Wood pellet facility

The policy in support for biobased energy proves to be an obstacle to better applications of biomass, in the view of BioBTX and KNN, two Groningen based companies. This policy drives upward the price of biomass, to the detriment of biobased chemicals production (less GHG emissions, more added value). – www.biobased-society.eu

Wood pellets can better be processed to biobased chemicals than being incinerated: better price, less GHG emissions.

Subsidy and quota schemes have clearly influenced biomass prices. In Germany for instance, wood pellet prices rose from 45 €/ton in 2003 to 90 €/ton in 2010. In Finland as well, pellet prices doubled in this period. The pellet market, in the view of the two companies, would seem to be a world market, whereas in practice it is dominated by growing European imports; Europe has a 85% share in global pellet imports. Four countries dominate those imports: Belgium, Italy, the Netherlands and Denmark; of which the Netherlands are responsible for by far the largest share. The pellet market, inter alia, is clearly distinct from the biofuels market, for which the European Parliament recently set lower ambitions.

A perverse effect of climate policy
The stimulus for firing wood pellets originates from climate policy, and is intended to reduce CO2 emissions. In order to get a clear picture of those emissions, according to these companies, we will have to take into account the whole product chain. And calculations show that it is better to process wood into chemicals than to burn it: less CO2 emissions. But, as we pointed out several times on this site, only direct incineration is supported by policy, not processing wood to biobased chemicals.

This stimulation policy has two adverse effects. Firstly, higher feedstock prices result in worse business cases for biobased chemicals. Although these carry a higher price in the market than biofuels, the difference is not of such a magnitude that the biobased chemicals business case would not be sensitive to feedstock prices. Therefore, both markets are interlinked. Moreover – we recently devoted a column to this phenomenon – government support appears to have a perverse