European Pellet Report

PellCert project, 2012

The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein.

April 2012 Authors: Nicolas Audigane, Propellet France Martin Bentele, DEPV Joo Manuel F. Ferreira, ANPEB gnes Gyurik, Hungarian Pellet Association Jean-Marc Jossart, AEBIOM Anne-Catherine Mangel, Propellet France Marcos Martin, AVEBIOM Pablo Rodero Masdemont, AVEBIOM Hampus Mrner, Swedish Bioenergy Association Annalisa Paniz, AIEL Nora Pieret, VALBIOM Peter Rechberger, AEBIOM Christian Rakos, proPellets Austria Christian Schlagitweit, proPellets Austria Anna K. Sievers, DEPV Hannes Tuohiniitty, Finnish Pellet Energy Association

Table of contents
Tables overview ............................................................................................................................................ 4 Figures overview........................................................................................................................................... 5 EUROPEAN OVERVIEW ........................................................................................................................... 8 1. 2. 3. Introduction ........................................................................................................................................... 9 Pellet markets ...................................................................................................................................... 13 Pellet quality and certification ............................................................................................................ 15

AUSTRIA ................................................................................................................................................... 17 1. 2. 3. 4. 5. Introduction ......................................................................................................................................... 18 Pellet market ....................................................................................................................................... 20 Pellet quality and certification ............................................................................................................ 27 Sustainability....................................................................................................................................... 34 Conclusion and outlook ...................................................................................................................... 34

BELGIUM .................................................................................................................................................. 36 1. 2. 3. 4. 5. Introduction ......................................................................................................................................... 37 Pellets market ...................................................................................................................................... 39 Pellet quality and certification ............................................................................................................ 43 Sustainability....................................................................................................................................... 46 Conclusions and outlook ..................................................................................................................... 50

GERMANY ................................................................................................................................................ 51 1. 2. 3. 4. 5. Introduction ......................................................................................................................................... 52 Pellet markets ...................................................................................................................................... 55 Pellet quality and certification ............................................................................................................ 57 Sustainability....................................................................................................................................... 61 Conclusions and outlook ..................................................................................................................... 62

SPAIN ......................................................................................................................................................... 63 1. 2. 3. 4. 5. 6. Introduction ......................................................................................................................................... 64 Pellet markets ...................................................................................................................................... 65 Pellet quality and certification ............................................................................................................ 68 Sustainability....................................................................................................................................... 68 Conclusions and outlook ..................................................................................................................... 72 Result of enquiries .............................................................................................................................. 73

FINLAND ................................................................................................................................................... 76 1. 2. 3. 4. 5. Introduction ......................................................................................................................................... 77 Pellet markets ...................................................................................................................................... 78 Pellet quality and certification ............................................................................................................ 83 Sustainability....................................................................................................................................... 85 Conclusions and outlook ..................................................................................................................... 87

FRANCE ..................................................................................................................................................... 88 1. 2. 3. 4. 5. Introduction ......................................................................................................................................... 89 Pellet markets ...................................................................................................................................... 90 Pellet quality and certification ............................................................................................................ 94 Sustainability....................................................................................................................................... 97 Conclusions and outlook ..................................................................................................................... 98

HUNGARY .............................................................................................................................................. 101 1. 2. 3. 4. 5. 6. Introduction ....................................................................................................................................... 102 Pellet markets .................................................................................................................................... 104 Pellet quality and certification .......................................................................................................... 108 Sustainability..................................................................................................................................... 110 Conclusions and outlook ................................................................................................................... 112 Annex: result of enquiries ................................................................................................................. 112

ITALY ...................................................................................................................................................... 114 1. 2. 3. 4. 5. 6. Introduction ....................................................................................................................................... 115 The Pellet Market.............................................................................................................................. 118 Pellet Quality and Certification ........................................................................................................ 127 Sustainability..................................................................................................................................... 130 Conclusions and Perspectives ........................................................................................................... 131 Attachment: Survey Results .............................................................................................................. 132

SWEDEN .................................................................................................................................................. 137 1. 2. 3. 4. 5. Introduction ....................................................................................................................................... 138 Pellet markets .................................................................................................................................... 139 Pellet quality and certification .......................................................................................................... 143 Sustainability..................................................................................................................................... 153 Conclusions and outlook ................................................................................................................... 155

Tables overview
Table 1 - Pellet consumption in the EU27 in kt; source: European Pellet Council 2011, Pellet Atlas 2009 8 Table 2 - European Pellet production 2005-2010 in kt; (source: European Pellet Council 2011, Pellet Atlas 2009) .................................................................................................................................................... 9 Table 3 - Wood pellet export to the EU27 in kt (source: Eurostat) ............................................................ 10 Table 4 - Wood pellets traded within EU27 (source: Eurostat*) ................................................................ 12 Table 5 - Pellet heating demand outlook (kt; source: PellCert, EPC, Ekman) ........................................... 15 Table 6- Capacity anbd production ............................................................................................................. 28 Table 7 - Evolution of the energy sources used in the Belgian primary energy consumption (ktep) (Source SPF Statbel). ............................................................................................................................................... 37 Table 8 ........................................................................................................................................................ 41 Table 9 - Investment costs variant 1: .......................................................................................................... 42 Table 10 - Investment costs variant 2: ........................................................................................................ 42 Table 11 ...................................................................................................................................................... 42 Table 12 ...................................................................................................................................................... 43 Table 13 ...................................................................................................................................................... 46 Table 14 ...................................................................................................................................................... 67 Table 15 - Forest surface with FSC, PEFC certification and Total of the EU countries and the world. ... 69 Table 16 - Certified forest area by FSC, PEFC and Total by Autonomous Community and total forest area, 2009. ................................................................................................................................................... 71 Table 17 - Review of pellet producers responds ....................................................................................... 84 Table 18 - Review of pellet traders responds ............................................................................................ 84 Table 19 - Review of installers responds................................................................................................... 84 Table 20 - Review of manufacturers of pellet heating appliances respond ............................................... 85 Table 21 - Protected forests in Finland. Source: Nordic Forest Owners Association. .............................. 86 Table 22 - Statistic on pellets production and capacities ............................................................................ 90 Table 23 - Consumption.............................................................................................................................. 91 Table 24 - Type of consumers .................................................................................................................... 91 Table 25 - Pellet production ........................................................................................................................ 93 Table 26- division of applied renewable energy in the sector of electricity, heating and cooling, and traffic in 2020 Source: REAP .............................................................................................................................. 103 Table 27 - Pellet boiler failure caused due to poor pellet quality ............................................................. 113 Table 28- Wood-biomass-generated energy consumption estimates (Source: Pettenella D., 2011). ...... 117 Table 29- Pellet import (2009-2010). Data processed by AIEL Source: Eurostat and USA/Canada statistics..................................................................................................................................................... 124 Table 30 - Certified pellets consumed in Italy in 2011 (Data processed by AIEL) .................................. 129 Table 31 - differences between FSC and PEFC. ....................................................................................... 130 Table 32 Production, import and export for wood pellets in Sweden in 1 000 tons (PiR, 2011) .......... 140 Table 33- Swedish large- and medium scale users knowledge of various pellets-certification schemes. 149

Figures overview
Figure 1 - Pellet production capacity and actual production in selected countries in kt, 2010 (source: EPC) .................................................................................................................................................................... 10 Figure 2 - Wood pellet supply and demand in Russia (source: Ekman) ..................................................... 11 Figure 3 - Annually sold pellet stoves in the EU (source: EPC)................................................................. 13 Figure 4 - Annually installed pellet boilers (<50KW) in selected countries (source: EPC) ....................... 14 Figure 5 - Annual increase of pellet demand due to new pellet boiler and stove installations ................... 14 Figure 6 - boiler installations in Austria ..................................................................................................... 18 Figure 7 Fuels share in heating in AT ...................................................................................................... 19 Figure 8 Installed residential boilers in AT ............................................................................................. 20 Figure 9 Pellet stoves in AT..................................................................................................................... 21 Figure 10 Prices AT ................................................................................................................................. 23 Figure 11 Fuel cost comparison in AT..................................................................................................... 24 Figure 12 Heating cost in AT................................................................................................................... 24 Figure 13 Pellet production, capacity and consumption in AT................................................................ 25 Figure 14 Sawdust and pellet prices in AT .............................................................................................. 26 Figure 15 Pellet trade flows in AT ........................................................................................................... 27 Figure 17 Traders using ENplus .............................................................................................................. 29 Figure 18 - Questionnaire ........................................................................................................................... 30 Figure 19 - Questionnaire ........................................................................................................................... 30 Figure 20 - Questionnaire ........................................................................................................................... 31 Figure 21 - Questionnaire ........................................................................................................................... 32 Figure 22 - Questionnaire ........................................................................................................................... 33 Figure 23 - Recommendation...................................................................................................................... 33 Figure 24 - Belgium territory uses in 2009 (Source : SPF Statbel, IGN) ................................................... 37 Figure 25 - Evolution of the Belgian households number.(Source : SPF Statbel). ..................................... 37 Figure 26 - Final energy consumption by sector (Source : SPF Economie, PME, classes sociales et nergie). ...................................................................................................................................................... 38 Figure 27 - Electricity production in BE..................................................................................................... 38 Figure 28 - Heat consumption in private households 2009......................................................................... 52 Figure 29 - Structure of renewable heating in Germany 2010 .................................................................... 53 Figure 30 - Use of energy wood in Germany.............................................................................................. 53 Figure 31 - Development of pellet heating systems in Germany ................................................................ 54 Figure 32 - Pellet production and use in Germany ..................................................................................... 55 Figure 33 - Prices for gas, light fuel oil and wood pellets .......................................................................... 56 Figure 34 - Price advantage pellets to heating oil ....................................................................................... 57 Figure 35 - Average price for wood pellets in Germany ............................................................................ 57 Figure 36 - Pellet production and use in Germany, including ENplus pellets ............................................ 58 Figure 37 - Supply and use of wood from German forests ......................................................................... 61 Figure 38 RES in FI ................................................................................................................................. 77

Figure 39 - Wood flow in Finnish Forestry, 2009. Source: VTT & Lappeenranta university of Technology. ................................................................................................................................................ 78 Figure 40 - Map of Finnish pellet plants ..................................................................................................... 79 Figure 41 - The use of pellets in Finland (1,000 tons/a). Source : Finnish Forest Research Institute (Metla) .................................................................................................................................................................... 80 Figure 42 - Price of energy for domestic users in Finland (snt/kWh), 2002-2011. Source : Statistics Finland ........................................................................................................................................................ 80 Figure 43 - Import and export of pellets in Finland (ktonnes), 2005-2010. Source Finnish Forest Research Institute (Metla) .......................................................................................................................................... 82 Figure 44 - Pellet heating appliances sold in Finland, 2005 2010. Source: Finnish Pellet Energy Association.................................................................................................................................................. 82 Figure 45 - Pellet production in FR (Source: SNPGB data, Propellet France prospectives Janvier 2011) .................................................................................................................................................................... 90 Figure 46- Annuals sales of pellets stoves and boilers in France ............................................................... 92 Figure 47 - Publication of a pellet price index (Evolutions of energies cost in euros centimes/kWh PCI.) .................................................................................................................................................................... 94 Figure 48 - Representation of the two assumptions sales of pellets stoves and boilers............................. 99 Figure 49 - Transposition of this two assumptions tons of pellets consumed........................................... 100 Figure 50 - Division of applied renewable energy Source: Renewable Energy Action Plan (REAP)...... 103 Figure 51- Number of pellet plans in Hungary Source : HPA .................................................................. 104 Figure 52 - Capacity of Hungarian pellet producing Source: HPA .......................................................... 105 Figure 53 - Rate of exported pellet Source: HPA ..................................................................................... 106 Figure 54 - The rate of import in Hungarian consumption Source: HPA ................................................. 106 Figure 55 - Average pellet price Source: HPA ......................................................................................... 107 Figure 56 - Rate of installed pellet stoves and boilers Source: HPA ........................................................ 108 Figure 57 - Expected share of RES by sector, Source: REAP .................................................................. 110 Figure 58 - Biomass potential in Hungary in million t/a, Source: Hungarian Academy of Sciences ....... 111 Figure 59 - Division of respondents.......................................................................................................... 112 Figure 60 - Problems in pellet quality....................................................................................................... 113 Figure 61 - National Energy Action Plan (NEAP). Solid-biomass-generated energy contribution to total energy consumption. Source: RES (2020). Elab. AIEL on NEAP ........................................................... 115 Figure 62 - Distribution of the three categories of renewable energy consumption in 2020. Data processed by .............................................................................................................................................................. 116 Figure 63 - Consumption of thermal energy generated by renewable sources. Comparison between 2008 and 2020. Source GSE. ............................................................................................................................. 116 Figure 64 - Consumption of different types of wood fuel in Italy ............................................................ 117 Figure 65 - Source: NEAP forecast and new estimates. Data processed by AIEL. Sources: NEAP and FIRE. ......................................................................................................................................................... 118 Figure 66 - Pellet production in Italy in tons (2003-2011). Source: AIEL. .............................................. 119 Figure 67 - Annual consumption of pellet in single household stoves and small-scale heating networks (1999-2011). Data processed by AIEL. Source: CECED and AIEL. ....................................................... 120 Figure 68 - wood household heating appliances (2010). Data processed by AIEL. Source CECED. ...... 120 Figure 69 - Sales of wood pellet stoves and corresponding fuel consumption (Mt). Data proceed by AIEL. Source: CECED. ....................................................................................................................................... 121

Figure 70 - Regional distribution of installed pellet stoves. Data proceed by AIEL. Source: CECED and APAT Lombardia...................................................................................................................................... 121 Figure 71 - Sales of wood pellet boilers and corresponding fuel consumption (tons). Data processed by AIEL. Source: AIEL and BG of AIEL. .................................................................................................... 122 Figure 72 - Comparision between domestic demand and production. Source: AIEL............................... 123 Figure 73- Geographical spread of pellet imports (2010) ......................................................................... 124 Figure 74 - Merging of production, import and consumption figures (2009-2011). Source: AIEL. ........ 125 Figure 75 - Trend of pellet wholesale price (2003-2011). Source: AIEL. ................................................ 126 Figure 76 - Comparison of primary energy costs (/MWh) produced by fossil and wood fuels (November 2011). ........................................................................................................................................................ 126 Figure 77 - Comparison of average quality of pellet produced in Italy from 2006 to 2011. Processed by AIEL. Data source: AIEL/Pellet Gold. ..................................................................................................... 127 Figure 78 - Share of certified domestic production pellet......................................................................... 129 Figure 79 - Sale forecasts of pellet heating appliances and pellet consumption by 2020 (Data processed by AIEL). ....................................................................................................................................................... 131 Figure 80 - result of survey in IT .............................................................................................................. 132 Figure 81 - Bioenergy-use in the transport, electricity and heating sector 2010 (Svebio, Swedish Energy Agency) ..................................................................................................................................................... 138 Figure 82 - Tax for production industries EUR/m3 oil E01 ..................................................................... 141 Figure 83 - Pellet burner installations < 25 kW (SBBA, 2007) ................................................................ 142 Figure 84 - The proportion of different quality classes (18) ..................................................................... 144 Figure 85 - Swedish producers views on pellets quality on the Swedish market. ................................... 145 Figure 86 - Swedish producers views on pellets quality on the Swedish market .................................... 145 Figure 87 - Share of different pellet-certification schemes of the Swedish pellet-production.................. 146 Figure 88 - Reasons for not implementing any certification scheme according to Swedish pellets producers. .................................................................................................................................................. 146 Figure 89 - Large and medium-scale user view of pellets quality on the Swedish market. ..................... 147 Figure 90 - Large and medium-scale user view of pellets quality on the Swedish market....................... 147 Figure 91 - Intentions to start using certified pellets in the future among lrage-scle users (Sweden) ...... 148 Figure 92 - Main Reasons among Swedish large scale-the uses note Implementing any certification on pellet.......................................................................................................................................................... 149 Figure 93 - Equipment-suppliers view of pellets quality on the Swedish market..................................... 150 Figure 94 - Equipment-suppliers view of pellets quality on the Swedish market..................................... 151 Figure 95 - Arisen problems for consumers because of the qualit. According to equipment-suppliers ... 151 Figure 96 - Arisen problems for consumers the pellets-equipment. According to equipment-suppliers .. 152 Figure 97 - Knowledge of various pellets-certifications among equipment-suppliers ............................. 152 Figure 98 - Stakeholders views on sustainability crieteras ...................................................................... 154 Figure 99 - Heating prices in Sweden ....................................................................................................... 156 Figure 100 - Pellet installations ................................................................................................................ 156 Figure 101 - Trade .................................................................................................................................... 157 Figure 102 - pellet heating systems in Sweden ......................................................................................... 157

EUROPEAN OVERVIEW
Table 1 - Pellet consumption in the EU27 in kt; source: European Pellet Council 2011, Pellet Atlas 2009 Country EU 27 Austria Belgium Bulgaria Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom n.a. n.a. 1.490 n.a. n.a. n.a. 1.685 n.a. 102 4 1.715 n.a. n.a. 10 1.850 760 n.a. n.a. 0,01 25 487 25 486 30 705 32 912 35 n.a. 270 n.a. 33 340 540 6 567 n.a. n.a. 850 312 818 59 40 240 n.a. 2005 3.835 303 2006 4.603 392 730 892 100 90 470 n.a. 2007 6.028 450 735 993 n.a. 135 600 1,31 2008 7.021 513 920 n.a. n.a. n.a. 900 n.a. 2010 9.817 660 920 12 3 1600 213 400 1200 11 10 30 850 39 20 913 300 10 25 18 112 95 2200 176

1.

Introduction

Today wood pellets are an established and valuable renewable energy source, while they were barely known in most parts of Europe only 20 years ago. From 2005 to 2010 pellet consumption almost tripled to 10 million tons and projections for 2020 foresee an increase to 25 or even up to 100Mt in Europe.
Table 2 - European Pellet production 2005-2010 in kt; (source: European Pellet Council 2011, Pellet Atlas 2009) Country Austria Belgium Bulgaria Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Netherlands Poland Portugal Romania Slovak Republic Slovenia Spain Sweden United Kingdom EU 27 2005 450 187 71 270 240 110 200 1.100 2.628 2006 617 134 121 470 300 110 280 30 1.458 3.520 2007 700 13 27 149 383 190 1.100 79 12 15 600 130 108 329 108 100 115 95 1.400 129 5.782 2008 625 485 27 168 70 240 1.460 15 15 700 120 378 111 117 163 1.405 194 6.294 2009 695 223 299 346 1.600 81 550 400 900 1.575 6.669 2010 850 286 40 223 180 381 300 495 1.750 33 162 27 600 223 133 120 410 430 157 117 154 120 1.645 138 9.241

In 2010 the European pellet sector supplied about 90% of the demand in Europe, with the largest production coming from Germany, Sweden and Austria. In general the production capacity has grown even stronger that the actual production in recent years. Worldwide capacity reached more than 33 Mt (including also other materials than wood like rice husk) in the beginning of 2012. Bioenergy International (www.bioenergyinternational.com) who keeps a database of pellet production suggests that less than half of the capacity is actually used. This implies that about two thirds of the world wide pellet production is consumed in Europe.

Figure 1 - Pellet production capacity and actual production in selected countries in kt, 2010 (source: EPC)

Large scale imports of pellets-for-energy to Europe are a rather recent phenomenon, especially spurred by the use of pellets in large scale applications for district heating and electricity generation. Main exporters are Canada, the United States and Russia. Imports to Europe grew by 50% from 2009 to 2010.
Table 3 - Wood pellet export to the EU27 in kt (source: Eurostat)

Exporting country Argentina Australia Bosnia Belarus Canada Chile Croatia New Zealand

2009 10 9 54 75 520 0 73 0

2010 9 66 44 90 983 1 95 21

2011 6 14 47 100 1.160 3 115 30

main target country IT NL IT, SLO LT, DK UK, NL, BE IT IT IT, UK

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Norway Russia South Africa Switzerland Ukraine USA total import to EU27

10 379 42 6 30 535 1.742

4 396 25 15 57 763 2.569

13 475 43 3 149 1.001 3.161

SE DK, SE NL, UK IT PL NL, UK, BE

The high density of pellets also facilitates trade within Europe. EU internal trade grew by 60% from 2009 to 2010 and is expected to expand further due to the official introduction of common European standards (EN 14961-2) in 2011. The largest pellet exporting nations are Germany, Latvia, Estonia and Austria. While Germany and Austria also feature a strong national demand, the Baltic countries utilize their big forest resources and strategic location on the Baltic Sea to supply large consumers, especially Denmark and Sweden.

Figure 2 - Wood pellet supply and demand in Russia (source: Ekman)

The large forest area in north-west Russia seems to attract a lot of investors and large pellet production plants has been built in recent years, including the worlds largest pellet plant in Vyborskaya (capacity of 900.000t per year). So far actual production kept pace, but could be increased quickly once favorable framework conditions for co-firing and large scale use of pellets in general are established (see industrial pellets report, available on www.pellcert.eu).

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Table 4 - Wood pellets traded within EU27 (source: Eurostat*)

Exporting country Austria Belgium Bulgaria Czech R Denmark Estonia Finland France Germany Hungary Italy Latvia Lithuania Luxembourg Netherlands Poland Portugal Romania Slovakia Slovenia Spain Spain Sweden UK EU27

2009 159 119 11 72 20 316 154 59 370 33 2 231 93 7 74 98 138 62 46 75 59 59 104 6 2.308

2010 285 50 8 102 124 383 187 62 543 13 4 420 126 15 103 142 199 142 64 81 138 138 69 61 3.323

2011 main target country 274 51 6 83 184 562 116 87 680 20 10 670 203 37 136 135 508 176 44 106 121 121 154 57 4.420 DK, BE DK DK, UK, NL AT, IT IT, HU IT PT, FR PT, FR DK DK DK DK, IT IT, DE FR, NL IT AT, IT, DE DE, SE, NL DK, SE DK, SE IT, BE, DE DK, AT, IT IT

*note: import and export data for Eurostat are not reported at the same time and might therefore not exactly match

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2.

Pellet markets

About half of the pellets in Europe are consumed in small scale heating appliances (boilers and stoves), whereas the other half goes to the power sector, as well as large scale CHP. This report focuses on the heating market, a dedicated Report on pellets for industrial use prepared by Laborelec is also available on the PellCert website (www.pellcert.eu).

Residential heating with pellets

Price increases of heating oil and natural gas together with a higher awareness of the general public about climate change and the importance of renewable energy have made heating with biomass a good and comfortable alternative. Two main forms of heating devices are used. Pellet boilers are used as the primary heating equipment in small and medium scale installations, while pellet stoves are used as a complementary heating option. Thanks to low investment costs and decreasing energy demand of new buildings, overall pellet stoves sales have been steadily increasing in recent years, driven especially by a strong Italian market.

Figure 3 - Annually sold pellet stoves in the EU (source: EPC)

Pellet boilers are the preferred option in central and northern Europe, with Germany being the main market. National incentive schemes as well as oil process have a distinct effect on boiler sales1.
1

The distinct drop in installations in 2007 can also be explained with a temporary spike of the pellet price caused by the first large scale pellet use in a Belgium power plant in 2006. However, this pellet shortage had a long lasting influence on the market, as pellet capacity has since then been growing faster than actual production, thus keeping pellet prices at rather low levels.

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Figure 4 - Annually installed pellet boilers (<50KW) in selected countries (source: EPC)

The combined boiler and stove sales give an approximate estimation of the pellet demand for these two categories in Europe. Figure 4 shows the annual increase of pellet demand due to new installations. Peak years create an additional demand of more than 1 million tons. In comparison a single electricity plant switching from coal to wood pellets also requires a similar volume.

Figure 5 - Annual increase of pellet demand due to new pellet boiler and stove installations

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A survey among PellCert partners, other pellet/biomass associations and Ekman shows that the pellet demand for heating (small scale stoves/boilers as well as heating plants) is projected to increase to more than 22 Mt by 2020.
Table 5 - Pellet heating demand outlook (kt; source: PellCert, EPC, Ekman)

2011 Austria Belgium Denmark France Finland Germany Ireland Italy Spain Sweden Switzerland UK other total 710 100 700 560 70 1.400 40 1.900 150 1.000 160 50 1.100 7.940

2015 1.490 150 1.000 1.400 150 1.900 60 3.100 450 1.200 250 500 1.600 13.250

2020 3.500 200 1.250 2.500 450 3.500 70 4.250 1.150 1.400 400 1.250 2.200 22.120

3.

Pellet quality and certification

Experiences with pellet quality certification in residential markets

When pellets were first introduced as fuel for residential heating in Europe, a number of quality issues quickly emerged. These issues related both to the handling properties of pellets and to the combustion properties. A key issue was the durability of pellets and the amount of fines. As pellets were delivered by delivery trucks and blown into the storage cellar of customers with high speed, pellets with low mechanical stability were crushed and transformed to saw dust. Saw dust, however has completely different combustion properties than pellets and could not be burned properly in pellet boilers. A high amount of fines had a similar effect as fines can separate from pellets in the storage gradually and then lead to heating system failure. A similarly important issue turned out to be ash content and ash melting behaviour. High ash content, which was often found to be related to lower ash melting temperature, led to 15

failures in boiler operation as clinker blocked the burning system. Finally, contaminations were addressed, not only for technical reasons, but also for legal reasons. Contaminated wood such as waste wood would not only be more likely to lead to failures in heating system operation, but would also create elevated emissions of air pollutants and would be legally prohibited. To eliminate this possibility a number of elements indicative of contaminations such as N, S and heavy metals where introduced as criteria for determining pellet quality. With the rapidly increasing number of deliveries to customers it was impossible to test pellet quality for every single delivery. At the same time both traders and consumers had to be certain, that the pellets they delivered or received fulfilled all quality criteria. For this reason certification was introduced. By periodic inspection of production plants it was possible to ensure, that only clean raw material was used and mechanical properties of pellets always achieved the required specifications. It should be emphasized, that certification has completely achieved its purpose of securing consistent high quality production of pellets.

How to deal with producers that deliver different product qualities based on different raw materials?
These questions will be addressed in the context of the on-going Pell-Cert project. Any opinions on the stated questions and the considerations above would be most welcome. See contact details on www.pellcert.eu. Additionally, another EU project (www.mixbiopells.eu) has developed a certification handbook for (mixed) agro pellets which might be

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AUSTRIA
Pellet production in kt
year 2005 2006 2007 2008 2009 2010 Source of information Plants 16 21 23 24 27 29 ProPellets Austria Capacity 490 650 900 978 1,100 1,200 ProPellets Austria Production 443 617 695 633 695 850 ProPellets Austria

Pellet consumption in kt
year 2005 2006 2007 2008 2009 2010 Source of information Heat 303 400 340 514 575 660 ProPellets Austria Power 0 0 0 0 0 0 ProPellets Austria Name of the power plants (& consumption)

Heating Devices
year 2005 2006 2007 2008 2009 2010 Source of information Boilers <50 kW (Residential) 714,000 916,000 992,000 1,206,000 1,370,000 1,515,000 N Landwirtschaftskammer, Ing. Haneder all boilers <100 kW Boilers >50 kW (Commercial) 128,600 197,700 246,100 352,500 443,000 543,000 N Landwirtschaftskammer, Ing. Haneder all boilers >100 kW Stoves 9,000 14,700 16,400 19,500 22,000 26,000 N Landwirtschaftskammer, Ing. Haneder

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1. Introduction
Austria is among the countries with the highest market penetration of bioenergy in the heat market in Europe and worldwide. While the traditional use of firewood still dominates for heating, the use of pellet heating systems has shown a very dynamic market development over the last 15 years. Currently an approximately equal amount of pellet boilers and logwood boilers are being sold in Austria. Figure 1 shows the development of the share of different heating systems in the Austrian market. It shows clearly the substantial use of wood fuels and the reduction of the market share of oil heating systems. Sales of natural gas boilers have also declined slightly but natural gas remain the most frequently used fuel for new heating installations.

Figure 6 - boiler installations in Austria

Figure 2 shows the share of different fuels for heating in households. The figure shows a market share of oil heating of 24%. The exchange rate of existing heating systems in Austria is very low. This means, that a large share of inefficient boilers, operated with fossil fuels, but also with logwood exist. No political initiative has so far taken an ambitious approach, to change this situation.

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Figure 7 Fuels share in heating in AT

The recent massive increase in heating oil prices could, however, lead to a market driven change of this situation. The recent survey lheizer in sterreich Heizkosten und Wechselbereitschaft 2 shows that 51% of oil heating households consider heating costs as a significant problem, with 31% considering it to be a very significant problem. 84% of households expect oil prices to further increase. As a consequence 36% of households declare they want to change their oil heating system within the next years. This means, that more than 260.000 households consider to change their heating system within the next two or three years. Currently the annual boiler market is about 60.000 units. If the result of the survey is actually realized, this could mean a substantial growth of pellet boiler sales. Among those oil heating households that declare they want switch to a different fuel, 21% mention heat pump, 19% pellets, 17% log wood, 14% district heating and 14% natural gas. Thus, the current market situation described in this report could change considerably in the years to come.

Dr. Peter Hajek und Mag. Alexandra Siegl, l-Heizer in sterreich - Heizkosten und Wechselbereitschaft, Wien 2011.

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2. Pellet market
Residential heating with Pellets
Residential heating with pellets is the main market for pellet use in Austria. First pellet boilers for residential heating were sold in 1997. The market grew with impressive growth rates, pellet heating quickly becoming the most fashionable heating system for builders of new single family houses. By 2006 pellet boilers achieved a market share of about 15 % of total boiler sales to consumer markets. In 2006 a shortage of wood pellets developed throughout European markets and led to a sharp increase of pellet prices. Media and consumers interpreted this increase as deliberate intent of the pellet industry to take advantage of rising oil prices. The image of preferred ecological choice for heating was severely damaged and sales of pellet boilers showed a dramatic drop in the subsequent year. 2008 pellet boiler sales recovered in view of sky rocketing oil prices. Since 2009 sales are stable at a level of 8000 to 9000 units per year. (Figure 3). In total almost 90.000 households are currently heating with pellet boilers.

Figure 8 Installed residential boilers in AT

About 25.000 households heat with pellet stoves, most of them are used additionally to other heating systems. Currently pellet stove sales are increasing (Figure 4).

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Figure 9 Pellet stoves in AT

Why did sales of pellet boilers not continue to grow after 2008? A key reason for the current stagnation of the Austrian pellet boiler market is due to structural changes in the new built single-family house market. Low energy housing and passive houses rapidly became market standard after 2005. The corresponding sharp decrease of heat demand and a number of practical advantages suddenly made heat pumps the preferred choice of single-family house builders. Heat pumps are easier to install, there is no need for ash removal, fuel supply and fuel storage. The main market for pellet boilers became existing buildings heated with fuel oil. As figure 2 shows, heating oil covers 24% of heating energy demand in Austria. This corresponds to more than 700.000 households heating with oil. The sharp increase of heating oil prices in 2008 created a temporary boom of pellet boiler sales that immediately dropped as oil prices sharply declined in 2009. Price volatility and economic crisis prevented users from replacing their existing oil system. This situation is about to change. The persistent high level of heating oil prices in 2011 is creating huge economic problems for households. Heating costs for an average single-family house are currently reaching 3.000 Euros per year twice the average monthly salary in Austria. The mentioned survey among oil heating households suggests, that a large number of households currently heating with oil is considering to change to other fuels, with pellet heating and heat pumps as the two preferred options. Thus expectations seem justified that 2012 will see a boom of pellet boiler sales. Pellet stove sales in Austria are significantly lower than pellet boiler sales, even though the investment costs are substantially lower. While replacement of an oil boiler by a pellet boiler will result in investments between 15.000 and 20.000 Euros, pellet stoves can be bought at 2.000 to 4.000 Euros. The weak development of pellet stoves in Austria is related to the existing heating culture that is predominately based on central heating systems.

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Unlike in countries with milder climates such as Mediterranean countries or countries in the Atlantic climate region, winters in Austria are too cold to heat only with stoves and still maintain a reasonable level of comfort. For this reason the role of stoves for heating has decreased over the last decades substantially and only few stove shops exist. This creates a substantial bottleneck for pellet stove sales there is no reasonably developed network of sellers. While do-it-yourself markets are becoming the main distributors of stoves, they are not well suited for distributing pellet stoves as these need after-sales services. Consumers need help to install a pellet stove and may also need repair and maintenance services, which do-it-yourself markets are not offering. Installers, on the other hand are generally oriented towards central heating systems and boilers, not stoves. proPellets Austria has been quite active in promoting the use of pellet stoves as a low cost option to use pellets. Recently these activities do seem to have an impact on the market. Since 2010 a federal subsidy of 500 Euros is available from the Climate and Energy Fund. It is available for pellet stoves that fulfil the requirements of the Austrian Eco label Umweltzeichen for stoves. This subsidy is expected to be continued into 2012 and it has been one of the reasons that do-it-yourself markets have started to actively promote pellet stoves. There is also a trend towards do-it-yourself markets offering various kinds of services, not just products for self-builders. This could enhance their role as sales outlets for pellet stoves in the future.

Commercial heating
The use of pellets as fuel is particularly attractive in buildings with a high energy demand such as residential blocks, hotels, public buildings and buildings for commercial or industrial use. Unfortunately, for the past no statistics are available on the development of pellet demand in this sector. 2010 the first survey was made that distinguishes between pellet boilers sold to residential use and commercial users. This survey shows, that in 2010 already 30% of the entire installed boiler capacity of pellet boilers was installed in units with more than 30 kW heat load that is in applications larger than typical single-family houses. A recently completed master-thesis of Michael Toth 3 analysed a database related to subsidies for commercial use of biomass. The so called Umweltfrderung im Inland offers a 20 - 30% investment subsidy for all businesses switching to biomass heating. The study shows that the most significant development took place in hotels. Austria has a very large tourism industry. Hotels are typically located outside of natural gas grids in skiing resorts etc. For hotels payback times for changing from oil to pellets are within the range of a few years. Consequently this sector shows quite dynamic development. In two other areas pellet heating systems also become increasingly successful: residential blocks and public buildings such as schools, kindergartens etc. Often, in this cases energy service companies plan, build and operate the heating system and sell heater to the customers. It is noteworthy that a significant share of commercial installations that changed to pellets did not take advantage of available subsidies. Unfortunately, in 2010 the administration of the subsidy scheme was
Michael Toth, Analysis, Perspectives and Challenges of the Commercial Segment of the Austrian Pellet and Pellet Boiler Market, Diplomarbeit TU Wien, Wien 2011
3

22

changed in such a way, that many of the pellet heating systems there were actually installed in 2010, will only be subsidised in 2011. That makes it currently impossible to compare the boiler statistics for 2010 with the subsidy statistics. It may however be assumed, that only 30 - 50% of the established pellet heating systems in commercial applications took advantage of available subsidies. The rest of the operators did not seem ready to take the trouble to go through the administrative requirements related to the subsidy or were not aware of the possibility to receive a subsidy.

Pellet prices and competitive position

The competitive position of pellet heating has improved substantially over the last decade. While pellet prices were at the same level as oil prices around the year 2000, pellets currently cost only half as much as heating oil for the same amount of energy delivered. Figure 5 shows the development of heating oil and pellet prices over the last decade.

Figure 10 Prices AT

Figure 6 shows the comparison of current pellet heating costs with other fuels. Only wood chips and wood logs are currently cheaper than pellets as a fuel.

23

Figure 11 Fuel cost comparison in AT

A recent study conducted by the Austrian Society for Environment and Technology 4 has made a full cost comparison between oil heating and pellet heating. Figure 7 shows the results.

Figure 12 Heating cost in AT

M. Cerveny, T. Sturm: Vollkostenvergleich von Heizsystemen fr Einfamilienhuser, GUT, Wien 2011. www.oegut.at/de/themen/energie/vollkostenvergleich-heizsysteme-efh.php 24

The investment costs for a pellet heating system are obviously significantly higher than for an oil heating system. Lower fuel costs lead to an overall cost advantage however. Obviously, this result is strongly dependent on assumed oil prices and the energy demand of the building. In the calculation it is assumed that that oil prices and pellet prices would stay at the current level throughout the operation of the heating system an assumption that is to the advantage of oil. Calculations in the mentioned study show, that the economic advantage of using pellets is increasing considerably with energy demand. The conversion of larger buildings using heating oil is significantly more attractive in economic terms that the conversion of small buildings and low energy buildings.

Development of pellet production

Figure 8 shows the growth of pellet production capacity, actual production and domestic consumption of pellets in Austria. The continuous expansion of production capacity is obvious. It increased from around 500.000 tons in 2005 to 1,23 million tons in 2011. It is noteworthy, that capacity has expanded stronger than actual production. Several factors have contributed to this fact: growth in pellet demand has not met expectations, stronger competition made it impossible to utilize full capacity and raw materials were not available at prices that would justify expanded production.

Figure 13 Pellet production, capacity and consumption in AT

25

Figure 9 shows how raw material prices and pellet prices developed over the last years. It is obvious, that raw material prices increased stronger than pellet prices making pelletizing less economically attractive.

Figure 14 Sawdust and pellet prices in AT

What is the outlook for Austrian pellet production? Sustained high oil prices are likely to lead to substantially increased pellet boiler sales and as a consequence also substantially increased demand for pellets. Currently Austrian pellet producers use only sawdust for pellet production. Wood chips, which are also a residue of lumber production and could be used for pellet production amount to twice the volume of raw material compared to saw dust. Currently wood chips are sold mainly to the pulp and paper industry because it would not be economic to transform them to pellets and there is no sufficient demand for increased level for pellet production. If demand increases significantly different scenarios for Austrian pellet production are possible: either exports decline due to stronger local demand or production is increased. If raw material prices and pellet prices do not allow for an increase of production growing imports could also lead to the balancing of supply and demand. Both imports as well as exports were strongly increasing in 2010. The import increased from 162.000 tons in 2009 to 286.000 tons in 2010; imports from German nearly doubled. Main destination for export is Italy, exports to Italy increased from 232.000 in 2009 to 403.000 tons in 2010. Total export nearly reached half a million tons, as Figure 10 shows.

26

Figure 15 Pellet trade flows in AT

3. Pellet quality and certification

Introduction
Austria was the first country to introduce a standard for wood pellets and subsequently a certification for wood pellet producers based on this standard (Norm M 7135). The reason for introducing pellet quality certification were substantial problems with pellet quality that led to the failure of heating systems in the introduction phase of the new technology. The sector quickly became aware, that successful market diffusion would only be possible, if these quality problems were properly addressed. The failure of a central heating system in a cold climate as in Austria leads to immediate very negative reactions of the affected persons and could have severely harmed the good image of the new green fuel. Thus practically all Austrian pellet producers became Norm certified soon after pellets were introduced into the market. Later DINplus certification was added as a second certification most producers used. There was little additional cost and effort necessary to get both certifications. After certification for pellet production was introduced also an Norm standard for pellet logistics and trade was developed and the corresponding certification was introduced. This system was not nearly as successful as pellet production certification. Only few large pellet traders became certified and used the system and is was never widely communicated to end consumers.

27

Stakeholder views: Pellet producers

As the German Pellet Association DEPV started to develop the new ENplus certification, soon Austrian industries, proPellets Austria and Austrian certification experts became involved in the definition of the new certification. With several Austrian pellet producers actively involved in the development of the new scheme the introduction of ENplus in Austria among pellet producers, which started in March 2011 turned out to be very easy. All major producers very quickly signed up for ENplus certification and by December 2011 most Austrian producers have been certified. The following figure 12 shows pellet producers, their production capacity and whether they are certified or being in the process of being certified.
Table 6- Capacity and production

With certification so advanced among producers only three interviews were conducted with producers that have not certified so far. 28

One company with a new management was not yet informed sufficiently about ENplus. They requested more information and seem to be interested in a certification. The other two companies expressed objections against ENplus. The main objection is that the system is too complicated and they cannot find any added value for the consumers. Both of these companies have a stabile customer base and operate with a well-introduced brand.

Stakeholder views: Pellet distributors

As was the case with the first pellet traders certification based on Norm M7136 ENplus certification turned out to be much more difficult to sell to traders than to producers. Fortunately, the two largest distributors of pellets quickly decided to get certified and are now actively using ENplus. Over all the following traders are using ENplus:

Figure 16 Traders using ENplus

These traders are distributing a total of approximately 215.000 tons a year, one third of the total market. As traders were not nearly as quickly in adopting ENplus the PellCert survey was a useful tool to analyse their opinions about ENplus and about pellet quality in general.

Results of the survey

Fourteen interviews were conducted with distributors of bulk pellets. All interviews were conducted via telephone using the PellCert questionnaire. Among the interviewed pellet distributors seven distributors were small distributing less than 10.000 tons per year, six were distributing between 10 and 50.000 tons a year and one was distributing more than 50.000 tons a year. Most of the distributors were delivering only a small share of bagged pellets. In seven cases the share of bagged pellets was 10 % or less of total delivered volume. Only two distributors reported a higher share in one case 15 %, in the other case 20 %. In four cases no answer was recorded regarding this question. The first question in the PellCert questionnaire asked how important qualified delivery of pellets was for customer satisfaction. Figure 13 shows the answers on this question: most distributors considered the quality of distribution as very important for customer satisfaction.

29

Figure 17 - Questionnaire

We also asked their opinion on the quality of their competitors. Respondents were frequently hesitating to answer this question and often not able or willing to give the share of distributors with poor quality. However, there seemed to be consensus that some distributors were not doing a good job in pellet delivery. The most frequent problems with pellet quality that was mentioned, was a too large share of fine particles. This problem was mentioned 13 times, 6 times slagging of pellet ashes was mentioned. All other problems seemed to be insignificant.

Figure 18 - Questionnaire

The next question addressed possible quality issues related to pellet delivery. Figure 15 shows the results. The most frequent problem seemed to be that the wished delivery dates could not be realised. Another more frequently mentioned problem was too high pressure of blowing in pellets into the customer storage. Selecting high pressure has the advantage of accelerating the off-loading process. However, high blow-in pressure leads to the development of a larger amount of fines and dust, as pellets are crushed due to the high speed and mechanical strain.

30

Figure 19 - Questionnaire

Interviews showed that the majority of interviewed pellet distributors already knew ENplus only three did not know anything about ENplus yet. This is likely due to the significant communication efforts proPellets Austria has already realized to inform pellet distributors about the new certification. Three events were organized in spring 2011 in different locations in Austria to inform pellet distributors about ENplus. Also information and materials regarding the certification were sent to all Austrian pellet traders proPellets Austria was aware of. For this reason, less than half of the respondents (6) said they were interested in receiving more information about ENplus. The following question What do you think about the ENplus certification? showed interesting responses. A majority of replies 8 of 14 was negative. Answers included remarks such as unnecessary, not very much, no additional value for the consumer, we do not need it, we have a stock of customers that stays with us, and similar remarks. 6 respondents made positive remarks such as very good, excellent and necessary, good but only effective, if certification is widely used or meaningful when the whole chain is certified. The responses to the questionnaire show the reservations pellet distributors have regarding certification. Many consider it as unnecessary and additional costs without particular benefit for the customer. It is interesting to note, that this opinion prevails even though there is a general opinion that poor distributors are also on the market. A certification expert reported in a personal communication from the problems that were encountered with introducing the Norm certification for traders. In some cases traders seemed to be reluctant regarding the certification, because they did not want to give auditors insight into their purchasing policies.

Stakeholder views: installers

The PellCert questionnaire was sent to so-called bioheat-installers holding a type of certification from the Austrian Biomass Association. The questionnaire was sent to 1.000 bio-heat installers via email. 20 responses were received via Fax within less than a week and analysed.

31

There was a complete consensus among respondents that pellet quality was very important for proper operation of pellet boilers. It was interesting however to note that the perception of how often pellet quality problems lead to operation problems with pellet boilers showed a wide variation. There were both installers claiming that 80 or 90% of boiler failures were due to poor pellet quality and installers claiming that there were no such cases at all or only less than 10% of all failures were due to poor pellet quality. Figure 16 shows the results on this question.

Figure 20 - Questionnaire

At the first glance these results seem quite strange how would it be possible that perceptions between different installers would vary so much on the same issue. The explanation we have for this result is that installers are often linked to certain boiler manufacturers and some boiler models are particularly sensitive on pellet quality. This is related to technical issues some boiler manufacturers did not solve properly. High temperatures in the combustion zone or inadequate grate cleaning mechanisms can lead to problems with pellets even if they are within the quality requirements of ENplus or the formerly used Norm M7135. The third question addressed the most frequent reasons of problems with pellet heating systems. Figure 18 shows the results: a substantial share of complaints relate to the inability of consumers to properly handle the system.

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Figure 21 - Questionnaire

The question regarding ENplus revealed that 40 % of installers that answered do not know ENplus. 45 % asked for additional information on ENplus. Thus there seems to be quite a considerable lack of information among installers. It is a fact that so far no major efforts were made to inform installers about ENplus. It will be an important task within the future work in the PellCert project to enhance information of installers as these do seem to take an active role with recommendations regarding pellets to be used.

Stakeholder views: Pellet boiler manufacturers

Several discussions have been held with boiler manufacturers during proPellets membership meetings on their role in promoting ENplus. Pellet boiler manufacturers have faced severe problems due to varying pellet quality in their export markets. For this reason they generally have a very positive opinion about ENplus and are ready to support its distribution. As a key measure to do so an agreement was made among proPellets member companies to attach a sticker (Figure 18) on new pellet boilers and pellet stoves that recommend the use of ENplus Pellets. The image of the sticker is shown below. The text says It is recommended to use ENplus pellets with this device

Figure 22 - Recommendation

As the discussion with boiler manufacturers is already in an advanced stage, no questionnaires were sent to them.

Summary
The PellCert survey shows that considerable efforts have to be made to secure full- scale market introduction of ENplus, particularly the use of ENplus by distributors. The only feasible way to do so seems to be to increase the demand for ENplus by informing consumers to ask for certified pellets only. 33

Installers play an important role in forming customer opinions regarding which pellets to use. They need to receive more information on ENplus to recommend certified pellets and increase consumer demand.

4. Sustainability
Currently no specific requirements regarding the sustainability of pellets used in Austria exist. The same is true for the much more extensive use of wood chips and logwood. In Austria a strict legal framework for forestry has been established a century ago, which ensures sustainable forest management. There are currently no concerns, that these legal requirements are not sufficient to ensure sustainable use of Austrian forests. Consequently no specific requirements have been formulated regarding the use of wood fuels, as these are predominantly sourced in Austrian forests. The level of forest harvesting in Austria has increased over the last years but is still well below the possible sustainable harvest based on annual regrowth of forests. Forest certification in Austria is well developed. About 75% of Austrian forest area is PEFC certified. Most pellet producers are PEFC chain of custody certified and could easily offer pellets with the PEFC certification. Usually this is not done, as no concerns have been raised so far regarding the sustainability and consumers are confident that pellets are being produced sustainably. As Austria is a net exporter of pellets no significant concerns have been raised regarding potential imports of unsustainably produced pellets. Bioenergy 2020+ conducted a comprehensive assessment of the CO2 balance of the Austrian pelletproducing sector. Pellet production plants representing 50% of the entire Austrian production were analysed in detail, with excellent results regarding the CO2 balance. All investigated plants are drying raw material with heat produced from wood residues that are used in many cases in a CHP plant. Electricity supply in Austria is based to a large extend on hydropower. Thus the CO2 balance of pellet production is excellent. On average 16 kg CO2 were emitted per ton of pellets produced by the investigated producers. This figure does not include wood transport to the sawmill and pellet transport to the customer. The integration of sustainability requirements in ENplus based on forest certification and requirements for CO2 balance, should not pose any problem to the Austrian pellet producing sector.

5. Conclusion and outlook

The outlook for the further development of the Austrian pellet sector is bright. In view of high oil prices large numbers of households and commercial users of fuel oil are currently considering to change fuel to save heating costs. Pellets cost less than half of heating oil and supply is ample. Assuming that a sharp decrease of heating oil costs is not very likely, the coming years will see strong growth in pellet use for domestic and commercial heating in Austria.

34

ENplus certification has seen very successful introduction among pellet producers. 72% of production capacity has been certified or is in the process of being certified. Market uptake by pellet traders is much more hesitant. So far distributors representing a market share of 33% are certified. This creates a certain threat because ENplus certification is based on the certification of the entire supply chain. Certified pellets that are not distributed by certified traders lose their certification. Pellet traders seem to be hesitant to become certified, on the one side, because they feel no need for it with few consumers asking for ENplus and possibly also because of the costs and the additional requirements attached to certification. It will be key for the success of the ENplus system in Austria to improve consumer information about ENplus and create increasing demand for certified product. The introduction of sustainability certification into the ENplus system would not create any problems in Austria. Most producers are PEFC chain of custody certified and the CO2 balance of pellet production is excellent. Certification of industrial pellets will not play a relevant role in the Austrian market. Currently there is no use of pellets for electricity generation and it seems unlikely, that this will happen in the near future. Austria has ample local wood resources that can be transported to power plants with short transport distances. Consequently all Austrian power generators using wood fuels are currently using wood chips, which are substantially cheaper than pellets.

35

BELGIUM
Pellet production in kt
year 2005 2006 2007 2008 2009 2010 Source of information Plants
1 (W) 1 (W) 5 (W) 6 (W) + 2 (F) 5 6 (W) + 2 (F) 7 (W) + 3 (F)

Capacity
15 (W) 15 (W) 271 (W) 420 (W) + * (F) 460 + * (F)
6

Production
10 (W) 10 (W) 64 (W) 213 (W) + * (F) 223 (W) + * (F) 286 (W) + 80 (F)

420 (W) + * (F)

ValBiom + ODE

ValBiom + ODE

ValBiom + ODE

Pellet consumption in kt
year 2005 2006 2007 2008 2009 2010 Source of information Heat
7 (W) + 7.4 (F) 19 (W) + 27.7 (F) 34 (W) + * (F) 52 (W) + * (F) 66 (W) + * (F) 80 (W) + * (F)

Power
350 (W) + 250 (F) 350 (W) + 250 (F) 350 (W) + 500 (F) 350 (W) + 500 (F) 350 (W) + 500 (F) 350 (W) + 500 (F)

Name of the power plants (& consumption)

Rodenhuize, les Awirs Rodenhuize, les Awirs les Awirs Rodenhuize, les Awirs Rodenhuize, les Awirs Rodenhuize, les Awirs,

ValBiom + VITO

Laborelec

Laborelec

Heating Devices
year 2005 2006 2007 2008 2009 2010 Source of information Boilers < 50 kW (Residential) Boilers > 50 kW (Commercial) Stoves
1,727.0 (W) + 1,695 (F) 4,631 (W) + 5,525 (F) 9,027 (W) + * (F) 13,241 (W) + * (F) 17,441.0 (W) + * (F) 21,641.0 (W) + * (F) SPW-DGO4, ValBiom, VITO 272 (W) + 371 (F) 716 (W) + 953 (F) 1,099 (W) + * (F) 1,791 (W) + * (F) 2,110 (W) + * (F) 2,212 (W) + * (F) SPW-DGO4, ValBiom, VITO SPW-DGO4, ValBiom, VITO

5 6

(W): Wallonia, (F): Flanders *: missing data

36

1. Introduction
1.1 Climate and geography
Belgium is a country of 30,528 km. The population is equal to 10.75 million of inhabitants and includes 4.6 million of households (Figure 25), representing a population density of 35.8 inhab./km. 23 % of the country is covered by woody lands (Figure 24). Forests represent more than 600,000 ha with 544,000 located in Wallonia.
66

Figure 2 : uses in 2009 (Source Figure 24 - Evolution of the Belgian households Figure 23 - Belgium territory : SPF Statbel, IGN) number.(Source : SPF Statbel).

Belgium is characterized by a temperate climate with cool and humid summer, damp and rainy winter (RMI). The annual mean temperature in 2009 was equal to 11 C (min: 7.1 C max: 15 C). However, extreme conditions can happened like - 22 C in winter 2009 for example.

Renewable energy uses

Renewable energy sources contribute to 15.3 % of the primary energy consumption in 2009 (Table 1) and the residential sector represents 33.3 % of the final energy consumption (Figure 26).
Table 7 - Evolution of the energy sources used in the Belgian primary
energy consumption (ktep) (Source SPF Statbel).

Energy sources (ktep) Solid fuels Oil Natural gas Nuclear energy Others (primary electricity) Renewable fuels and substitution Total

2008 4713 24882 14879 11873 1027 2347 59721

2009 Increase (%) 3257 -30.9 24615 -1.1 15153 1.8 12304 3.6 -21 * 2706 15.3 58014 -2.9

37

Figure 25 - Final energy consumption by sector (Source : SPF Economie, PME, classes sociales et nergie).

Solid biomass represents 3.3 % of the electricity production. In electricity production (power plants and CHP plants), kinds of biomass used are wood pellets, olives byproducts, liquid biofuels, biogas and substitution fuels. Imported wood pellets represent the most part of the supply. Wood is indeed historically the first renewable energy source used to produce electricity in plant in Belgium. It is currently the most important source but wind and solar energies are increasing (Figure 27).
Figure 26 - Electricity production in BE

Residential sector use more and more renewable fuels but it is still anecdotic in comparison with gas and oil (Figure 5). In Wallonia, heat production represents 80 % of the total energy consumption of one household. To produce heat in residential houses, the Belgian people use electricity, heating fuels, natural gas, heat pumps, coal, woodlogs, wood chips or wood pellets. The fuel used to produce heat is linked to the place of living: in cities heat fuel and natural gas and in the countryside fossil fuel and wood fuels. Wood fuels are more often used like a support to fossil fuels than main heat production system even if the number of wood central devices is increasing.

38

Heating with wood logs is quite a tradition in Wallonia, woody region. Wallonia has a grant system in force to support investments in a full automatic biomass boiler. Flanders and Brussels regions dont support wood energy at the residential scale because they want to avoid an increase of dust emissions.

2. Pellets market
Pellets production
The pellet production started in 2005 in Wallonia, latter in Flanders. There isnt any producer in Brussels. At this period, no installers of technologies were practicing regularly; only few people were coming from abroad to install stoves. Consequently, pellets were considered as something new and interesting but a bit risky and original. Statistics are not easy to gather. Quite detailed figures are available in Wallonia, less in Flanders.

Wallonia
In 2010, Wallonia counted 7 producers for a production capacity equal to 460 kt/a. The producers have only one production site. Regarding Wallonia, 286 kt were produced and 97 kt were dedicated to residential market. The sold is used in power plants a in storage for a small part. Wallonia counts indeed one power plant with an output of 80 MW using 100 % of pellets. Raw material used are dry saw dust (1 rare) 7, wet saw dust (5), round wood (1), It is difficult to collect data on import and export. Based on a ValBiom enquiry, ValBiom estimated that imports reached 10 kt and export 2 kt in 2010 for use in residential sector. However, imports are important to supply the power plant les Awirs: 380 kt/a. In general, storage is quite small. Few problems of storage happened in 2009 due to a very cold winter. Since this period, producers organize themselves to optimize the storage. Wallonia counts close to 150 stakeholders like manufacturers, importers, traders and installers.

Flanders
Flanders counts 4 producers producing 50 kt/a and approximately 50 stakeholders.

Consumption market
The pellets are mainly supplied with the help of stores network, in bagged packaging but the delivery in bulk is growing. 7 trucks are riding in Wallonia. Traders and deliver less than 10 000 T/a each and pellets in bags represent close to 50 %. They all delivered A1 quality.

Numbers in parentheses precise the number of questionnaires where the idea has been estate.
39

The analyze of the grant files furnish us quite precise figures regarding boilers, not for stoves since 2008 (end of the grants). To update the figures, a constant increase of pellets stoves is considered. In Wallonia, the market is more important for stoves. The grants and the increase of the fossil fuel motivated people to replace their boiler with a less expensive technology. Sales reached their top in 2008 with 692 monitored boilers. Then, fossil fuel price decreased and the pellets boilers sales decreased too (Figure 7). The boilers in use could represent a consumption of 79,602 T/a in 2009 in Wallonia for all pellets devices (Figure 8). Pellets are currently seen by the public as an ecologic alternative to fossil fuel but complicated and expensive. In Flanders, available figures are older. It is estimated that, in 2006, 953 boilers were in use and 5,525 pellets stoves. That could represent a consumption of pellets equal to 2,770 T/a.

Public incentives to wood pellets

Belgium is a federal country. Energy is a regional political matter. Several incentives systems co-exist.

Industrial sector
At the industrial level, the use of pellets is indirectly supported by the incentive to green electricity production. Each region has is own green certification system. In Wallonia, the green certificate system is described in the AGW of the 30/11/2006 modified the 20/12/2007. 0.8 GC are given per MWel produced with renewable energy GC are given by CWaPE to green energy producer: 1 GC/1 MWh produced from a renewable energy source, corresponding to avoid the emission of 456 kg CO. The currently GC price is equal to 81.84 and is quite stable. In another way, energy suppliers are required to buy some GC corresponding to a ratio of 9 % of the electricity supplied every three months. If the requested amount is not buy, a penalty of 100 /MW will have to be paid. This ratio will increase of 1 % yearly until 2012. As a guarantee, the electricity network manager is required to buy GC at a minimum price of 65 /GC. At the federal level, a minimum price is also guaranteed (CWaPE). Industries can receive incentives for heat production with wood under a help for investment. In general, they dont use wood pellets but wood industries by-products or green wastes. Grants are different between regions.

Residential sector
At Federal level, a tax deduction is allowed to householders for investments to reduce energy consumption like the replacement of old boilers by an automatic wood boiler. The deduction is equal to 40 % of the income with a maximum of 2,830 in 2012 (income 2011). The tax deduction will end in 2012. In March 2006, Wallonia public services implemented a financial support for investments in sustainable use of energy, including a support to renewable energy technologies implementation as biomass/wood fuels (wood logs, wood chips and pellets) devices (stoves, boilers with manual or automatic load). In 40

2008, the grants regarding non automatic wood devices were stopped, only automatic biomass boilers were still supported. Since 2008, incentive system doesnt evolve. The amount of the incentive is fixed based on the output of the device. The maximum of the grant is equal to 50 % of the income with a maximum of 15,000 per device: Up to 100 kW : 1.750 , increase of 35 /kW between 50 and 100 kW, More than 100 kW : 3.500 , increase of 18 /kW between 100 and 500 kW, More than 500 kW : 10.700 , increase of 8 /kW more than 500 kW.

The Luxembourg province also promotes wood energy. The financial incentive is 750 for a boiler and 500 for a stove. There isnt any incentive in Brussels and Flanders to support wood heat production in residential sector.

Pellets price
In Wallonia, domestic pellets price is monitored monthly by enquiries and compared to heat fuel and gas prices. In Wallonia, domestic pellets price is really stable. The most important factor in the price building is the raw material cost. In Wallonia, 3 producers have raw material available inside their plant due to a parallel sawmill activity. The others have to buy sawdust on the market (Belgian sawmills, France, etc.). Sometimes, wood chips are also used.

Switch from heat fuel to pellets

The EIE-EUBIONET III project studied the interest to switch from fossil fuel to biomass energy production. In the context of this project, the Gembloux Agricultural Research Center took as a case study the switch from heat fuel to wood pellets in a house. The main results are presented below, for more details, the detailed case study is available on the EUBIONET III project (www.eubionet.net). Two variants were compared to change of the existing old fuel boiler: 1) a fully automatic wood pellets boiler with a capacity of 20 kW, 2) a new heat fuel boiler. For the variant 1, the wood pellets have to fulfil the requirements according to standards like DIN plus, EN plus, NF or NORM. Wood pellets have a net calorific value of 4.8 kWh/kg and a moisture content of less than 10 %. Due to this calorific value and to cover a heat demand of 23,000 kWh/year, a fuel amount of 4.9 tonnes of pellets per year is required. With a wood pellets price in bulk of 200 to 240 per tons, the annual fuel costs mount up to 980 to 1,225 a year.
Table 8

New wood pellets boiler Producer Type Capacity

kofen PELLEMATIC PE 20 20 KW 41

Year of manufacture
Table 9 - Investment costs variant 1:

2009

Boiler plant and accessories Wood pellets silo (+/- 9m3) (Homemade labor not included) Gross investment costs Investment subsidy* Tax deduction 2008** Tax deduction 2009** Final gross investment costs

13,508.00 500.00 14,008 - 1,750.00 - 2,650.00 - 2,770.00 6,838.00

*Regional program in case of installation of an automatic biomass boiler the new boiler has to reach min 80% yield-, 1,750 up to 50 kW, but max 50% of the investment. **National program in case of old boiler replacement -the new boiler has to complete several conditions-, tax reduction: 40% of the investment, max. 2,830. Source: http://minfin.fgov.be/portail2/fr/themes/dwelling/energysaving/index.htm and http://energie.wallonie.be/fr/appareil-de-chauffagebiomasse-a-alimentation-automatique-2011.html?IDC=6367&IDD=46079

The second variant is calculated with a new heating fuel boiler. The boiler has a nominal heating capacity of 18 kW. It could be installed instead of the old oil boiler and all facilities could be used again, only the boiler has to be changed. The price of the heating oil over the last 5 years was between 0.57 and 0.78 /litre. With a fuel demand of 2,300 litres, the annual fuel cost varies from 1,311 to 1,794 .
Table 10 - Investment costs variant 2:

Boiler plant and accessories Tax deduction 2008* Gross investment costs

6,776.00 - 2,710.00 4,066.00

*National program in case of old boiler replacement -the new boiler has to complete several conditions-, tax reduction: 40% of the investment, max. 2,830. Source: http://minfin.fgov.be/portail2/fr/themes/dwelling/energysaving/index.htm and http://energie.wallonie.be/fr/appareil-de-chauffagebiomasse-a-alimentation-automatique-2011.html?IDC=6367&IDD=46079

To compare the two variant, a service life of all variants with 15 years was considered. The fixed costs are calculated by a simplified annuity method with a rate of interest of 4.95% and a service life of 15 years. The variable costs are the annual fuel costs. The table below also shows the fixed costs, the variable costs and the total yearly costs per MWh.
Table 11

Heat demand in MWh Investment costs Service life in years Rate of interest Fixed costs

Wood pellets boiler 23,00 6,838.00 15 4,95% 656.56 28.55 /MWh 42

Heating oil Boiler 23,00 4,066.00 15 4,95% 390.40 16.97 /MWh

Variable costs = fuel costs Yearly costs

1,102.50 1,759.06

47.93 /MWh 76.48 /MWh

1,552.50 1,942.90

67.50 /MWh 84.47 /MWh

The graph below (Figure 12) shows the total costs in per MWh divided into variable and fixed costs. Variant 1 has the lowest total costs with 70.39 /MWh, because of low fuels/variable costs. The total costs of variant 2, the heating oil boiler system, are higher due to higher fuel cost.

3. Pellet quality and certification

Initiatives in force
In 2011, Belgium has voted a new Royal decree defining mandatory criteria for pellets used in small scale devices (output < or = 300 kW), to be traded on the Belgian territory. This law has been based on the EN 14961 part 1 and 2. To be traded on the market, two conditions have to be fulfilled: 1) the pellets have to respect few critical values; 2) a specific label has to join the pellets. The law recognizes stranger labels. The critical values are presented below:

Table 12
Parameter Humidity Ashes content Calorific value Unit % wet weight % dry mass Mj/kg Critical value < 10 < 1.5 16.3 European standard EN 14774-2 EN 14775 EN 14918 et CEN/TS 15234 AEf2 prEN 14961-2 prEN 14961-2 Comments

Diameter Lenght

mm mm

5d<9 3.15 l 40

5 % of pellets with L > 40 mm are allowed, L max = 45 mm

Dust (sale points) Durability (production site) Abrasion Dust (production site) Density Binder

% %

2 97.5 2.3 1 600 <2

CEN/TS 1149-2 EN 15210-1 DIN 51731 CEN/TS 15149-2 CEN/TS 15103 Pr EN14961-2

% kg/m %

Has to be declared by the producer

S content

% dry mass

CEN/TS 15289

43

N content Cl content As content Cd content Cr content Cu content Pb content Hg content Ni content Zn content

% % mg/kg mg/kg mg/kg mg/kg mg/kg mg/kg mg/kg mg/kg

0.5 0.02 1.0 0.5 10 10 10 0.1 10 100

CEN/TS 15289 prEN 15297 prEN 15297 prEN 15297 prEN 15297 prEN 15297 prEN 15297 prEN 15297 prEN 15297 prEN 15297

The label has to mention (Art.4): The name of the producer or the mandatory established in the EC. The country of origin of the raw material used The brand The sentence We certified that these wood pellets respect the of the Royal decree of the 5th of April 2001 defining mandatory criteria for wood pellets used in non-industrial devices. The humidity in percentage of the wet weight Ashes content in % of the dry mass The calorific value in MJ/kg, calculated based on the humidity and hash content The length in mm The diameter in mm The dust content in % in the sales points The durability in % or the abrasion The production date dd/mm/aaaa Each bag has to be label with this label. In case of delivery in bulk, the label has to be join to the income. Non planned controls will be led at least once a year in the production sites and in the sale points. In the production sites, sampling methods will respect the European standards. In the sale points, 3 bags will be picked; one bag will be sent to a certified laboratory, the two other have to be stored by the stakeholder. Certified laboratories have to subscribe. Certified laboratories in the context of the DIN+, norm or others equivalents are recognized by BELAC. Based on the analysis report, if the mandatory criteria are not fulfilled, the pellets of the same production date will be forbidden of sale and destroyed. A list of the brands and stakeholders in order will be regularly published on a specific web site.

Current situation
Belgian producers are cautious of quality. The DIN+ certification system is the most popular in Belgium. In 2011, 5 producers in Wallonia were DIN+ certified, generally at 100 % of the production. 1 is certified in Flanders. The stakeholders, except producers, dont know the EN 14961 parts 1 and 2 or have just heard about it. 44

Quality is important from the stakeholder, in particular whose working with high quality devices. Quality problems lead to a lack of confidence in the pellets use. Consumer thinks in general it is a technical problem (boiler problem) not a fuel quality problem. Pellets devices installers/traders estimate 60 to 70 % of the market is composed by bad quality pellets, 20% from the pellets traders point of view. Bad quality pellets would be traded in the small sale points under the shape of false DIN+, cheaper pellets. Imports are not checked; they consist in bad quality pellets but cheaper and attracted the customer. Consequently, bad quality pellet come from bagged market less than bulk delivery. Quality of pellets in bulk has been really improved last 2 years. Bad quality pellets come also from supermarkets that import cheaper pellets and dont respect storage best practices. This market has quickly grown since last two years. They offer cheaper products and steal job to stakeholders, smaller but experts in pellets use. They also sale devices with standard settings not adapted to pellets offered on the local market. 80 - 90 % of the devices breakdowns would come from quality problems: too much dust (4), too much ashes, too long (5), slagging (4) or bad delivery conditions (3) (blowing pressure that breaks the pellets and produce dust). There is a variation of quality between summer and winter, pellets being more wet in winter. Breakdowns are also due to variation in pellets supply without adaptation of the device settings. From the side of the consumer, quality is also important. Clients are more and more aware of quality in particular ones having a high performance boiler. But, currently, price always leads the final choice. And cheaper pellets are often synonym of bad quality. DIN+ name is well known by consumers but not the real meaning nor the content of the label (any idea of the criteria and their meaning). Consumer trusts blindly the DIN+ sound Stakeholder generally advice the use of the DIN+ pellets and sometimes a Walloon brand in particular. Other dont recommend a brand in particular but provide advices on storage and blow in bulk best practices. By this way, the consumer can be more independent and control himself the delivery. They also advice to test samples of pellets before buying bigger quantities. Most of the stakeholders already know the EN+ certification system. They are ready to recommend it and promote it. Few of them already speak about it to their clients. Stakeholders are very motivated by the EN+ because they are convinced it is time to act in quality improvement. Traders and importers precise the decision to promote ENplus is up to their product producer (they will have to adapt data sheet). Stakeholders are a bit skeptical regarding the added value in comparison with the DIN+. For them, it is important to be sure the system will be more efficient in particular in terms of protection of the label (avoid false ENplus). Stakeholders also estate Belgium is not the wrong example in terms of quality and we have to be careful to not complicate the market to solve non-existent problems, in particular under a competition climate. The DIN+ doesnt fully cancel the bad quality pellets due to the quality variation in winter (2) and the no consideration of the way to work (1). There is also problem of no registered mixtures and blends on production sites, traders or suppliers. From their point of view, the market is not transparent enough for the consumer. Few suggestions were added to improve the market quality: Quality of the handling and the delivery should be improved by training of the staff as a whole, in general less aware than the direction; There are still too much wrong storage practices in the households;

45

Delivery in bulk should be improved. Blowing practices and weighing system should be checked;

The pellets promotion should include an information campaign to answer the client fears for example fear of deforestation, breaking of the supply, price increase, distinction of pellets chains in the provided information (heat vs electricity production). Regarding agro-pellets future development, stakeholders have only few comments. Some of them think agro-pellets could have a future, others not a all. In the first case, the market could be in public or industrial sector. However, importers are testing combustion with solid agro fuels in their devices. Some installers predict more an increase of wood chips boilers sales. For them, wood pellets and agro-pellets will stay niche markets. For others, agro-pellets future will be led by the market rules: price and energy content in comparison with wood pellets.

4. Sustainability
Green certificate systems
In Belgium, three regional systems are in use to grant green certificates to promote and to support power production from renewable energy sources. In the Flemish region, green certificates are granted according to the energy balance of the supply chain by comparison with a reference system being a power plant firing natural gas with an efficiency of 55 %. On the other hand, in Wallonia, green certificates are granted based on proven sustainability according to CO2 balance of the supply chain and the same reference system as in Flanders 8. Each green electricity supplier is submitted to an energetic audit of the supply chain if he wants to obtain green certificates as an obligation from Belgian authorities. The audit aims at investigating sustainability of the raw material production and the energy balance of the whole supply chain 9. To answer to the authorities requirements, a verification procedure for the energy balance and sustainability of the wood pellets supply chain has been developed by SGS and Research Centre Laborelec 10. The SGS and Laborelec system is describe below (extract of EIE-EUBIONET III project: N. PIERET. 2009. Belgian report WP 4.3: Country report of different criteria for sustainability and certification of biomass and solid, liquid and gaseous biofuels, 43 p. www.eubionet.net):
Table 13
General characteristics: Laborelec certification procedure for the sustainable import of wood pellets

1. Van Stappen F., Marchal D., Ryckmans Y., Creahy R. & Schenkel Y. Green certificates mechanisms in Belgium: a useful instrument to mitigate GHG emissions, 2009, 6 p. http://www.laborelec.com/pages_files/Valbiom-Berlin-Green_certificates_Belgium-V4%20II%2055.pdf 2. CWaPE, Certification des sites de production dlectricit verte-Caractrisation des intrants biomasse, 2007, 2 p. http://www.cwape.be/servlet/Repository/Note_sur_la_caract%C3%A9risation_d.PDF?IDR=9354

3. Laborelec, SGS Belgium, Introduction to the biomass verification procedure, 2009, 3 p. http://www.laborelec.com/content/EN/Renewables-and-biomass_p83

46

Initiator system:

On the request of GDF-SUEZ/Electrabel, designed by Laborelec and SGS Belgium - Follow-up verification suppliers to GDF-SUEZ/Electrabel TPM/Fuel Procurement - Technical specifications and verification process: Laborelec - Inspection and independent reporting: SGS Belgium. SGS Belgium has been accepted as independent body to check the data all over the world. 2006 Meta-standard concept: - If biomass has a certified origin, the following certification systems are recognized: 1) Forest biomass: FSC, PEFC, CSA-SFM, SFI, FFCS, APSC, GGLS5. 2) Agricultural resources: RSPO, Agricultural EUREGAP, EU grown agricultural products, GGLS2 Agricultural Source Criteria. - If biomass has an uncertified origin: sustainability must be reported according to criteria derived from sustainability basic principles of the existing certification schemes FSC or RSPO (see principles below).

Coordinating party:

Initiation duration: Grade of integration:

Geographical coverage: Scope (feedstock included):

Sourcing: International, Use: national. Biofuels production from forestry or agriculture raw material and transport for energy production. Biomass production, pellets production and transport.

Value chain Mission or objective:

On behalf of Electrabel, Laborelec and SGS Belgium have designed a fast and cheap certification procedure aiming at gathering the whole set of data required for the grant of green certificates in Belgium (sustainability of the raw material origin and energy balance of the whole supply chain) as well as obtaining guarantees regarding biomass traceability and sustainability. Context (i.e. legal requirement, related policies):

Principles included: Criteria included: Indicators included:

Y N N

Belgium has committed itself to reduce the GHG emissions with 7.5 % in 2012. In addition, electricity sales are submitted to a renewable obligation of 6% renewable electricity by 2010. To support the production of green electricity, authorities implement regional green certificates granting systems. To grant green certificates to electricity produced from biomass, Belgian Authorities impose an extensive analysis of the bio-fuel supply chain: all bio-fuel suppliers must undergo an energy audit, identify their biomass resources and detail the energy balance of the whole supply chain. If the product would appear in contradiction with the generic sustainability principles, the CWaPE would have the rights to cancel green certificates. Indeed, CWaPE is the Walloon regulation body in charge of the green certificates granting and the market survey. Current status of system: In use. 30 pellets suppliers have already been screened by SGS. Planned activities:

47

Electrabel still negotiates with the Walloon Region for considering pellets suppliers separately as in Flemish Region. Structure of the system or initiative: Stakeholder participation: Commitment: Mandatory system to sell pellets to Electrabel for power production at national level. Pellets suppliers have to fill in a declaration form. The transport company in charge of the international transport has to fill in a declaration form too. These both declarations are considered as official documents which shall be verified by an independent inspection body.

Stakeholder integration:

Monitoring performance:

A local independent inspection body is granted by SGS International, the local independent inspection body being indeed generally a local division of SGS or a local subcontracting party. The inspector prepares an audit report based on a onsite visit and a fixed audit procedure form. The auditor verifies the data delivered by the pellets supplier with respect to the origin of the raw material, the characteristics of the pellet production and the energy consumption related to production and local transport. The inspector also checks the declaration of the transport company. All data and documents are then gathered in an Audit Inspection Report to be sent to SGS Belgium. SGS prepares a full Audit Report which comprises a check of the origin of the raw material, a check of the energy consumptions of the supply chain and a check of the technical specifications.

Chain of custody mechanism: Verification mechanisms:

Track and trace system. First, a supplier declaration form is filled in and signed by a pellets supplier. The first audit needs to be performed within 6 month after the pellets first burning in the power plant. SGS requires then the auditor to visit the site of the biomass production plant once a year to prepare a new report.

Further information: Removal of trade barriers Costs: The procedure is cheap: less than 0.1 % of the biomass fuel cost.

List of principles included: 1 2 3 4 5 Respect of legislation on forestry (afforestation and management plans). Respect of legislation, rights and responsibility for soil use. Respect of legislation, rights and responsibility for irrigation and water use. Respect of rights of local inhabitants. Respect of rights of workers (especially which ones dealing with the working children interdiction).

48

6 7

Respect of legislation and responsible management of the waste streams. Respect of environmental legislation (emissions in air, water and soils).

Laborelec, SGS Belgium, Country report on sustainability of natural resources, 2009, 3 p. http://www.laborelec.com/content/EN/Renewables-and-biomass_p83 Laborelec, SGS Belgium, Introduction to the biomass verification procedure, 2009, 3 p. http://www.laborelec.com/content/EN/Renewables-and-biomass_p83 Laborelec, SGS Belgium, Pellet supplier declaration form, 2009, 8 p. http://www.laborelec.com/content/EN/Renewables-and-biomass_p83 Ryckmans, Y., Andre, N., Novel certification procedure for the sustainable import of wood pellets to power plants in Belgium, 2008, 4 p. http://www.laborelec.com/content/EN/Renewables-and-biomass_p83 SGS Belgium, Energy Balance form, 2009, 2 p. http://www.laborelec.com/content/EN/Renewables-and-biomass_p83 Website: http://www.laborelec.com/content/EN/Renewables-and-biomass_p83

Belgian royal decree

In the Royal decree of the 5th of April 2011, the 4th article indicates that the origin of the raw material used has to be mentioned on the label. In addition, Article 5 mentions that the wood used to produce the pellets has not to be chemically treated and coming from sustainably managed forests as FSC or PEFC certified forests. Other labels can be used if they respect the same objectives than FSC or PEFC.

Current market situation

In Belgium, forests are certified PEFC in Wallonia (278,236 ha - 51 %) and mostly FSC in Flanders (16,000 ha - 30 %). 2 pellets producers are PEFC certified in Flanders, no producers are certified in FSC. Producers dont know currently wich share is certified PEFC or FSC in their raw material supply, when they buy sawdust on the market. However, they buy sawdust in Wallonia where forests are PEFC certified at 51 %. Stakeholders are in favor with sustainability criteria implementation but the level of complexity is different between them. It is difficult to imagine the consequences on the field for them. With the help of the green certificates system, there is already a check of the raw material sustainability and chain of custody emissions, it could be too complicate and time consuming for them to have a second system to fulfill (1). Few stakeholders ask that the whole chain of custody should be evaluate, included transports on the production site (1): for example, silos with automatic supply are not supported by the current emission evaluation system as they are the alternative to trucks using fossil fuel. The system should be also independent of the stakeholder size (3) or not (1). Finally, few producers are in favor with the integration of socio-economic criteria (1).

49

5. Conclusions and outlook

In Belgium, the raw material use to produce pellets is mainly sawdust. This causes difficulty for tracability as sawdust is often supplied as a blend by trucks to the pellets plant, when producer buys the raw material on the market. The Belgian stakeholders are cautious of quality and want to improve the market together. In Belgium, there are still bad quality pellets for sale but not the biggest part. Quality of Belgian pellets delivered in bulk has been improved last two years with the help of the stakeholders quality search. Bad quality is generally cheaper, coming from abroad and traded in bagged shape. Stakeholders are highly interested by the ENplus implementation in Belgium even if they wonder if it will be really more efficient than the DIN+ system. Market isnt transparent at all for customers regarding labels and EN+ is seen like the solution. Producers that are not involved in the residential market but only power production are currently not interested. There is many troubles due to supermarkets activity in pellets market. Blowing bad practices also lead to quality problems. There are discussions about conflict of use with non-energetic use, due to the green certificate system and dust emissions risks. Stakeholders who are experts would like to be better considered and represented. To answer this demand, the creation of a federation is in progress. Finally, federal administration, cautious of environmental aspects, has implemented Royal decrees that helps the quality improvement on the pellets market.

50

GERMANY
Pellet production in tone
Year
2005 2006 2007 2008 2009 2010

Plants

Capacity 380.000 900.000 2.000.000 2.400.000 2.500.000 74 2.600.000 DEPV

Production 250.000 470.000 1.100.000 1.480.000 1.600.000 1.750.000 DEPV

Source

DEPV

Pellet consumption in tone

Year
2005 2006 2007 2008 2009 2010

Heat 200.000 470.000 600.000 900.000 1.100.000 1.200.000 DEPV

Power 40.000 100.000 50.000 40.000 30.000 5.000 DEPV

Name of the power plants (& consumption) 0 0 0 0 0 0 DEPV

Source

Heating Devices
Year Boilers <50 kW (Residential) 2005 43.500
2006 2007 2008 2009 2010

Boilers >50 kW (Commercial) 500 2.100 3.000 5.300 6.700 7.500 DEPV, BDH

Stoves 20.000 25.000 32.000 41.000 65.000 80.000 DEPV, HKI

67.600 80.700 103.000 122.500 137.000 DEPV, BDH

Source

51

1. Introduction
Environmental protection is highly accepted in Germany, starting with the recycling movement in the 1980ies and founding its climax in the second nuclear phase-out coming into law in 2011 after the disaster of Fukushima fallout. Therefore, Germans are keen to overcome fossil energy: 80 % of the population thinks that use and development of renewable energy is very important. Since pellet heating systems were first sold in Germany more than ten years ago, the demand and the supply has increased steadily. The annual growth rate for pellet boilers installed was between 12 and 58 percent. The turn towards renewable heating is supported by federal and local government which offer various programmes for financial support and facilitation. The MAP-programme pays at least 2.000 EUR, when a fossil boiler is replaced by a pellet boiler. Also credits at reduced rates of interests are granted to house owners. Moreover, federal states offer various programmes for renewable heating. Wood pellets are taxed with only 7 % VAT instead of 19 %. But as media and politics focus on electricity instead of heating, development in the sector of efficient renewable heating systems has not sped up yet to the numbers necessary for CO2-reduction plans. Most systems used for solid biomass heating are classic single stoves and open fireplaces where energy is not used efficiently. Moreover, many central heating systems are technically not up-to-date anymore and should be replaced. But to the necessary replacement quota of 5 % is not reached yet. Still, theres a broad acceptance for the use of solid biomass for production of energy in Germany. More than 50 Mio. m wood is used energetically for electricity and heating purposes annually. Out of all renewables used for heating wood adds up to 70 % (wood chips, wood pellets, firewood etc.). Over 14 Mio. single heating devices need more than 24 Mio. m firewood. Therefore, wood is quite important for renewable energies in Germany. As the German governments aim ist o raise the amount of renewable energy used for heating from 9 % in 2010 up to 14 % in 2020, a further development of energy wood is necessary.

Figure 27 - Heat consumption in private households 2009

52

Struktur der Wrmebereitstellung aus erneuerbaren Energien in Deutschland im Jahr 2010

Gesamt: 136,1 TWh
biogene Festbrennstoffe (Haushalte): 53,4 % oberflchennahe Geothermie: 3,9 %

biogene Festbrennstoffe (Industrie): 15,0 % biogene Festbrennstoffe (HW/HKW): 5,3 % biogene flssige Brennstoffe: 3,0 %

tiefe Geothermie: 0,2 %

Solarthermie: 3,8 %

biogener Anteil des Abfalls: 8,7 %

Biogas: 5,6 % Klrgas: 0,8 %

Deponiegas: 0,3 %

Biomasseanteil* : rd. 92 %

* Feste und flssige Biomasse, Biogas, Deponie- und Klrgas, biogener Anteil des Abfalls; Quelle: BMU-KI III 1 nach Arbeitsgruppe Erneuerbare Energien-Statistik (AGEE-Stat); 1 TWh = 1 Mrd. kWh; Abweichungen in den Summen durch Rundungen; Stand: Juli 2011; Angaben vorlufig

Figure 28 - Structure of renewable heating in Germany 2010

Figure 29 - Use of energy wood in Germany

Unfortunately has the increase of anew installed pellet boilers slowed down last year. A reason for this is the irregular support by the Federal Government. The support by the market incentive programme is negotiated yearly and is therefore not reliable. A pause of the programme in summer 2010 has caused massive uncertainty among potential pellet heaters and installers which resulted in a massive slowdown in sales. The market has until now not fully recovered yet.

53

Figure 30 - Development of pellet heating systems in Germany

54

2. Pellet markets
Pellet production and capacity
In Germany, 60 companies with around 70 production sites for wood pellets have a production capacity of 2.7 Mio. tons per year. In 2010, 1.75 million t pellets were produced in Germany by which one quarter had to be exported because of insufficient domestic sales. About 85 percent of pellets were produced of saw rest wood. 15 percent of raw material was industry wood (round wood, which cannot be sawed). Most pellets produced in Germany are certified (ENplus/DINplus). In 2010, 83 % were certified A 1 for private use, of which 15 % were sold bagged, 68 % in bulk. 17 % of the total amount was sold as industry pellets. In 2011, they produced an estimated amount of 1.8 Mio. tons from which 1.4 Mio. tons were used in the country. The high inland production results in a security of supply even in long, cold winters as in 2009/2010 and 2010/2011. Additionally, prices are stable at a low level. The average price for wood pellets was 225 EUR/t in 2010 and 233 EUR/t in 2011.

Figure 31 - Pellet production and use in Germany

Most production sites are located in the densely wooded low mountain ranges in Germany. For pellet production, mainly residues from sawmill industry are used (85 %), meaning sawdust and wood chips, only 15 % account for round wood that cannot be sawed. Softwood is mainly used in order to produce better pellet qualities. Fast growing woods from agricultural production land are not widely used yet. Unfortunate for German pellet producers are rising prices for raw material: Sawdust has risen in price by 20 % in 2010, up to 115 EUR/tatro.

55

Usage
Around 1.4 Mio. tons were used domestically in 2011. That means that around one quarter of the overall production has to be exported since 2007. The broad availability of pellets is a good base to raise the number of pellet heating systems as the potential this renewable energy offers is not fully used yet.

Security of supply
As to the surplus production pellet traders are able to raise their stock up to 10 to 15 % of the yearly production volume. As pellet distributors are located all over the country, security of supply is no problem anymore. More than 600 traders sell wood pellets: large energy suppliers, specialized pellet traders and small-scale traders who added wood pellets to their assortment.

Pellet price
The price for wood pellets has undergone only moderate increase since 2002. The average annual rate of price increase was between 3.1 % (2002-2011), which corresponds to the European inflation ratio. The German market for wood pellets is independent of the international energy markets and speculations. It is moreover based on the basic mechanism of supply and demand. As to the vast number of small- and medium-scale producers as well as traders and the high amount of pellets offered, prices are likely to stay at the bottom level of the price range. In 2010, the average price of wood pellets in Germany amounts to 225 EUR per ton, in 2011 to 233 EUR per ton. Price advantage from pellets to fossil fuels (natural gas or heating oil) ranges between 40 and 45 %. The annual low is usually in the summer as the supply of pellets is high and demand low. Demand concentrates almost exclusively on A 1 quality for private use. As the single amounts traded are therefore small, there is no stock trade for wood pellets and the price is not influenced by speculations. Moreover, the geopolitical situation does not influence the market.

Figure 32 - Prices for gas, light fuel oil and wood pellets

56

Figure 33 - Price advantage pellets to heating oil

Figure 34 - Average price for wood pellets in Germany

3. Pellet quality and certification

ENplus in Germany
Starting in September 2011, the new European Standard for solid biomass replaced all existing norms (e.g. DIN 51731 for wood pellets). With the certification scheme ENplus the EN 14961-2 is being implemented in Germany since autumn 2010 by the German Pellet Institute (DEPI). In addition to the standards set by the European Standard, ENplus also certifies pellet traders in order to document the whole supply chain for wood pellets. Pellet producers and traders have accepted ENplus quickly and use the opportunity to show quality and competence to their clients. By the end of 2011, 16 pellet producers and 40 pellet traders, among these big trading companies, are certified. This means, that customers can buy ENplus pellets everywhere in Germany. DEPI supported

57

the market launch of ENplus with press and media work. It also offered marketing support to all companies certified. In 2010 1.75 million tons Pellets were produced in Germany. About 85 percent of the Pellets were produced of saw rest wood. 15 percent of the raw material was industry wood (round wood, which cannot be sawed). Most pellets produced in Germany are certified (ENplus/DINplus). In 2010 83 % of all pellets produced were high quality A1 pellets destined for private use. 1.55 million tons were certified with ENplus. By the end of 2011, DEPV expects more than two third of the overall production to come from ENplus-certified production sites. More than half of the domestic trade volume in Germany is already certified according to ENplus.

Figure 35 - Pellet production and use in Germany, including ENplus pellets

58

Heating installers specialized in pellet and biomass heating

In order to raise public awareness and acceptance of pellets and biomass, the German Pellet Institute (DEPI) and the German Association for Sanitation, Heating and Air Conditioning (ZVSHK) started a campaign to further educate heating installers in order to become a company specialized in pellet and biomass heating. The campaign is supported by various federal heating associations as well as the national chimney sweeper association (ZIV) and DEPV members (several pellet stove, boiler and pellet producers). Heating installers are the most important stakeholders when it comes to direct customer contact. Only with highly qualified and personally convinced heating installers it is possible to raise the share of pellet heating systems in Germany. Starting in April 2011 more than 1,000 heating installers took part in the qualification. In order to attend a half-day course organized by DEPI, participants had amongst other things to proof that they have installed at least five pellet boilers and have successfully passed a technical workshop about pellet or biomass heating systems. During the course participants learn about sustainability, forest and renewable heating as well as pellet production, storage and quality. For pellet quality ENplus playsan important role and thus is covered in detail during the course. Moreover, information about the new law for emission control and fire prevention is given. Facts, figures and lines of arguments to fight the most common prejudices regarding pellets are provided as well as marketing support. After having taken part in the course, participants can be found in an online database by postal code for three years before they have to take part again (www.pelletfachbetrieb.de). A monthly newsletter informs all participants about the latest market development, price indices and issues concering ENplus and its broad availability nationwide. A marketing campaign focusses on the issue quality for pellet heating and underlines the importance of the specialiced heating installers as well as certified pellet traders for a smooth, consumer-friendly and professional possibility to heat responsibly. In 2012 DEPI and ZVSHK have scheduled ten courses all over Germany. Aim of the campaign is to qualify 4,000 heating installers by 2015.

59

Results of stakeholder enquiry

In order to gather data for the PellCert questionnaire in Germany, the English version of the questionnaire was translated and adapted to country-specific requirements. It was then sent out by email (as a pdf-file) to all DEPV members belonging to the different industry sectors as well as to installers who participated in an advanced training to become specialist for pellets and biomass heating organized by the German Pellet Institute (DEPI) and the German Association for Sanitation, Heating and Air Conditioning (ZVSHK). The overall return rate was 32 percent which accounts for 53 questionnaires returned For almost 80 percent of boiler manufacturers and distributers poor pellet quality is the main reason for problems with the heating system. Still, only half of them (46 %) are willing to attach a sticker recommending ENplus on their product. In contrary, most installers (61 %) believe that poor pellet quality causes only a marginal share of those problems (see fig. 3). The main reasons for their customers to call for help are other reasons not related to pellet quality (40 %), followed by too much fines (23 %) and slagging (9 %) (see fig. 4). Almost all installers (87 %) recommend a certain pellet quality to their customers, but only a third suggests to use ENplus certified pellets, compared to 55 percent who recommend DINplus For pellet traders with bulk delivery too much fines is the most common problem they have to deal with. It accounts for more than half of all problems (56 %). The reason for too much fines is very often a defective storage room (46 %) or a too long filling pipe (27 %), according to pellet traders. According to pellet traders, ENplus pellets delivered on bulk are mostly or exclusively A1 quality. Three out of five traders also deliver a maximum of 20 percent of A2 or B quality. Many producers use several certification systems in coexistence; ENplus as well as DINplus and, in addition, sometimes also NORM, PEFC and FSC. Those numbers show that the relatively new ENplus has reached a market share similar to DINplus at least among members of DEPV.

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4. Sustainability
Sustainability becomes more and more important in public discussion about energy wood and energy turnaround. Most people are not aware that an overexploitation of German forests is forbidden by law. The Bundeswaldgesetz (BWaldG Federal law for forests) states sustainability as a major principle for all forests in Germany. All foresters have to oblige to the law and therefore only can log as many trees as grow back. The German Bundeswaldgesetz is often referred to as best-practice worldwide, as it combines sustainability with ecological and economical requirements. Germany has a large stock of wood in hand. From its 3.6 billion cubic meters of wood emerges a growth of 120 Mio. m3 every year, including bark. Only 60 % of the growth is used meaning, that forests are growing constantly. 70 Mio. m3 of log wood is cut every year. From this amount, around 30 % residues (saw dust, wood chips, saw mill residue) can be used for pellet production theoretically. Right now, only 4 Mio m3 is used for pellets by 70 production sites. Although the demand for wood pellets has increased in the last years, German forests are not even close to overexploitation. Moreover, the supply with sawdust suffices for a stable pellet production in the next couple of years, even if the number of boilers increases. Even so, pellet producers are already exploring alternatives for raw material, especially from Short Rotation Coppice (SRC) with cottonwood or willow. DEPV and NABU, which is one of the oldest and largest environment associations in Germany (Nature and Biodiversity conservation Union), have agreed in a position paper on sustainable forests not to not use wood from very old trees, valuable biotope structures or clear cutting. Within the ENplus certification scheme, pellet producers have to give proof about their sources of raw material and inform the certification body about raw material from certified sources like FSC or PEFC once a year. In a next step pellet producers will have to proof that a certain amount of raw material comes from certified sustainable sources. Moreover, in 2012, pellet producers also have to inform about carbon dioxide emissions caused during the production process. The European Pellet Councils standard figures can be used for this, but its also possible to collect individual data for energy consumption of the pellet production plant and the energy source used. In case of individual data, the check on carbon dioxide emissions becomes part of the annual audit.
Figure 36 - Supply and use of wood from German forests

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5. Conclusions and outlook

By the end of 2011 already two third of the overall production of wood pellets in Germany is certified with ENplus. Those pellets come from 16 pellet producers. About one third of the domestic trade volume is labelled with ENplus and distributed by 40 pellet traders, among these big trading companies. After only one year it is possible to buy ENplus certified pellets everywhere in Germany. The acceptance of the new certification scheme is generally high: pellet producers are using ENplus and DINplus parallel and half of all boiler producers are willing to recommend using ENplus pellets for their products. Installers are not quite familiar with ENplus yet; half of them still recommend DINplus pellets where the supply chain is not certified as a whole. One third of installers suggest to their clients to buy pellets with the ENplus label. This proofs, that installers are very important multipliers to spread the news about ENplus. Thus, the qualification campaign initiated by DEPI and ZVSHK is an excellent way to inform installers in details about the importance of high quality pellets and to deliver continuously new information about ENplus. Quality in pellet heating is and will be an issue in the future. The industry sector has to make sure that high quality pellets are available nationwide. With ENplus this challenge has been met very successfully during the short time of one year. The campaign to qualify installers for pellet and biomass heating systems plays also an important part to ensure quality, both for the boiler or stove itself, but also for storage and professional advice and planning in the first place. The main challenge in Germany for the whole industry sector is to raise the exchange rate of insufficient fossil heating systems with modern biomass heating systems, especially for wood pellets. A main factor for this is the future development of the pellet price as well as the development of other energy prices, particularly heating oil and natural gas. But also the political framework, official funding and energy saving laws are important. Overproduction was an issue in the last few years and as long as there is no significant rise in the numbers of pellet boiler and ovens installed domestically, it will be a problem in the future. Regarding the European market Co-firing becomes more and more interesting. As there is no official funding or economic incentive (CO2 certificates) it is not profitable in Germany. The question of pellets for power or heat is therefore marginal and only of importance for pellet producers who seek new markets outside of the country.

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SPAIN
Pellet production in kt
year 2005 2006 2007 2008 2009 2010 Source of information Plants 16 21 23 24 27 29 Avebiom Capacity n/a n/a n/a n/a n/a 900 Avebiom Production n/a n/a n/a n/a n/a 150 Avebiom

Pellet consumption in kt (large scale)

year 2007 2008 2009 2010 Source of information Heat n/a n/a n/a 90 Avebiom Power 0 0 0 0 Avebiom Name of the power plants (& consumption)

Heating Devices
year 2006 2007 2008 2009 2010 Source of information Burners installed < 25 Burners installed 25 kW ~ 500 kW ~ 243 517 342 607 510 705 578 706 1185 858 Avebioms National SBB Avebioms National Biomass Boiler Biomass Boiler Observatory Observatory A New installations (Boilers > 60 kw) ~ 477 1676 4476 9840 15755 Avebioms National Biomass Boiler Observatory

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1. Introduction
Renewable energy in Spain has developed into a growing share of the energy system, which is evidenced by the coverage of demand, expressed in terms of primary energy as final. This has seen a significant rise from 2005. In 2009, renewables have accounted for 9.4% of primary energy supply, and exceeded 12% in terms of gross final energy. Electricity production from renewable sources, oscillating due to climatic variations that affect water resources, shows a more stable and upward trend since 2005. In the past ten years, electricity from renewable sources has experienced an increase of over 40%, reaching in 2009 24.7% of gross electricity production in Spain. According to objectives settled in the Spanish REAP, Spain should be consuming 9 to 11 million tons per year of biomass for heating purposes by 2020. An affordable goal, taking into account all Spanish biomass that every year remains in the forests (it is being used only 29% of the annual available biomass stock for all industrial uses of wood). In Spain, the Renewable Energy Plan (PER) 2005-2010 the IDAE provided that, in 2010, biomass would account for 57% within a global contribution of renewable energy sources (RES) of 12.6% on energy consumption primary. The fact is that biomass has only about 500 MW, compared with 1,317 MW expected in the period 2005 to 2010. Biomass consumption in the industrial sector from 2000 to 2008 have stabilized its upward trend in key subsectors, but the changes from 2005 in some companies in the pulp and paper sector, the new cogeneration projects in pellet plants and in agri-alimentary sector, coupled with measures to boost renewable thermal energy (such as incentives or credit lines) allows to establish a significant increase of biomass consumption in the industrial sector. Currently, the consumption in the industrial sector was 1,478 ktoe in 2008. Concerning the evolution of consumption in the domestic sector, from 2003 to 2008, the market has begun to taking off for modern thermal biomass for domestic purpose, agricultural applications, developments in public administration and services sector. The biomass consumption for the household sector and miscellaneous uses was a total of 2,138 ktoe in 2008. The use of biomass in the domestic sector is the most competitive application and in which you get the biggest savings of greenhouse gases (GHG) emissions and energy efficiencies (90%), but its development has been slowed down by the lack of incentives to cover the initial risks of implementation related to high investment costs of equipment, uncertainties in the supply and maintenance of facilities. The amendments proposed in the RITE (heating in buildings regulations) for biomass facilities have provided a major boost, although the lines of subsidy for the installation are important in the allocation 64

unit, between 25% and 40% - but count with very little volume of money. The result is that there are very few facilities that benefit. Biomcasa program, the next program funding distributed heating (GIT) and the municipal district heatings will be an important point for the impulse of thermal applications, especially in small and medium rural municipalities linked to resources. The text of the NREAPs recognizes that small centralized heating networks 5 MW, mainly newly established can be significant in contributing to the objectives. However, in Spain the development of electrical appliance has been slowed down by a lack of support from administrations and unattractive power premiums in the tariff regulation for biomass plants. The profitability of these plants has been insufficient in the current frame to offset the risk of technology and supply they have. Barriers that have limited its development: Insufficient remuneration according to the RD 661 Underdeveloped energy crops. Failure to ensure an adequate supply in the medium and long term biomass plants.

2. Pellet markets
Production
Nowadays in Spain there are 30 pellet factories with a capacity over 10.000 t/y working or ready to start operating in few weeks; several projects at different stages of development; and 7 plants that have closed, been sold or stopped producing during more than a year either. Moreover there are an undetermined number of small scale plants, under 4.000 t/y, spread all over Spain, usually related to small or medium size saw mills or carpenters. Considering all factories (even those closed but not dismantled) there is a capacity of production of around 900.000 t/y. although actual production is still far from reaching that potential. According to companies, production is increasing slowly every year and nowadays plants are working at 30% of their capacity and we could estimate that for 2012 they will produce around 300.000 t/y. If we take into account the data from Apropellets, the Spanish production for 2010 was around 150.000 tons. According to the producers there are insufficient boilers and stoves installed to absorb the whole production of pellets in Spain. In general the existing factories in Spain have a small production capacity compared to their European counterparts, while the largest Spanish plants have a capacity close to 35,000 tons annually in the rest of Europe the average size of plants is greater. The larger plant in Spain is Biomass Forestal S.L. located at As Pontes with a production capacity of 60,000 tons producing pellet of industrial quality. Also its surprising that most of the Spanish pellet plants are trying to reach is the domestic consumer market. The reason for this industrial pellets shortage may be the abundance in Spain of other biomasses that are cheaper alternatives such as olive cake, straw, husks, etc. 65

In Spain, several plants have closed in the last years, either because they were obsolete or because the real market has not met expectations and consequently the companies havent survived to the lack of sales. By contrast, in the coming months are going to inaugurate many projects of medium size (30,000 tons) pelletizing plants, the most immediate in its opening are: Aprovechamientos Energticos del Campo in Aldeaquemada (Jan), Pellets Asturias in Tineo (Asturias), Energas Renovables de Tarazona (Albacete), Burpellet (Burgos) and Ribsa in Huerta del Rey, (Burgos). Nowadays the trend is to combine the pellets production with an ORC to generate electricity which is an interesting way of being more cost-effective. This is the case in the Tineo Tarazona factories. We have analyzed the market prices of pellets in Spain through an online and telephone questionnaire to the pellets distributors and manufacturers. The average price of the 15 kg pellets bag is about 4.10, ranging from 3.50 up to 5.78 (VAT included) for pellets with quality assurance. Buying a whole pallet is a more economical option for home use. The pallet of bags is around 245, a pallet of bags can be made up of about 70 or 75 sacks and can deduct up to 8% the price of each bag (about 50 cents per bag). When quality is not guaranteed and / or the pellet is not certified the price is usually lower. Regarding the bulk price of the pellets for users with a silo, the price per ton is about 225. It is important to consider transport costs may increase the final price, and these depend on the proximity of a distributor, but if you have a provider within the autonomous community, the addition will be about between 80 and 100 for service . Producers in general agree that there are not enough boilers and stoves installed to absorb the production of pellets in Spain. This is why most of the plants dont work at its maximum and big quantities are exported. Another barrier to market development is the existence of an underdeveloped distribution network that increases transportation costs making them an important part of the pellets final price.

Consumption
As mentioned previously, the pellet market in Spain is quite limited and insufficient to absorb all the production, which requires that a high proportion of this is exported. Domestic quality pellets are mainly exported to Portugal, Ireland, United Kingdom, Italy and France. Italy is the main buyer importing 60% of the total Spanish annual production in bags of 15 kg that get there by trucks. Producers point out that half of the benefits are lost because of the logistics and they wish to see a more developed biomass heating market in Spain that would allow an increase in pellet demand. Regarding industrial pellets, customers are mainly in the UK, Belgium and Sweden. Its very difficult to estimate the total consumption of wood pellets in Spain since there are no official figures and producers are reluctant to make public this kind of information. Last data from producers

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association (APROPELLETS) as previously mentioned is that Spain produced 150.000 tons in 2010 and as per their information more that 60% was exported. Other figures from Propellets Austria and Pelletsatlas situated the Spanish internal consumption in 95.000 tons in 2010. We have tried to make an estimation with the boilers/stoves installed capacity installed in Spain since some years ago, Avebiom has started a surveillance project called National Biomass Boiler Observatory (NBBC) which currently has around 25,000 registered installations in Spain with a cumulative installed capacity which nowadays is nearly 1,500 Mw. in which are included both industrial and domestic boilers.

We have classified these boilers into two categories, installations below 1 Mw that corresponds to the majority of domestic installations and over 1Mw which are the very big industrial boilers that most of them, about all in Andalusia, work with Olive cake, Olive stones or wood chips (olive tree pruning, pine, etc.).
Table 14

Region Andalusia <1 MW Rest of Spain Total Andalusia >1 MW Rest of Spain Total

N installations 22.409

MW 466,9

1.802 174,6 24.211 641,5 27 317,7 104 517,5 131 835,2

To have an estimation of how much kilograms of biomass is consumed per Mw we are going to assume that all these megawatts below 1 <Mw are thermal. Considering a PCI half of 3,500 Kcal / Kg., A yield of 85% and an annual use of about 1640 h / year (heating), results in a consumption of approximately 250 tons of pellets (with a humidity of 8 to 10%) per MW. Also we have to take into account that we estimate that the National Biomass Boiler Observatory covers approximately 40% of biomass boilers we supposed are installed in reality. Regarding the fuels, we estimate that in Andalusia 25% of the domestic boilers/stoves consume wood pellets and in the rest of Spain we can say that 70% of the domestic boilers/stoves consume wood pellets. Considering all these factors: Estimation of pellet consumption for Andalusia = 250 tons/Mw x 466,9 x 0,25 x 100/40 = 72.953 tons 67

Estimation of pellet consumption for the rest of Spain = 250 tons/Mw x 174,6 x 0,70 x 100/40 = 76.388 tons

If we sum the two ciphers we have estimation for the Spanish pellet consumption of about 149.341 tons/y. that represents half of the production of the 2010

3. Pellet quality and certification

AVEBIOM along with an independent laboratory implemented a secret quality test of the pellet market in Spain. The pellets produced in Spain are generally good quality from the standpoint of chemical and energy, but obviously it would be advisable for producers an impact on improving the physical aspects such as durability and fines content for their products can classify into categories A1, A2 and B quality of ENplus certification. Most of the tests showed high pellet quality, with energy content superior to 16,5MJ/Kg and ash content below 0,5%. Actually, there are already 4 producers certified under ENplus A1. Carles Vilaseca, president of Apropellets and owner of a pellet plant in Catalonia, points out 2 key aspects that could determine the future of the industry: biomass mobilization to ensure raw material and competitiveness of the companies to ensure a normalized product to the consumer. And also very important too: make biomass for heating use better known among the people for a larger, cheaper and more efficient distribution. Most of the pellet producers are unhappy about the high production costs, mainly due to electricity, and some have decided to install ORC units to compensate this cost. Meanwhile, last 4 years the Spanish pellet price kept at the same level, so there was less profit for the plants.

4. Sustainability
The main sustainability certification schemes developed in Spain are:

Related to forest industry

PEFC, The Programme for the Endorsement of Forest Certification. PEFC works throughout the entire forest supply chain to promote good practice in the forest and to ensure that timber and non-timber forest products are produced with respect for the highest ecological, social and ethical standards. Thanks to its eco-label, customers and consumers are able to identify products from sustainably managed forests. 68

FSC, The Forest Stewardship Council FSC is a certification system that provides internationally recognized standard-setting, trademark assurance and accreditation services to companies, organizations, and communities interested in responsible forestry.

Related to general companies

ECUATOR PRINCIPLES Any project financed by a financial entity needs to fulfil with these principles, that seeks for the sustainability of the total project. The Equator Principles (EPs) are a credit risk management framework for determining, assessing and managing environmental and social risk in project finance transactions The Principles apply to all new project financings globally with total project capital costs of US$10 million or more, and across all industry sectors. In addition, while the Principles are not intended to be applied retroactively, we will apply them to all project financings covering expansion or upgrade of an existing facility where changes in scale or scope may create significant environmental and/or social impacts, or significantly change the nature or degree of an existing impact.

Area, share and potential wood fuel supply from certified forests
In Spain, the ciphers of certified forest area by PEFC (June 2009) amounted to 1.123,8 thousand hectares and by FSC system up to 126,8 thousand ha., Representing an estimated total area of 1241 ha. (91% PEFC and 9% FSC), meaning 6.8% of the Spanish forest surface. Regarding the situation in the EU, we see how Spain is the eleventh country with more certified forest (1,5% of the total EU-27), with Finland (28.3% of total), Sweden (23.9 % of total), Germany (10.6% of total) and Poland (9.5% of total) leading.

When analysing the percentage of certified forest area, Spain are, with Italy the seventh country with lowest rate, ahead of Portugal (5%), Bulgaria (2.9%) and Greece (1%), compared to Finland (92.5%), Poland (76%), Slovakia (72.3%), Czech Republic (71.2%) and Germany (70.3%).
Table 15 - Forest surface with FSC, PEFC certification and Total of the EU countries and the world. Total certified forest Certified forest Certified forest Total certified surface * (thousand surface FSC surface PEFC forest surface * ha) compared to (thousand ha) (thousand ha) (thousand ha) EU-27 451,7 7.338,00 5,1 1.955,80 7.789,70 1.960,90 10,6 2,7 Total certified forest surface (thousand ha) compared to wooded forest surface** 70,3 50,8

Region

Germany Austria

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Belgium Bulgaria Cyprus Denmark Slovakia Slovenia Spain Estonia Finland France Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal United Kingdom Czech Republic Romania Sweden Total UE-27 World 9.736,00 25.349,20 114.408,70 6.990,00 1.620,90 1.082,90

16,8 104,4 0 110,6 174,1 1.220,60 270,8 126,8 1.123,80 9,6 20.806,20 16,6 4.999,40 36,6 251,9 448,6 48,8 976,9 18,8 0 151,6 225,4 1.503,40 53,3 1.833,10 917,5 7.889,40 48.319,00 223.656,40

281,1 297,9 0 104,4 0 215,3 325,8 1.394,70 0 270,8 1.250,60 0 1.082,90 20.815,70 5.016,00 0,00 0,00 251,9 0,00 448,6 630,2 678,9 0,00 1.620,90 0,00 976,9 26,2 0,00 0,00 151,6 0,00 6.990,00 0,00 225,4 0,00 1.503,40 1.886,40 0 917,5 17.625,50 73.668,20 338.065,20 45 0 36,6 0

0,4 0,1 0 0,4 1,9 0,4 1,7 1,5 28,3 6,8 0 0,3 0,6 0,9 2,2 1,3 0,1 0 0,2 9,5 0,3 2 2,6 1,2 23,9 100

44,7 2,9 0 65,2 72,3 21,4 6,8 47,4 92,5 32,2 1 12,7 67,1 6,8 55,1 46,5 51,8 0 41,5 76 6 52,8 71,2 14,4 64 47,3 8,6

* Estimation of area by summing certified forest land by PEFC and FSC, without considering the possible existence of surfaces that have both systems certified. ** Calculated wooded area according to FAO (2005) except for Spain with IFN3 data.

At the national level, highlights Castilla y Leon that has certified 511,6 thousand ha (41.2% of national total), Andalusia has 233.6 thousand ha (18.8%) and Navarre with 150 000 ha (9.1% ). Navarra is the region with a higher proportion of certified forest surface (32.4%), followed by La Rioja (28.2%), Castilla y Len (17.2%) and Basque Country (15.8%). The Autonomous Communities without certified forest area Baleares, Castilla la Mancha and Madrid.

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Table 16 - Certified forest area by FSC, PEFC and Total by Autonomous Community and total forest area, 2009. Certified % Total Total Certified Certified % Total certified Certified Certified forest surface certified forest Autonomous forest surface forest surface forest surface forest surface forest surface PEFC total surface.* Community (CC.AA) * (ha) FSC compared to FSC (ha) PEFC (ha) certific. compared to wooded surface total certific. total Spain CC.AA. (%) CC.AA. (%) ANDALUCA ARAGN ASTURIAS BALEARES CANARIAS 77914,00 333,00 0,00 0,00 1635,00 155658,00 78,00 6200,00 0,00 0,00 22556,00 500943,00 0,00 74833,00 222,00 104972,00 47861,00 0,00 10070,00 136394,00 62810,00 1219,00 1123816,00 233572,00 411,00 6200,00 0,00 1635,00 22556,00 511597,00 0,00 86126,00 490,00 104972,00 47861,00 0,00 10070,00 149971,00 62810,00 2294,00 1240565,00 33,40 81,00 0,00 0,00 100,00 0,00 2,10 0,00 13,10 54,70 0,00 0,00 0,00 100,00 9,10 0,00 46,90 9,40 66,60 19,00 100,00 0,00 0,00 100,00 97,90 0,00 86,90 45,30 100,00 100,00 0,00 100,00 90,90 100,00 53,10 90,60 100,00 12,10 41,20 0,00 6,90 0,00 8,50 3,90 28,20 0,00 0,80 32,40 5,10 15,80 0,20 0,30 6,80 0,00 3,20 18,80 0,00 0,50 0,00 0,10 1,80 10,50 17,20 0,00 5,30 0,00 7,50 8,80 0,00 1,40 0,00 1,20

CANTABRIA 0,00 CASTILLA Y LEN 10654,00 CASTILLA LA 0,00 MANCHA CATALUA 11293,00 EXTREMADURA GALICIA LA RIOJA MADRID MURCIA NAVARRA PAS VASCO COMUNIDAD VALENCIANA TOTAL 268,00 0,00 0,00 0,00 10070,00 13577,00 0,00 1075,00 126819,00

*Estimated area by the sum of the certified forest area by FSC and PEFC, regardless of the existence of possible surfaces that have both certificates, except for Murcia, which has 10,070 certified by both systems

Companies with FSC/PEFC Chain of Custody certificate

The number of Spanish companies certified in the chain of custody by NGOs FSC and PEFC is 375 and 800 respectively and the number of hectares certified amounts to 143,446.39 ha and 1,442,366 ha respectively.

The sort of business that requires this type of certification are wood-related businesses in all states, from the origin (the tree on the mountain) to the finished product (table).

The main activities developed by these companies are:

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Merchants and bidders Sawmills Pulp and paper Graphic Industries Manufacturers (furniture, boards, ...) Lumber and construction

Lately, the growth is more appreciated on the certified forest area than in the number of companies that develop and market forest products coming from these forests, and within these companies there is a greater implementation of the chain custody between the industries of primary processing of wood, while is still low in the presence of second transformation.

5. Conclusions and outlook

It seems the sector continues to develop raising the production with According to Spanish producers, ensuring the quality of pellets is a major factor for increasing pellet penetration in the domestic thermal market. Everyone agrees on the need for a certification system that allows the user to easily recognize the characteristics and use of the product you are buying.

AVEBIOM, the Spanish Biomass Association, is the national association to support the certification system that manages the brand in Spain, and AENOR is the entity that certificates ENplus. So far Avebiom has already been contacted by about twenty companies that have expressed interest in the certification process which there are 15 producers that represent the 35% of Spanish production capacity installed (about 315,000 tons) In Spain, the first factories to have achieved the first certification are Pellets Asturias SL located in Tineo (Asturias), Enerpellet for their factories in Muxika and Sahugo; BIOTERNA (Biomas Trmica de Navarra) situated in Sangesa (Navarra) and Pellets y Virutas de Galicia.

AENOR has certified that Pellets Asturias comply with all requirements for the best planned by the certification system, the ENplus A-1, becoming the first producer to get the quality certification in Spain. The factory has a production capacity of 30,000 tons of wood pellets, which provides approximately 20% bagged in bags of 15 kg., 20% in big-bags and the remaining material is sold in bulk.

A few weeks later, Enerpellet fulfilled all the formalities to certify that its two factories comply with the 72

quality requirements for Class A-1 of ENplus certification. The production capacity of both plants can reach up to 60,000 tons, and from this quantity, about half will be sold bagged

The next two factories to get the certification were Biomasa Trmica in Navarra with A-2 quality pellet and Pellets y Virutas de Galicia with A-1 quality. These factories have a production capacity of 12,000 and 14,000 tons respectively.

6. Result of enquiries
The results of PellCerts questionnaire which was sent to various companies are classified according to their business in the following sections:

PELLET PRODUCERS
Fourteen questionnaires were received from the following producers: BIOTERNA, COPROSOL, ECOWARM, ERTASA, NATURFOC, PELLETS ASTURIAS, REBROT I

PAISATGE,CALORPELL, AMATEX, SARMAN, HIJOS DE TOMS MARTN, FARPLA, ENERPELLET, APROVECHAMIENTOS ENERGTICOS DEL CAMPO. Approximately the half of them have a production of 5,000 t / y, while the rest are between 5,000 and 50,000 t / y, being all concentrated in a single production center and only two of the producers say that this production is integrated into a sawmill. Regarding the raw material used, the answers are widely spread between wet sawdust, dry sawdust and wood chips, being those last responses more common. Only four of the producers have a pellet certification. The most common certifications are ENplus, DINplus and PEFC. All the companies which are not certified are planning plan to do in ENplus although they claim of some problems that are the consequence of not having done it before. These problems are mostly the ignorance of market standards and that both, producers and consumers, do not know what to do. Almost everyone is answering that has enough information of ENplus but there were three producers that say that they dont have enough. Regarding the raw material that coming from certified forests, we had all kind of answers varying from 100 % up to 0 %. When asked about making obligatory a few sustainability criteria, some of them answered that it should depend on the size of pellet producers/traders and that it should be stricter. Other producers

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think that, at least, it should be required the label guaranteeing that wood comes from certified forests. Finally, it was asked about what topic they would like to receive information and all the answers were quite dispersed among the different options offered.

PELLET TRADERS WITH BULK DELIVERY

We got the answer of 4 companies: PELLETS ASTURIAS, FACTOR VERDE, ENERPELLET AND CALORPEL. The volume of pellets commercialized as bulk distributors is two companies less than 10.000 t/y and two more than 10.000 t/y Regarding the quality of these producers, they comprise the three types (A1, A2 and B) and the percentage of pellets distributed in bags goes from 95 % to 30 % (against pellet in bulk). Three traders think that it is between relevant and very relevant a suitable quality of pellet and distribution for the satisfaction of the consumer, also they think that 50 % of the distributors do not offer a suitable quality of pellet and distribution, being the excesses of fines and the slag appearance the most frequent problems of quality. The ENplus certification is well known by all of them and their opinion about the system is that constitutes a good way of homogenizing the quality of the product to enhance trust in the final consumer. Also they think that the Enplus label means a distinction sign against the competition. Finally, when we asked if they wanted to be kept on informed they answered positively about all the topics which we proposed.

PELLET TRADERS WITH BAG DELIVERY

Seven traders answered this part of the questionnaire: BIORECAM, BIOERCAM, IBERPELLET, PELLETS ASTURIAS, SATIS, ENERPELLET, CALORPEL AND CARSANBIO All the traders asked said that its volume of traded pellets is below 10.000 t/y and also they believe that the pellet quality and distribution quality are extremely relevant for consumer satisfaction. In addition they think that more than half of pellet production does not reach the requirements EN 14961-2 quality A1, considering among the most important quality problems the fines and ashes excesses, slag, length and durability. Four of the suppliers request quality certificates in pellets they sell. Usually they ask for ENplus and DINplus.

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All traders are interested in receiving information of all the topics presented in the questionnaire.

BOILER MANUFACTURERS/DISTRIBUTORS
Questionnaire was answered by 8 boilers distributors / manufacturers: AEMA, PALAZZETTI, HARGASSNER, PARADIGM, SATIS, SISTEMA INFORMACIN BIOMASA S.L, CARSANBIO, KAPELBI Most of them answered that they believe that low quality of pellets on the national market causes the majority of the problems in boilers and all of them recommend to theirs clients buying certified pellets. All of them would be willing to place an ENplus informative leaflet in the user's guide and most of them would even place a sticker recommending the use of certified pellets on their boilers. Regarding the role that will have the pellets made with agricultural raw material, the answers are much distributed between for heating in homes and heating for companies / commerce, although there are some of them who answered that they will not have any relevancy. All of them are interested in receiving information of all the topics presented in the questionnaire.

BOILER INSTALLERS
Only one installer responded to this questionnaire: IMENER They consider pellet quality very important for the proper working of a boiler. Boilers they install cost between 4000 and 6000 and although they havent had problems in their installations, they think that pellets quality affect in the possible mal function problems. This installer thinks that one of the main reasons consumers ask for help is that pellets (or other biomass) do not burn properly. This installer uses to advice his clients that they should use good quality pellets for example ENplus certification. Finally the installer requests for information about all the topics proposed in the questionnaire.

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FINLAND
Pellet production in 1, 000 tons
year 2005 2006 2007 2008 2009 2010 Source of information Plants
20 24 25 29 29 27

Capacity
520 640 660 700 700 650

Production
192 259 326 373 299 290

SPE

SPE

Metla/VTT

Pellet consumption in 1,000 tons

year 2005 2006 2007 2008 2009 2010 Source of information Heat
55 87 117 151 156 170

Power 0 0 0 0 0 0 SPE

Name of the power plants (& consumption)

SPE

Heating Devices
year 2005 2006 2007 2008 2009 2010 Source of information Boilers <50 kW (Residential) 342 000 342 100 342 600 343 100 344 200 345 200 Statistics Finland/municipalities Boilers >50 kW (Commercial) 62 000 62 000 61 500 61 700 61 600 61 600 Statistics Finland/municipalities Stoves/ovens (sold annually), stock ca. 2,9 million na na na 53 000 43 000 52 000 Fireplace Association in Finland (TSY)

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1. Introduction
Finland relies traditionally on biomass on heating houses and on large scale heat and CHP production. The bioenergy is high on the agenda in Finland where the share of renewables on final energy consumption is currently 29% and ca. 83% of that accounts for bioenergy (Ministry of Employment and the Economy, 2011). The national target for renewable energy in 2020 is 38% of final energy consumption. Energy demand of domestic houses in Finland is ca. 34 TWh (122,400 TJ) annually. Heating with wood on small houses produces ca. 12 TWh (43,200 TJ) annually, ca. 35 % of all heating energy which is the highest share of any energy. There is a long tradition of heating with wood in Finland. Historically wood stoves have been used as the main heating for centuries and there still are ca. 2.9 million wood stoves, ovens and other fireplaces used for primary or secondary heating, on a country of 5.4 million inhabitants.
Figure 37 RES in FI
Graph 1. Renewable energy in Finland. Source: VTT.

On 20th century the use of wood on central heating appliances has risen up. There are ca. 105,000 houses in Finland which are heated primarily on wood boilers. However the amount will be likely to increase in future as there still are more than 300 000 buildings that are heated with light fuel oil. Additionally ca. 7 TWh (25,200 TJ) of energy is produced with wood is used for district heating and CHP production in Finland. There are ca. 250 larger heat and CHP producers and ca. 500 smaller than 5 MWth heat entrepreneurs in Finland. Forest industry produces great amount of bioenergy with black liquor. In addition the industry benefits other energy products, as illustrated on Graph 2. Bioenergy is well acknowledged and traditional way of heating. Forestry in Finland is profoundly established and maintained sustainably. The use of biomass is promoted through and investment aid to homeowners to shift from electricity or oil heating to for example to wood or pellet boiler heating.

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The use of biomass for CHP and large district heating is rapidly increasing to replace fossil fuels. This increase has induced more discussion on the availability of biomass for energy and the competition between different biomass users. Public and scientific discussion on sustainability issues and CO2-balance has evolved recently in Finland too. It is though commonly acknowledged that the CO2stock within the Finnish forests is growing faster than the use of biomass decreases the stock. Finnish Pellet Energy Association (SPE) represents the whole pellet sector in Finland. 40 members are the manufacturers and importers of heating appliances, pellet producers, pellet and Figure 38 - Wood flow in Finnish Forestry, 2009. Source: VTT appliances dealers, R&D organisations.
& Lappeenranta university of Technology.

2. Pellet markets
Pellet production
Pellet production started in Finland in late 1990s. The production peaked in 2009 on 373,000 tons. There are ca 25 pellet producing plants in Finland (Figure 1.). Total capacity in Finland is 512,000 tonnes/a. Biggest producers are Vapo Oy with 5 plants, capacity of 262,000 tonnes/a and Versowood Oy with 2 plants, capacity of 80,000 tonnes/a.

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Figure 39 - Map of Finnish pellet plants

Production plants rely mainly on sawdust and shavings as a raw material. 6-7 plants are capable of drying raw material. Rest of the plants use dry raw material only. There are no plants at the moment that would use round wood as raw material. One plant under construction could use round wood. Additionally some production tests have been made by the research institutions on round wood. Bulk deliveries are available on the whole country. In south of Jyvskyl there is more competition as several companies are delivering in bulk. Delivery by big bags has more competition as many smaller producers favour that delivery. In addition most of the imported pellets are delivered by big bags or pallets of small bags. Ordering of pellets is possible through national call centers of biggest producers, directly from smaller producers or through ca 250 traders. Most of the traders are hardware stores or agricultural stores.

Pellet comsumption in Finland

Pellet heating is used on ca 25,000 single family houses and on ca 1,000 larger buildings or small district heating (middle scale sector) around Finland.

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There are no big power plants regularly using pellets in Finland at the moment. Some biggest coal powered CHP-plants, in Helsinki and Vantaa, have tested pellets. They havent started using pellets in great amounts. The use of pellets has increased in recent years on middle scale sector more rapidly than on small scale markets, passing it by volumes in 2009.

180 160 140 120 100 80 60 40 20 0 2005 2006 2007 2008 2009 2010 Small scale Mid sector Total

Figure 40 - The use of pellets in Finland (1,000 tons/a). Source : Finnish Forest Research Institute (Metla)

Bulk delivery of pellets is the most common way of deliveries in Finland. Smallest delivery size, without extra costs is usually 3 tonnes. Big bags of 500 or 1000 kgs are in use and slightly increasing their share as the import has increased. Small bags are used mostly by pellet stove customers.

Market drivers and obstacles

There has not so far been long perspective and coherent policies to support the use of pellets in Finland. In 2006-2007 and 2011 an investment aid through municipalities was available for home owners and 2010-2011 for housing cooperatives to shift from oil or elecricity to pellets or other renewables. Investment aid to build new installations or for companies and some organisations through Ministry of Employment and the Economy has been available for many years. This investment aid though is not only for renewable energy but could be used for any improvement of energy systems. Until 2006 there has been an investment subsidy for companies building pellet plants, but due to overcapacity this subsidy is not in force at the moment. The price of electricity in Finland for domestic users has long been one of the lowest in Europe, ca. 12 snt/kWh all included to date. Oil price in Finland has been rising most rapidly in recent years, being ca. 110 snt/litre all included to date.

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Figure 41 - Price of energy for domestic users in Finland (snt/kWh), 2002-2011. Source : Statistics Finland

14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00

01/01/2004 01/07/2004 01/01/2005 01/07/2005 01/01/2006 01/07/2006 01/01/2007 01/01/2002 01/07/2002 01/01/2003 01/07/2003 01/07/2007 01/01/2008 01/07/2008 01/01/2009 01/07/2009 01/01/2010 01/07/2010 01/01/2011 01/07/2011

Electricity Oil Pellets

CO2 based energy taxation act came into force in Finland in 2011. Even though the tax of oil and electricity is only one third to half of compared to other nordic countries after the new act, it has significantly improved the compatability of pellet heating.

Import and export of pellets in Finland

Exporting some of the pellets has been a major strategy of the companies in starting the pellet production in Finland. Main export countries have been Sweden, Denmark and United Kingdom. The share of export has been in decline (Graph 5.) in recent years. Recently main exporter Vapo Oy has announced that due to lowering export prices it will shut down three pellet plants that have been mainly producing for exporting. Pellets have been imported to Finland since 2008. Main importing countries are Russia, Estonia, Latvia and Ukraine (Sunflower husk pellets). Some Finnish pellet companies have established connections to Russia, even building small plants to assure the import quality. Imported pellets have had wide variety of quality. Import of pellets is decreasing by volume, even though there are more companies marketing imported pellets in Finland.

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250 200 150 100 50 0 2005 2006 2007 2008 2009 2010

Import Export

Figure 42 - Import and export of pellets in Finland (ktonnes), 2005-2010. Source Finnish Forest Research Institute (Metla)

Heating appliances
Nordic tradition for heating systems has been separate boiler and burner. This tradition has influenced the markets as many customers have purchased burners to be installed on former wood, oil or combined boiler. There has been as well difficulties operating these self combined pellet heating systems. The tradition has been changing in recent years as many producers are now producing integrated systems. The biggest domestic manufacturers of pellet heating appliances are: Ariterm Oy and HT Enerco Oy (Tulimax brand). There are as well major foreign brands represented in Finland, such as: Biotech, Ravelli, Ecoforest, Herz, Iwabo, Janfire, Effecta, PellX, Gilles, Hargassner, Viessmann. Great majority, ca 70% of pellet heaters have self made delivery silo. Addition to low investments price, this has had also negative side effects as the structure of silos often vary from most desired.

3000 2500 2000 1500 1000 500 0 2005 2006 2007 2008 2009 2010 New Renovation

Figure 43 - Pellet heating appliances sold in Finland, 2005 2010. Source: Finnish Pellet Energy Association

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Future of pellets market in Finland

Despite the overcapacity of pellet plants in Finland, there are several new plants under planning. Many of the plants are local by nature and depend on the local raw material, therefore smaller than 50,000 tonnes/a. Industrial pellet plants of 2 x 200,000 tonnes/a have been discussed in southern Finland, to supply coal replacement in power plants. Even though there are no coal power plants permanently using coal, the Ministry of Employment and Economy is discussing possibility to introduce variable tariff for electricity produced with pellet co-firing. There are ca 300,000 buildings in Finland using light fuel oil and ca 650,000 buildings using electricity for heating. In recent years electricity and heat pump heating is opted for on ca.70 % of the new build domestic houses. However, rising electricity price is expected to change the tide. Greatest growth sector by pellet volume appears to be medium size sector at the moment. There are several service provider companies sprouting up to facilitate an easy shift to pellet heating. New build communities are as well interesting market for local heating networks by pellets. Pellet Energy Association has estimated that current side products and other raw material would make it in practise possible to produce 1.5 million tons of pellet domestically in Finland.

3. Pellet quality and certification

Pellet certification and labelling schemes in Finland
Pellet certification has been almost invisible on home market in Finland. The biggest producers have had to get certification for export, but they havent used it on home market. Some imported pellets have been labelled, mainly by DIN certification. In short, the Finnish customers are not familiar with pellet quality certification and labelling schemes. Finnish Pellet Energy Association has discussed with the main pellet producers and started preparation to introduce ENplus certification scheme.

Quality of pellets in Finland

Main pellet producers in Finland have used several years the criteria of pellet prEN standards (EN 149611 or EN 14961-2) on their production and been active on developing the standards. Pellets quality has been studied by pellets producers. According to self-inspection of producers and customer complaints the quality of pellets have improved along the decade. Biggest problems have been the fines and mechanical durability of pellets. After these had been more or less resolved have too long pellets and ash melting been more of the issue. 83

Latest challenge has been pellet off-gassing. The off-gassing has resulted after a shift to wet saw dust. Off-gassing has resulted two casualties while customers got into a silo and fainted because of low oxygen level and high CO level. R&D activities have managed to get hold on off-gassing reducing the dehydration process by changes on production processes. SPE has also prepared stickers warning on offgassing in silos.

Enquiry and the results

Finnish Pellet Energy Association prepared a set of enquiries (Annex 1) which was send in November to 93 recipients. Enquiry was targeted into five different recipient groups: pellet producers, pellet bulk deliverers, pellet bag deliverers, manufacturers of heating appliances and installers of heating appliances. The questions differed from one group to another. Total of 30 answers were received; 5 of bag deliverers, 4 of bulk deliverers, 5 of pellet producers, 11 of installers and 5 of manufacturers or importer of appliances. The responds in categories in reviewed as follows in Table 1 4. The enquiry of 5 different questionnaires may be found, in Finnish at: http://pellettienergia.fi/index.php/ajankohtaista/1-yhdistys/196-pellcert-hankkeen-kysely
Table 17 - Review of pellet producers responds
1. Size production/a of % 2.Raw materials % 3.Do you have any quality certification for pellets? Yes No % 4.Do you consider to have quality certification in future? Yes No %

1000 5000 tn 5000 10 000 tn 10 000 50 000 tn >50 000 tn

40% 20% 40% 0%

Dry saw dust Dhavings Wood chips Fresh saw dust, whole wood

20% 100% 40% 0%

0% 100 %

40% 60%

Table 18 - Review of pellet traders responds

1.How often do your competitors on bulk delivery have low quality? 10-30% of delivery 30-50% 50-70% 70-100% % 2.What are the most common quality problems with pellets? Too much fines High ash content Slagging Too long pellets % 3.How essential is the quality of pellets for customer satisfaction? Totally essential Very essential Essential No essential % 4.Are you planning to buy ENplus pellets in future? Yes No I dont know %

50% 25% 25% 0%

78% 22% 22% 0%

67% 22% 11% 0%

25% 0% 75%

Table 19 - Review of installers responds

1.How essential is the quality of pellets for boiler operation? Very essential % 2.What is the average pellet heating system you sell worth? <2000 e % 3.How big portion of the pellet boiler problems are due to poor quality of pellets? 0 - 10% %

55%

0%

18%

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Essential Not so essential Not essential at all

36% 9% 0%

2000 4000 e 4000 6000 e >6000 e

36% 46% 18%

10 30% 30 50% 50 70%

46% 0% 36%

Table 20 - Review of manufacturers of pellet heating appliances respond

1.Has the poor pellet quality resulted failures of your boilers in domestic markets? Yes No % 2.Would you distribute ENplus leaflet to customers with your boiler? Yes No % 3.Would you consider adding ENplus sticker to your boiler as a proof of correct pellet quality to use? Yes No

60% 40%

100% 0%

60% 40%

The outcome of the enquiry supports the assumption that experts of pellet heating see pellet quality very essential for proper operation of pellet heating systems. That may be an outcome from the result that majority of the malfunction of pellet heating appliances are considered to result from poor quality of pellets. Minority of responding pellet producers in Finland at the moment consider to start quality certification in future.

4. Sustainability
Finland is the most forested land in Europe. 23 million hectares of forest cover ca. 76 % of the total land area of the country. The volume of Finnish Forests has been rising over 50 years now being 2,200 million m3 at the end of 2010. The annual growth of the trees exceeds the annual felling by 30 % and the annual felling has been steadily since the early 20th century. (Finnish Forest Research Institute, 2011) About 95% of forests are certified according Finnish PEFC certification.

Legal framework for sustainable forestry in Finland

Sustainable forestry is widely defined by legal framework. Forest Act (1093/1996) and Forest decree (1200/1996) defines the areas of specific values. Finnish Nature Conservation act (1096/1996) defines rare biotopes. Fairly new legal instrument is the decree on sustainable management and use of forests (1234/2010). The decree defines the management of forests in details. Recommendations for good forest management by Forestry Development Centre Tapio are a collection of good practice to fullfill legal and other requirements. The recommendations are used on educating forest owners on the sustainable forestry. There are more than 2.9 million hectares of different kind of protected areas of forest land, which is ca 13% of all forest land. The share of strictly protected forest area is 5.2 % of all forest area. (Table 5.)

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Table 21 - Protected forests in Finland. Source: Nordic Forest Owners Association.

Forest certification in Finland

Forest certification schemes cover ca. 95 % of Finnish Forest area. Nearly all (21.9 million ha) is certified by Finnish Forest Certification System (FFCS) which is endorsed by PEFC scheme and therefore named as Finnish PEFC. Smaller part (400,000 ha) is certified by Forest Stewardship Council (FSC). FFCS has started in 2000, after 4 years of preliminary work. Members of the FFCS are many organisations; forest owners organisation, forest workers organisations, Finnish church and forest industry organisations. FFCS consist of the chain of custody (CoC) certification and forest certification. CoC is certification mainly for companies refining the wood or marketing the wood products. Forest certification is certification for forest owners. Forest certification is possible for individual forest owner or through group certification of certain geographic area. In Finland group certification is the prevailing method of use, due to the fact that most of the forestry (52%) is a small scale family forestry with typical forest holding size being 25 hectares. FFCS consists of 29 criteria, which include social, ecological, economic and cultural aspects. On ecological aspect there are for example criteria that emphasise to maintain the carbon sink properties of forests, to save biotopes of endangered species. Altogether ca. 15 criteria are securing the ecological aspects of certified forests. 86

The standard is renewed every 5 years through extensive network of experts and organisations. The latest renewal was submitted to international PEFC for approval in 2010 and the new standard was evaluated by independent company. The criteria of harvesting wood specifically for energy use, has been added to FFCS in 2009, for the first in the world. Wide representation of forestry companies, Finnish environmental organisations (NGOs) and other interested parties have been active on developing Finnish FSC standard. The system is being accredited at the moment. The FSC standard consists of 10 principle which cover social, economic, cultural and ecological aspects. Finnish Nature Conservation League (SLL), which is active on FSC development, has criticised FFSC/PEFC for not fully protecting the sustainability. According to SLL, there has been reported cases of destruction of valuable biotopes, logging of protected areas and violation of rights of Finnish indigenious Saemi people. SLL calls for better complaints procedure which could have an effect on the renewal of standard.

5. Conclusions and outlook

Pellet heating in Finland has great potential to grow in ten fold in future. SPE and their member organisations have started joint development project to increase turn-key services and improve the quality and compatibility of overall heating system. The quality of pellets seems to vary and this has resulted problems of maintenance of pellet heating appliances. According the enquiry there has been quite a few problems with pellet fines and not so often with slagging. The manufacturers and installer of boilers are convinced that the quality of pellets have resulted operational problems. Minority of pellet producers in Finland are at the moment interested to have quality certification. However if two main pellet producers get certification more than 80 % of the production is covered. Pellet energy sector would benefit from quality system. Pellet quality certification is an essential key to improve public acceptance and attractiveness of pellet heating. So far the customer has not had a tool to ensure the quality of pellets in advance. SPE will prepare the launch of ENplus certification system in 2012 with Finnish pellet producers. The discussion has been going on with two biggest producers and other producers will be included as well.

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FRANCE
Pellet production in kt
year 2005 2006 2007 2008 2009 2010 Source of information Plants 2 or 3 Capacity Production 25 000 50 000 100 000 208 000 345 000 465 000 SNPGB

42 50 Propellet

800 000 Propellet

Pellet consumption in kt
year 2007 2008 2009 2010 Source of information Heat Power 0,2 (350 MWatt) 193 000 305 000 405 000 SNPGB 0,5 SER 193 000 305 000 405 000 SNPGB Name of the power plants (& consumption)

Heating Devices
year 2005 2006 2007 2008 2009 2010 Source of information Boilers <50 kW (Residential) 1 250 3 697 798 5 510 4 310 5 000 ObservER Boilers >50 kW (Commercial) 5 710 10 278 13 787 17 100 23 000 30 000 ObservER Stoves 1 250 3 697 798 5 510 4 310 5 000 ObservER

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1. Introduction
Country situation
In France, the pellets market has a very small position in the heating market because our main energy sources are fossil and fissile energies (nuclear, electric, oil). The pellets stove market represents only 5% of the heating market of independents heating systems in our country and the pellet boilers market represents just 1% of the global market of boilers in 2010. We have done a survey concerning pellets in 2010 and the first results confirmed this view of the market: 50% of French people dont know what wood pellets are. In France, pellets are not used to produce power. The first goal for pellets is the household heating system. We have few medium power heats. Wood pellets its mainly for individual use.

Importance of renewable
In 2007, France has set up meeting concerning sustainability management: le Grenelle de lenvironnement. Several decisions were implemented about all the renewable energies. The French goal concerning renewable energies is to reach 23% of the global consumption of country in energies in 2020 and the biomasss aim represent 45% of this principal goal. The biomass contained biofuels, processing of gasification and methanation and firewood (logs, pellets and woodchips). This is a strong commitment because energies from biomass are not well known by French public. When the subject is discussed, the name of the energies that occur most offend is solar energy and wind power and not ecological firewood.

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2. Pellet markets
Table 22 - Statistic on pellets production and capacities

Year 2005 2006 2007 2008 2009 2010 Source of information

Plants 2 or 3

Pellets production Capacity (tons)

42 50 Propellet

800 000 Propellet

Production (tons) 25 000 50 000 100 000 208 000 345 000 465 000 SNPGB

There are in France fifty production plants, located all over the country. The pellet industrials come together to increase their production capacity, the scope of their actions. They begin a process of creating an industry of quality (Deshydrome with SGA becomes NEeco...). The French pellets production, like other European country, is increasing since ten years. Many firms are working below a really potential of capacity because its a very young market. But with the increasing annual sales of pellets stoves and boilers we think that our manufacturers will have the ability to meet demand in future.

Figure 44 - Pellet production in FR (Source: SNPGB data, Propellet France prospectives Janvier 2011)

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Table 23 - Consumption

Year 2005 2006 2007 2008 2009 2010 Source of information

Consumption Heat (tons)

Power (Mtoe)

0,2 (350 MWatt) 193 000 305 000 405 000 SNPGB 0,5 SER

82% of the French pellets productions are consumed in France in 2010. Our market is very little and he is increasing each years. We have the capacity to produce more to meet the increasing demand. Pellets prices are increasing because of the increasing prices of saw dust and other raw materials. Sawmills that value still little raw materials, barks and sawdust, should make in practice the highest prices than their colleagues already practicing. Under these conditions, it is likely that there is homogenization of pellet prices with an increase in the average price.

Table 24 - Type of consumers

Heating devices Year Boilers (<50 kW) Boilers (>50 kW) Stoves 2005 1 250 5 710 2006 3 697 10 278 2007 798 13 787 2008 5 510 17 100 2009 4 310 23 000 2010 5 000 30 000 Source of information ObservER ObservER The majority of consumers are individuals and they use pellet stoves or pellet boilers.

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Figure 45- Annuals sales of pellets stoves and boilers in France

On these estimates of annuals sales of pellets installations performed by ObservER for ADEME, consolidates by SER (syndicate of the renewable energies), we can observe the market trend. This graph shows a trend over that real image of the market situation. The market for pellets stove experienced a strong growth while sales of pellet boilers tend to stagnate. Cope with the increased sales of pellet stove expected in the coming years, it is important to ensure the achievement of quality facilities. Accumulated annuals sales, the installed base in France represent 120 000 of pellet stoves and 25 000 of pellet boilers. An enquiry organized by differents French wood organization (CIBE, SNPGB) explains the pellets opportunity on the industrial or collective solutions for heating. It will help this is a new market in development: on the end of 2011 the most important market for pellets in French is individual heating.

Import / Export
Approximately 15% of French pellets production is for exportation. A few society exports pellets in nearest country like Italy, Germany, Great-Britain and Spain. This is not an important part of our market.

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Table 25 - Pellet production Wood pellets production in France 2005 2006 2007 2008 Production
1 2 2

2009 345 000 t 104 000 t 59 000 t 390 000 t

2010 465 000 t 143 000 t 66 000 t 542 000 t

25 000 t

50 000 t

100 000 t

208 000 20 000 t 35 000 t 193 000 t

Importations

Exportations Consommations
source SNPGB source Eurodata

The official numbers (Eurostat) of importations and exportations for the French pellets market are very amazing for us.

IMPORTS
Eurostat announce for 2009, 104,000 tons of pellets and 143,000 tons for 2010. In same time SNPGB give other tonnages: 10,000 tons for 2009 and 20,000 tons for 2010.The tonnages proposed by SNPGB or by Eurostat are not very usable. The French customs service has identified the pellets in wide market by a generic name boulettes de bois which not used in French. It is a source of mistake in the import and export French data.

EXPORTS
This is the estimates tonnages of exportations from SNPGB. Exports Year 2008 2009 2010 Tons 35 000 50 000 80 000 Concerning exportations the tonnages given by Eurostat are approximately same: 59,000 tons for 2009 and 66,000 tons for 2010. A process is underway to change the name in data from the French customs service. It wont be changed this name after 2015 The goal is to have access to real data concerning each wood product exports.

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Figure 46 - Publication of a pellet price index (Evolutions of energies cost in euros centimes/kWh PCI.)

Quaterly we publish a price index that compares wood pellets (packed in bulk) with other fossils energies (electricity (pink), propane (dark blue), domestic fuel (black), natural gas (blue). Seventeen firms members of Propellet are contacted to make it (producer and retailers of wood pellets). To realize this index, we interview our firms about the price they charges for delivery of five tons of woods pellets in an area of fifty kilometers. The result for the fourth price index of 2011 is 5, 02 euros centimes/kWh. This allows us to follow the evolutions of energies cost over several years and to bring some reasons of this evolution at many actors of wood pellets sector and other professionals (reporters, journalists). In 2012, this index of woods pellets will change. The department of ecology will help us make it more visible.

3. Pellet quality and certification

Description of stakeholder enquiry
In November of 2011, we realized the Pellcerts enquiry for France and we received 22 answers by different firms from the pellet market: eleven producers or retailers of pellets, seven manufacturers or retailers of pellets stoves or boilers and four stoves or boilers installers.

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Concerning our feed-back about this enquiry some remarks were made: Some of these respondents dont know the existence of the new certification ENplus, to them the French pellets market have so much certification in place and they dont know why the European pellets council would like to take in place the new ENplus certification. There are already some certifications in France for the wood pellets: NF and DINplus and some of our professionals dont know the commitments of all of them. French pellets producers and retailers would like to became ENplus actors in France, but if the certification in place (NF, DINplus, CBQ+) based their criteria and foundations with EPC. These stakeholders dont know advantages the new brand will bring for their activities. In addition, some of the respondents are aware the new certification brand will become an obligation in the medium term.

Problem encountered
We encountered one problem concerning the realization of this enquiry. We have treated only 22 professionals answers because we are in high season for the pellets delivery. This problem should be the same in each country where the survey was conducted.

Quality of pellets
In France, the professionals of wood pellets place our production in high step. We place the quality at the center of the pellet production. To produce a good quality of wood pellets, some characteristics are required. This concern: Calorific value and moisture The rate of fine (particles smaller than two mm emitted in the flue gases during combustion) The ash Mechanical strength The bulk density The sulfur, chlorine and nitrogen Many respondents place quality at the base of their business, not only wood pellets but also according standards or certification in each other trade interviewed.

Existing quality certification / label scheme

In France 85% of the French pellets production was certified by DINplus, NF Biocombustibles or ENplus in 2011. The French pellets market has four different certifications in application: 95

NF Biocombustibles (production and delivering certification) DINplus (only production certification in France) Chaleur Bois Qualit + (only delivering certification) ENplus (production and delivering certification) PEFC and FSC (sustainability only) NF BIOCOMBUSTIBLES SOLIDES

NF Biocombustibles is a property of AFAQ - AFNOR, a French certification organization in different kind of markets. AFAQ mandated the FCBA (France Cellulose Bois Ameublement) for the management of this certification. NF BIOCOMBUSTIBLES SOLIDES, granuls de bois represent ten production plants in France and three pellets retailers. This system includes a real delivery certification scheme for the retailers job. The NF BIOCOMBUSTIBLES SOLIDES brand also includes wood-coal and wood-logs. Useful links: New handbook for producers and distributors: www.fcba.fr/getfile.php?table_fich=CERTIFICATION&id_fich=55&nom_champ_fich=CERTIFICATIO N_REGLES_GEN_URL_DOCZ Link up to date of the NF BIOCOMBUSTIBLES holders (13 in France): www.fcba.fr/getfile.php?table_fich=CERTIFICATION&id_fich=55&nom_champ_fich=CERTIFICATIO N_TITULAIRES_URL_DOCZ Contact : FCBA : Siegrid Paris - responsable de marque - siegrid.paris@fcba.fr - Tl : 01 40 19 48 72 CHALEUR BOIS QUALITE + Chaleur Bois Qualit plus is also a property of AFAQ - AFNOR.AFAQ mandated FIBOIS ArdcheDrme and FIBRA for the management of this certification. At the beginning, the objectives are concentrated for the wood chips. This certification is just a delivering certification for wood pellets and not a certification about the product composition. Four firms in Rhone-Alps are certified by CBQ+ and some initiatives are beginning in others regions of France: Franche-Comt and Ile de France. Useful links: Website of the CBQ+ certification: www.chaleur-bois-qualite-plus.org Link up to date of the CBQ+ holders: http://www.fibra.net/docs/4/entreprises_AFAQ.pdf Contact: FIBRA - Agropole 23, rue Jean Baldassini 69364 Lyon Cedex 07 info@fibra.net Tl : 04 78 37 09 66

DINplus and ENplus

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DINplus represent ten production plants and four pellets distributors in France. ENplus is at the beginning of his activity: one French pellets producers has just got the ENplus certification in September 2011. PEFC and FSC Around 1/3 of the French forest is certified by PEFC (5, 06 million hectares) in 2010. The PEFC system is much more developed in France than FSC (98% of French certified forest surfaces). FSC France represent 13% of all forests firms certified FSC, in 2008. These firms are engaged to use only wood from sustainable forest in the world. Share of certified pellet We have noticed that many professionals confuse norms with certification, yet the distinction is significant. Norms are public, but certifications are private. Each professional can meet the norms recommendations and announce but only assigns can assert certification. Certification guarantees the respect of the norm by an audit system and some internal and external controls. Concerning the pellet market, today we have only one European norm (EN 14 961-2) and several certifications: NF Biocombustibles solides, DINplus, ENplus and CBQ+. For example, a firm which indicates consistent at DINplus is wrong, if it is not certified by Din Certco and if it doesnt have an approval number. As a conclusion: 85% of the French pellets production was certified either by DINplus, NF Biocombustibles solides or ENplus in 2011.Twenty-eight companies are certified: thirteen by NF Biocombustible solides, fourteen by DINplus and one by ENplus. Among around forty of the French production plants, nineteen are certified. It is more difficult to evaluate the amount of pellet certified by retailers, anyway and the delivery certification scheme are not very developed in France (only 3 delivering companies are certified by NF and 4 companies by CBQ+).

4. Sustainability
Existing initiatives
FLAMME VERTE label The FLAMME VERTE label has been developed by ADEME (a branch of the ministry of ecology) and different manufacturer of heating systems. This label is administrated by SER (syndicate of the renewable energies). Concerning the household market, boilers must: - have a minimum yield of 70% - have a rejection rate of carbon monoxide below 0,3% - respect the requirements of the European standards NF CEN 303.5 on polluting emissions.

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Since the first of January 2011, the criteria have changed to reach a common goal for all certified companies by 2015.

National requirements
In France, consumers can get some subsidies and financial support to help them to invest in a woods pellets system, but they decrease from year to year. The tax credit for sustainability development (TCSD) It allows households to deduct from their income tax the expenses incurred for energy efficiency improvements to their primary habitation. It is a way to give subsidies. In 2011, as part of heating with pellets, the amount of the tax credit ranges from 22% to 36% of expenditure tax (including labor) paid between 1st of January to 31th of December 2011. For the 2012 year, French national assembly decided to reduce the credit. Here are details to consider: 18% in primary acquisition and 31% for renewal equipment Additional 10 points if completion of two work stations (categories thermal insulation of walls, windows or ceiling and in the positions biomass heating or hot water, condensation The TCSD will be 28% or 41% of biomass equipment. It is possible to combine the assistance aid with obtaining an interest-free loan if your wages do not exceed 30,000 Euros per year. Obtaining of this aid will be conditioned by the qualification criteria of the installers. Value added tax at 5, 5% for the purchase of fuel and equipment for energy production using renewable energy sources. It will reach 7% in 2012. This value added tax is less than the common tax on other activities: 19, 6 % (22 % in 2012) CEE (saving energies certificate) This is a French system to force polluting companies (fossil energies providers/suppliers for instance) to take measures to encourage saving energy and renewable energy: to prove it, theme must collect saving energy certificates. For instance, each acquisition of a new device for pellets may be subject to a saving energy certificate, which is signed for the purchase. The amount to the users of this certicate is variable and depends on the professional involved in the collect (pellets supplier, pellets heating system installers, fossil fuel suppliers).

5. Conclusions and outlook

The prospective Propellet on sales trends and on pellet consumption are based on two scenarios: Scenario 1: upgrading of Austria and Italy in 2020: We assume that in ten years, the French pellet market will be at the actual Austrian and Italian market level. The Austrian market for pellet boilers in 2010 was 10 000 pieces on a global market of 70,000 boilers. Extrapolated to the French market this would give a market of 85,000 pellet boilers per year. The 98

Italian market for pellet stoves in 2009 was approximately 200,000 stoves per year. Extrapolated to the French pellets stoves market this would give a market of 200,000 stoves par year. Scenario 2: prospective study ADEME 2010-2020: ADEME has made a prospective study 2010-2020 on the development of domestic wood energy in France. The most probable scenario presented by the study predicts for 2020 annuals sales of 136,000 pellet stoves and 87,000 wood boilers including pellet boilers at a higher level than today One quarter of wood boilers sold today are pellets boilers. Our own estimation for 2020 is at one half of all facilities: approximately 43,000 pellet boilers per year. This high increasing of sales must be linked to a constant consumption of wood: a strong goal of the Grenelle (French environment law) is to keep a constant amount of wood consumption by 2020 and to increase the number of houses heated with wood, due to lower consumption of housing and improving performance of devices. The study states that this scenario is feasible if there is a strong will of governments to support the development of wood heating systems.

Figure 47 - Representation of the two assumptions sales of pellets stoves and boilers

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Figure 48 - Transposition of this two assumptions tons of pellets consumed

This two assumptions lead to a annual consumption between two and three million tons by 2020 whether 0.8 to 1.2 Mtoe (million tons oil equivalent) for a total constant over the next ten years by about six Mtoe of wood energy consumed each year for the domestic use. Adoption of EN standards / ENplus The ENplus market is very young in France. Some French companies are interested to get information concerning this European global certification scheme ENplus. We can think that the pellets market will moved toward this harmonized certification in the future, even in France. A very large part of the French pellets production can be certified EN+ with A1 quality, because it is the same standards as the actual certification that certifies 85% of the French production. Future development of pellet sector The most important issue to achieve a recovery of the ENplus certification in France is to cover existing certifications (NF, DINplus and CBQ+) by taking into account some of these criteria.

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HUNGARY
Pellet production in kt
year 2006 2007 2008 2009 2010 Source of information Plants 1 2 8 10 11 Hungarian Pellet Association Capacity 3,6 4,6 30,9 76,9 96,5 Hungarian Pellet Association Production 0,48 2 2,7 29,2 32 Hungarian Pellet Association

Pellet consumption in kt
year 2009 2010 Source of information Heat 9 15,3 Power 0 0 Name of the power plants (& consumption)

Hungarian Pellet Association Hungarian Pellet Association

Heating Devices
year 2009 2010 Source of information Boilers <50 kW (Residential) 200 300 Hungarian Pellet Association Boilers >50 kW (Commercial) 50 75 Hungarian Pellet Association Stoves 1200 2150 Hungarian Pellet Association

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1. Introduction
Comparing to the countries in Western Europe, Hungary is behind in using renewable energy sources such as biomass. The percentage of total renewable energy was only 7.3 % in 2009 (while the target of Hungary is 14.6 % till 2020). The primary reason is the state of supply by natural gas in Hungary which currently covers more than 70% of the national energy demand. Moreover, the gas price was significantly cheaper in Hungary than in other parts of Europe until 2006, after that year the price closed in on the world market price. The price of natural gas had been held down for a long time and the support of fossil energy is a major barrier for the off take of any renewable energy source today (government expenses were 600 billion HUF for supporting of price of gas and wear-heat from 2003 to 2009, at the same time the government spent only 10 billion HUF in National Energy Efficient Program). The high cost of investment represents another barrier in the implementation of renewable energy systems. The state support does not offer reasonable incentives for new renewable projects. The large part of available biomass, (garbage, waste from agriculture, timber industry) is not used in Hungary, thus underutilizing Hungarys bioenergy potential. Out of the all forestry biomass used for energy (3.6 million m3 of firewood in every year) 88.5 % is being burned by large power-plant. This way of utilization of biomass is not efficient, and the emergent heat is not (or only in parts) harnessed. Production of heat made of biomass is only attractive, if the price of gas is increased. Most biomass heating is used in family houses. Mostly typical form of biomass used is wood logs, but pellet and briquettes start to gain ground. The Hungarian pellet sector only formed in 2008, about a decade later than in Western Europe. In that year six plants started their initial test runs. In the beginning, these plants produced only for export, but in the second half of 2009 the number of installed pellet stoves and boilers increased, thus kick-starting the domestic market. Lack of knowledge was part of the problem before as potential consumers were not well informed about the new fuel. The awareness of pellets has been gradually increased in the past three years due to the information campaign of the Hungarian Pellet Association. This favorable trend stopped in 2010, mainly due to the economic crisis. The pellet consumption and the number of new pellet installations setting have decreased. Therewith the consumptions of fossil energy

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carriers were continually being supported by the government. Later the (justified) price increase of natural gas was delayed. An investment grant for pellet installations proved insufficient. The pellet plants were faced with the problem of lack of raw material supply as sawmills saw fewer orders thus reducing availability of saw dust. At the end of 2010 Hungary Renewable Energy Action Plan was published. The energetic use of biomass will be the main contribution to the Hungarian renewables target for 2010. Bioenergy should reach 60.97 PJ annually by 2020 equal to half of the total generation of renewable energy.

Figure 49 - Division of applied renewable energy Source: Renewable Energy Action Plan (REAP) Table 26- division of applied renewable energy in the sector of electricity, heating and cooling, and traffic in 2020 Source: REAP

division of applied renewable energy in the sector of electricity, heating and cooling, and traffic 2020 biomass solar energy PJ % 60,97 74 3,73 3 water energy 0,86 1 16,43 14 22,4 18 geothermal traffic heat pump 5,99 5 wind energy 5,56 5 4,63 4 biogas

According to the REAP forecast bio-waste and by-product should provide about 50 % of the biomass mix. 103

2. Pellet markets
As mentioned before the pellet sector was really started in 2008 and most of the plants also started that year.

Figure 50- Number of pellet plans in Hungary Source : HPA

By the end of 2011, 11 plants with small and medium capacity and two larger ones (exceeding 30,000 t/year capacity) are operating with total capacity of 126,500 t/year. (Fig. 4)

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Figure 51 - Capacity of Hungarian pellet producing Source: HPA

The actual production is lower than this figure. About 32,000 t pellets were produced by Hungarian plants in 2010, and approximately 40,000 t in 2011. The main reasons for the rather low degree of capacity utilization are the following: technological issues due to the young age of the business economic crisis, the wood mills supplied less raw material for the pellet production it endangered continuous pellet production. economic crisis, lack of capital postponed the urgently needed technological improvements; credit practice of the banks were also unfavorable two plants with high capacity at first could not produce continuously due to technological issues

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Export, import
Hungarian wood pellet plants mostly produce for export (approx. 70-75%), main target countries are Italy, Austria, Slovakia and Poland.

Figure 52 - Rate of exported pellet Source: HPA

The Hungarian domestic demand is mostly covered by local production of the Hungarian plants with 30% of the total consumption coming from imports, which was approximately 5,000 t in 2010 (see Fig.6.). Pellet mostly is imported from Ukraine and Romania to Hungary.

Figure 53 - The rate of import in Hungarian consumption Source: HPA

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Pellet Prices
The history of the Hungarian pellet market is rather short. Pellet prices have been recorded only for the past three years. The Hungarian pellet prices in the Hungarian trade and market were affected by export prices - mostly Italian and Austrian markets, and increasing production costs.

average price of wood pellets in Hungary (net/kg HUF)

Figure 54 - Average pellet price Source: HPA

Hungarian pellet consumption

The main motivation to switch to pellets from gas is the possibility of saving running costs. The heating cost of a pellet system was about 30% lower in 2010 and 20-25% in 2011 because the Hungarian government locked the natural gas price. At the same time, the switch to pellet heating is directly related to the liquidity of real estate owners. Pellet heating systems are mostly chosen by the wealthier middle class, who in general deem the use of renewable energy important.

Beside private consumers, public institutions with (heating range of 50-200 kw) and entrepreneurs with smaller floor spaces changed to pellet heating and their number will probably increase due to tenders cofinanced by EU. Most of the winners of these tenders have not yet carried out the investment, so decisionmaking is still going on.

85% of installed appliances are pellet stoves, so pellets are typically sold in bags in Hungary.

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Figure 55 - Rate of installed pellet stoves and boilers Source: HPA

3. Pellet quality and certification

The survey represents the opinion and experience of pellet stakeholders, and reflects the rate of market players - 2 fire place builders, 8 equipment installers, 4 pellet producers and 4 pellet traders were interviewed. It should be mentioned that most stakeholders are active in several fields - e.g. equipment installers sell pellets as well.

All stakeholders have the same opinion concerning pellets quality which is seen as an extremely or very relevant factor. According to the Hungarian experiences, consumers frequently get poor pellet quality; the source of 80% of pellets is unknown. These poor quality pellets are packed in unmarked bags are and sold in wholesale trade. These pellets frequently cause damages that can set back the improving of young, Hungarian market.

Therefore fire place and stove builders, distributers and installers recommend the parameters of pellet using in appliances. The most frequently problem regarding to quality is slagging.

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Most of domestic producer have the quality of pellet tested. In Hungary there are several accredited laboratories to test the quality of pellet, and products get a certification from congruence according to the CEN/TS 14961 standard. DIN certification has become known in public awareness and in the consumers. Foreign traders and some of informed consumers examine DIN certification of domestic producers. The new EN standard has started to appear in public awareness. Productions get Hungarian Pellet Associations trade-mark by using the EN standard.

Good quality pellet (and also appliances) can use MPE trade-mark for one year, after that they need to apply again.

All of respondents know about ENplus system, but have no detailed information yet, and they would like to be better informed about it. The introduction of a quality insurance system is considered a good thing, if it can guarantee continuous good quality. It is feared that it could be an excessive burden in this market circumstances and it may affect the market price. The quality insurance system could only reach its goal, if it is adapted to the practice of Hungarian plants. Domestic agro pellets also need to be included in a quality insurance method at least in the medium term.

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4. Sustainability
The improvement of the Hungarian pellet sector is supported by the government, according to the medium and long term development of the RES sector due to the EU directive. The tow decisive documents are the Renewable Energy Action Plan and Hungarys Energy Strategy to 2030 Priorities are the following:

Reduction of dependence on imports

Hungarian energy consumption declined between 1990 and 2004 by 10%, the rate of imported fossil energy carrier reached 67.3% due to a 30% increase in gas consumption. Along with imported nuclear fuel, the countrys dependence on imports exceeds 78.5%, putting Hungary in an exposed situation from an energetic point of view.

Raising rate of renewable energy

According to 2009/28/EC guideline Hungary has to reach 14.6% renewables in final energy consumption by 2020. Fossil energy sources will be displaced at highest rate in heating and cooling by renewables.

Figure 56 - Expected share of RES by sector, Source: REAP

Improving green economy

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The creation of new jobs in the sector will persuade politicians to support pellets. According to the estimation of the Hungarian Pellet Association, 100 new workplaces have been created in 2011. This number may multiply due to improvement of this sector and may be expected multiplicative effects as well.

Internal sustainability considerations

At this time, the quantity of wood by-products in Hungary (approximately 250.000 t/a) exceeds the applied quantity of the pellet plants. At the same time it's needed to forecast a lack of raw material and its transport in the medium term. One of the ambitions in Hungary is widening the basic material base and forming a suitable agro pellet system. The available quantity of agricultural by-products is very important in Hungary.

Figure 57 - Biomass potential in Hungary in million t/a, Source: Hungarian Academy of Sciences

Quality assurance
In the young Hungarian market the biggest challenge for manufacturers is the production of good quality pellets from raw material which is usually not homogenous. In 2011 several Hungarian plants used their own innovative developments, hereby resulting in significant quality improvements in the end-product. At the same time, it is needed to step forward in quality assurance.

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5. Conclusions and outlook

The development of the three years old Hungarian pellet sector is slowed down by circumstances mentioned in point 1. The big improvements expected by market stakeholders have been delayed, but the growth of pellet production and installed appliances continues. The experience with pellet production and appliances is growing and so is the number of consumers. The Hungarian market is still very young and therefore vulnerable, so not all quality problems could be solved. Important issues for the future market developments are: innovation and quality assurance. All market stakeholders have to professionalize their business to ensure satisfied consumers. According to the members of the sector, especially the challenges crated by expanding the raw material base have to be anticipated in order to be tackled.

6. Annex: result of enquiries

Questionnaires were sent to companies, with 18 answers (until December 2011). Among the respondents are 2 fireplace builder, 8 installers, 4 pellet producers and 4 pellet traders.

Result of survey

Figure 58 - Division of respondents

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Respondents answers regarding pellet quality

The pellet quality is extremely important according to the respondents. Installers have different view regarding to pellet boiler failure caused due to poor pellet quality. (Fig. 12)

Table 27 - Pellet boiler failure caused due to poor pellet quality

If there is a pellet boiler failure in how many % of cases is this due to poor pellet quality? /%/ 99 50 50 85 98 95 50 98 Every pellet traders and boilers installers pointed out that the most frequent quality problem is slagging. Other problems are too much fines and too much ash.

Figure 59 - Problems in pellet quality

Three respondent pellet producers produce pellets with certified quality by using Hungarian Pellet Associations trade-mark, and one does not. (CEN/TS 14961)

All of respondents have already heard about the EN standard and ENplus quality insurance system, but they have not got enough information about it.

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ITALY
Pellet production in kt
Year 2006 2007 2008 2009 2010 2011 Source of information Year 2006 2007 2008 2009 2010 2011 Source of information Year 2006 2007 2008 2009 2010 2011 Source of information Plants Capacity Production 400 750 700 550 530 520 AIEL

23 AIEL

AIEL

Pellet consumption in kt
Heat 830 1,055 1,225 1,427 1,628 1,852 AIEL Power 0 0 0 0 0 0 AIEL Name of the power plants (& consumption)

Heating Devices
Boilers <50 kW (Residential) 2550 1900 1620 1550 1360 1470 AIEL Boilers >50 kW (Commercial) Stoves 308.571 193.337 143.480 171.000 170.000 188.013 CEDED Italia

600 498 870 AIEL

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1. Introduction
The biomass sector plays a strategic role in the Italian policy for renewable energy sources: according to the National Energy Action Plan (NEAP), approved in June 2010 following EU Directive 28/2009, biomass should become the primary renewable energy source by 2020, covering 44% of renewable consumption (22.3 Mtoe) 20% in electric power generation, 58% in thermal power generation and 84% in the production of biofuels (Fig. 1). The final energy consumption in 2009 was approximately 132.7 Mtoe and by 2020 the estimate has been set at 145.6 Mtoe. The use of solid biomass, represented mainly by wood, has been assigned a primary role as a renewable energy source. According to the estimate reported in the National Forests and Carbon Inventory (www.infc.it), the Italian forest area amounts to 8.8 million hectares (Mha), with a potential availability of 874 Mt (dry basis) or 1,269 million cubic meters per year.

Figure 60 - National Energy Action Plan (NEAP). Solid-biomass-generated energy contribution to total energy consumption. Source: RES (2020). Elab. AIEL on NEAP

The development policies in favour of renewable energy have been up to now focused almost exclusively on electric power generation, although, by 2020, 48% of total energy consumption in Italy will be represented by thermal energy (Fig. 2). By the year 2020, among renewable sources, biomass will have reached a record of 54% of the total thermal energy produced (10.5 Mtoe). Nevertheless, at the moment, there are no specific incentives or subsidies in favour of thermal energy production. Structural policies are urgently needed.

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Figure 61 - Distribution of the three categories of renewable energy consumption in 2020. Data processed by

In 20055, the production of thermal energy based on renewable sources was estimated at 2.4 Mtoe (Source: ENEA). The target set by NEAP (National Energy Action Plan) for 2020 is 5.2 - 5.4 Mtoe (Fig. 3).

Figure 62 - Consumption of thermal energy generated by renewable sources. Comparison between 2008 and 2020. Source GSE.

Comparing data from different sources leads us to conclude that the forecasts reported in NEAP are strongly underestimated. The total of solid-biomass generated energy production forecast by the year 2020 (5.2 Mtoe) has probably already been reached. A rough estimate of the total solid-biomassgenerated energy in 2010 reached about 6.7 Mtoe, of which about 6.4 Mtoe were consumed by small scale domestic devices and small / medium district heating networks. (Table 1 and Fig. 4). NEAP estimates to be revised (Fig. 5).

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Table 28- Wood-biomass-generated energy consumption estimates (Source: Pettenella D., 2011).

Mt Districts heating Small districts heating Domestic consumption (pellet included) Power plants Total 1 tep= 11,63 MWh 0,41 0,38 18,00 1,8 20,59

M (%) 40 30 20 50

NCV (MWh/t) 2,81 3,4 3,98 2,23

TWh 1,2 1,3 71,6 4,0 78,1

Mtoe* 0,1 0,1 6,2 0,3 6,7

Figure 63 - Consumption of different types of wood fuel in Italy

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Figure 64 - Source: NEAP forecast and new estimates. Data processed by AIEL. Sources: NEAP and FIRE.

2. The Pellet Market

The pellet sector in Italy is steadily growing and becoming of increasing importance to the national economy. Present data shows its major role in the renewable energy market. Our estimates on the Italian market confirm the following: Over 3,500 companies entirely dedicated to this sector; More than 1.8 million Mt of pellet consumed in 2011; More than 470 million euro worth of pellet consumed in Italy per year; The sector currently employs over 19,000 persons. The annual turnover of the sole pellet stove segment exceeds 10 million Euro (Source: CECED, 2007).

Production
Wood pellet is the second most commonly used wood fuel in Italy, covering approximately 9% of total wood fuels consumption. Specific statistics on pellet production and distribution of heating devices are not available at the moment. The following data has been elaborated by AIEL on the basis of its own surveys as well as various other sources. Pellet production in Italy began in the late '90s. In particular, the wood pellet market began in Northern Italy, especially in border regions. About 86% of pellet producers are located in Northern Italy where almost 95% of the total domestic production is carried out. Production has suffered a sharp decline in the past three years, following a 59% yearly growth rate between 2003 and 2007 and a peak production in 2007 of 750,000 tons. Over the past four years (20082011), the production has decreased at a rate of 8,5% per year. Domestic production will not exceed 520,000 tons in the current year (Fig. 6). 118

Figure 65 - Pellet production in Italy in tons (2003-2011). Source: AIEL.

The decrease in domestic production is mainly due to the decline of the entire wood processing industry, which has led to scarce availability of raw materials for pellet production (sawdust, shavings and other non-chemically treated wood scrap). The lack of raw material and the consequent increase in prices have resulted in a decrease of production as well as the closing of a number of pellet producers. The first pellet market survey carried out in 2003 showed that 40 producers, which eventually increased to nearly 90 in 2007, covered by far the largest share of the Italian market. Only 23 producers were surveyed in 2011, with an average production per company of 20,000 tons per year. In addition to the decrease of domestic production we have experienced an increasingly widespread relocation of Italian-owned production plants to Eastern European countries. Several Italian entrepreneurs have started pellet production companies abroad aimed at the exclusive supply of the Italian market. At present it is difficult to accurately estimate the quantities of pellet produced and exported to Italy by these companies.

Consumption
From 1999 to 2011 pellet consumption increased by an average rate of 56% per year. Our estimates show that pellet consumption amounted to 1,852,700 tons (732.80 ktoe) in 2011, of which 89% (1,652,300 tons) consumed by single household stoves and inserts; only the remaining 11% (200,400 tons) was consumed by small-scale heating networks (Fig. 7).

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Figure 66 - Annual consumption of pellet in single household stoves and small-scale heating networks (19992011). Data processed by AIEL. Source: CECED and AIEL.

Pellet stove and boiler markets are different in size and characteristics. Nearly 5,900,000 household heating devices (including fireplaces and stoves) were installed by 2010, 24% of which fueled with pellets (Fig. 8).

Figure 67 - wood household heating appliances (2010). Data processed by AIEL. Source CECED.

From 1999 to 2005, the sales of pellet stoves (8-12 kW) on the domestic market witnessed an average annual growth rate of 49% with a sudden rise in 2006 (+137%). 2007 and 2008 saw a sharp drop in sales (-37%) followed by a recovery in the following years (Fig. 9). The sales of pellet stoves in 2011 are 120

estimated at 188,000 units. So far, over 1,561,000 stoves have been installed in Italy, of which 48% in Northern Italy (Fig. 10), corresponding to an annual consumption of about 1,650,000 tons of pellet. If the sales rates were to follow those of the last four years, it would be safe to assume that by 2020 the number of installed pellet stoves will reach 3,600,000 units, corresponding to a total consumption of over 3,828,900 tons (1,514 ktoe) (please note that our calculations do not consider the replacement of old heating devices).

Figure 68 - Sales of wood pellet stoves and corresponding fuel consumption (Mt). Data proceed by AIEL. Source: CECED.

Figure 69 - Regional distribution of installed pellet stoves. Data proceed by AIEL. Source: CECED and APAT Lombardia.

The pellet-boiler market is a niche market when compared to the pellet stove one. From 1999 to 2006, sales registered an average annual growth rate of 122%, even if overall sales remained very modest. Sales 121

decreased by -13% from 2007 to 2010 and began to pick up again (+9.7%) only in 2011. Sales of pellet boilers have been estimated at 1,549 units in 2011, totalling just over 15,600 units installed so far, corresponding to a consumption of about 200,000 tons of pellet (Fig. 11). Almost all boilers are used for residential heating purposes and have an output lower than 150 kW. Slightly less than 5% of pellet consumption in 2011 was related to pellet boilers with power output exceeding 1 MW.

Figure 70 - Sales of wood pellet boilers and corresponding fuel consumption (tons). Data processed by AIEL. Source: AIEL and BG of AIEL.

If sales rates remain at the level of the last four years, it is safe to assume that by 2020 the number of installed boilers will rise to 29,800 units, corresponding to a consumption of 345,000 tons of pellet. Pellet in Italy is used only for small scale heating networks. Immediate future trend changes are not predictable and it is unlikely that pellet will be used for the production of electric power in CHP or cofiring. Since 89% of pellets are used in stoves, the most common packaging is 15kg-bags, also used for fueling low power boilers (<35 kW). Nevertheless, in the case of this type of heating unit, consumers mostly use pellets in large bags to be returned empty to the supplier or, as an alternative, buy bulk, delivered by truck. Companies that provide this type of service have doubled in the last two years (20102011). Currently, at least 16 pellet silotrucks operate in northern Italy. They are mostly owned by trading companies which buy pellet from abroad, mainly from Austria, Germany, France and Slovenia. It is estimated that pellet delivered loose by silotruck amounts to at least 91,000 tons per year.

Pellet Consumption and Supply

When comparing supply with consumption data, it is clear that domestic production does not cover the total domestic demand for pellet. Only 28% of the demand is met by domestic production (Fig. 12). A large part of pellet used in our country comes from abroad, both from European and non-European

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countries. Since 2009, official import / export data is published by Eurostat for all European countries. Previously, the survey of national import data was very tricky. According to Eurostat, Italy imported more than 471,600 tons in 2009 and over 827,200 tons in 2010 (Table 2 - Fig. 13). Although updated data is not yet available for 2011 it is safe to assume that the share of imports will exceed 1.2 million tons. It should be noted that large shares of imports are not subject to official statistics, partly because they are based on national statistics, often partial or unreliable.

Figure 71 - Comparision between domestic demand and production. Source: AIEL.

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Table 29- Pellet import (2009-2010). Data processed by AIEL Source: Eurostat and USA/Canada statistics. 2009 Canada USA Austria Bulgaria Czech Republic France Germany Hungary Latvia Lithuania Poland Portugal Romania Slovenia Slovak Spain EU extra 27 TOTAL 39,60 143.646,20 10.968,40 8.265,20 12.045,60 74.449,70 3.025,00 1.718,50 5.982,80 9.462,80 313,90 12.778,10 67.397,30 14.160,40 210,90 107.205,00 471.669,40 2010 9.810,10 3.533,10 268.179,10 7.444,60 22.213,50 26.300,50 106.774,80 8.371,00 3.540,70 32.252,50 25.286,60 3.458,10 48.393,20 78.533,30 23.056,30 7.226,20 152.876,20 827.249,80 Figure 72- Geographical spread of pellet imports (2010)

Austria represented the largest pellet supplier of the Italian market and traditionally a substantial share of its production is meant for the Italian market. According to an estimate by proPellets Austria, in 2011 exports to Italy will exceed 400,000 tons. A strategic supplier for Italy is also Canada, whose exports to Europe are forecasted to be 1.7 million Mt. Italy is a candidate to become the leading European importer of pellets for domestic use and the only country where consumption is almost four times higher than production. Importer profiles are very different and include: Pellet producers who buy wood pellet from abroad in order to integrate their production; Large traders who wholesale pellet to medium / small retailers; Domestic large retailers; Medium / large retailers of heating fuel (both fossil and wood); Loose pellet distributors. Merging production, import and consumption figures for the last three years (2009 -2011) highlights some inconsistencies (Fig. 14). As can be seen from the graph, the demand is always higher than the sum of production and import. Assuming that data concerning sales of heating devices is based on reliable information, we can assume that the inconsistency is based on erroneous data concerning imports and domestic production whose figures have not been accurately gathered.

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Figure 73 - Merging of production, import and consumption figures (2009-2011). Source: AIEL.

Pellets prices
Following the strong fluctuation of the price of pellet when the market was not yet fully mature (20032008), from 2009 on, the market has shown a higher level of stability. The gap between pre-seasonal and seasonal prices (based on Austrian trends) has been reduced, as well as the difference between minimum and maximum market price (Fig. 15). The result is a greater market stability, as well as greater balance between supply and demand. The significant increase in the price of pellet on major European markets occurred between 2006 and 2007 and was caused by a hysterical increase in demand, not matched by an increase in pellet supply. The consequence has been a sharp rise in prices (+40%) due to the limited supply. The unbalance between supply and demand had negative repercussions. Comparing the trends of prices and sales of pellet stoves and boilers (see Figures 9 and 11), it is clear that the peak in the price of pellet corresponds to a sharp decline in sales of heating devices, as occurred in 2007 and 2008.

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Figure 74 - Trend of pellet wholesale price (2003-2011). Source: AIEL.

The comparison of costs of thermal energy generated by pellet and other fuels, both fossil and wood, is particulary interesting (Fig. 16).

Figure 75 - Comparison of primary energy costs (/MWh) produced by fossil and wood fuels (November 2011).

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3. Pellet Quality and Certification

Pellet Quality
The monitoring of pellet quality in Italy started in 2006 with the pellet quality certification labelled Pellet Gold. Surveys covering the Italian production over the same period of time clearly show that the quality of pellets produced by Italian companies has improved significantly. Figure 17 compares, over the years, the main quality parameters of Class A1 pellet introduced by EN 14961-2. Hereafter we selected only the most significant parameters: water content, ash content, content of N, Cl and S, net calorific value (NCV) and durability. 100 has been set as the limit value for A1 class pellet in order to verify the percentage changes in the average values from 2006 to 2011. Particular attention must be paid to ash content which over the years has been gradually reduced. In 2006, the average content was slightly less than 1%, almost 40% higher than the limit set for class A1. In 2011, the testing of samples shows an average content of ash close to the limit. The content of nitrogen, chlorine and sulfur has gradually declined over the years, as well as the water content. The net calorific value (NCV) has witnessed a slight increase.

Figure 76 - Comparison of average quality of pellet produced in Italy from 2006 to 2011. Processed by AIEL. Data source: AIEL/Pellet Gold.

Problems
In 2011, only 28% of domestic demand was covered by domestic production. High demand for pellet, as opposed to limited domestic supply, results in considerable uncertainty in terms of quality of supply. In fact, only imported pellet from consolidated partners such as Austria, Germany, Canada and a few other countries, is duly certified. At the same time we should underline the fact that Italy still lacks a consolidated quality philosophy in pellet production. It is not yet mandatory for pellet 127

producers/traders/importers to indicate clear information concerning product characterisitcs, quality certification and the full address of the manufacturer/trader/importer. It is therefore impossible to prevent the entry and circulation of lower quality pellet on the national market. The problem could be solved by imposing a standard European certification. In terms of quality, the main problems to be tackled are: high ash content, which in cases exceeds 2% and makes the product inappropriate for domestic consumption, as well as low mechanical durability which is also often found in the product, resulting in an excess of fines.

Existing Quality Certification Systems

The first and only quality certification system in Italy, before the introduction of ENplus, was Pellet Gold, a voluntary certification introduced by AIEL and based on the main European pellet standards. As of 2011, Pellet Gold has conformed with EN 14961-2 standards. Pellet Gold aims at insuring that pellet production meets the standards outlined in the certification requirments. It is the only European certification system that also provides for formaldehyde content testing (HCHO), essential in order to detect the presence of materials (glues and paints) dangerous to the health of consumers, as well as the presence of radioactivity.

The certification procedure requires an initial inspection visit which checks: Production process control; Pellet quality control system. During the inspection visit, the auditor collects samples on which laboratory analysis will be performed in order to check their compliance with the certification standards handbook. Certified pellet is labelled with the Pellet Gold seal.

The Importance of Quality Certification

A quality certification system is the only valid instrument aimed at guaranteeing consumer protection. Quality cannot be based on self-certification and must be guaranteed by an impartial certification organisation. In order to insure the level of quality required by the market as well as by consumers, specific rules must be put in place. The awareness of the importance of pellet certification has grown in the last years among Italian consumers who have realized that for a slightly higher cost, they can obtain heating fuel which ensures excellent performance of the heating appliance and highly efficient combustion. More and more consumers have turned their attention to certified pellet. The introduction of an EU-wide certification will surely benefit the Italian consumer, forcing pellet coming from Eastern European countries to meet required quality standards.

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Share of Certified Pellets

In view of the various origins of pellet consumed in Italy, at present it is very difficult to estimate the share of certified pellet sold on the market. With regards to pellet produced in Italy (520,000 t/year), 47% of the production is not certified, while the remaining 53% is partly certified as Pellet Gold and a smaller portion as ENplus (Fig. 18).

Figure 77 - Share of certified domestic production pellet.

Regarding imported pellet, we can assume that pellet produced in Austria and Germany is ENplus / DINplus certified, while pellet from Slovenia is Pellet Gold certified. On the basis of import forecasts for 2011, we can assume that about 51% of pellet consumed in Italy is certified either ENplus, DINplus or Pellet Gold (Table 3).
Table 30 - Certified pellets consumed in Italy in 2011 (Data processed by AIEL)

Domestic production Pellet Gold Domestic production ENplus Pellet produced in Austria* Pellet produced in Germany* Pellet produced in Slovenia* Total of certified pellets Total consumed pellets
* import forecast (2011)

212.000 t 60.000 t 400.000 t 210.000 t 70.000 t 952.000 t 1.852.679 t 51%

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4. Sustainability
The issue of wood fuel sustainability is not yet popular with Italian consumers. There are no specific initiatives aimed at introducing guidelines and a certification system for transportation and pellet sustainability. Sustainability of raw materials used in pellet production is dealt with by two main forest certification schemes developed by: The Forest Stewardship Council (FSC), providing for 10 criteria for sustainable forest management and rules for the accreditation of certification on a legal basis; The Pan-European Forest Certification Council (PEFCC). For the implementation of regional forest certification in Europe, PEFCC refers to 6 criteria and indicators for sustainable forest management developed by the pan-European process
Table 31 - differences between FSC and PEFC.
Characteristics FSC FSC Trademark 1996 Forest Stewardship Council A.C. www.fsc-info.org www.fsc-italia.it From Object of certification 1993 1998-2000 PEFC PEFC Trademark PEFC/01-00-01 www.pefc.org www.pefc.it

Forest management (including timber and Forest management (including timber and non non timber products) and chain of custody. timber products) and chain of custody. Wood Wood arboriculture is included. arboriculture is not included. With three chambers, one for each sector: economic, environmental and social. Representatives of environmental ONGs, group and association of consumers. Directely by FSC Single company and group From 1 to 3 votes per delegate depending on the woody production level per country. Representation for industry, private forest owners' associations, public administrations. At national level and indipendent form PEFC Single company, and regional.

Type of representatives

Accreditation of certification bodies Tipo di certificato rilasciato CoC Approach Inspections Duration of certification Norms and standards Indicators Logo / Seal Costs Consensus among stakeholders

Based on the inventory and the separation Three typs Tre tipi riconoscibili da due loghi e of certified products. diciture diverse. Based on performance Provided 5 years Defined by FSC at internationa level Indicaors of GFS defined at local scale. Based on performance Provided 5 years Defined by pan-european process of Helsinki and Lisbona. Indicators approved by PEFCC, additional indicators defined at local scale.

For forest management and CoC. Final For forest management and CoC. Final products can be sealed only in case of CoC. products can be sealed only in case of CoC. Group certification is allowd to permit the Certification costs divided inside the group or riduction of costs. at regional level. Support of environmental NGOs and social Strongly challenged by environmental NGOs, parties. Criticism from smallholders and supported by small owners, industry and public industries. administration. Existing for all indicators. Available for the mandatory indicators. Only non-binding indicators monitor some social and cultural indicators.

Minimum standards

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The interest in sustainability for pellet production is widespread among market actors, in particular among those who are already involved in forest certification processes and environmental associations. No Italian company has a CoC of FSC or PEFC applied to pellet production. Interviews carried out with pellet producers confirm that the share of certified FSC or PEFC raw materials exceeds 50%.

5. Conclusions and Perspectives

Over one and a half million families are presently using pellet-fueled domestic heating systems. The remarkable success of pellet stoves in Italy, as opposed to other European countries, was not due to specific subsidies but to the high price of traditional fossil fuels. At present, there are twenty-three pellet producers in Italy, fewer than in previous years. The past and present difficulties of the wood processing industry has a negative impact on pellet production and resulted in the decrease of production as well as the closing of several pellet producers. The domestic production in 2011 will not exceed 520,000 tones compared with a consumption of over 1.8 million tones. In order to meet the high demand, Italy must import at least 1.2 million tones of pellet. Italy is certainly the most important European pellet consumer and a major net importer. Almost all pellet traded in our country is packaged in 15 kg bags even if the share of pellet sold loose is rapidly growing. We estimate that the amount of loose pellet delivered by silotruck amounts to 91,000 tons. According to our estimates, should sales of pellet stoves and boilers settle at the levels of the last four years, the number of heating appliances installed by 2020 will exceed 3,670,000 units, resulting in a consumption of over 4 million tons of pellet per year (Fig. 19).

Figure 78 - Sale forecasts of pellet heating appliances and pellet consumption by 2020 (Data processed by AIEL).

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In this growth scenario in which the Italian pellet market will become increasingly international, it is clear that the ENplus certification will be an important tool to guarantee the stability of the market. Pellet manufacturers and retailers are increasingly interested in certification and in the near future a large part of the Italian production will be certified. Pellet stove and boiler manufacturers also believe that this certification is the only tool able to guarantee consumer protection and the proper operation of heating equipment..

6. Attachment: Survey Results

The consolidated questionnaire created by AEBIOM with the support of the project consortium was translated into Italian at the end of October 2011. The translation was carried out in order to guarantee a most easy comprehension from Italian market actors. At the beginning of November 2011 the questionnaire was sent to the most important Italian pellets market stakeholders: Pellet producers Traders of loose pellets Traders of small bags pellet Pellet stoves and boilers producers and traders. We received 37 answers, mostly from pellet stoves producers, the most stronger actors in the Italian market (fig. 20).

Figure 79 - result of survey in IT

The results of specific survey carried out through each category of market actors are afterwards summarized. Pellet stoves and boilers producers and traders

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Pellet producers

133

The reason is the high cost of certification

Interviews carried out with pellet producers confirm that the share of certified FSC or PEFC raw materials exceeds 50%.

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Small bags pellet traders

All pellets traded is imported from abroad.

If you consider the market in your country, how large is the share of pellets that do not achieve EN 14961-2? Almost 75%

All pellet traders require quality certification for pellets they sell.

Traders of loose pellets

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Share of bagged pellets compred with total deliveries Average value: 58%

All pellet delivered in bulk is imported form other counties. Austria, Germany, Slovenia and France.

If you consider your competitors, how large is the share of distributers that do not offer adequate pellet quality or poor delivery quality (%)? The average value id 27%

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SWEDEN
Pellet production in kt
year 2005 2006 2007 2008 2009 2010 Source of information Plants Capacity 1400 1716 2032 2200 2300 Svebio, PiR Production 1100 1458 1400 1405 1575 1645 Svebio, PiR

80 80 Svebio, PiR

Pellet consumption in kt (large scale)

year 2007 2008 2009 2010 Heat 475 606 499 Power 208 239 250 Name of the power plants (& consumption)*** Fortum vrme Stockholm resundskraft, Helsingborg Fortum vrme Stockholm resundskraft, Helsingborg Fortum vrme Stockholm resundskraft, Helsingborg Fortum vrme Stockholm resundskraft, Helsingborg

Source of District Heating Sweden District Heating Sweden District Heating Sweden information *Pellet consumption for district heating (District heating Sweden, 2008, 2009) ** Pellet consumption for Power generation for Combined heat and Power generation (District Heating Sweden 2008, 2009) ***Largest consuming plants (District Heating Sweden, 2008, 2009)

Heating Devices
year 2005 2006 2007 Source of information Burners installed kW ~ 78 000 115 000 118 000 SBBA < 25 Burners installed 500 kW ~ 2 400 3 500 4 000 SBBA 25 New installations (Boilers > 60 kw) ~

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1. Introduction
In 2010 Swedens final use of bioenergy grew by 12 TWh, compared to 2009 (Svebio). ~ 30 % of Swedens final energy use is derived from biomass. Within the heating sector, bioenergy is the major source of energy. And it is growing steadily in the production of electricity and transport fuels. (Figure 1.)

Figure 80 - Bioenergy-use in the transport, electricity and heating sector 2010 (Svebio, Swedish Energy

In Sweden district heating is used frequently in most towns. In 2008, total deliveries of district heating

Agency)

reached ~ 50 TWh (District Heating Sweden, 2011). The most widely used fuel in the district heating

sector is biomass of different forms. To name a few; branches and tops, recycled wood-fuel, briquettes
and bio-oil. Pellet is a quite popular fuel as well. In 2009 appr. 2 TWh or ~ 500 000 tons of pellets was consumed in the district heating system. Biomass is also common among small households. Final use of biomass, for heating, increased with nearly 26 percent (2006-2009), in the small-scale sector (Swedish Energy Agency, 2011). The final use of biomass in the smale-scale sector was 13 TWh in 2009. The most common source for heating is still 138

electricity. Electricity-prices have been relatively high in recent winters. The potential for biomass is therefore assessed as high. Sweden introduced carbon tax on fossil fuels in 1990. Since then Sweden has experienced rapid economic growth and decreased carbon emissions. The carbon tax has paved the way for an increased use of bioenergy and other forms of renewable energy. Not just for the industry but for the whole society (more on this see chapter 5). In 2003 the electricity certificate system was introduced. It is a market-based support system for electricity from renewable energy sources (Swedish Energy Agency). The system is intended to increase the production of renewable electricity with 25 TWh by 2020 (compared to 2002). One electricity certificate is issued to each producer who, in an approved plant, produces one megawatt-hour. Demand for certificates is created by that electricity suppliers, are required to purchase certificates corresponding to a certain proportion (quota) of their electricity sales (or use). The system is therefore market-based because the principle of the system is that there are sellers and purchasers of certificates. Biomass is one of many sources which entitle its producers to certificates. Sweden has been allocated the highest target in the RES directive. In 2020, 49 percent of Swedens energy consumption is supposed to be renewable. The Swedish government has set an even higher target, 50 percent. An estimation made by the Swedish Energy agency shows that Sweden will reach nearly 51 percent in 2020. Much of this renewable energy will come from bioenergy. The total input of Bioenergy in Sweden reached 141 TWh in 2010. An estimation made by the Swedish Bioenergy Association (Svebio) shows that the supply of bioenergy can increase to nearly 248 TWh in 2020. Biomass does and will continue to play an important role for heating in Sweden. Also in the power sector the use of biomass is expected to grow. A recent study prepared by the associations Svebio, Swedeenergy, District Heating Sweden and the Swedish Forest Industries Federation, shows that the total CHP production will increase with over 3 TWh until 2016 in Sweden (Svebio, Skogsindustrierna, Svensk Fjrrvrme, Svensk Energi, 2011)

2. Pellet markets
Most of the statistical data about pellets in this chapter is from the Swedish Pellet Producers association (PiR). PiR is a non-profit member organization today organizing 15 member companies in Sweden accounting for appr. 85 % of the Swedish pellet production. Estimations have been made of the volume that is not covered by PiR.

Summary
In 2010 the total pellets production in Sweden reached ~ 1 700 000 tons. Apr. 700 000 tons was imported. Apr. 2 300 000 tons was consumed. The total consumption of pellets increased with nearly 400 000 tones between 2009 and 2010. The cold winter that hit Sweden these two years is the main reason for this increase. A forecast made by PiR shows that consumption will end up at a level similar to that of 2009. 139

Which means a consumption of ~ 1 900 000 2 000 000 tones. The production of wood pellets has increased rapidly since 1997.
Table 32 Production, import and export for wood pellets in Sweden in 1 000 tons (PiR, 2011)

Year

Production (tons)

Export, from Import PiR members (tons) (tons)

Total (tons)

Used by private consumers (tons)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

438 467 540 549 782 766 869 915 1287 1363 1359 1579 1576 1649

7 13 26 20 49 36 6 20 144 129 54 92 88 65

63 82 116 157 173 172 266 341 330 350 358 363 430 695

494 536 630 686 906 902 1129 1236 1473 1585 1663 1850 1918 2280

39 58 81 80 150 235 297 345 458 609 635 680 695 785

Herinafter:

Large-Scale > 2 MW Medium-Scale 25 kW 2 MW Small-Scale < 25 kW

Brief summary of different segments

Below provides a brief summary of different segments.

Large - Scale market

District heating or Combined Heat and Power (CHP) are quite common in Sweden. Many (as good as all) district heating plants have changed from oil to wood firing. Wood pellets have been used frequently during the last 25 years in this segment. Pellets, especially, is a frequently used wood-fuel in the large scale market during cold winter days. Deliveries, from Swedish producers, of pellets to the large-scale

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market (> 2 MW) have declined in recent years. At the most (2005) appr. 600 000 tons of pellets, from Swedish producers, was delivered to the large-scale market. In 2010 appr. 360 000 tons was delivered. Possible explanations for this could be the e cold winters that hit Sweden 2009 and 2010 forcing the users to use more oil. Also investments in boilers, more capable to handle cheaper fuels with a lower quality than pellets can be an explanation. But the most likely explanation is that the import has increased rapidly, mainly to large-scale users.

Medium Scale market

At the moment the medium-scale market is one of the most interesting pellets-markets in Sweden. This is because of a recently introduced energy tax. Also the Carbon dioxide tax has been raised for this segment. The production industry has not previously paid full carbon dioxide tax (reduction). Many production industries still use oil for heating. Since the beginning of 2011 industries not participating in the emission trading system (ETS) are now paying more carbon dioxide tax and a recently introduced energy tax. Industries not participating in the ETS system will be imposed an additional tax increase 2015. The figure below

shows what the tax raise means for

production industries still using oil for

heating

without

participating in the ETS. (Tax only

EUR/cubic meter oil, EO1) (Swedish tax office, 2011) One cannot say that
Figure 81 - Tax for production industries EUR/m3 oil E01

any major effects have occurred yet.

Probably due to a lack of information from relevant authorities. There is also a huge opportunity for
the market to inform relevant companies on this. The major effect is likely to be felt in 2012. Because then it will become very clear how much more expensive it was to use oil for heating in 2011 compared to 2010. The deliveries from Swedish pellet producers to the middle-scale was appr 500 00 tons in 2010. Deliveries from PiR members reached appr. 440 000 tons. In 2005 the deliveries from the PiR members to the middle-scale segment was appr. 165 000 tons. 141

The imported pellets mainly go to the large-scale market for the moment. Therefor this segment is expected to grow mainly for the Swedish pellet producers (short-term).

Small - Scale Market

The small scale market is around 785 000 tons large. The market expanded considerably over the years of ~ 2004-2007. This was mainly because of a financial support that made it very profitable for homeowners to convert from oil to pellets. Simply by replacing and putting a pellet-burner at the oil boiler instead of an oil-burner. This huge conversion caused the pellets-market to rise sharply. Unfortunately, the ability to apply for financial support disappeared sooner than expected. The funding proved more popular than expected. New installations of pellet burners decreased dramatically between 2006 and 2007. From 32 000 to 6 000 (SBBA, 2007). Statistics regarding pellet equipment is made primarily of the Swedish Heating and burners Association. Unfortunately, not all statistics are published. The figure below shows the most current and available statistics for this report.

Figure 82 - Pellet burner installations < 25 kW (SBBA, 2007)

The deliveries of pellets to this segment increased with nearly 100 000 tons between 2009 and 2010, mainly because of the cold winter. An estimation made by the PiR shows that the deliveries to the smallscale market will end up at level of appr. 720 000 tons.

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Electricity prices in Sweden have been low over time compared to the rest of Europe. Therefore are heatpumps a popular alternative among homeowners. However, Sweden has recently been divided into 4 different electricity-areas. This is because of an uneven distribution between different parts of the country in production and consumption. In summary this means that the electricity prices for the south part of Sweden will be higher than in the north part of the country, where most of the electricity production takes place (hydro-power). Southern Sweden is more densely populated than northern Sweden. Higher electricity prices will make heat pumps less competitive and pellets even more competitive.

3. Pellet quality and certification

This chapter provides an overview of various stakeholders point of view regarding the quality and certification of pellets in Sweden. The chapter is divided into Producers of pellets, Users of pellets and Installers/resellers of pellets related equipment.

The questionnaire
A questionnaire was sent out to relevant stakeholders to be able to map the view on sustainability, quality, certification, labeling schemes, share of certified pellets etc. The questionnaire and the results are attached to this report (chapter 6). Most of the questions are multiple-choice. This means that, for some questions, the respondent can choose to answer with several options. Stakeholders were found through relevant associations and companies. Respondents answered different questions depending on which category they belong to. Of course, whenever possible, some questions were answered by several categories. Because of this answers could be compared between the different categories. Respondents were divided into the following categories. Producers (pellets) (33 ) Users of bioenergy (mainly large-scale both pellets users and non-pellets users) (111) Installers of pellet related equipment (stoves, boilers, burners) (small-scale) (122) Traders/agents of pellets (3) Sellers of pellets related equipment (stoves, boilers, burner) (small-scale) (27)

The questionnaire was sent to 296 respondents (e-mail). 109 respondents answered the questionnaire (33 %).

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Relevant questions and results are listed in the following sector, 3.2. For a complete report please see annex 1.

Pellets quality and certification according to:

This section is divided into Producers of pellet, Users of pellets and Installers/Sellers of pellets related equipment. The number in parentheses, after each question, indicates the number of respondents who answered that specific question

Pellet producers
33 producers were asked to answer the questionnaire. At most 18 producers answered the questions. Some of these 18 producers chose not to answer some of the questions. A majority of the producers, state A1 class (EN 14961-2) as the most frequently pellets-standard. Probably is the share of A1 even greater because many respondents simply do not know under which quality class their company mainly deliveries. Probably this is because many do not know that now they produce under the European standard, and not the old Swedish one SS 187120. Most of the producers fulfill the new European standard.

Figure 83 - The proportion of different quality classes (18)

Producers in Sweden also believe that pellets concentrated to their home-market fulfills a high quality (Figure 5). Neither do they believe that there is wide variation in quality (Figure 6). 44 % of the respondents believe that pellets is a number of biofuels that need additional quality classifications. 39 % of the respondents think that its not needed. 50 % of the respondents do not believe that there are enough regulations that address differences and problems in quality, when there is. 14 producers have answered the question; Which is the most common problems that you have heard of and which relate solely to differences in pellet quality. The most common problem with pellets-quality according to the producers is fine fractions (fines). 57 % of the respondents have chosen this option from the options given. Also sintering is a common problem related to pellet properties. 36 % of the respondents have stated this as a common problem as well.

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Most raw-material is purchased as saw-dust, mainly dry. But the share of wet saw dust is also significant.

Figure 84 - Swedish producers views on pellets quality on the Swedish market.

Figure 85 - Swedish producers views on pellets quality on the Swedish market

. There is no established certification scheme for pellets in Sweden among the producers. The majority of the producers do not produce under any specific certification scheme (Figure 7). The most common certification is FSC, which is not a specific pellet certification. 145

Figure 86 - Share of different pellet-certification schemes of the Swedish pellet-production

Most of the producers do not consider implementing any certification-scheme for the moment. The main reason for this is that they dont believe that certification adds any extra value (Figure 8).

Figure 87 - Reasons for not implementing any certification scheme according to Swedish pellets producers.

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Pellets users
This category consists of medium and large scale-users of pellets. All of the respondents deliver district heating. Some of the respondents are also CHP-plant and deliverer both power and district heating. Some of the respondents, 28, have stated that they use pellets to a certain extent according to statistic from the Swedish district heating assc. (2009).The majority of pellets-users in this study consume < 5 000 tons pellets every year.

Figure 89 - Large and medium-scale user view of pellets quality on the Swedish market.

A total of 48 users answered the questionnaire. Not all questions were mandatory. The number in parentheses, after each question, indicates the number of respondents who answered that specific question.

Figure 88 Large and medium-scale user view of pellets quality on the Swedish market.

A majority is satisfied with the pellets quality of their home market (Figure 9). They do not believe that

there are wide variations in quality (Figure 10).

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21 of the users have answered the question; Which is the most common problems that you have
heard of and which relate solely to differences in pellet quality. The most common problem with pellets-quality according to the users is fine fractions (fines). 48 % of the respondents have chosen this option from the options that were given. Also sintering is a common problem related to pellet properties. 38 % of the respondents have stated this as a common problem as well. This shows that both producers and users are experiencing the same problems, when and if there are any, with pellets quality. It should also be mentioned that 33 % of the users do not think there are any problems in connection with pellets-use that can be related to pellets-quality only.

21 of the users have answered the question; Do you think that today there is an adequate regulatory
framework that handles deviations in quality 29 % of the users do not consider existing regulations, governing the handling of deviations in quality, are sufficiently. 33 % of the users consider there are enough regulations. 38 % of the users state that they simply do not know.

The majority of users do not intend to start using certified pellet (if possible) (Figure 11). Reason
for this is the same as for producers.

Figure 90 - Intentions to start using certified pellets in the future among lrage-scle users (Sweden)

A small number of users are aware of any of the pellets certifications available today. 19 people have checked the option No, none of these at the question (Table 2). 148

Before this survey, have you heard of any of the following certification schemes?
Table 33- Swedish large- and medium scale users knowledge of various pellets-certification schemes.

YES - Enplus YES - DINplus YES - NORM YES - PelletGold YES - NF YES - Green Gold Label NO - None of these YES - Other

1 1 0 0 0 1 19 O

Figure 91 - Main Reasons among Swedish large scale-the uses note Implementing any certification on pellet.

Installers, Sellers and Producers of pellets related equipment

149

Respondents in this category mainly operate in the small-scale and residential market. They can be an installer, a reseller or a producer of pellets related equipment (stoves, burners, boilers etc.).
Hereinafter, this category is called equipment suppliers. The population, of the equipment suppliers in this report, consists of 30 respondents. The population consists mainly of installers of pellet-related equipment (20). Unlike the users in the section above, this category has experience of pellet use within the small-scale market (residential market). This category is in close contact with the consumers. The small-scale market is a segment which usually raises the bar

on quality.
Most of the equipment-suppliers are satisfied with the pellet-quality at their home market. But the rating is slightly lower than what the large-scale users say (Figure 13).

Figure 92 - Equipment-suppliers view of pellets quality on the Swedish market

It is clear that equipment-suppliers are experiencing more problems with pellet-quality than large-scale users. Probably due to the small-scale market is more sensitive to variations in pelletsquality. A variation in pellets quality is something that many equipment suppliers seem to experience (Figure 14). Most perceived problems that can be related solely to pellets quality are fines and sintering. 70 % of the respondents have chosen fines from the options given in the survey. Also sintering is a common problem related to pellet properties. 52 % of the respondents have stated that this as a common problem as well. Most equipment-suppliers do not consider that there is a sufficient regulatory framework for handling variations in pellets-quality. 63 % say no 22 % say yes and 15 % dont know when asked if there is a sufficient regulatory framework for handling variations in pellets-quality.

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Equipment may also be the reason why there are sometimes problems for consumers. The equipmentsuppliers are fully aware of this. When compared, the equipment-suppliers state that problems encountered usually occur because of "errors" with the equipment also. (Figure 15 and 16). In the free text answers, many also indicated that customers often do not know how to handle the equipment correct.

Figure 93 - Equipment-suppliers view of pellets quality on the Swedish market

Figure 94 - Arisen problems for consumers because of the qualit. According to equipment-suppliers

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Figure 95 - Arisen problems for consumers the pellets-equipment. According to equipment-suppliers

It is clear that many equipment- suppliers recommend their costumers which pellets to use. 68 % the equipment- suppliers have stated that they usually recommend their costumers particular pellets. 72 % recommend both a particular producer and/or a reseller.

Figure 96 - Knowledge of various pellets-certifications among equipment-suppliers

Knowledge of different pellets-certifications is low. 85 % of the equipment-suppliers state that they never heard of any certification given as an alternative (Figure 17). Many of the equipment-suppliers are asking for more information of different pellets-certifications. If there is a certification they can trust, many equipment-suppliers would be willing to put a sticker with a certification on their products (64 %). They would also be willing to provide an information sheet about a certification they can trust (60 %) with their products. Most equipment- suppliers want to know more about what various certifications means before making such a decision.

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4. Sustainability
This section gives a short brief about Swedish forestry, relevant laws, incentives and stakeholders views on sustainability. Sweden is a country dominated by forest and forestry is crucial for the national economy. The forest industry in Sweden employs appr. 70 000 people (Swedish Forest Industries Federation, 2011). The annual growth in the Swedish forests amounts to ~ 120 million cubic meters (over bark) (Swedish Forest Agency, 2009). The annual cut amounts ~ 90 million cubic meters (over bark). Both the carbon stock and the standing volume have increased dramatically in the Swedish forests since the beginning of the last century.

The Forestry Act and the Environmental Code

During the 19th century, many forests were being overused for logs (both fuel and timber) and charcoal for the industry. One can say there was some form of deforestation. After decades of political debate, the parliament passed the first Forestry Act into law in 1903. Sweden was one of the first countries where forest conservation laws came into effect (Swedish Forest Agency, 2011). The Forestry Act has been updated four times since 1903 and todays comprehensive legislation balances economic, ecological and social interests. The Swedish Forest Agency is responsible for assuring http://www.skogsstyrelsen.se/en/forestry/The-Forestry-Act/The-Forestrycompliance with the law. Act/Reforestation-/ The Forestry Act sets out demands upon forest owners. These demands include wood production levels, that must be attained, and considerations for conservation of nature and the cultural heritage (various sustainability criterias). New forest must be planted or naturally generated after felling when the lands capacity to produce timber is not fully exploited. Three years after the felling, the planting or measures for natural regeneration must have been completed. The Swedish forest Agency is also responsible for enforcing the Environmental Code (when possible/needed). The Swedish Environmental Code entered into force 1 January 1999. The rules contained within 15 acts have been amalgamated in the Code. Its rules relate to the management of land, water, nature conservation, the protection of plant and animal species, environmentally hazardous activities and health protection, water operations, genetic engineering, chemical products and waste. The Environmental code is highly relevant when forestry measures significantly change the natural environment. http://www.skogsstyrelsen.se/en/forestry/The-Forestry-Act/The-Environmental-Code/

Carbon dioxide tax a great example of a general and successful incentive

Sweden introduced carbon tax in 1990. Since then Sweden has experienced rapid economic growth and decreased carbon emissions. Sweden has the highest Carbon tax, about 15 U.S. cents per kg of carbon dioxide. The purpose of carbon taxation is not to punish people for their life style or technical equipment today, but to help them make the right choices and investments for the future.

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The level of the Carbon tax is not the main issue at the start. More important is to get a general acceptance for the carbon taxation. Once the tax is introduced it can be raised gradually to make it possible for companies and individuals to take action to reduce their use of fossil fuels. According to Polluter Pays Principle (PPP) emitters of CO2 should pay a Carbon tax for their emissions and in this way pay for current and future costs caused by the emission. That way the environmental costs (external costs) are internalized and made a part of the total cost of the polluting activity. The purpose of the tax is not to increase taxation, but to steer the economy in a sustainable direction. Other taxes can be lowered to compensate for the raised Carbon tax, in a green tax shift. A Carbon tax is always the same or higher in the future, if this has been decided on. The tax therefore creates a higher degree of certainty for investors. A quota system or a feed-in tariff system is good for the investors and energy producers who qualify for the system, but it doesnt affect the whole society the same way as a Carbon tax. Furthermore, the politicians have to decide what technologies to stimulate, e.g. whether to further energy efficiency or renewable energy production, as well as what kind of renewable technology. With a Carbon tax these decisions are left to the market (the companies, the consumers).

Position of different stakeholders

Relevant stakeholders were asked to give their views on sustainability criterias in this study. It is clear that many of the respondents participating in this study are not aware of potential sustainability criterias (Figure 18). Of course, the respondents in this study were given short facts about potential sustainability criterias before answering this question. It is also clear, that respondents who do not respond that they do not know anything about this subject do not prefer strict rules. This also shows that there is a huge need for more information to relevant stakeholders on sustainability criterias.

Figure 97 - Stakeholders views on sustainability crieteras

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Many Swedish stakeholders, ranging from the authorities to relevant associations and enterprises, have stated very clear that harmonized sustainability criterias is an inappropriate instrument to ensure sustainability for bioenergy. Stakeholders like relevant associations, authorities, and scientist. Even the Swedish government, together with the governments of Denmark, Estonia, Finland, Latvia, Lithuania and Norway, has questioned the possibility to ensure sustainable forestry for biomass. As good as every political party in Sweden has a stated desire to decrease the bureaucracy for many small-businesses. A detailed sustainability scheme would bring an additional bureaucracy, administrative costs and risk the many of the feasibilities of small-business. This might discourage forest owners and producers from certifying. Perhaps sustainable products will not be offered to the market cause of the bureaucracy. Given the varying national and local conditions one can question the possibility to establish harmonized and detailed sustainability criteria. All products from the forest should be subject to same criteria. The individual forest owner does not know the end use of the tree when the forest is being harvest. One cannot harvest one tree and ensure a sustainability of its bark to be used for bioenergy but ignore the sustainability of the stem used by the timber industry.

5. Conclusions and outlook

The Swedish pellets-market is expected to grow in the future. The medium-scale market is one of the most interesting markets because of tax raises on oil. If the price of electricity also increases the competitiveness of pellets can be further increased in the small-scale market. The majority of the Swedish pellets producers fulfil the criterias for A1 class (EN 14961-2). It is clear that both producers and large-scale users believe that the quality of pellets produced in Sweden is high. Neither do these two stakeholder groups perceive that there is wide variation in pellets-quality. The sellers of pellets-related equipment find the quality of pellets in their home lower than producers and large-scale users. They also believe that there is a wide variation in quality. The small-scale market is a segment which usually raises the bar on quality. Any deficiency in the pellet quality is therefore easier detected. This is also the segment who claims the most that that there is a lack of an adequate regulatory framework. It is also clear that the most common problems related to pellets-quality are fines and sintering. The ENplus is not implemented among the Swedish pellets producers. This survey shows not that they plan to do it either. Primary reason for this is presented as certifications do not add any extra value. However, if mandatory sustainability criterias for solid biomass are to be implemented, the producers will have to prove their sustainability in some way. Certification is of course one way. Also, the Swedish pellets producers association, PiR, recently announced that they are investigating a launch of a Scandinavian certification scheme in the future.

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The knowledge of ENplus is poor. However, both large-scale users and sellers of pellets-related equipment are interested in receiving more info on relevant certifications. Most of the sellers of pelletsrelated equipment are also willing to promote some form of certification together with their own products. As long as they know they can trust that specific certification-scheme. To prove sustainability, general and wide incentives should be adopted as fare as possible. Sweden has long traditions of sustainable forestry through general and market-driven incentives and national forest legislation.
Figure 98 - Heating prices in Sweden
14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00
01/01/2002 01/07/2002 01/01/2003 01/07/2003 01/01/2004 01/07/2004 01/01/2005 01/07/2005 01/01/2006 01/07/2006 01/01/2007 01/07/2007 01/01/2008 01/07/2008 01/01/2009 01/07/2009 01/01/2010 01/07/2010 01/01/2011 01/07/2011

Electricity Oil Pellets

180 160 140 120 100 80 60 40 20 0 2005 2006 2007 2008 2009 2010 Small scale Mid sector Total

Figure 99 - Pellet installations

156

250 200 150 100 50 0 2005 2006 2007 2008 2009 2010

Import Export

Figure 100 - Trade

3000 2500 2000 1500 1000 500 0 2005 2006 2007 2008 2009 2010 New Renovation

Figure 101 - pellet heating systems in Sweden

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For more information about ENplus certification and its development visit www.enplus-pellets.eu More information about the European standards for solid biomass: www.solidstandards.eu General bioenergy information and biomass statistics: www.aebiom.org Picture credits front page: Deutsches Pellet Institut

PellCert project, 2012 Project number IEE/10/463/S12.592427