market background and trends

7/29/2019 Market Background and Trends

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122-Feb-12

Contents:

- Worlds Feedstock

- Pellet Production Stats

- EU Policies

- European Pellet Stats

- European Markets- Pellet Price Index

- Nations Targets on NREAPs

- European Pellet Market Trend

- Conclusions

- Biography

Wood Pellet Market


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Worlds Feedstock Availability


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World wood pellet production has increasedby about 33% pa over the past five years


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The EU's Renewable Energy Directive

(The 20-20-20 targets)

reduce EU greenhouse gas emissions by at least20%compared to 1990 levels; i.e. unilaterallyextending the EU's 8% Kyoto obligation

20% of the EU's final energy consumption to comefrom renewable sources by 2020

reduce primary energy use by 20% compared with

projected levels; to be achieved by improvingenergy efficiency


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Balance of Pellet Volumes - 2009


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European Pellet Volumes - 2009

Biggest ProducersGermany (1.6 M); Sweden (1.6 M); Italy (750 K);Russia (750 K); Austria (630 K); Latvia (550 K)

Biggest ConsumersSweden (2.1 M); Italy (1.1 M); Netherlands (950 K);Germany (930 K); Denmark (850 K); Belgium (700 K)

Biggest Exporters

Germany (600 K); Latvia (450 K); Russia (400 K);Austria, Portugal & Estonia (350 K)


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Balance of Pellet Volumes - 2010


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European Pellet Data (2010)

Over 650 Plants in Europe, 480 > 10.000 mt per year More than 10 M mt produced out of a 12-14 M mtinstalled capacity

More than 15 M mt consumed (9.2 M on the industrialmarket), main imports from Canada, US and Oceania

Represents a modest 0.2 % of Gross Energy Consumption

(75 EJ level in 2008) in Europe Room for growth!


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European Pellet Volumes - 2011 forecast

Biggest ProducersGermany (2 M); Sweden (1.8 M); Russia (1.1 M);Italy (900 K); Austria (800 K); Portugal (600 K)

Biggest ConsumersSweden (2.1 M); Italy (1.3 M); Netherlands (1.3 M);Germany (1 M); Denmark (1 M ); Belgium (900 K)

Biggest Exporters

Russia (800 K); Germany (600 K); Portugal (500 K);Latvia & Austria (400 K); Estonia (300 K)


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Main Market Types per Country


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Major European growth Market

for Biomass Heat & Power

Biomass heating France (mainly domestic) Germany (mainly domestic) Italy UK Sweden

Biomass power Germany (mainly domestic) UK Italy Sweden Netherlands Poland (mainly domestic)


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CIF prices of bulk pellet for large scalepower production and for medium scaledistrict heating & CHP


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TWh 2008 2020 % pa growthof renewables

2008-20AllEnergy

RenewableEnergy

%renewable

All Energy RenewableEnergy

%renewable

Electricity 387 22 5.7% 386 117 30% 15%

Heat 711 7 1.0% 599 72 12% 21%

Transport 598 9 1.5% 605 49 8% 15%

Total FinalEnergyConsumption

1,695 39 2.3% 1,590 239 15% 16%

Meeting the UK's 15% Renewable Energy Target...

The burden of meeting the UK's 15% renewable energy target will fall

most heavily on electricity.

By 2020, about 30% of UK electricity generation will need to come

from renewable sources, up from 5.7% in 2008 and 8.5% in the first half

of 2009

The UK's 2020 renewable energy target


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Note:

National biomass

electricity targetshave been

expressed in the

implied feedstock

requirementexpressed in million

tonnes of dry wood

equivalent.

We have assumed

an average 30%conversion

efficiency.

Electricity generated from solid biomass - 2010 & 2020

How countries plan to meet their targetsNational Renewable Energy Action Plans (NREAPs)


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Heating & cooling from biomass - 2010 & 2020

How countries plan to meet their targetsNational Renewable Energy Action Plans (NREAPs)

Note:

Biomass heatdemand has been

converted from

tonnes of oil

equivalent (toe) totonnes of dry wood

equivalent,

assuming thatthere is 0.45

toe/tonne of dry

wood.


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European Pellet Market Trend

Favourable legislation for continuous growth ofconsumptionparticularly UK; Benelux;Scandinavia

Announced fade out of existing nuclear plants:Belgium, Switzerland and Germany (? - to beconfirmed)

Financial Sector crisis + Sharp rise in Raw

Materials + Rise in Mwe Costs + Steady (but slow)Pellet Price increase = new projects stalled


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European Pellet Market Trend (2)

UK only will need about 15 M mt per year in2015 and 24 M mt per year in 2020.

If Germany moves ahead with no-nuclear

plan, demand and prices in Europe will increaseabout 40 and 30%, respectively.

Consumer Market Vs Industrial Market sales

strategy: more SPOT vessels; shorter term largevolume contracts, appearance of medium-sizedbagged Pellets distributors/traders;


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European Pellet Market Trend (3)

Russia & Portugal as new players in the exportfor industrial market

Baltics to suffer from high cost of Raw Materials

gold rush from Utilities to US, Canada & Brasilfor security of long term, high Volume suppliesIMPORTS NEEDED !!!


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CONCLUSIONSEU needs pellets!

Imports supply a growing

proportion of EU wood pelletconsumption - about 25% in 2010

EU imports of wood pellet

from non-EU countries


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CONCLUSIONS (2)US & Canada will

supply them!

1 million t/y of new wood pellet capacity hasbeen added in Canada in 2010-2011; more 1million t/y expected in 2012-2013

more than 2.4 million t/y of new wood pellet

capacity in the USA by end-2012


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Biography

The European Wood Pellet Market: currentstatus and prospects for 2020

Sikkema et Al (Feb 2011)

Argus MediaArgus biomass Markets (Oct 2011)

Wood Pellet Market opportunities: production& brokerage activities in Europe, US, Canada &

BrazilTiago Andrade (Sept 2011)

Developments in the global market for WoodPellets

Hawkins & Wright (Nov 2011)

market background and trends

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