Thematic Research
Industry background research available to all professional investors under MiFID II as a minor non-monetary benefit.
Energy from biomass or waste can be genuinely low carbon and sustainable, representing a major tool in the decarbonisation toolbox. The ability to add carbon capture technology creates an immediately available negative emissions solution and adding liquid fuels allows the decarbonisation of sectors previously seen as challenging. Demand for all these solutions is likely to grow as decarbonisation and energy security become essential requirements in the energy mix.
Key Takeaways:
• Major Role in Net Zero: Biomass and waste offer proven low-carbon solutions, with BECCS enabling negative emissions that support Net Zero targets.
• Sufficient Feedstock: Up to 100EJ per year of sustainable biomass is available globally — more than double the 40EJ needed for a 1.5°C IPCC pathway.
• Scalable Technologies: Thermal, thermo-chemical, and biochemical pathways enable deployment across feedstocks. Gasification, pyrolysis, anaerobic digestion, and advanced fermentation all play a role.
• Negative Emissions Ready: BECCS is immediately scalable. Drax Group is a key player — its two BECCS units could meet 40% of the UK’s negative emissions needs.
• Investor Exposure: Listed companies across the value chain offer opportunities — EQTEC and Velocys for gasification and biofuels; Powerhouse Energy for hydrogen from waste; Drax for BECCS.
• Policy and Incentives Supportive: Tax credits (e.g. US 45Q up to $85/tCO₂), EU Taxonomy, and UK CfD consultations underpin economics. Further policy development expected globally.
Industry Overview
Bioenergy and Waste Feedstocks
Biomass: Proven low-carbon with sustainable forest management ensuring replenishment and stable long-term supply.
Municipal Waste: Methane emissions from landfill are 22x more potent than CO₂ — energy recovery avoids this, reducing emissions 25–30% vs incineration.
Key Technologies
Thermal (Combustion): Large-scale dispatchable power and heat, especially with post-combustion CCS for BECCS.
Thermo-chemical (Gasification & Pyrolysis): Produces syngas, bio-oils, and biochar. Scalable for power, hydrogen, and advanced fuels.
Biochemical (Anaerobic Digestion): Converts wet organic feedstock into biogas and RNG with digestate by-product as fertiliser.
Negative Emissions Potential
BECCS: Highest TRL; Drax and others pursuing commercial CCS deployment.
CCUS Costs: Expected to decrease to as low as £44/tCO₂ for future projects with improved solvents and economies of scale.
Advanced Biofuels
Hard-to-Abate Transport: Biofuels like green methanol, ammonia, and Bio-LNG decarbonise shipping and aviation.
Engine Compatibility: Methanol and ammonia can run in modified dual-fuel engines; LNG drop-in, methanol engines already operating.
Feedstock Availability & Policy Support
Sustainable Feedstock: Waste destined for landfill or incineration provides 680 Mtpa globally; agricultural and forestry residues offer up to 100EJ per year.
Global Policy
EU Support: Cohesion funds and taxonomy classify BECCS as sustainable.
US Support: 45Q tax credits up to $85/tCO₂ and investment tax credits drive CCS adoption.
UK Support: CfD consultations underway for BECCS commercialisation.
Investment Opportunities
Investors can gain exposure across the bioenergy value chain. Leaders include:- Drax Group (DRX LN): BECCS and biomass power
- EQTEC (EQT LN): Gasification of waste and biomass
- Velocys (VLS LN): Gasification to sustainable aviation fuels
- Powerhouse Energy (PHE LN): Hydrogen from waste gasification
- Verbio, Enviva, Montauk Renewables: Biofuels and renewable gas
