Competitiveness of conventional and advanced biofuels Daniela Thrän, Markus Millinger, Stefan Majer

Transcription

1 Competitiveness of conventional and advanced biofuels Daniela Thrän, Markus Millinger, Stefan Majer Sustainable First and Second Generation Bioethanol for Europe: Opportunities for People, Planet and Profit International Conference, 26 Sep. 2017, Brussels

2 BACKGROUND Biofuels Production and Use Total biofuels volume and trade has been stabilised Page 2

3 BACKGROUND RED recast Transport: Cap for conventional fuels from agricultural biomass (Art. 7) The maximum contribution of conventional fuels is limited to 7% and shall be reduced (in a stepwise approach) to 3.8% until ,0% 6,7% 6,4% 6,1% 5,8% 5,4% 5,0% 4,6% 4,2% 3,8% Mandatory, increasing targets for advanced fuels The contribution of advanced fuels shall be increased from 1.5% in 2021 to 6.8% (with a minimum share of 5,3% advanced biofuels) in Page 3

4 BACKGROUND Expectationon Future Mobility Transport sector emits 20% of e.g. German GHG emissions Biofuels reduce GHG impact today (.g. 5 Mt CO2eq in Germany 2016) Biofuels will also reduce GHG impact until e.g. electric vehicles take over Costs of biofuels are crucial Better understanding of competiveness of different biofuels is key Page 4

5 BACKGROUND Biomass Potentials in Potenzial in EJ a Potenzial in EJ a Jahr und Studie Jahr und Studie Min Mi elwert Max FW Min FW Mittelwert FW Max Potenzial in EJ a Potenzial in EJ a Jahr und Studie Jahr und Studie E Min E Mittelwert E Max R Min R Mittelwert R Max Uncertainties in energy crop potentials lead to uncertainties in future biomass prices Page 5

6 BACKGROUND Advanced Biofuels Advanced lignofuels vs conventional: + potentially less food/fuel, GHG & LUC (expected) + higher potential and better economics (expected) Not yet in the market: large uncertainties on all parameters 3x FT diesel investment and production cost uncertainty Biomass usage is a complex field connected to many sectors, with trade offs: Economic: investment vs feedstock cost Environmental: land use, LUC, GHG, etc. Scenario modelling of biofuel futures necessary to depict complexity and highlight uncertainties 4x Haarlemmer, et.al.. Second generation BtL type biofuels a production cost analysis. Energy & Environmental Science, 5(9):8445, ISSN doi: /c2ee21750c. Page 6

7 APPROACH 1. Long term policy strategies come into practice by day to day investors decisions 2. Assuming the biofuels sector as a level playing field we wanted to know which biofuel option will be realised if a country decides for increasing biofuels utilisation 3. We include R&D effort (technical learning) and higher prices for GHG emission certificates as political elements to govern the system 4. We considered dynamics in the agricultural sector (crop selection based on scenarios for feedstock costs) Page 7

8 APPROACH Biofuels Options Included Biofuel Feedstock Process Biodiesel Rape seed Transesterification Bioethanol Sugar beet Fermentation Biomethane Maize (+ manure) FT-Diesel ( BtL ) Anaerobic Digestion Synthetic Natural Gasification Woody Gas (bio-sng) biomass Lignoethanol Pre-treatment + fermentation Data: investment cost, O&M, input output, conversion efficiency, learning rate, feedstock costs Focus on for purpose energy crops BTL and LignoEtOH similar data, latter higher investment BTL proxy in the results Bioethanol from grains due to high feedstock costs excluded pre modelling Page 8

9 METHOD BENSIM (BioENergy SImulationModel) Myopic least cost simulation Technological learning Matlab based Bottom up German frame condition (biofuel demand: PJ/a) Biomass potential available for modelling (historic*) Biomass already used for bionenergy production (historic*) Biomass potential available for modelling Biomass already used for bionenergy production MC system MC system TC MC Capacity Tech 1 BIOFUEL TARGET 1. If TC tech < MC system Investment until equilibrium 2. Production in merit order 3. Learning effect Investment cost reductions PJ Page 9

10 METHOD ESTIMATING POTENTIAL BIOMASS PRICE DEVELOPMENTS At what price does it make sense for farmers to switch to energy crops? Assumed development for benchmark feedstock (wheat) Other feedstocks to achieve same revenue as benchmark per hectare minimum feedstock price developments Risk considerations for perennials not included Maize Sugar beet Rape seed Poplar Willow Miscanthus Wheat Page 10

11 RESULTS All fuels included Liquid fuels only Constant wheat price Wheat price +2%/year Wheat price +4%/year Diesel alternatives not competitive! Quotas not most costefficient biomass use At higher feedstock cost increases, land use efficiency increasingly important Advanced biofuels not better than some conventional EtOH from sugar beet most competitive in all cases, Biomethane at higher feedstock costs Feedstock prices increasing Page 11

12 RESULTS Of advanced fuels, Bio SNG significantly more competitive than BTL orlignoetoh Feedstock costs are most important driver inhibits investment Technological learning plays a small role (efficiency improvements more important) Also GHG emission prices will play a role if there is a wide spread between the biofuels (e.g. iluc debate) At higher feedstock cost developments, land use becomes key Maize based biomethane long term most competitive Page 12

13 DISCUSSION The BENSIM model makes it possible to include a multitude of aspects into one integrated scenario assessment with extensive sensitivity analsis. Work in progress on e.g. GHG abatement, longterm optimization, end use scenarios, EU level and electrofuels. Several challenges / possible barriers for a transition to advanced fuels have to be considered additionally: Feedstock transportability ( flexible crops ) Efforts and uncertainties for market introduction of new technologies Gas vehicle market Perennials Risk for farmers Page 13

14 CONCLUSIONS AND OUTLOOK The choice of (bio)fuels is only one uncertainty of future transport systems. To use their potental for GHG emssion reduction we conclude: Regarding the biomass: Biofuels from food crops (sugar and maize) are cost competitive also in the long run Regarding the biofuel types: Gaseous fuels are advantageous if advanced fuels are required (SNG) or at high feedstock cost developments (biomethane) Regarding the actual markets: Diesel alternatives not competitive quotas do not lead to most cost efficient result Regarding the uncertainties: Focusing policy on high yielding fuels decreases cost uncertainty But total GHG Abatement and ecology needs to be taken into account! Page 14

15 THANK YOU! References: EU (2016), Proposal for a directive of the European Parliament and of the council amending Directive 2010/31/EU on the promotion of the use of energy from renewable sources (recast). COM/2016/0767 final/2 2016/0382 (COD). Haarlemmer, et.al. (2012). Second generation BtL type biofuels a production cost analysis. Energy & Environmental Science, 5(9):8445, ISSN doi: /c2ee21750c. Millinger, M., Thrän, D. (2016): Biomass price developments inhibit biofuel investments and research in Germany: The crucial future role of high yields. Journal of Cleaner Production. Millinger, M., Ponitka, J., Arendt, O., Thrän, D. (2017): Competitiveness of advanced and conventional biofuels: Results from least cost modelling of biofuel competition in Germany. Energy Policy. 107, Naumann, K.; Oehmichen, K.; Remmele, E.; Thuneke, K.; Schröder, J.; Zeymer, M.; Zech, K.; Müller Langer, F. (2016): Monitoring Biokraftstoffsektor. 3. überarbeitete und erweiterte Auflage. Leipzig: DBFZ (DBFZ Report Nr. 11). ISBN Thrän, D., Schaldach, R., Millinger, M., Wolf, V., Arendt, O., Ponitka, J., Gärtner, S., Rettenmaier, N., Hennenberg, K., Schüngel, J., (2016). The MILESTONES modeling framework: An integrated analysis of national bioenergy strategies and their global environmental impacts. Environ. Modell. Softw. 86, 14 Contact: Daniela.Thraen@ufz.de Markus.Millinger@ufz.de Stefan.Majer@dbfz.de Page 15