risks in irisks in international pellet supplynternational pellet supply

8/20/2019 Risks in IRisks in International Pellet supplynternational Pellet Supply

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S P R I N GE R B R I E F S I N

A P P L I E D S C I E N C E S A N D T E C H N O LO G Y

Rita EhrigFrank BehrendtManfred WörgetterChristoph Strasser

Economics andPrice Risks inInternationalPellet SupplyChains


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Rita Ehrig · Frank Behrendt · Manfred WörgetterChristoph Strasser

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Economics and Price

Risks in International PelletSupply Chains


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Rita EhrigChristoph StrasserUnit Resources and Technical LogisticsBIOENERGY 2020+ GmbHWieselburg-LandAustria

Frank BehrendtChair Energy Process Engineering and

Conversion Technologies for RenewableEnergies

Berlin Institute of Technology (TU Berlin)BerlinGermany

© The Author(s) 2014This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or partof the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission orinformation storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar

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ISSN 2191-530X ISSN 2191-5318 (electronic)ISBN 978-3-319-07015-5 ISBN 978-3-319-07016-2 (eBook)DOI 10.1007/978-3-319-07016-2Springer Cham Heidelberg New York Dordrecht London

Library of Congress Control Number: 2014939044

Manfred WörgetterBIOENERGY 2020+ GmbHWieselburg-LandAustria


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v

Contents

1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2 Methods and Related Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.1 State of Biomass Supply Chain Research . . . . . . . . . . . . . . . . . . . . . 52.2 Case Study Compilation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.3 Cost Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.4 Evaluation of Price Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.4.1 Methodology for Evaluating 10-year Price Variations . . . . . . 92.4.2 Methodology for Evaluating Recent 3-year

Price Variations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

2.4.3 Expert Interviews on Supply Risks andDe-risk Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3 Pellet Supply Costs Along Three Case Studies . . . . . . . . . . . . . . . . . . . . 153.1 Canadian Pellets to Europe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153.2 Australian Pellets to Europe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183.3 Pellets from Northwest Russia to Europe. . . . . . . . . . . . . . . . . . . . . . 183.4 Summary of Pellet Supply Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

4 Price Risks Along Pellet Supply Chains . . . . . . . . . . . . . . . . . . . . . . . . . 274.1 Price Risks and Indices Along the Pellet Supply Chain. . . . . . . . . . . 27

4.1.1 Raw Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.1.2 Pellet Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284.1.3 Transportation and Logistics . . . . . . . . . . . . . . . . . . . . . . . . . 284.1.4 Conversion in Power Plants . . . . . . . . . . . . . . . . . . . . . . . . . . 304.1.5 Price Factors Affecting the Whole Supply Chain. . . . . . . . . . 30

4.2 Modelling 10-year Price Variations Along the Supply Chain . . . . . . 344.3 Simulation of Recent 3-year Price Fluctuations. . . . . . . . . . . . . . . . . 384.4 Concluding Findings on Risks and Hedging Strategies . . . . . . . . . . . 42References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

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5 Summary and Discussion of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

6 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Appendix A: Key Process and Country Parameters . . . . . . . . . . . . . . . . . . 49

Appendix B: National and Specific Price Indices . . . . . . . . . . . . . . . . . . . . . 53

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Abstract

Purpose

This work investigates critical economic aspects and price risks along international

pellet supply chains. This allows an estimation of risk margins in pellet trade andgives insight into crucial mechanisms, which drive pellet prices and worldwide trade.

Methodology/Approach

Supply costs for three real case studies are assessed with Canada, Australia andRussia as exporting countries and the EU as target market. Based on these, mostsignificant economics and price indicators along the supply chain are identifiedand analysed. With these, the impact of several risks like raw material prices,exchange and freight rates on total prices is investigated.

FindingsCoincidently occurring price fluctuations within the supply chain can effect a34–57 % variation of import prices. So, exchange rate volatility with more than 30% variation between 2008 and 2011 has strongly hit individual pellet exporters tothe EU. Nevertheless, the pellet price bears lesser risk than hard coal prices.

Research and Practical Implications

The assessment of various price data along the supply chain as well as interviewswith pellets market actors allow to conclude how the pellet supply chain can bede-risked and how price risks are hedged to avoid project defaults and achieveconsumers’ renewable energy targets.

Originality/Value

A comprehensive review and analysis of pellet price risks has not been accomplishedbefore and thus this work allows new insight into the interconnections between thesector, the various supply risks on the market and related de-risk strategies.


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1

Abstract This chapter outlines the role of biomass imports to the EU and thus

the importance of reliable supply to the consumers. Biomass plays a major role tofulfil the EU’s energy targets for 2020. For reaching the ambitious energy targets,the EU member states will rely on biomass imports from non-EU countries.Economics and reliability of pellet supply are key issues in international trade.Pellet economics and pricing is characterised by a complex pattern of multiplemarket actors, interconnections and dynamics in the entire supply chain, which arewidely non-transparent and still intangible to allow for reliable, long-term projectand investment planning. This study is addressing this research gap by reviewingthe current state of worldwide pellet trade economics and price risks based on

three case studies on pellet trade from Canada, Australia and Russia to the EU.

Keywords EU energy targets • Biomass supply • Reliability • Investment planning

Biomass plays a major role to fulfil the EU’s energy targets for 2020 (EP, EUCouncil 2009). The EU’s 20-20-20 targets aim for a 20 % reduction of greenhousegas emissions from energy, a 20 % increase in efficiency and a 20 % increase ofrenewable energy sources in energy consumption by 2020 compared to 1990 levels.

So far, renewables take a share of around 13 % of the EU27’s energy consump-tion, whereas most comes from woody biomass. Not only today, but also for the2020 targets biomass should contribute much more than 50 % to the EU’s renew-able energy consumption, and 19 % (or 16 % solid biomass) to the EU’s renewableelectricity production (Beurskens et al. 2011; Donnelly 2012), see Fig. 1.1.

In 2011, around 3300 PJ primary energy of biomass was produced in the EU,whereas slightly more solid biomass (3383 PJ) was consumed. That means 66 %of the EU’s primary renewable energy production comes already from biomass(Eurostat 2013a). Thereby, currently 72 % of biomass is used for heating and

cooling, about 15 % for transportation and 13 % for electricity use. In 2010, mostelectricity from biomass was produced in Germany with 30,000 GWh/a, followedby Sweden, the UK, and Finland. For this electricity, forestry in terms of wood

Chapter 1

Introduction

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2 1 Introduction

and wood waste is the main supply sector. According to EU estimations, forestrywill remain the main supply sector for the EU’s solid biomass supply by 2020

(Donnelly 2012).For reaching the ambitious energy targets, the EU member states will rely

on biomass imports from non-EU countries, in particular for electricity genera-tion (Hewitt 2011). Co-firing of industrial wood pellets represents one of the mostcost-efficient and easy-to-adopt technologies to produce renewable electricity. It iswidely implemented throughout EU countries like the Netherlands, Belgium, UKand Scandinavia. According to Lamers et al. (2012), EU imports of industrial pelletsalready reached 2.5 million ton in 2010, which amounts to more than 20 % of theEU consumption. Most imports are from Canada with almost 1 million ton pellets in

2010, then 0.7 million ton from the USA, 0.4 million ton from Russia and 63,000 tonfrom Australia. Junginger (2012) estimates that the EU pellet demand will rise tobetween 20 and 50 million ton by 2020, which means a sharp increase of almost16 million biomass imports to the EU.

In this frame, the present work reviews the current state of worldwide pellettrade economics based on three case studies on pellet trade from Canada, Australiaand Russia to the EU. With these, the following questions are raised:

(1) Which price fluctuations have the biggest influence on pellet supply costs andthus on the import price? How do they affect electricity production costs duringco-firing?

(2) What is the magnitude of pellet price volatility over typical supply contractperiods?

(3) In which way do pellet importers face and handle price variations and de-riskthe supply chain within contractual relationships?

Fig. 1.1 Contribution of biomass to EU27 renewable energy consumption in 2010 and 2020according to National Renewable Energy Action Plans (NREAPs). Source Beurskens et al. (2011)


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31 Introduction

The present work is organised as follows: Methods and related works are presentedin Chap. 2. Typical supply costs along three real case studies are assessed in Chap. 3.Most crucial price variations along the pellet supply chains are evaluated in Chap. 4.Resulting findings are discussed in Chap. 5. Finally, answers and conclusions on the

central questions are given in Chap. 6. Detailed data on technology parameters andprices can be found in the Appendices.

References

Beurskens LWM, Hekkenberg M, Vethman P (2011) Renewable energy projections as publishedin the national renewable energy action plans of the European member states, summary report.Energy Research Centre of the Netherlands and European Environment Agency, Copenhagen

Donnelly M (2012) Biomass—role in achieving the 20 % target. Paper presented at the Europeanbiomass power generation conference, London, 1–2 Oct 2012

European Parliament and the Council of the European Union (2009) Directive 2009/28/EC ofthe European Parliament and of the Council of 23 April 2009 on the promotion of the useof energy from renewable sources and amending and subsequently repealing Directives2001/77/EC and 2003/30/EC, L140/ 16–62, Brussels, Strassburg

Ehrig R, Wörgetter M, Pointner C, Kristöfel C, Strasser C (2011) Biomass mobilisation forindustrial-scale bioenergy plants. Practical approach for establishing real biomass supply path-ways in Austria. In: Proceedings of the 19th European Biomass Conference and Exhibition inBerlin, 6–10 June 2011 (Eta Florence/ WIP Munich, Florence, Munich, 2011)

European Commission, Eurostat (2013a) EU27 trade since 1995 by CN8, Monthly data,

Brussels, last update 27.04.2012Hewitt J (2011) Flows of biomass to and from the EU. An analysis of data and trends, report pub-

lished by FERN, Brussels, 2011Junginger M (2012) Overview of global solid and liquid biomass trade for energy. In:

Proceedings of IEA Bioenergy Conference 2012, Vienna, Nov 13–15, 2012Lamers P, Junginger M, Hamelinck C, Faaij A (2012) Developments in international solid biofuel

trade—an analysis of volumes, policies, and market factors. Renew Sustain Energy Rev16(5):3176–3199

Pöyry Ed (2011) Pellets—Becoming a Global Commodity? Pöyry View Point. Global market,players and trade to 2020, Vantaa

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Abstract This chapter gives an overview of related research and outlines the

methods applied in the present study. The study is analysing three real case bio-mass supply chains with an in-depth assessment of individual variables underly-ing actual market actions. Because of increasing biomass resources and recentdominance over pellet imports into the European market, the considered origincountries are Western Canada, Western Australia, and Northwest Russia. Studiedsupply phases include the raw material production and delivery, pellet production,transport to Europe, as well as delivery and conversion in a coal based co-firingpower plant in the EU. The specific supply costs from origin country to the EU arederived from current market and country related data. For evaluating the pellets

production and end-conversion in power plants, a full cost account is applied. Formost vulnerable, market-related cost items the imputed risk is evaluated as effectof underlying price changes in a 3- to 10-year period. Corresponding de-risk strat-egies are concluded from expert interviews.

Keywords State of research • Case study approach • Cost account • Risk

evaluation

2.1 State of Biomass Supply Chain Research

Since the last 10–15 years, several studies have been dealing with modelling andoptimisation of particular biomass supply chains using GIS models, linear ormixed integer modelling (see e.g. Freppaz et al. 2004). These all have a specificfocus (e.g. optimisation of logistics, costs or allocation of resources), and respond

to a given framework and several assumptions. That is a local logistics network,

Chapter 2

Methods and Related Work



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6 2 Methods and Related Work

specific transportation means or the allocation of resources for specific end-usedemand. Though, these models represent the actual market situation only little.

More focussed on actual trade flows, a comprehensive model on biomass supplychains was accomplished by Hamelinck et al. (2005) comparing different interna-

tional bioenergy chains to Europe with focus on logistics. An evaluation of sup-ply costs from Argentina to the Netherlands was done by Uasuf (2010). Costs forthe pellet supply from British Columbia to the EU has been assessed before bySikkema et al. (2010). In several market reports, the given framework for inter-national biomass trade and specific aspects like shipping (Bradley et al. 2009) orequity and investments (Bradley 2010) are discussed. Moreover, in a scenario-based study Heinimö (2011) determined critical factors for the future developmentof the global (solid) biomass market (Heinimö 2011):

•

Price competitiveness of bioenergy• Energy policy (subsidies, R&D)• Imbalance between supply and demand of bioenergy (sources)• International agreements• Sustainability issues to the utilisation of biomass

These existing studies serve as profound background and for comparison ofassessed supply chains in this thesis. Nevertheless, so far there has been hardlyany study, which combines an analysis of real case biomass supply with a detailedassessment of individual variables underlying actual market, regulatory and tech-

nology actions.

2.2 Case Study Compilation

Three different case studies for pellet imports to Europe are investigated for asso-ciated supply costs from resource origin to end-user in the EU, following the pat-tern in Fig. 2.1. Studied phases include the raw material production and delivery,

pellet production, transport to Europe as well as delivery and conversion in a coal-based co-firing power plant, located 75 km from EU import harbour. Because ofincreasing biomass resources and recent dominance over pellet imports into theEuropean market, British Columbia (Canada), Western Australia, and NorthwestRussia are chosen as the case studies (Junginger 2012; Lamers et al. 2012; Röder2012). They further offer a good comparison as they differ significantly in biomasssource, distance and region.

Related work was accomplished by Hamelinck et al. (2005) comparing differ-ent international bioenergy chains to Europe with focus on logistics. An evalua-

tion of supply costs from Argentina to the Netherlands was done by Uasuf (2010).Costs for the pellet supply from British Columbia to the EU has been assessedbefore by Sikkema et al. (2010), who already discussed price sensitivities. Theseexisting studies serve as profound background and for comparison of assessedsupply chains in this work. The present study reassesses the Canadian case


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because of its prominent role in pellet exports to the EU, in order to vary inputparameters and with the new target to explore price risks along the supply chain.

The pellet production phase and logistic operations are based on typical capaci-ties and on technology in use in the respective countries. For all chains, two fueloptions are distinguished for drying the raw material: biomass (Bio) and naturalgas (NG). As result, a detailed description of the three pellet supply cases fromresource origin to conversion plant in Europe is presented in Sects. 3.1–3.3.

Fig. 2.1 Outline of pellet supply chain model

2.2 Case Study Compilation

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Due to high ash contents caused by bark or other impurities, the consideredpellets fulfil the B category according to the current standard for wood pellets (EN14961-2:2011). Thus, the pellets are suitable for industrial use only. All informa-tion and calculations in this study are based on the net calorific value of fuels,

which is 4.9 MWh/t for pellets with 6 % moisture content (mc) delivered at theconversion plant and 7.8 MWh/t for hard coal with


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where C el are the levelised costs of electricity [ € /kWh], OM are the annual costsfor operation, maintenance and other costs [ € /a], calculated as relative share (%)of investment costs, E is the annual electricity production [kWh], C F are theannual fuel costs [in € per primary GJ], η is the efficiency of the plant [%], andCO2 costs are the charged EU emission allowances for combusting the used fuel[ € /kWh].

In this work a 10 % co-firing of pellets (80 MWel installed biomass capacity) isregarded as technically viable. Assumed extra costs due to co-firing pellets can befound in the Appendices (Table A.2).

The underlying cost data for energy conversion are adjusted using current fuelprices (EEX 2012a, b). The allocated CO2 emissions from combustion of hardcoal are calculated according to the EU's emission trading system (EC 2007). Allcalculations are estimated in € using the exchange rates for 2011 (see Table 2.1).VAT, profit margins or supply charges are not included. The results are pre-sented either in € /t pellets (delivered at import harbour or conversion plant) or in € /MWhel converted energy. The resulting structuring of cost data along the supplychain in Sect. 3.1–3.3 is inspired by Sikkema et al. (2010).

2.4 Evaluation of Price Risks

2.4.1 Methodology for Evaluating 10-year Price Variations

The defined supply costs are basis for evaluating market risks in the supply chain.Thus, for most vulnerable, market-related cost items the imputed risk is evalu-ated as effect of underlying price changes. This is a common approach during costaccounting for entrepreneurial activities. That means, based on historical pricevariations within one contractual period, the expected losses or revenues for thefuture period can be extrapolated (Mumm 2008). Certain attempts of this approachhave been performed for individual price effects by Sikkema et al. (2010) or inconnection with sensitivity analyses by Uasuf (2010). Sikkema et al. (2011)

further explored the general market and trade conditions and prospects of theEuropean pellets market. Anyway, so far there has been no comprehensive pricerisk analysis for pellet supply chains.

First, most relevant price variations within the recent 10 years are identified anddetermined. The 10-year period covers the time frame the pellet market has just

Table 2.1 Currencyexchange rates to Euro for theyear 2011

Source Eurostat (2012a)

1 € corresponds to Currency

1.35 Australian dollar: AUS-$1.38 Canadian dollar: CAN-$40.88 Russian rouble: RUB

1.39 US dollar: US-$

2.3 Cost Assumptions



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evolved. Hence, a straightforward and unambiguous statistical analysis is appliedby assessing the range of price variations as factors of total supply chain costs.

As shown in Fig. 2.2, different price indices along the supply chain have been

identified. The stated data series for a 10-year period are inflation-adjusted usingthe relevant consumer price indices (Eurostat 2012b).

Based on the evaluated costs for Canadian, Australian and Russian pelletsexported to the EU, the total supply costs free conversion plant are assumed to bearithmetic mean. With that, the relevant price variation—in terms of their standardvariation or range—is charged as multiplier of the respective cost share in the sup-ply chain (see Eqs. 2.4 and 2.5). In that way, the price effect of each factor on totalcosts can be revealed.

Supply costs subject to standard variation of price index xp

where C Total( x,σ

+/− xp )

are the total supply costs, which are subject to the standarddeviation of price index xp in cost item C x [ € /t], σ xp+ / − is the negative (−) or posi-tive (+) standard deviation of index xp, described as percentage of arithmeticmean of index xp [%] and C i are the cost components 1 to n in the supply chain[ € /t].

Supply costs subject to lower and upper range limit of price index xp

(2.4)C Total ( x,σ +/− xp ) = C x ·1+ σ +/− xp

+

ni=1,i�= x

C i

(2.5)C Total ( x, R+/− xp ) =C x · R

+/− xp +

i=1,i�= x

C i

Fig. 2.2 Considered price indices for modelling price fluctuations along pellet supply chainsdestined for EU co-firing


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11

where C Total ( x, R

+/− xp )

are the total supply costs, which are subject to the lower R− xp

or higher ( R xp+) range of price index xp in cost component x.The corresponding results are described in Sect. 4.2.

2.4.2 Methodology for Evaluating Recent 3-year

Price Variations

After the observation of long-term price variations, actual price changes in the3-year period from 2008 to 2011 are investigated. A period of 3 years complieswith the typical (long-term) planning and contracting horizon of pellet producersand end-users (Alakangas et al. 2012; Sikkema et al. 2011).

The simulation of the recent 3-year variations reflects the cumulative annualprice changes due to raw material prices, exchange rates and ocean shipping ratesas the most crucial price factors (see Fig. 2.3). Apart from that, all other costs areassumed to be constant as defined for 2011, the “base price” (see Sect. 3.4). TheEU pellet market price for imported pellets reported by APX (2012) serves asreference.

For actual pellet feedstock price variations (see Sect. 4.1.1. for explanation) theuse of alternative assortments is considered. Due to higher quality, the deliveryover long distances or demand from other industries, this feedstock is associatedwith higher purchase prices, see Table 2.2. For Australia, the case of cheaper alter-native sawdust at minor costs is investigated as well (May 2012).

The results of the 3-year price simulation are displayed in Sect. 4.3.

Fig. 2.3 Considered indices and prices for simulating 3-year-price fluctuations

2.4 Evaluation of Price Risks

http://dx.doi.org/10.1007/978-3-319-07016-2_4http://dx.doi.org/10.1007/978-3-319-07016-2_3http://dx.doi.org/10.1007/978-3-319-07016-2_4http://dx.doi.org/10.1007/978-3-319-07016-2_4http://dx.doi.org/10.1007/978-3-319-07016-2_4http://dx.doi.org/10.1007/978-3-319-07016-2_4http://dx.doi.org/10.1007/978-3-319-07016-2_3http://dx.doi.org/10.1007/978-3-319-07016-2_4


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2.4.3 Expert Interviews on Supply Risks

and De-risk Strategies

The risk analysis is complemented by personal communications with pellet marketactors and related literature regarding their evaluation and hedging mechanismsagainst price risks in international biomass trade. The interviews were conducted

face-to-face or via e-mail, following a semi-structured guideline. For confidential-ity reasons, interview results containing potential sensitive data are indicated inaggregated form (Interviews 2011–2013). With these, insight is gained into possi-ble hedging and contractual provisions to catch arising price gaps. Resulting find-ings can be found in Sects 4.1 and 4.4.

References

Alakangas E, Junginger M, van Dam J, Hinge J, Keränen J, Olsson O, Porsö C, Martikainen A,Rathbauer J, Sulzbacher L, Vesterinen P, Vinterbäck J (2012) EUBIONET III – Solutions tobiomass trade and market barriers. Renew Sustain Energ Rev 16(6):4277–4290

APX-ENDEX (2012) Historical pellets market prices, Weekly prices. Compilation by Sipke Veer,Amsterdam, 14.07.2012

Bradley D (2010) Canada Report on Bioenergy 2010, Sponsored by Canadian BioenergyAssociation, Natural Resources Canada, Canadian Wood Fibre Centre, Wood PelletAssociation of Canada, Ottawa, 15 Sept 2010

Bradley D (2012) Canada—biomass supply/demand, export availability. In: Proceedings of worldbioenergy 2012, Jönkoping, Sweden, 30 May 2012

Bradley D, Diesenreiter F, Wild M, Tromborg E (2009)World Biofuel Maritime Shipping Study.

Report accomplished for IEA Task 40. Ottawa, Vienna, 01 July 2009Clean Energy Council (2010) Bioenergy industry, report prepared by stephen schuck. Killara,

Australia, June 2010

Table 2.2 Price variation of raw material in the case study countries

Country Price changes(in brackets the baseprice considered for cost

analyses in Sect. 2.3)

Unit and biomassassortment

Sources

Canada 65 (32) € /tdry harvest residues Bradley (2012),Murray (2012)

Russia 40 (22) € /tdry sawmill residuespurchased

Cocchi et al. (2011)

Australia 70 (39) € /tdry low valueplantation whole treechips (assumed)

Clean Energy Council(2010) Stucley et al.(2012)

11 € /tdry sawdust May (2012), Clean EnergyCouncil (2010)



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13

Cocchi M, Nikolaisen L, Junginger M, Sheng Goh S, Heinimö J, Bradley D, Hess R, JacobsonJ, Ovard LP, Thrän D, Hennig C, Deutmeyer M, Schouwenberg PP, Marchal D (2011)Global wood pellet industry market and trade study, prepared for IEA Bioenergy Task 40:International sustainable bioenergy trade, Florence, Dec 2011

European Commission (2007) Commission decision of 18 July 2007 establishing guidelines forthe monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/ECof the European Parliament and of the Council. (2007/589/EC), Official Journal of theEuropean Union, L 229/1, Brussels, 31 Aug 2007

European Commission, Eurostat (2012a) Euro/Ecu Exchange rates 2000—2011. Quarterly data,Brussels, last update 04 July 2012

European Commission, Eurostat (2012b) Harmonised Consumer Price Index—Inflation rate1997—2011 European and Non-European countries, Brussels, 2012

European Energy Exchange (2012a) ARA Coal Year Futures, Request of historical pricesfrom 2006 to Oct 2012 at: http://www.eex.com/de/Marktdaten/Handelsdaten/Kohle/Coal.Accessed 15 Oct 2012

European Energy Exchange (2012b) Prices and trade volume of EU Emission Allowances,Request of historical prices and volumes at: http://www.eex.com/de/Marktdaten/Handelsdaten/ Emissionsrechte. Accessed 15 Fib 2012

Freppaz D, Minciardi R, Robba M, Rovatti M, Sacile R, Taramasso A (2004) Optimizing forestbiomass exploitation for energy supply at regional level. Biomass Bioenergy 26:15–25

Hamelinck C, Suurs R, Faaij A (2005) International bioenergy transport costs and energy balance.Biomass Bioenergy 29(2):114–134

Heinimö J (2011) Developing markets of energy biomass—local and global perspectives. Ph.D.thesis at Mikkeli University, Mikkeli, Finland

Interviewed pellet producers, traders and end-users (2011–2013) Personal communication with:Dusan S (2011), Black pellets manager of Vattenfall Europe AG, 08 Aug 2011. Hermes HD(2012) Director Business Development Biomass of Vattenfall Europe GmbH, 29 Oct 2012.Mertens J (2013) Biomass Procurement Officer at GDF Suez, 07 Feb 2013. Lugner M (2012)Sales Manager Max Lugner from pellets producer Schweighofer, 15 Jun 2012. Pease H(2013) Senior Biofuel Portfolio Manager for RWE Supply and Trading, 18 Aprl 2013

Junginger M (2012) Overview of global solid and liquid biomass trade for energy. In:Proceedings of IEA Bioenergy Conference 2012, Vienna, 13–15 Nov 2012

Lamers P, Junginger M, Hamelinck C, Faaij A (2012) Developments in international solidbiofuel trade—An analysis of volumes, policies, and market factors. Renew Sustain EnergRev 16(5):3176–3199

May B (2012) Personal communication about biomass prices and the australian biomass mar-ket with former researcher at commonwealth scientific and industrial research organisation(CSIRO). Aust Natl Sci Agency 06(08):2012

Mumm M (2008) Kosten- und Leistungsrechnung: Internes Rechnungswesen für Industrie- undHandelsbetriebe. Springer, Hamburg

Murray G (2012) Personal e-mail communication with executive director of the Wood PelletAssociation of Canada, 22 Oct 2012

Obernberger I, Thek G (2010) The pellet handbook. The production and thermal utilisation ofbiomass pellets, Earthscan, London

Röder H, (2012) Global development of bioenergy, presentation from Pöyry consulting atUniversity of Applied Sciences Wiener Neustadt. Wieselburg, Nov 2012

Sikkema R, Junginger M, Pichler W, Hayes S, Faaij A (2010) The international logistics of woodpellets for heating and power production in Europe: Costs, energy-input and greenhousegas balances of pellet consumption in Italy, Sweden and the Netherlands. Biofuels BioprodBiorefinery 4(2):132–153

Sikkema R, Steiner M, Junginger M, Hiegl W, Hansen MT, Faaij A (2011) The European wood pel-let markets: current status and prospects for 2020. Biofuels Bioprod Biorefinery 5(3):250–278

References

http://www.eex.com/de/Marktdaten/Handelsdaten/Kohle/Coalhttp://www.eex.com/de/Marktdaten/Handelsdaten/Emissionsrechtehttp://www.eex.com/de/Marktdaten/Handelsdaten/Emissionsrechtehttp://www.eex.com/de/Marktdaten/Handelsdaten/Emissionsrechtehttp://www.eex.com/de/Marktdaten/Handelsdaten/Emissionsrechtehttp://www.eex.com/de/Marktdaten/Handelsdaten/Kohle/Coal


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Stucley C, Schuck S, Sims R, Bland J, Marino B, Borowitzka M, Abadi A, Bartle J, Giles R,Thomas Q (2012) Bioenergy in Australia, Status and Opportunities. Report, Surrey Hills,Victoria, Nov 2012

Uasuf A (2010) Economic and environmental assessment of an international wood pellets supplychain: a case study of wood pellets export from northeast Argentina to Europe. Doctoral the-sis, Albert-Ludwigs-Universität Freiburg im Breisgau, Faculty of Forest and EnvironmentalSciences, Dec 2010

Umweltbundesministerium (ed) (2010) Leitstudie 2010—Langfristszenarien und Strategienfür den Ausbau der erneuerbaren Energien in Deutschland bei Berücksichtigung derEntwicklung in Europa und global, Appendix II, Stuttgart, Kassel, Teltow, Dec 2010


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15

Abstract This chapter describes the three chosen case studies for biomass supply

from Canada, Australia, and Russia to the EU. The case studies contain a detailedcost outline from biomass resource to final consumer for the year 2011. The sup-ply patterns include raw material, pellet production phase, transportation andshipping to the EU, delivery to the conversion plant and final conversion in a coalco-firing plant. The individual costs are summarised and compared, explaining therelated market connections. Dedicated and region specific cost drivers and eco-nomic framework conditions are defined along the whole biomass supply chain.

Keywords Case study analysis–Canada • Russia and Australia–supply costs

3.1 Canadian Pellets to Europe

British Columbia in Western Canada has a vast potential of 417 million ha for-ests representing the 3rd largest forest area in the world (Ferguson 2010). In 2010,the lumber production was 27 million m3 (Bradley 2010) with resulting volumeof sawmill residues between 18 and 25.6 million m3 /a (6.8–9.7 million tdry /a)

(Verkerk 2008; Wiik et al. 2009).The raw material for pellet production taken into account are sawdust andshavings from spruce (36 % mc), which is transported 100 km on average fromsawmills or harvesting sites to the pellet plant (Sikkema et al. 2010; Urbanowski2005). The raw material costs are set 23.41 € /t feedstock (wet) delivered at pelletmill gate. This corresponds to 33.25 € /twet pellets, which is in line with the dataprovided by Sikkema et al. (2010) and Bradley (2012).

The modelled input data and results for the pellet production and deliveryphases are listed in Table 3.1. The assumed pellet plant capacity is 120,000 t/a.

Within the production process a rotary drum dryer with respective energy demandis considered (Magelli et al. 2009; Urbanowski 2005).

Chapter 3

Pellet Supply Costs Along Three

Case Studies



22/62

16 3 Pellet Supply Costs Along Three Case Studies

T a b l e 3 . 1

C o s t b r e a k d o w n a l o n g t h e s u p p l y c h a i n C a n a d a – E u r o p e

B

a s i c d a t a

€ / t p e l l e t s d e l i v e r e d

R e f e r e n c e s

1 ) R a w m a t e r i a l s u p p l y

R a w m a t e r i a l

S

a w d u s t a n d s h a v i n g s f r o m

s p r u c e , 3 6 % m c o n a v e r a g e

5 . 0 0 € / t f e e d s t o c k

B r a d l e y ( 2 0 1 0 ) ,

U r b a n o w s k

i ( 2 0 0 5 )

T r a n s p o r t o f r a

w

m a t e r i a l t o

p e l l e t p l a n t i n c l .

H a n d l i n g a

n d s t o r a g e

A

v e r a g e d i s t a n c e 1 0 0 k m t r u c k

t r a n s p o r t f r o m s a w m i l l

i n c l . u n l o a d

1 8 . 4 1 € / t f e e d s t o c k

U r b a n o w s k i ( 2

0 0 5 ) w i t h

a n n u a l 2 %

c o s t i n c r e a s e


d e l i v e r e d t o

p e l l e t p l a n t

1

7 0 , 4 3 8 t / a r a w

m a t e r i a l r e q u i r e d

3 3 . 2 5

C a l c u l a t i o n i n

a c c o r d a n c e

t o F e r g u s o n ( 2 0 1 0 ) ,

B r a d l e y ( 2 0 1 2 )

2 ) P e l l e t p r o d u c t i o n

P e l l e t p r o d u c t i o n

1

2 0 , 0 0 0 t p e l l e t p r o d u c t i o n

1

% m a s s l o s s e s i n c l u d e d

9 . 1 8 m i l l i o n €

i n v e s t m e n t c o s t s

O w n c a l c u l a t i o n b a s e d

o n p l a n t d a

t a f r o m

O b e r n b e r g e r a n d T h e k

( 2 0 1 0 ) ( a s s

u m i n g

t h e u s e o f a r o t a r y

d r u m d r y e r b a s e d o n

U r b a n o w s k

i ( 2 0 0 5 ) a n d

M a g e l l i e t a l . ( 2 0 0 9 ) )

a n d l o c a l e n e r g y p r i c e s ;

i n c l . h a n d l i n g a n d

s t o r a g e o f r a w m a t e r i a l

a n d p e l l e t s

C a p i t a l c o s t s

6

% i n t e r e s t r a t e , 1 7 . 5

a v e r a g e l i f e t i m e

7 . 1 8

C o n s u m p t i o n c o s t s e x c l . r a w

m a t e r i a l a n

d f u e l

7 . 5 2

N a t u r a l g a s c o s t s f o r d r y i n g

9

0 % b o i l e r e f fi c i e n c y

7 . 4 2

B i o m a s s c o s t s

f o r d r y i n g

9

0 % b o i l e r e f fi c i e n c y

3 . 1 7

O p e r a t i o n a n d

m a i n t e n a n c e

3

s h i f t s / d ; 7 w o r k i n g d a y s / w e e k

4 . 8 2

O t h e r c o s t s

2 . 6 0

S u b s u m p e l l e t

p r o d u c t i o n c o s t s

D

r i e d w i t h n a t u r a l g a s

6 2 . 7 9

D

r i e d w i t h b i o m a s s

5 8 . 5 4

( c o n t i n u e d )


23/62

173.1 Canadian Pellets to Europe

T a b l e 3 . 1 c o n

t i n u e d

B

a s i c d a t a


R e f e r e n c e s

3 ) T r a n s p o r t t o

e x p o r t h a r b o u r

L o a d i n g

1 . 5 0

S i k k e m a e t a l .

( 2 0 1 0 )

T r a i n t r a n s p o r t t o e x p o r t p o r t

5

0 0 k m , 8 4 t ( 1 3 0 m ³ )

l o a d p e r r a i l c a r

2 4 . 8 5

C N ( 2 0 1 2 ) , S p

e l t e r a n d

M c K e e v e r ( 2 0 0 9 )

4 ) O c e a n s h i p p

i n g t o t h e E U

H a n d l i n g a n d s t o r a g e

i n c l . 1 % m a s s l o s s e s

2 . 3 8


( 2 0 1 0 )

O c e a n t r a n s p o r t

H

a n d y s i z e , 1 6 . 5 0 0 k m ;

V a n c o u v e r - R o t t e r d a m

i n c l . 1 . 5 % m a s s l o s s e s

3 6 . 6 1

F e r g u s o n ( 2 0 1 0 ) , M e l i n

( 2 0 1 2 )

I m p o r t c o s t s R

o t t e r d a m

( s u b t o t a l )

P

e l l e t s d r i e d w i t h n a t u r a l g a s

1 2 3 . 8 7

P

e l l e t s d r i e d w i t h b i o m a s s

1 2 8 . 1 2

5 ) D i s t r i b u t i o n

t o c o n v e r s i o n p l a n t


a t i m p o r t p o r t

D

i s c h a r g e b y c l a m b u c k e t s ,

c o n v e y o r s y s t e m ,

s t o r a g e , l o a d

5 . 0 0


( 2 0 1 0 ) ,

S u m e t z b e r g e r ( 2 0 1 2 ) ,


( 2 0 1 0 )

T r a i n t r a n s p o r t t o c o n v e r s i o n

p l a n t B E o r N L

7

5 k m

5 . 5 0

C a l c u l a t i o n b a s e d o n

Ö k o i n s t i t u t a n d E n e r k o

( 2 0 0 8 ) , P r o

g n o s ( 2 0 0 6 )

T o t a l c o s t s f r e e c o n v e r s i o n p l a n t

P

e l l e t s ( N G )

1 3 8 . 6 2

P

e l l e t s ( B i o )

1 3 4 . 3 7


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As seen in Table 3.1, the total costs for Canadian pellets delivered to Rotterdamare therefore 124–128 € /t, or 134–139 € /t pellets delivered to the conversion plant.The composition of costs is similar to those estimated by Ferguson (2010) andSikkema et al. (2010). Compared to Sikkema et al. (2010) less freight costs have

been assumed here, because increased freight capacity and return trips on theVancouver—Rotterdam route could be realised within the last years (Murray 2012).

3.2 Australian Pellets to Europe

Southern Australia offers an increasing potential of eucalyptus (blue gum) plan-tations from marginal farm land destined for industrial pellets production. It is

expected to provide significant volumes to the global pellet market, includingEurope (Junginger 2012; Röder 2012). Foresters expect an extension of the plan-tation area from 0.58 million ha in 2009 up to 2 million ha in 2014. In 2010, thefirst large-scale 125,000 t/a pellet plant (later upscaled to 250,000 t/a) started theproduction of industrial wood pellets from plantation residues in Albany (WesternAustralia), mainly for export to Northwest Europe. The industry announced anincreasing set up of pellet plant facilities to 850,000 t/a production capacity in nearfuture (Smith 2010; Waring 2010). But different factors currently hinder the pelletexport: The operator of the largest Australian pellet plant recently faced economicproblems due to strength of Australian dollar to Euro and because of switching fromresidues to more expensive raw material (Grieve 2012). Another influencing factorfor the Australian-European trade is the competition with Asia, which could lead tomore exports from Australia to Japan or Korea (Waring 2010). Nevertheless, the EUis still one of the dedicated target markets for future pellet exports from Australia(Clean Energy Council 2010; Lamers et al. 2012; Lang 2013).

The present supply model is based on the evaluation of the existing pellet plantin Western Australia replying on local eucalyptus plantation residues. The produc-tion phase is based on 120,000 t/a capacity, which corresponds to approximatelyone unit in Albany. All assumptions and results are listed in Table 3.2. The result-

ing total supply costs are in line with the estimations by Smith (2010), taking intoaccount the 2009 framework assumed in his study.

3.3 Pellets from Northwest Russia to Europe

Russia has vast wood reserves and a strong wood industry. The region NorthwestRussia is favoured by direct access to the Baltic Sea. Sawmills in the Leningrad

region surrounding St. Petersburg process more than 1 million m3

wood per year(Karjalainen and Gerasimov 2010). The annual forest waste composes at least100 million m3, reported by Cocchi et al. (2011). The number of pellet produc-tion plants is constantly growing. The 800,000 t/a production capacity reported in2008 (Rakitova et al. 2009) and the recent increase by the 1 million t/a pellet plant


25/62


T a b l e 3 . 2

C o s t b r e a k d o w n a l o n g t h e s u p p l y c h a i n A u s t r a l i a – E u r o p e

B a s i c d a t a


R e f e r e n c e s



S a w d u s t a n d w o o d c h i p s

f r o m b l u e g u m p l a n t a t i o n

i n c l . d e l

i v e r y ,

4 5 % m c o n a v e r a g e

2 7 . 2 0 € / t f e e d s t o c k

A B A R E S ( 2 0 1 1 ) , C l e a n E n e r g y

C o u n c i l ( 2 0 1 0 ) , S t u c l e y

e t a l . ( 2 0 1 2 )

R a w m a t e r i a l d e l i v e r e d t o

p e l l e t p l a n t

1 9 8 , 3 2 7 t / a

f e e d s t o c k u s e d

4 4 . 9 5

O w n c a l c u l a t i o n b a s e d o n f e e d s t o c k

c h a r a c t e r i s t i c s a n d c

o n v e r s i o n

f a c t o r s


P e l l e t p r o d u c t i o n

1 2 0 , 0 0 0 t p e l l e t

p r o d u c t i o n ; a d d i t i o n a l c o a r s e

g r i n d i n g

u n i t s u i t a b l e f o r w o o d

c h i p s ; i n

c l . 1 % m a s s l o s s e s

1 1 . 2 9 m i l l i o n €


O w n c a l c u l a t i o n b a s e d o n p l a n t d a t a

f r o m O b e r n b e r g e r a n d T h e k

( 2 0 1 0 ) a n d l o c a l e n e r g y p r i c e s ;

i n c l . H a n d l i n g a n d s

t o r a g e o f r a w

m a t e r i a l a n d p e l l e t s


6 % i n t e r e s t r a t e , 1 7 . 5

a v e r a g e

l i f e t i m e

8 . 8 3

C o n s u m p t i o n c o s t s

e x c l . r a w m

a t e r i a l

a n d f u e l

9 . 1 9


9 0 % b o i l e r

e f fi c i e n c y

1 3 . 8 3


f o r d r y i n g

9 0 % b o i l e r

e f fi c i e n c y

8 . 2 7



3 s h i f t s / d ; 7

w o r k i n g

d a y s / w e

e k

5 . 2 5

O t h e r c o s t s

2 . 6 0



26/62


T a b l e 3 . 2

( c o

n t i n u e d )

B a s i c d a t a


R e f e r e n c e s


p r o d u c t i o n

c o s t s

D r i e d w i t h n a t u r a l g a s

8 4 . 6 5

D r i e d w i t h b i o m a s s

7 9 . 0 9

3 ) T r a n s p o r t t o e x p o r t h a r b o u r

L o a d i n g

3 . 0 0

O b e r n b e r g e r a n d T h e k ( 2 0 1 0 )

T r u c k t r a n s p o r

t t o e x p o r t p o r t

4 0 k m ( 2 0 k

m

w i t h e m p t y

r e t u r n t r i p )

6 . 1 7

A l l e n ( 2 0 1 1 ) , F r e i g h t M

e t r i c s ( 2 0 1 2 ) ,

S m i t h ( 2 0 1 0 ) , u n l o a d i n g f r o m

O b e r n b e r g e r a n d T h

e k ( 2 0 1 0 )

4 ) O c e a n s h i p

p i n g t o t h e E U


D e d i c a t e d w

o o d p e l l e t s t e r m i n a l a v a i l a b l e ;

i n c l . 1 %

m a s s l o s s e s

2 . 7 0

A l b a n y p o r t 2 0 1 2 ( w i t h o u t

i n v e s t m e n t c o s t s )


H a n d y s i z e o r P a n a m a x ; A l b a n y - R o t t e r d a m

2 1 , 5 7 0 k

m ;

i n c l . 1 , 5 % m a s s l o s s e s

4 7 . 5 0

A l d e r t o n ( 2 0 1 2 )


o t t e r d a m

( s u b t o t a l )

P e l l e t s d r i e d w i t h n a t u r a l g a s

1 4 4 . 0 3

P e l l e t s d r i e d w i t h b i o m a s s

1 3 8 . 4 6

5 ) D i s t r i b u t i o n t o c o n v e r s i o n p l a n t

H a n d l i n g a n d s t o r a g e a t i m p o r t

p o r t

D i s c h a r g e b

y c l a m b u c k e t s , c o n v e y o r

s y s t e m ,

s t o r a g e , l o a d

5 . 0 0

S u m e t z b e r g e r ( 2 0 1 2 ) , S

i k k e m a e t a l .

( 2 0 1 0 ) , O b e r n b e r g e r a n d T h e k

( 2 0 1 0 )

T r a i n t r a n s p o r t t o c o n v e r s i o n

p l a n t

7 5 k m

5 . 5 0

C a l c u l a t i o n b a s e d o n Ö k o i n s t i t u t a n d

E n e r k o ( 2 0 0 8 ) , P r o g

n o s ( 2 0 0 6 )


P e l l e t s ( N G

)

1 5 4 . 5 3

P e l l e t s ( B i o

)

1 4 8 . 9 6


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T a b l e 3 . 3

C o s t b r e a k d o w n a l o n g t h e s u p p l y c h a i n R u s s i a – E u r o p e

B a s i c d a t a


R e f e r e n c e s



s a w d u s t i n c l . d e l i v e r y ,

5 5 % m c o n a v e r a g e

1 3 . 8 9 € / t f e e d s t o c k

C o c c h i e t a l . ( 2 0 1 1 )

R a w m a t e r i a l d e l i v e r e d

t o p e l l e t p l a n t

8 0

, 8 0 0 t / a r a w

m a t e r i a l r e q u i r e d

2 8 . 0 6

o w n c a l c u l a t i o n b a s e d o n

f e e d s t o c k c h a

r a c t e r i s t i c s

a n d c o n v e r s i o

n


P e l l e t p r o d u c t i

o n

4 0

, 0 0 0 t p e l l e t p r o d u c t i o n

3 . 7 4 m i l l i o n €


O w n c a l c u l a t i o n

b a s e d

o n p l a n t d a t a f r o m


( 2 0 1 0 ) a n d l o c a l e n e r g y

p r i c e s ; i n c l . H

a n d l i n g a n d

s t o r a g e o f r a w

m a t e r i a l a n d

p e l l e t s

N a t u r a l g a s a n d e

l e c t r i c i t y

p r i c e s f r o m F e d e r a l T a r i f f

S e r v i c e ( 2 0 1 3

) , G e r a s i m o v

( 2 0 1 2 )


6 % i n t e r e s t r a t e , 1 7 . 5

a v e r a g e l i f e t i m e

8 . 7 8

C o n s u m p t i o n c o s t s e x c l . r a w

m a t e r i a l a n

d f u e l

8 . 4 4


9 0

% b o i l e r e f fi c i e n c y

8 . 8 0


f o r d r y i n g

9 0

% b o i l e r e f fi c i e n c y

8 . 3 3



3 s h i f t s / d ; 7 w o r k i n g

d a y s / w e e k

6 . 2 2

O t h e r c o s t s

2 . 6 0


c o s t s

D r i e d w i t h n a t u r a l g a s

6 2 . 8 9

D r i e d w i t h b i o m a s s

6 2 . 4 3

3 ) T r a n s p o r t t o e x p o r t h a r b o u r

L o a d i n g

1 . 5 0

S i k k e m a e t a l . ( 2 0 1 0 )

T r a i n t r a n s p o r t t o e x p o r t p o r t

4 0

0 k m

1 0 . 0 3

K a r j a l a i n e n a n d G e r a s i m o v

( 2 0 1 0 ) ; i n a c c

o r d a n c e w i t h

R a k i t o v a a n d

K h o l o d k o v

( 2 0 0 9 )



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T a b l e 3 . 3

( c o

n t i n u e d )

B a

s i c d a t a


R e f e r e n c e s

4 ) O c e a n s h i p

p i n g t o t h e E U


i n c l . 1 % m a s s l o s s e s

1 2 . 0 0

C o c c h i e t a l . ( 2 0 1 1 ) , O v s i a n k o

( 2 0 0 6 )


a s s u m e d 4 , 0 0 0 t c a p a c i t y ;

S t . P e t e r s b u r g - R o t t e r d a m ;

i n c l . 1 . 5 % l o s s e s

2 0 . 3 0

S u m e t z b e r g e r ( 2 0 1 2 )


o t t e r d a m ( s u b t o t a l )

P e

l l e t s d r i e d w i t h n a t u r a l g a s

1 0 6 . 7 2

P e

l l e t s d r i e d w i t h b i o m a s s

1 0 6 . 2 6

5 ) D i s t r i b u t i o n t o c o n v e r s i o n p l a n t

H a n d l i n g a n d s t o r a g e a t i m p o r t p o r t

D i s c h a r g e b y c l a m b u c k e t s , c o n v e y

o r

s y s t e m , s t o r a g e , l o a d

5 . 0 0

S u m e t z b e r g e r ( 2 0 1 2 ) ,


( 2 0 1 0 ) , S i k k e m a e t a l .

( 2 0 1 0 )

T r a i n t r a n s p o r t t o c o n v e r s i o n p l a n t

7 5

k m

5 . 5 0

C a l c u l a t i o n b a s e d o n

Ö k o i n s t i t u t a n

d E n e r k o

( 2 0 0 8 ) , P r o g n

o s ( 2 0 0 6 )


P e

l l e t s ( N G )

1 1 7 . 2 2

P e

l l e t s ( B i o )

1 1 6 . 7 6


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23

Vyborgskaya amount to a total capacity of 1.8 million t/a in the region. Up to now,the actual production is estimated at only 1 million t/a (Rakitova 2011). Most pelletsare exported to the EU industrial market, where the revenue is comparably high. It isassumed that no export duties are imposed to exported pellets (Rakitova et al. 2009).

For the Russian supply case, sawdust from soft wood with 55 % mc is consid-ered. The supplying wood industry is nearby the pellet plant. A smaller pellet plantwith 40,000 t/a capacity is taken into account, which is the case at the installedsites in Northwest Russia (Cocchi et al. 2011). The distance to export harbour St.Petersburg is assumed to be 400 km. The costs for handling and transshipment of

pellets at St. Petersburg harbour is high with 12 € /t pellets. This is due to a lack ofa specialised cargo handling terminal with dedicated equipment for pellet trans-shipment (Cocchi et al. 2011; Ovsianko 2006; Rakitova and Kholodkov 2009). Allinput data and resulting costs are listed in Table 3.3.

3.4 Summary of Pellet Supply Costs

Based on the previous assessments (Sect. 3.1–3.3), the overall pellet supply costsfor supply chains from Canada, Australia and Russia to EU import harbour aresummarised in Fig. 3.1. The raw material costs amount to about one third of thetotal costs. Transport costs from pellet plant to EU import harbour amounts toanother 30–50 % of total supply costs. The cases with natural gas (NG) as drying

Fig. 3.1 Supply costs of defined pellet chains from origin to EU import harbour Rotterdam andaverage market price for pellets 2011. Source for pellets market price: APX (2012)



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fuel are slightly more costly than those with biomass (Bio), which is due to thequite low raw material costs required for international pellet trade.

The CIF ARA market price (price including cost, insurance, freight set at theports Amsterdam, Rotterdam, Antwerp) indicated in Fig. 3.1 is 131 € /t pellets on

average for the year 2011 (APX 2012). Apparently, the Australian supply costsexceed the achievable market price in the EU. Thus, for the present input dataand exchange rate the Australian supply chain is not profitable. Supply costs forCanadian pellets are below the market price, but without much scope for profit orguarantee margins. Against, the supply costs for Russian pellets are very low withsufficient scope for both pellet producer and trader margins, which usually amountto between 8 and 10 % each (Interviews 2011–2013; Sumetzberger 2012).

References

Australian Government, Department for Environment, Fishery and Forestry, Department ofAgriculture, Fisheries and Forestry (ABARES) (2011) Forest and wood products statistics.Canberra. Dec 2011

Albany Port Authority (2010) Port Talk. Albany Port Community Newsletter. Albany, Australia.March 2010

Alderton P (2012) Personal communication with bulk parcel operator Furness withy Australiaabout ocean transport freight costs for wood pellets. 23 July 2012

Allen D (2011) Energy pellet production experience, presentation of plantation energy at CRCfor forestry workshop: generating renewable energy from forest residues: opportunities, chal-lenges and the latest research, Canberra, Australia, 14 Apr 2011

APX-ENDEX (2012) Historical pellets market prices. Weekly prices, Compilation by Sipke Veer,Amsterdam, 14 July 2012

Bradley D (2010) Canada Report on Bioenergy 2010, Sponsored by canadian bioenergy asso-ciation, natural resources Canada, Canadian Wood Fibre Centre, Wood Pellet Association ofCanada, Ottawa, 15 Sept 2010

Bradley D (2012) Canada—biomass supply/demand, export availability. In: Proceedings of worldbioenergy 2012, Jönkoping, Sweden, 30 May 2012

Clean Energy Council (2010) Bioenergy industry, report prepared by stephen schuck, Killara,Australia, June 2010

Canadian National Railway Company (CN) (2012) Price proposal for appr. 500 km rail transportof pellets to port of Vancouver by covered hopper. http://www.cn.ca. Accessed 13 Dec 2011

Cocchi M, Nikolaisen L, Junginger M, Sheng Goh S, Heinimö J, Bradley D, Hess R, JacobsonJ, Ovard LP, Thrän D, Hennig C, Deutmeyer M, Schouwenberg PP, Marchal D (2011)Global wood pellet industry market and trade study, prepared for IEA Bioenergy Task 40:International sustainable bioenergy trade, Florence, Dec. 2011

Federal Tariff Service Russia (2012) Natural gas wholesale price for industrial consumers for2010. http://www.fstrf.ru/eng/tariffs/analit_info Accessed 20 Jun 2012

Ferguson S (2010) Bioenergy development in British Columbia, Canada. Mutual exchange withEurope, presentation of the BC bioenergy network at 4biomass workshop, Vienna, 5th Oct 2010

Freight Metrics

risks in irisks in international pellet supplynternational pellet supply

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