After Japan and Korea have been the main markets for wood pellets in Asia for years, Taiwan is predicted to emerge as a new destination for the wood pellet market in Asia. This is because Taiwan's energy policy targets 20% renewable energy use by 2025. Namely by focusing on the energy transition from coal and other fossil fuels to renewable energy sources including biomass, solar and wind to increase renewable energy from 10% to 20% by 2025. The Greenhouse Gas Reduction and Management Act requires annual carbon emissions to be reduced by 20% by 2030 and 50% by 2050, below 2005 levels or a reduction of 53 million tons of CO2 equivalent by 2030 and 133 million tons by 2050. This is also part of Taiwan's nuclear-free vision and supports the national goal of achieving net-zero carbon emissions by 2050. Renewable energy development is the most important implementation to achieve this goal and wood pellets are a top priority. Taiwan will import wood pellets in large quantities to achieve its new green energy production targets.
The need for wood pellets in Taiwan reaches millions of tons or more detailed estimates are 1.7 million tons per year specifically for Taiwan Power Company, which will be implemented immediately when the policy is implemented. And there are also a number of independent power plants (IPP) that use coal boilers to generate electricity, especially the plastic industry, petroleum refineries and papermaking. Currently, renewable energy accounts for less than 10% of the total energy output in Taiwan. Meanwhile, the government aims to have 778 megawatts (MW) of biomass-based power plants by 2025, allowing production of 4.1 billion kWh.
The world's major wood pellets producing countries are looking to Taiwan, such as the United States, Vietnam and Canada. Vietnam has even become the second largest wood pellet producer in the world, overtaking Canada. And nationally, Vietnam's wood product exports are more than 70% for furniture and interior applications, 7% for wood-based panels, 17% wood chips and 5% for wood pellets. And to produce these products, Vietnam also imports large amounts of wood from more than 114 countries and 700 species / subspecies, amounting to $ 3.1 billion in the form of logs, sawnwood and plywood and imports almost 2 million cubic meters of tropical hardwood.
Basically, the major wood pellet producing countries are competing to convince Taiwan as a user or buyer of wood pellets about the supply capability, including quantity and quality, logistics reliability and sustainability of its supply. Although the Japanese and Korean markets continue to grow, penetration into a new market will add an opportunity to these producers. Even in Japan, many new power plants are being built so that the need for wood pellets is also increasing. In addition, the increase in the cofiring ratio in power plants in Japan will also increase the demand for wood pellets.
And globally according to Hawkin Wright, wood pellet sales are the highest among other biomass fuels, which is more than 27 million tons/year in 2025. While FutureMetric that the market for wood pellets for industry (industrial pellet fuel) can reach 55 million tons in 2030. Thus the need for wood pellets will continue to increase with an average of more than 5.5 million tons per year so that the production of wood pellets. Indonesia still has great potential to become a world wood pellet producer because of the potential raw materials that can be sought, both from wood and forestry industry waste and from energy plantations. With a location that is not too far from Taiwan (compared to wood pellet producing countries such as the United States and Canada) so that logistics or transportation costs are cheaper, the opportunity to compete is also quite large. In addition, PKS (palm kernel shell) are also an alternative biomass fuel besides wood pellets and as a producer of palm oil / CPO or the owner of the largest palm oil plantation in the world, Indonesia is number one for that.
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