Economic sustainability for wood pellets production – A comparative study between Finland, Germany, Norway, Sweden and the US

Published Date
October 2013, Vol.57:68–77, doi:10.1016/j.biombioe.2013.01.030

Author 

Erik Trømborg ^a,,

Tapio Ranta ^b,1,

Jörg Schweinle ^c,2,

Birger Solberg ^a,3,

Geir Skjevrak ^d,4,

Douglas G. Tiffany ^e,5,

aDepartment of Ecology and Natural Resource Management, Norwegian University of Life Sciences, PO Box 5003, N-1432 Ås, Norway

• bLappeenranta University of Technology, Prikaatinkatu 3E., FIN-50100 Mikkeli, Finland
• cJohann Heinrich von Thünen-Institute (vTI) Federal Research Institute for Rural Areas, Forestry and, Fisheries, Institute of Forest Based Sector Economics, Postbox 80 02 09, 21002 Hamburg Leuschnerstr. 91, 21031 Hamburg, Germany
• dNorwegian University of Science and Technology, Department of Energy and Process Engineering, Kolbjørn Hejes v. 1, N-7481 Trondheim, Norway
• eUniversity of Minnesota, Extension. 316D Ruttan Hall, 1994 Buford Avenue, St. Paul, MN 55108, USA

Received 14 May 2012. Revised 23 January 2013. Accepted 27 January 2013. Available online 13 March 2013. 

Abstract

The consumption of wood pellets grew rapidly during the last decade. In this paper we compare the development of the production factors for wood pellet markets in Finland, Germany, Sweden, Norway and the US; we analyze how domestic market prices for pellet production factors as well as domestic market prices for pellets vary among the countries. The analyses are based on two model plants. The first represents common technologies for small scale pellet production based on dry residues from sawnwood production, while the second represents large scale production based on a blend of dry and wet materials. The results show how differences in costs of feedstock, energy and labor affect the profitability of pellet production and hence the development of pellet production in the analyzed countries. Pellet producers in the US have lower feedstock costs than producers in the analyzed European countries. The economic sustainability for European pellet producers depends to a large extent on their domestic markets as internationally traded pellets are priced lower than their production costs. Future pellet production will, to a greater extent, be based on wet feedstock such as roundwood and wet sawdust. These feedstocks are also demanded by wood-based industries (pulp and paper, particle- and fiber-board) as well as for traditional fuelwood. The transition from smaller pellet plants using dry feedstock to larger plants using wet feedstock in future pellet production, can be expected to follow comparative advantages regarding feedstock and energy costs, but also with respect to economies of scale.

Keywords

Bioenergy

Profitability

Market comparison

Technical Production Coefficients

Biomass Costs

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