Japanese engineering giant IHI Corp. is exiting its biomass power operations in the United States, citing unfavorable policy shifts under President Donald Trump’s administration, Nikkei reported. The company will divest stakes in five California power plants to focus resources on its more profitable aircraft engine division.
IHI acquired 45% to 50% ownership in the facilities from Exelon Corp. in 2012 for an undisclosed sum, including three wood waste biomass plants and two coal-fired stations it planned to convert to biomass. However, the coal plant conversions never materialized due to insufficient investment capacity, highlighting execution challenges that have plagued the broader biomass sector.
The withdrawal reflects mounting pressures on biomass power generation, which has struggled with subsidy dependencies and emissions concerns while competing against cheaper natural gas and subsidized renewables. Trump’s energy policies have deprioritized decarbonization efforts, making the business environment less favorable for alternative energy sources.
IHI’s pivot appears strategically sound given its aerospace division’s strong performance. The unit posted ¥100 billion ($667 million) in first-quarter revenues, up 27.9% year-over-year, driven by robust demand for aircraft engine components and spare parts. Company executives expect aerospace revenues to double by 2030, making it a more attractive growth vehicle than the embattled biomass sector.
The move underscores how policy uncertainty can reshape corporate investment priorities in the energy transition.
