Biorefinery feasibility study
Amsterdam, 20 October 2011
Background of feasibility study
What
• Feasibility study on establishment of integrated, demonstration scale, biorefineries 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
Who
• Europa Bio Team
• Dalberg (external consultant)
• Bio-based industry:
1
2nd generation biorefineries align with EU priorities
Strong alignment with EU core priorities….
• The EU has defined three ambitions for 2020,
which are linked to the biobased economy and 2nd
generation biorefineries:
1.
Smart growth: developing an economy based
on knowledge and innovation
2.
Sustainable growth: promoting a more
efficient, greener and more competitive
economy
3.
Inclusive growth: fostering a highemployment economy delivering social and
territorial cohesion
… but interventions need to be targeted, and
aligned with other initiatives
• 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 support to realize demonstration projects
2
Overcoming the gap from research to funding (called the “valley of death”)
requires co-investments from public and private stakeholders
Governments and Industry
Markets
Number of projects
Financing,
technology,
ideas
Research
and
Development
Graphics: Mercer
Demonstration
Deployment
Diffusion
3
Brazil, China and the US are making significant public investments in bringing
biorefineries to commercial scale
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
EU
• High targets for the
replacement of fossil
transportation fuels
• Focus: biodiesel/
biochemicals
• Public support last 5 years1:
~€ 200 million
BRAZIL
• World leading first generation biofuel
production
• Some commercial 2G bagasse
refineries in operation
• Aggressive government growth
targets for bioethanol by 2025
1. Estimated funds provided by FP6 and FP7 to biorefinery-related projects
Source: US Department of Energy, EU, World Economic Forum, Bio-economy.net
CHINA
• Large-scale investment in
biorefineries
• Plan to substitute 20% of
crude oil imports by 2020
• Target of 1.7bgy ethanol
by 2010
4
For example the US has multiple support mechanisms for the biorefinery
industry focusing on demonstration and commercial application
Low
High
• Mainly for
solving national
security issue of
foreign oil
dependency
Demand
US approach to
bio-refineries
Supply
• 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
Program (start year)
Description
• 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
• 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
• 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
• Bio-preferred labelling
(2002)
• Focused on biofuels and bioethanol in
particular
Government
institution
Estimated
Impact*
Potential
• Dep. Agriculture
* Impact to date – some programs have only been starting slowly and are therefore not showing too much impact yet
Source: interview with BIO; Dalberg analysis
5
Funding mechanisms
Fuel
Chemicals
Mixed outputs
Current landscape of biorefinery initiatives in the EU
EuroBioRef
European
Union
FP6 - FP7
BioCore
EuroBioRef
BioCoup
SupraBio
Member
States
NER300
Research projects
• Belgium (>20)
• Finland (>50)
• France (>20)
• Germany (>10)
• Sweden (>10)
BioSynergy
EIBI
SupraBio
Leibniz Inst fur Agrartechnik
Icelandic biorefinery
Icelandic biomass
Biorefinery Ireland
BioMCN
Nuon
National funding (e.g. FNR - Germany, Nordic Energy
Research, BOF - Belgium, BBSRC -UK, etc.)
Inbicon
DTU/BioGas
Company
Procethol 2G
Sekab
Research
NOT EXHAUSTIVE
Pilot
Europe BioHub Rotterdam
Inbicon
Biogasol
NSE Biofuels
BioAmber
Solvay
Bio T-Fuel
FMS
ARD Biodemo
GoBioGas
BPS
Brensbach
Abengoa
Roquette/DSM
Innventia
TMO
Demonstration
• 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
6
Source: Star Colibri, Dalberg research
EU Support should address multiple challenges
Push
mechanisms
• Public support to overcome “valley of death”, and to co-invest together with the private
sector
Agricultural
policy
• 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
Pull
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
7
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 biobased 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 conversion of 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 substantially
8
Summary 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 analysis
9
Steps to define location of demonstration biorefinery
Decision 1:
• Build on
existing facility
and/or
• Build a new
facility
Decision
Criteria:
Decision
outcome:
Decision 2 (if
decided to build a
new facility)
• Funding mechanism
• Feedstock, technical
route, output
• What needs to be
tested
Decision 3:
Decision 4:
Selection of
attractive clusters
(co-location
synergies)
Selection final
candidates to host the
biorefinery
Specific
biorefinery
location
• Availability of time and
financial resources
• Project match with
existing facilities
• Open funding
windows
• Member states’
support
• Consortia’s private
interests, state the
technology
• 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
• 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 analysis
Where 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 20132020)
• 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
11
Primary
recommended options
Best alternative options
Funding options
Timing of grant
Short term
(2011-13)
Establish
demonstration
scale lignocellulosic biorefineries
producing
chemicals and
materials
Medium term
(2013-15)
Program/facility
Options to use
CPI, BE-Basic, BioBase
Europe, ARD, etc.
Work with/build on existing facility
with potential support from FP7
call
European Industrial
Bioenergy Initiative (EIBI)
Establish consortia to answer EIBI
call for demo facility
Tailored European
Biorefinery Initiative (EBI)
Engage EC to include this
initiative under the European
Strategy for Bioeconomy
Structural funds
Invoke a member state to support a
biorefinery project
FP8 call for biorefineries
focused on non-fuels
Engage in FP8 dialogue to help
define early FP8 call for demo
biorefineries
PPP for demo biorefineries focused on
non-fuels
Help design new PPP instruments
Form coalition to apply in 2014
NER300
Establish consortia for next
NER300 call
Invoke national research support
to form partnership
Long term
(2015-)
Article 185
ERA Net Plus
High
Low
Estimated
match
Invoke national research
institutions to establish joint call
12
Steering group and external experts
Steering Group
• Yvon Le Henaff
• Jean-Marie Chauvet
• Chris Dowle
• Jerry Cooper
• Ana-Maria Bravo
• Marcel Wubbolts
• Ward Mosmuller
• Andreas Jung
• Manfred Kircher
• Matthias Moll
• Lars Hansen
• Anders Kristoffersen
• Vincent de Jong
• Peter Baets
• Johan Elvnert
• Irina Sterr
• Ulrich Kettling
• Clas Engstrom
Other experts interviewed
ARD
ARD
CPI
CPI
Danisco/Genencor
DSM
DSM
Evonik
Evonik
Evonik
Novozymes
Novozymes
Purac
Purac
Star Colibri
SüdChemie
SüdChemie
Processum SE
• 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
13