Enviva renegotiates wood pellet contract with Sumitomo

Spanish Market: Biomass
22/10/24

US wood pellet producer Enviva has renegotiated a long-term offtake contract with Japanese trading house Sumitomo, with amendments made to contractual volumes, base pricing and shipping arrangements, it said in a court filing on 21 October.

The new deal includes modifications to "purchase option terms related to volume and pricing", Enviva said in the filing, without specifying the direction of the changes.

The parties will probably have some flexibility on pricing, as they have agreed on "additional functionality to discuss updating the base price to account for changes in end-user financial condition and production costs", Enviva said. No base price was specified in the court filing, although contracts signed with Japanese counterparties in 2018-19 were typically priced near the $200-205/t cfr Japan range.

The original contract signed in January 2019 was for about 400,000 t/yr, for 18-year offtake to supply Sumitomo's biomass plant in Fukushima, with deliveries starting from 2022, but the renegotiated annual volume is thought to have been reduced.

The parties have also agreed on the revision of the shipment price, including "specified annual escalations", updates to the bunker fuel adjustment calculation, modification to provisions regarding laytime and demurrage, and updates to certain logistics specifications, including applicable ports and delivery schedule.

The renewed contract will take force 14 days after the court filing, barring any objections and pending court authorisation.

Enviva rejected two contracts with Sumitomo earlier this year under the ongoing bankruptcy court proceedings, for supplies to the Kaita and Sendai power plants.

By Hannah Adler

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16/12/24

Erex delays starting wood pellet production in Vietnam

Tokyo, 16 December (Argus) — Japan's renewable energy developer Erex will postpone the start-up of its wood pellet factory in Vietnam from December 2024 to around February 2025. The Tuyen Quang factory — which is the company's first wood pellet production project in Vietnam — has been running test operations, but cannot start commercial operations this month as initially scheduled, Erex said on 13 December. The company did not disclose the reasons for the delay. The factory in Tuyen Quang province will produce around 150,000 t/yr of wood pellets, mainly from locally-secured unused forest materials, and export them to other countries including Japan for biomass-fired power plants. The investment amount for this project is $20.4mn. Erex aims to build up to 20 wood pellet factories in Vietnam, and several ones in Cambodia. The company is also planning biomass-fired generation capacity in southeast Asia, with up to 18 power plants in Vietnam and five in Cambodia. The first one is scheduled to come on line this month in Vietnam. Erex's profits from projects in Vietnam and Cambodia are expected to grow rapidly and will account for more than 70pc of its whole profits around 2030, according to the company. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU affirms 12-month deforestation delay

03/12/24

EU affirms 12-month deforestation delay

Brussels, 3 December (Argus) — Negotiators for the European Parliament and EU member states have provisionally agreed on delaying the implementation of the EU's 2023 deforestation regulation by one year. Fast-track adoption can now take place with a plenary vote expected on 16-19 December and later approval by EU ministers. The EU's council of ministers noted that the provisional agreement does not affect the substance of the existing deforestation rules. The final text, provisionally agreed, does not retain a "no risk" category, put forward by parliament's largest centre-right EPP party. Parliament had narrowly accepted the EPP proposal for the "no risk" category. Backing down on the amendment now allows the EU to proceed to EUDR adoption and publication in the bloc's official journal before the end of the year. Due diligence obligations set by the EU's 2023 deforestation regulation require operators and traders to ensure listed commodities and derived products, sold in or exported to the EU are "deforestation-free". Products include those made from cattle, wood, cocoa, soy, palm oil, coffee and rubber. The European Commission said it aims to finalise the country benchmarking system "as soon as possible but no later than 30 June 2025". And an information system where firms register due diligence statements will enter into operation on 4 December. Parliament's lead negotiator for the deforestation law, Christine Schneider, also pointed to a commitment by the commission to an "impact assessment and further simplification" for low risk countries or regions. "From 2028, countries practising sustainable forest management and showing no deforestation will have the opportunity to be exempted from unnecessary red tape," said Schneider, a member of the German centre-right EPP. The Centre-left S&D group said the system of "no risk" countries would have created an "unfair double standard", dividing EU member states into different risk categories. Negotiators firmly rejected this approach, the group said. "It was clear all along that their half-baked amendment proposals had no chance of success with the council and the commission," said Delara Burkhardt, German S&D negotiator for the deforestation law. Citing reasons of legal certainty, EU states quickly came out in favour of just a one year delay , agreeing with the commission's original proposal. Speaking to parliament on 3 December, the EU's director general for trade Sabine Weyand said robust commitments to halt deforestation in South America, as of 2030, and to ensure adherence to the Paris climate Agreement, are also "essential" elements of the EU's free trade agreement (FTA) with Mercosur countries — Brazil, Argentina, Paraguay, Uruguay, and now Bolivia. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Beccs 'interesting business model' for German biomass

29/11/24

Beccs 'interesting business model' for German biomass

Berlin, 29 November (Argus) — Costs for generating negative CO2 emissions through bioenergy with carbon capture and storage (Beccs) technology in Germany are €103.43/t of CO2 on average for woody biomass, initial results of an unpublished study commissioned by the country's bioenergy association BBE suggests. The average cost of €103.43/t applies to 1t of liquid CO2, which meets food purity standards. This could be the foundation of an interesting future business model for biomass plants, if negative emissions are incorporated into the EU emissions trading system and gain traction as a counterbalance to Germany's residual "hard-to-abate" greenhouse gas emissions, BBE's wood energy consultant, Tim Pettenkofer, said this week. A 20.5MW biomass cogeneration plant could raise its revenues by about 13pc by investing in Beccs, study co-author Lennart Reese of Seeger Engineering suggested. The plant operator would go from annual power revenues of €5.5mn, assuming annual running hours of 8,000 and a power price of €125/MWh, to about €6.2mn, assuming a CO2 price of €120/t. The calculations assume an annuity of 10pc and take into account other factors such as lost earnings from the power volumes used to sequester and liquefy the CO2. Electricity for liquefaction is the biggest cost item of the Beccs process, with Seeger Engineering putting average costs at €28.75/t of CO2. The final study will also look into the costs for Beccs from biogas and bioethanol plants. Beccs costs in the solid biomass segment will be highest, as its tailpipe CO2 intensity is about 10-15pc, the CO2 not being a by-product of a production process and therefore necessitating additional investment in flue gas cooling and sequestration technology. The CO2 intensity for biomethane and bioethanol plants is about 25-45pc and 95pc, respectively. Germany's government estimates the country's residual and hard-to-abate emissions will stand at about 50mn t of CO2 equivalent by 2045. An earlier study by BBE estimated potential for 10.7mn t/yr of CO2 negative emissions from Beccs with existing bioenergy plants in Germany, or 12.9mn t/yr of CO2 based on expected future availability. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Biomass could benefit from Trump’s presidency

29/11/24

Biomass could benefit from Trump’s presidency

London, 29 November (Argus) — The biomass industry expects continued support following the election of Donald Trump as president of the US — primarily through deregulation and expected wider economic benefits. But uncertainties remain, depending on whether the incoming administration will withdraw from the Paris climate accord, remove the Inflation Reduction Act (IRA) or other renewables support, and the success of other related policies. "Our industry has always enjoyed strong bipartisan support, having achieved substantial growth under both Democratic and Republican administrations," US Industrial Wood Pellets Association interim executive director Elizabeth Woodworth told Argus . US wood pellet producers expect no major changes in trade policy under Trump, because of his support for exports. The US does not currently consume any industrial pellets and nearly all of the 10mn t/yr produced are exported to Europe and Asia. Some expect that less red tape on environmental permitting could speed up biomass projects. Trump has pledged to roll back rules on emissions and greenhouse gas limits for power plants, and to repeal regulations limiting coal-fired power generation, among others. These would mimic the relaxation of environmental permitting regulations during Trump's first term. On a wider macroeconomic level, companies expect production costs could fall if Trump's campaign pledges of lower energy costs — by increasing oil and gas production — and lower inflation, materialise. But some analysts suggest these targets could be hard to achieve. On gas, wholesale prices have already dropped, triggering production cuts, and increasing output may not be enough to lower prices further. Trump's proposed growth-oriented economic policies are, at least in the short term, expected to be inflationary and result in higher interest rates and a stronger US dollar. Some campaign pledges to reverse clean energy policies, pull the US out of the Paris Agreement again and cancel unspent funds from the IRA may also affect US biomass industry's future — particularly the development of pellet-fired generation capacity and of bioenergy with carbon capture and storage (Beccs) projects. The IRA, which was signed into law in 2022 and allocated $369bn for climate change and energy-related spending, included support for carbon removals under Beccs projects. Specifically, the IRA's section 45Q provides a tax credit for CO2 sequestration and carbon capture, utilisation and storage deployment. The tax credit value for CO2 captured and permanently sequestered CO2 — geological storage — is $85/US short ton of CO2, while for direct air capture it is $180/st for up to 12 years. In addition, projects for renewable energy and energy storage assets in the US can benefit from investment tax credits. Some analysts argue that repealing the IRA would be met with opposition from industry groups and Republican-led districts benefitting from IRA funds. UK-headquartered utility and wood pellet producer Drax, which has invested in and is developing biomass-fired generation capacity and Beccs projects in the US, expects continued support. "We expect key policies for biomass and Beccs to remain unchanged... We are ready to work with the new administration and congress to deliver all the long-term benefits that biomass, Beccs and carbon removals will bring," a Drax spokesperson told Argus . Drax believes what it "can offer the US and the world in terms of power stability and security, carbon removals, jobs and investment, is valuable under any political party", the spokesperson added. The level of impact on the biomass industry in the short and long term will depend on how boldly and quickly the incoming administration fulfils its campaign pledges. "I am not looking forward to the unpredictable nature of the next administration, but at least it will create some volatility," one market source said. By Erisa Senerdem Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s wood pellet, PKS imports rise in October

28/11/24

Japan’s wood pellet, PKS imports rise in October

Tokyo, 28 November (Argus) — Japan's wood pellet and palm kernel shells (PKS) imports rose on the year in October, the finance ministry data show. The country imported 692,000t of wood pellets in October, higher by 4pc on the month and by 37pc on the year, the data published on 28 November show. Vietnam remained the biggest supplier in October at 317,000t, followed by the US and Canada at 202,000t and 91,000t, respectively. Japan's PKS imports in October increased by 19pc on the year to 482,000t, but were lower by 8pc on the month. The biggest supplier was Indonesia at 320,000t, followed by Malaysia at 148,000t. Higher imports came against a backdrop of the start of several biomass-fired power plants in Japan. The country brought on line its 75MW Ichihara Yawatafuto plant in Chiba prefecture on 21 September, while the 50MW Hyuga plant in Miyazaki prefecture started commercial operations on 16 October. But Ichihara Yawatafuto stopped operations from 22 October to 5 November because of a fire. The country plans to restart its 75MW Tokushima Tsuda biomass-fired power plant, which has been halted since late September for facility renovations, after the completion of its maintenance in late December. Separately, the 20MW Tosa has been shut for an indefinite period because of aging facilities. By Takeshi Maeda Japan's imports from key countries ('000t) Oct-24 Sep-24 Oct-23 m-o-m ± % y-o-y ± % Wood Pellet Canada 91 105 144 -14 -37 Thailand 11 0 0 - - Indonesia 45 32 0 41 - Vietnam 317 345 178 -8 78 Malaysia 24 35 35 -33 -32 US 202 148 148 37 37 Russia 2 0 0 - - Total 692 665 505 4 37 PKS Indonesia 320 420 337 -24 -5 Malaysia 148 88 64 69 133 Sri Lanka 3 4 3 -20 21 Thailand 10 11 0 -6 - Total 482 523 403 -8 19 Source: Finance ministry Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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