* European wood pellet demand to rise to 29 mt in 2020

 

* Europe to import 66 pct of biomass from abroad

* Global biomass power production to rise 9 pct per year

 

LONDON, Jan 11 (Reuters) - European demand for wood pellets to produce electricity is seen rising more than three-fold by 2020, as governments offer subsidies for greener energy sources, a report said on Friday.

Wood pellets, which can replace dirtier coal in electricity generation, can be part of a pro-environmental policy given their burning results in no net carbon emissions compared with fossil fuels.

Yet the strong growth in demand for such biomass resources has also raised concerns aboutsustainable sourcing and the fact that their use will likely increase reliance on imports from countries such as Brazil and Canada.

Several European governments, driven by the need to reach legally-binding targets to cut carbon emissions, have granted subsidies for the use in power plants of biomass - mainly wood pellets but also some crops - most notably Britain, Nordic countries and the Netherlands.

Biomass is also attractive in a green energy mix because unlike intermittentrenewable energy sources like wind or solar it provides stable baseload power.

The demand for wood pellets in Europe will reach 29 million tonnes in 2020, up from 8 million in 2010, Bain analysts estimate.

Yet the majority of Europe's biomass needs, around 66 percent or 19 million tonnes, will have to be imported from outside the continent, mainly from North America, Russia and Brazil, the analysts said.

"Europe is importing a good proportion of its energy anyway, the question is to what extent are you putting all your eggs in one basket?" said Julian Critchlow, head of Bain's European utilitiespractice.

"The benefit of having a diverse energy policy is you have different fuel sources coming from different regions. If one is suffering problems, the other can replace it."

Globally, the amount of electricity generated from biomass will rise around 9 percent a year through 2020, with the latter half of the century seeing the strongest growth.

The European Union and Eurasia will account for around a third of this increase, Bain said, whileChina and Latin and North America will represent most of the remainder.

China's demand alone will rise 40 percent annually until 2015 and 21 percent a year after that until 2020, Bain predicted.

Most of the biomass used in power plants will continue to come from wood pellets by the end of this century, but energy crops will see a significant spurt this decade, with a 42 percent annual supply growth until 2015 forecast. (Editing by David Holmes)