global pellet market outlook - bioeconomy...
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FutureMetrics
Global Pellet Market Outlook
Canadian Bioeconomy Conference June 7, 2018 Seth Walker
[email protected] www.FutureMetrics.com
@Bioeconomist
FutureMetrics
IntelligentAnalysis,MarketIntelligence,OperationsGuidance,andStrategicLeadershipforthePelletSector
8AirportRoad Bethel,ME04217,USAwww.FutureMetrics.com
Dr.WilliamStrauss,President
Namedoneofthemostinfluentialleadersinthebiomasssectorin2016and2017byArgusMedia.
Recipientofthe2012InternationalExcellenceinBioenergyAward.Aleaderintheindustryfortwo
decades.
JohnSwaan,PelletPlant
Operations
Recipientofthe2014InternationalFoundersAward.FounderofPacificBioEnergyandproducerofthefirst
shipmentofwoodpelletsfromNorthAmericatoEurope(1998).Leadingexpertonpelletplantoperations.
SethWalker,SeniorEconomist
Aleadingandoftencitedresearcher,analyst,andauthor
inthewoodpelletsector.Haspresentedatdozensofconferencesthroughoutthe
world.
LaurenzSchmidt,TechnologySpecialist
Globallyrespectedexpertinthermodynamicsandmassand
energyflowdynamics.HasauthoredFutureMetricsanalysesofsteamexploded
pelletproduction.
Senior Members of the FutureMetrics Team
Consultants to the World’s Leading Companies in the Wood Pellet Sector
Twomajormarketsforpellets:(1)Industrialpelletsusedasasubstituteforcoalinlargeutilitypowerstations;(2)Premiumheatingpelletsusedinpelletstovesandpelletfueledcentralheatingsystems.
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
GlobalPelletDemandMillionMT
Industrial PremiumHeating
IndustrialPelletDemand• Motivatedbypoliciesthatpromoterenewableenergyand/orthereduction
ofGHGEmissions• Primarilyincountrieswithlimiteddomesticresources(smallsize,large
population)andhistoricrelianceoncoal• FirstNorthwestEuropeandUKnowNorthAsia
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
GlobalIndustrialPelletDemandMillionMT
UK Netherlands Belgium Denmark Sweden Other S.Korea Japan
European Industrial Pellet Markets
• UK – increasing from 7 – 10.5 million MT • Drax 4th unit conversion • Lynemouth + MGT Teeside
• Netherlands – co-firing to resume • RWE: Amer 9, Eemshaven; Uniper: Maasvlakte; Engine:
Rotterdam • Major point of contention – shuttering of coal plants by 2030
(2024) • Denmark – 2nd biggest importer in 2017
• Heat > Electricity • More than 64% of Danish households get heat from district
heating • Belgium – “steady state” at ~ 1 million MT
• Could Langerlo be revisited?
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Asian Industrial Pellet Markets
Japanese and Korean wood pellet imports have increased 15-fold from 2012 to 2017, from 194,000 MT to 2.9 million MT
In 2017:
Korea imported 2.4 million MT a 41% increase from 2016
Japan imported 506,000 MT, a 46% increase from 2016
Most of the growth in pellet demand forecasted over the next 10 years will occur in Asia
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QuarterlyAsianWoodPelletImportsThousandMT
SouthKorea Japan
Japan
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Two distinct Markets 1. Dedicated biomass
Independent Power Producers (IPPs) • Motivated by FiT for
renewable energy 2. Co-firing at major coal
stations • Some support from FiT • Efficiency standards • Emissions intensity
reduction -
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JapaneseBiomassDemandMillionMT(pelletequivalent)
PelletIPPsPelletCo-firingPKSDomesticBiomassImportedChips
• Renewableenergypromotedbythecountry’sRenewableportfolioStandard(RPS).
• RenewableEnergyCertificates(RECs)usedtodemonstratecompliance.
• UtilitiesmustgenerateorbuyREC’stomeettheirRPSobligation,orpayafineof150%oftheaverageRECprice.*CurrentRECprice(110,301KRW/US$102.41)on5/25/18
Challenges:• Uncertaintyinsubsidyvalue(tradablemarketforRECs)• Limitationsonl/tcontracts(tenderingsystemused)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
2.0% 2.5% 3.0% 3.0% 3.5% 4.0% 4.5% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%
Korea’s RPS
North American Pellet Exports
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Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4
2015 2016 2017
Quarterly Wood Pellet Exports Thousand MT
Canada USA
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Source:GTA
UK 80%
Belgium 11%
Denmark 7% Italy
1%
Other 1%
UK 69%
Japan 11%
United States 10%
Belgium 6% Korea
2% Italy 2%
Other 0%
USA CA
New Pellet Production Regions
• Vietnamese pellet production increased to 1.6 million MT in 2017
• Elsewhere in Southeast Asia (Malaysia, Indonesia, Thailand) pellets more than doubled from 298,000 MT in 2016 to 628,000 MT in 2017
• Australia – Plantation Energy and Altus re-starts
• US Northwest – several projects in development
• Brazil – a few flops (Suzano), alternative feedstocks?
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2012 2013 2014 2015 2016 2017
AsianWoodPelletExportsMillionMT
Vietnam Malaysia Russia China
Indonesia Thailand Other