With less than a decade left for European Union member countries to produce 20% of power generation from renewable resources, the demand for North American woody biomass from those countries has started in earnest. Written by Lisa Gibson and published in Biomass Magazine, "Bridging the Global Supply/Demand Gap" covers the dynamic created by underutilization of woody biomass in the US domestic market and the limited supply and high land-based transportation costs of woody biomass in most of the EU.
“I do think there’s such an incredible demand in Europe that there’s going to be biomass wood chip and pellet export opportunities, and it’s going to grow over the next five to ten years,” says Pete Stewart, President and CEO of Forest2Market.
This seemingly basic supply and demand situation is complicated by several factors. The owners and investors in US wood pellet facilities in some cases have unrealistic profit margin expectations which can price them out of the market. Also, EU power producers have both high, quality requirements for wood pellets and chips and extensive experience in running wood pellet manufacturing facilities themselves.
Furthermore, oceanic transportation of this bulk material has complications all its own. There is a need for more deep water ports with bulk material handling capabilities near the sources of woody biomass and facilities that process it. In addition, the potentially empty shipping containers coming back from Europe to pick up more chips or pellets could make shipping costs prohibitively expensive.
All of these obstacles create a challenging but not impossible landscape. It will take time for the market to develop the needed infrastructure and cull out those within the supply chain that are not capable of producing a quality product at the price the market will pay. In time, those facilities less capable of producing what the market wants will be forced out by those who better understand the demands of the market.
Read more of Stewart's insights about the wood pellet market.
Suz-Anne Kinney
Forest2Market: July 14, 2023
