Domestic wood pellet production was affected by scarcity of raw materials

In 2022, a total of 360,000 tonnes of wood pellets was produced in Finland. Russian wood pellets are no longer sold in Finland, which led to a decrease in pellet imports.  The figures are based on recent statistics on annual pellet production published by the Natural Resources Institute Finland (Luke) and provisional data from Finnish Customs.

According to Tuomas Niinistö, Senior Statistician at the Natural Resources Institute Finland (Luke), a scarcity of raw materials led to a decrease in wood pellet production. Pellet production, which makes use of forest industry by-products and residues, is closely tied to forest industry production volumes.  Pellet raw materials are also in great demand for use as fuel in heating and power plants.

A total of 360,000 tonnes of wood pellets was produced in Finland, a decrease of two per cent from 2021.

The war in Ukraine led to changes in the European pellet markets

The decrease in imports boosted domestic demand for pellets. In the past, a substantial proportion of the pellets used in Finland came from Russia, but the war in Ukraine ended all pellet imports from that country. According to provisional data of Finnish Customs, 187,000 tonnes of wood pellets were imported to Finland in 2022, and the imports from Russia during the early months of the year accounted for 73,000 tonnes of this total. Despite the war in Ukraine, Russia remained the largest single source of imported pellets, but imports from other countries increased.

In 2021, a total of 196,000 tonnes of wood pellets were imported to Finland, and Russia accounted for more than 60 per cent of this amount. Rising energy prices also had an impact on pellet markets, and as a result, there was a substantial increase in real import prices for wood pellets in 2022. The real value of pellet imports increased by 59 per cent compared to 2021 (deflation: wholesale price index, 1949=100), even though the volume of imports decreased by more than four per cent.

“The termination of pellet imports from Russia has been particularly problematic for Central European countries where pellets play an important role in heat generation. For European countries, North America has replaced Russia as the prime source of pellets,” Niinistö explains.

The growing demand in the European market was also reflected in Finnish pellet exports, which increased by more than a third to 18,000 tonnes. Denmark and the United Kingdom were the biggest export markets for Finnish pellets. Despite the growth, export volumes remained small.

As a result of falling production and changes in foreign trade, the calculated consumption of wood pellets (production + imports – exports) in Finland decreased by four per cent to 529,000 tonnes.

A growing proportion of domestically produced wood pellets goes to heating and power plants

Pellets still play only a minor role in energy generation in Finland, and they only account for about three per cent of the total wood energy consumption in our country. The scarcity of wood pellets has little impact on the energy market, as the amounts can be replaced with other fuels such as forest chips.

However, deliveries by domestic pellet producers to customers (390,000 tonnes) increased by five per cent from the previous year. Pellet deliveries to heating and power plants increased by 20,000 tonnes, totalling 330,000 tonnes. At the same time, deliveries to households and farms decreased by two per cent, totalling 59,000 tonnes.

European countries are working to boost pellet production

According to the statistical period starting in 2004, there has been a significant increase in wood pellet production in Europe over the last few years: According to Bioenergy Europe statistics, the volume was 21.6 million tonnes in 2021.

“Germany is the biggest producer of wood pellets in Europe, and in 2021, its output was more than three million tonnes,” Niinistö says.

In 2021, the consumption of wood pellets in Europe reached 35.6 million tonnes, an increase of more than four million tonnes from the previous year. With a consumption of 9.8 million tonnes, the United Kingdom was the biggest market for wood pellets in Europe. In the EU, the top position was held by Denmark (3.4 million tonnes).

Information about the statistics

Information about wood pellet production and deliveries is collected directly from pellet producers. Information about the imports and exports is obtained from the international trade statistics of the Finnish Customs.