It is a problem as old as commerce. When supply exceeds demand, prices fall. When supply is increased even further, weak prices fall further and take out the higher cost producers.
This is exactly what is happening in the pellet market in Europe, especially to utility companies. Ostensibly, total demand for wood pellets from power companies across Europe is close to 5 million tonnes. However, supply for this market from
Europe (including Scandinavia) and North America alone is well in excess of this number.
To put this in context, global demand for wood pellets is approximately 12 million tonnes, of which 5 million tonnes is from the commercial sector and 7 million tonnes from the residential sector. The most current data is for 2009, and sourced
from Hawkins Wright and RISI.
To make matter worse, various pellet suppliers are announcing with glee that they are about to build the biggest, fastest or most efficient pellet manufacturing plants. Yet prices are seriously low. If these mills cannot turn a profit at the very low industrial pellet prices in Europe (+/-EURCif118.10/t), then the investments to build them will be risky.
Combined commercial and residential demand in Europe accounts for just over 75 per cent of the global market for wood pellets. North America follows with close to 20 per cent and the other regions make up less than 5 per cent. Therefore, the overwhelming demand is in Europe and North America. Both regions are facing extreme financial challenges.
While global demand for wood pellets in 2009 was close to 12 million tonnes, supply capacity is currently more than 14.5 million tonnes, meaning that more than 17 per cent is under utilised.
The forecast figures for 2015 do not make pragmatists joyful. Demand is projected to increase by almost 28 per cent per annum, to reach 32 million tonnes. Production in 2015 is estimated to be 35 million tonnes with a capacity of 41 million tonnes. Therefore, production is going to be in the region of 9 per cent higher than demand, and around15 per cent of capacity is going to be under-utilised. (Report of Carbon Edge, Australia December 2010).
So if you still want to force yourself to produce wood pellets a large scale? Think with logic and realistic, then decide it.
Biochar is a wise choice, for several reasons:
1. Environmental problems of organic wastes pollution that need immediate treatment and global environmental problems of climate change and global warming so that the required real solution to this. Biochar as one of the best choices by absorbing CO2 from the atmosphere or carbon-negative strategy to prevent global warming.
2. Food security. Declining soil quality will have an impact in declining crop productivity. Biochar as a carbon-rich material that will improve soil quality and increase crop production. For this case so that the needs of biochar is large and ever-increasing.
The world’s total agricultural area is about 5 billion hectares, one billion more than for forests. Of this, about 1.5 billion ha (30 percent) is arable land and land under permanent crops,and the remaining 3.5 billion ha is permanent pasture. In addition, there are also up to 2.5 billion ha of rangelands.
Soils naturally contain large amounts of carbon, derived primarily from decayed vegetation. But the last few decades have seen a dramatic loss of top soil, soil carbon and inherent soil fertility due to the spread of unecological farming methods, and the one-way traic of food supplies from rural areas to cities without the return of carbon back to the farmland where the food was grown. A recent report by the FAO states: “Most agricultural soils have lost anything between 30 and 75 percent of their antecedent soil organic carbon pool, or a total of 30 to 40 tC/ha. Carbon loss from soils is mainly associated with soil degradation . . . and has amounted to 78 +/- 12 Gt since 1850. Thus, the present organic carbon pool in agricultural soils is much lower than their potential capacity.
3. Renewable energy. Our pyrolysis plant will produce biooil and syngas as side products. Both can be used for energy and green chemical applications. Excess syngas for energy applications for the capacity of 200 TPD INPUT plant will produce at least 5 MW of electricity.
4. Activated carbon. Biochar or charcoal can be improved quality into activated carbon. The high water pollution in major cities and around mining areas increase the need for activated carbon. Many purification industries also require large of the activated carbon to improve the quality of their products.