Pellet production in Estonia, Latvia and Lithuania started around 2000, when the rising pellet demand in Scandinavia brought mainly Swedish companies to invest in pellet production plants in the Baltic States. Accordingly, the pellet markets in these countries are, until today, very oriented to exporting pellets, again mainly to Scandinavia. The local pellet production not only relies on the large wood resources produced domestically but also on raw materials derived from large amounts of timber imported from countries such as Russia.
The pellet industry was quickly growing until 2007. In 2008, many companies disappeared from the market and produced and traded volumes decreased. The general weakness of international markets, decreasing energy prices and decreasing timber imports from Russia were the main reason for this unfavorable development. Due to this development, market volumes are hard to estimate for 2008. It can be estimated that produced volumes stagnated or even decreased slightly as compared to 2007, when e.g. in Estonia, more than 300,000 tons of pellets were produced. Today, around 6 producers are left in Estonia.
As already said, the largest share (80 – 90 %) of the pellets produced is exported via Baltic Sea ports. In addition, these ports have become important as transits for pellets produced in Ukraine and Russia.
The amounts of pellets produced make the Baltic pellet markets belong to the largest in terms of per capita production. In contrast, there is no significant consumption. Consumption for residential heating is negligible and the use of pellets for electricity production is not reported.
High investment costs for pellet appliances and the availability of cheaper alternatives are the main barrier to the development of residential pellet heating markets. The potential for bioenergy production is enormous in these countries. However, it is more likely that less expensive forms of biomass (e.g. wood chips) are used in large-scale applications in the near future.
Please refer to the Publication section for a comprehensive report on the Baltic pellet market.