On September 6, 2023, the Swedish Bioenergy Association (Svebio) held its sixth consecutive annual Fuel Market Day in Stockholm. With a record attendance of some 100 or participants, this year's edition was held against a continued biomass "situation room" backdrop in the Royal Swedish Academy of Engineering Sciences (IVA) venue, though without the doomsday drama.
Speakers and delegates alike provided insightful analyses and open discussions on what one might expect this coming 2023/2024 heating season in Sweden.
Market players from Sweden, the Baltic Sea Region countries – and as far as Brazil – participated and gave their views on the current market situation, macroeconomic trends, price developments, and forecasts.
The fretful apocalyptic-like atmosphere of last year’s edition at IVA was replaced by a candid solutions-oriented “this is the new normal” mood – perhaps a result of mature reflection over experiences gained and contingencies implemented since the previous 2022/2023 season.
Nonetheless, a general sentiment underlying the one-day conference was the precarious (energy) security situation on account of Russia’s ongoing war in Ukraine, and theconsequences of reducedrather than entirely stopped, flows of forest- and energy products from Belarus and Russia, and by default from Ukraine to the European Union (EU).
Despite EU sanctions and embargoes imposed on the former two, one might add, or indeed because of them.
Natural gas and LNG consignments of Russian originare still flowing into central European industries and householdsthrough still intact gas infrastructure while wood pellets, reputedly from the same, are seemingly trickling into the EU residential heating markets. Either directly via imports from dubious third-party countries or indirectly.
The latter isa subtle circumventionas countries that have not imposed sanctions against Belarus and Russia, would seem to be importing pellets for domestic consumption while exporting the displaced domestic production to the EU instead.
Be that as it may, pellets from new “legitimate” non-European producer regions, such as Southeast Asia, as well as increasing volumes from North America would seem to be filling the immediate void while fewer heating degree days and increased European production have helped.
The fast-approaching 2023/2024 heating season had discussions revolving around amongst other things the publically sensitive issue of increasing district heating prices, and new heating price models to recompense part of the increase in fuel costs, while public- and political perception of “Battle of the Forest” and thewar on wood(for energy purposes) compounds the operating environment complexity even further.
Practicalities discussed included increasing storage capacities, flex-fuel capabilities, as well as new sourcing models and regions.
With the latter in mind, the case for contract growing of eucalyptus biomass on disused anddegraded agricultural land in Brazilas a part of a fuel futures hedging strategy, does not seem as outlandish as it first might sound.
If not before, the next edition of Fuel Market Day slated to be held in September 2024 will reveal if there have been any uptakes.
