Since several years now, the Chilean pellet market has entered a very dynamic phase. Demand for pellets for the last 3 years has increased by an average rate of about 20%. The current production capacity is about 400.000 tons/year and production in 2022 is expected to reach about 200.000 tons/year – with a reduction of around 10% compared to the 2021 levels. The Chilean pellet market is mostly driven by domestic consumption which represents around 90% of the production. Investments for new production capacity are expected to materialize in 2023, and next year’s output is expected to reach 370,000.
Even though bioenergy is the second largest energy source in Chile (about 25% of primary energy supply comes from biomass, very close to petroleum), it is only recently that, after decades of procrastination, the parliament has approved the law that recognizes solid biofuels as fuels. This is good news for the Chilean bioenergy market and will open new opportunities, but also create new challenges.
In the past months, the Chilean pellet market has also experienced stresses and market tightness. Several factors are responsible: increases in the prices of natural gas - and therefore of electricity – between June 2021-2022, reduction in lumber production and increased used for wood as a co-firing fuel in power plants. On a positive note, this has promoted increased collaboration between market actors and a multisector work group composed by government ministries, companies, financial institutions, and associations among others. All these stakeholders started working together to prevent this situation from happening again in the future, as well as address any other relevant challenges defined.
In 2021, a network called “Red Futuro Madera” (www.futuromadera.cl) was established, bringing together associations from different sectors of the forest value chain: pulp & paper, timber, boards, bio packaging, natural forest; forestry services companies and bioenergy. The network aims to transmit information to the general public, authorities, NGOs and companies about the potential of the forestry sector to develop a circular bioeconomy model through multiple natural based solutions, allowing massive and multisectoral actions related to increase the number and impact of ESG initiatives.
Rodrido O’Ryan Blaitt
President of AChBIOM