EU BIOMASS SUPPLY: POTENTIAL TO REPLACE GAS? WBA Workshop: Reducing dependence on Russian natural gas with bioenergy

Transcription

1 EU BIOMASS SUPPLY: POTENTIAL TO REPLACE GAS? WBA Workshop: Reducing dependence on Russian natural gas with bioenergy Silvio Mergner, Pöyry Management Consulting 12 May 2014

2 AGENDA 1. Pöyry intro 2. The situation: EU biomass market complexity 3. Energy and natural gas market dynamics 4. EU biomass supply estimation and mobilisation barriers 5. Conclusions EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 2

3 PÖYRY S BUSINESS SECTORS Energy Forest Industry Chemicals & Biorefining Mining & Metals Transportation Water EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 3

4 SERVICES FOR CLIENT S ENTIRE BUSINESS LIFECYCLE Strategic Advisory Engineering Services Project Implementation Operations Support Management Consulting Technical Consulting Site Supervision Operational Improvement Operational Excellence Conceptual Design Project / Construction Management O&M Management Basic Engineering EPCM Outsourced Operations Detailed Engineering EPS/EPC EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 4

5 BIOMASS SUPPLY IN THE EU: A COMPLEX ISSUE (1/2) Many feedstocks, processes and bioproducts Value added Bio-CHP Torrefied pellets Biodiesel Bio-based intermediates Bio-based specialty chemicals Agro Feedstock Wood Waste Pellets Ethanol Biobased platform chemicals Biobased materials Advanced biobased materials from carbon fibres onwards EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 5

6 BIOMASS SUPPLY IN THE EU: A COMPLEX ISSUE (2/2) Large numbers of stakeholders and development goals affect EU biomass markets Stable energy supply Resource-efficiency Resource owners Environment Biobased products Consumer Transport Innovation Industry.and many more EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 6

7 EUROPE S ENERGY POLICY CHALLENGES The EU energy policy challenge is to take into account the competitiveness, security of energy supply and emission reductions all at the same time Emissions reduction Security of supply Cost for economy Price of gas proportional to US shale gas price (2014) 1 Imports Gas 65% Oil 85% x2 x3 EU 2020 & 2030 Climate and Energy Policy EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 7

8 EU NATURAL GAS IMPORTS: CORE COUNTRIES TO FOCUS ON Imports of natural gas in the EU are dominated by five countries: Italy, Germany, France, the UK, and Spain; import dependency in general is large Net imports of natural gas (Mtoe) (%) Import dependency Net export Net import Rest of EU Spain 34 United Kingdom France Italy Germany Top five importers account for >80%: net import of 249 Mtoe in CZ LV FRANCE SK AT SPAIN PT LT BE EL FI SE EE LU SI IE ITALY GERMANY BG UNITED KINGDOM HU PL RO HR DK NL source: Eurostat 103 EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 8

9 GAS MARKET DYNAMICS: IMPACT OF SHALE GAS Shale gas production could have a significant impact on the European economy and energy system; Without EU28 additional substitution or reductions in gas demand, import dependency may increase further No shale gas in EU Some shale Shale boom 100 (%) (%) (%) LNG North Africa Norway Russia Unconventional Conventional Source: Pöyry EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 9

10 REALISTIC BIOMASS SUPPLY PROJECTION: HOW? Realistic potential must consider relevant constraints Technical potential Scenario-based assumptions Upper limit Degree of difficulty in estimating? LOW Environmental constraints Environmental policy & legal framework Certification standards (e.g. FSC) LOW - MEDIUM Practical constraints Production & logistics capacity Ownership and sector behaviour Reliable statistics & transparency HIGH Commercial constraints Cost of production Cost of supply Economics of consumption HIGH EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 10

11 OUTLOOK: EU BIOMASS SUPPLY AND DEMAND 2020 / 2030 Views on the EU biomass supply potential going forward vary widely; how much of the potential can be supplied sustainably from domestic sources, at what price? EU Biomass Supply and Demand (Mtoe) Supply NREAP (2020) Waste 110 Agriculture Lines represent supply potentials (range) identified in select studies (EEA, IE, BTG) Forestry 211 Demand Max supply Min supply Combined demand (primary energy)* Combined biomass consumption in EU 250 Mtoe by 2030 (WBA position paper) Sector studies address EU biomass supply potentials: 90 to 340 Mtoe Questions How big is the gap / surplus really? Which technology mix is best to promote within a 2030 policy target? * WBA position paper (5/2014): The future contribution of Bioenergy to the European Energy System EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 11

12 ADDITIONAL BIOMASS SUPPLY IN THE EU: IS THIS DOABLE? Sustainable supply potential in European forests is growing; for a realistic picture on biomass availability three main questions need to be answered 1) Are statistics reliable? 2) Can the surplus be mobilised directly? 3) How will industrial processing capacity develop, impacting cascaded use? EU28 forest growing stock Mtoe equivalent EU28 removals vs. increment Mtoe equivalent ,1% increment +0,5% removal source: Eurostat; calculations by Pöyry EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 12

13 WBA POSITION PAPER: EU BIOMASS SUPPLY INCREASE The current policy, legal and market situation in the EU is not promoting an increased use of biomass as formulated by WBA FORESTS AGRICULTURE WASTE IMPORTS WBA position 22 Mtoe 19 Mtoe (by-products) 40 Mtoe (energy crops) 10 Mtoe 22 Mtoe (pellets) 12 Mtoe (liquid fuels) Barriers Fragmented ownership Biomass not driving forest management! Energy crops often unattractive for farmers Fragmented supply Only few really! Lower demand from heat / power Supply capacity not established Funding limited Pöyry Significant share of biomass supply increase at risk to materialise under current policy, legal and market conditions EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 13

14 THE COST OF BIOMASS A realistic view on cost of biomass supply chains is key to mobilise 1. Untapped domestic supply potential 2. Import potential STEP Transport (road, rail, ship) Refining (Chips/Bales/ Pellets) Biomass at the source (cellulosic) DRIVERS Distance Bulk density Transport mode Refining process Economies of scale Energy & labour cost Crop mgmt & yields Harvesting efficiency Market forces COST RANGE (EUR/odt) (0) EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 14

15 BIOMASS CASCADE AND MARKET COMPLEXITY Any influence (e.g. subsidies) in the market will affect other streams and shift powers: Opposition by key consumers may be strong! SUPPLY UTILISATION CASCADE END-USE Sawnwood Pulp & Paper Sawlogs & Veneerlogs Panels SUSTAINABLE ANNUAL SUPPLY (FORESTRY) Pulplogs & other roundwood Harvesting Residues Waste Wood Un-mobilised supply Sawmill Residues suitable assortments Other assortments Household Heating Pellets Energy Un-mobilised EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 15

16 EXAMPLE: THEORETICAL BIOMASS IMPORT POTENTIAL Even tight emissions savings targets leave room for a substantial (theoretical!) biomass import potential; how will the regional competitive landscape develop? Maximum distances to achieve CO 2 emissions savings limit Orange: Raw biomass Blue: Refined biomass Biomass supply potential within specified emissions (Mtoe) EU Above threshold Within threshold Note: outlook for all biomass sources; emissions savings threshold set to >60% against current fossil fuel comparator (savings 200kg CO 2eq /MWh); source and calculations: Pöyry 0 raw refined EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 16

17 SUMMARY AND CONCLUSIONS Whatever the potential.how do you get it moving? Biomass supply EU biomass: not easily measurable / potential to increase / requires significant imports Complex matrix of stakeholders Challenges Financial incentives & stable framework: right balance challenging Replacement of gas: allocation in highest value segment needed Realising the potential: Mobilisation of untapped biomass Conclusions EU commitment to raise domestic biomass supply pre-requisite SUPPLY CONSTRAINT Trust in demand development necessary to build import chains DEMAND CONSTRAINT EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 17

18 HUGE LESSONS LEARNT FROM THE PAST! HISTORY TODAY sources: Pöyry EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 18

19 THANK YOU! Contact details: Name: Silvio Mergner Mail: Phone: