White Papers Supply Chain Challenges: BIOMASS | Page 3

BIOMASS
A ComTechAdvisory Whitepaper
ENVIRONMENTAL REGULATIONS DRIVE
THE MARKET
The rapidly increasing demand for wood pellets and other biomass sources, has been largely
driven by environmental regulations. Within the EU, the goal to meet targets of a 20 percent
reduction in GHG emissions, a 20 percent use of renewable energy, and a 20 percent
improvement in energy efficiency, has been the core driver.
Biomass is projected to account for up to 80
percent of renewable energy used for heating and
cooling, and nearly 20 percent of the electric power.
Additionally, schemes like the EU ETS may have also
aided the switch to large-scale biomass generation,
although since 2012 the effectiveness of this “cap
and trade” mechanism for driving down carbon
dioxide emissions has been called into question.
Consequently a number of EU countries and the
UK have added their own incentives in the form of
other green certificates and subsidies. However,
these schemes are in some instances shorter than
the investment horizon required for profitability in the
long term regulatory and subsidy environment, which
is subject to political risk and change, especially in an
era of austerity. international trade and the development of biomass
specific logistics and supply chains. In the UK, the
majority of wood pellets are imported from overseas
locations, primarily from the US, Canada, Latvia, and
a small, but growing tonnage from Brazil. According
to the US Trade Commission, “in 2013, U.S. wood
Irrespective of these risks, the use of biomass has
grown dramatically, both for macro scale projects
such as Drax Power, and for much smaller and widely
distributed retail “on premise” generators. The political environment in the EU and the incentives
provided, has resulted in significant fuel switching.
Up to 80% less CO2 is produced burning wood
pellets than heating oil 2 and wood pellets have less
environmental impact generally. Wood pellets are
replacing coal as a generation fuel and facilities such
as the Drax coal-fired generator in the UK are the
The use of wood pellets for power generation
has been the catalyst for massive increases of
pellet exports to the EU exceeded $358 million
and 2.8 million Mt, up from just $88 million and 0.5
million Mt in 2009. In 2016 this was forecast to grow
to over 4 million tonnes. The four largest destinations
for U.S. wood pellet exports in 2013 were the UK
(accounting for 59 percent), Belgium (15 percent),
Denmark (8 percent), and the Netherlands (6
percent). U.S. exports to South Korea have also been
growing along with that country’s imports from other
sources.”
2. https://www.woodpellets2u.co.uk/switching-from-heating-oil-to-wood-pellets
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