Global Biomass Trade 28/07/2015. Current Biomass Exports Little Biomass; few trade routes. World Demand for Biomass

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1 BANZ Webinar Oct 4, 2013 Douglas Bradley President, Climate Change Solutions 402 Third Avenue Ottawa, Ontario Canada K1S 2K7 phone web site Global Biomass Trade World Demand for Biomass Global Biomass Trade Supply Chain Game Changers Bio trade Equity Fund Current Biomass Exports Little Biomass; few trade routes Canada USA W. Europe E. Europe & CIS Japan Ethanol ethanol Pellets pellets Palm palm oil oil & & agricultural agricultural residues residues Brazil South East Asia Wood Pellets (Mostly from Canada and US to Europe) Ethanol (Mostly Brazil to Asia, Europe, US) Palm Oil (Mostly Malaysia & Indonesia to Europe) Are there other sources of biomass? 1

2 For Heat & Power? Mostly pellets Global wood pellet trade 2010 (Source: Lamers et al. 2012) Source: Lamers et al., RSER, 16(2012) Pellet Imports EU27 Pellet Imports Jan Sept 2012 % Cumul % MT 1US Canada Russia Ukraine South Africa Australia other

3 US South Pellets BC Canada Pellet Supply Chains East Canada Pellets 3

4 Pellet Demand (MT) Biomass Demand in Europe MT p.a Logistics Costs of Trade Total Logistics (% of End User Price) Feed stock 1 to 25 if mill residues 1 if road side/standing di 10 to 25 Mill 8 to 15 Finance 6 to 10 Transport to port 5 to 10 5 to 10 Storage, load/unload 5 to 12 5 to 12 Ocean shipping 12 to to 20 Transport to end user 2 to 10 2 to 10 Risk and profit to 122* 34 to 77* * in these cases, the projects would not be viable 4

5 Make Denser Transportable Products Torrefied Pellets Heat Value GJ/t vs Density t/m 3 45 Heavy Oil Char Ethanol Wood Pellets Pyrolysis Oil Wood Chips Torrefied Wood World s Largest Pyrolysis Oil Plants Dynamotive West Lorne- 130tpd Start-up 2005 Ensyn Renfrew 100tpd Start-up 2004 Guelph- 200tpd Dynamotive Production Mar

6 Pyrolysis Oil Renewable Products Commercialization renewable food and chemicals development of pyrolysis oil for heat and power 2013 power from diesel engines renewable transportation fuels; jet fuel, diesel, gasoline Global Potentials 2050 Lots of biomass available How to get it where it is needed? Infrastructure and Supply Chain Game Changers Needed for Global Biomass Trade 6

7 Supply Chain Game Changers Existing Supply Chains Match the chain to the need! Buying the ground supply chain Match ports storage and loading to vessel size Denser tradable dbl products lower shipping i cost Torrefied wood, Pyrolysis oil Integrating the supply chain New Supply chains Innovation Sharing existing chains Building whole new infrastructures Potential Investments Ground supply chains Biomass densification Port facilities Specialized ships Chippers Trucks Specialized eqt Pellets Torrefied pellets Pyrolysis l oil Rail cars Storage Conveyers Existing Supply Chains BC Buy the Supply Chain! Stage 1 Each BC pellet company negotiates with CN Rail Stage 2 Several companies negotiate better rate with CN Rail Stage 3 Pinnacle Pellet buys 330 rail cars Lowers cost, reduces risk 7

8 Make the port match the need Prince Rupert Prince Rupert BC Westview Terminal Plan Ridley 14,000t Westview 60,000t Make Terminal match the need Fibreco ,000 t storage invest 25 million ,000 t storage (=Handymax ship) Will handle 1.6 Mt in 2012 Future 60,000 t storage (=Panamax ship) Separate line for torrefied wood pellets Higher Volumes, Bigger Ships, Matching storage to ships /GJ Handymax Panamax Hold Full Full Storage/Handling Shipping

9 Integrate Supply Chain Wilmar International Oil palm cultivation Oilseed crushing Edible oils refining i Biodiesel manufacturing Branding/Merchandising Own fleet of 200 vessels Low cost due to economies of scale, integration, logistics advantages Sharing Existing Efficient Supply Chains Palm oil fill large ships, long distances 50 MT palm fruit bunches Multi pyrolysis oil plants side by side Ship oil to port in same supply chains as palm oil Lease space on Wilmar Ships Sharing the Coal Supply Chain Coal Capesize Torrefied Pellets Handymax 9

10 Shipping Torrefied Pellets with Coal Ship tonnes TJ /GJ 100% Torr. Pellets 1/4 Handymax 11, % Torr. Pellets Handymax 45,000 1, % Coal Capesize 150,000 5, % Coal, 10% Torr. Pellets Capesize 150,000 4, Exports Coal Trade Imports Mil. Tons % Australia % Indonesia % Russia % United States % South Africa % Colombia % Canada % Other Total 1,212.8 Mil. Tons % Japan % China % South Korea % India % Taiwan % Germany % Other Total 1,178.1 Even if there IS a biomass market (Europe? Korea?) it is often considered too risky for one investor to build a biomass plant in many regions. Solution? Invest in the whole supply chain! Spread risk among many investors Bio trade Equity Fund No Biomass supply Yes Biomass supply Plant Port Shipping Port Market Plant Port Shipping Port Market 10

11 Bio trade Equity Fund Objective Invest in whole supply chains to unlock stranded biomass, ship to markets, enable RE targets million (NZ ) 10 year fund (Invest 5 years, divest 5 years) Begin investing end of 2014 Possible portfolio 60% low risk countries Canada, Australia, New Zealand.. 20% medium risk Brazil, Malaysia... 20% EU and higher risk regions Bio trade Equity Fund 2013 Investment Capital Firms Bio-trade Fund- Fund Manager Partners? Project 1 Low risk Project 2 Low risk All at low risk Project Finders Project Developers Project 3 Low risk Bio trade Equity Fund Countries Pension Funds Mutual Funds cash flow Capital Firms Bio-trade Fund Project 1 Low risk Project 2 Low risk Project 3 Low risk Project 4 Med risk Project 5 Med risk Partners 11

12 Biomass trade routes Asia Bio trade Equity Fund Europe Bio trade Equity Fund Summary To reach RE targets must have a quantum increase in biomass trade, requiring better supply chains Infrastructure for existing exporting regions (Canada, US) Buy the ground supply chain (Pinnacle) Match port to volumes (Westview, Fibreco) Make new denser products (pyrolysis oil) Share existing efficient supply chains Torrefied wood with coal (larger ships, lower cost) Pyrolysis oil with palm oil Infrastructure for new biomass supply chains Biotrade Equity Fund will invest What I need from you Cost of NZ wood fibre Sustainable wood fibre near coal ports (torrefied pellets) Any fibre near ports (for pyrolysis oil Local partners Any biomass export project 12