Industrial Wood Pellet Market Size, Share & COVID-19 Impact Analysis, By Feedstock (Forest Wastes, Agricultural Waste, and Others), By Application (Power Generation, and Combined Heat and Power [CHP]), and Regional Forecast, 2020-2027

The global industrial wood pellet market size was USD 5.54 billion in 2019. The global impact of COVID-19 has been unprecedented and staggering, with industrial pellet mills experiencing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market will exhibit a huge decline of -21.91% in 2020. The market is projected to grow from USD 4.33 billion in 2020 to USD 7.69 billion in 2027 at a CAGR of 8.56% in the 2020-2027 period. The sudden rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

Wood pellets are manufactured from forest by-products, sawdust, and agricultural waste materials. As per the World Bioenergy Association, pellets can replace coal in power generation facilities. Rising concerns about environmental safety and increased demand for clean energy are key factors driving the growth of the market.

COVID-19 Pandemic to Severely Affect Pellet Industry

The outbreak of the infectious disease COVID-19 has caused chaos and panic all over the world resulting in the ceasing of all normal daily activities. Amid the increasing concern over the pandemic, several industries across the globe, such as automotive, aviation, and oil & gas, are experiencing a negative impact on their businesses. Amid the pandemic, there has been a slowdown in forest management activities owing to the shortage of workforce.

The forest-based industry such as the paper industry and wood industry is anticipated to have immediate consequences due to the decline in wood products, such as wood runoff, and disruption in the supply chain. However, the market is anticipated to recover post-pandemic due to a rise in the utilization ofwood pelletsand pulp for sanitary purposes. On the production side, the supply of raw material was reduced due to the slowdown of the sawmilling activity. For instance, in March 2020, Stelmet, Poland's largest pellet manufacturing company, shut down its wood pellet production until mid-April as a result of the coronavirus outbreak. Also, in the same month, the government of Malaysia enforced a lockdown to limit the spread of COVID-19. As a result, the country’s pellet industries were closed till mid-April.

LATEST TRENDS

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Continuously Increasing Demand for Electricity is a Prominent Trend

Rapid growth in population, thriving industrial sector, and increasing infrastructure development have led to a significant rise in electricity generation. Owing to the development of countries and the improvement in the living standard of people, there is a greater demand for energy consumption. As the demand for electricity increases, regions across the globe surge their power generation capacity by installing new plants or expanding the capacity of the existing ones. Due to stringent government regulations regarding carbon emission, companies are more inclined toward the usage of renewable energy sources for power generation.

Using wood pellets has drawn considerable attention globally as an innovative strategy to tackle climate change, minimize GHG emissions, and fulfil the Kyoto Protocol agreements. According to the Global Energy Statistical Yearbook, Europe's total electricity consumption in 2017 was 3,395 TWh, which increased to 3,410 TWh in 2018.

DRIVING FACTORS

High Demand for Industrial Wood Pellets from End-use Industry to Fuel Market Growth

Wood pellets are becoming popular across the globe owing to the increasing prices of primary fuel. Moreover, the easy availability of pellet fuel feedstock and low production cost has led to its higher consumption in the industrial sector. Currently, power plants are the largest consumer of industrial pellets. Most of the companies in Europe & North America are converting their power plants from coal to biomass. This is majorly because governments of these countries have opted to fulfill their obligations for renewable energy use by using sustainable biomass for electricity generation.

最近,英国电力g。德拉克斯集团eneration company, started transitioning its units of coal into wood fuel because the U.K. government is putting tight restrictions on carbon emissions to help fight climate change. Additionally, Engie’s 731MW Rotterdam plant at 10%, Uniper’s 1.1GW Maasvlakte (MPP3) plant at 15%, and RWE’s 777MW Eemshaven A and B units at 15%, all are expected to begin commercial co-firing by the end of 2020. Thus, the demand for pellets is expected to increase continuously.

Supportive Government Initiatives and Policies to Propel Industrial Wood Pellet Market Growth

近来,碳排放量增加了推崇bly due to rapid industrialization, which is ultimately leading to climate change. Governments of various countries are striving to lower the climate change impact by enhancing the penetration of renewable technologies. Several tax incentives programs, such as state income tax credit, state sales tax exemption, local property tax exemption, and corporate income tax deduction, are offered by various governments to promote the adoption of renewable resources.

Regulatory framework and government support, such as government grants and funding programs, which provide investment subsidies and tax benefits, play a key role in driving the industrial wood pellets market. Various government schemes, such as the Renewable Heat Incentive (RHI) introduced in April 2013 have resulted in generating substantial interest in the pellets market in the U.K. Such schemes are expected to drive the market in the near future.

RESTRAINING FACTORS

Fulfilling Certification Criteria to Restrain Industrial Wood Pellet Market

Government certification is a valuable tool to assure customers that pellets have come from sustainably managed forests. The increasing certification criteria for exporting goods to Europe and other countries where various policies mandate renewable energy production is a key restraining factor in the market for industrial wood pellet. The Sustainable Forestry Initiative (SFI), American Tree Farm System, Forest Stewardship Council (FSC), and Program for the Endorsement of Forest Certification (PEFC) are the largest forest certification standard organizations and systems in the world. In the industrial sector, pellet producers are concerned about sustainability certification. This is to demonstrate to their customers, and ultimately to governments, that pellets used for power are produced sustainably. Currently, the U.S. has over 300 million hectares of forest land. However, major U.S. standards certify only around 19% of U.S. commercial forestland.

SEGMENTATION

By Feedstock Analysis

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Forest Waste Segment to Lead during the Forecast Period

Based on feedstock, the market is segmented into forest waste, agricultural waste, and others. The forest waste segment held the major share of the global market. Pellets are mainly produced from the by-products of traditional forestry operations such as sawmills and finished wood products manufacturing. Several companies such as Eviva and Drax Group own a private forest for pellet production. In the U.S., across the southeastern region, over 85% of forestland is owned by small scale, private family landowners. Most of these landowners manage their lands as working forests or forests that are carefully managed to sustainably supply a variety of forest products to various industries.

The agricultural waste segment is expected to contribute significantly during the forecast period. As per the Global Bioenergy Statistics, energy generation from agricultural residues could meet about 3 – 14% of the total energy supply globally.

By Application Analysis

Power Generation Application Held the Dominant Share of the Market

Based on the application, the market can be segmented into power generation and combined heat and power (CHP). Stringent environmental regulations to reduce carbon emission and increasing renewable energy targets are the major factors driving the growth of the market. Emissions at the smokestack from using wood energy to produce power and heat are considered carbon-neutral by regulators and policymakers around the world. This will positively impact the industrial wood pellets market growth. Industrial pellets are considered much better for the environment than coal or any of the fossil fuels that legacy power plants use to produce electricity. According to the U.K. Environment Agency, switching to pellets from coal has been shown to reduce carbon emissions between 74 – 90%.

The CHP segment is projected to grow at a significant pace during the forecast period. The voluntary target within the updated Renewable Energy Directive (RED) for member states to increase renewable energy in heating and cooling by 1.3 percentage/year should open up opportunities for heating application.

REGIONAL INSIGHTS

Europe Industrial Wood Pellet Market Size, 2019 (USD Billion)

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Geographically, the global market has been analyzed across five key regions, including North America, Europe, Asia Pacific, the Middle East & Africa, and South America. Europe held the major share of the global market in 2019. According to the European Pellet Council, the region remained the largest consumer of industrial pellets in the world and consumed 13.20 million tons of industrial pellets in 2019.

英国was the largest user of pellet-based energy with its consumption of more than 8 million tonnes. In countries including the U.K, Belgium, and the Netherlands, the residential use of pellets is negligible and the demand for wood pellets is dominated by large-scale power plants. Governments of these countries have opted to fulfill their obligations for renewable energy use by the utilization of sustainable biomass for the generation of electricity. As these countries lack sufficient domestic production of pellets, they largely depend on imports. In 2019, Europe imported around 6.89 million tonnes of pellets only from the U.S.

The Asia Pacific market is expected to grow at the highest pace during the forecast period. China, South Korea, and Japan are the major consumers of industrial wood pellets. South Korea is primarily importing its pellets from Vietnam and Malaysia, while Japan is sourcing its pellet principally from Canada. North America has been a significant region for industrial wood pellets. The U.S. pellet exports increased by 14% in 2019. The U.K. remained the largest importer of U.S. pellets with 78% of the total volume. The Southeastern part of the U.S. has emerged as a major supplier and net exporter of pellets. The industry has continued to thrive on the abundant timber resources in the Southeast. The region contains over 24 million acres of bottomland hardwood forests that account for 65% of the total amount found in the nation.

KEY INDUSTRY PLAYERS

专注于扩大的关键参与者Production Capacities

The global industrial wood pellet market is highly fragmented due to the presence of a large number of players. Each of the present companies in the market has a strong foothold on their base country and region. Several players across the global market are increasingly participating in organic & inorganic developments to solidify their positions globally. Most of the companies are concentrating on expanding their production capacities by introducing new plants or broadening the existing ones.

Recently, in July 2019, Pinnacle Renewable Energy entered into a limited partnership agreement with Tolko Industries Ltd. to build a new industrial pellet production facility in High Level, Alberta, the U.S. In July 2020, Alabama Pellets, a subsidiary of Pinnacle Renewable Energy Inc., planned to invest USD 95 million to construct a pellet production facility in Demopolis, Alabama. The Alabama Pellets facility is expected to have an annual production volume of 360,000 metric tons and will start the initial industrial pellet production by mid-2021.

LIST OF KEY COMPANIES PROFILED:

• Drax Group (U.K)


• Enviva(U.S.)


• Pinnacle Renewable Energy Group (Canada)


• The Westervelt Company (U.S.)


• Fram Renewables Fuels LLC(U.S.)


• AS Graanul Invest (Estonia)


• Bluesky Biomass Georgia (U.S.)


• Thunderbolt Biomass Inc. (U.S.)


• Energex Pellet Fuel, Inc. (U.S.)


• An Viet Phat Group (Vietnam)

关键行业的发展:

• In October 2019,Enviva Partners LP decided to construct a new manufacturing plant for wood pellets in Lucedale, Mississippi, U.S. The company will invest around USD 140 million in this new plant.


• In October 2018, Pinnacle Renewable Holdings Inc. announced that it has completed the acquisition of a 70 percent interest in an industrial pellet production facility located in Aliceville, Alabama from the Westervelt Company.

REPORT COVERAGE

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The industrial wood pellet market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies and leading feedstock, and the application of the product. Besides this, it offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth rate of the advanced market over recent years.

REPORT SCOPE & SEGMENTATION

ATTRIBUTE	DETAILS
Study Period	2016-2027
Base Year	2019
Forecast Period	2020-2027
Historic Period	2016-2018
Unit	Value (USD Billion) & Volume (Thousand Tons)
分割	By Feedstock Forest Waste Agricultural Waste Others
	By Application Power Generation Combined Heat & Power (CHP)
	By Region North America (By Feedstock, Application, and Country) The U.S. Canada Europe (By Feedstock, Application, and Country) 英国 Germany Belgium Denmark Sweden Rest of Europe Asia Pacific (By Feedstock, Application, and Country) China Japan South Korea Rest of Asia Pacific Rest of World (By Feedstock and Application)