European wood pellet market integration – A study of the residential sector

The integration of European energy markets is a key goal of EU energy policy, and has also been the focal point of many scientific studies in recent years. International markets for coal, oil, natural gas and electricity have previously been investigated in order to determine the extent of the respective markets. This study enhances this field of research to bioenergy markets. Price series data and time series econometrics are used to determine whether residential sector wood pellet markets of Austria, Germany and Sweden are integrated. The results of the econometric tests show that the German and Austrian markets can be considered to be integrated, whereas the Swedish market is separate from the other two countries. Although increased internationalization of wood pellet markets is likely to contribute to European price convergence and market integration, this process is far from completed.