Pellet Market Overview The wood pellet market is booming in Europe at a growth rate of 25% year to year; the

EU 2020 target for renewable energy, i.e. 20% in gross energy consumption (GEC), is a predominant driver for this boom. The annual pellet production in Europe amounted to 8 million tons in 2008, which corresponds to approximately $2.4 billion. According to the European Biomass Association, Europe is expected to reach a consumption level of 50 million tons per year by 2020, which is approximately equal to $15 billion in 2009 unit prices. In 2009, around 60 % of the produced pellets were of high quality, suitable for usage in small-scale residential combustion. Main producing countries are Sweden, Germany, Austria and Italy. The other 40 % were industrial pellets of lower quality. Again, Germany and Sweden contribute large shares but also countries such as Belgium and the Eastern European countries (e.g. Poland and Estonia) are important industrial pellet producers. In 2008, approximately 630 pellet plants produced about 8 million tons of pellets in 30 European countries. Imports from North America amounted to over a million tons. 95% of the produced and imported pellets were consumed in EU 27 (representing a 0.1% share of the Gross Energy Consumption). For 2009 imports in Europe are estimated with about 3.4 million tons, of which about the half of it can be assumed as EU intra trade. Total export is estimated with 2.7 million tons, mainly intra trade. While some large markets, such as Germany and Austria, are largely self-sufficient, other markets depend on the import of wood pellets, like the Netherlands, Belgium, and Denmark. Rotterdam is one of the major hubs for imported pellets, St. Petersburg and Riga those for export. Bulk pellets for power production show higher price fluctuations, compared to those for district heating. Different price ranges observed in 2006 and 2007 for residential heating in individual countries moved towards the same range in 2008, leading to the assumption, that a European pellet market begins to develop.

Figure 1: Balance of pellet volumes for the major European country markets 2008 Future Development: - The demand for high quality pellets in the residential sector and particularly in the medium scale sector (e.g. community solutions) is likely to continue growing strongly, not only in the traditional markets (Germany, Austria, Italy) but also in currently small markets such as France, Spain and also in Eastern Europe. - it is unclear how the demand for industrial use (e.g. in CHP applications) will develop. In this sector, growth is anticipated in countries such as Poland but plants using pellets for co-firing are usually very flexible concerning the fuel used. Changes in pellet prices or other factors such as changes in support policies could have large influence on the future demand in this sector. - The uncertain demand development in the large-scale sector is accompanied by an ongoing build-up of additional production capacities for industrial pellets (Canada, USA and Eastern Europe, incl. Russia) while the increasing demand for high quality pellets is challenged by a difficult raw material supply situation in Europe. - Long-distance transports of high quality pellets are rarely reported. The logistics of pellet supply to the residential sector therefore still seems to be mainly based on national or even regional supply chains. Exceptions are the pellet trade from e.g. the Baltic States to Denmark or the pellet transport from various European countries to Italy. - In contrast, the international trade with industrial pellets has reached impressive volumes. One reason for this of course is the fact that large-scale pellet consumption mainly occurs in countries without significant domestic pellet production (e.g. the Netherlands, UK and Denmark).

This picture might change in the future and the long-distance trade with high quality pellets (e.g. from Canada or Russia to Europe) might become necessary.

A common characteristic of all pellet markets in Europe is the ongoing rapid growth on the demand and supply sides that even occurs in mature markets. On the other hand, the availability of raw materials becomes more and more limited due to the competition with other industries. This effect is currently intensified following the low activity of the construction sector and other wood processing industries and, as a consequence, decreased timber sales. Even if the recovery of these industries can be foreseen, the European pellet industry will have to meet two major challenges in order to provide for further market growth. Firstly, a broader raw material basis is necessary to increase pellet production in Europe. Further R&D effort is needed to facilitate the use and to show the environmental and economical viability of alternative wood and non wood feedstock. Namely, forest thinnings, wood chips, short rotation coppice, agricultural residues (e.g. straw) and dedicated herbaceous energy crops are considered. Secondly, pellets are traded internationally in significant amounts already today. With growing demand this source of pellet supply will gain importance. Reliable and cost effective trading schemes need to be developed in order to ensure stable pellet markets in Europe. Above all, the sustainability of all current and future supply chains needs to be assessed. Trading schemes and production systems that are environmentally or socially harmful must be avoided. Based on preliminary 2009 production and trade figures, the consumption for 2009 is expected to be about 8 million tons in 2009 which is an increase from 1.5 million tons in 2001. Countries having a high consumption level are Sweden, Denmark (both: mainly bulk pellets for combined heat and power), the Netherlands, Belgium (both: pellets for large scale power production), Germany (mainly bulk pellets for residential heating) and Italy (pellets in small bags). Sweden is by far the largest user of pellets (1.8 million tons), whereas the other countries cited have estimated consumption levels around 1.0 million tons. What is the Potential for pellets in Europe? Current use of heating oil in the EU is 75 Mtons per year. Assuming that wood pellets would substitute primarily fuel oil consumption, this corresponds roughly to 150 Mtons of pellets. According to the European Biomass Association, Europe is expected to reach a consumption level of 50 million tons per year by 2020, compared with 8 million tons in 2009. This is likely to exceed European biomass production capacity, which is approximately 14 Mton per year (including EU + non-EU Europe). Thus Europe would rely heavily on alternative supply sources to meet this rapidly increasing demand.

Ref: European Bioenergy Services Drivers for the global growth can be summarized as; - Oil/Gas/Coal prices raising further - IEA sees serious shortages both in oil and natural gas supply ahead - Constant increase of global power demand - New and advanced processing technologies ahead - More developed trading mechanisms

Increased security of supply by diversification of resources

Figure comparison of average fuel prices in Europe Consumer Characteristics The individual consumers in Europe can be characterized as follows (Aebiom 2008): Small scale residential users with a demand of less than 10 tons pellets per year. They consume pellets for heating of individual houses using pellet stoves, like in Italy, or pellets boilers for warm water heating systems. The delivery is organized using bags (for pellet stoves) or as bulk (for boilers), where trucks blow the quantity needed for one year into a pellet storage room or container. Small to medium scale users with a demand between 10 and 1,000 tons pellets (in bulk) per year. Typical users of this size are companies, hotels, the service sector, and bigger residential units. The market share is rapidly growing due to growing prices of heating oil. Medium and large scale users with a demand above 1,000 tons per year. Power plants, industries and large district heating companies may typically consume several hundred thousand tons per year in a single plant.

Figure Per capita pellet consumption in residential heating (2008)

REFERENCE: http://www.eubia.org/uploads/media/NEF_B_WtE_Investment_trends_01.pdf European Pellet Consumption

Historical Pellet Consumption

Expected Growth Trends to 2030

Shipping Costs

Note: Freight costs based on shipping 40,000 tons pellets from Vancouver to Europe Cost Break Down (2009) Raw Material Production Shipping Charter rate Fuel oil/diesel Loading/discharging Fees/customs/duty Harbor dues / Mis. Margin Selling Price in ARA Total Costs Development of Pellet Production & Consumption in Europe Ref: http://www.pwc.com/en_GX/gx/forest-paperpackaging/events/pdf/ReEnergising1_PetriLehtonen.pdf Global and European Perspectives on Wood-Based Bioenergy, Petri Lehtonen, Indufor Oy Vancouver 14 May 2009

$23.6 $70 $26 $22 $5.5 $5.5 $3.6 $23.9 $180

Pellet Demand in Europe:

Fuel Cost Comparisons and Feasibility in Europe Ref: European Biomass Association, http://www.aebiom.org/IMG/pdf/Pellet_Roadmap_final.pdf

CO2 Reduction Benefits:

GLOBAL PELLET EXPORTS Ref: University of Utrecht, 2009

Pellet Potential in Turkey Wood is widely used for heating and cooking purposes in Turkey. Annual fire wood production of General Directorate of Forestry (GDF) are about 3 Mt. (6million m3). According to GDF calculations, sustainable forest residue potential for bio-energy purposes is approximately 5 to 7 Mt annually. Currently, electricity production from wood is made only in a paper factory for their own needs in Turkey. The paper sack factory use annually 6,000 tons wood residues for power generation and the capacity of plant are 10 MW. Furthermore, it is estimated that annually about 2 Mtons woody residues potential used in forestry industry for heating purposes in some production processes. Turkey has about 21.7 Mha forest areas. It is about 27% of the countrys land area of which GDF has wood residue resources. Commercial removals are average annually 16 Mm3 and annual increment is approximately 36 Mm3. Annual fire wood production is about 6 Mm3. In the residential sector, people in rural areas are the biggest users of wood energy. Currently industrial wood energy sector has not developed yet. There are only a few

wood briquettes production factories. Wood chips are only used in some processes for heat generation in big forestry factories. Although there is no commercial wood and co-firing power plants in Turkey, due to the promote legislation it is expected to be installed in coming years. On the other hand, the growth of the biomass sector in Europe creates an opportunity for the development of wood energy markets in Turkey. Building Statistics & Heating Types in Turkey Haber: Yap Dergisi/239 01.10.2001 Devlet statistik Enstits'nn (DE) 1984 ylnda yapt bina saym anketi geniletilerek yenilendi. DE 2000 Bina Saym statistikleri'nde konut yaps, kanalizasyon, su ve stma sistemleri inceleniyor. Elde edilen verilere gre son 16 yl iinde bina sys yzde 78.6 orannda artarak 4 milyon 387 binden 7 milyon 838 bine ykseldi. 1984'te binalarn yzde 80'i borulu su tesisatna sahipken 2000'de bu ora n yzde 90'a ulat. Trkiye'de konut amal kullanlan bina says 6 milyon 635 bin olarak belirlendi. 7.8 milyon konutun 6.8 milyonu stma gereksinimini soba ile karlyor. 255 bin konut kaloriferli. Doalgaz tesisat ulaan bina says ise 322 bin. statistikler Trkiye'de binalarn ortalama 2.1 katl olduunu ortaya koyuyor. Be ve daha yksek katl bina says 600 binin zerine ularken yalnzca 41.714 binann yangn merdiveni bulunuyor. 7.8 milyon konutun yalnzca 966 bini ak ya da kapal otoparka sahip.
2004 yl verilerine gre Trkiye'de toplam 17 096 000 adet konut mevcut olup, bu konutlarda tketilen toplam enerji 16 565 000 TEP'dir. Bu tketilen toplam enerjinin 726 000 TEP (% 4.4) kadar fuel oil ile karlanmtr.

Sanayi Sektr 2004 yl verilerine gre lkemiz sanayisinde tketilen enerji miktar 27 406 000 TEP olup, bu enerjinin 4 110 900 TEP (%15) kadar fuel oilden karlanmtr.
SEKTR ADI ENERJ TKETM (Bin TEP)

Sanayi Konut ve Hizmet Ulatrma Tarm Dier

30.996 23.860 15.010 3.610 27.470

Turkiyede Soba Kullanimi - 100 MLYON TLLK SEKTR Ssler Soba Genel Mdr Cemal Dereolu, sobada sezon satlarnn ekim, aralk aylarnda olduunu, bu k, ar souklar ve yksek elektrik ve doalgaz faturalar sebebiyle, kk bir kesimin sobaya geri dndn sylyor. Ancak, Dereolunun verdii bilgiye gre, sobaya dnenlerin ou dk gelirli tketiciler ve odun -kmr sobas kullanm bykehirlerin varolarna ve krsal kesime doru kesiyor. Byle olunca da, ucuz ve kalitesiz merdivanalt sobalara talep artyor. Zaten, geleneksel byk soba reticileri de (son yllarn trendini gz nnde tutarak) ya soba retimini terk ediyor, ya da yan i olarak srdrmeyi tercih ediyor. Dereolu, 17 milyon Trk hanesinde soba kullanm orannn yzde 20lere indiini ama her eye ramen Trkiyede ylda ortalama 500 bin adet odun-kmr sobas satldn ve sektrn 100 milyon TLlik ulatn sylyor: Sobann maliyeti (fiyat olacak her halde) 100-300 TL arasnda deiiyor. ou hanede de eski sobalar kullanlyor. Yeni hanelerde zaten soba kullanm yok. Toplu konutlarda zaten merkezi stma var. Bu nedenle retim arlkl merdivenaltna kayd. Byk reticilerin byk ksm da farkl alanlara giriyor. Soba zaten sezonluk bir rn. Nisanda balayp aralk ayna kadar sryor. Son krizde soba pazar daralsa da, yksek faturalardan kaan pek ok aile, ya tavan arasndaki sobay yeniden kurdu, ya da yeni bir soba ald. Cemal Dereolu, sobann geleneksel snma tr olduunu, zellikle ya ellinin zerinde olanlarn her zaman bu scakl aradn ve saylar az da olsa, sobaya dndklerini sylyor. Belediyelerin bedava kmr datmas da, dk gelirli ailelerin sobadan vazgememesine hatta sobaya dnmesine sebep oluyor. Tabii ki bu politikalar, zellikle bykehirlerde hava kirlenmesine sebep oluyor. zetle, evre kirlilii ve (doalgaz ve elektrie nazaran) kullanm zorluuna ramen, geleneksel odun -kmr sobalarnn tketici nezdindeki tartmasn en byk arts, (Dedeolunun verdii rakama gre) yzde 30 ila 50 arasnda tasarruf salamas. KII 800 TLYE IKARTIRIYOR stanbul Sultanbeylide eitli marka sobalarn satn yapan Ata Sobann kurucusu Kksal Ata da, odun ve kmrle snmann yzde 50 tasarruf saladn iddia ediyor: Bir konut, k bir buuk ton kmrle karabilir. Bunun da maliyeti 800 TLye denk geliyor. Dier snma trlerine gre hl hesapl. Ayrca 50 yan zerindekiler eski scakl zledikleri iin doalgaz yerine odun ve kmr sobasn tercih edebiliyor. Son dnemde yksek faturalar nedeniyle sobaya dn olsa da, yllarn soba satcs Ata, her k daha az soba satmaktan yaknyor, Gemii ok aryoruz. Doalgazn gittii yer says arttka, soba says her geen yl azalyor diyor. Sobalarn daha ok, varo denilen, stanbulun Sultanbeyli, Samandra gibi dk gelirli semtlerinde satldn syleyen Ata, soba alacaklara bir de tyo veriyor: Tulal soba aln ve zgarasn n st seviyede ve koval olmasna dikkat edin!