by John Stang July 30th, 2012
The Asian wood pellet market is growing, and the the United States and Canada are poised to be a prime source for it, according to a second-quarter 2012 report from the U.S. Department of Agriculture’s Pacific Northwest Research Station. “The West Coast is in a strong position to supply Asia with wood pellets, drawing on both timber supply and proximity to Asian markets,” the report said.
China, Japan and South Korea have large demands for wood pellets for home heating and for mixing with coal in power plants. The primary use for wood pellets in Asia is co-firing at coal-power plants. “Therefore, business development should include….coal power plants that have an interest in increasing their renewable energy output,” the report said. This demand meshes with the Obama administration’s goal of doubling exports from $1 trillion to $2 trillion by 2015 – enough to create a cabinet level post to pursue that target, the report said.
Pellets are made from sawdust, shavings, and wood chips from the manufacture of lumber, furniture other forest products, the report said.
Global wood pellet production was approximately 12 milion metric tons in 2009, and is predicted to increased to 100 million metric tons by 2020. The World Bank noted the Earth’s energy demands will grow with wood pellets becoming more of a source. The United States, Canada, Germany and Sweden are the greatest producers of wood pellets. Belgium, Denmark, the Netherlands and Sweden are the biggest importers. The United States produced 1.8 million metric tons of wood pellets in 2010, but consumed 80 percent of that amount. Meanwhile, Canada produced 1.2 million metric tons in 2010, and exported roughly 80 percent.
“Wood pellet research is a fairly new field, with most of the studies focusing on the North American and European markets. However, while these markets are well established, a number of Asian governments are developing policies to promote the use of renewable energy, and wood pellets are benefiting from these policies,” the report said.
Here is how the report breaks down the situations for China, South Korea and Japan.
- “China has the potential to become the largest wood pellet market in Asia. Its economy is strong, energy demand is growing, and the Chinese government is looking for solutions to substitute renewable energy for coal,” the report said. “Additionally, the Chinese currency has appreciated against the U.S.dollar, making U.S. wood pellets easier to sell in the Chinese market.” Right now, China imports few wood pellets from the United States, so a significant amount of market development is needed. China is the world’s second largest consumer of energy after the United States. Right now, 70 percent of China’s energy comes from coal. The nation produced 800,000 metric tons of wood pellets in 2008 and 1 million metric ton in 2009. While China is leery about participating in a global climate-change agreement, it has also set a target of creating 15 percent of its energy for renewable resources by 2015, the report said..
- South Korea is a also a small importer of wood pellets, while seeking to increase its renewable energy percentage to 11 percent. “Overall, wood pellet demand will increase in South Korea, but it is difficult to predict what portion will be imported from North America,” according to the report. South Korea’s economic growth has been powered by fossil fuel. That translated to the nation’s carbon dioxide emissions increasing by 97 percent from 1990 to 2006, compared to a parallel increase of 11 percent in Japan. South Korea has set goals of significantly reducing its use of fossil fuels, while increasing its renewable energy production from 2.4 percent in 2007 to 11 percent by 2030. It is already seeking more wood pellets from Indonesia. In 2009, South Korea used 30,0000 metric tons of wood pellets with a third of that imported. Its wood pellet demand is predicted to hit 5 million metric tons by 2020, the report said.
- Meanwhile, Japan’s wood-pellet demand is also linked mostly to the its power industry, which is trying to reduce its emissions because of the Kyoto Protocol. The nation copes with having almost no natural resources. And it is a signatory of the Kyoto Protocol, which required it to reduce its emissions by 6 percent below 1990’s level by this year. Wood pellets are used for both power generation and home heating in Japan. The country produced 60,000 metric tons of wood pellets in 2008 and imported 49,000 metric tons in 2009, the report said.