Biomass demand may reach 250mn t/yr by 2030: Enviva

Global demand for biomass feedstocks may reach 250mn t/yr of wood pellet equivalent by the end of the decade, US wood pellet producer Enviva said in a presentation to investors on 3 April.

This includes demand from hard-to-abate sectors such as sustainable aviation fuels (SAF), aggregates, methanol, metals and mining, as well as from carbon sequestration projects such as bioenergy with carbon capture, utilisation and storage (Beccus) and biochar. Enviva is in discussions with power and heat-generating and other hard-to-abate sectors for supplies of up to 19mn t/yr of additional long-term contractual volumes (see table).

Enviva has already signed a number of deals for offtake agreements to supply industrial customers with wood pellets or biomass feedstocks. The company expects a third of its customer base by 2023 to be heat and power customers in Europe, another third to be utilities in Asia, and the remaining third to be industrial customers all over the globe. This would look very different from the 45pc each from utilities in Europe and Asia and just 10pc of its client base comprising industrial users by 2025, the company said. Enviva expects its customer base to rise to around 40 by 2025 from 20 in 2022, it said.

Domestic opportunities for SAF and other fuels derived from woody biomass feedstocks in the US will grow, particularly because of the favourable landscape created by the Inflation Reduction Act (IRA) — which will introduce tax credits for sustainable transport fuels. This could present domestic opportunities for US wood pellet producers, Enviva said.

The IRA enhances tax credits for Beccus projects at US power plants and in other industries, Enviva said. And the regulatory regime in the UK, a key market for Enviva, remains "constructive for biomass, with subsidies being considered [for Beccs projects]".

Conversion of coal-fired plants to biomass in Germany and Poland are expected in 2025 and 2026, respectively, and present opportunities for growth, Enviva said. Germany's 2022 legislation on renewable energy deployment includes biomass, as does Poland's energy policy until 2040, which was also published last year.

The company sees opportunities in the Asian power-generating sector. "Regulatory regime remains very constructive for biomass" in Japan, where the government has plans to phase out inefficient coal-fired power plants, a part of which could potentially be converted to co-fired or dedicated biomass plants, Enviva said. The firm has already signed a number of long-term supply contracts with Japanese consumers, and it "continues to progress" discussions for 5mn t/yr of biomass with Japanese power producer and wholesaler J-Power, which it announced in November 2021.

Enviva expects to "be an important partner" in supplying the Hsinta power plant in Taiwan, once a coal-fired unit there is converted to biomass. It is in active discussions with industrial companies in Taiwan and expects to "announce contracting progress in 2023", it said on 3 April.

Enviva aims to increase its pellet production capacity from 6mn t/yr currently to 13mn t/yr in the next five years. It plans to add another four new fully contracted wood pellet plants by 2027, including the 1.1mn t/yr plant in Epes, Alabama, currently under construction and due to start up by the first half of 2024. Its plans also include the 1.1mn t/yr Bond plant in Mississippi, construction of which will start in the second half of this year and complete by 2025, as well as two more plants of the same capacity that are currently under development. Enviva has projects for two more plants with 1.1mn t/yr of capacity each "under option", which it could start developing from 2024.

Enviva aims to undertake several "capital-light projects" to increase nameplate production capacity.

By John Cooper and Erisa Senerdem