As Europe's focus shifts to sustainable energy, demand for Portuguese industrial wood pellets is gaining momentum, executive board member of producer Unipellets Bruno Brandao told Argus. Rising interest from hard-to-abate sectors, shifting EU policies, geopolitical tensions, and environmental, social and governance (ESG) priorities are shifting the biomass landscape.
How do you see current demand for Portuguese industrial pellets?
Demand is undergoing a transitional phase. After a moderate first quarter, traction is increasing in the European industrial channel, driven by three key factors — reinforcement of EU energy policy, with greater focus on local biomass sourcing; geopolitical volatility disrupting transcontinental supply chains; and the upcoming implementation of the EU deforestation regulation (EUDR), which is reshaping the attractiveness of tropical-origin biomass. The second half of the year is expected to bring stronger and more ESG-driven demand, favouring certified, traceable and low-transport footprint producers such as those based in Portugal.
While logistical and exchange rate differentials still play a role, they are beginning to fade. Increasing demand for lower-carbon footprint and EU-produced biomass combined with the strengthening of the euro against the dollar should support demand.
Are there other industries, such as the hard-to-abate sectors, which you see increasing their buying interest in Portuguese pellets?
Yes, hard-to-abate sectors such as cement and steel are showing growing interest in biomass pellets as a low-carbon alternative. From day one, Unipellets has been actively advocating this transition, including among more sceptical stakeholders. Industrial use of biomass pellets for heating is experiencing double-digit growth, with an increasing number of cement and steel facilities integrating biomass combustion systems as part of their decarbonisation strategies. In Portugal, while pellet use remains largely domestic, we are seeing steady progress toward the adoption of large-scale thermal conversion systems in industrial sectors. Unipellets is the first entity with a dedicated in-house team studying and supporting this transition, signalling a shift in national consumption patterns toward industrial use.
How do you see supply of biomass developing over the remainder of 2025?
Global biomass supply, particularly wood pellets, is expected to remain robust throughout the rest of this year. The global biomass pellets market is projected to grow at a compound annual growth rate of 6.7pc. In Europe, pellet demand is increasing at an annual rate of 3.6pc through to 2030, driven by renewable energy policies and emission reduction targets. In Portugal, the effective annual production of pellets is estimated at around 906,100t, with installed capacity sufficient to meet both domestic demand and export commitments. Unimadeiras remains a key partner in the supply of raw materials, while Unipellets serves as a financial partner to domestic producers.
What trends do you expect to develop later in the year?
The value gap between certified European pellets and transcontinental commodities is expected to widen. Owing to the full enforcement of the EUDR from 30 December, we expect increasing penalties for high-footprint products such as palm kernel shells and tropical pellets (e.g. acai-based), even when certified, given their longer supply chains and associated carbon intensity; growing investor scrutiny through green finance frameworks and supply chain auditing; and disincentives for transatlantic biomass imports, except under exceptional market conditions.
How do you see regulatory shifts and geopolitics affecting the biomass market?
The unfolding global trade landscape suggests that we may be witnessing the consolidation of a more protectionist, regionally-focused order — one that could have a direct and structural impact on the biomass sector. Recent signals — such as the geopolitical discomfort related to the Greenland issue between the US and Denmark, and emerging discussions on potential tariffs or restrictions on US pellet imports to the EU — illustrate a scenario where commercial tensions could escalate beyond current expectations.
In this context, the EUDR plays a dual role — not only as a sustainability milestone but also as a de facto industrial policy instrument that favours EU producers and discourages dependency on high-footprint transcontinental supply chains. The European Commission's EUDR Impact Assessment frames the regulation as both an environmental and industrial safeguard.
What place in the market do you think torrefaction will have in the coming years, and do you expect an increase in torrefied production facilities in Portugal?
Torrefaction is increasingly seen as a promising technology to enhance the properties of biomass pellets, making them more suitable for demanding industrial applications. Although the current market is subdued, we believe the best is yet to come. To be fully transparent, while Portugal does not yet have large-scale torrefied biomass production facilities, the country has a strong foundation in pellet manufacturing and a well-developed forestry sector, which positions it favourably to invest in this technology in the coming years.
