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The European wood pellets for heating market - Price developments, trade and market efficiency

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  • Schipfer, Fabian
  • Kranzl, Lukas
  • Olsson, Olle
  • Lamers, Patrick

Abstract

Competitive international markets imply adjustments towards competitive spatial equilibrium in which excess from one market is transferred to another and prices are equilibrated except for remaining differences that can be assigned to transfer costs. The European market for wood pellets used in small-scale heating systems has been expanding significantly over the past decade. Small scale pellet heating is arguably a mature technology, but whether the market is mature is another question. In this paper we analyse recent data on trade flows and price developments between Italy, Austria, Germany and France to understand the developments of wood pellet market efficiency and to draw conclusions about market function. The objective of this study is to establish a framework to test the European residential wood pellet market for competitive spatial equilibrium using modern trade theory. We find mainly inefficiently integrated markets with remaining positive marginal profits and detectable arbitrageurs’ activity. Based on a thorough discussion of these findings and the underlying data we outline possible methodology advancements and list policy recommendations to secure access and affordability of this renewable heating commodity in the long run.

Suggested Citation

  • Schipfer, Fabian & Kranzl, Lukas & Olsson, Olle & Lamers, Patrick, 2020. "The European wood pellets for heating market - Price developments, trade and market efficiency," Energy, Elsevier, vol. 212(C).
    • Handle: RePEc:eee:energy:v:212:y:2020:i:c:s0360544220317448
    DOI: 10.1016/j.energy.2020.118636
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    2. Giuseppe Toscano & Elena Leoni & Carmine De Francesco & Giacomo Ciccone & Thomas Gasperini, 2023. "The Application of Image Acquisition and Processing Techniques for the Determination of Wooden Pellet Length as an Alternative to ISO 17829," Resources, MDPI, vol. 12(10), pages 1-12, October.
    3. Schipfer, F. & Mäki, E. & Schmieder, U. & Lange, N. & Schildhauer, T. & Hennig, C. & Thrän, D., 2022. "Status of and expectations for flexible bioenergy to support resource efficiency and to accelerate the energy transition," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    4. Aneta Saletnik & Bogdan Saletnik & Czesław Puchalski, 2021. "Modification of Energy Parameters in Wood Pellets with the Use of Waste Cooking Oil," Energies, MDPI, vol. 14(20), pages 1-16, October.
    5. Workson Siwale & Stefan Frodeson & Michael Finell & Mehrdad Arshadi & Carina Jonsson & Gunnar Henriksson & Jonas Berghel, 2022. "Understanding Off-Gassing of Biofuel Wood Pellets Using Pellets Produced from Pure Microcrystalline Cellulose with Different Additive Oils," Energies, MDPI, vol. 15(6), pages 1-12, March.
    6. Bruno Gagnon & Heather MacDonald & Emily Hope & Margaret Jean Blair & Daniel W. McKenney, 2022. "Impact of the COVID-19 Pandemic on Biomass Supply Chains: The Case of the Canadian Wood Pellet Industry," Energies, MDPI, vol. 15(9), pages 1-18, April.

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