Wood pellets are one of the wood industry products that have recorded some of the highest growth rates in production, consumption and trade over the past twenty years, both globally and in many countries around the world, including Serbia. This expansion in production, consumption and trade is the result of several factors, the most important of which are:
- the convenience that wood pellets provide during use,
- high combustion efficiency and the release of a large amount of energy,
- small amounts of ash, and
- the fact that they are a fuel produced from renewable resources and therefore belong to the group of so-called green energy sources.
Over the past seventeen years, global wood pellet production has increased more than 18-fold, clearly demonstrating the scale of this expansion. No other wood product in recent times has experienced production growth comparable to that of wood pellets.
Wood Pellet Production
With 17.7 million tonnes produced in 2017, Europe was the world’s largest producer of wood pellets, accounting for approximately 47% of global production. North America was the world’s second-largest producer of this wood fuel, while Asia and Russia were also significant producers.
Wood Pellet Consumption
Although Europe accounts for almost 50% of global production, it is the world leader in wood pellet consumption, consuming more than 23 million tonnes, or almost 80% of total global consumption. The largest increase in wood pellet consumption in Europe was recorded in electricity generation at CHP plants, particularly in the United Kingdom, Belgium and Denmark.
Wood Pellet Consumption in Serbia
In Serbia, wood pellet production continued to grow in 2017, exceeding the milestone of 300,000 tonnes. During the first three months of 2018, production slowed due to large inventories affecting almost all producers. These inventories were the result of a sharp increase in pellet imports into Serbia in 2017, particularly from Ukraine, as well as a relatively mild winter and reduced household consumption, which represents the most important consumer category. However, the situation improved from April onwards, when demand began to increase again both on the domestic market and for export.
Although wood pellet consumption in Serbia had grown at an average annual rate of 21% over the previous four years, the situation in this segment was still considered unsatisfactory. This was particularly significant because almost 30% of total production continued to be exported. Wood pellet exports cannot be viewed in the same way as exports of other products because pellets are an environmentally friendly fuel. Exporting them effectively means exporting green energy and enabling other countries to make a greater contribution to mitigating climate change than Serbia itself. Specifically, if the wood energy contained in the pellets exported from Serbia over the previous ten years had been consumed domestically instead of natural gas, Serbia could have directly reduced CO₂ emissions by almost 345,000 tonnes.
In terms of wood pellet consumption, Serbia was the leader in the Western Balkans, with consumption of approximately 215,000 tonnes. Due to rapid consumption growth and its leading position in the region, Serbia became an increasingly attractive market for foreign producers seeking to sell their pellets.
As a result, wood pellet imports “exploded” in 2017. Compared with 2016, imports increased 3.7-fold, reaching nearly 70,000 tonnes. The largest quantity was imported from Ukraine (31,000 tonnes), followed by Bosnia and Herzegovina (18,000 tonnes) and Croatia (10,500 tonnes). The sharp increase in wood pellet imports significantly disrupted the Serbian market, particularly in terms of prices. The average price of wood pellets imported from Ukraine was USD 113 per tonne, significantly lower than the cost of producing pellets in Serbia.
Wood Pellet Quality
The growth of wood pellet production and exports from Serbia was not accompanied by an adequate improvement in quality. In June 2018, only six producers in Serbia held an ENplus certificate, while most small and medium-sized producers did not hold ENplus certification and relied only on test reports issued by domestic laboratories.
As a result, the quality of wood pellets varied considerably, ranging from exceptionally good to unsatisfactory.
In 2017, the quality of wood pellets imported from certain countries was particularly problematic, as there was no mandatory quality control during either the import process or their distribution through retail outlets. Low-quality pellets caused significant problems for end consumers, resulting in numerous complaints and dissatisfaction.
If imports of low-quality pellets without mandatory quality controls were to continue in subsequent years, this could cause serious problems not only for domestic producers of high-quality pellets, but also for consumer confidence in wood pellets as a fuel.
For this reason, an initiative was launched to introduce regulations governing the quality of wood fuels. Such regulations would primarily protect end consumers by preventing pellets that do not meet the quality criteria prescribed by the relevant standards from being distributed through retail outlets. The next step was up to the competent ministry.