Biomass is an important energy source that can help significantly reduce greenhouse gases and pollution; among other applications, when burned in conjunction with coal in coal fired plants. Biomass fuels, including wood pellets produced using best practices from sustainably managed forests, fuel crops, or other forms of biomass waste are generally recognized as having far lower net lifecycle carbon dioxide emissions than fossil fuel equivalents, to the order of 98% fewer emissions. In order to create highly efficient biomass-to-energy chains, torrefaction of wood biomass is recommended in combination with densification (pelletisation/briquetting), which improves logistic and economics in large scale projects.
Torrified Wood Pellets – Co-Generation Markets. Large scale co-firing in coal fired power plants:
Charcoal Pellets – Consumer, Metalurgical (Steel production), Power and Heat Markets
Alternative sources of biomass available in Brazil – Elephant Grass and Sugar Cane Waste (Bagasse)
Although biomass does not qualify for credits under the Kyoto protocol, for example by applying sustainable forestry management techniques, under the post Kyoto system of Voluntary Emission Reductions (VERs) credits can be exchanged in the voluntary over the counter market.
Brazil has tradition and a significant potential on biomass production. The historical importance of biomass energy in Brazil is due to a set of factors, including: the size of the country and the availability of land; the climate; the availability and the low cost of the working force and, most important the availability of biomass-production and biomass-conversion technologies.
Europe is the largest consumer of biomass, as the European Union’s goal of reaching 20 percent renewable energy by 2020 has significantly increased demand. Many countries have ramped up their consumption of woody biomass in the form of wood pellets and wood chips in the past few years to meet the renewable target. More than 24 million tons of wood pellets were consumed in the EU in 2018, up 7 percent from the previous year and demand is expected to continue to grow during 2019. There is a deficit in global production of biomass pellets and a significant market opportunity to develop additional supply in Brazil. There are many projects targeting this opportunity in Brazil.
Projects can be co-developed with Brazilian developers and can encompass supply of pellets for at a fixed price for least a 10 year period, with signed term sheets with the developer to purchase the pellets and carbon credits deriving from the project. Vertical integration is key to the economics of wood pellets.
Typically projects can be financed by BNDES the Brazilian development bank, providing debt financing at a level of 70%. Production from a 50,000 ha project is 100,000 tonnes of pellets per annum. Based upon such a project with an investment of R$50 (BRL) million, the estimated IRR is above 35%.
The biomass production sites must be located, at sites chosen to optimize logistics, near railways, with connections to ports and where employment is needed the most.
Projects are scalable based upon substantial untapped resources.
10 year fixed price contracts can be negotiated for biomass pellet supply with an investment grade counter-party, which will guarantee bankability of projects.
Projects with up to 600,000 tonnes of pellets per annum are currently being developed.
In addition to investment opportunities we also design tailor-made investment solutions in the form of individual mandates or specific investment strategies and their implementation.
The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.