UK Wood Pellet Imports Fell 30% to a Ten-Year Low – Why?

In 2022, the UK imported 7.52 million metric tons of wood pellets for energy production. This was down from a five-year high of 9.13 million tons in 2021. 

According to data from the UK government, the majority of wood pellet imports, approximately 60%, came from the US. The other leading imports were sourced at 18% from the EU and 16% from Canada.  

For the first 11 months of 2023, the UK imported less than 6 million metric tons of wood pellets, with a significant portion of 4.24 million tons from the US. This suggests that both total pellet imports and imports from the US are expected to decline considerably in 2023 compared to the previous two years. 

Several factors contributed to the decrease in wood pellet imports in the UK in 2023, including: 

• Lower demand for wood pellets from Drax’s huge power plant in Shelby, Yorkshire, and the EPH biomass-burning power plant in Lynemouth. 
• The UK’s Contract for Difference (CfD) scheme reportedly made pellet fuel temporarily uneconomical for CfD-backed units. The CfD scheme is a mechanism for supporting low-carbon electricity generation by protecting project developers from volatile wholesale prices. 

The Influence of Sustainability on the Demand for Wood Pellets

Over the past few years, the European wood pellet market has witnessed remarkable growth. It was driven by a combination of factors such as gas shortages, surging carbon prices, and the implementation of progressive EU energy policies. 

With mounting concerns about climate change, there has been a boost in demand for renewable energy sources. Wood pellets, when obtained sustainably, are considered carbon-neutral since the carbon dioxide emitted during combustion is predominately offset by the amount absorbed by trees during their growth. This intricate cycle creates a self-contained carbon loop, further emphasizing the environmental benefits of wood pellets as a renewable energy solution. 

Wood pellets are an excellent feedstock for biomass power plants, where they are efficiently burned to generate steam. This steam is then harnessed to produce electricity, allowing these biomass power plants to make a valuable contribution to the grid as a reliable and renewable energy source. 

Government policies, subsidies, and incentives have created a significant push towards renewable energy. This shift has led to a surge in the utilization of wood pellets as a renewable energy source, driving up the demand for them. 

Gain Further Insights on How the UK Legislature Could Impact the Wood Pellet Market

The CfD program will be extended to support bioenergy with carbon capture and storage (BECCS) after the UK government sets out its plan in December 2023 to develop a competitive market in Carbon Capture, Usage, and Storage (CCUS) by 2035. This plan is expected to boost the UK economy by 5 billion a year by 2050 and make the UK a pioneer in this technology. 

Learn more about how this and other legislature could impact the wood pellet market with our Market Insights report from Audrey Dixon, Managing Editor/Writer, Forestry, ResourceWise. Download the report below.