Global Wood Pellet Operations Update:
Colossal US Senate Bill Includes Funding for Biomass
In another show of political support for biomass as a renewable energy source in the inchoate fight against climate change, the US Senate recently passed a massive government spending bill that includes incentives for much of the biomass sector. Provisions aimed at incentivizing the biofuel and bioenergy industry include a new tax credit for sustainable aviation fuel (SAF), a new technology-neutral tax credit for clean transportation fuels, and a new tax credit for clean hydrogen production.
In addition to the appropriation of US$500 million to support the development of biofuel infrastructure, the bill supports the renewable electricity sector.
Elsewhere in the renewable energy industry, the bill will also increase the amount of credit for industrial facilities and power plants that capture their carbon emissions, as well as for direct air capture technologies.
US Biomass Producers Warn of Ongoing Wood Pellet Fuel Supply Issues
Biomass industry representatives in the United States have been urging owners of residential wood pellet heating appliances to secure their biomass fuel supplies early, in advance of the upcoming heating season. According to the Pellet Fuels Institute, the absence of Russian biomass in the global wood pellet market due to the invasion of Ukraine and subsequent sanctions is causing an ongoing shortage of supply. This development primarily affects EU nations, but the supply crunch is tangible in the US too.
Domestic inventories of wood pellets are apparently copasetic currently, but heating season hasn’t begun yet in the highest-consuming residential regions of the US, particularly the Northeastern States. Producers are adamant about the importance of inventory continually moving through the system in the run up to heating season, with strong late summer sales allowing producers to build inventory before usage begins to outpace production in the dead of winter.
Wood pellets are used as a primary or secondary heat source in more than one million homes in the United States, generating demand for nearly two million tons of premium heating pellets per year.
EU Biomass Demand on Pace to Set New Record in 2022
Following Russia’s invasion of Ukraine and the subsequent cutting off of the former country’s heretofore steady flow of fossil fuels to the European Union, markets in the EU continue their struggle to find alternative sources of energy generation.
A new report filed with the USDA’s Foreign Agricultural Services (FAS) Global Agricultural Information Network (GAIN) examines the role of biomass energy in pursuit of that goal. According to FAS estimates, the EU consumed a record 23.1 million metric tons of wood pellets in 2021, up 2.7 per cent from 22.5 million metric tons in 2020. Consumption is expected to continue growing this year to a projected 24.3 million metric tons.
According to the report, the main drivers appear to be increased co-firing of wood pellets with coal in the Netherlands and growing residential use in Germany. Despite increases in domestic capacity over the past decade, EU demand for wood pellets continues to significantly outpace domestic production, leading to a subsequent rise in imports from Russia, the US, Belarus, and Ukraine.
Russia and the US are consistently the largest sources of EU wood pellet imports, respectively accounting for 35 and 34 per cent of total imports in 2021. Canada was a distant fifth at just 5 per cent, behind Belarus and Ukraine.
Two Massive Global Companies Choose US Location for Biomass Production
Korea-based chemical company LG Chem and US-based biosolutions firm ADM held a signing ceremony in mid-August to launch two joint ventures that will be located in the United States. The projects will be located in Decatur, Illinois, and will include two plant-based materials production facilities.
The first joint venture, GreenWise Lactic, intends to produce up to 150,000 tons of high-purity corn-based lactic acid on an annual basis, for use in a wide range of plant-based products, including bioplastics. The second project, dubbed LG Chem Illinois Biochem, will expand upon LG Chem’s bioplastics operations and use lactic acid produced at the GreenWise facility to manufacture around 75,000 tons of polylactic acid per year.
The commercial production of lactic acid uses lignocellulosic biomass as a feedstock in the fermentation process.