The industrial wood pellet industry is experiencing an extended period of rapid demand growth. According to Hawkins Wright, annual industrial wood pellet demand increased from 9.4 million MT in 2013 to 12.9 million MT in 2016, representing a CAGR of 11.1%. Hawkins Wright estimates that potential demand for industrial wood pellets will more than double to 29.2 million MT by 2021, representing a CAGR of 17.7% relative to 2016 demand levels.

The growing global potential demand for industrial wood pellets is being driven by a shift toward renewable power generation, largely motivated by the introduction of regulatory frameworks that set targets and create incentives for the reduction of GHG emissions. Several global, regional and local regulatory frameworks and policies have been put in place to facilitate this shift to a cleaner energy mix, such as the Paris Agreement (Global), the Climate Change Act (U.K.), the Renewable Energy Directive (E.U.), the Best Energy Mix (Japan) and the Renewable Portfolio Standard (Korea).

These policy frameworks have incented large utilities and power generators to develop renewable energy resources, including dispatchable power generation that can provide baseload capacity. We believe demand for sustainable baseload capacity in key markets, coupled with the ability of power utilities to either convert existing coal fired power plants to utilize biomass or construct new greenfield plants, will continue to drive global demand for industrial wood pellets.

Primarily as a consequence of demand from the United Kingdom ("U.K."), Denmark, Sweden and Belgium, Europe is the single largest industrial wood pellet consuming region in the world, accounting for 82% of demand for industrial wood pellets in 2016. While Asia currently accounts for a relatively small percentage of the overall market, it is expected to become the world's fastest growing region due to recently implemented government support for greenfield renewable energy power plants and coal conversion projects in Japan and South Korea. In the period beyond 2021, Asian potential demand is expected to be the primary driver of growth in the global industrial wood pellet industry.

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  United Kingdom >>
The driving force behind growth in demand for industrial wood pellets in the U.K. is the Climate Change Act, which requires the U.K. government... More >>

  European Union (excluding the U.K.) >>
The primary policy that is driving the industrial wood pellet market in Europe is the Renewable Energy Directive, which sets binding targets on the... More >>

  Japan >>
Japan is currently the fastest growing industrial wood pellet market in Asia. The Japanese government has stated that it remains committed to... More >>

  South Korea >>
In January 2012, the South Korean government introduced the Renewable Portfolio Standard, which requires 14 energy companies to source an increasing... More >>

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