The production and consumption of pellets stagnated worldwide, breaking a two-decade-long trend of uninterrupted growth.

After years of continued growth, 2023 marks the first instance in which the global pellet market underwent a slight contraction. These are not happy news for the sector, said Pablo Rodero, President of the European Pellet Council (EPC) adding that the report “helps market actors understand the underlying causes, allowing them to adapt.”

Europe remains the largest producer and consumer

Despite slight contractions in the market, the European Union (EU) remains the world’s largest pellet producer and consumer. It produces 44 percent of the world’s pellets and consumes 50 percent.

The report finds that the challenges facing the European pellet industry are threefold: higher input prices, falling industrial demand, and a record-warm winter.

Electricity, a key cost for pellet production, remains more expensive following the energy crisis leading to elevated pellet prices.

Higher pellet prices and a volatile energy market have caused power-only producers to significantly scale back on production.

Finally, record-high temperatures during the winter reduced the need for heating, decreasing the demand for pellets.

Growth in residential- and commercial heating

Despite the challenges, the use of pellets for heating in the residential market remained strong.

In 2023 the share of residential and commercial consumption of pellets reached 59 percent, the highest in a decade.

Pellet heating is a good option for households, especially in rural areas rich in biomass with lower connections to the energy system.

Biomass heating reduces heat-related electricity demand at the time of year when renewable electricity production is often lower and less efficient.

By reducing the load on the electricity grid, bioenergy can complement electrification, lower electricity needs, increase energy efficiency, and safeguard the EU’s energy future.

For us as an association, it is now particularly important to reaffirm the image of pellet heating as a reliable, clean, sustainable, and especially price-stable source of heat and to work towards a secure regulatory environment, said Doris Stiksl, CEO of Propellet Austria commenting on the report.

Call for “wise implementation” of the Green Deal

Bioenergy Europe highlights that to fight climate change and increase Europe’s energy autonomy, “the new EU leadership needs to ensure a wise implementation of the Green Deal while continuing to replace fossil fuel with renewables such as bioenergy from wood pellets.”

To that end, Bioenergy Europe has put together three proposals for the new EU leadership “3 Steps Towards the Energy Transition”. The European bioenergy sector is ready to scale up and push forward for a more sustainable, affordable, and innovative EU.

Despite significant progress, our industry’s growth is being stunted by the EU’s continued dependence on fossil fuels. It is imperative that we accelerate the transition to renewable energy sources to stabilize energy prices and combat climate change effectively, commented Jean-Marc Jossart, Secretary General of Bioenergy Europe.

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The large-scale project hit a milestone on June 10, 2024, when after 38 years, the last piece of coal was burned at the Oberkirch CHP plant.

The power plant is now stopped, and extensive overhauling and conversion work for switching over to biomass fuel has been going full speed ahead.

Biomass receiving completed

The Biomass Receiving Area 1 and four new silos have been completed, the material handling equipment and the conveying path from the silos to the power plant are being worked on.

In addition, building services are being installed at Biomass Receiving Area 2. This new material handling equipment will be used to transfer biomass to the boiler inside the power plant in the future.

The gas supply system has been completed and the cold reserve has been successfully switched over to dual-fuel burning, the new emergency generator has been put into operation as well.

This ensures that the Koehler Group CHP plant in Oberkirch will continue to be powered until the conversion work at the CHP plant is completed.

The commissioning and testing phase will start in mid-August, and the energy plant should begin to run on biomass starting in October 2024.

Now that the last piece of coal has burned at the plant, over 150,000 tonnes of direct fossil carbon dioxide (CO₂) emissions will be cut per year at the Oberkirch site by the switch to biomass.

For us, decarbonization of our coal-fired power plant in Oberkirch is another crucial step in our efforts to achieve our climate goals and produce more renewable energy than we need for our paper production operations starting in 2030, said Kai Furler, CEO of Koehler Group.

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Drax Group, the world’s second-largest wood pellet producer, has pellet production in both the US South and Canada.

The company has a longstanding relationship with NBP which transports its pellets to Japan.

These pellets are currently shipped through smaller handysize bulkers, which, due to the limited size of their fuel tanks, have proved challenging to switch to lower emission fuels, such as ammonia.

Through the MoU, signed mid-May at the British Embassy in Tokyo, Japan, the companies will initially start research to develop the new shipping technology, an on-board biomass energy plant required to power a bioship.

Drax aims to be carbon-negative by 2030 and decarbonising our supply chain is critical to reaching this goal. This MoU is an important step in the development of the technology required to power and launch the world’s first bioship, which will support Drax’s decarbonization goals but could also drive the innovation needed to transform shipping and cut carbon emissions and fuel costs in global supply chains. I’m looking forward to working with our partners NYK, NBP, and TSUNEISHI SHIPBUILDING, to explore the potential this technology has to support global efforts to address the climate crisis. We are also exploring the role of other renewable technologies in delivering greener shipping, said Paul Sheffield, Chief Commercial Officer at Drax Group.

The four companies are exploring how other renewable technologies could be used to reduce emissions and fuel costs of shipping biomass.

This initiative is part of NYK’s long-term target of net-zero emission of greenhouse gas by 2050 for the NYK Group’s oceangoing businesses. The NYK Group is committed to providing its expertise in low-carbon and decarbonized maritime transportation as per this MoU and will utilize the knowledge gained in this research and development to promote initiatives related to various energy-saving technologies. Through our strength in high-quality transportation services, we will continue to co-create value for society with our partners Drax and TSUNEISHI SHIPBUILDING, said Shinichi Yanagisawa, Executive Officer of NYK Line.

Explore onboard biomass gasification

The onboard energy plant would use a gasifier to gasify pellets at high temperatures and create and contain gases including carbon monoxide, hydrogen, and methane (synthesis gas – syngas).

The syngas would then be used to power a generator which could propel the bioship and provide a proportion of its internal power.

The installation of a biomass energy plant could see up to a 22 percent reduction in well-to-wake carbon emissions in bioships when compared to using fossil fuels.

TSUNEISHI SHIPBUILDING focuses on reducing the global environmental impact in the design and construction of our vessels and has declared to achieve carbon neutrality by 2050. To realize this aim and recognize ourselves as a frontrunner of an environmentally friendly yard, we are driving to develop and construct new fueled vessels that combine environmental impact reduction and economic efficiency. We are very proud to be involved in this project, which aims to achieve the world’s first maritime transport using wood biomass energy, in collaboration with NYK Line, NYK Bulk & Projects Carriers, and Drax Group. This project is an attempt to implement ‘Creating the future, today’ as the TSUNEISHI Group slogan, and TSUNEISHI SHIPBUILDING will contribute by demonstrating our function as a shipbuilder for the project members, said Kenichi Shibata, Managing Executive Officer of TSUNEISHI SHIPBUILDING.

If this development is successful, the companies will jointly study the possibility of building a bioship by the end of 2029.

Drax is a leading renewable energy company, and we are honored to be a part of this symbolic project to use its main products as environmentally friendly fuel in the transportation of the products themselves. After a study of the biomass fuel plant and gasifier system, Drax, TSUNEISHI SHIPBUILDING, NYK, and NBP have concluded an MoU for the feasibility study on the development of the world’s first wood pellets-powered Super Low-Emission Vessel. This is an important step towards a decarbonized society for all concerned parties. NBP will continue to contribute to global decarbonization together with its customers and partners, ended Masashi Suda, President of NBP.

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The new plant will meet the need for more renewable district heating in the southern part of Göteborg Energi’s district heating network and optimize district heat production in the Mölndal–Gothenburg region.

Through this investment, we will be more resource-efficient and increase the amount of renewable district heating in the region. As a whole, the district heating customers in Mölndal and Gothenburg will get more cost-effective and reliable district heating, said Per-Anders Gustafsson, CEO of Göteborg Energi.

Valmet’s turnkey delivery, the value of which has not been disclosed, to the Riskulla plant will include a boiler with a fuel receiving pocket, pellet storage as well as milling and wood dust dosing to the boiler.

Valmet will also supply a flue gas cleaning system consisting of a Valmet Bag House Filter and a Valmet Selective Catalytic Reduction (SCR) system. Spare parts are included in the delivery the value of which has not been disclosed.

We are very pleased to continue our good cooperation with Göteborg Energi in replacing fossil fuels with renewable wood pellets in district heat production. This is the second order that they have placed on Valmet within a short period of time and an addition to our long track record of projects together, said Aleksi Salmirinne, VP Energy business unit, Pulp and Energy business line, Valmet.

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The production run is an important milestone in the ongoing commercial upgrades at CHAR Technologies’ state-of-the-art Thorold facility.

Pelletization, also known as densification, is essential for creating a biocarbon that can be utilized as a drop-in replacement for fossil coal.

Achieving proper pellet size and density is crucial for its use in heavy industrial applications, including steelmaking and mining, as well as for ensuring effective transportation, handling, and weather resilience.

Pelletization of biocarbon is a critical step in meeting the specifications, including physical properties, of met coal to allow for direct drop-in replacement. It can also be a tricky step with a number of different operational factors at play to be able to create a pelletized material that can be used in heavy industrial applications, and that can withstand handling, transportation, and weather. We’re looking forward to getting the pelletized biocarbon into the hands of our clients, including ArcelorMittal, over the coming months, said Andrew White, CEO of CHAR Tech.

The global demand for pelletized biocarbon is substantial. CHAR Technologies continues to advance its capabilities in meeting this demand with multiple production facilities under development.

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The runner-up is Austria, which increased its annual certified production by 100,000 tonnes to more than 1.6 million tonnes. France comes third, followed closely by Spain in fourth place.

The Top 5 list of countries with the largest certified pellet output for 2023 is completed by Belgium with almost 600,000 tonnes of certified pellets.

Growing in Brazil, China, and Japan

The certification scheme continues gaining popularity outside Europe. In the past few months, the number of pellet producers with active certification in Brazil has increased to over 30.

This led to the organization of the scheme’s first training in the country, dedicated to the quality managers of the certified companies.

Less than a year after joining the list of countries where the certification scheme is present, China has eight certified pellet producers and one certified pellet trader, and Japan has its first two certified pellet traders.

As of May 2024, the country with the most ENplus-certified pellet producers is Poland where the market seems to embrace the certification more than ever.

Despite the war in Ukraine, the country is another example of an increasing number of newly issued certificates.

Pushing against fraud

In the past year, the ENplus management invested extra efforts and closed more than 150 cases of fraud, which led to the achievement of another milestone – over 1,100 fraud cases have been identified and resolved in total.

Additionally, the blacklist where all fraudulent entities are exposed to the public has also been updated and now includes over 300 companies that should not be trusted.

This year the scheme´s management pays special attention to the companies who were among the first to join the scheme and have remained loyal over a decade.

Their inspirational stories, good practices, and impact on the local economy are shared through a dedicated series that can be followed via the scheme´s website and digital communications channels.

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According to CPM, the move demonstrates the company’s “commitment to its customers looking for higher-capacity, more energy-efficient biomass machines.“

We are steadily and systematically expanding our biomass technology portfolio and are well-positioned to supply and service the global biomass market. This direct-drive pellet mill is the only one of its kind in the biomass industry today. Our customers asked for a higher capacity, lower energy pellet mill with a small footprint, and we listened, said Maarten Visser, General Manager of Industrial Solutions at CPM.

Three types of pellet mill solutions

The CPM biomass portfolio now offers a full range of technologies including three types of pellet mill solutions – Direct Drive, Gear Drive, and Belt Drive.

According to CPM, this offers its biomass customers the flexible options needed to plan their optimal processing operation.

The all-new Direct Drive technology is beneficial for several reasons. The force from the pellet mill motor is directly driven to the machine. This reduces the need for other mechanical components thus offering a smaller footprint and simplified maintenance.

Higher torque produces denser pellets. The technology is more sustainable as it lowers the use of grease due to its low vibration and low die speed which also preserves the longevity of machine parts.

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Switching to renewable energy costs, but is extremely central to us reaching our climate goals. We are living in a critical decade for the climate and with the investment we are taking further steps to reduce our and our products’ climate footprint, said Michael Byman, Plant Manager at Orkla Fågelmara.

A major ketchup producer

Orkla Fågelmara is one of Europe’s largest ketchup (aka tomato sauce) production plants.

Here, the iconic “Felix Ketchup”, other sauces, and dressings are prepared, along with brand ketchup for other Nordic markets.

Some 30,000 tonnes of ketchup and dressings per annum are produced for the Swedish market and export.

Orkla is investing SEK 25 million (≈ EUR 2.2 million) in the new energy plant. Of this about SEK 11 million (≈ EUR 969,300) is investment support from the Swedish Environmental Protection Agency’s “Climate Step” (Klimatklivet) program.

We are very happy to be able to start work on a renewable energy plant here in Fågelmara and we already expect to have fossil-free cooking of ketchup and dressing next year, said Michael Byman.

Pellet powered plant

Using wood pellets as fuel is estimated to reduce fossil CO₂ emissions from liquefied petroleum gas (LPG) at Orkla Fågelmara by 2,000 tonnes annually.

Orkla Foods Sverige’s goal is for all of the company’s facilities to be powered by fossil-free energy by 2030 – a target approved and verified by the Science Based Targets initiative (SBTi) as being in line with the Paris Agreement 1.5 degree target.

By 2025, more than 60 percent of the company’s energy use must be from renewable sources and have reduced greenhouse gas (GHG) emissions by 65 percent from its operations (scope 1 and 2).

The new energy plant is expected to be ready by the summer of 2025. Since before, Orkla Fågelmara already uses fossil-free electricity via Guarantees of Origin (GO), and geothermal heat to heat a large part of the factory’s buildings.

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The location is of strategic importance due to its geographical proximity to both the forest plantations from which Eternali will purchase stumpage – the Coopmar plantations – and the larger international port, Porto de Santana, which Eternali intends to use for its international deliveries.

This land is incredibly important for us to build the hub for transshipment, storage, and drying we need for further transport to our international port. From the moment we began discussions with the Coopmar-cooperative to purchase from their large plantations in the area, we knew how critical it would be to find land around the Paru River for our logistics chain, said Andreas Forssell, CEO of Eternali.

The seller of the land is the company’s COO, Gustavo de Silveira.

In the spring of 2023, we also invested in building a road from the Coopmar plantations to the river area to validate our logistics solutions with potential customers. It is challenging to find good riverside plots in this area, and we are truly grateful that after long discussions with Gustavo, we have had the opportunity to acquire the property for Eternali, so we now can prepare the land, Andreas Forssell said.

On the property, Eternali intends to establish a logistics center with facilities for unloading incoming raw materials from the plantations via trucks, storage, and drying of raw materials, and transshipment of raw materials for transport via the Paru River to Porto de Santana.

The size of the property also allows for the potential establishment of a wood-chipping operation for biomass if needed.

The acquisition of the property is financed through an interest-free promissory note amounting to R$7.2 million (≈ US$1.34 million) which represents a discount compared to the independent valuation of the property commissioned by the company.

The board will propose that the 2024 annual general meeting approve a debt-for-equity swap for the corresponding amount.

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Growing from a small sawmill business to an innovative recycled biomass company, Musser offers some of the most eco-friendly and highest-quality dry wood fiber on the market.

Using a state-of-the-art low-temperature drying technology, Musser produces a sustainable, differentiated, uncontaminated fiber used in composite manufactured wood products, grilling pellets, residential heating pellets and briquettes, animal bedding, and other existing growth markets.

Positioned for growth

The company is actively exploring emerging clean, dry biomass fiber applications.

Musser is thrilled to partner with the Watermill Group on our next chapter of growth. We’re confident that the Watermill Group’s industry expertise and strategic approach will support and accelerate our vision to redefine and expand the uses for dry wood fiber, said Ed Musser, President and CEO of Musser Biomass and Wood Products.

The investment by Watermill Group positions Musser for substantial growth in an emerging market with an opportunity to capitalize on a shift in evolving consumer preferences driven by sustainability, which includes increased outdoor living expenditures and a commercial preference for ESG-certified products.

Musser represents a compelling opportunity to invest in a sustainable business that serves growing markets and has exciting avenues for growth. For more than half a century, Musser Lumber Company has been a respected supplier in the lumber industry. In recent years, it has become a pioneer in biomass wood fiber, trailblazing new paths to success both in products and processes. The Watermill Group couldn’t be more excited about the opportunities ahead for this partnership, said Robert Ackerman, Senior Partner, Watermill Group.

The debt for the transaction, the value of which has not been disclosed, was provided by Energy Impact Partners’ Credit Group, and Pinnacle Financial Partners provided the operating line of credit. Richter Consulting provided financial due diligence advice to Watermill Group.

Jasso Lopez provided legal counsel and Blais Halpert provided tax counsel to Watermill. Musser Lumber Company received legal counsel from Gentry Locke and advisory services from Brown Gibbons Lang & Company (BGL).

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