The Rise of Utility Wood Pellet Energy in the Era of Climate Change

Utility wood pellets (wood pellets) are a densified biomass fuel that can generate electricity or heating when burned. Production, consumption, and trade of wood pellets have grown substantially since the late 2000s in a small number of countries. The locus of consumption growth is industrial power plants where wood pellets are frequently used for co-firing with, or replacement of, coal. The catalytic factors for the robust wood pellet expansion have been European Union (EU) climate change policies and incentives, particularly designating the product as a ‘renewable energy,’ assessing their carbon emissions as zero, and providing financial support. The United States, with its sizeable forests and timber plantations, reacted by intensifying wood pellet production for export, primarily to the United Kingdom and several EU member states. In 2021, U.S. wood pellet exports reached $1 billion for the first time. Wood pellet consumption is also rising in Asia with South Korea and Japan, driven by their own climate change policies, incentivizing rapid recent growth in imports. This paper examines the rise of wood pellets as an alternative energy source and traded commodity in the era of climate change.