EU wood pellet consumption for heat and power generation will grow this year, but production in the bloc may fail to keep pace, the US Department of Agriculture (USDA) forecasts in its latest annual wood pellet report.
The EU will produce 20.5mn t of wood pellets in 2025, up from 19.9mn t a year earlier, the report forecasts, while consumption will rise to 23.5mn t from 22.6mn t, bolstered by European Commission mandates and EU member state incentives.
EU pellet production is expected to rise on the year in 2025, predominantly in France and Germany, with residential supply making up much of that change.
Lithuanian and Polish production is forecast to increase, but government policy limiting wood harvests could restrict raw material availability.
Conversely, Estonian production is forecast to fall, following a government ruling that limits forestry activity in protected areas.
Despite rising production, EU demand — particularly for residential heating — could outpace supply later this year, the USDA says.
The bloc should consider agricultural residues as feedstock for wood pellets, as EU deforestation regulation scheduled to take effect in late December could hinder imports from the US, the report says.
Residential use of wood pellets in the EU will increase in 2025, driven predominantly by France, Germany, Austria and Poland, but also by Finland, where pellet use will grow despite a ban on Russian and Belarusian supply, the USDA forecasts.
National incentives aimed at increasing European pellet consumption, especially in Germany, Poland and Latvia, could leave less available for export, the department says.
Germany supports wood pellet burn for heat generation through mandates and restrictions on heating systems fuelled with oil and gas, the USDA says.
But the "relatively high price" of limited supply could cause residential consumption in Italy and the Nordics to plateau.
EU consumption of industrial-grade pellets could also increase this year, but more slowly than residential demand, the USDA says. In the Netherlands — the EU's largest industrial pellet market — consumption is forecast to jump in tandem with industrial use, although imports remain steadier on the year thanks to relatively high stocks.
A large portion of wood pellets consumed in Denmark are imported, and consumption and imports of industrial-grade pellets are expected to rise in 2025, the USDA says.
