Integrated Forest Products
Biorefineries
Presentation to the SUNY-ESF Forest
Biorefinery Conference, October 9, 2007
John G. Cowie Ph.D.
Director
Technology Management and Deployment
Agenda 2020 Technology Alliance
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Today’s Presentation
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Industry Context
Global Issues
Forest Products Potential
Integrated Forest Products Biorefinery
z Concept
z Forest Products Industry Advantage
z Mill Integration Model
z Product/Offtake Options and Markets
z Initial Economics
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Industry Context
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Employ 1.3 million people
Sales ~$230 billion/yr
7-9% of primary industrial energy
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Biorefinery: more efficient renewable energy
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Industry in a Crisis
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Global competition
z Latest technology
z Cost advantages
Prices declined
Economic pressure
Mills shut down
Production moved overseas
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Global Issues
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Energy Supply
CO2 emissions
Climate change
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Forest Products Potential
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Cellulose – abundant
90 billion tons
carbon is equivalent to ~10X
world consumption
Renewable and carbon neutral
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Forest Products Potential
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“The Billion Ton Study”
400 million dry tons/year
Total: 1 billion dry tons
z Agricultural biomass
z Woody biomass
= 1/3 of all transportation fuels
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Integrated Forest Products
Biorefinery (IFPB)
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Sustainable renewable energy
Evolving into integrated forest products refineries
1st International Biorefinery Workshop (2005)
By 2050 all gasoline replaced by biomass-derived fuels
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Integrated Forest Products
Biorefinery (IFPB)
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Unique opportunity - increase revenue
Sustainable stream of
z High-value chemicals
z Fuel and/or electric power
Traditional line of products
z Wood
z Pulp and paper
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Agenda 2020
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Agenda 2020 Technology Alliance - leadership
for industry biorefinery strategy
z Partnership with industry, government, and
academia
z Innovation in processes, materials, and
markets
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Components of the Agenda 2020
IFPB Technology Strategy
Value Prior to Pulping –
Fermentation/Biochemical Pathway
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Separate and extract selected components
process into chemical and liquid fuel products
New Value Streams from residuals and pulping liquors –
Thermochemical Pathway
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Convert residues and pulping liquors
Liquid fuels, power, and chemicals
Sustainable Forest Productivity
Feedstock Pathway
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Biotechnology and nanotechnology breakthroughs
Sustainable forestry - high intensity
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Agenda 2020: Integrated Forest
Products Biorefinery (IFPB) Concept
Forest
Building
Products Mill
Recovery/
Power Plant
Pulp Mill
Pulp
Paper, Board,
Other Mills
Energy
Chips
Optimized
Plantations
Energy
Black
Liquor
Fuels/
Chemicals
Fuels/
Chemicals
Hemi Extraction
and Conversion
Gasifier
Biomass
Boards,
Paneling,
Etc.
Ethanol,
Polymers,
Etc.
Ethanol,
Others
Paper,
Boxes/Cartons,
Tissue/Diapers,
Specialties
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IFPB: Forest Products Industry
Advantages (1)
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Forest-based materials - feedstock
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30% of resources to support bio-industries.
Ethanol from hemicellulose uses less fossil fuel with existing
mills.
Managed forests - positive ecological impacts
Infrastructure and expertise
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Owns and manages operations for feedstock harvesting,
transportation and storage, manufacturing and conversion, and
waste handling and recovery.
Raw material supplied to mills.
Experience in chemical processing and handling
Location of facilities in rural areas
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IFPB: Forest Products Industry
Advantages (2)
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IFPB technologies - potential national benefits:
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Diversified, more secure national energy supply
Geographically distributed supply source
Reduced environmental impacts
Improved energy efficiencies
Carbon benefits include:
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Displace use of natural gas in industrial applications
“Green” liquid transportation fuels - co-product
Changes in land management, increasing carbon stored per acre
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IFPB: Forest Products Industry
Advantages (3)
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Initial economics - compelling
z Princeton/Navigant - strong IRR,
z Potential for new revenues
z Monetizing environmental benefits
z Private investor studies - after corn ethanol,
biorefineries integrated with pulp and paper mills show
promise for biofuels production
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Bioconversion Pathway
(Fermentation)
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Hemicellulose - 20 to 30% of wood used in the pulping
process considered waste product
Hemicellulose extracted prior to pulping - without fiber
damage
Hemicellulose – fermented & distilled into ethanol
35 gal per ton of paper
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Thermochemical Pathway
(Gasification)
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Existing gasification technology - high conversion
efficiencies
Biomass stream - higher value products
Gasification convert all of the plant - not limited to
sugars.
Process modeling - conversion efficiencies > 75%
possible
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Gasification Continued
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~ 60% of energy converted to synthetic gas:
z Primary fuel in
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Boilers
gas turbines
lime kilns
direct fired dryers
Converted to bio-crude or fuels/chemicals using
Fischer Tropsch process
20% to 25% of energy in biomass recovered and
converted to steam for use in manufacturing process (i.e.
Pulp & Paper mills).
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IFPB Components
Value Prior to Pulping (VPP)
Separate and extract selected components of wood prior to
pulping, and process these streams to produce commercially
attractive chemical and liquid fuel products
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Hot water extraction vessels
Soluble hemicelluloses extracted
Acetic acid separated, sugars fermented to ethanol
Ethanol - low end of products
Removing “sugars” improves throughput potential
“Fermentation system” - produce high-value chemicals and ethanol
Key Technologies
z Hemicellulose extraction
z Hydrolysis and Saccharification
z Fermentation (enzymes)
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VPP Product Value Chain
Adhesives
Films
Polymers
Precursors
Fuels
Chemicals
Modified lignin
Modified fibers
Fermentable sugars
Polymeric lignin
Fractionated fibers
Pretreated lignocellulose
Value
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VPP Status – October 2007
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Project Kickoff meeting held August 29th & 30th
DOE grant for $1,523,000 project finalized
Total current committed resources - $2,656,000
Additional resources being pursued - $580,000
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VPP Status – Project Teams
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Pre-Extraction & Pulping
Extract Processing
Fermentation & Ethanol Production
Modeling & Business Case Development
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VPP Status – Where are we?
Concept
Generation
Risk
Assessment
Proof of
Concept
Proof of
Process
Demonstration
Approach
Transfer
Deployment
Decisions
Concept
Concept
Generation
Generation
Risk
Assessment &
Proof of Concept
Compelling
Business Case
Proof of
Process
Large Scale
Demonstration &
Technology Transfer
Stage
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II
Stage
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Gate
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IFPB Product/Offtake Options and
Markets
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Electric Power Co-Generation
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Fuels and /or Chemicals Production (gas-to-liquids)
z Gasification
z Cellulosic Ethanol
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Industrial Gasification/Green Feedstocks
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IFPB Product Option:
Electric Power Co-Generation
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Industry currently generates power for industrial applications - sells
to grid
z 60% of energy - supplied by biomass
z 89% of electricity generated on-site is CHP
In P&P mill, Tomlinson boiler provides power & chemical recovery
Gasification of IFPB - initially augment, then replace the Tomlinson
Key drivers for the forest products partner:
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Improved energy efficiency & increased power output
Offset purchases of fossil fuels and power
Improved emissions profile
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80%-90% reduction of NOx and SO2 emissions
80%-90% reduction VOCs and particulate matter
Reduction of over 20 million tons carbon emissions
Carbon-neutral in relation to greenhouse gas emissions
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Potential IFPB Markets for Fuels and
Chemicals
U.S. Market Size, 2005
Physical Units
Quads
per yr
Average refinery gate
price (excl. taxes),
2005
Approximate market
U.S. wholesale, 2005
FUELS
Motor gasoline
9.13 million bbl/day
17.2
$1.67/gal
$13.6/million BTU
233 B$/yr
Motor diesel
4.11 million bbl/day
8.74
$1.75/gal
$12.6/million BTU
110 B$/yr
LPG
2.02 million bbl/day
3.05
$0.92/gal
$9.36/million BTU
29 B$/yr
Ethanol
0.26 million bbl/day
0.34
$1.89/gal
$22.4/million BTU
8 B$/yr
Natural Gas
21.98 trillion SCF
22.6
$7.51/scf (well head)
$7.31/million BTU
165 B$/yr
CHEMICALS
Methanol
0.185 million bbl/d (2001)
3-4 B$/yr
Hydrogen
10 million t (15% of which is merchant)
15-75 M$/yr (merchant)
Ammonia
21 million tons (2001)
2-7 B$/yr
Mixed Alcohols
3.7 billion pounds
3-4 B$/yr
Source: Princeton/Navigant
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Market Context » P&P Industry Access to Product Markets › Infrastructure
In some parts of the United States there is good
overlap between P&P mills and petroleum refineries.
Location of U.S. Refineries and Pulp and Paper Mills
Sources: Paper mills: Lockwood‐Post, 2001; Refineries: National Petrochemical and Refiners Association, NPRA United States Refining and Storage Capacity Report, July 2004 (NPRA data based on DOE EIA’s 2003 Petroleum Supply Annual and covers 149 refineries)
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Bonus Offtake Option: Industrial
Gasification
• Energy flexibility for industrial applications
• Reduce natural gas consumption - alternative fuels and
feedstocks (e.g., syngas)
• Replace natural gas in industrial boilers & process
heaters - biomass-based gas
Source: Adapted from DOE/ITP
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Energy Use in Key Industrial Sectors
(All Figures in Trillion BTUs)
Natural
Gas
Residual
Fuels
Distillate
Fuels
LPG/
NGL
Coal
and
Coke
Derived Net
Electricity
Other
Total Use,
Net
Chemicals
1984
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9
51
284
602
749
3729
Mining
1268
5
262
0
77
355
631
2598
Petroleum Ref
948
70
4
33
0
123
2300
3478
Forest Products
659
152
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9
279
327
1825
3272
Steel
456
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5
0
48
163
971
1672
Glass
194
3
0
1
0
54
2
254
Aluminum
189
0
1
1
1
246
3
441
Metalcasting
136
0
1
2
0
63
31
233
Agriculture
77
0
339
221
0
221
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1072
5911
309
642
318
689
2154
6526
16749
Sector
TOTALS
Taken from “Profile of Total Energy Use for US Industry”, Energetics, Inc. for the US DOE, 12 / 04.
LPG / NGL = Liquefied Petroleum Gas / Natural Gas Liquids
Table does not include energy sources used as raw materials.
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Cost- Benefit Analysis of
Gasification-Based Biorefining
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Study - Princeton University, Navigant Consulting,
Inc., Politecnico di Milano, and IPST
Thermochemical pathway - various production
scenarios for biofuels, biochemicals & electric
power
Alternative investment considerations
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Tomlinson boiler
Bioenergy partners
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other feedstocks
stand alone configurations
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Only Some Factors Addressed by
Cost/Benefit Model
z Reduced emissions
Public Sector Benefits
z Reduced fossil fuel use
z Improved energy security & diversity
z Displace high‐priced and volatile fossil fuels
z The value of technology leadership
Pulp & Paper Industry Benefits
z Replace Tomlinson boilers with BLG to improve competitiveness –
higher energy efficiency, reduced emissions, modified pulping strategies, improved safety.
z Opportunity for new revenue streams from sale of biofuels and bio‐based chemicals.
z Utilization of woody biomass (beyond existing residues) for added revenue.
z Increasing need for clean fuels to meet fuel formulation requirements and new Energy Industry Benefits
Federal Renewable Fuel Standard1
z Helps meet rising demand for renewable energy, e.g., Federal Renewable Fuel standard, state renewable portfolio standards, and state renewable fuels mandates1
z Helps pulp and paper producers maintain competitiveness in global markets ‐ can help retain jobs and contributions of this industry to the U.S. economy.
1. Value is expressed by way of incentives and “green” premiums.
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Cost Benefit Model
Sensitivity Analysis
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Sensitivity analyses
Uncertainty in the data - key variables
Retail energy & commodity sales prices
z Two energy price scenarios - EIA Annual Energy
Outlook 2006
ƒ Reference Energy Price Scenario: Crude oil = $50/bbl
ƒ Tight Supplies Energy Price Scenario: Crude oil =
$78/bbl
z Biomass price (energy, not paper production)
z Electricity prices
Incentives
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Mill-Level Financial Analysis
No Incentives & Reference Energy
Price Scenario
Most options have IRRs above 15%
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Source: Navigant Consulting
Mill-Level Financial Analysis
No Incentives & Tight Supply Energy
Price Scenario
Most options have IRRs between 20 and 30%
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Source: Navigant Consulting
Mill-Level Financial Analysis
Summary
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Attractive economics relative to new Tomlinson system
Biorefineries - more energy efficient than Tomlinson
Integration with the mill and avoided costs - key to
profitability
Reference energy price scenario, IRRs above 15%
Tight supplies energy price scenario, IRRs 20-30%
The mixed alcohol case (separated) - best (IRRs 32-34%)
Incentives - increase IRRs ~ 5% - 6%
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Key Conclusions of Cost/Benefit
Analysis
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Economics positive for gasification biorefinery
High environmental value to industry
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Implications for improving negotiating position with EPA
Current market conditions & renewable energy incentives improve economics
Broad options in financing capital costs
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Utilities
Private equity
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Challenges:
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Biomass gasification technology is new
Risks are high
No individual company wants to be first.
Need:
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Partners
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Questions?
Please visit our booth
Contact Information:
john_cowie@afandpa.org
202-463-2749
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