A future for pellets? An assessment of the economic and carbon impacts of lignocellulosic pellet supply

This thesis analyses the potential current and future impact of increased wood pellet production and international long distance trade on costs and emissions. Variation in supply chain costs is analysed by accounting for regional and temporal differences in cost factors, by including the impact of supply chain design and by analysing the uncertainty of available data on cost components. The impact of supply chain design on both costs and emissions is especially considered for different production regions, by including structural differences in cost factors and by accounting for spatially explicit feedstock availability resulting in different logistics requirements. The spatially explicit availability and allocation of feedstock for pellet production is furthermore assessed in relation to the competition and synergies with other wood-based products industries. Availability and use of feedstock has several impacts. Cost and emission thresholds limit the type of feedstock used for pellet production and the total sourcing areas and production potential. On the other hand, increased pellet production impacts total feedstock demand, impacting the supply chain design, costs and emissions as well as the balance between carbon emission and sequestration in forest areas. The main factors that determine supply chain costs are feedstock (25-53%), pellet transport (8-23%) and shipping (6-19%), although this depends strongly on the specific supply chain design. For GHG emissions, especially the pelletizing step adds to total emissions (16-54%), followed by shipping (7-36%), feedstock transport (15-25%) and pellet transport (11-19%). Reducing costs through supply chain optimisation is complicated because of trade-offs between several cost components. Economies of scale, the production of torrefied pellets and the use of industry residues instead of roundwood could all result in cost savings. Total supply chain costs and cost saving potentials depend strongly on specific supply chain characteristics. As cost and GHG emission criteria become stricter, the potential to import pellets from selected case study countries almost disappears completely. The largest costs factors are feedstock costs and pelletizing costs. Assuming business as usual conditions, with an emission reduction threshold of 70% and a cost limit of 150 €/t pellets, the total potential that can be imported is up to 38 Mt pellets. A stricter GHG emission criteria of 80% reduces the potential to a maximum of 15 Mt pellets and a criterium of 85% to only 1 Mt pellets. GHG emissions are largely determined by the pelletizing step, feedstock transport and shipping transport. Increased pellet production in the Southeast US results in higher overall utilization of industry residues, but also in the use of minor shares of pulplogs and sawlogs for pellet production and the reduction of residue use in other industries, resulting in more roundwood harvesting for pulp and paper production as well. The increase in harvesting leads to a shifting balance between carbon sequestration, through tree growth, and emissions, through tree removal, resulting in increased carbon flux in forest areas. Additional use of logging residues can reduce part of the carbon flux increase, however beyond 20 Mt production in 2030 also the availability of logging residues is limited.