Changes to global supply chains brought on by the crisis in Ukraine, as well as increased demand across Europe, have seen UK producers and suppliers urgently switch to alternative sources of imported wood pellets to ensure minimal impact on the biomass (for heating) market, a sector that currently sees UK demand for premium grade wood pellets reaching 600,000t per annum.
The UK Pellet Council (UKPC), the trade body representing the premium wood pellet (for heating) sector – a niche and completely separate industry to the biomass for power market, is now forging new partnerships with worldwide suppliers to plug an immediate pellet shortfall of 200,000t 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 who months ago were shipping approximately 150,000t annually to the UK), and potentially North and South America producers too should an excess premium grade inventory exist.
Furthermore, with a significant behavioural shift towards low carbon, renewable energy now apace and Government initiatives, such as the Boiler Upgrade Scheme which began in April encouraging a switch away from fossil fuel systems in buildings, there is huge potential to develop and grow the biomass wood pellet market in the UK.
Chair Mark Lebus, explained, “The country is 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, and despite these circumstances being brought on by the worse possible events overseas, it is now an opportunity for change and growth.”
The UK 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. Whilst storage options may be lower than other European countries at present, companies operating within the biomass for heat market take regular shipments of 1t bulk bags (25/container) to 3,000-5,000t 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.
Mark continued, “Our sector has continuously developed over the last ten years, being very much supported by the domestic and non-domestic Renewable Heat Incentive (RHI) scheme. Whilst this has now come to an end, 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 and therefore a very attractive heating option.
“However, looking ahead, the UK 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 Government’s Boiler Upgrade Scheme went live in April, and the awaited Biomass Strategy, to be delivered by the Department for Business, Energy and Industry Strategy (BEIS), is due for release later in the year, and both should allow our industry to be a driving force in encouraging a switch from oil, coal and LPG systems in the hardest to heat properties or more 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 from hospitals and care homes, to agricultural producers, poultry farms, schools and leisure resorts. Furthermore, independent research has identified that there are approximately 1.45m (and possibly up to 1.9m homes) or 7% of the total housing stock, and 200,000 commercial buildings that cannot be decarbonised 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 prioritised.
“Additionally, 57% of rural homes use oil, coal or LPG currently, producing 20-40% more carbon emissions than natural gas in urban areas, and that is where the big change needs to happen as a priority. With a fit-for-purpose strategy in place working hard for rural areas, we can fully demonstrate that our industry becomes the keystone that pulls every element together within a productive circular economy.
“Demand for premium wood pellets will increase as people move away from fossil fuel use, and while we would still have a need for premium imported stock, we must also grab the opportunity here and now 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 for heating industry, the UKPC is at the forefront of wider discussions to help grow our industry both at home and on an international level.”
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