The Asian Wood 

Pellet Markets

Joseph A. Roos and Allen M. Brackley

United States 

Department of 

Agriculture

Forest Service

Pacific Northwest 

Research Station

General Technical Report 

PNW-GTR-861

May 2012

DEPAR TMENT OF AGRICULT URE
Authors

Joseph A. Roos is a researcher at the University of Washington, College of the 

Environment, Box 352100, Seattle, WA 98195; and Allen M. Brackley is a research 

forester, U.S. Department of Agriculture, Forest Service, Pacific Northwest 

Research Station, Alaska Wood Utilization Research and Development Center, 204 

Siginaka Way, Sitka, AK 99835.

Cover photographs: Scenes from Superior Wood Pellet plant in North Pole, Alaska. 

Clockwise from upper left: pelleting machine; pellets bagged for home use; a 

Superior Pellet Fuels bag; inventory of product ready for shipment to retailers. 

Upper right photo by David Nicholls; all others by Allen M. Brackley.

The Forest Service of the U.S. Department of Agriculture is dedicated to the principle of 

multiple use management of the Nation’s forest resources for sustained yields of wood, 

water, forage, wildlife, and recreation. Through forestry research, cooperation with the 

States and private forest owners, and management of the National Forests and National 

Grasslands, it strives—as directed by Congress—to provide increasingly greater service 

to a growing Nation.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and 

activities on the basis of race, color, national origin, age, disability, and where applicable, 

sex, marital status, familial status, parental status, religion, sexual orientation, genetic 

information, political beliefs, reprisal, or because all or part of an individual’s income 

is derived from any public assistance program. (Not all prohibited bases apply to all 

programs.) Persons with disabilities who require alternative means for communication of 

program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET 

Center at (202) 720–2600 (voice and TDD). To file a complaint of discrimination, write 

USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW, Washington, DC 

20250–9410 or call (800) 795–3272 (voice) or (202) 720–6382 (TDD). USDA is an equal 

opportunity provider and employer.
Abstract

Roos, Joseph A.; Brackley, Allen, M. 2012. The Asian Wood Pellet Markets. Gen 

Tech Rep. PNW-GTR-861. Portland, OR. U.S. Department of Agriculture, Forest 

Service, Pacific Northwest Research Station. 25 p.

This study examines the three major wood pellet markets in Asia: China, Japan, 

and South Korea. In contrast to the United States, where most wood pellets are 

used for residential heating with pellet stoves, a majority of the wood pellets in 

Asia are used for co-firing at coal-fired power plants. Our analysis indicated that 

Japan is the largest importer of wood pellets in Asia and that most of the pellets 

it consumes are used for co-firing at power plants. South Korean wood pellet 

imports are fairly small; however, South Korea is striving to increase its percentage of renewable energy, which could benefit the wood pellets industry. We 

found that China, the largest energy consumer in Asia, has an established wood 

pellet market. However, a majority of these wood pellets are manufactured in 

China, thus imports are minimal. A consistent factor in these nations is that their 

governments are promoting renewable energy, leading to policies that are driving 

demand for wood pellets. As these countries strive to meet their renewable energy 

targets, their wood pellet consumption is projected to grow. 

Keywords: Renewable energy, wood pellets, Asia, China, Japan, South Korea.
Contents

1 Introduction

2 The Global Energy Portfolio

2 Biomass Energy

4 Wood Pellets

5 Global Wood Pellet Market Overview

7 Asian Wood Pellet Markets

8 China’s Wood Pellet Market

10 South Korea’s Wood Pellet Market

13 Japan’s Wood Pellet Market

16 Conclusions

17 Acknowledgments

17 English Equivalents

18 Literature Cited

22 Appendix: Sources for Wood Pellet and Export Assistance
1

The Asian Wood Pellet Markets

Introduction

Global wood pellet production was approximately 12 million metric tons in 2009, 

and is predicted to increase to 100 million metric tons by 2020 (Bloomberg 2010a). 

The primary drivers for increasing global demand for wood pellets are government 

policies and global agreements in support of renewable sources of energy. The first 

major climate-change agreement to reduce greenhouse gas (GHG) emissions was 

the Kyoto Protocol, developed under the United Nations Framework Convention on 

Climate Change (UNFCCC). The Kyoto Protocol went into effect in February 2005 

and set a target for reducing GHG emissions by signatory countries to an average 

of 5 percent below 1990 levels between 2008 and 2012. The UNFCCC is now 

planning for a new climate-change agreement to follow the Kyoto Protocol. Representatives from various countries met in Copenhagen in December 2009 to discuss 

a post-Kyoto Protocol climate-change agreement. Although no concrete agreement 

emerged, the meeting produced a draft that stipulates that global emissions be 

reduced “to hold the increase in global temperature below 2 degrees Celsius, and 

take action to meet this objective consistent with science and on the basis of equity” 

(UNFCCC 2010). 

Although the United States did not participate in the Kyoto Protocol, there is 

movement in the United States to reduce GHG emissions. On April 17, 2009, the 

U.S. Environmental Protection Agency (EPA) formally announced its determination that GHGs pose a threat to public health and the environment (EPA 2009). This 

announcement was significant because it gives the executive branch the authority 

to impose carbon regulations on carbon-emitting entities. There are also two major 

climate change bills that have been introduced by the legislative branch. The first 

is The American Clean Energy and Security Act, also known as the WaxmanMarkey Bill, in the House. The second is the American Power Act, also known 

as the Kerry-Lieberman Bill, in the Senate. The Waxman-Markey bill calls for a 

20-percent reduction of greenhouse gas emissions from 2005 levels by 2020, and 

the Kerry-Lieberman bill calls for a 17-percent reduction over the same period. 

The Waxman-Markey bill also sets a mandate for renewable energy, requiring 25 

percent of all energy sold to be sourced from renewable energy by 2025. However, 

as of this writing (August 2010), both of these bills appear to be temporarily shelved 

in favor of an energy bill proposed in 2010 by Senate Majority Leader Harry Reid.

While the energy policy in the United States remains unclear, Japan and South 

Korea have established renewable energy policies that are increasing demand for 

wood pellets. The purpose of this paper is to examine the Asian wood pellet market 

and the potential for U.S. wood pellet exports. 
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GENERAL TECHNICAL REPORT PNW-GTR-861

The Global Energy Portfolio

By 2035, global energy consumption is projected to increase approximately 50 

percent from current levels (EIA 2010). The top three global energy sources are oil, 

coal, and natural gas; and these three sources supply approximately 86 percent of 

the world’s energy, requirements (fig. 1). There are many types of renewable energy 

including hydroelectric, geothermal, wind, solar, tidal and wave, and biomass 

energy. Although oil, coal, and natural gas are expected to remain the world’s 

primary sources of energy, renewable energy, including hydroelectric power, is 

projected to increase to 100 quadrillion British Thermal Units (BTU), or 14 percent 

of global energy consumption, by 2035 (fig. 2). 

36%

6%

6%

2%

Oil

Coal

Natural gas

Hydroelectric

Nuclear

Renewable

27%

23%

Biomass Energy

Biomass energy refers to energy stored in organic material such as forest and 

agricultural products. Biomass is a key energy source in the developing world 

in the form of firewood used for heating and cooking. In the developed world, 

biomass energy is gaining popularity as a fuel source for electricity generation. 

One advantage that biomass has over wind and solar power is that it can generate 

electricity continuously or on a schedule, rather than relying on conditions of the 

wind or sun. The primary feedstock of biomass for heat and electricity generation is 

woody biomass. Other sources include corn, soy, crop residues, and grasses. Global 

production of biomass, waste, and ocean-based sources of energy is predicted to 

Figure 1—Percentage of global energy production by source. Source: EIA 2008.
3

The Asian Wood Pellet Markets

increase more than three times the 2007 level by 2035 (fig. 3). There are various 

methods to generate heat and electricity using biomass feedstocks (Pew Center for 

Global Climate Change 2009): 

• Direct firing—Biomass is the only fuel used at a given power plant. The 

feedstock is fed into a boiler, which in turn powers a steam turbine to 

generate electricity. The direct firing method attains efficiencies of up 

to 40 percent. 

• Co-firing—Biomass is substituted for a portion of the coal burned 

in a coal-fired power plant. A coal-fired power plant can be modified 

to accommodate biomass and use it to supply up to 20 percent of its 

fuel requirements. This method reaches efficiencies between 33 and 

37 percent. 

• Cogeneration—Fuel is burned to produce both electricity and heat. As 

with direct firing, the biomass fuel powers a steam turbine generator. 

However, unlike direct firing, cogeneration uses the resulting exhaust 

flow for further electricity generation or heat generation. The advantage 

of cogeneration is improved efficiencies between 75 and 90 percent. 

• Gasification—Feedstock is processed in a hot oxygen-starved area to 

produce a gas, composed mostly of carbon monoxide and hydrogen. This 

gas fuels a turbine to produce electricity. This method reaches efficiencies 

of up to 60 percent.

0

50

100

150

200

250

1990 2000 2007 2015f 2025f 2035f

Oil

Coal

Natural gas

Renewables

Nuclear

Global energy consumption (quadrillion BTU)

Year

Figure 2—Global energy consumption by source. Source: EIA 2010; f = forecast; BTU=British 

thermal units.
4

GENERAL TECHNICAL REPORT PNW-GTR-861

Wood Pellets

Wood pellets are one type of biomass energy. Pellets are primarily manufactured 

from wood waste, including sawdust, shavings, and wood chips, which are byproducts of the manufacture of lumber, furniture, and other forest products. The pellet 

manufacturing process consists of the following steps: receipt of raw materials, 

screening, grinding, drying, pelletizing, cooling, screening, and packaging. The 

raw materials should be dried to the desired moisture content (Brackley and Parrent 

2011, Hansen et al. 2009). Once the material is dried, it is ground so that each piece 

has a diameter that meets proper specifications. In some cases, the raw material is 

then conditioned in a steam conditioner to soften the wood before it is compacted. 

This makes the raw material less abrasive to the equipment. The next step is the 

pelletizing itself. Pellet machines apply pressure to force the raw materials through 

holes that shape the pellets. Pressure and friction are used to increase the temperature of the wood, which in turn allows the lignum to soften and the wood fibers 

to be reshaped into pellets. After the pellets leave the extruder, they are air-cooled, 

the lignums solidify, and the pellet is formed. The dimensions, density, and other 

factors are specified by standards designed by industry groups. In the United 

States, the Pellet Fuel Institute has designed a set of standards for wood pellet 

fuel grading (table 1). Kilowatt hours (billions)

Year

0

100

200

300

400

500

600

700

800

900

1,000

2007 2015 2020 2025 2030 2035

Figure 3—Biomass and ocean energy production projections. Source: EIA 2010.
5

The Asian Wood Pellet Markets

Global Wood Pellet Market Overview

The global economy is gradually recovering from the worst economic downturn 

since the Great Depression. The World Bank predicted that global gross domestic 

product (GDP) growth for 2010 would be 3.3 percent, which is double the 2008 level 

(World Bank 2010). This new phase of global expansion will stimulate demand for 

more energy, including wood pellets.

The major wood pellet-producing countries in North America and Europe are 

Canada, Germany, Sweden, and the United States. The major consumer countries 

for wood pellets are Belgium, Denmark, the Netherlands, Sweden, and the United 

States (fig. 4). The major wood pellet importing countries are Belgium, Denmark, 

the Netherlands, and Sweden. As figure 4 shows, the United States produces a large 

quantity of wood pellets but also consumes a large quantity. In contrast, Canada 

produces a large quantity of wood pellets but exports approximately 80 percent of 

its production. 

The European wood pellet market can be divided into two segments: electric 

power generation and heating. Denmark, Finland, and Sweden use wood pellets for 

both heating and electricity generation. In contrast, Austria, France, Germany, and 

Italy use pellets mostly for heating (Peksa-Blanchar et al. 2007).

The European wood pellet industry can be traced back to Sweden in the late 

1970s, when equipment was developed for converting oil boilers to pellet fuel use. 

Stimulation of a viable wood-pellet industry increased in the 1990s, starting in 

1991 when the Swedish government implemented a tax on fossil fuels. As Belgium, 

Denmark, Germany and the Netherlands adopted similar policies, the European 

wood pellet market began to expand rapidly. 

A large part of European wood pellet demand can be attributed to the Kyoto 

Protocol requirement to reduce GHG emissions 5 percent below 1990 levels. Many 

European coal-fired power plants have found that co-firing with biomass energy is 

a cost-effective way to reduce GHG emissions. Another key policy that increased 

Table 1—Pellet Fuels Institute standards, effective October 27, 2010 (PFI 2010)

Fuel property Premium grade Standard grade Utility grade

Bulk density 40.0–46.0 38.0–46.0 38.0–46.0

Diameter (inches) 0.230–0.285 0.230–0.285 0.230–0.285

Diameter (mm) 5.84–7.25 5.84–7.25 5.84–7.25

Pellet durability index ≥96.5 ≥95.0 ≥95.0

Fines (percent at mill gate) ≤1.0 ≤1.00 ≤1.00

Inorganic ash percentage ≤1.0 ≤2.00 ≤6.0

Length (percentage > 1.5 inches) ≤1.0 ≤1.0 ≤1.0

Moisture percentage (wet basis) ≤6.0 ≤10.0 ≤10.0

Chloride (parts per million) ≤300 ≤300 ≤300
6

GENERAL TECHNICAL REPORT PNW-GTR-861

wood pellet demand in Europe was the European Biomass Action Plan of 2005. 

The European Union (EU) generated approximately 4 percent of its 2005 energy 

needs from biomass energy. The goal of the European Biomass Action Plan was 

to promote research and development and increase utilization of biomass energy. 

This plan also set a target of increasing biomass energy to 8 percent of total energy 

production by 2010, a goal that has increased demand for wood pellets. 

The North American market for wood pellets began to gain traction in the late 

1970s. Initially, wood pellets were used mainly by industrial, commercial, and 

institutional sectors for heating. Then pellets began to enter the residential heating 

market as pellet-fueled heating stoves gained popularity. Currently, the United 

States provides a federal tax credit for renewable energy generation, the Renewable Energy Production Tax Credit, which provides a 2.2 cent-per-kilowatt-hour 

(kWh) tax credit for wind, geothermal, and closed-loop biomass energy production 

(DSIRE 2010). There are also various incentives in support of renewable energy at 

the state, county, and local government levels. 

Wood pellet production in 2010 was estimated to be 1.8 million metric tons 

in the United States and 1.2 million metric tons in Canada (Murray 2010). Most 

of the U.S. pellet production was consumed domestically, with only 20 percent 

2,500

2,000

1,500

1,000

500

0

Tons (thousands)

United States

Sweden

Denmark

China

Belgium

Netherlands

Germany

Italy

Austria

Canada

Japan

Country

Production

Consumption

Figure 4—Wood pellet production and consumption in 2009 by country. Source: Murray 2010.
7

The Asian Wood Pellet Markets

of total production exported. The primary wood pellet use in the United States is 

home heating in pellet stoves, thus most of the production is packaged in 40-pound 

(18-kilogram) bags (Spelter and Toth 2009). In contrast to the United States, 83 

percent of Canadian 2009 production was exported and shipped in bulk. 

Researchers have also examined the potential for biomass energy to meet 

Alaska’s heating and energy needs. Forests cover 129 million acres of Alaska, or 

about one third of the state; given this vast resource, wood energy has the potential 

to supply a significant portion of Alaska’s energy demands. Currently, wood energy 

is being used to heat residences, schools, community centers, and commercial 

buildings. Nicholls (2009) examined the potential role of wood in providing energy 

to Alaska’s rural communities. This study found that the main limitations of wood 

energy include the availability of woody biomass, fuel moisture content, and transportation costs. The research also found that, in certain cases, wood burners worked 

well to meet the heating needs of rural communities. An analysis of the Kenai 

Peninsula showed that the payback period ranged from 4 to 20 years depending on 

competing fuel, machinery, and other factors (Nicholls and Crimp 2002).

Wood pellet market research is a fairly new field, with most of the studies 

focusing on the North American and European markets. However, while these markets are well established, a number of Asian governments are developing policies to 

promote the use of renewable energy, and wood pellets are benefitting from these 

policies. The following section examines Asian markets for wood pellets and their 

potential as markets for U.S. exports.

Asian Wood Pellet Markets

The Asian wood pellet market is expanding at a steady pace. This can be seen in the 

quantity of wood pellet exports from the Port of Prince Rupert, British Columbia, 

to Asia, which increased 33 percent in the first half of 2010 over the same period in 

the previous year (Prince Rupert Port Authority 2010). The west coast is in a strong 

position to supply Asia with wood pellets, drawing on both timber supply and 

proximity to Asian markets. 

Most of the wood pellets shipped to Asia are directed to two markets. The first 

is the industrial energy sector, where pellets are used for co-firing with coal at 

power plants and in large boilers. The second is the home heating market, where 

pellets are used in pellet stoves. Generally, wood pellets shipped to the industrial 

energy markets in Asia are shipped via bulk carrier rather than by container ships. 

The three largest consumers of wood pellets in Asia are China, South Korea, and 

Japan; the following sections provide an overview of their general economies, 

energy needs, and wood pellet markets.
8

GENERAL TECHNICAL REPORT PNW-GTR-861

China’s Wood Pellet Market

China’s 2008 GDP was US$4.3 trillion. Although the world’s GDP growth contracted 2 percent in 2009, China’s GDP growth surged at 8.7 percent (fig. 5). Much 

of this growth was fueled by infrastructure projects funded by government stimulus 

funds. China’s GDP growth was projected to be between 9 percent and 10 percent 

in 2010, then to slow to 8.3 percent in 2011 (EIU 2010). 

One area of contention between China and its trading partners has been the 

manipulation of the Chinese currency to keep it at artificially undervalued levels. 

This practice has kept the price of goods exported from China low, while keeping the price of goods imported into China high. However, on June 19, 2010, the 

Chinese government announced it would be more flexible in managing its currency. 

As a result, the Chinese yuan appreciated against the U.S. dollar for the first time 

since July 2005, making U.S. exports somewhat cheaper for Chinese consumers 

(Bloomberg 2010b). 

China is currently the second largest consumer of energy in the world, behind 

the United States. Energy has been the foundation of China’s economic growth. 

At the center of China’s energy consumption is coal, which provides China with 

70 percent of its energy needs, making it the world’s largest coal consumer. Oil 

14

12

10

8

6

4

2

0 0

5,000

10,000

15,000

20,000

25,000

Gross domestic product (billion yuan)

Percentage of change

19901992199419961998200020022004200620082010

Real gross domestic product (GDP)

Real GDP (percentage of change)

Year

Figure 5—China’s gross domestic product (GDP) and GDP growth. Source: Economic Intelligence 

Unit 2010.
9

The Asian Wood Pellet Markets

accounts for approximately 20 percent of China’s energy consumption and the 

remaining 10 percent comes from natural gas, renewable energy, and nuclear 

energy (fig. 6).

Coal

Oil

Natural gas

Renewable

Nuclear 70%

20%

3%

6%

1%

Figure 6—China’s energy consumption by type. Source: Economic Intelligence Unit 2009.

China’s energy policy is to secure enough energy to fuel its continued economic 

growth. China has been hesitant to commit to any global climate-change agreement 

that mandates emission reductions. Its official position on climate change is the 

“principle of common but differentiated responsibilities” (National Development 

and Reform Commission 2009). This policy takes the position that developed countries need to take responsibility for their historical cumulative emissions and their 

current high per capita emissions. China has agreed to pursue the common goal of 

mitigating the impacts of climate change but has resisted committing to any specific 

emission-reduction goals. 

Although China has avoided committing to mandatory emission reductions, it 

is investing heavily in renewable energy. The basis for China’s renewable energy 

policy is its Renewable Energy Law, which was enacted January 1, 2006. This law 

mandates that power grid companies purchase all the renewable energy that can be 

supplied to their grids. An amendment to this law was enacted on April 1, 2010, that 

increases the enforcement of the mandatory purchase clause and increases support 

for the purchase of renewable energy (Schaub 2010). China also has mandated that 

at least 15 percent of their its capacity be generated from renewable energy sources 

by 2015 (China Daily 2009). 
10

GENERAL TECHNICAL REPORT PNW-GTR-861

Biomass fuel development is a top priority in China. One area China is 

examining to supplement its coal use is wood pellets (Wang 2005). China’s 

production of wood pellets was estimated to be 800 000 metric tons in 2008 

(Swaan 2008) and 1 million metric tons in 2009 (Yamamoto et al. 2009). China’s 

wood pellet consumption relies primarily on domestic production, and imports are 

minimal. In 2008, China imported approximately US$10.3 million dollars of wood 

fuel; only a fraction of this figure was for wood pellets (FAO 2010). However, the 

Chinese currency has appreciated against the U.S. dollar, which may make U.S. 

wood pellets more cost-competitive in the Chinese market. As in Japan, the major 

market for wood pellets in China is for co-firing at coal power plants. In summary, 

China has the second largest energy market in the world and is searching for ways 

to increase its percentage of renewable energy. However, China’s wood pellet 

import volume is still relatively small, thus strong efforts would need to be 

made in market development. 

South Korea’s Wood Pellet Market

South Korea has a strong economy with a 2009 estimated GDP of US$1.36 trillion (fig. 7). As with many other global economies, South Korea’s 2009 economic 

growth was sluggish at 0.2 percent. However, the Bank of Korea forecast its 2010 

GDP to grow at a rate of 5.2 percent. The South Korean government reacted swiftly 

and effectively to the global economic crisis, while maintaining sound fiscal 

policies. Additionally, South Korea’s exports have been strong and the country is 

gaining market share on its Japanese rivals in key markets such as electronics and 

automobiles. As a result of its strong fundamentals, South Korea’s credit rating was 

upgraded by Moody’s Investor Service in April 2010 (Bloomberg 2010c).

South Korea’s steady economic growth has been fueled by fossil fuel energy, 

which has sharply increased carbon dioxide (CO2) emissions. From 1990 to 2006, 

South Korea’s CO2 output increased by approximately 97 percent. This is in sharp 

contrast to neighboring Japan, which increased by 11 percent during the same 

period (United Nations Statistics Division 2010). The top three energy sources 

for South Korea are oil, coal, and natural gas, respectively (fig. 8). Although oil is 

the largest energy source, South Korea has substantially reduced its reliance on 

oil. Currently, South Korea’s oil consumption is approximately 35 percent of total 

energy consumption, a substantial decrease from the 65-percent level of 1994 

(EIA 2010). As oil consumption has been decreasing, nuclear power and natural 

gas have been increasing. 
11

The Asian Wood Pellet Markets

South Korea is taking aggressive steps to increase its renewable energy 

resources, including wind power, tidal power, and biofuels. Under President Lee 

Myung Bak, the country has pursued an energy policy that aims for energy security, economic efficiency, and environmental protection. This policy calls for the 

reduction of fossil fuels from the 2007 level of 83 percent of total energy use to 61 

percent, and aims to increase renewable energy from the 2007 level of 2.4 percent 

to 11 percent by 2030 (IEA 2008). 

South Korea relies heavily on imports for forest products, with a forest products 

self-sufficiency rate of only 6 percent (Korea Forest Service 2010). The top three 

exporters of forest products to South Korea are China, Malaysia, and New Zealand 

(Global Trade Atlas 2010). Wood energy development is being promoted by the 

Korea Forest Service. One unique approach South Korea is taking is to jointly 

develop wood energy technology and resources with other countries. In March 

2009, the Korea Forest Service and the Indonesia Forest Ministry signed a pact to 

put aside 200 000 ha of forest land in Indonesia to produce wood pellets starting in 

2010 (Thai Indian News 2009). 

Figure 7—South Korea’s gross domestic product (GDP) and GDP growth. Source: Economic Intelligence Unit 2010; 

e=estimate; f=forecast. Gross domestic product (trillion won)

Percentage of change

199019911992199319941995199619971998199920002001200220032004

2005

2006

2007

2008

2009

2010e

2011f

Real gross domestic product (GDP)

Real GDP (percentage of change)

0

200

400

600

800

1,000

1,200 10

8

6

4

2

0

-2

-4

-6

-8

-10

Year
12

GENERAL TECHNICAL REPORT PNW-GTR-861

In 2009, South Korea’s total pellet market was estimated to be 30 000 metric 

tons, with 10 000 metric tons being imported and 20 000 metric tons being produced domestically (Han 2009). Wood pellet demand was projected to more than 

double by 2012 to 750 000 metric tons, then increase to 5 million metric tons by 

2020 (fig. 9). 

Figure 9—Projected pellet demand in South Korea. Source: Han 2009.

2010 2011 2012 2016 2020

Metric tons (thousands)

Year

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

0

Figure 8—South Korea’s energy consumption by type. Source: Economic Intelligence Unit 2009.

Oil

Coal

Nuclear

Natural gas

Renewable

35%

22%

26%

14%

3%
13

The Asian Wood Pellet Markets

These projections are based on South Korea increasing its portion of renewable 

energy in order to meet the 11 percent renewable energy requirement by 2020. This 

2020 requirement, combined with firm economic growth, makes South Korea a 

strong wood pellet market. However, currently its import quantity is fairly low, so 

U.S. exporters would need to establish relationships and invest in business development. 

Japan’s Wood Pellet Market

Japan’s 2009 GDP was approximately US$4.14 trillion. After the collapse of the 

nation’s real estate bubble in 1990, the Japanese economy entered what is known 

as the “lost decade,” which describes Japan’s stagnant economy between 1991 and 

2001, when GDP growth rates averaged 1.2 percent annually and the government 

struggled to stimulate the economy (fig. 10). The global economic recession of 2008 

hit Japan harder than China and South Korea. In 2009, Japan’s economy contracted 

by 5.2 percent from the previous year. In contrast, the South Korean economy held 

its ground and China grew by 8.7 percent. One problem that continues to plague 

Japan is its government debt. Japan’s efforts to stimulate its economy through 

infrastructure projects during the last 20 years has left the government saddled 

with a debt load that is almost twice the country’s GDP (Bloomberg 2010d). In June 

2010, Japan’s parliament installed a new prime minister, Naoto Kan, who said he 

would make reducing the debt a top priority and that he may raise the national sales 

Figure 10—Japan’s gross domestic product (GDP) and GDP growth. Source: Economic Intelligence Unit 2010. Gross domestic product (trillion yen)

Percentage of change

1990

1991

1992

1993

1994

1995

1996

19971998199920002001

2002

20032004

2005

200620072008

2009

2010

600

550

500

450

400

350

300

6

4

2

0

-2

-4

-6

Year

Real gross domestic product (GDP)

Real GDP (percentage of change)
14

GENERAL TECHNICAL REPORT PNW-GTR-861

tax. However, if the new administration increases the national sales tax, this could 

further hinder Japan’s economic recovery. 

Japan has almost no natural resources, so it imports almost all of its coal, oil, 

and natural gas supplies. Japan is the world’s largest importer of natural gas and 

second largest importer of oil. The top three sources of Japan’s energy consumption 

are oil at 49 percent, coal at 20 percent, and natural gas at 14 percent (fig. 11). The 

remaining energy consumption is made up of hydroelectric, nuclear, and non-hydro 

renewable sources. Japan is a signatory member of the Kyoto Protocol agreement 

and is required to reduce emissions by 6 percent below 1990 levels by 2012. To 

meet these targets, Japan was striving to increase its supply of nuclear and renewable energy. The center of this effort is Japan’s Renewable Energy Portfolio Standard Law, which was enacted on April 1, 2003. This law sets the target to increase 

renewable energy to 16 billion kilowatt hours by 2014 (IEA 2007). This figure is 

double the amount of 2005 renewable energy generated in Japan. The types of 

renewable energy stipulated in the law are solar, wind, biomass, hydroelectric, and 

geothermal power. 

The wood pellet industry is firmly established in Japan and is used for home 

heating as well as for power generation. In 2003, Japan produced an estimated 2400 

metric tons of wood pellets, which increased to 60000 metric tons by 2008 (fig. 12). 

The Japan Wood Pellet Association reports that there are 55 wood pellet manufacturing facilities in Japan (Japan Wood Pellet Association 2010). 

49%

20%

14%

13%

3% 1%

Oil

Coal

Natural gas

Nuclear

Hydroelectric

Other renewables

Figure 11—Japan’s energy portfolio. Source: U.S. Energy Information Administration 2010.
15

The Asian Wood Pellet Markets

In addition to domestic production, Japan imported approximately 49 000 

metric tons of wood pellets in 2009 (Murray 2010). A majority of the imported 

wood pellets are sourced from Canada. Additionally, the Port of Prince Rupert has 

exported 120 723 metric tons of wood pellets to Asia as of August 2010, is a 36 

percent increase from the same time the previous year (Port of Prince Rupert 2010). 

A large portion of Japan’s wood pellets are being used for electric power 

generation. Kansai Electric Power Corporation, a leader in this field, started using 

wood pellets for co-firing with coal at its Maizuru power plant in August 2008. The 

wood pellets will furnish approximately 120 million kilowatt hours of electricity 

per year, which is about 2 percent of the Maizuru plant’s total output (Canada Trade 

Commission 2008). Another company investing heavily in wood pellets is Mitsubishi Corporation, which has acquired 45 percent of Vis Nova Trading GmbH. This 

German company is a global leader in Europe’s wood pellet industry (Guizot 2010).

In spite of the current economic downturn, Japan still has one of the strongest 

economies in the world and as a signatory member of the Kyoto Protocol is committed to reducing GHG emissions. This commitment will continue to fuel demand 

for renewable energy. Although the wood pellet market is still in its infancy, it is 

growing, making this is a good time for North American exporters to explore the 

market and begin establishing relationships.

Figure 12—Japan’s wood pellet production. Source: Japan Wood Pellet Association 2010.

60

50

40

30

20

10

0

2003 2004 2005 2006 2007 2008

Metric tons (thousands)

Year
16

GENERAL TECHNICAL REPORT PNW-GTR-861

Conclusions

U.S. President Obama has pledged to double exports from the current level of 

approximately $1 trillion to $2 trillion by 2015. The center of this plan is to create a 

trade cabinet post that is focused on finding global markets for U.S. exports. Wood 

pellets fit in well with this strategy, because all three Asian nations discussed in this 

report have government policies that are encouraging power utilities to increase 

their use of renewable energy. Using wood pellets is advantageous to using other 

renewable energy sources such as wind, solar, and geothermal energy because it 

can be used with existing infrastructure for co-firing at coal-fired power plants.

Of the three markets, China has the potential to become the largest wood pellet 

market in Asia. Its economy is strong, energy demand is growing, and the Chinese 

government is looking for solutions to substitute renewable energy for coal. Additionally, the Chinese currency has appreciated against the U.S. dollar, making U.S. 

wood pellets easier to sell in the Chinese market. However, China imports only 

a very small quantity of wood pellets from North America, so this market would 

require substantial market development. A majority of China’s wood pellet demand 

comes from the industrial energy market, thus market development efforts should 

be targeted toward government energy officials and coal-fired power plants. 

The South Korean economy has weathered the global economic crisis and is 

now on a path to economic growth. This growth should fuel demand for wood 

pellets as South Korea strives to meet its goal of increasing its percentage of renewable energy to 11 percent by 2020. However, the quantity of wood pellet imports is 

still fairly small. Furthermore, South Korea appears to be pursuing a wood pellet 

strategy of joint development with other Asian countries. Overall, wood pellet 

demand will increase in South Korea, but it is difficult to predict what portion will 

be imported from North America.

As in China, a majority of Japan’s wood pellet demand comes from the 

industrial energy sector. The leader in Japan for using wood pellets for co-firing is 

Kansai Electric Power Corporation. Because Japanese power utilities are held to 

Kyoto Protocol emission-reduction standards, there is a strong possibility that other 

electric utilities will follow Kansai Electric’s lead and use more wood pellets as a 

substitute for coal. 

The wood pellets markets in all three Asian countries examined are in their 

early stages but are growing. The primary use for wood pellets in Asia is for 

co-firing at coal power plants. Therefore, business development strategies should 

include developing relationships with coal power plants that have an interest in 

increasing their renewable energy output. This could be done in cooperation with 
17

The Asian Wood Pellet Markets

the U.S. Commercial Service (app.), which assists U.S. exporters with finding 

customers in foreign countries and has offices in China, Japan, and South Korea. In 

summary, Asian government policies requiring increased use of renewable energy 

should stimulate demand for wood pellets, offering an opportunity for U.S. wood 

pellet manufacturers. 

Acknowledgments

This work is based upon work supported by the U.S. Forest Service and the University of Washington. Any opinions, findings, conclusions, or recommendations 

expressed in this publication are those of the authors and do not necessarily reflect 

the views of the U.S. Department of Agriculture.

English Equivalents

When you know: Multiply by: To find:

Kilograms 2.205 Pounds 

Metric tons or tonnes 1.102 Tons or short tons

British thermal units (BTU) 1,050 Joules (J)

Hectares .405 Acres
18

GENERAL TECHNICAL REPORT PNW-GTR-861

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Appendix: Sources for Wood Pellet and 

Export Assistance

American Chamber of Commerce in Japan

Masonic 39 MT Bldg. 10F

2-4-5 Azabudai, Minato-Ku

Tokyo 106-0041, Japan 

Phone: (81) 3-3433-5381

Fax: (81) 3-3433-8454

http://www.accj.or.jp

E-Mail: programs@accj.or.jp 

American Hardwood Export Council

U.S. Embassy 10F, 2-11-5 

Nishi-Temma, Kita-ku, 

Osaka 530-0047, Japan

Phone: (81) 6-6315-5101

Fax: (81) 6-6315-5103

E-mail: info@ahec-japan.org

http://www.ahec.org/

American Softwoods China Office

Room 4706, Tower 1 Grand Gateway

1 Hangqiao Road, 

Shanghai 200030, China

Phone: (86) 21-6448-4401

Fax: (86) 21-6448-4404

http://www.afandpa-china.org/

Chinese Ministries and Councils Web Site

http://english.gov.cn/

European Biomass Industry Organization

http://www.eubia.org/

Export.gov

A list of export resources offered by the U.S. government. 

http://www.export.gov/
23

The Asian Wood Pellet Markets

Japan Coal Energy Center

9F, Meiji Yasuda Seimei Mita Bldg.

3-14-10 Mita, Minato-ku

Tokyo 108-0073, Japan 

Phone: (81) 3-6400-5191

Fax: (81)-3-3-6400-5206

E-mail: jcoal-qa@jcoal.or.jp

http://www.jcoal.or.jp/

Japan External Trade Association

(San Francisco Office)

235 Pine Street, Suite 1700

San Francisco CA 94104

Phone: (415) 392-1333

Fax: (415) 788-6927

Japan Wood Pellet Association

Minato-Ku Akasaka 2-2-19 

Tokyo 107-0052, Japan

Phone: 03-3585-5595

Fax: 03-3585-5598

http://www.mokushin.com/jpa/index2.html

Korea Chamber of Commerce and Industry

45 4ga Namdaemunro, Jung-gu

Seoul 100-743, Korea 

Phone: (82) 2-6050-3114

Fax: (82) 2-6050-3400

http://english.korcham.net/

Pellet Fuels Institute

1901N Moore St Suite 600

Arlington, VA 22209

Phone: (703) 522-6778

http://www.pelletheat.org/
24

GENERAL TECHNICAL REPORT PNW-GTR-861

Softwoods Export Council, Japan Office

AIOS Toranomon 9F

1-6-12 Nishi Shinbashi, Minato-ku,

Tokyo 105-0003, Japan, 

Phone: (03) 3501-2131

South Korea Energy Department, Ministry of Knowledge Economy

88 Gwanmoonro, Gwacheon-si, Gyeonggi-do, 

Seoul 427-723, Korea 

Phone: (81) 2-1577-0900

http://www.mke.go.kr/language/eng/policy/Epolicies.jsp

The U.S./China Business Council

U.S. Office

1818 N Street, NW, Suite 200

Washington, DC 20036

Phone: (202) 429-0340

Beijing Office

CITIC Building, Suite 10-01

19 Jianguomenwai Dajie

Beijing 100004, China

Phone: (86) 10-6592-0727

http://www.uschina.org/

U.S.-China Chamber of Commerce

2309 Portman Center, 52 Caihong North Road,

Ningbo, Zhejiang Province, China 315040

Phone: (86) 574-8795-3268

Fax: (86) 574-879-53267

E-mail: jianmingzhang@usccc.org

http://www.usccc.org/

U.S. Commercial Service, China

Cathy Wang, Commercial Specialist

Phone: (86) 20 8667-4011 ext.616

Fax: (86) 20 8666-6409

E-mail: Cathy.Wang@trade.gov

http://www.buyusa.gov/china/en/
25

The Asian Wood Pellet Markets

U.S. Commercial Service in China

U.S. Embassy Beijing 

No. 55 An Jia Lou Road, 

Chaoyang District

Beijing 100600, China

Phone: (86-10) 8531-3000

Fax: (86-10) 8531-3701

E-mail: Office.Beijing@trade.gov

http://www.buyusa.gov/china/en/

U.S. Commercial Service, Japan

Kazuhisa Takabatake, Senior Commercial Specialist

Phone: (81) 6-6315-5955

Fax: (81) 6-6315-5963

E-mail: Kazuhisa.Takabatake@trade.gov

http://www.buyusa.gov/japan/en/

U.S. Commercial Service, South Korea

Nathan Huh, Commercial Specialist

Phone: (82) 2-397-4535

Fax: (82) 2-739-1628

E-mail: Nathan.Huh@trade.gov

http://www.buyusa.gov/korea/en/

Wood Pellet Association of Canada

P.O. Box 2989

1877 Upper McKinnon Road

Revelstoke, BC V0E 2S0, Canada 

Phone: (250) 837-8821

http://www.pellet.org/

Wood Pellet Fuel Association

42 Prospect St. Whitefield, NH 03598

Phone: (603) 837-9759

http://www.woodpelletfuel.org/

Pacific Northwest Research Station

Web site http://www.fs.fed.us/pnw/

Telephone (503) 808–2592

Publication requests (503) 808–2138

FAX (503) 808–2130

E-mail pnw_pnwpubs@fs.fed.us

Mailing address Publications Distribution

Pacific Northwest Research Station

P.O. Box 3890

Portland, OR 97208–3890
U.S. Department of Agriculture

Pacific Northwest Research Station

333 SW First Avenue

P.O. Box 3890

Portland, OR 97208–3890

Official Business

Penalty for Private Use, $300