pellets
and wood chips, over the next ten years. These countries will invest in
domestic production capacity and increase imports.

Pellet prices have trended upward for the past seven years,
as reported by the Wood Resource Quarterly. Prices in Sweden have generally
been higher than in Central Europe, but in 2009, prices fell the most in
Sweden, resulting in a convergence with prices in Germany and Austria. Wood
fiber costs are expected to increase later this year, which would result in
higher production costs for many pellet manufacturers. As a consequence, it is
probable tha
t wood pellet prices will start increasing again this coming winter
after a few months in retreat.