Biogas the solution? Charlotte Hauksson WSP Sverige AB

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1 Biogas the solution? Charlotte Hauksson WSP Sverige AB

2 WSP employee worldwide 2600 in Sweden Housing Energy och climate issues Airindustry Commercial Hospitals Industry Internationell development Railway Offices Rekreation and leisure Urban development Telecom Education Water, wastwwater and waste Bridges, infrastructrue Public buildnings

3 Biogassys and WSP Initiator! Matchmaking Trends and on-going Dissemination

4 Fossil free public transport A socio-economic and business cost comparison of renewable fuels for city buses in Uppsala based on three tax scenarios Eeva-Liisa Nordström

5 Background to the study The goal for Uppsala 100 % renewable fuels for the city buses by 2020 Uncertain future for biofuels with constantly changing policy control measures Stricter sustainability criteria and the ILUC debate Need to consider other emissions than CO 2 as well, for example NO x and particles

6 General objective Develop a calculation model for comparing socioeconomic and business costs for the acquisition and management of city buses powered with different renewable fuels Based on different tax scenarios investigate which renewable fuel option would be most cost effective regarding both socio-economic and business costs for city buses in Uppsala

7 Fuel alternatives FAME Fatty Acid Methyl Ester HVO Hydrogenated Vegetable Oils Ethanol Biogas (both locally produced and transported from other places in Sweden) Electricity from renewable energy sources (electric bus and electric hybrid)

8 General design of the calculation model Facts Fuel consumption Fuel price Emissions Costs for emissions O&M costs Second-hand value Calculations Socio-economic and business costs for the different alternatives Results Annual socio-economic and business costs for the alternatives GHG reduction for the alternative fuels compared to fossil diesel Input Tax rate Fuel consumption Population Data for comparison

9 Tax scenarios for the biofuels Scenario 1 Scenario 2 Scenario 3 Full energy tax Full CO 2 tax Full energy tax Exemption from CO 2 tax Maximum tax reduction based on the margin for overcompensation

10 14 Calculation of the tax reduction for Scenario 3 SEK per liter Taxes Production costs (from the Swedish Energy Agency) The margin for overcompensation Taxes Price from the Swedish Energy Agency 0 Biofuel Fossil fuel

11 Annual socio-economic costs SEK per year PM2,5 HC NOx CO2e

12 Annual business costs (Scenario 1) SEK per year Fordonsskatt Service Bränsle Ränta (på lånet) Investering (amorteringen)

13 Annual business costs for biofuels Fossil diesel FAME SEK per year Scenario 1 Scenario 2 Scenario 3 HVO Etanol Biogas (lokalproducerad) Biogas (flakad)

14 The most cost effective alternative regarding both socio-economic and business costs Scenario 1 Scenario 2 Scenario 3 The electric bus (with an investment cost of 6 MSEK) Electric hybrid with FAME FAME (both hybrid and normal ) Locally produced biogas Locally produced biogas Biogas transported with truck

15 Conclusions The model functioned well for the purpose The fuel costs are strongly dependent on the tax conditions Including the socio-economic costs, fossil fuel is not the cheapest option Electric hybrids are generally profitable The profitability of the electric bus is strongly dependent on the acquisition value Biogas is a very cost effective alternative with the right tax conditions

16 Realization of the Swedish biogas potential for the transport sector, 2030 Stefan Dahlgren WSP Process

17 Assessments of biogas potential 80,0 70,0 60,0 50,0 Earlier investigations have shown significant differences between the Swedish biogas potential 59,0 40,0 30,0 20,0 10,0 15,2 3-4 Energy Agency has a strong focus on the current situation and thereby does not consider Thermal gasification Future incentives 0,0 Theoretical potential Estimation of potential by the Energy Authority Biogas from digestion Biogas from gasification

18 Realization of the theoretical biogas potential by 2030 (a WSP study) Aim of WSP s study Assess the realizable biogas potential by 2030 from both digestion and gasification out of three predefined scenarios HYPOTHESIS: Realization of the theoretical potential depends to a large extend on the profitability for the producer

19 Methodology (qualitative and quantitative analys) The potentials are estimated out of three future scenarios with different degrees of favorability Scenario 2 MODERATELY GOOD Scenario 1 FAVOURABLE Scenario 3 LESS PREFERRED Considered conditions price increase in fossil fuels inflation development of technology share of favorable incentives exemption from energy tax share of carbon tax of the total taxation new establishments in cultivation of energy crops

20 Differences in the three scenarios Parameter Scenario 3 Scenario 2 Scenario 1 Economic growth Less preferred Moderately good Favorable Price increase in fossil fuels Low High High Inflation 1,5 % 2 % 2,5 % Development of technology Slow Moderate Good Incentives (production and investment support, etc ) No incentives 1) Investment support 2) From 2020 subsidies for manure digestion Climate certificate from 2020 Energy tax From 2014 Exempted to 2020 Exempted to 2020 Energy crops (25 % of cultivated energy crops are used for biogas production) 4% of arable land 6 % of arable land 10 % of arable land

21 Affecting factors qualitative analysis AD and gasification Access to substrate to digest Access to forest fuels to gasify Distribution and logistics Competition and price levels Access to substrat and raw material Processing of digestate Digestion of straw LBG production Plant optimization Development of existing and planned gasification projects Expected technology development Need for research and allocation Technology status and development Realizable Potential Disposal of gas and digestate Distribution Request Market forces Vehicle fuel, Industry or Electricity Competing energy and fuel alternatives

22 Cash flow analysis, example Case study plant 2: 40 GWh/yr Case study plant 3: 100 GWh/yr

23 Payback periods from cash flow analyses Payback periods and acceptance margins with normal transport conditions Payback period Requirement Scenario 3 Scenario 2 Scenario 1 Case study plant 1 3 GWh/yr Case study plant 2 40 GWh/yr Case study plant GWh/yr Case study plant GWh/yr EG 5 10 yr >20 yr 9 yr 10 yr 8 12 yr 13 yr 6 yr 8 yr 8 12 yr >15 yr 6 yr 7 yr 8-10 yr >20 yr 5 yr 7 yr

24 Assessment of total realizable potential, based on the qualitative and quantitative analysis Realizable potential in scenario 3 from 1.2 to 2.6 TWh - No economic driving forces - Co-digestion and sludge digestion (WWTP) TWh 25 Total realizable potential from digestion and thermal gasification by year 2030 Realizable potential in scenario 2, from TWh - Very good economical conditions, investment support - Realizable potential in scenario 1 from TWh - Very good economical condition, climate certificate Scenario 3 Scenario 2 Scenario 1 Min potential Max potential

25 Conclusions Market conditions are critical for the magnitude of the realizable potential If energy tax is added on biogas some form of incentives or a strong increase of fossil fuel prices is needed to (even with favorable advances in technology) In order to realize production of large volumes it is necessary to have long sighted and favorable incentives TWh Realizable biogas production by 2030 under the given conditions Scenario 3 Scenario 2 Scenario 1

26 Stefan Dahlgren, WSP Process ,