Mitsubishi has signed a memorandum of understanding with $8bn (£5bn)-a-year US forestry company Weyerhaeuser, which will see the two companies explore the possibility 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 bio-pellet production facility in the US by 2011.

Depending on the success of a joint feasibility study, more facilities could follow in addition to an initial production plant.

The bio-pellets will be produced using wood-based biomass targeted from US-sourced sustainably managed forest resources or by-products and sold to utilities and industrial users for energy production.

Mitsubishi currently operates two bio-pellet facilities in Japan and is also actively involved in the management of Vis Nova Trading, a major producer of bio-pellets in Germany.

Bio-pellets are made from biomass, which can include by-products from forest management. The biomass is compressed and moulded into small, cylindrical pellets. Co-firing bio-pellets with coal has proved effective in reducing greenhouse-gas emissions at coal-fired power plants.