Panel Discussion Investment Challenges. December 7, 2016 CETC

Transcription

1 Panel Discussion Investment Challenges December 7, 2016 CETC

2 Your Panel Tessellate Enerkem ALPAC Capital Power University of Alberta Tom Ogaranko Moderator David Lynch Geoff Clarke Sandy Fleming David Bressler

3 Investment Challenges Al-Pac Context Alberta s BioEconomy Engagement Panel Discussions Geoff Clarke, MBA, MF, RPF Program Lead, Bio-Product Development Business Development & Government Affairs Alberta-Pacific Forest Industries Inc. Dec 7 th, 2016 Clean Energy Technology Centre Drayton Valley, AB

4 Alberta forestry commercial Context Alberta s forest sector Large & sustainable fibre supplies Mandatory reforestation 3 rd largest manufacturing sector pulp, lumber, engineered wood Competitive challenges slow growing fibre, distance to tide water, US housing collapse, global competition 4

5 Alberta Pulp Sector Context 7 pulp mills 4 chemical and 3 mechanical mills printing & writing papers, tissue, personal care & hygiene products reduce costs & diversify markets green energy self-sufficient facilities improve products to maintain markets pursue new products and markets to diversify seeking high value market demand Cross sectoral solutions 5

6 About Alberta-Pacific Newest & largest single line Kraft pulpmill in North America ,738 km 2 boreal mixed wood forest, FSC certified since 2005 Al-Pac s Sustainable Harvest Levels 2.56 million m 3 /yr deciduous 786,000 m3/yr coniferous 400,000 bdt/yr forest residues Production Capacity: 640,000 ADMT/yr NBHK (85%) & NBSK (15%) 500,000 MW/yr of Renewable Power 3,000 tonnes/yr of Bio Methanol 1,100 Employees / Contractors $1.3 Billion Infrastructure $400 MM/sales

7 About Alberta-Pacific 7

8 2013 RISI, Inc. All Rights Reserved. North American Printing & Writing Demand Introduction of I-Pads with wireless data services Great Economic Recession

9 Al-Pac s Market Diversification Diversification within our traditional industry Sell market pulp to different market segments Diversify from declining commodity markets Improve our competitive position Reduce exposure to risk from: economic cycles and global competition 9

10 Al-Pac s Pulp Markets Then & Now Coated 44% Board 4% Tissue 6% Uncoated 35% Specialty 11% Coated 22% Uncoated 28% Board 6% Specialty 20% Tissue 24%

11 Al-Pac s Market Diversification Diversification into non-traditional markets Convert existing materials for non-traditional market segments Leverage emerging technologies to create disruptive materials Pulp Fibre Reinforced Thermoplastics BioMethanol I.E. Cellulosic NanoCrystals 11

12 Application Development Pipeline Likelihood of Success TRLs ideas How about...? TRLs technically feasible TRLs scaled up, technically sound promising economics TRL new applications commercialized /year 12

13 Dr. David Bressler Professor, Department of Agricultural, Food & Nutritional Science Executive Director, Biorefining Conversions Network

14 From Grande Prairie BSc: Cell Biotechnology (U of Alberta) Summers In-feed Team Weyerhaeuser G.P. PhD: Microbiology and Biotechnology (U of Alberta) Postdoc/Research Manager: Chemical Engineering (Syncrude) Faculty Position: Agricultural, Life and Environmental Sciences Major Programs in: Industry Process Optimization (Fermentation) Advanced Biofuels from Biomass Wood Resins and Adhesives Bioplastics Biobased Diluents & Solvents Hats that I wear: Professor / BCN Executive Director CSO for Forge Hydrocarbons Conversion Theme Co-lead for Biofuelnet Scientific Advisory Board Member for First Green Partners ($350M USA VC fund)

15 Source: NRCAN and Industry Canada

16 BCN projects focus on 3 themes: Byproducts Utilization Synthetic Biology Chemical Platforms Value-add Opportunities Biocatalysis & Fermentation Advanced Bioproducts

17 Byproducts Utilization and Value-Add Opportunities Strong Collaborations with Alberta Forestry Industry Mapping and Quantitation of Forestry Waste Streams Forest Ash Characterization & Utilization Tall Oils to Fuels Terpenes Lignin Chemistry Cellulose Nano- Crystals Massive opportunity to integrate with traditional resource industries in Alberta

18 Hydrocarbons from Lipids Simplified Process Flow 23

19 Process Development Scale-Up Scale-up, design and optimization of a 1L CSTR o o heated feed tank and pumping system rated 500 C and 5000 PSIG

20

21 Pathway to Commercialization Basic Research Applied Research L scale online 2006 First Patents Filed Initial License Full Patents Awarded 3 more patent families filed 2012 Recovered IP and Re-Licensed Tim Haig (Forge Hydrocarbons)

22 2013 WED & ALMA Pilot Funding 2013 Company Launch 2013 $5M Strategic Investment nd US patents awarded April K L/y Online 2015 SDTC Funding 2017? First Commercial Groundbreaking

23 Lessons Learned technology pipeline 1. Idea generation 2. Years of research (proof of concept) 3. File Patent (early and often) 4. 1 year to find partner 5. Negotiate IP cost coverage 6. Refine Technology 7. Patents awarded (3-5 years later) 8. Need Scale-up and Commercial investments total years... 23

24 Small vs. Large Corporate Partners Small: Better chance for entrepreneurial role Higher chance of snake oil Potential for greater time pressures Less technical support within company Company is also usually looking for funds Source: Photo 24

25 Small vs. Large Corporate Partners Large: Companies due diligence more intense Companies have expertise to contribute More likely to take advantage of unaware More likely to change focus/interest Greater resources to contribute - Especially to scale-up commercialization Source: Photo 25

26 Who should own what? Stage 1: Opportunity Identification $ Stage 2: Idea Generation (IP) $$$ Stage 3: Reduction to practice $$ Stage 4: Scale-up $$$$ Stage 5: Commercialization $$$$$$$... Source: Photo 26

27 Negotiable Returns 1. Outright payment (License fee) 2. Ownership Stake in Company 3. Further Research Investment 4. Royalty Stream (eg. $/unit produced) 5. Position in company (Consultant/ CSO) Source: Photo 27

28 Thank-You Questions? For further info, please contact: David Bressler 410 Agriculture Forestry Bldg. University of Alberta, Alberta, Canada. T6G 2P5 Tel# 1 (780)

29 Alberta s Bioeconomy Engagement Panel Discussions December 7, 2016 David Lynch General Manager, Research and Development Integrated solid waste management: Waste-to-Biofuels and Biochemicals

30 Enerkem: a global cleantech company WESTBURY DEMO EDMONTON 1 ST FULL SCALE FACILITY COMMERCIAL GROWTH SHERBROOKE LAB & PILOT VARENNES (QC) + INTERNATIONAL Pre-commercial phase Employs 200 people Beginning commercial phase (modular manufacturing) Raised over $400M in financing from lab to commercial stage Headquartered in Montreal Operates first full-scale facility in Edmonton (production ramp-up) Preparing for construction launch in Varennes in 2017 Developing projects abroad with key industrial partners, including AkzoNobel in the Netherlands Operates innovation centers in Sherbrooke and in Edmonton for new product development

31 An efficient carbon-recycling process 100k MT of RDF ~24 MM Liters per year of Jet & Diesel (60MM liters per year MeOH)

32 Energy Benefits of Enerkem facilities in Diversifies energy basket Environmental/Social Alberta Contributes to meeting provincial Renewable Fuel Standard Positions Alberta at the forefront of clean technology and advanced biofuels Creates synergies with petrochemical sector and research institutions Solves a waste problem and avoids methane emissions Reduces GHG emissions by ~ 60% when compared to gasoline when using MSW Can become a model for municipalities around the world

33 Value proposition for Alberta MLPY Diesel & Jet Feedstock supplier: Supplies 100, ,000 tons of waste feedstock per year (long-term contract) Suggests sites Enerkem: Invests approx. $100M to build, own and operate the biorefinery Converts Waste into 24 to 96 MLPY of biofuels / bio-chemicals Works with stakeholders to optimize waste handling and site selection Manages business risks incl. sale of final product Creates high-quality jobs: MLPY MeOH or EtOH 610 direct/indirect during construction 152 direct/indirect (permanent) during operation (for 1 X standard Enerkem system of 6 MMGPY Diesel / Jet) Generates $C65 M/year in net economic benefits in the region (for 1 X standard Enerkem system of 10 MMGPY)

34 Renewable chemicals for everyday use

35 Thank you For more information: David Lynch General Manager, Research and Development

36 From waste stream to value-add Establishing an Alberta platform for biofuels

37 Setting Context: Alberta Climate Leadership Plan Phase out coal-generated electricity by 2030 Replace coal generation with 5,000 MW of renewables, balance of natural gas by 2030 Implement a new carbon price on greenhouse gas emissions 37

38 Defining the initial opportunity Alberta mills produce enough wood residuals to replace ~10% of the coal used in power generation Forestry Industry Must find new ways to dispose of mill residuals following the shut down of beehive burners and other pressures Convert waste wood into value-added industries, local jobs and cleaner air. Rural Economies Seeking value-added industries that create local jobs 38 Electricity Generators Can achieve pre-2030 emission reductions by co-firing with biofuel, which displaces coal

39 Coal Power Generation in Alberta 6 Newest Units Built Between Cannot burn coal after Sub & 2 Super-Critical 400 or 450 megawatts Both Super-Critical Units Jointly Owned by Capital Power & TransAlta Each Unit Consumes ~1,500,000 million tonnes/year of coal Co-Firing focus is on Genesee 1&2 39

40 Advanced Pelletization Gasification Four fuel conversion options Critical to identify the optimal fuel source for each unit Types Steam Explosion Torrefaction Thermocatalytic Benefits Optimal transportation costs Potentially less capital investment at coal plant Energy density equal to or better than coal Water resistant (better for storage) Risks/Drawbacks High capital investment at biofuel plant Few co-firing projects operating on a sustained basis Benefits Optimal combustion Better handling of non-uniform fuels Risks/Drawbacks High capital investment must be done at the site of the generating station New technology Potential energy losses in fuel conversion 40 Presentation supplied in confidence, as provided by s.16 of the FOIP Act.

41 Four fuel conversion options Critical to identify the optimal fuel source for each unit White Wood Pelletization Solid Fuel Blending Benefits Fuel processing and logistics are well established Numerous market players Risks/Drawbacks Higher capital cost at coal plant Higher cost fuel due to processing Benefits Minimal capital investment Faster implementation Risks/Drawbacks Highest transportation costs Typically requires co-firing with coal 41

42 REALIZING THE OPPORTUNITY Choosing a Solution for Genesee 42

43 REALIZING THE OPPORTUNITY Technical findings Capital Power s research and testing has quantified the scope of the opportunity and narrowed the range of preferred fuel options Sub-critical coal boilers at Genesee 1 and 2 can be safely and reliably operated with up to 30% of the fuel supply coming from wood residuals, using solid fuel blending a. Capital Power is investigating the feasibility and most suitable technologies for higher co-firing rates. b. Additional work is required to determine if biomass could be safely and reliably used in supercritical boilers such as Genesee 3. 43

44 REALIZING THE OPPORTUNITY Technical findings CO 2 -equivalent reductions from co-firing are significant. For our planned project of 15%- 30% co-firing in Unit 1: At 15% co-firing in one 400MW unit, emissions reductions are: ~400,000 t/year reduction from coal use ~200,000 t/year CO 2 e reduction of wood stockpile methane A 15-30% co-firing project could be up and running by late 2017 or early 2018 Emission reductions from using biomass at a coal-fired plant are magnified because they displace actual coal use, whereas a stand-alone biomass plant is less efficient and would displace mostly gas-fired generation. Co-firing biomass at a coal plant results in ~70% more emissions reduction for electrical generation than a stand-alone biomass generation plant. 44

45 REALIZING THE OPPORTUNITY Economic and policy gaps Capital Power has made a request to the Government of Alberta Climate Change Office for a project-specific exemption to an emissions offset protocol Will apply to new ERA Methane Challenge Has applied for Federal NRCAN funding 45 Within 100km Within km Within km

46 Policy Considerations For further use of forest residuals beyond the initial Genesee Cofiring Project Possible Policy Considerations The government may wish to consider two additional elements for a large scale bio-energy program: A requirement that biomass fuel be used within Alberta. Recognition of benefits of use in existing coal facilities. Absent these elements, wood residuals may be exported or burned less efficiently in standalone facilities. In these scenarios, Alberta would lose an opportunity to immediately reduce in-province emissions, and make effective use of existing infrastructure and the communities that support existing infrastructure. 46

47 Power forward. Opportunity. Benefits. Sustainability. Opportunity for different industries to come together creating large-scale solutions Benefits & Sustainability contributes to the sustainability of mill operations creates new jobs in rural communities reduces pre-2030 emissions in Alberta by partly substituting for coal combustion Need to optimize fuel processing method based on available fuels, logistics and generator attributes an offset protocol to make an initial project economic and additional supports to move to further sources 47

48 1200, Street NW Edmonton, AB T5H 0E9 48

49 Discussion Tessellate Enerkem ALPAC Capital Power University of Alberta Tom Ogaranko Moderator David Lynch Geoff Clarke Sandy Fleming David Bressler