Posted Feb. 2, 2010, at 2:10 p.m. CST

Mitsubishi Corp. and Weyerhaeuser Co. announced Feb. 2 that the two companies signed a strategic memorandum of understanding (MOU) to explore the possibilities of collaborating in the biomass-to-energy business.

The companies are specifically interested in assessing the feasibility of jointly investing in and operating a commercial-scale biopellet production facility in the U.S. by 2011. Depending on the success of the joint feasibility study, more facilities could follow in addition to the initial production facility, in aspiration to become a world class biopellet producer. The biopellets will be produced using wood-based biomass, targeted from U.S.-sourced sustainably managed forest resources or byproducts and sold to utilities and industrial users for energy production.

The agreement signals the belief of both companies that there are existing and emerging opportunities in an expanding bio-energy market. The MOU brings together two industry leaders and leverages the strengths of both companies: Weyerhaeuser's capacity to produce renewable biomass at scale from its sustainably managed forests and Mitsubishi's worldwide network and experience in the energy sector and biopellet manufacturing business. Mitsubishi currently operates two biopellet facilities in Japan and is also actively involved in the management of Vis Nova Trading GmbH, a major producer of biopellets in Germany.

"Weyerhaeuser is committed to developing sustainable and renewable energy solutions for a carbon-constrained world," said Dan Fulton, Weyerhaeuser president and CEO. "This opportunity has the potential to offer a significant renewable energy option here in North America and beyond while also creating green jobs in our operating communities. At the same time, we have the opportunity to enhance the value of Weyerhaeuser timberlands by converting residuals from our forest management activities into a new revenue stream."

"Through this collaboration, Mitsubishi Corp. is further demonstrating our commitment to the environment by developing practical business solutions to address climate change. Given the potential for biopellets to reduce the greenhouse gas emissions from coal-fired power plants, we see good prospects for future biopellet market growth," said Yorihiko Kojima, Mitsubishi president and CEO. "This opportunity with Weyerhaeuser will enable us to establish a biopellet production facility in the U.S., adding to our existing investments in Japan and Europe and thereby creating a stable worldwide supply."

Biopellets are a renewable and carbon-neutral fuel made from biomass, which can include by-products from forest management. The biomass is compressed and molded into small, cylindrical pellets. Cofiring biopellets with thermal coal has proved effective in reducing greenhouse gas emissions at coal-fired power plants.

SOURCE: WEYERHAEUSER CO. AND MITSUBISHI CORP.