Monday, 17 August 2015

Market for Wood Pellets Expected to Boom Owing to Their Use as an Alternative to Fossil Fuel

The production of wood pellets has seen a spike in recent years, thanks to their attributes such as high energy density and ease of production/supply. These qualities of wood pellets have gained significance in the backdrop of tighter emission control norms. Based on these trends, it is expected that the global wood pellets market will rise at a remarkable 14.1% CAGR between 2015 and 2023, by which year the market is expected to touch a value of US$20,073.1 million. Governments and environmental regulation agencies have stressed on the use of wood pellets as a means to cut back on the high degree of dependence on fossil fuel, especially coal.

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Thus, it is easy to see why nearly every stakeholder across the value chain of the global wood pellet market will benefit from the impending boom in the market.

Canada and U.S. Top Global Wood Pellet Exports

As things stood in 2014, Canada and the United States were the largest wood pellet exporters in the world. In both these countries, wood pellet production has been encouraged because of two key reasons:

  • Wood pellets are regarded as a sustainable alternative to fossil fuels, helping them gain the stamp of approval from regulatory agencies. Because wood pellets are an affordable, carbon-neutral and easily-available biofuel, several industries have been quick to adopt them.
  • They are made from raw material that would otherwise find little use in other applications. From bark to saw dust to wood shavings, a variety of superfluous materials go into the production of wood pellets.

It is because of these above-mentioned factors that the global wood pellets market will see robust growth.


Regional Subsidies Provide an Impetus to Global Wood Pellet Market

As wood pellets are widely regarded as a carbon-neutral fuel and energy source, environmental agencies are formulating policies that encourage the use of pellet fuel. Subsidies have been the most effective way to attract the attention of industrial players and prompt them to replace fossil fuel with wood pellets. This has caused the demand for wood pellets to swing upward – it will continue to show this upward trend for the next few years, expect market analysts.

Europe, which is a region that lays great emphasis on green industrial policies, was the largest wood pellet market in the world as of 2014. The United Kingdom, with a slew of initiatives encouraging the uptake of wood pellets, was the largest wood pellet market within Europe. Germany is yet another large market for wood pellets – the country produced an estimated 980,000 tons of the fuel source in 2015 (H1), says IHB, a network for professionals in the German timber market. Likewise, stringent emission norms enforced in most states in the United States create a conducive environment for the growth of the wood pellet market here.


Demand for Wood Pellets in Heating Applications to Remain Highest

The use of pellet fuel is primarily seen in power generation and in heating applications. Market analysts expect that heating, which was the predominant application of wood pellets in 2014, will remain the largest in the global market until early next decade. Existing and anticipated incentive packages will continue to fuel the growth of the global wood pellets market; however, the key drawback that the global market will have to contend with is the release of flue gases during the storage their storage.

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