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Analysis Of Wood Pellets Market In Asian
Mar 20, 2018

China

Unlike  Japan and South Korea, other Asian countries are mainly wood pellet  exporters such as China, Thailand, Vietnam, Indonesia, and Malaysia. China's renewable energy industry has shown rapid growth in recent years. In  2013, the National Energy Administration of China issued the  “Guidelines for Establishing Portfolio Standards for Renewable Energy  Resources”, which requires that renewable energy sources account for 15%  and 20% of primary energy consumption in 2020 and 2030, respectively. RPS  is a requirement to increase the use of renewable energy sources such  as wind, solar, biomass, and geothermal energy production. It  is stipulated that power supply companies use a certain percentage of  renewable energy, but some policies are still not perfect, such as the  lack of regulatory and penalties.

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  1-2015年中国颗粒进出口情况

China has a wide  variety of biomass resources including crop stalks, branches, animal  manure, energy crops, industrial organic wastewater, municipal  wastewater, and garbage. The supply of wood (forest) waste is approximately 900 Mt, of which 300 Mt can be used for energy consumption. Energy  crops such as sorghum and jatropha mainly occupy about 2 billion  hectares to meet the demand for bio-liquid fuel feedstock with an annual  output of about 50 Mt (2012 data from China National Energy  Administration). Demand for wood pellets is  increasing in China, mainly in the eastern and Guangdong provinces. The  local government has banned coal-fired boilers and the cost of pellets  is lower than in other parts of the country.


Korea

Regulatory frameworks, market drivers and barriers

Since  its establishment in 2012, the Renewable Energy Portfolio Standard  (RPS) has played an important role in the wood pellet market in Korea. Power companies are required to increase their renewable energy generation ratio from 2% to 10% in the next decade.

Compared  with other renewable energy sources such as wind, solar, or  hydroelectric power, biomass is expected to provide most clean energy,  estimated at 50-60%. After the implementation of RPS, the demand for sawdust pellets in  South Korea began to rise, and imports from other countries increased.

RPS  has advantages, including lower costs through the penetration of  competing technologies and the achievement of renewable energy supply  obligations. However, investors may bear the risk of managing an excessively high or low cost electricity supply.

Production capacity, production and raw materials

According  to estimates of FAOSTAT 2016, in the past five years, the average  annual production of sawdust pellet in Korea is only about 15 kt,  which cannot meet domestic demand. Forest products are mainly used for watershed protection and clean  water to prevent soil erosion and forest landscapes (Korean Forest  Service, 2015).

Consumption

The consumption of sawdust pellets is much higher than that of wood pellets produced in Korea. Imported wood pellets increased from 122 kt in 2012 to 1,850 kt in  2014, and slightly decreased to 1471 kt in 2015 (FAOSTAT, 2016).

Price trend

Import prices range from €109-135/t but in 2015 it is €110/t (FAOSTAT, 2016).

Trade and logistics

The  South Korean government has set the goal of importing 5 Mt of wood  pellets by 2020 to meet 75% of particle demand (Roos and Brackley,  2012). Wood  products, including pellets, are mainly from Vietnam (70%) and other  countries such as Malaysia and Canada (FAOSTAT, 2016). Other suppliers are from the United States, Canada, Russia, Indonesia and Australia.

Pellet quality standards

Unlike most other countries, Korea does not accept custody chain certification as evidence of fiber origin (Murray, 2015). The  Ministry of Environment of the Republic of Korea requires that the wood  pellets is legally sourced and that they must be made of pure wood  fibre, without any non-wood materials mixed (Murray, 2015). The Ministry of the Environment has also introduced the "Act on Promoting the Storage and Recycling of Resources". According  to the act, the importer or manufacturer of the SRF should report to  the Minister of the Environment or the local government manager after  conducting the quality inspection. If the product does not meet the  standards, the Ministry can enforce import bans and production or make  improvement as required. According  to Murray, rice husk is one of the main problems because pellets  containing any material other than wood are considered to be biomass  solid waste fuel. Allows the import of solid waste fuel (SRF) made from waste, such as  palm shells, but will strengthen the quality inspection of the import,  production and use of these products, while establishing public and  private organizations that waste energy.

South Korea allows the import of biomass fuels - palm shells. It is expected that the distribution of renewable energy can be expanded to replace fossil fuels. Moreover, this will help solve the concerns of power generation  companies in implementing the Renewable Energy Portfolio Standard  (Ministry of Environment of Korea, 2014).


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