In the video below, the answer is..."Europe has strong renewable energy policies"...and it cites their goal of 20% renewable energy by 2020. The full set of policies is embodied in the phrase "20/20/20 targets"; 20% reduction in greenhouse gases, 20% production of total energy consumption from renewable resources, and 20% reduction in energy consumption.
Update, 1/20/2015: The original video has disappeared; this newer video gives us an update of EU goals for the period 2020 - 2030...which has a target of 27% renewables by 2030.
The first report referenced in the video is European Power from U.S. Forests, and it is a useful document for getting a handle on the current and projected wood pellet markets in North America and the EU, and for the policy drivers and shifts in each country. Indeed, if the renewable energy world goes as projected in the studies cited in the document, wood pellet markets look very bright indeed.
This is the Conclusion of the first document referenced in the video:
While there is much uncertainty in pellet demand projections for the next 5–10 years within Europe, it is likely that imports will remain important and will continue to increase, especially in countries such as Denmark, the Netherlands, Belgium, Italy, the UK, and Sweden. Within the scope of the reports studied here, import projections range from 16 million to 60 million tonnes. It is also possible that new markets will develop, particularly in Germany and Austria. Demand for pellets for CHP and district heating will likely increase, as those technologies are considered highly efficient and are strongly encouraged in several EU policies. The mandatory development of National Heating and Cooling Plans for all Member Countries should provide an additional stimulus. Demand for pellets for electricity generation will likely increase as well, as some countries are implementing mandatory co-firing regulations, or encouraging dedicated biomass firing in power plants through financial schemes. The large potential capacity for pellet production in the U.S. (currently estimated at 6 million tonnes) could be made available for increased EU demand, but will require production practices and supply chain logistics meet sustainability and quality requirements for the EU markets.
Sustainability is likely to remain a pivotal issue into the future. The general trend is toward harmonization of sustainability requirements, yet it remains to be seen whether this will be industry-led or through EU legislation. Topics such as carbon accounting and indirect land use changes need to be resolved, if possible with a global consensus, in both certification schemes and national or international agreements on sustainability requirements. This will help to decrease trade and market barriers globally while ensuring climate goals are met through bioenergy development.
It is probable that certification of pellets will become the norm within the EU, and U.S. producers need to consider how they might begin to meet those requirements. Within the Southern U.S., only 17% of commercial forest land is certified sustainable through one of the major U.S. schemes: Forest Stewardship Council (FSC), Sustainable Forestry Initiative (SFI), and American Tree Farm System (ATFS) (Lowe et al. 2011). Of that 17%, FSC certified land makes up 1%, while SFI and ATFS represent 16% of the total certified land within the southern U.S. (Lowe et al. 2011). Whether or not forest management practices within North America are generally considered to be “sustainable,” it is necessary to ensure that specific sustainability requirements for wood pellets in the EU are met or exceeded by U.S. forestry practices.
Sustainability requirements laid out in the EC-RED and Report COM (2010)11 likely will remain the baseline for future policies. Domestic producers need to examine how sustainability pathways, whether through certification, biomass harvest guidelines, or other conservation programs, might be consistent with the sustainability requirements of the EU. See the companion report Pathways to Sustainability by Environmental Defense Fund and Pinchot Institute on this topic. The upcoming report from the EU examining the different national sustainability schemes should provide additional guidance as to which European schemes will be appropriate in the near future and will further define what sustainability standards will be required for production of wood pellets in the United States.- Environmental Defense Fund, European Power from U.S. Forests
The projections are clearly ambitious and at the same time, unrealistic in the face of the gathering economic storm in the EU. Otherwise laudable sustainability goals will seem minor in importance to the Euros as they struggle to keep economic and social stability on the continent. The rather isolated and forest resource-rich Scandinavian countries may come close to meeting the goals, but the others really don't have a prayer. Or if they do, it will be because the Eurozone is economically crashing and can't afford the energy, not because they're transitioning seamlessly to renewable energy resources.
As our wood pellet industry ramps up for these overly optimistic projections, look for the pellet market to go soft in the coming years. Demand will probably fall short of the projections, and sustainability-certified supply requirements will drive costs higher. Once again, unintended consequences of good intentions enforced by government fiat instead of free markets will probably fudge the whole thing up.