Lecture 4: Peak Oil's Skeptics

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A critical analysis of thermochemical
cellulosic biorefinery capital cost
estimates
Tristan Brown
SUNY-ESF
Presented at tcbiomass2015
November 5, 2015
The problem: GHG emissions from petroleum
•
•
Image Credit: Brown and Brown, Why Are We Producing Biofuels?
Winter 2011. Source: Carbon Dioxide Information Analysis Center
Petroleum is a leading
source of fossil fuel CO2
emissions
Increasing atmospheric
concentrations of CO2
are believed to be linked
to global climate change
and extreme weather
events
A solution: Reduced emissions via biofuels
RFS2 Biofuel category
GHG reduction threshold
Renewable fuel (corn ethanol)
20%
Advanced biofuel
50%
Biomass-based diesel
50%
Cellulosic biofuel
60%
The definitions:
• Renewable fuel – renewable fuel meeting 20% GHG reduction threshold
• Advanced biofuel – any renewable fuel meeting 50% reduction threshold other than
corn EtOH (mostly cane EtOH)
• Biomass-based diesel – diesel from renewable biomass meeting 50% reduction
threshold (mostly biodiesel)
• Cellulosic biofuel – any fuel from cellulosic biomass meeting 60% reduction
threshold
The cellulosic biofuel mandate
Million gallons EtOH-eq.
3500
EISA mandated
3000
EPA revised
2500
Actual production
2000
1500
1000
500
0
2010
2011
* Denotes estimate based on production through August
2012
2013
2014
2015*
Source: Schnepf (2014), EPA (2015)
Explaining the shortfall – High capital
costs
Pathway
Cat. FPH
FPH
FPH
FPG
HPH
MTG
MAS
MAS
FTSb
S2Dc
SLc
a
TCI ($MM)a
457
429
379
449
286
217
220
560
657
519
555
TIEC/TPEC
3.02
3.02
3.02
3.02
1.55
2.46
2.47
1.98
2.12
2.02
2.47
All TCIs are for 2000 MTPD capacity biorefineries and reported in 2011 dollars.
High-temperature scenario.
c State-of-technology scenario.
b
TCI/TIEC
1.69
1.81
1.81
1.81
2.07
1.38
1.39
1.74
1.96
1.70
1.70
TCI/TPEC
5.10
5.46
5.46
5.46
3.19
3.40
3.43
3.45
4.16
3.43
4.20
Capital cost sensitivity
Pathway
TCI
TCI
TCI
(optimistic) (base case) (pessimistic)
Cat. FPH
296.0
457.4
472.6
FPH
259.3
429.0
414.1
FTS
521.4
657.3
832.7
HPH
295.7
285.9
472.3
MAS
535.5
559.8
855.1
MTG
210.2
216.5
335.6
TCI – Total Capital
Investment
Cat. FPH – Catalytic Fast
Pyrolysis and
Hydroprocessing
FPH – Fast Pyrolysis and
Hydroprocessing
FTS – Gasification and
Fischer-Tropsch Synthesis
HPH – Hydropyrolysis and
Hydroprocessing
MAS – Gasification and
Mixed Alcohols Synthesis
MTG – Gasification and
Methanol-to-Gasoline
Synthesis
Qatar’s Pearl GTL facility
• Converts NG to 50 MM
bbl/yr of gasoline and
diesel fuel
• Capital cost est.
escalated from $5 billion
in 2003 to $19 billion
upon completion
• Profitable (as of 2013)
because it receives NG
for free (stranded gas)
Capital cost sensitivity and pathway
NPV
20-year NPVs for 2000 MTPD capacity biorefineries, reported in 2011 dollars.
Renewable energy and capital cost
uncertainty
• Analyses of thermochemical cellulosic biofuel
pathways commonly assume that TCI
uncertainty is neither biased nor skewed
• Studies of existing renewable energy projects
(wind-, thermal-, and hydro-power) find that
their capital costs are asymmetrical and
positively-skewed
– Cost over-runs are more common than under-runs
– Extreme over-runs result in overall positive bias
Capital cost uncertainty and NPV
20-year NPVs for 2000 MTPD capacity biorefineries, reported in 2011 dollars.
Conclusions
• Analyses of economic feasibility of
thermochemical cellulosic biofuel facilities
underestimate likelihood and magnitude of
capital cost overruns
• The accuracy of assessments of subsidies
needed for cellulosic biofuels to
commercialize is improved if data from
existing renewables projects is employed
Questions?
Tristan R. Brown
[email protected]