The European wood pelletmarket

Arnold DaleEkman & Co

WPAC conferenceNovember 2014 Vancouver, Canada

Ekman is one of the world´s leading sales and marketing organizations, focusing on the global forest industry.

Represented in 100 + countries

Paper & Packaging

Ekman at a glance

Pulp Recovered Materials

Bioenergy

+ 4 800 000tons/year

Incorporated in 1802

277 employees 40 locations

Main focus

Paper & Packaging

Recovered Materials

Pulp Bioenergy

”We are specialized in the sales and marketing of forestproducts. We have broad experience in creating solutionsfor related financial and logistical matters.”

Ekman GroupVolume & Turnover 10 years

0

1 000

2 000

3 000

4 000

5 000

6 000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Turnover,USDmillion

Tons,thousand

Bioenergy – at a glance

• Employees in Sweden, Latvia and Denmark

• Trading bioenergy products since 2008• A leading biomass trader in Europe• Exclusive agents for the wood pellet

plants of VLK in Vyborg, Russia, and Scotia Atlantic Biomass in Halifax, Canada

• Delivering to the residential markets in Scandinavia, Germany and Italy

The European wood pelletmarket

Arnold DaleEkman & Co

WPAC conferenceNovember 2014 Vancouver, Canada

Dedicated chapter on wood pellets• Pellet production• Pellet consumption• Heating appliances• Consumption for heating• Report available from 19 November

for €500Please order your report from: www.aebiom.org

GILLES GAUTHIEREPC & EIPS General Manager

www.pelletcouncil.eu

World wood pellet production share in 2013 [in million tonnes]

Source: IEA Bioenergy Task 40

48%

32%

7%

6%

4% 3%EU28

NorthAmerica

Russia

China

Rest ofWorld

Rest ofAsia

• A survey by the European Pellet Council revealed the major concerns for European wood pellet producers.

• 41% were most concerned by the increasing price of raw material

• 24% felt that imports created too much competition

• 23% believed that a lack of raw material is the major concern

• 12% had difficulties with finding clients for their product

European wood pellet producers’ perception of 2013 major difficulties [in %] Source: EPC survey

European wood pellet producers’ perception of growth by 2020 [in %] Source: EPC survey

• In another survey carried out by the European Pellet Council European wood pellet producers seem remarkably optimistic!

• 53% replied that they expected strong growth of more than 15% per annum

• 41% expressed a belief that growth would be more modest at about 5% per annum

• 6% believed that there would be no growth in the coming year

05

101520253035404550

Growth

World wood pellet demand in 2013 - power versus heating [in million tonnes] Sources: Hawkins Wright, EPC Survey

*2/3 of the global pellet consumption of CHP is attributed to heating & 1/3 is attributed to power.

,0

,2

,4

,6

,8

,10

,12

,14

,16

,18

Power (Power plants, CHP*) Heating (residential, commercial,district heating, CHP* )

Asia

OtherEurope

Russia &CIS

NorthAmerica

EU 28

Main European wood pellet producer countries in 2013 compared with 2012 [in thousand tonnes] Source: EPC

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0.500

1.000

1.500

2.000

2.500

DE SE LV AT FR PT PL EE RO

20122013

Top ten wood pellet consuming countries, by end-use in 2013 [in million tonnes] Sources: Hawkins Wright, EPC Survey

*2/3 of the global pellet consumption of CHP is attributed to heating & 1/3 is attributed to power.

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

UK IT US DE SE DK BE NL AT FR PL

Power (Power plants,CHP*)

Heating (residential,commercial, districtheating, CHP* )

Top 10 of the EU-28 wood pellet exporting countries 2009-2013 [in thousand tonnes] Source:EPC

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400

600

800

1000

1200

2009 2010 2011 2012 2013

LVPTDEEEATROBELTDKPL

Main EU-28 wood pellet consumers for heating in 2013 [in million tonnes] Source: EPC

3,28

1,93

1,53

0,92

0,89

0,88

0,380,320,22 0,16 0,16 IT

DEDKSEFRATESPLFICZNL

Improved technologies for small scale wood gas CHP running on premium quality wood pellets

• Main Features• 110kg/hr wood pellets feedstock• 190kW electricity• 260kW thermal (90degC hot water)• Compression ignition CHP with bio

diesel pilot fuel• >43% engine efficiency• Guaranteed 7500hrs/year

availability

Evolution of wood pellet consumption for residential and commercial heating in highest consuming countries 2012-2014 [in thousand tonnes] Source: EPC

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,500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

IT DE SE FR AT DK ES FI PL NL

201220132014

ENplus certification

• Certification managed by the European Pellet Council

• Based on European standard-EN 14961-2

• A handbook describes the requirements for certification

• Reduces risk for buyers – buyer can expect specifications are being met

• Is highly valued in residential grade markets – significant improvement of marketablility

• Market price for certified wood pellets is higher

• License fees for certification (10-20 c/t) support lobbying at the national and European Level

Evolution of EN plus certified wood pellet volumes 2011-2014 [in thousand tonnes] Source:EPC

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2011 2012 2013 2014DE AT US FR PL BE ES EE UK CA CH HR RURS PT SL LV NL CZ DK LT UA IT BG SK RO

The European wood pellet market Conclusions

• The European wood pellet market is the world’s largest market this will not change

• Europe is still the worlds largest wood pellet producer with 48% of global production, but North America may overtake Europe in time

• Contrary to expectations production volumes in nearly all European countries are showing healthy increases

• Consumption in both the power and heat markets are showing good growth• In an EPC survey 94% of all European producers expect to see growth next

year• EN Plus certification increased from just over 4 million mt in 2013 to more than

6 million in 2014• A new EN plus handbook will be published next year• Despite the increased demand we expect prices will remain relatively stable

ONE OF THE WORLD’S LEADING SALES AND MARKETING ORGANIZATIONS FOCUSING ON THE GLOBAL FOREST INDUSTRY.