Top Biomass Energy Stocks for 2024: From Organic Waste to Bioenergy

As the world searches for renewable energy sources, biomass energy offers a unique and promising solution. Biomass can turn food scraps, animal manure, and other waste into clean energy. It’s a resource we can always renew through sustainable practices. The best part is that we can modify existing power plants to burn biomass alongside fossil fuels for a smoother transition to green energy. All of these advantages make biomass energy a promising market for investors. In this article, we’ll explore the top biomass stocks for 2024, ranked by pure-play focus.

Biomass Energy from Wood Pellets
Wood pellets can be burned for biomass energy.

Tier 1: Pure-Play Biomass Energy Stocks

These companies have a laser-sharp focus on the biomass sector. Their core business revolves around developing, producing, or utilizing biomass energy, making them heavily reliant on the industry’s growth and success. Investing in these pure-play biomass energy stocks offers direct exposure to the potential of this renewable energy source.

Enviva Partners, LP (EVA): The Global Leader in Wood Pellet Production

Enviva Partners, LP (EVA) is the biggest producer of wood pellets in the world, powering the switch to cleaner energy with a global network.

Enviva is the world’s largest producer and supplier of industrial-grade wood pellets. These pellets are a form of biomass – they are made from compressed wood residues like sawdust and forest thinnings. Wood pellets are burned in power plants, primarily in Europe, as a substitute for coal. While the burning of wood pellets does release carbon dioxide, it’s a lower-carbon alternative to fossil fuels. Here’s what sets them apart:

  • Global Supply Chain: Enviva meticulously sources wood fiber from responsible forest management practices in the southeastern US. Their ten production facilities (like those in Northampton, NC, and Greenwood, SC) have a combined capacity of approximately 6.2 million metric tons of wood pellets per year. They ship from deep-water ports in Chesapeake, VA, and Wilmington, NC, delivering to customers across Europe and Asia.
  • Fueling Renewable Transition: Enviva plays a vital role in helping major utilities like Drax in the UK replace coal with biomass. Their wood pellets offer a lower-carbon alternative, allowing existing power plants to contribute to emissions reduction goals.
  • Contract Stability and Expansion: Enviva operates primarily on long-term, take-or-pay contracts, often spanning 10-15 years. This model provides revenue predictability and reduces exposure to volatile commodity markets. With a track record of expansion, including their newest plant in Epes, Alabama, Enviva is poised to capitalize on the rising demand for biomass energy globally.

Investor Takeaway: Enviva isn’t a small-scale biomass player; they command the global supply chain for wood pellets. Their focus on wood pellets as the backbone of a cleaner energy grid, combined with their operational scale and long-term contracts, make them a top contender for investors seeking pure-play exposure to the burgeoning biomass energy sector.

Drax Group plc (DRXAY): Pioneering Biomass Power Conversion

Drax Group plc (DRXAY), a UK power company, leads the way in turning coal plants into biomass plants, showing how biomass can change the energy game.

Drax Group stands out as a power company transformed by its embrace of sustainable biomass. Based in the UK, they have spearheaded the world’s largest coal-to-biomass conversion project at their Drax Power Station in North Yorkshire. Here’s what distinguishes them:

  • Biomass Powerhouse: Drax has successfully converted four out of six generating units at its power station to run on compressed wood pellets. This fuels a massive output of roughly 2.6 gigawatts from biomass alone, making it a major player in the UK’s renewable energy mix.
  • Beyond Power: Drax isn’t solely focused on electricity. Their plans include developing Bioenergy with Carbon Capture and Storage (BECCS) technology. BECCS could provide “negative emissions” by capturing and storing carbon released during biomass burning.
  • Flexible Sourcing: Drax draws its biomass from a global network, including its own pellet production facilities in Louisiana and Mississippi, adding resilience to its supply chain. Once heavily reliant on coal, Drax now aims to be carbon negative by 2030, showcasing an impressive transition to sustainable energy.

Investor Takeaway: Drax is a case-study in biomass adaptation at scale. Their conversion of an existing coal plant underscores the potential of biomass for established utilities. Additionally, their ambition with BECCS reflects a future-forward approach within the biomass energy sector. These factors make them attractive to investors seeking players shaping the industry’s evolution.

Gevo, Inc. (GEVO): Aviation Biofuels from Biomass

Gevo, Inc. (GEVO) uses new technology to turn plants into sustainable aviation biofuel (SAF) and other renewable fuels, going beyond the usual uses of biomass.

Gevo isn’t just another biomass player; they’re focused on transforming biomass-based feedstocks into high-value, renewable fuels and chemicals that directly replace their fossil-fuel counterparts. Here’s what sets them apart:

  • Beyond Biodiesel: Gevo’s proprietary technology converts cellulosic sugars into renewable fuels like sustainable aviation fuel (SAF) and isobutanol, a building block for renewable gasoline. Their Net-Zero 1 project in South Dakota is designed to produce approximately 45 million gallons of SAF annually.
  • Feedstock Flexibility: Gevo’s process can utilize various feedstocks, including agricultural waste like corn stover. This flexibility expands their potential sources of biomass for fuel production.
  • Partnerships for Success: Gevo’s partnerships with major airlines like Delta Air Lines and the broader OneWorld Alliance highlight the growing demand for low-carbon fuels, particularly SAF.

Investor Takeaway: Gevo’s focus on cutting-edge fuel technology that utilizes sustainable feedstocks makes them stand out in the biomass energy sector. Their emphasis on high-value markets like SAF, combined with strategic partnerships, positions them as an innovator for investors seeking more than traditional biomass solutions.

How biomass energy works.
How biomass energy works. Credit: Thomasz Kalak

Tier 2: Companies with Strong Bioenergy Operations

While these companies might have diversified business models, they boast significant operations and a clear commitment to biomass energy. These biomass energy stocks offer exposure to the sector alongside participation in other related or complementary industries.

OPAL Fuels (OPAL): Leader in Renewable Natural Gas

OPAL Fuels (OPAL) makes renewable natural gas (RNG) from waste, helping make transportation cleaner and waste less of a problem.

OPAL Fuels is a leading producer and distributor of renewable natural gas (RNG). While RNG can be derived from various organic waste sources, their focus on landfill diversion creates a strong link to the biomass sector. Here’s what investors need to know:

  • Waste-to-Energy: OPAL partners with landfills across the country, such as the Redwood Landfill in California, to capture methane, a potent greenhouse gas, which is then processed into RNG for use as a transportation fuel. This directly utilizes waste biomass that would otherwise be a source of emissions.
  • Growing Network: OPAL has built over 15 RNG production facilities and has numerous fueling stations across the country. Their expanding infrastructure demonstrates their commitment to building a viable distribution network for their renewable fuel.
  • Fleet Applications: RNG derived from landfill waste offers significant carbon reductions compared to diesel – often achieving scores of “carbon-negative” on a lifecycle basis. This makes OPAL’s fuel particularly attractive for commercial fleets seeking to meet ambitious sustainability goals.

Investor Takeaway: OPAL occupies a unique space where biomass and RNG intersect. Their focus on capturing and converting landfill waste into a clean-burning transportation fuel aligns well with broader sustainability and decarbonization goals. Their growing network highlights their commitment to developing infrastructure for this renewable energy solution.

Aemetis, Inc. (AMTX): Renewable Biofuels and Chemicals

Aemetis, Inc. (AMTX) focuses on renewable fuels (like sustainable aviation fuel) and chemicals from biomass, giving investors a piece of multiple renewable energy markets.

Aemetis brings a diverse approach to biomass utilization, focusing on multiple renewable biofuels and chemical products. Here’s what sets them apart:

  • Sustainable Aviation Fuel (SAF): Aemetis’s flagship project is the “Carbon Zero” plant under development in Riverbank, California. This facility is designed to produce approximately 45 million gallons of SAF annually from waste wood and orchard residues.
  • Renewable Diesel: Aemetis operates a renewable diesel plant in Keyes, California, with a capacity for about 16 million gallons per year. This facility contributes to the growing market for low-carbon fuels in California.
  • Beyond Fuels: Aemetis is developing products like renewable cellulosic ethanol and has invested in a dairy biogas project, highlighting their commitment to multiple forms of biofuels.

Investor Takeaway: Aemetis offers exposure to multiple markets within the renewable energy sector, with particular emphasis on the growing demand for sustainable aviation fuel. Their focus on California’s strict carbon reduction goals aligns them with strong regulatory support for renewable fuels. Their diversified biomass solutions appeal to investors looking for companies tackling various challenges with innovative renewable products.

Darling Ingredients Inc. (DAR): Waste Recycling and Repurposing

Darling Ingredients Inc. (DAR) is a big player in waste recycling, turning animal byproducts into renewable diesel fuel and other valuable resources.

Darling Ingredients stands out as a major player in transforming waste products from the food chain into valuable ingredients and renewable fuels. Their focus on recycling puts them squarely in the realm of biomass utilization. Here’s why they warrant investor attention:

  • Scale and Scope: Darling boasts a global network of over 250 facilities that collect and process animal byproducts like fats, proteins, and hides. These materials are then transformed into products like animal feed ingredients, biofertilizers, and even collagen.
  • Renewable Diesel Push: Darling’s joint venture with Valero Energy, Diamond Green Diesel, is the largest renewable diesel producer in the U.S with a production capacity of around 700 million gallons annually. They source feedstocks primarily from Darling’s rendering network.
  • Circular Economy Player: Darling embodies the concept of a circular economy, where waste materials are repurposed into valuable products, reducing landfilling and maximizing resource utilization.

Investor Takeaway: Darling Ingredients isn’t a pure-play biomass company, but their emphasis on rendering and repurposing waste fats and oils positions them prominently within the sector. Their role in renewable diesel production, vast processing network, and commitment to circular economy principles make them an interesting option for investors.

Tier 3: Diversified Giants with Bioenergy Initiatives

These well-established energy companies have expanding biomass projects alongside their traditional energy portfolios. Investing in these biomass energy stocks allows participation in the biomass sector’s growth while maintaining exposure to the broader energy market.

NextEra Energy, Inc. (NEE): Renewable Giant with Growing Biomass Focus

NextEra Energy, Inc. (NEE), a renewable energy leader, is adding renewable natural gas (RNG) projects to their lineup, turning waste biomass into more clean energy options.

NextEra Energy is one of the world’s largest renewable energy companies, known for its extensive wind and solar portfolios. However, they’re also expanding their focus on biomass-related initiatives, particularly with renewable natural gas (RNG). Here’s what you need to know:

  • RNG Investments: NextEra has committed to investing heavily in RNG projects. One example is their planned facility in Coffee County, Alabama, which aims to capture methane from a landfill and produce enough RNG to power thousands of homes.
  • Waste-to-Value: Their growing interest in RNG taps into the concept of waste-to-energy, transforming biomass resources that would otherwise emit methane into a clean-burning fuel.
  • Portfolio Complement: While their wind and solar projects remain dominant, NextEra sees RNG as a valuable addition to their renewable offerings. This aligns with their broader vision for diversified energy solutions.

Investor Takeaway: NextEra is an established player in the renewable energy sector, providing stability and diversification. Their interest in RNG, backed by concrete investments, highlights a strategic focus on capturing value from waste biomass while expanding their sustainable energy solutions.

Duke Energy Corporation (DUK): Utility Giant with Biomass Initiatives

Duke Energy Corporation (DUK) burns biomass alongside coal at some power plants and is looking into renewable natural gas.

Duke Energy is a major utility with a growing interest in renewable energy sources, including biomass. Here’s what sets them apart in this sector:

  • Biomass Co-firing: Duke utilizes co-firing at several power plants, including the Roxboro Plant in North Carolina and the Buck Station in South Carolina. Biomass typically accounts for around 5-10% of the fuel mix, contributing to emission reductions.
  • Exploring RNG: Duke is investing in pilot projects to evaluate the potential of renewable natural gas (RNG) derived from sources like landfills and swine waste. A recent project in North Carolina demonstrates their interest in utilizing RNG for power generation.
  • Regulatory Landscape: Duke operates in states like North Carolina and South Carolina, where policies can support biomass energy development, particularly for utility-scale projects. This regulatory environment could encourage further adoption of biomass solutions.

Investor Takeaway: Duke Energy represents a traditional utility transitioning towards a more diversified energy mix. Their biomass initiatives, including specific co-firing projects and RNG exploration, demonstrate a commitment to renewable energy integration. Their scale and regulatory landscape position them for potential growth within the biomass sector.

Dominion Energy, Inc. (D): Utility with Biomass and RNG Ambitions

Dominion Energy, Inc. (D) also uses biomass with coal in power plants and invests heavily in renewable natural gas, working towards their goal of zero emissions.

Dominion Energy is another large utility player with a growing focus on renewable energy, including specific initiatives within the biomass sector. Here’s their key differentiators:

  • Biomass Co-firing: Dominion employs biomass co-firing strategies at several power stations. Their Virginia City Hybrid Energy Center can utilize up to 20% biomass in its fuel mix, demonstrating a notable commitment to co-firing.
  • Strategic RNG Focus: Dominion has shown significant interest in renewable natural gas projects. They’ve formed partnerships like Align RNG, a joint venture with Smithfield Foods, to capture methane from hog farms and convert it into RNG. Multiple RNG projects are in their development pipeline.
  • Sustainability Goals: Dominion has set ambitious targets to achieve net-zero carbon and methane emissions by 2050. Biomass solutions play a role in achieving these goals, aligning RNG and co-firing initiatives with the company’s broader vision.

Investor Takeaway: Dominion Energy aligns with other major utilities recognizing the potential of biomass within a broader clean energy strategy. Their co-firing projects and significant focus on RNG, backed by concrete partnerships and project developments, demonstrate a proactive approach to utilizing biomass resources for renewable energy generation.

Biomass energy is unique – it can turn waste into fuel, cut emissions, and help us use resources better. The companies we’ve discussed show the many ways to harness this power. Pure-play companies lead the charge with bioenergy innovation, while others prove their commitment to renewable solutions by adding biofuels to their energy mix. Remember, like any new market, the biomass industry has risks. Costs for feedstock, changing policies, and new technologies can all affect its growth. Still, if you’re going to invest in the shift to sustainable energy, biomass energy stocks are worth a serious look.

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