BIOMASS MARKETS BUDDING

Biomass Markets and Technologies; Biomass Energy Generation, Biofuels, and Bioproducts: Market Analysis and Forecasts
Leslie Los and Clint Wheelock, 3Q 2010 (Pike Research)

"Biomass markets are dynamic and rapidly evolving. Pike Research’s analysis indicates that developers and investors are constantly monitoring and evaluating new feedstock opportunities, federal and state policy changes, environmental concerns, and developing technology improvements. At this time, investment in the biomass market is generally in the R&D sector as well as in unique smaller scale projects…the bioplastics market has significant growth potential and will see major investments…Large grid-tied biomass energy projects are emerging as possible new base-load power source opportunities…

"Private equity investment in renewable energy projects experienced a surge in February 2010, up 133% from January ($547 million from $235 million) and a three- year-over-year increase ($149 million recorded in February 2009). The United States accounted for 43% of the investment volume…Spain reported the highest value in deals at $216 million. This is a sign that the recession could be waning…[B]iomass is conducive to producing different types of energy…such as transportation fuels, bio-derived products…and electricity generation…[R]esources are evenly distributed…Many different feedstocks can be classified as "biomass" …In the United States, the biomass opportunities are coast-to-coast, with a higher concentration in the fertile lands of the Midwest….[T]he International Energy Agency (IEA) venture estimates, the capital investment into the biomass market will be in the range of $41 billion to $83billion per year over the next 20 years…"

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"…The emerging energy plans, which Pike Research believes will be supported by the U.S. government’s investment in national security, influences of carbon tax and/or carbon cap and trade economics, and profitable prospects over the next 5 to 10 years, will drive a paradigm shift to renewable, sustainable energy. Government policies and public opinion will progressively enable increasing amounts of biofuels, bioproducts, and biopower to be deployed across the world from a widening array of feedstock, resulting in a significant displacement of oil use and a massive change to the world’s energy supply.

"Pike Research has concluded that the biomass industry, driven by strong R&D investment and some niche project opportunities, is just starting to emerge from its investment hiatus. The biofuels sector will continue to lag behind bioenergy and bioproducts until second- and third-generation cellulosic technologies are available on a commercial scale, which is estimated to be 2 to 3 years away. The waning economic atmosphere and the shift to nonfood feedstocks are major drivers that will negatively influence the biofuels market growth rate over the next 2 years."

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"The biochemical and the bioenergy sectors will progress much faster than biofuels and see immediate investment in 2010 and a 1% growth rate through 2035. The industry is increasingly moving to explore economical opportunities to use fast growing crops (referred to as energy crops) and biomass waste streams (e.g., wood chips from forest thinning activities, crop residues, municipal waste streams, etc.) as renewable energy feedstocks for…[1] Power generation (electricity, steam, combined heat and power [CHP])…[2] Biogas for manufacturing use (heat for product drying)…[3] Oil (pyrolysis liquids from biogasification waste stream)…[4] Hydrogen production (e.g., transportation fuel sector)…[5] Biorefineries (steam, power, value added bioproducts)

"The challenge at hand is to identify which solutions will be right, and how to address the massive economic, technological, and social changes to come. Solutions need to be economical, environmentally acceptable, and sustainable. Pike Research believes that governments must be cautious not to support any one solution or technology too early, and that the industry needs to pick the winners based on market needs and definitive financial rewards. The influence of government policies and incentives in supporting any one technology or solution could cause unwanted results that are not sustainable."