Viewpoint: Pellet boiler sales to drop in 2025

Spanish Market: Biomass
27/12/24

Sales of pellet-fired boilers and stoves for residential consumption are set to fall in 2025, after reaching record highs in 2024, partly because of government subsidies in Austria and Germany.

The Austrian government has offered subsidies of up to €18,000 ($18,800) towards the price of a pellet stove or boiler — around 75pc of the cost of the appliance. The subsidies have been in place for the past two years, with the aim of incentivising households to switch away from fossil fuels. Low-income consumers are able to qualify for a subsidy of up to 100pc of the cost of a stove or boiler. This pushed up Austrian new boiler purchases to a record high of 19,181 in January-November, leading to expectations that full-year sales will surpass 2022 full-year sales of 21,629, figures from industry association ProPellets Austria show. Austrian pellet consumption is expected to reach 1.4mn t in 2024, well above the 1.2 mn t sold a year earlier.

But Austrian elections earlier this year have resulted in a new and more conservative coalition government taking office, which will likely alter the subsidy scheme and reduce the subsidies' value. Coalition negotiations are currently ongoing.

Several customer registrations for the subsidy scheme are still being finalised, so these buyers will likely purchase their boilers using the subsidies in the new year, according to ProPellets Austria data. This means boiler sales will probably be above the long-term average next year but below 2024 sales.

Germany has launched a similar subsidy scheme, covering up to 70pc of the cost of a boiler. Wood pellet exports out of the country decreased by 139,705t on the year to 512,980t in January-September, customs data show, suggesting increased local demand.

Wood pellet consumption in Switzerland is also expected to be stronger year on year, at 470,000t this year compared with 416,197t in 2023, according to wood pellet association ProPellets Switzerland data and projections.

Meanwhile, pellet demand from the Italian and French markets has decreased on the year as the consumer base in those countries has declined. Italian and French households are not using pellet-fired stoves or boilers for their heating needs as much as they did in the past. And several buyers in Italy and France were still relying on stocks carried over from the previous year, as mild weather reduced consumption that year.

Italian household pellet consumption fell to an estimated 2.2mn-2.4mn t in 2024 from around 3mn t/yr a year earlier, and this has weighed on pellet trading activity with pellet producers in the Baltic region — one of the main suppliers to the Italian market. Higher transport costs made it unprofitable to import pellets from the Baltic — which is over 700-800km away from Italy. And the cost of raw materials in the Baltic region increased this year, meaning pellets from the region were outpriced by pellets from other markets. Italian buyers are now heavily reliant on cheaper Brazilian pellets, which has also weighed on imports from other countries. Italy imported 262,245t from Brazil in January-September, up from 186,770t over the same period in 2023, the latest customs data show. This trend could continue well into 2025, with Brazil becoming an increasingly influential sourcing country for Europe. Danish imports from Brazil rose to 77,375t in January-November 2024 from just 1,110t a year earlier, customs data show.

By Marta Imarisio

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27/12/24

Viewpoint: Wood chip supply may tighten in 2025

London, 27 December (Argus) — Wood chip raw material availability has grown tighter in Europe in the past couple of years and is expected to remain so in 2025, but its impact on the spot market has been limited by lower-than-typical overall demand in the period. A stronger consumption outlook by energy and other industrial segments at existing and new plants may put the market to test in 2025. In the Nordics, wood chip supply availability was tight this year in the wake of a cut-off in Russian and Belarus supply following sanctions in 2022 and harvesting restrictions imposed by national and EU regulations. A slowdown in sawmilling also contributed to a steady tightening of wood chip supply, particularly in Finland, who's imports rose year on year in 2024 as companies struggled with increased domestic wood chip prices as raw material prices held high. Swedish hardwood chip imports over the first nine months of 2024 held considerably higher than long term averages but were lower when compared with a year prior ( see chart ). This was mainly owing to a year-on-year a drop in receipts from Uruguay, Germany and Portugal. Swedish end-users struggled to meet demand from local sources that at most times were uncompetitive with chips from abroad. Swedish forest industry group Sodra, located in southern Sweden, raised the prices of its wood to historical highs earlier in the year and also expects 2025 to be a "challenging" year. Wood chip supply in the Baltics also was tightened by a slowdown in sawmilling that weighed on sawmill residue supply and is not expected to improve in the near term. But forestry feedstock was available, and prices of fuel wood harvested in Estonia's state and private-owned forests edged down on the year in January-October, following record-high prices in 2022, data from Estonian state forestry agency RMK and private forestry centre Eramets show, although prices were still well above long-term averages ( see graph ). This scarcity has yet to have a market impact as end-users still are well supplied with near capacity stocks. End-users delayed deliveries where they could or put deliveries into storage over October-November 2024. Most northern European utilities switched on their wood chip-fired boilers later than usual as warmer weather pared heating demand. Outages further pressured on the demand side, with Swedish utility Stockholm Exergi's 190MW Vartan 1 having undergone an outage of nearly six months that is scheduled to end on 27 January 2025. Although consumption picked up from late November as temperatures dropped, the delay in wood chip burn for heat generation has left end-users with ample stocks. But a structural lack of raw materials probably will tighten wood chip supply once consumption picks up in the first half of next year on forecast colder weather. Lower temperatures forecast over the next month should result in quicker stock withdrawals and encourage spot demand. For example, overnight temperatures in Oslo, Norway, are forecast to average minus 5.5°C, about 0.5°C below seasonal norms in the 45 days to 9 February, Speedwell Weather data show. Elsewhere, in Poland, supply availability of biomass may tighten, if the draft regulation on requirements for domestic energy wood put forward by the government in July is approved. But it is likely that the restrictions will be softened in the final draft by the ministry, following public consultation in the preceding months, market sources said. Looking forward, new projects across northwest Europe probably will support import demand. While a 13-month outage that began on 12 December 2023 at Gazel Energie's 150MW wood chip-fired Provence 4 power plant weakened wood chip consumption this year, it is scheduled to resume operations on 5 January 2025. Gazel Energie reached a deal with the French government to supply power from the plant over the coming eight years, which may bolster imports. French hardwood imports more than halved in January-September this year compared with a year earlier. Elsewhere, in Finland, energy company Joensuu Biocoal is set to begin commercial operations at the 60,000 t/yr heat-treated biomass production plant in the first quarter of next year. Paired with fresh demand from new projects planned for the first quarter of 2025, the deficit of supply seen in the woody feedstock market this year probably will continue into 2025, tightening wood chip availability once consumption picks up. By Hannah Adler Swedish imports of hardwood chips '000t Estonia raw material prices €/m3 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Erex delays starting wood pellet production in Vietnam

16/12/24

Erex delays starting wood pellet production in Vietnam

Tokyo, 16 December (Argus) — Japan's renewable energy developer Erex will postpone the start-up of its wood pellet factory in Vietnam from December 2024 to around February 2025. The Tuyen Quang factory — which is the company's first wood pellet production project in Vietnam — has been running test operations, but cannot start commercial operations this month as initially scheduled, Erex said on 13 December. The company did not disclose the reasons for the delay. The factory in Tuyen Quang province will produce around 150,000 t/yr of wood pellets, mainly from locally-secured unused forest materials, and export them to other countries including Japan for biomass-fired power plants. The investment amount for this project is $20.4mn. Erex aims to build up to 20 wood pellet factories in Vietnam, and several ones in Cambodia. The company is also planning biomass-fired generation capacity in southeast Asia, with up to 18 power plants in Vietnam and five in Cambodia. The first one is scheduled to come on line this month in Vietnam. Erex's profits from projects in Vietnam and Cambodia are expected to grow rapidly and will account for more than 70pc of its whole profits around 2030, according to the company. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU affirms 12-month deforestation delay

03/12/24

EU affirms 12-month deforestation delay

Brussels, 3 December (Argus) — Negotiators for the European Parliament and EU member states have provisionally agreed on delaying the implementation of the EU's 2023 deforestation regulation by one year. Fast-track adoption can now take place with a plenary vote expected on 16-19 December and later approval by EU ministers. The EU's council of ministers noted that the provisional agreement does not affect the substance of the existing deforestation rules. The final text, provisionally agreed, does not retain a "no risk" category, put forward by parliament's largest centre-right EPP party. Parliament had narrowly accepted the EPP proposal for the "no risk" category. Backing down on the amendment now allows the EU to proceed to EUDR adoption and publication in the bloc's official journal before the end of the year. Due diligence obligations set by the EU's 2023 deforestation regulation require operators and traders to ensure listed commodities and derived products, sold in or exported to the EU are "deforestation-free". Products include those made from cattle, wood, cocoa, soy, palm oil, coffee and rubber. The European Commission said it aims to finalise the country benchmarking system "as soon as possible but no later than 30 June 2025". And an information system where firms register due diligence statements will enter into operation on 4 December. Parliament's lead negotiator for the deforestation law, Christine Schneider, also pointed to a commitment by the commission to an "impact assessment and further simplification" for low risk countries or regions. "From 2028, countries practising sustainable forest management and showing no deforestation will have the opportunity to be exempted from unnecessary red tape," said Schneider, a member of the German centre-right EPP. The Centre-left S&D group said the system of "no risk" countries would have created an "unfair double standard", dividing EU member states into different risk categories. Negotiators firmly rejected this approach, the group said. "It was clear all along that their half-baked amendment proposals had no chance of success with the council and the commission," said Delara Burkhardt, German S&D negotiator for the deforestation law. Citing reasons of legal certainty, EU states quickly came out in favour of just a one year delay , agreeing with the commission's original proposal. Speaking to parliament on 3 December, the EU's director general for trade Sabine Weyand said robust commitments to halt deforestation in South America, as of 2030, and to ensure adherence to the Paris climate Agreement, are also "essential" elements of the EU's free trade agreement (FTA) with Mercosur countries — Brazil, Argentina, Paraguay, Uruguay, and now Bolivia. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Beccs 'interesting business model' for German biomass

29/11/24

Beccs 'interesting business model' for German biomass

Berlin, 29 November (Argus) — Costs for generating negative CO2 emissions through bioenergy with carbon capture and storage (Beccs) technology in Germany are €103.43/t of CO2 on average for woody biomass, initial results of an unpublished study commissioned by the country's bioenergy association BBE suggests. The average cost of €103.43/t applies to 1t of liquid CO2, which meets food purity standards. This could be the foundation of an interesting future business model for biomass plants, if negative emissions are incorporated into the EU emissions trading system and gain traction as a counterbalance to Germany's residual "hard-to-abate" greenhouse gas emissions, BBE's wood energy consultant, Tim Pettenkofer, said this week. A 20.5MW biomass cogeneration plant could raise its revenues by about 13pc by investing in Beccs, study co-author Lennart Reese of Seeger Engineering suggested. The plant operator would go from annual power revenues of €5.5mn, assuming annual running hours of 8,000 and a power price of €125/MWh, to about €6.2mn, assuming a CO2 price of €120/t. The calculations assume an annuity of 10pc and take into account other factors such as lost earnings from the power volumes used to sequester and liquefy the CO2. Electricity for liquefaction is the biggest cost item of the Beccs process, with Seeger Engineering putting average costs at €28.75/t of CO2. The final study will also look into the costs for Beccs from biogas and bioethanol plants. Beccs costs in the solid biomass segment will be highest, as its tailpipe CO2 intensity is about 10-15pc, the CO2 not being a by-product of a production process and therefore necessitating additional investment in flue gas cooling and sequestration technology. The CO2 intensity for biomethane and bioethanol plants is about 25-45pc and 95pc, respectively. Germany's government estimates the country's residual and hard-to-abate emissions will stand at about 50mn t of CO2 equivalent by 2045. An earlier study by BBE estimated potential for 10.7mn t/yr of CO2 negative emissions from Beccs with existing bioenergy plants in Germany, or 12.9mn t/yr of CO2 based on expected future availability. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Biomass could benefit from Trump’s presidency

29/11/24

Biomass could benefit from Trump’s presidency

London, 29 November (Argus) — The biomass industry expects continued support following the election of Donald Trump as president of the US — primarily through deregulation and expected wider economic benefits. But uncertainties remain, depending on whether the incoming administration will withdraw from the Paris climate accord, remove the Inflation Reduction Act (IRA) or other renewables support, and the success of other related policies. "Our industry has always enjoyed strong bipartisan support, having achieved substantial growth under both Democratic and Republican administrations," US Industrial Wood Pellets Association interim executive director Elizabeth Woodworth told Argus . US wood pellet producers expect no major changes in trade policy under Trump, because of his support for exports. The US does not currently consume any industrial pellets and nearly all of the 10mn t/yr produced are exported to Europe and Asia. Some expect that less red tape on environmental permitting could speed up biomass projects. Trump has pledged to roll back rules on emissions and greenhouse gas limits for power plants, and to repeal regulations limiting coal-fired power generation, among others. These would mimic the relaxation of environmental permitting regulations during Trump's first term. On a wider macroeconomic level, companies expect production costs could fall if Trump's campaign pledges of lower energy costs — by increasing oil and gas production — and lower inflation, materialise. But some analysts suggest these targets could be hard to achieve. On gas, wholesale prices have already dropped, triggering production cuts, and increasing output may not be enough to lower prices further. Trump's proposed growth-oriented economic policies are, at least in the short term, expected to be inflationary and result in higher interest rates and a stronger US dollar. Some campaign pledges to reverse clean energy policies, pull the US out of the Paris Agreement again and cancel unspent funds from the IRA may also affect US biomass industry's future — particularly the development of pellet-fired generation capacity and of bioenergy with carbon capture and storage (Beccs) projects. The IRA, which was signed into law in 2022 and allocated $369bn for climate change and energy-related spending, included support for carbon removals under Beccs projects. Specifically, the IRA's section 45Q provides a tax credit for CO2 sequestration and carbon capture, utilisation and storage deployment. The tax credit value for CO2 captured and permanently sequestered CO2 — geological storage — is $85/US short ton of CO2, while for direct air capture it is $180/st for up to 12 years. In addition, projects for renewable energy and energy storage assets in the US can benefit from investment tax credits. Some analysts argue that repealing the IRA would be met with opposition from industry groups and Republican-led districts benefitting from IRA funds. UK-headquartered utility and wood pellet producer Drax, which has invested in and is developing biomass-fired generation capacity and Beccs projects in the US, expects continued support. "We expect key policies for biomass and Beccs to remain unchanged... We are ready to work with the new administration and congress to deliver all the long-term benefits that biomass, Beccs and carbon removals will bring," a Drax spokesperson told Argus . Drax believes what it "can offer the US and the world in terms of power stability and security, carbon removals, jobs and investment, is valuable under any political party", the spokesperson added. The level of impact on the biomass industry in the short and long term will depend on how boldly and quickly the incoming administration fulfils its campaign pledges. "I am not looking forward to the unpredictable nature of the next administration, but at least it will create some volatility," one market source said. By Erisa Senerdem Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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