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.
