Production and Consumption of Wood Pellets in the European Union Arnold Dale Ekman & Co AB WPAC conference November 2015 Halifax, Nova Scotia, Canada

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Estimated world wood pellet production (million tonnes) Source: IEA Bioenergy Task 40, Hawkins Wright, EPC Survey

World pellet market overview in 2014 (million tonnes) Source: EPC Survey, Hawkins Wright, FAO

WORLD PELLET TRADE Source: EPC Survey, Hawkins Wright

•  Producing 13,5 million tonnes but consuming 18,8 million tonnes, the EU is the biggest pellet importer in the world.

•  Imported pellets are mainly for industrial use (Power plants and CHPs) •  The imported pellets are mainly sourced from the USA and Canada •  Russia & CIS countries are gaining importance in EU pellet supply to both the

Industrial and residential sectors •  Trade from North America to EU has slightly increased from 4,69 million

tonnes in 2013 to 5,15 million tonnes in 2014 showing a very different trend in USA than Canada.

•  US exports to EU have increased 41 % with 3,89 million tonnes, while Canadian exports have reduced 34%.

•  Exports from Russia & CIS countries to EU have increased around 20 % from 2013 to 2015 to reach 950.000 tonnes.

•  The Baltic states and Russia produced 4.15 million tons during 2015

World industrial pellet consumption for power and CHP in 2014 (percentage) Source: EPC Survey, Hawkins Wright, Ekman &Co

48%

19%

15%

6%

5% 1% 1%

1% 4%

UK Korea Denmark Belgium Sweden Poland Holland Japan Other EU

Top 10 wood pellet consuming countries by end-use in 2014 (million tonnes) Source: EPC Survey, Hawkins Wright, Ekman & Co

0

1

2

3

4

5

6

CHP Heat Power

Overview of European wood pellet production in 2014

Division of total EU28 exports 2014 (percentage) Source: Eurostat

Latvia, 20%

Portugal , 12%

Germany, 10%

Estonia, 10% Austria, 7%

Romania, 6%

Lithuania, 5%

Sweden, 4%

Holland, 4%

Poland, 3%

Rest of EU28, 19%

Latvia

Portugal

Germany

Estonia

Austria

Romania

Lithuania

Sweden

Holland

Poland

Rest of EU28

World wood pellet production shares in 2014 Source: Hawkins Wright, EPC Survey

EU28 50%

Other Europe

4%

North America

30%

Russia & CIS 6%

China 5%

Rest of Asia 4%

Rest of World

1%

• Globally 27,1 million tonnes of pellets produced in 2014.

•  13,5 million tonnes produced in the European Union

• North America slightly increased its production

• Russia & CIS and Asia have shown an important growth in their production

Forests in Europe

Ports of the Baltic Sea Region

Forest growth in Latvia 1930-2015 Source:

¡  Annual natural increment 27 mln. m³ ¡  Annual fellings 10-12 mln. m³ ¡  Annual fellings per capita ~ 5 m³ ¡  Annual wood consumption per capita 0,9 m³ ¡  In previous 14 years the amount of standing wood in forests of Latvia

has increased by approx. 125 mln m3 (+23%)  

Latvian Forest Deviation of Tree Species

13.30%

38%

29.30%

19.40%

Other Spruce Birch Pine

The Baltic states and Russia produced 4.15 million tons in 2014

•  Estonia had a limited pellet production a few years ago but has very quickly become a large pellet producer and the 4th biggest EU pellet exporter in 2014.

•  Estonia produced 1 million tons in 16 mills •  Pellet production in Latvia has boomed making

the country the 3rd largest pellet producer and the biggest exporter in the EU

•  Latvia produced 1.35 million tons in 23 mills •  Lithuania produces mainly bagged pellets for the

residential market and most of the production is exported

•  Lithuania produced 300 000 tons in 10 mills •  Total Baltic states production in 2014 was 2.65

million tons •  Russia produces around 1.5 million tons in 90

mills •  Total production from the Baltic states and Russia

4.15 million tons in 2014

175,015 km2 (

67,523 sq mi

Who are the main producers in the Baltic states?

•  AS Graanul Invest is a privately owned company, established in 2003, and focuses on forestry, development of bioenergy and the production of renewable energy. Annual production capacity of 853 thousand tonnes

•  Latgran, established in 2004, produced 497 thousand tonnes of pellets in its four factories in 2014

•  Granuul acquired Latgran in 2015 •  Combined capacity will produce 1.8

million in 2015 making Granuul the largest producer in Europe

•  Many small and medium sized producers

The European wood pellet market Conclusions

•  The European wood pellet market is the world’s largest market this will not change

•  Europe is still the worlds largest wood pellet producer with 50% of global production, but North America may overtake Europe in time

•  Contrary to expectations production volumes in nearly all European countries are showing healthy increases

•  Consumption the power market has levelled off •  Consumption in the CHP and heat markets are showing good growth •  More and more wood pellet manufacturers are selling into both the heat and

power markets •  It looks like 2016 will be a tough year for industrial pellet producers

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