Biomass - the green alternative to fossil fuels

In the 1990s, in the early years of the wellness trend that has now become a global juggernaut, health-conscious people in Brazil and beyond began to laud the purported health benefits of the tiny berries of a palm tree that was native to the swamps and floodplains of eastern Amazonia.

Locals had long enjoyed the taste of the açaí berry's purple pulp, but now açaí was becoming a superfood used in smoothies and brunch bowls in the cafes and health food stores of Melbourne, New York and London. Vast tracts of land were given over to the palm's intensive cultivation.

But this has not been the only byproduct of the açaí craze. Only around 15 % of each berry is edible, and every year half a million tonnes of açaí pits, or stones, are left over in Pará, the northern state that accounts for almost all the world's açaí production. The waste is typically dumped as landfill, leaching residue into rivers and streams, and causing blockages and biological contamination in one of the world's most vulnerable ecosystems.

In more recent years, Pará has begun to reckon with this superfood waste crisis, and enterprising sustainability startups are finding ways to recycle açaí residues in everything from bioplastic bottles to cosmetic products and fibreboards for construction.

From plant waste to valuable energy

More than 2000 kilometres south of Belem, Pará's capital, a company based in São Paulo with a growing international profile is using açaí as one of dozens of recycled sources of energy in its boilers, which burn biomass instead of fossil fuels to create heat for heavy industry.

"So, there are actually two benefits here," says Paulo Skaf Filho, the co-founder and CEO of ComBio Energia, a company that was ahead of its time when it started life in 2008, and is now receiving significant interest from investors. "The first is to switch the use of fossil fuels for thermal generation, and the other is stopping raw materials going to landfill, where they decompose and release methane into the atmosphere."

ComBio is an example of a company tackling sustainability challenges in what are known as hard-to-abate sectors, where technological and financial barriers, as well as a lack of incentives, are making progress slow. Yet these industries also include some of the world's biggest emitters, including cement and steel manufacturing, as well as refining and mining.

Skaf Filho had a background in the finance sector when he was inspired by the growing use in Europe of wood pellets as a fuel for domestic heating. He then saw a better opportunity in industry, where heat creates the steam that is used for multiple processes in manufacturing. "The problem was that most of the heat in Brazilian industry was generated by fossil fuels, so the CO2 was a challenge," he says. "But we also have a state monopoly on such fuels, which makes them very expensive in Brazil."

Heat for steam to drive industrial plants

ComBio began finding new sources of biofuel for its custom boilers, adjusting what they could burn according to supply, cost, and in some cases, seasonality. They take unwanted bamboo, straw, and bagasse, the pulpy byproduct of sugarcane crushing, as well as waste from wood and paper production, agriculture, and fertiliser production, which Skaf Filho says are all materials that typically end up in landfill.

ComBio has so far installed 18 giant biomass boilers at 11 plants, creating steam to drive industries that include food and aluminium manufacturing, chemicals, paper production, and mining processes. "Almost every industrial plant requires heat to a certain degree," Skaf Filho says. The company also sells biomass to clients as big as Unilever.

The Brazilian outfit is far from alone in the wider biomass industry, where natural materials, including trees from managed forests, are used to create biofuels and generate power. But its particular focus on creating heat for industry, using boilers that can accept a wide range of feedstocks, has recently brought it to the attention of investors.

A young industry with potential

Last year, the company secured USD 90 million in a funding round co-led by Lightrock, the London-based impact investor that spun out of LGT's existing impact investing activities in 2022. "We believe the sector is still in its infancy and that the potential of biomass as an alternative to fossil fuels is largely untapped," says Gustavo Verdelli, a partner at Lightrock. "Considering the emission reduction targets being pursued by a wide range of companies, ComBio's solution is set to become increasingly relevant."

Despite ComBio's long history of bootstrapping in Brazil, Verdelli says biomass has only recently started to be seen as a viable alternative to fossil fuels for generating steam. "And given the highly regionalised dynamics of biomass in Brazil, especially considering that different regions of the country have different types of feedstock, operating in this space requires a very niche skill set, which not many other companies have."

Skaf Filho agrees that using biomass for heat is only now starting to gain major momentum. This is partly because solar and wind energy are becoming far more sustainable and cost effective for electricity generation, so the emphasis for biomass has moved to heat. Furthermore, pressure is growing in all industries to meet climate targets.

Crucially, and in stark contrast to fossil fuels, biomass is considered to be carbon neutral, because burning it releases carbon that was absorbed during the growth of the feedstock, be it açaí palm or sugar cane, making it part of the natural carbon cycle. The European Union classified biomass as renewable energy on this basis in 2009.

There is also a strong financial incentive for ComBio's clients in Brazil, where the company pays for boiler installation and maintenance, then sells heat to clients up to 45% cheaper in some cases than they could secure by using oil.

Sector not without challenges

But the wider growth of the biomass industry has raised some concerns in the sustainability world. Critics have questioned the environmental logic of burning wood, for example, and doubt that such sources can really be considered part of the natural carbon cycle. According to experts, burning wood for energy can emit more greenhouse gases per unit of energy produced than fossil fuels, depending on the efficiency of the technology used to burn the fuel and the supply-chain emissions from harvesting, collecting, and transporting materials. If the material used is grown specifically for biomass energy production, land and water use issues can also be critical.

The non-profit European Biomass Industry Association, which was established in Brussels in 1996, lists the challenges the wider sector faces. These include the emissions related to transporting feedstock, and the impact of plantations used to provide biomass. Elsewhere, residents living close to biomass plants have complained of breathing problems.

Skaf Filho recognises the importance of tracking and auditing feedstocks to ensure there is a net benefit to using them, and confirms that ComBio uses a third-party European certification company. He says that his projects are preventing 800,000 tonnes of emissions a year, a figure he expects to rise to 2 million tonnes a year in the next three years, as new boilers are fired up.

He is realistic about the potential of his business model to take hold in other markets, at least in the short term, particularly in countries like the USA, where fossil fuels, including shale gas, remain relatively cheap. Verdelli agrees. "A company like ComBio is only able to come to fruition in a country with a wide availability of feedstock," he says. "For that reason, there is a natural impediment for a business like ComBio to expand into geographies where biomass is not abundant and cost-effective."

Skaf Filho says that even the more progressive companies, including his clients, have only recently begun to think about alternative energy sources. "I would say that before 2020 they didn't even care about this," he says. "But now, more and more, and every day, we are seeing companies looking at their emissions and reductions targets, and they are approaching us. But their main drive is still cost reduction."

When switching comes with costs rather than savings, Skaf Filho predicts, perhaps with a degree of optimism, that pragmatism about the likely mid- to long-term future will drive further adoption of such technologies in markets far beyond Brazil's borders. "At the end of the day, all industries are going to have to move towards net zero. If that happens, then it's no longer a matter of competitiveness against natural gas, for example. You will just have to go renewable."