Biorefinery feasibility study

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Biorefinery feasibility study. Amsterdam, 20 October 2011. Background of feasibility study. Feasibility study on establishment of integrated, demonstration scale, bio-refineries in Europe, focusing high value add products and second generation feedstock
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Biorefinery feasibility studyAmsterdam, 20 October 2011Background of feasibility study
  • Feasibility study on establishment of integrated, demonstration scale, bio-refineries in Europe, focusing high value add products and second generation feedstock
  • Focus on vision, value chains and required capital investments, funding options, governance and implementation paths
  • What
  • Europa Bio Team
  • Dalberg (external consultant)
  • Bio-based industry:
  • Who2nd generation biorefineries align with EU prioritiesStrong alignment with EU core priorities….… but interventions need to be targeted, and aligned with other initiatives
  • The EU has defined three ambitions for 2020, which are linked to the biobased economy and 2nd generation biorefineries:
  • Smart growth: developing an economy based on knowledge and innovation
  • Sustainable growth: promoting a more efficient, greener and more competitive economy
  • Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion
  • There is much research on 2nd generation biorefineries, but the “valley of death” between early stage research and commercialization, especially outside bio-fuels (Chemicals, materials and fibres) remains
  • Europe is well positioned to spearhead the development of a new bio-economy but risks falling behind the global competition
  • European decision makers expressed interest in seeing more demonstration scale activity and asked for a fact base on options and funding needs
  • The industry is willing to invest but lacks public funding supportto realize demonstration projects
  • 2Overcoming the gap from research to funding (called the “valley of death”) requires co-investments from public and private stakeholdersGovernments and IndustryMarketsFinancing, technology,ideasResearchandDevelopmentDemonstrationDeploymentNumber of projectsDiffusion
  • Graphics: Mercer
  • Brazil, China and the US are making significant public investments in bringing biorefineries to commercial scale
  • EU
  • High targets for the replacement of fossil transportation fuels
  • Focus: biodiesel/ biochemicals
  • Public support last 5 years1: ~€ 200 million
  • US
  • High targets for the replacement of fossil transportation fuels
  • Wide range of support schemes including grants, tax credits, loan guarantees, etc
  • Focus: bioethanol
  • Public support last 5 years: ~ € 1.2 billion
  • BRAZIL
  • World leading first generation biofuel production
  • Some commercial 2G bagasse refineries in operation
  • Aggressive government growth targets for bioethanol by 2025
  • CHINA
  • Large-scale investment in biorefineries
  • Plan to substitute 20% of crude oil imports by 2020
  • Target of 1.7bgy ethanol by 2010
  • Estimated funds provided by FP6 and FP7 to biorefinery-related projectsSource: US Department of Energy, EU, World Economic Forum, Bio-economy.netFor example the US has multiple support mechanisms for the biorefinery industry focusing on demonstration and commercial applicationLowHighUS approach to bio-refineriesGovernment institutionEstimatedImpact*PotentialDescriptionProgram (start year)
  • Mainly for solving national security issue of foreign oil dependency
  • Focused on bio-fuels and bio-ethanol in particular
  • Started under Bush administration and continued under current
  • Support programs boosted with the Economic Recovery Act or 2010 granting USD 564 million to bio-refinery projects
  • Renewable Fuel Standard
  • Goal to produce 36 billion gallons of bio-fuels by 2022
  • US gov
  • Bio-preferred procurement (2002)
  • Act to favour bio-based products over alternatives in public procurement
  • Dep. Agriculture
  • Demand
  • Bio-preferred labelling (2002)
  • Cataloguing and labelling products based on biorefinery ingredients
  • Dep. Agriculture
  • Biomass Crop Assistance Program (2008)
  • Lucrative support for farmers to transition to energy crops
  • Dep. Agriculture
  • Biomass Program
  • USD 2-300 million per year support to 2nd generation biorefineries (mainly demo)
  • Dep. Energy
  • Clean Energy Loan guarantee (2007)
  • Loan guarantee to finance commercial scale bio-refineries
  • Dep. Energy
  • Supply
  • Bio-fuels Loan guarantee
  • Loan guarantee to finance 2nd generation bio-refuel plants
  • Dep. Agriculture
  • Corn Ethanol tax Credit
  • Applies to all bio-fuels
  • 0.45 $/gallon
  • IRS
  • Cellulosic Ethanol tax Credit
  • 1.01 $/gallon production tax credit terminates 2012
  • IRS
  • * Impact to date – some programs have only been starting slowly and are therefore not showing too much impact yetSource: interview with BIO; Dalberg analysisFunding mechanismsFuelCurrent landscape of biorefinery initiatives in the EUChemicalsMixed outputsNER300EuroBioRefEuropean UnionNOT EXHAUSTIVEFP6 - FP7BioSynergyEuroBioRefBioCoupEIBIBioCoreSupraBioSupraBio
  • Research projects
  • Belgium (>20)
  • Finland (>50)
  • France (>20)
  • Germany (>10)
  • Sweden (>10)
  • Leibniz Inst fur AgrartechnikIcelandic biorefineryIcelandic biomass Biorefinery IrelandBioMCNNuon Europe BioHub RotterdamMember StatesNational funding (e.g. FNR - Germany, Nordic Energy Research, BOF - Belgium, BBSRC -UK, etc.) Inbicon Biogasol BrensbachNSE Biofuels AbengoaBioAmber Solvay Roquette/DSMBio T-Fuel FMS Innventia ARD BiodemoGoBioGas BPS TMOInbicon DTU/BioGasProcethol 2G SekabCompanyResearch PilotDemonstration
  • EU is still far from a biobased economy despite the number of initiates and funding mechanisms:
  • Most facilities focus on biofuels and first generation feedstock
  • Most funding is for research activities, rather than demonstration facilities
  • Source: Star Colibri, Dalberg researchEU Support should address multiple challengesPush mechanisms
  • Public support to overcome “valley of death”, and to co-invest together with the private sector
  • Policies to promote production of RRM for all industrial uses (material and bioenergy) to secure sustainable renewable feedstock.
  • Support for resource efficiency (land use, climate action) of RRMs, including support for “cascade utilisation”
  • Need for financial incentives to improve logistical capacity to collect biomass residues in EU Ag and forestry policies
  • Agricultural policyPull mechanisms
  • Need for innovative incentives (e.g. tax or state aid measures) to support the development of new sustainable bio-based product production processes
  • Binding political framework for supporting biobased economy in the long-term
  • Study findings : Capital requirements, Technical design and Funding model
  • There are different technological and commercial options for technologies and feedstock to create the 2nd generation bio-based economy
  • Biological enzymatic conversion of into C5 and C6 sugars and ultimately chemicals, materials and energy.
  • Thermochemical conversion of wood and black liquor into chemicals, materials, fibres and energy.
  • Thermic conversionof agricultural residue, hard wood and energy crops into syngas and subsequent biotechnological transformation to chemicals and energy carriers
  • There are different objectives for 2nd generation bio-refineries
  • Different foci along the value-chains (e.g. input, conversion technologies, output)
  • Different beliefs in optimal technological pathways
  • There are two main models for public-private collaboration, with distinct costs and benefits
  • A joint, consensus-focused design in which a wide range of private and public actors work together to develop 2-3 designs
  • Competing coalitions (sub-consortia) of private sector companies vying for public sector funding (match-fund)
  • 1. For a new biological enzymatic biorefinery the size of 10 tons of dry biomass per day the capital investment required will be in the range of € 25-50 million. For a new thermochemical facility at 100 tons per day the capital investment is likely to be € 150-200 million. If feasible to build on existing facilities investments required will drop substantiallySummary of principles for ideal location for a biorefinery
  • The locations of the bio-refinery is a complex decision-making process, incorporating feedstock availability, capital costs, clusters, co-location synergies, member state involvement and logistic capabilities
  • The importance of the location variables depends on the scale of the plant and the time horizon considered. It should optimize the plant’s economics and operations in order to provide the best simulation for larger-scale plants
  • Early stage facilities are very sensitive to Capex. Commercial scale plants, however, are much more sensitive to operating costs
  • External financial support and co-location synergies have a high impact on funding needed and are key for demonstration scale facilities
  • Feedstock costs are especially important for commercial scale facilities
  • In the medium to long-term, different EU regions might improve their cluster landscape, funding schemes, feedstock availability or transportation network. This would increase the number of potential good hosting regions for the biorefinery
  • In the short-term, some EU countries (e.g. France, Germany, Belgium, the Netherlands, Denmark, UK, Sweden and Finland) are more attractive locations for a biorefinery (agriculture-based in the heart of Europe and UK, wood-based in Scandinavia)
  • In the long-term – and as full commercial scale biorefineries emerge - other regions could become attractive locations for a biorefinery provided improvement in key location variables (e.g. Eastern Europe)
  • Source: Interviews, Dalberg analysisSteps to define location of demonstration biorefinery
  • Decision 2 (if decided to build a new facility)
  • Funding mechanism
  • Feedstock, technical route, output
  • What needs to be tested
  • Decision 1:
  • Build on existing facility
  • and/or
  • Build a new facility
  • Decision 3:Selection of attractive clusters (co-location synergies)Decision 4:Selection final candidates to host the biorefinerySpecific biorefinery location
  • Economic synergies
  • Operability, access to talent pool and expertise
  • Feasibility to join the cluster (regulation, capacity, etc.)
  • Existence of local feedstock market close to cluster
  • Degree of industrialization of agriculture/forest processing
  • Crops/forest residues yields
  • Access to transportation network
  • Open funding windows
  • Member states’ support
  • Consortia’s private interests, state the technology
  • Availability of time and financial resources
  • Project match with existing facilities
  • DecisionCriteria:Decision outcome:
  • Decision to build a new plant and/or to join an existing facility
  • Selection of country or high-level region
  • Selection of most attractive clusters within the selected regions
  • Selection of key clusters offering the best co-location synergies, feedstock availability and transportation costs
  • Source: Dalberg analysisWhere does this lead
  • Establishing a dedicated platform for biorefineries through a possible ERANET + Scheme
  • Investigating funding for biorefineries through PPPs and Horizon 2020 (EC Framework programme for research and innovation 2013-2020)
  • Input into recently published Star-COLIBRI Vision document and Research Roadmap and ambitions for the future
  • Feasibility study findings integrated into the Commission’s consultation on the Common Strategic Framework for EU Research and Innovation Funding
  • Primary recommended optionsHighLow Funding optionsBest alternative optionsEstimated matchTiming of grantProgram/facilityOptions to useCPI, BE-Basic, BioBase Europe, ARD, etc.Work with/build on existing facility with potential support from FP7 callShort term(2011-13)European Industrial Bioenergy Initiative (EIBI)Establish consortia to answer EIBI call for demo facilityTailored European Biorefinery Initiative (EBI)Engage EC to include this initiative under the European Strategy for BioeconomyEstablish demonstration scale ligno-cellulosic bio-refineries producing chemicals and materialsMedium term(2013-15)Structural fundsInvoke a member state to support a biorefinery projectNER300Establish consortia for next NER300 callLong term(2015-)PPP for demo bio-refineries focused on non-fuelsHelp design new PPP instrumentsForm coalition to apply in 2014Article 185Invoke national research support to form partnershipERA Net PlusInvoke national research institutions to establish joint callFP8 call for biorefineries focused on non-fuelsEngage in FP8 dialogue to help define early FP8 call for demo biorefineriesSteering group and external experts
  • Steering Group
  • Yvon Le Henaff ARD
  • Jean-Marie Chauvet ARD
  • Chris Dowle CPI
  • Jerry Cooper CPI
  • Ana-Maria Bravo Danisco/Genencor
  • Marcel Wubbolts DSM
  • Ward Mosmuller DSM
  • Andreas Jung Evonik
  • Manfred Kircher Evonik
  • Matthias Moll Evonik
  • Lars Hansen Novozymes
  • Anders Kristoffersen Novozymes
  • Vincent de Jong Purac
  • Peter Baets Purac
  • Johan Elvnert Star Colibri
  • Irina Sterr SüdChemie
  • Ulrich Kettling SüdChemie
  • Clas Engstrom Processum SE
  • Other experts interviewed
  • Peter Axegard Innventia
  • Pascal Bailleul Chamtor
  • Greg Arrowsmith NER300
  • Birger Kerckow FNR, EIBI member
  • Bruno Schmitz DG RTD
  • Andreas Pilzecker DG Agriculture
  • Maria Fernandez DG Research and Innovation
  • Jean-Emmanuel Faure DG Research and Innovation
  • Brigitte Weiss Research and Innovation
  • Giulia del Brenna DG Enterprise and Industry
  • Andrew Hagar World Economic Forum
  • Thomas Pscorn Andritz
  • Corry van Driel BE-Basic
  • Project Team – EuropaBio
  • Dirk Carrez
  • Jasmiina Laurmaa
  • Antoine Peeters
  • Camille Burel
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