UK Wood Pellet Market Open to New Supply Opportunities

Changes to global supply chains brought on by the crisis in Ukraine, as well as increased demand across Europe, have seen United Kingdom producers and suppliers urgently switch to alternative sources of imported wood pellets to ensure minimal impact on the biomass heating market, a sector that currently sees U.K. demand for premium grade wood pellets reaching 600,000 tons per annum.

The UK Pellet Council, a trade body representing the premium wood pellet heating sector—a niche and separate industry to the biomass power market—is now forging new partnerships with worldwide suppliers to plug an immediate pellet shortfall of 200,000 tons per annum, previously sourced from Siberia but ceased following its EN Plus certification suspension.

This has created new opportunities for existing pellet suppliers from the Baltics and the Iberian Peninsula to increase exports (and months ago, were shipping approximately 150,000 tons annually to the U.K.), and potentially, North and South America producers, too, should an excess of premium grade inventory exist. We are very much open for business, with the UKPC and its members now looking for alternative wood pellet producers and competitive supply routes, all working under the EN Plus A1 accreditation scheme or equivalent quality standards. Our market needs to respond to (and accommodate) a short-term issue brought on by the crisis in Ukraine, and whilst overall heating demand is beginning to reduce as we head into the warmer summer months, we must have new supply chains up and running now to prevent any possible shortfall across the whole of Europe next winter. With up to 55% of our annual demand sourced from imports, the knock-on effect would be huge; therefore, we’re open to all discussions. Despite these circumstances being brought on by the worst possible events overseas, it is now an opportunity for change and growth.

The U.K. is home to many strategic ports located up and down the coastline, with several regions already receiving regular wood pellet shipments via dedicated fuel handling facilities. Storage options may be lower than other European countries at present, but companies operating within the biomass heating market take regular shipments of one-ton bulk bags (25 per container) to 3,000- to 5,000-ton-plus bulk pellet consignments. Working hand-in-hand with a domestic production sector, this is also an area that could also be developed further via major inward investment.

Our sector has continuously developed over the past 10 years, being very much supported by the domestic and nondomestic Renewable Heat Incentive scheme. While this has ended, it has meant a seven-year subsidy for domestic heating and 20 years for commercial users based on metered heat use. This ensured that high-quality wood pellets remained competitive against fossil fuels.

Looking ahead, the U.K. government has committed to ambitious net zero targets with biomass (wood pellets) being identified to help achieve that, especially for rural off-grid homes and buildings where other technologies simply aren’t feasible. The awaited Biomass Strategy, to be delivered by the Department for Business, Energy and Industry Strategy, is due for release later this year. This program, along with the Boiler Upgrade Scheme that began in April, should allow our industry to be a driving force in encouraging a switch from oil, coal and liquefied petroleum gas (LPG) systems in the hardest-to-heat properties, as well as challenging and remote, rural off-grid locations.

And this is where a major opportunity lies. Our customers include private homeowners and an array of commercial users. Furthermore, independent research has identified that there are approximately 1.45 million (and possibly up to 1.9 million homes) or 7% of the total housing stock, and 200,000 commercial buildings that cannot be decarbonized via the gas grid. Of these, at least 422,000 homes are only suitable for biomass and bioenergy, with this number likely to be much higher when the cost benefit analysis has been completed on electrical grid investment, as urban areas will likely be prioritized.

Additionally, 57% of rural homes use oil, coal or LPG currently, producing 20 to 40% more carbon emissions than natural gas in urban areas.

Demand for premium wood pellets will increase as people move away from fossil fuel use, and while we will still have a need for premium imported stock, we must also grab the opportunity to upscale our own home-grown, domestic production in line with new woodland creation and sustainable forestry management. Investment and increased government support would help develop more strategic autonomy, allowing us to become more protected from global price surges and a crippling energy crisis.

We have a lot of work to do, but the opportunity is now. As representatives of the wood pellet sector and the biomass heating industry, the UKPC is at the forefront of wider discussions to help grow our industry both at home and on an international level.

Contact: Mark Lebus
Chair, UK Pellet Council
www.pelletcouncil.org.uk
+44 (0) 1670 338395

Printed in Issue 2, 2022 of Pellet Mill Magazine