Strategic forescasting of European biomass demand

BEDFORD, MA, Aug. 8, 2011 (RISI) - As European countries push forward to meet renewable energy goals of 20% by 2020, demand for imported biomass -- specifically, wood pellets -- will rise. Commercial scale pellet manufacturing is growing quickly in North America to meet this demand, especially in the southeastern USA. Established producers such as Green Circle, Fram Renewables and Enviva are being joined by several new large-scale facilities as announced in recent months, including: the Georgia Biomass 750,000 ton mill in partnership with RWE Innogy; Enviva's 330,000 ton mill in North Carolina; the Westervelt Company's 550,000 ton target capacity mill in Alabama to be built by 2012; and Point Bio Energy LLC's proposed 500,000 ton mill in Louisiana. The question for those in this industry looking to further invest in new capacity in North America -- as well as those concerned about regional biomass feedstock supply and the growing global competition in industrial-grade pellets -- is to what extent and at what pace European energy demand for biomass will develop.

The EU itself has certainly reported in detail on the mandated renewable energy action plans of its Member States (NREAPs); however, in RISI interviews, European utility company executives have been critical as to the reliability of industry knowledge and technical scope outlined in these bureaucratic assessments. Many other respected organizations have also released their own estimates of forecasted European wood pellet demand; however, these vary wildly. Argus Media recently reported that this number could reach 32 million tons per year by 2016. An article in Biofuels, Bioproducts and Biorefining stated that this figure could be 115-335 million tons per year by 2020. From RISI's perspective, which information to utilize for your strategic planning certainly depends upon the methodology and comprehensiveness of the analysis.

In the European Biomass Review, released July 2011, RISI developed its own viewpoint as to the future development of European energy and related biomass supply markets. The 169-page report is an independent assessment of what RISI believes is possible for 2020 -- given that the EU's renewable energy policy is unique in its ambition and its impact will be felt globally. This in-depth study has been developed from published reports by various agencies, extensive interviewing of European energy industry players and technical consultants, application of RISI's European Wood Biomass Projects Database, and analysis utilizing RISI's global group of integrated bioenergy and forest product econometric expertise. The report chapters of "Policy Environment," "Demand Outlook," "Supply Potential" and "Future Market Outlook" (which includes biomass supply mobilization and regional cost curve scenarios by biomass type, outlining implications for biomass pricing and imports) have been evaluated for each of the 27 EU Member States and are summarized regionally as North, West, East, South, and UK & Ireland. RISI's objective in producing the European Biomass Review was not just to provide a forecast number in support of strategic decision-making for the European industry and North American biomass supply players, but also to illustrate detailed supporting analysis so that the reader can thoroughly understand the underlying drivers and independently review RISI's position for their own due diligence.

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