Japan, Vietnam firms cooperate to produce biomass pellets

Japan’s Nihon Toyo and Vietnam’s Power Engineering Consulting JSC 2 (PECC2) have agreed to cooperate in a trial production of biomass pellets.

Nihon Toyo, a subsidiary of Japanese giant Toyo Group, and PECC, part of national utility Vietnam Electricity (EVN), will cooperate in establishing a production line deploying a high-temperature, high-humidity hydrolysis machine to make solid fuel from waste.

Speaking at the signing ceremony on Monday, Nihon Toyo chairman Koshio Katsuhiko said they have high expectations from the collaboration with PECC2 to tap the power generation market with a combination of biomass pellets and coal as fuel.

Tran Dinh Nhan, CEO of EVN, welcomed the collaboration and urged the Japanese firm to further research coal-fired power generation in line with Vietnam’s newly-approved Power Development Plan VIII (PDP VIII).

Katsuhiko also proposed cooperation in other fields, including technical services for power plant operations; and supply of fuels like coal, oil and LNG to power plants in Vietnam.

Last month, Idemitsu Green Energy Vietnam, a subsidiary of Japan’s Idemitsu Kosan, inaugurated a wood pellet factory in the south-central province of Binh Dinh. The factory in Hoai Nhon town has an annual capacity of 120,000 tons of green energy pellets that will be exported to Japan.

Vietnam’s embrace of the circular economy and impending support policies from the government creates business opportunities, said Idemitsu Kosan representative Atsuhiko Hirano.

Also in July, Japanese renewable energy firm Erex Co., Ltd. and local partner Sakura Green Energy JSC broke ground for a VND474.8 billion ($19.99 million) biomass fuel plant in the northern mountainous province of Yen Bai. The three-hectare factory will have a designed annual capacity of 150,000 tons of wood pellets and 305,000 tons of wood chip products a year.

The number of wood pellet exporters in Vietnam fell from 152 in 2022 to 119 in May 2023 as exports to major markets Japan and South Korea reduced significantly, the Vietnam Timber and Forest Product Association (Viforest) noted in its January-June report.

South Korea and Japan were the two largest markets for Vietnam’s wood pellets, accounting for 95% of export revenue, according to Viforest. Vietnam earned $151.06 million from export of 871,356 tons of wood pellets to Japan in the first five months of this year, the report said.

It said the Japanese market was more stable than the South Korean market, placing long-term orders of 10-15 years at export prices of $145-165 per ton. The demand for pellets in Japan is expected to grow strongly from eight million tons at the moment to 20 million tons in 2030, it added.