News
22/05/25
Q&A: Portuguese industrial biomass gaining momentum
London, 22 May (Argus) — 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. By Hannah Adler Send comments and request more information at
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