UK was biggest overseas market for US wood pellets in 2013, according to Energy Information Administration, driven by EU legislation to force power plants to convert to biomass fuels

LONDON , May 26, 2014 () –

Wood pellets have emerged as a surprise new asset class in the world of commodities as more power companies convert turbines to burn biomass as an alternative to coal.

According to the US government's Energy Information Administration (EIA), Britain was the biggest overseas market for American wood pellets last year. Exports of the pellets nearly doubled last year, from 1.6m tonnes, equal to 22 trillion British thermal units of measured energy in 2012, to 3.2m tonnes in 2013.

European Union legislation to force power plant operators to convert to biomass fuels are behind the creation of the new export market for the US, according to the EIA. Up until the introduction of EU regulations to reduce greenhouse gas emissions by up to 20pc by 2020 from their 1990 levels, the US consumed the majority of its own domestic wood pellet production.

As more of the UK's power plants such as Drax convert to biomass burning turbines, imports of wood pellets have surged. Last year, Britain imported more than 3.5m tonnes from all sources, up from virtually no requirement in 2009 and making it the largest market in Europe for imported biomass.

Although the majority of Britain's biomass pellets are coming from the US, other potential suppliers include Canada.

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