With a degree in physics, Christian Rakos has been executive director of the Austrian Pellet Industry Association 'proPellets Austria' since 2005 and president of the European Pellet Council since 2010. He has held posts at the Institute for Technology Assessment of the Austrian Academy of Sciences, the Austrian Energy Agency and the Irish Renewable Energy Information Office.
What is the European Pellet Council and what is its role?
The European Pellet Council is an umbrella organisation representing the interests of the international pellet industry. We have 23 members, all of which are national pellet or biomass associations. Our objectives are to represent the pellet industry and its interests at the European institutions in Brussels, to stimulate cooperation between national pellet associations and to operate a certification scheme for pellet quality – the ENplus certification, which plays a key role for successful market development.
How important is the contribution of solid biomass to the SET-Plan and attainment of Renewable Energy Directive targets, to 2020 and beyond?
In my view the role of solid biomass for space heating and low- and medium-temperature industrial heat has been neglected in the past by most national and European renewable energy policies. What puzzles me most is the fact that solid biomass use in heat markets is only getting attention now, even though it offers a commercially viable use of renewable energy. With limited financial efforts but well organized policies, major shifts in our heat markets could be realized, leading to net financial savings, greater energy security and a substantial reduction of greenhouse gas emissions.
You have argued in the past1 that solid biofuels and the heating sector offer greater potential to reduce greenhouse gas emissions than liquid biofuels and the transport sector, yet the latter receive more focus in policy. Could you expand on whether this is still the case?
For the time being we can see a dynamic market uptake of wood pellets for heating in just a few countries in Europe: Denmark, Sweden, Germany, Italy, Austria and France. In these countries dedicated policy measures have helped to kick-start the market, which is now on a sustainable growth curve. This year more than 10 million tons of pellets will be consumed in these heat markets. The average annual demand growth for pellets in the heat sector in the last four years was 15%. The main driver for market development is the fact that wood pellets are substantially cheaper than heating oil and national gas. Nevertheless, many countries have not realized this opportunity yet and have failed to kick-start market development by policy measures.
Do we have enough wood in Europe to meet the EU demand for pellets? And for imports, say from North America, if transportation costs and fuel oil for shipping are factored in, are the GHG savings still economically interesting?
Obviously, Europe is a densely populated continent with limited biomass resources. Nevertheless, in many Member States, use of wood resources is still way below the annual regrowth and could be significantly expanded. U.S. and Canadian imports add to supply security and the stability of pellet prices. In the U.S. the demand for pulpwood has declined by 100 million tons between 1995 and 2010. Consequently huge amounts of fibre are available at low prices. In terms of greenhouse gas savings, imported pellets from the U.S. can still achieve more than 80% GHG reduction, an excellent value compared to first generation liquid biofuels, which achieve around 30% GHG reduction.2 With respect to costs, transport across the Atlantic in large vessels is fairly cheap and, given the lower fibre prices in the US, the imported pellets are cheaper at the port than European pellets.
Fast-growing forests for solid biofuels often have very low biodiversity, while continuous harvesting can exhaust the soil. How sustainable is the wood pellet industry, for example, in the long term?
In Europe, raw material used for pellet production mainly comes from saw-mill residues and to a lesser degree, also from low value pulp-wood. Indeed, in the U.S. a large part of pellet production is based on fast growing pine tree plantations that have been established to supply the pulp industry with fibre. Trees, in contrast to annual crops, require significantly lower levels of nutrients. Due to the permanent cover, no soil degradation takes place. Also, herbicides are usually not applied except once in 20 years, just after planting. So, tree plantations are much more sustainable from an ecological point of view than annual crops.
Is the future market for the pellet industry in Europe in the domestic heating sector, in pellet boilers and stoves for example, or in the power industry? Or both? Where is the most growth expected?
Currently wood pellet consumption in Europe for power production is around 9 million tons, and for heat generation, about 10 million tons. In my view, both markets complement each other and support each other’s development. The ability of power producers to sign long-term advance agreements to purchase pellets (off-take agreements) has enabled major investments into pellet production facilities that are now also starting to supply heat markets. On the other hand, demand in heat markets is growing in a more predictable way than in the power sector as it is not dependent on day-by-day political decisions.
The role of pellet use in power markets is entirely dependent on adequate political framework conditions, as pellets are significantly more expensive than coal. On the other hand, with the conversion of coal-fired power plants to wood pellets, it is possible to realize large greenhouse gas savings within a very short period of time and at comparatively low costs, compared to other renewable electricity generation technologies. At the moment it seems that certain Member States’ policies aimed at reducing electricity costs have an adverse effect on renewable energy technologies. Recently, the use of wood pellets for power production was stopped in Belgium and in the Netherlands, for regulatory reasons. In Poland the market for power generation collapsed last year for similar reasons. In the UK, the Department of Energy and Climate Change is constantly altering its policies and creating very significant risks for generators. This makes it very hard to predict future growth in the power market.
Pellet use in heat markets will continue to grow in those countries where it has entered into steep growth curves. The question is whether we will also see more widespread use of pellets for heating in currently dormant markets. I believe this will happen and continued rapid growth of the market can be expected.
What are some of the main challenges and opportunities facing the solid biofuel industry in the next decade or so?
A major challenge we face at the moment is posed by policies that attempt to establish emission limits that are extremely difficult to meet. This could lead to massive cost increases due to the necessary attachment of filters. At present a modern pellet boiler reduces particulate matter emissions, compared to an old logwood boiler, by about 95%. From our point of view it would make much more sense to promote the use of pellets and reduce the use of old logwood stove and boilers than to require even lower emissions of already clean burning appliances. Another challenge I see is the huge communication effort needed to introduce a new fuel in the market. Our industry is mainly based on small and medium sized enterprises that do not have the means for communication and promotion on the large scale necessary. This is one of the main things we need policy support for. Apart from that, the opportunities are great. Fuel availability with on-going internationalisation is almost unlimited. The price of our fuel is fully competitive. Technologies are fully developed and used by millions of European households and the only question is how can we expand this technology from the developing markets to dormant markets in other Member States..
What potential is there for synergy with other renewable energies, such as solar, for example?
The synergies between pellet heating and solar thermal collectors are considerable and increasingly both systems are combined. A buffer tank, needed to run the solar thermal collectors is very useful for stabilizing heat demand from the pellet boiler. The downside is that the cost of heat provided from the pellet boiler is very low, so the economical benefit from the solar system is not so significant. We can also observe synergies between air source heat pumps, which operate very inefficiently at cold outside temperatures, and pellet stoves that can top up heating capacity and reduce electricity demand during cold weather conditions.
1 Conference of the Association for the Study of Peak Oil and Gas (ASPO) in 2012
2 Editor’s note: GHG reductions can vary, depending on how different variables such as transport are factored in. In a recent article in Environmental Research Letters, estimates of 50% to 68% GHG reductions were found for pellets imported into the UK from USA. See: Puneet Dwivedi et al (2014) Environ. Res. Lett. 9 024007 doi:10.1088/1748-9326/9/2/024007.