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The wood pellet market is booming in Europe. The EU 2020 policy targets for renewable energy sources and greenhouse gas (GHG) emissions reduction are among the main drivers. The aim of this analysis is to map current European national wood pellet demand and supplies, to provide a comprehensive overview of major market types and prices, and to discuss the future outlook in light of raw material supply. Approximately 650 pellet plants produced more than 10 million tonnes of pellets in 2009 in Europe. Total European consumption was about 9.8 million tonnes, of which some 9.2 million tonnes is within the EU-27, representing a modest 0.2% of Gross Energy Consumption (75 EJ level in 2008). The prices of most pellet types are increasing. While most markets of non-industrial pellets are largely self-suffi cient, industrial pellet markets depend on the import of wood pellets from outside the EU-27. Industrial pellet markets are relatively mature, compared to non-industrial ones, because of their advanced storage facilities and long-term price-setting. However, industrial pellet markets are unstable, depending mainly on the establishment or the abolishment of public support schemes.Following our scenarios, additional 2020 demand for woody biomass varies from 105 million tonnes, based on market forecasts for pellets in the energy sector and a reference growth of the forest sector, to 305 million tonnes, based on maximum demand in energy and transport sectors and a rapid growth of the forest sector. Additional supply of woody biomass may vary from 45 million tonnes from increased harvest levels to 400 million tonnes after the recovery of slash via altered forest management, the recovery of waste wood via recycling, and the establishment of woody energy plantations in the future. Any short-term shortages within the EU-27 may be bridged via imports from nearby regions such as north west Russia or overseas.

The European wood pellet market is booming: concerns about climate change and renewable energy targets are predominant drivers. The aim of this analysis is to compare typical wood pellet chains from the purchase of the feedstock from sawmills to the conversion into heat or electricity. Cost structures, primary energy inputs and avoided greenhouse gas (GHG) emissions are reviewed. Three cases are defined: pellets for district heating (DH) in Sweden (replacing heavy fuel oil); bagged pellets for residential heating in Italy (natural gas); and Canadian pellets for electricity production in the Netherlands (coal). Supply may cost €110–€170 per tonne of delivered pellets, with the main cost factors being feedstock collection, drying and long‐distance ocean transportation (for Canadian pellets only). Largest avoided emissions are for power production (1937 kg CO2eq/tonne of pellets), followed by district heating (1483 kg). In relative terms, the GHG reduction varies from 81% for residential heating (with pre‐dried feedstock) to 97% for DH. Based on a wood‐pellet consumption of 8.2 million tonnes, the EU27 plus Norway and Switzerland avoided about 12.6 million tonnes of CO2 emissions in 2008. Concluding, wood pellets can achieve substantial GHG savings, especially when substituting coal for power production. However, wood pellets are relatively expensive, especially compared to coal. Only in the case of high oil prices, can the substitution of heating oil for DH be commercially viable. In most other cases, substitution is only possible with financial support from national governments, for example, feed‐in tariffs or carbon taxes. The commercial markets for CO2 emission rights may cover some costs, but their impact is still limited. Copyright © 2010 Society of Chemical Industry and John Wiley & Sons, Ltd

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