International markets for advanced biofuels - recent trends, outlook and main uncertainties

Transcription

1 Copernicus Institute of Sustainable Development International markets for advanced biofuels - recent trends, outlook and main uncertainties Ric Hoefnagels, Martin Junginger Utrecht university 1 Skog & Tre Konferansen 1 June 2018

2 Contents Global EU28 Nordic countries Global biofuel production And future outlook Mid-term biofuel demand scenarios Impact of RED II Short-term opportunities Case study Sweden 2

3 Energy content (Mtoe) Global: biofuel production Historical Forecast 2DS target Ethanol Biodiesel Advanced ethanol Advanced biodiesel International Energy Agency (2017), Tracking Clean Energy Progress 2017, OECD/IEA, Paris 3

4 bln liters / y bln liters / y bln liters / y bln liters / y bln liters / y bln liters / y Global: biofuel production and key production regions United States EU China World Ethanol Biodiesel and HVO Brazil US: production expected to stabalize Brazil: commited to 18% share by 2030 (50 bln L) EU: RED II Asia: policy support for domestic biofuels Indonesia /Malaysia Data: REN21 ( reports)

5 Biofuel demand (billion liters) Global: future biofuel demand could still increase substantially : % increase compared to 2016 Scenarios of liquid biofuel demand Source: IRENA (2016) INNOVATION OUTLOOK ADVANCED LIQUID BIOFUELS Actual production (2016) BP Energy Outlook (2013) Exxon Energy Outlook (2015) IEA ETP 4DS (2014) IRENA Reference Case (2016) IRENA Remap (2016) WEO 450 (2012) Biofuel WEO New Policy (2012) Global projections provide limited insights in biofuel trade flows, technology development and regional (support) policies

6 EU: a revised energy directive RED-I RED-II Targets 10% biofuels in 2020, applying to each MS 0.5% voluntary target advanced biofuels (proposal) % for cat. 1-5 fuels, applying EU-wide Subtarget: % for cat-1 (advanced) biofuels) Caps 7% on food-based biofuels % for cat-6 (food-based) biofuels 1.7% for cat-2 fuels Sectors (In the nominator) Road and rail Road, rail Aviation and marine with a 1.2 multiplier GHG threshold - 50% - 60% post 2015 installations Fossil fuel: 83.8 CO 2eq /MJ -50% for pre-2015, -60% for post % for post 2021 Fossil fuel: 94 CO2eq/MJ (iluc factors remain the same) 6

7 EU: Bioenergy landscape (2015) AEBIOM

8 Biofuel use (PJ/yr) EU: Biofuel use projections in transport sector Marine and aviation biofuels driven by multiplier and cost of fossil fuels (jet-a, marine gasoil) Road Marine Aviation Implications in PJ ( Mt) RJF 6-9% of total EU jet fuel consumption Mt CO2-eq reductions Additional cost RJF over B over 10 years /departing intra-eu passenger Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary 8

9 Biofuel use (PJ/yr) EU: The multiplier mechanism affects the distribution among end use sectors and the total biofuel production Biofuel use projections in EU transport sector Multiplier RJF 1.2 Multiplier RJF Marine Aviation 200 Road Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary 9

10 EU: biofuel imports could still grow substantially Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary Biofuel imports could increase up to 25% of gross inland consumption 10

11 EU: Biofuel mix by conversion technology and feedstock type Biofuel volume (PJ) HTL Pyrolysis BioLNG ATJ FT Biomethane for transport HEFA Ethanol (advanced) Ethanol (food-based) FAME LSLD LSHD HSLD HSHD Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary 11

12 Nordic countries: Case study Sweden The case : optimize biofuel supply chain in Sweden Feedstock Upstream transport Conversion Downstream transport and handling Total biofuel production cost 12 De Jong et al. (2017)

13 SE: Smart site selection and economies of scale Biomass cost, supply and competing demand Production cost Supply Competing demand Cheap Expensive Low supply High supply High demand Low demand 13 Trade-off: feedstock cost-supply vs competing demand

14 !( 40-60PJin 60-80PJin!( PJin!( SE: Integration with existing industries Natural gas grid (centralized) $+ <10 PJin $ PJin $ PJin $ PJin $ PJin $ PJin Natural gas grid (upgrading only)!( <10 PJin 14 Refineries Pulp mill Sawmills!( PJin!( PJin!( 40-60PJin!( 60-80PJin!( PJin Pulp mill (HTL only) ") <10 PJin ") PJin ") PJin ") 40-60PJin ") 60-80PJin ") PJin Refinery (centralized) $+ <10 PJin $ PJin $ PJin $ PJin $ PJin $ PJin Refinery (upgrading only)!( <10 PJin!( PJin!( PJin!( 40-60PJin 60-80PJin!( Refineries Trade-off: integration benefits vs location PJin

15 SE: Results for different demand scenarios Fossil fuel benchmark 15

16 16 #* PJin 60-80PJin #* PJin! Legend SE: Results #* for different 40-60PJin PJin ConversionLocations <all #*! demand 60-80PJin other values> Blending terminal! <10 PJin #* #* <10 PJin PJin! PJin scenarios #* PJin District heating PJininsertion point (HTL) #* PJin ")! 40-60PJin <10 #* 60-80PJin! 40-60PJin ") PJin ") PJin #* 1 PJ a -1 ") PJin! 40-60PJin PJin #* 60-80PJin ") Blending terminal #* <10 PJin ") ") <10 PJin PJin ") PJin #* PJin #* ") PJin PJin Forestry terminal (HTL only) #* ") #* 40-60PJin 40-60PJin ") <10 PJin ") PJin 60-80PJin Legend60-80PJin ") ") PJin ConversionLocations PJin #* ") 40-60PJin <all ") other PJin values> District heating insertion point (HTL) 60-80PJin ")! <10 PJin Forestry terminal (HTL only) <10 PJin PJin ") ")! < PJin PJin PJin PJin PJin PJin!") PJin LNG ") terminal 40-60PJin (centralized) 60-80PJin ") $+ <10 PJin!") 40-60PJin $ PJin $+ ") 40-60PJin 60-80PJin PJin 60-80PJin PJin ")! $ PJin PJin ") Forestry 60-80PJin terminal (HTL only) $ PJin! LNG terminal (centralized) ") <10 PJin ") PJin PJin $+ $+ <10 PJin Blending $ terminal PJin ") PJin #* $ <10 PJin LNG terminal ") 40-60PJin (upgrading only) 60-80PJin ")!( <10 PJin #* $ PJin PJin!( PJin #* PJin 60-80PJin!( PJin $ PJin ")!( 40-60PJin HTL plant #* $ PJin PJin Centralized plant LNG!( terminal 60-80PJin 60-80PJin (centralized) #* LNG terminal (upgrading only) $+ <10 PJin $ PJin!(!( <10 PJin Hydroprocessing plant!( PJin $+ #* Blending terminal PJin!( PJin Natural gas $ PJin grid (centralized) District!( 40-60PJin heating insertion point (HTL) $+ <10 PJin ") <10 PJin $ PJin PJin $+!( PJin ") PJin PJin $+!( 40-60PJin PJin PJin ") LNG terminal 60-80PJin (upgrading only) $+ Natural gas grid (centralized)!( <10 PJin ") 40-60PJin 50 PJ a PJ a -1 District heating insertion point (HTL)

17 Are (advanced) biofuels needed? The Economist, Aug 12th

18 Conclusions Low carbon liquid transportation will be needed still for many decades to meet long term climate targets And play a central role in sectors that have little alternatives for decarbonisaton on the longer term including heavy duty transport, aviation and shipping Upscaling of advanced biofuel production needs to be accelerated substantially Smart site selection, supply chain design and integration with existing industries can further improve its economic feasibility 18

19 Thank you for your attention Contact Details: Ric Hoefnagels Martin Junginger Copernicus Institute Energy & Resources Utrecht University 19

20 Extra slides 20

21 Advanced biofuels PtX synthetic fuels Advanced biofuels and other liquid renewable fuels Source: ADVANCEFUEL ( 21

22 Planned advanced biofuel capacity in the EU to 2020 Production capacity is expected to be close to 0.8 Mtoe (35 PJ/a) with a total investment of billion Source: Baker et al (European Commission, DG R&I) 22

23 Declining global investments in biofuels USD bln/ year 30 Conventional Advanced $ Source: IRENA (2016) INNOVATION OUTLOOK ADVANCED LIQUID BIOFUELS 23

24 Global market penetration of BEH & PHEV 24

25 A European bioenergy model was used to study the effect of the Winter Package on biofuels in the EU28 Final Consumption Demand for biomass Input data Techno-economic and LCA data Biomass potentials RED Winter package Technological learning RESolve-Biomass model Cost optimization model for EU-28 from developed by Energy Centre Netherlands (ECN) Deployment scenarios Low/high biomass supply (LS / HS) Low/high biomass demand (LD / HD) Outcome: Feedstock/technology portfolio and associated costs Time Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary 25

26 Feedstock supply cost 26 Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary

27 Additional cost: renewable jet fuels (RJF) 27 Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary

28 EU: Biofuel mix by end use sector Biofuel volume (PJ) 800 Aviation 700 Aviation UCOAF*-based 600 Aviation Advanced biofuels Marine Marine UCOAF*-based Marine Advanced biofuels Marine Food-based 300 Road Road UCOAF*-based Road Advanced biofuels Road Food-based *UCOAF = Used cooking oil and animal fat LSLD LSHD HSLD HSHD Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary 28

29 29

30 Infeasible Infeasible Biofuel volume (PJ) Biofuel mix by end use sector Sensitivity scenarios: technology development Aviation Aviation UCOAF*-based Aviation Advanced biofuels Marine Marine UCOAF*-based Marine Advanced biofuels Marine Food-based Road Road UCOAF*-based Road Advanced biofuels Road Food-based *UCOAF = Used cooking oil and animal fat LSLD (base) Low Tech High tech Forthcoming publication: De Jong et al. (2018), please do not cite, as preliminary 30

31 31

32 Net import of biofuels (Mtoe/y) Share of gross inland consumption Development of net imports of biofuel to the EU 3.00 EU28 25% Ethanol Others % Ethanol CIS and Ukraine Ethanol Africa 2.00 Ethanol Asia 15% Ethanol North America 1.50 Ethanol South America % Biodiesel Others Biodiesel CIS and Ukraine Biodiesel Africa % Biodiesel Asia Biodiesel North America Biodiesel South America % Share of net imported biofuels Data: EUROSTAT (2017), F.O. Lichts World Ethanol & Biofuels Report (2016) Excluding imports of vegetable oils 32

33 5 strategies to reduce the cost of biofuel production 1 Smart site selection 2 Upscaling! 3 Intermodal transport 4 Pre-treatment: distributed supply chains 5 Integration with existing industries 33

34 2 Upscaling! Oil industry odz. Bigger is better Biofuel There s a trade-off 34 Trade-off: scale vs transport cost

35 3 Intermodal transport 35

36 4 Distributed supply chains Centralized supply chain Distributed supply chain (Linear type) Distributed supply chain (Hub-and-spoke type) Lower CAPEX/OPEX, higher upstream transportation cost Higher CAPEX/OPEX, lower upstream transportation cost Higher CAPEX/OPEX, lower upstream transportation cost Feedstock Pre-treatment unit Upgrading unit Storage terminal 36 Trade-off: conversion cost vs transport cost

37 5 strategies to reduce the cost of biofuel production Which one dominates? 1 Smart site selection 2 Upscaling! 3 Intermodal transport 4 Pre-treatment: distributed supply chains 5 Integration with existing industries 37

38 5 strategies to reduce the cost of biofuel production Which one dominates? 1 Smart site selection very important + 2 Upscaling! cost reduction of 0-12% (increasing with biofuel production level) 3 Intermodal transport cost reduction of 0-6% (increasing with biofuel production level) + 4 Pre-treatment: distributed supply chains cost reduction of <1% 5 Integration with existing industries cost reduction of 1-10%, decreasing with biofuel production level 38

39 Conclusions Sweden case 1. Even with all 5 cost strategies, biofuel is more expensive than fossil fuel (in this spatiotemporal context for this technology) 2. Economies of scale provide the largest cost benefits (although upscaling for this technology is yet to be proven) 3. Distributed supply chain designs are only preferred when transport distance is high or biomass density is low 39

40 Biofuel production capacity (Million litres p.a.) Planned and operational capacity of advanced biofuel plants Current installed production capacity for advanced biofuels: ~1 billion liters (<1% of total biofuel production) ATJ Gasification + syngas fermentation Other Enzymatic hydrolysis + fermentation Gasification + alcohol synthesis Gasification + FT synthesis Planned Operational / under construction Source: IRENA (2016) INNOVATION OUTLOOK ADVANCED LIQUID BIOFUELS 40

41 Biofuel production capacity (Million litres p.a.) Planned and operational capacity of advanced biofuel plants ATJ Gasification + syngas fermentation Other Enzymatic hydrolysis + fermentation Gasification + alcohol synthesis Gasification + FT synthesis Planned Operat ional / under const ruction Swedish Biofuels AB, Sweden (Capacity: 6 ML/y), waste gas fermentation (Lanzatech) combined with conversion of alcohols into drop-in jet fuels (Swedish Biofuels) 41 Source: IRENA (2016)

42 Biofuel production capacity (Million litres p.a.) Planned and operational capacity of advanced biofuel plants ATJ Gasification + syngas fermentation Other Enzymatic hydrolysis + fermentation Gasification + alcohol synthesis Gasification + FT synthesis Planned Operat ional / under const ruction INEOS Bio, US (Capacity: 30 ML/y). Palm fronds and MSW to ethanol. 42 Source: IRENA (2016)

43 Biofuel production capacity (Million litres p.a.) Planned and operational capacity of advanced biofuel plants ATJ Gasification + syngas fermentation Other Enzymatic hydrolysis + fermentation Gasification + alcohol synthesis Gasification + FT synthesis Planned Operat ional / under const ruction BioMCN, Netherlands (Capacity: 252 ML/y). Crude glycerine, biomethane to methanol 43 Source: IRENA (2016)

44 Biofuel production capacity (Million litres p.a.) Planned and operational capacity of advanced biofuel plants ATJ Gasification + syngas fermentation Other Enzymatic hydrolysis + fermentation Gasification + alcohol synthesis Gasification + FT synthesis Planned Operat ional / under const ruction Operational capacity mainly in the US (242 ML/y) including Dupont (114 ML/y) and POET-DSM (76 ML/y) Operational capacity in Europe is 95 ML/a including Beta Renewables (Italy, 51 ML/y) and Borregaard (Norway, 20 ML/y) 44 Source: IRENA (2016)

45 Biofuel production capacity (Million litres p.a.) Planned and operational capacity of advanced biofuel plants ATJ Gasification + syngas fermentation Other Enzymatic hydrolysis + fermentation Gasification + alcohol synthesis Gasification + FT synthesis Planned Operat ional / under const ruction Operational capacity: mainly Enerkem (Canada, 34 ML/y) Planned capacity: half of capacity is Woodspirit (Netherlands, 464 ML/a), by BioMCN. The project is officially cancelled. 45 Source: IRENA (2016)

46 Biofuel production capacity (Million litres p.a.) Planned and operational capacity of advanced biofuel plants ATJ Gasification + syngas fermentation Other Enzymatic hydrolysis + fermentation Gasification + alcohol synthesis Gasification + FT synthesis Planned Operat ional / under const ruction Planned capacity in the US is in advanced stage: Fulcrum Biofuels (33 ML/a), Red Rock Biofuels (61 ML/a) Planned capacity in Europe is more uncertain: UPM Stracel BTL (France, 108 ML/y) 46 Source: IRENA (2016)