This Is How the Global Energy Crisis Ends

Posted on Categories Market news

This Is How the Global Energy Crisis Ends

 

IN THE US, filling up your car has become 46 percent more expensive in the last year—though those outside the country can only dream of paying $4.25 for a gallon of gas. In the UK, the average price at the pump is closer to $9.77 a gallon. Austria and Germany are planning to ration natural gas usage in the face of high prices. And on April 1, UK consumers swallowed a 54 percent price increase to heat their homes. Meanwhile, Russian president Vladimir Putin has said customers must pay for Russian gas in rubles or face being cut off. In response to recent events, US president Joe Biden has dipped into the country’s strategic petroleum reserve, bringing it to its lowest levels in nearly 30 years. Despite that, a barrel of oil still costs 60 percent more than it did a year ago. Interventions to bring prices down haven’t worked.

Wherever you are and whatever you do, you have almost certainly felt the sting of the global energy crisis. And there’s no end in sight. “We got into this mess long before the Ukraine war,” says Thierry Bros, professor of energy at the Sciences Po university in Paris. “But Putin also helped us get into this mess.” Bros points to Europe’s overdependence on energy giant Gazprom, which the Russian state owns a majority share in, making it impossible to replace all Russian gas overnight. Russia is the world’s second-biggest supplier of natural gas, behind the US, and third-biggest supplier of oil, behind the US and Saudi Arabia. For Adi Ismirovic, a senior research fellow at the UK-based Oxford Institute for Energy Studies, it’s an indication that the world has sleepwalked into the energy crisis by not preparing for the post-fossil-fuel future.

Germany, for instance, is closing several of its nuclear power plants at a time when they still work and are still needed in the European energy mix. Why? Blame politics. As it stands, Ismirovic believes that Europe can survive without Russian oil, which accounts for around 30 percent of supplies for the European Union. But it can’t survive without Russian gas, which makes up 40 percent of gas in the EU. “Without oil, there will be problems, but it can survive,” he says. “But it would really struggle without Russian gas. Lights will probably have to go out next winter.” That’s if Russia decides to halt deliveries—and that remains a big if. But the situation is deteriorating. Putin has said that he will require payment for Russian gas supplies in rubles from April 1 in order to dodge sanctions—a move countries including Germany have described as “blackmail.” The move has raised concerns that supplies could be disrupted.

Faced with ballooning prices and the fallout of Russia’s illegal war, countries are asking other fossil fuel producers to turn on the taps. OPEC, which is often cited as an example of a cartel, organizes and then disburses what accounts to around 40 percent of average annual global demand. The oil trading organization has been asked to increase supplies to make up for any Russian shortfall—or to allow countries to cut Russia out entirely. So far OPEC has refused. On March 31, it said it would increase supplies by 432,000 barrels a day starting in May, an amount far lower than is needed and a less than 2 percent rise on existing production. So why won’t OPEC open up the taps? The reasons may be economic. Ismirovic says high prices mean more money for OPEC countries, many of which are allied to Russia and likely to benefit from the market crunch. (The poor relationship between the US and key OPEC member Saudi Arabia after the murder of journalist Jamal Khashoggi may also make the organization less likely to act.) “You can’t press cartels to supply more oil because the cartel is there to ensure higher revenues for the cartel members,” says Ismirovic. “They want high prices, not low prices.”

OPEC’s inaction is why Biden has tapped the US strategic petroleum reserve, releasing a million barrels of oil into the market a day. But this seemingly bold move has had little impact. The oil price fell when Biden announced he was taking action, but not significantly—an indication that US strategic oil amounts to little in the larger context. “It’s an easy button to press,” says Ismirovic. “It’s a fundamentally tight market.” And it’s one of our own making.

Political expediency and short-term thinking have kept the world on the brink of an energy crisis for years, with politicians preferring to win voters with eye-catching policies than to implement difficult long-term plans that would change market fundamentals. The global share of gas in primary energy consumption has never been higher at a time when the world is supposedly greenifying its energy supply. Politicians have kept fuel prices low and threatened windfall taxes on energy companies, limiting their ability to invest in alternative solutions, says Ismirovic. Countries have built infrastructure to prop up cheap hydrocarbons, rather than investing in more expensive alternatives that would be beneficial in the long term. The world has dipped its toe into the renewables sector, growing the global share of renewables in electricity generation to 38 percent in 2021, while not fully supporting it fast enough to make up for fossil fuel shortfalls in the case of emergencies. Then the global energy crisis came along to demonstrate how broken things really are.

Politicians the world over are now forced to try alternative methods to stymie energy demand and shrink the supply gap. Ismirovic says the UK government’s recent announcement of an energy price cap for customers is another example of short-term thinking that exacerbates, rather than addresses, the underlying issue with the market. The price cap limits the amount suppliers can charge households even if wholesale prices increase more than the 54 percent mandated rise. Germany and Austria plan to ration gas use in the face of high prices. Rationing has occurred because of fears about the long-term viability of the Russian supply: Germany meets 56 billion cubic meters of its total 102.1 bcm demand using Russian gas, while Austria relies on Russia for 80 percent of its gas demand.

“Markets are the best solution for high prices,” Ismirovic says. “You get what we call ‘demand destruction.’” The state should support those unable to pay through other governmental levers, Ismirovic argues, rather than instigating rationing or price caps. With price-driven demand destruction, users that don’t need to consume energy, such as fertilizer firms that use gas, or individuals who drive cars as an option rather than a necessity, drop out as the prices get too high for them, he says. At the same time, government financial stipends can support households struggling to pay bills. Demand destruction leads to a temporary reduction in the amount of energy we need, which in turn gives the market breathing space to readjust in times of shortage.

And there’s another, impossible-to-ignore factor at play. The world may now need to temporarily postpone its green energy plans, after having overlooked clean energy options when there was plentiful fossil fuel supply. “Renewables can’t do much,” says Bros. Low-carbon sources of energy account for less than 40 percent of global electricity generation—a significant proportion, but not enough to survive on. And renewable energy growth slowed last year, compared to the 10-year average. “What’s not already in production isn’t going to help us in the coming days,” says Bros. His suggestion? Put the climate crisis on hold for the coming months and burn whatever is available now—then, once fossil fuel prices come down, move back into green tech.

Bringing the global energy crisis to an end by swallowing higher prices and undoing years of progress on climate change may seem drastic—but we’re in pretty drastic times. “We are facing a military crisis, an economic crisis, an energy crisis, and the climate crisis,” says Bros. “Let’s solve them in order, otherwise we’re not going to solve anything.” Currently, the urgency of the supply crisis outpaces the rate at which we can build the cleaner, greener infrastructure needed to beat back climate change.

Getting out of the current mess will also require brutal honesty from politicians, who will need to embrace unpopular measures. Governments need to explain that massive investment, far more than has already been earmarked for green alternatives, is needed to secure the future, even if Russia ends its illegal war. Countries will need to “overinvest” to increase spare capacity, while individuals will need to reduce their energy usage. Germany will have to reconsider its approach to nuclear, and other countries will be forced to reconsider their attitude toward fossil fuels.

“I consider myself green,” says Ismirovic, “but I’ve had arguments with uber-green people who say: ‘No more oil, no more gas.’ It doesn’t work like that. We still need some oil and some gas. Pressing companies not to produce has driven supply down.” Mooted windfall taxes are also a no-go, he suggests.

There are no quick fixes for the global energy crisis, Ismirovic argues, but we can use this moment as motivation to unpick the almighty mess that got us here in the first place. “You need these energy companies to solve your problem,” he says. “These guys have to invest for the next 10, 20, or 30 years—even longer, sometimes—to get the sort of energy we need.”

Biomass Power Market Size, Share & Trends Analysis Report

Posted on Categories Market news

 

Biomass Power Market Size, Share & Trends Analysis Report

 

Technology Insights

On the basis of technologies, the global market for biomass power has been further categorized into combustion, gasification, and anaerobic digestion. In terms of revenue, the combustion segment dominated the market in 2021 and accounted for the maximum share of more than 88.0% of the global revenue. The trend is expected to continue in the future with the segment registering a steady growth rate over the forecast period. Biomass feedstock is directly combusted in a furnace with air, to convert water into steam. The produced steam is used to drive a steam turbine to generate electricity.

The combustion technology has a non-complex operation and operates at a lesser cost compared to other advanced biomass power technologies. This is expected to drive the demand for combustion technology in the market over other available technologies. Biomass power can be used for power generation, lighting, heating, and cooking gas applications. These factors are expected to boost the growth of the anaerobic digestion technology segment over the forecast period. However, the gasification technology segment is estimated to register the fastest CAGR over the forecast period.

Feedstock Insights

On the basis of feedstock, the global market has been further segmented into solid biofuel, liquid biofuel, and biogas. In terms of revenue, the solid biofuel segment accounted for the maximum revenue share of 85.5% in 2021. The segment will expand further at a steady CAGR retaining its leading position throughout the forecast period. The easy availability and low cost of solid biofuelshave resulted in their higher adoption over liquid biofuels and biogas for power generation applications. On the other hand, the liquid biofuel segment is projected to record the fastest growth rate during the forecast period.

To learn more about this report, request a free sample copy

The biogas segment accounted for the second-largest market share, in terms of revenue, in 2021 owing to its higher calorific value and ability to be produced and utilized in remote areas. The segment is expected to grow at a steady growth rate during the forecast period. Biogas is majorly composed of methane and carbon dioxide, which is produced by the process of anaerobic digestion and it can be also produced through the thermal process of solid biofuel. Biomass power can be utilized for various applications, such as power generation, heating, and cooking.

Regional Insights

Europe was the largest regional market in 2021 and accounted for a revenue share of more than 37.0%. The European Union, in its long-term strategy, has aimed to be carbon-neutral by 2050. This objective is in line with the European Union’s commitments as part of the Paris Agreement. According to the European Green Deal, the European Commission in March 2020 has passed the first-ever European Climate Law to achieve its 2050 climate-neutrality goal. Furthermore, the European Union member countries are required to develop and implement national long-term strategies to achieve their commitments as per the Paris Agreement.

North America also accounted for a significant share of the global market revenue in 2021. The demand for biomass power across North America is primarily driven by the U.S. and Canada. The North America region is majorly dependent on coal for power generation. The recent discovery of shale gas reserves in the region has resulted in gas-based power generation, which is gaining higher growth over coal-based power generation. On the other hand, the market in Asia Pacific is estimated to register the fastest growth rate over the forecast period.

 

Biomass Power Market Report Scope

 

ARE WOOD PELLETS SUSTAINABLE?

Posted on Categories Market news

ARE WOOD PELLETS SUSTAINABLE?

 

The question as to whether wood pellets are a sustainable source of heat and power is often raised and one we would like to address here and now.  By evaluating the entire wood pellet production process in stages it is possible to allocate the associated carbon emissions, starting at the beginning with harvest.

Today in the UK the majority of wood for the domestic heating industry still comes from indigenous sources by making use of sawmill waste or rejected forestry crops, those trees that are misshapen, too small or too large. To make biomass viable it needs to be locally sourced, otherwise transportation costs make it uneconomic as an energy source.

Of the UK’s near 3million Ha of forest, nearly 50% of it (1.5M Ha) is managed under the Forest Stewardship Council certification (FSC) ensuring its sustainable management and re planting.  The harvesting of timber in the UK is carried out by machinery, which is powered by diesel power. The FSC in 2014 estimates that the total emissions from harvesting and forwarding to be 0.071 M/t of CO2 per year which equates to 7.9 Kg per tonne of wood harvested.

Once harvested the raw material needs to be transported from the logging site to the pellet processing plant.  Processing the raw timber into pellets will typically produce 0.03kg/CO2e/kWh, however there is still room to reduce these emissions further as we have demonstrated at our Girvan production site by installing an on-site combined heat and power plant, where we have reduced our emissions to 0.011kg/CO2e/kWh.

When calculating the emissions from transportation, there are two journeys that have to be considered; firstly, the movement of feedstocks to production facilities and the second is transportation of the finished product to the end consumer.  We have calculated that an average tonne of feedstock travels 56 km to the production facility and assuming 0.123Kg CO2e/tonne is emitted per kilometre travelled and that three tonnes of feedstock (pellet+fuel) is required to produce one tonne of pellets the emissions for that tonne of pellet equals 20.66 Kg CO2e or 0.0044Kg/Co2e/kWh

The majority of feedstock is transported by road, but here we differ, due to our quay side location we can receive 1000t of raw feedstock in one shipment from around Scotland, one ship delivery equates to approximately 70 truck movements, again reducing embodied carbon.

From the dawn of time man has used wood to cook food and provide warmth, but what has changed over the centuries is how efficient the heat production process has become.  Today’s biomass boilers can operate at over 90% efficiency.

From our analysis of the wood pellet supply chain it is the production process that has the greater influence over the total carbon emissions of the entire supply chain compared to the transportation of raw materials or the finished product.  Where a Combined Heat and Power plant (CHP) is used to provide the heat for the drying of incoming timber there are carbon emissions of 0.01 Kg/CO2e/kWh which is 0.0201 Kg/CO2e/kWh less than a plant that uses gas heated rotary dryers.

Overall, harvesting and transport to the production plant represent only around 20-25% of supply chain emissions. These are likely to remain consistent over time as the economics of the process require the raw material source to be local to the plant.  The location of the forests that are used for timber production will often mean that the factory location will be away from the gas grid, another reason why CHP plants become a viable option. The embryonic nature of end market means that the delivery to the final end user represents a further 25% of the carbon emissions with in the supply chain, which is predominantly to do with the low volumes within the overall market, where delivery distances can be as high as 200 miles per drop.

 

Stage by stage emissions per kWh of heat energy

Direct emissions from typical UK Biomass pellet supply chain KgCO22e/kWh
Harvesting and forwarding (FSC Sourced Forest in UK) 0.0039
Transportation from forest to production facilities (approx. 42 miles) 0.0044
Production based on plant without a CHP 0.0300
Production based on plant with a CHP 0.0110
Transportation from production facility to end user (approx. 200 miles per delivery) 0.0070
Heating efficiency losses assuming boiler is 90% efficient 0.0050
Total Without a CHP plant 0.0504
Total With a CHP plant 0.0304

 

As this typical analysis shows that UK wood pellets can provide an 80-90% reduction in CO2 emissions compared to oil, which, due to locations of the majority of boilers being installed, is the fuel that is replaced, comfortably within DECC’s requirement of a 60% reduction.

The answer to the question posed ‘Are wood pellets sustainable?’ is clearly a yes.

 

VIETNAM WOOD PELLET PRODUCTION AND EXPORT: ENVIRONMENTAL AND SOCIAL ASPECTS

Posted on Categories Market news

 

VIETNAM WOOD PELLET PRODUCTION AND EXPORT: ENVIRONMENTAL AND SOCIAL ASPECTS

Vietnam’s exports of wood pellets

  1. Exports have boomed since 2017:

On average over the past three years, Vietnam has exported about 3 million tons of wood pellets on an annual basis, valued at nearly US$350 million (Figure 1). Export volumes are expected to reach record highs in 2021, with 2.4 million tons, equivalent to US$273 million, already reported in the fi rst 8 months of 2021 alone. In general, export has been on the rise.

 

  1. Impact of COVID 19 on exports:

While a recent surge of COVID-19 cases in Vietnam beginning in April 2021 has had a signifi cant impact on Vietnam’s export of wood products to major markets like the U.S. and EU, it has had a much lesser impact on Vietnam’s wood pellets export (Figure 2), primarily because the surge took place mostly in the country’s southern provinces where furniture processing clusters are located, while wood pellet manufacturing takes place primarily in northern provinces.

Figure 1. Vietnam’s export volume and value of pellets, 2013 – August 2021

Figure 2. Vietnam wood pellets export, January – August 2021

 

  1. Export Markets:

South Korea and Japan are Vietnam’s two largest markets for wood pellet exports, accounting for over 90% of total export volume each year. South Korea is by far the main destination for pellets in Asia, although Japan has been rapidly increasing its demand over the past three years. In both countries, government programs (subsidies as well as regulations) have incentivized an increase in the use of wood pellets for renewable energy. The South Korean market for wood pellets has historically been nearly twice as large as Japan’s; however, the stability of Japanese imports is higher and growing more consistently. The South Korean market contains some uncertainty, particularly price volatility.

 

Davos 2022: We are in the middle of the first global energy crisis. Here’s how we can fix it

Posted on Categories Market news

Davos 2022: We are in the middle of the first global energy crisis. Here’s how we can fix it

 

The world is in the middle of its first truly global energy crisis. The answer is not additional fossil fuels, but instead putting efforts into the energy transition, according to the Executive Director of the International Energy Agency.

Fatih Birol told the Energy Outlook: Overcoming the Crisis panel on the opening morning of Davos 2022, that the world needs to make energy investments that look beyond the immediate term and are viable for the future.

The global energy landscape has been radically reshaped since the Russian invasion of Ukraine on 24 February, prompting governments, businesses and other organizations to reduce their dependence on Russian energy. Now they need to prioritize bringing to a halt the energy crisis and provide greater energy security and sustainability.

“We are in the middle of the first global energy crisis. In the Seventies, it was the oil crisis and now we have an oil crisis, a natural gas crisis, a coal crisis – all prices are skyrocketing and energy security is a priority for many governments, if not all,” Birol told the panel.

“Of course, we are not living in a dream world. The world has to replace the oil and gas from Russia with first oil and gas and then other technologies. I completely agree that the immediate response should include bringing additional oil and gas into the markets. But I would prefer that our immediate response does not look into our energy infrastructure for fossil fuels for many years to come.”

Key to alleviating the current energy crisis, he said, is to make the most out of the existing oil and gas fields, plus using shale oil and gas because it’s quick to come to market, as well as reducing the amount of methane emissions from fossil fuel operations and ensuring that liquefied natural gas terminals are built to store ammonia or hydrogen in the future.

“But, in my view, the biggest part of the response comes from putting emphasis on clean energy, renewables, energy efficiency and, in the countries where they have nuclear capacity, increasing nuclear production there,” he added.

“We don’t need to choose between an energy crisis and a climate crisis – we can solve both of them with the right investment.”

Germany is one of the countries which had been badly hit by a dependence on Russian gas. Robert Haback, Federal Minister for Economic Affairs and Climate Action, acknowledged that this had been a strategic error and told the panel that the country is ready to fight the energy crisis and is now looking to diversify its fossil fuel imports at incredible speed – with processes that once took decades now taking months.

“We are really improving our ability to get things done, which hasn’t been done so good in the past. We are building up energy infrastructure and trying to get new suppliers for oil and coal,” said Haback.

“But this is only short term, of course. It is only one step in the direction to become not only independent of Russian fossil fuels, but of fossil fuels. From my point of view, caring about a new security of energy supply is not a contradiction to the greater goal of getting independent from fossil fuels at all.”

Haback added that global security has been rocked by at least four interwoven crises – high inflation, the energy crisis, food poverty and the climate crisis. “And we can’t solve the problems if we only focus on one,” he warned.

The panel concluded that collaboration and tackling the energy crisis needed to be done alongside action on issues such as the rising cost of living. “All stakeholders in the global system need to do some serious introspection and subject whatever they’ve been saying and doing to a reality check,” said Puri in his closing remarks.

“We need to deal with all these crises simultaneously, without allowing the solution of one crisis to exacerbate the other crisis. You’ve got to navigate your way out of the high-cost situation – this is not sustainable – at the same time you have accelerate the green energy transition.

“Taken together, yes, we will come out of it. The cost will be there, there will be pain. But at the end of the day, we’ll be working towards a better energy world.”

 

WHAT IS FSC CERTIFICATION

Posted on Categories Market news

WHAT IS FSC CERTIFICATION

What is FSC?

The Forest Stewardship Council (FSC) is an international non-profit organisation that acts to promote the responsible management of the world’s forests.

The Earth loses 18.7 million acres of forests per year, which is equal to 27 soccer fields every minute (source). It’s the FSC’s mission to highlight the dangers of poor forestry practice and grow the demand for sustainably sourced products and suppliers.

As part of their mission, the FSC works closely with landowner

s and workers to monitor the systems and processes, and trace the lifecycle of production: guaranteeing that the paper and timber supply in the market does not contribute to environmental destruction or habitat loss.

So, how can we ensure that our paper and birchwood supply isn’t contributing to negative environmental impacts? With a highly-sought-after FSC certification.

What is an FSC certification?

An FSC certification is built upon strict environmental and social responsibilities, both of which ensure long-term protection of our forests, and help reduce our negative impact on the environment and communities.

An FSC certification sets standards on products produced from trees and certifies t

hem as eco-friendly based on the lifecycle of the product and how it came to be: FSC standards ensure that both the environment and communities were protected during the process.

According to the FSC, only 7 per cent of the world’s forests are plantations, but a third (33 per cent) of the world’s forest products are produced by them (source). Paper-based packaging with an FSC certification ensures customers and suppliers that the wood used to create the product has been responsibly managed in an environmentally sustainable manner – water and energy use, community support, and the end product’s overall environmental rating can all be cemented as responsible following an FSC certification.

Environmental advantages of an FSC certification

An FSC certification represents so much more than environmental impact. Rather, the FSC works tirelessly to ensure that ecological, social, and cultural needs of indigenous communities and workers are being upheld throughout the journey.

As a result, the FSC has had a profound impact on the logging industry both in Australia and around the world. Here’s how an FSC certification impacts the wider community:

  • Landowners are now applying responsible practices that preserve the natural ecosystem when it comes to plantations.
  • The FSC has worked tirelessly to implement standards that have improved forest management around the world. Not only are the environmental improvements present, but communities and local workers alike are enjoying economic and social benefits, too.
  • FSC certifications give consumers confidence that their paper-based packaging is a responsibly sourced product. Both consumers and retailers alike can benefit from trustworthiness and marketing possibilities.
  • Combatting the growing number of plantations that are producing illegal timber. Countries around the world have legislation in place that bans the trade of illegally harvested timber and derived products – FSC certifications for responsible plantations are highlighting landowners and workers who are performing sustainable forestry practices.

Due to the FSC process and regulations, illegal forestation has declined, and communities, as well as landowners, have enjoyed numerous social and economic benefits.

 

Establishing a lasting wood pellet industry in Vietnam

Posted on Categories Market news

Establishing a lasting wood pellet industry in Vietnam

 

With the demand in markets like Japan expected to rise, the wood pellet industry has much room for sustainable development, which can be boosted by increasing the proportion of Forest Stewardship Council (FSC)-certified products.

Statistics from the Ministry of Agriculture and Rural Development show that in 2019 there were about 80 wood pellet factories in the country. However, other sources claim that there might be up to 300 pellet processing establishments, far more than the official statistics.

According to these sources, in Vietnam’s southeastern region alone, where wood processing facilities are concentrated, the number of pellet producers had reached about 200. The main reason for this strong concentration would be that wood by-products from other processing facilities are brought in as input material to produce pellets.

Such input sources include sawdust, shavings, twigs, and tops of planted wood with a diameter of about two centimetres or less. The pellet producers do not require large and complex investments in management technology, which enables them to easily participate in the production.

In addition, Vietnam has a geographical advantage when it comes to these raw materials as exports seaports are nearby, enabling convenient transportation.

The demand for wood pellets is forecast to expand three times by 2024-2025 compared to today. However, a significant supply-demand imbalance, together with issues in quality and legal conditions, affect large-scale exporters and the sustainable development of the pellet industry. Up to now, most of the involved enterprises act rather spontaneous, without much institutional support to regulate the development of the industry.

Therefore, there are several limitations within the industry. Firstly, input materials lack quality control, and some processing facilities use mixed materials, affecting the end product’s quality.

The input supply with FSC certified wood is also limited, while the export markets demand these certified products increasingly. There have also been some indications of fraud when it comes to FSC-certified products, with more claims than the actual supply. Even if these indicators turn out to be false, such information harms the industry.

Next, the industry is faced with greater supply than demand, leading to fierce competition among businesses and including unfair aspects such as price manipulation. While many enterprises are involved in processing, only a few exporters exist. With this current situation, the industry remains unsustainable at large.

Nevertheless, wood pellets are an important export item of Vietnam. In recent years, around three million tonnes, equivalent to $350 million, had been exported. South Korea and Japan are the most important markets of Vietnam, with the volume of these two markets accounting for over 90 per cent of the total annual export volume.

In the first eight months of 2021, the export volume reached 2.4 million tonnes, equivalent to $273 million in turnover. In general, exports are on a growth track and increased sharply in the 2018-2020 period.

The pandemic has had an impact on all socioeconomic aspects, especially on production and exports. Like other industries, Vietnam’s wood pellet industry has also been negatively impacted, with exports and volumes falling sharply in recent months.

Markets by volume and value

Between South Korea and Japan, the former is larger than the latter. However, the level of stability in the Japanese market is higher, as South Korea contains some uncertainties.

Like the export volume, the export turnover from the Japanese market is smaller than that of South Korea but has greater stability. The South Korean market had a very strong decline in 2019 and since then there has been no sign of growth again. The average export price to the Japanese market is currently higher than the one to South Korea, about $20-30 per tonne on average.

Information from some exporters shows that the current low export price to the South Korean market comes as this market applies an auction mechanism when buying products, with businesses offering low prices.

After receiving these contracts, the businesses return to manufacturers in Vietnam and push product prices down to meet the contracts they have signed with buyers.

Meanwhile, the purchasing mechanism in the Japanese market does not follow the auction model but depends directly on the agreements between buyers and sellers and consequently does not push down prices.

Enterprises by market and size

Statistical data on the export of wood pellets shows that on average, over 70 enterprises are involved in exporting each year. The number of businesses participating in this stage has not changed much, at least between 2019 and 2020. However, this went down in the first eight months of 2021 to only 59, much smaller than in 2020 and likely due to the pandemic.

The number of exporting enterprises to South Korea was much larger than those exporting to Japan, which corresponds to the volume of exports to these two markets.

The average export price per unit to Japan is always higher than to South Korea. This may cause exporters to move from the South Korean market to the Japanese market, or at least try to enter both markets. However, businesses participating in both markets at the same time are rare. For example, in 2020 only 10 enterprises were participating in both markets, but it remains unclear why.

One of the main characteristics of exporters is that there is a great deal of differentiation, with a small number of very large export companies and many smaller companies.

In that year, there were six very large enterprises, equivalent to 8 per cent of the total number of exporters. These six exported about 1.96 million tonnes of wood pellets, accounting for 61 per cent of total exports. In the same year, 40 enterprises accounting for 54 per cent of the total had a very small export volume, with less than 10,000 tonnes per company and a export share of a mere 2 per cent.

In the next 2-3 years, if Vietnam’s production capacity is kept at the current level, the supply and demand for wood pellets will be balanced. However, to do so, it is necessary to form an organisation representing the industry because this would directly contribute to the regulation of production and export activities. Such an organisation would take the role of connecting manufacturing and exporting enterprises and regulating output market.

The organisation could then act as a focal point, providing members with information on the output markets, including on-demand and legal and sustainable requirements. Moreover, the organisation could convey recommendations to management agencies to form policy mechanisms close to reality, promoting the sustainable development of the industry in Vietnam.

 

What are wood pellets used for?

Posted on Categories Market news

What are wood pellets used for?

Wood Pellets are widely used in recent years with many different applications, from heating, cooking, generating industrial energy…..

Wood pellets used in industrial field:

Large-scale industrial use of wood pellets is used to enhance the thermal value of waste during heating and significantly reduce pollutant emissions.

The conversion from energy structure from fossil fuel to using biomass fuel (wood pellets) has been strongly developed. As we can see, worldwide, more and more industrial power plants are being converted into CHP models, in which wood pellets play a big role.

Used in heating systems and hot water supply:

The use of wood pellets in small fireplaces and hot water supply systems is increasingly being used to replace electric or gas fireplaces. Like other heating systems, fireplaces using wood pellets can distribute heat to all areas of the house with a heat pipe system. But, its advantage is high heating efficiency, can control the heat and help you save a lot of money.

Used in cooking:

The food industry, service industries, bakeries, etc. are also considering the use of wood pellets as an alternative fuel. High energy efficiency, environmental friendliness and economic efficiency are the things that make wood pellets the preferred choice.

Used for animal bedding:

Besides using wood pellets for heating and generating industrial energy, wood pellets are also used for animal bedding.

For example, many families have used wood pellets to line the cat’s nest. Tablets will absorb all the warmth and turn into sawdust. This method not only saves wood pellets, but also cuts waste into the environment.

Same with the barns. Normally, cattle sheds will be lined with straw, waste wood, … but wood pellets are gradually becoming more popular because they have good moisture absorption and 4 times increase in odor removal capacity. Takes up little space – good absorption – smoothness and can be cleaned up easily are the advantages of using wood pellets to line livestock.

Wood pellet prices rise as UK ends Russian imports

Posted on Categories Market news

Wood pellet prices rise as UK ends Russian imports

The cost of wood pellets in the UK is rising, as pellets are no longer being sourced from Russia.

UK Pellet Council chair, Mark Lebus, said the organisation is working with overseas partners to help ensure a continuous supply of biomass wood pellets for UK customers, as wood pellets will no longer be sourced from Russia or imported from Russian producers.

“Given the previous levels of Russian exports, this will, of course, have an impact on supply worldwide, not just to the UK but for other countries too who are all now competing for the same premium product from similar suppliers,” commented Lebus.

“With UK and international sanctions in place, we estimate that total European production may be reduced by some 12-15%, so there may be some short-term price rises due to the ongoing situation and heightened competitiveness between countries.

“UK customers may have experienced the price per tonne rising by approximately 25-40% (cost average £360-385 [€428-458]), although most accept that this is still much lower than consumers using oil or gas-fuelled systems. Current wood pellet costs are also in line with prices across Europe.”

Lebus emphasised that price increases are only expected to be a short-term problem while new supply chains and arrangements are put in place.
“This will be mostly over the next six weeks and with heating demand from customers naturally falling as we head into the spring and warmer months, new imports coming into the UK, for instance from the Iberian peninsula, should ensure most end-users see minimal disruption.”

While the UK biomass heat industry is a small and niche market, primarily servicing rural and off-grid, domestic and commercial users, it operates in a global industry. Lebus noted the market going into the winter season was tight due to an increased roll-out of biomass boiler installations in Europe, and new renewable energy programmes being delivered across EU Member States, and this was further amplified by a sharp rise in shipping and container costs.

“These external factors also pushed other industries, such as the power stations and larger utility companies totally separate to the biomass heat sector, to purchase and opt for bigger bulk shipments, buying a much greater quantity of and higher quality of premium wood pellets, in addition to their usual lower, industrial-grade stock requirement,” he said.

“However, what we must seriously look at and the UK Government must seriously consider going forward is that we have a very real opportunity here and now to better support, strengthen and heavily invest in a home-grown wood pellet production market which would not only see the UK becoming mostly self-sufficient for biomass wood fuel, and, therefore, less reliant on imports and energy price hikes, but also attract greater inward investment for new manufacturing plants, creating thousands of green jobs for rural areas.”

The UK Pellet Council believes that by growing and fortifying a domestic production in line with sustainable forestry management and DEFRA’s tree planting and new woodland creation ambitions, the UK could take “huge strides” in achieving its net-zero goals.

“Long-term policy direction, signalled by government, could strongly encourage and deliver the kind of investment needed to develop strategic autonomy from world markets by quite literally, growing our own wood fuel supply,” said Lebus.

“At present, the UK cannot provide the required volumes and, therefore, we import on a considerable scale and have become drawn into a growing energy crisis.

“Biomass for heating creates more jobs than any other renewable technology, especially for rural communities with hard-to-heat or off-grid homes, and with the boiler replacement scheme offering £5,000 (€5,900) grants for new biomass installations from 1 April, the opportunity is right there in front of us, so these conversations must be had.”

Wood pellets – Potential market for Vietnamese businesses

Posted on Categories Market news

Wood pellets – Potential market for Vietnamese businesses

 

The global wood pellet market is forecasted to reach $15.63 billion by 2026. Vietnam is currently the world’s second largest supplier of wood pellets. With the existing strengths and increasing demand for this product, Vietnamese businesses are looking for directions to develop in this market.

The market still has a lot of room:

With the current situation of fuel sources such as coal, gasoline, oil … are increasingly exhausted, the need to find alternative materials becomes urgent in any country. In particular, wood pellets are considered as an alternative material with many advantages as raw materials are readily available, abundant and cheap. In particular, with scientific advances in the production of thermally upgraded wood pellets, making it a very promising alternative to traditional coal fuel in energy production.

At the United Nations Climate Change Summit in 2021 (COP26), the majority of countries pledged to cut, even bring greenhouse gas emissions to “zero”. To do this, low-carbon energy economic development is a must.

The Asian markets (Japan, Korea) and Europe are currently experiencing high demand for wood pellets in clean energy production. The Asia-Pacific market, which has the largest number of coal-fired power plants in the world, is forecasted to grow rapidly in the near future and is an opportunity for Vietnamese wood pellet manufacturers. The World Bioenergy Association forecasts the global wood pellets market is expected to reach $15.63 billion by 2026, with a compound annual growth rate of 7.28% between 2021-2026.

According to the Vietnam Wood and Forest Products Association, pellets are in the group of 5 items with the highest export value of the wood industry. Vietnam is currently the second largest tablet exporter in the world.

During the past seven years, the production, export and value of finished products of wood pellets have been increasing day by day. Specifically, the volume of exported pellets increased by over 18.28 times, from 175 thousand tons in 2013 to about 3.2 million tons in 2020. The export value of tablets increased 15.3 times, from nearly 23 million USD in 2013. , to 351 million USD in 2020.

Japan and South Korea are the two main export markets of Vietnam’s tablets, accounting for 99.8% of total export turnover in 2021. The demand is especially high after natural disasters such as earthquakes and tsunamis, to development of bioelectricity.

In 2021, South Korea imported 1.96 million tons of tablets from Vietnam, equivalent to $212.04 million, down 0.9% in volume but up 9.6% in value compared to 2020. Japan imported 1. .53 million tons in 2021, equivalent to USD 200.11 million, up 26.1% in volume and 27% in value compared to 2020.

In Japan alone, pellets are expected to meet 38% of total energy demand by 2030. Some exporters said that the volume of pellets exported to this market could expand 3 times by 2020. 2024 – 2025 compared to today.

Suitable for small and medium businesses:

Wood pellets are considered a perfect alternative to fossil fuels not only because of their low emission advantages, renewable ability but also because of their low cost.

From an economic perspective, wood pellets have a cheap source of raw materials with readily available inputs, not picky. While finished tablets have stable export value, even increase. The price of tablets exported to the Japanese market ranges from 127-139 USD/ton of tablets. In the second main export market, Korea, recorded a significant increase in the last six months of 2021 from 97-134 USD/ton.

Normally, in order to produce wood pellets, production facilities make use of all their “waste products”, such as sawdust, wood chips, wood chips, etc., even taking advantage of other industry wastes such as rice husk, straw, bagasse, stalks, seed pods… In this way, businesses can “double” their revenue. Previously, the business mainly only made profits from processing and exporting woodworking products such as furniture and raw wood furniture. It can be said that the opening of the wood pellet market has helped businesses quickly increase the value of their products, and at the same time treat a large part of the waste arising from the production process.

Another advantage of the production of tablets is that the process is simple and does not require high technology. If in the furniture processing industry, a process requires many steps and steps, requiring workers to be meticulous and highly aesthetic, on the contrary, the production of wood pellets is simpler. This wood pellet production process consists of 5 steps of crushing, drying, pressing, cooling and packing, and is mainly operated by machines. Thus, production facilities can save time and labor in the production of wood pellets.

Improve the value of wood pellets:

The wood pellet industry is having a very good stepping stone for future development, but to go further, there are still some points that need to be overcome. According to Dr. To Xuan Phuc, an expert at Forest Trends, this “half-billion dollar” manufacturing and exporting industry has some limitations.

Due to the simple manufacturing process, wood pellets are a product that can be easily processed in small to large establishments. However, this source of raw materials is sometimes not strictly controlled in terms of quality and legality.

In terms of quality, there are many establishments that use mixed materials, creating poor quality products and losing credibility with customers. Therefore, a prerequisite to be able to go far in this potential market is that enterprises must proactively screen more carefully the source of input materials, not using raw materials, impurities, and poor quality.

Another difficulty that businesses are facing is the procedures related to bidding and exporting in some markets. For example, selling goods to a Korean thermal power plant must go through a commercial intermediary, making small and medium-sized enterprises highly dependent on third parties. This also makes the cost of products delivered to customers significantly increase.

This fact requires support to create links through organizations and representative agencies in order to reduce barriers and help businesses access more widely to international markets.

Another factor that makes the export value of pellets not high, or difficult to break into difficult markets such as Europe and Japan, is the lack of sustainable forest management certificates (FSCs). In this regard, the forestry sector has plans to accelerate the issuance of FSC certification, with the goal of reaching 10 million hectares by 2030.

According to the General Department of Forestry, the source of wood materials in Vietnam has been improved quite well through the development of plantation forests, so far 75% of the annual demand for raw materials has been proactive. In recent years, the annual export volume of tablets has reached about 3 million tons, equivalent to 350 million USD in turnover. This number can completely increase if Vietnamese enterprises solve their problems and have appropriate production plans and business strategies.