Economic and Sustainability Comparative Study of Wood Pellets Production in Portugal, Germany and Sweden

Abstract

During the last decade wood pellets consumption grew rapidly. In this paper the development of the wood pellet production factors for markets in Germany, Sweden and Portugal are compared. Domestic market prices for pellet production factors as well as domestic market prices for pellets variation are analysed. The analysis are based on two model plants, representing the first common technologies for small scale production based on dry sawdust sources, and the second represents large scale production based on wet materials. The results show how differences in costs of raw materials, energy and labour affects wood pellets production. The economic sustainability for European pellet producers depends on their domestic markets as internationally traded pellets are priced lower than their production costs, being Portugal an exception due to lower labour and raw materials costs. Future pellet production will be based on wet raw materials such as logs and wet sawdust. These raw materials are also demanded by pulp and paper or fiberboard industries. The transition from smaller wood pellets plants using dry raw materials to larger plants using wet raw materials, can be expected to follow comparative advantages regarding raw materials, energy costs and economies of scale.