BANZ Webinar Oct 4, 2013 Douglas Bradley President, Climate Change Solutions 402 Third Avenue Ottawa, Ontario Canada K1S 2K7 phone 613.321 2303 email douglas.bradley@rogers.com web site www.climatechangesolutions.net 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
For Heat & Power? Mostly pellets Global wood pellet trade 2010 (Source: Lamers et al. 2012) Source: Lamers et al., RSER, 16(2012) 3176 3199 Pellet Imports EU27 Pellet Imports Jan Sept 2012 % Cumul % MT 1US 39 39 2.0 2Canada 29 68 1.5 3Russia 16 84 0.8 4Ukraine 4.8 89 0.2 5South Africa 1.9 91 0.1 6Australia 0.5 91 0.0 other 8.8 100 0.5 100 5.2 2
US South Pellets BC Canada Pellet Supply Chains East Canada Pellets 3
Pellet Demand 2010 20 (MT) 140 120 100 80 60 40 20 0 Biomass Demand in Europe MT p.a. 150 6 13 2006 2010 2015 2020 50 80 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 20 12 to 20 Transport to end user 2 to 10 2 to 10 Risk and profit 20+ 59 to 122* 34 to 77* * in these cases, the projects would not be viable 4
Make Denser Transportable Products Torrefied Pellets Heat Value GJ/t vs Density t/m 3 45 Heavy Oil 40 35 Char Ethanol 30 25 20 Wood Pellets Pyrolysis Oil 15 10 Wood Chips Torrefied Wood 5 0 0 0.2 0.4 0.6 0.8 1 1.2 1.4 World s Largest Pyrolysis Oil Plants Dynamotive West Lorne- 130tpd Start-up 2005 Ensyn Renfrew 100tpd Start-up 2004 Guelph- 200tpd Dynamotive Production Mar 2008 5
Pyrolysis Oil Renewable Products 1980 2000 Commercialization renewable food and chemicals 2004 2010 development of pyrolysis oil for heat and power 2013 power from diesel engines 2014 15 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
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
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 2005 18,000 t storage 2005 12 invest 25 million 2011 45,000 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 0.20 0.20 0.10 Shipping 0.50 0.45 0.35 0.70 0.65 0.45 8
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
Shipping Torrefied Pellets with Coal Ship tonnes TJ /GJ 100% Torr. Pellets 1/4 Handymax 11,250 313 0.35 100% Torr. Pellets Handymax 45,000 1,253 0.25 100% Coal Capesize 150,000 5,222 0.053 90% Coal, 10% Torr. Pellets Capesize 150,000 4,060 0.068 Exports Coal Trade Imports Mil. Tons % Australia 328.1 27.1% Indonesia 316.2 26.1% Russia 122.1 10.1% United States 83.2 6.9% South Africa 76.7 6.3% Colombia 76.4 6.3% Canada 36.9 3.0% Other 173.2 Total 1,212.8 Mil. Tons % Japan 206.7 17.5% China 195.1 16.6% South Korea 125.8 10.7% India 101.6 8.6% Taiwan 71.1 6.0% Germany 55.1 4.7% Other 422.7 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
Bio trade Equity Fund Objective Invest in whole supply chains to unlock stranded biomass, ship to markets, enable RE targets 150 200 million (NZ245 325) 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 2014 20 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
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