Biomass and Crops An Industry Perspective

Biomass and Crops An Industry Perspective EuroScience Open Forum - Barcelona, July 21, 2008 Markwart Kunz

Content Brief introduction incl. remarks about Südzucker Bio-mass for food, feed and energy Acreage, options and limitations Yield Improvements, stabilization and optimization Remarks on plant biotech expectations Meat production, GHG emissions and feed usage Bio-energy comparison of different uses Conclusions ESOF, 21-07-2008 2

Most important challenge of mankind will be Feeding the world and Solving the energy problem Depletion of today s resources e. g. oil, gas, coal and phosphate AND Global warming because of greenhouse gas emissions The only long-term solution is the increased usage of renewable resources. ESOF, 21-07-2008 3

Südzucker Group: Overview Globally operating European food group Segments: sugar, special products, fruit 18,600 employees 5.8 billion annual turnover Sugar production: 4.6 million tonnes Leader on the European sugar market Member of German MDAX ESOF, 21-07-2008

Agricultural raw materials Sugar beet Maize Potatoes Rice Products Sucrose Invert syrup Fructose (Glucose) Palatinose Isomalt Burnt sugar Starch Starch derivatives Starch hydrolysates Chicory Inulin Fructooligosaccharides Fructose syrups Sugar beet Maize Wheat, barley, triticale Fruit Ethanol (ferm.) Fruit juice concentrates Fruit preparations ESOF, 21-07-2008 5

Fertilizer recommendation system in Südzucker AG 1. Soil sampling 2. Soil analysis by means of EUF kg ha -1 300 250 200 150 100 50 0 5. Results: - high yield - good quality - low residual NO 3 1980 1982 K2O P2O5 N 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 3. Fertilizer recommendation 4. Group advisory in field and room ESOF, 21-07-2008 6

Renewable energies at Südzucker Bio-ethanol Bio-fuel Bio-gas Inhouse use since 25 years Project: grid supply Agrarian by-products: bran, straw (Process energy, electricity by co-generation) Wood from short rotation forestry (co-firing) Process energy, electricity by co-generation ESOF, 21-07-2008 7

Common sense Energy savings have highest priority Increased efficiency e. g. in industry is inevitable Exchange through renewables has to be brought forward ESOF, 21-07-2008 8

Energy needs for different purposes We need energy for different purposes Heating and cooling Production Transportation Electricity (different purposes) However, we are used to have energy supply on demand. Not alle renewables are staple energies (solar, wind). ESOF, 21-07-2008 9

Trend of CO 2 -emissions in Germany in different sectors 450 400 350 300 Mn t CO 2 415 362 1990 2005 250 216 200 150 100 166 162 164 155 103 85 78 50 0 Energy industry incl. electricity Households and small-user Traffic Industry in general Industrial processes Source: Umweltbundesamt, Nationale Trendtabellen für die deutsche Berichterstattung atmosphärischer Emissionen seit 1990 ESOF, 21-07-2008 10

In a country like Germany Today, 8.5 % of end energy usage is based on renewables of which two thirds are based on bio-mass. In future (2020), exp. share of end energy usage will be 18 % of which two thirds will be based on bio-mass. *) This means that due to the increasing share of renewables in total energy consumption an important additional bio-mass production will be needed. *) acc. to BMU ESOF, 21-07-2008 11

Demand of bio-mass Additional demand can be met only by industrial production of bio-mass through Better usage of today s acreage Usage of potential acreage ESOF, 21-07-2008 13

Usage of potential acreage World 1,245 260 2,541 Source: Global Argro-ecological Assessment for Agriculture in the 21st Century, IIASA and FAO 2002 http://www.iiasa.ac.at/research/luc/saez/index.html ESOF, 21-07-2008 14

Regions for sustainable land use (without irrigation, without forest use) Source: Global Agro-ecological Assessment for Agriculture in the 21st Century, IIASA and FAO 2002 ESOF, 21-07-2008 15 http://www.iiasa.ac.at/research/luc/saez/index.html

Impact of land use changes 100 GHG savings in % GHG savings of Brazilian cane ethanol 50 0 75 65 40-50 ex ethanol plant in Brazil incl. transport to EU with LUC (Cerrado to arable) with LUC (rain forest to arable) -100-150 -314-200 -250-300 -350 ESOF, 21-07-2008 16

Demand of bio-mass Better usage of today s acreage Increased yields Better input to output ratios ESOF, 21-07-2008 17

Producer s prices for wheat and wheat yields, EU 15 ESOF, 21-07-2008 18

Evolution of wheat yield in Great Britain before MacSharry Agrarian Reform ESOF, 21-07-2008 19

Evolution of wheat yield in Great Britain after MacSharry Agrarian Reform ESOF, 21-07-2008 20

300 Producer s prices soft wheat since 1980 /t free registering warehouse (Source: ZMP) 250 200 150 100 50 Jan 80 Jan 82 Jan 84 Jan 86 Jan 88 Jan 90 Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Producer s prices /t incl. VAT Soft wheat /t Intervention price /t ESOF, 21-07-2008 21

Beet production in Western Europe: Example Südzucker (Sugar yields the last 25 years) [t sugar/ha] 13 12 11 10 9 8 7 6 5 4 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 ESOF, 21-07-2008 22

Sugar yields [t sugar/ha grown] - the last 10 years [t sugar/ha] 13 12 11 10 9 8 7 6 5 4 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Yield stability: Temperature, water supply? ESOF, 21-07-2008 23

Light interception of sugar beet in rel. to dry matter development PAR: 400-700 nm, Göttingen 1952-2004; absorption acc. to Röver (1995) photosyn. Photosynth. active aktive radiation Strahlung (MJ m -2-2 month Monat -1-1 ) ) 300 250 200 150 100 50 0 Jan. rapid canopy development early sowing Feb. Mar März April Mai May PAR Juni June Juli Aug. Sept. Total DM (t ha -1 ) 35 early sowing 30 rapid canopy development 25 (13 37) absorbed radiation July Okt. Oct. normal sowing date Nov. Dez. Dec. (Hoffmann 2008) ESOF, 21-07-2008 24

Yield potential of sugar beet growth rate of total dry matter (root + leaves) Germany, 13 trials in 2000 and 14 trials in 2001 (Kenter 2003) 35 max. growth rate crop Wachstumsrate growth rate (g (g TM DM m -2 Tag m -2-1 day ) -1 ) 30 25 20 15 10 5 42 t DM ha -1 24 t sugar ha -1 0 May June July Aug. Sept. Root/leaf ratio: 2.3; 75 % sucroseof drymatter, Kenter (2003) Oct. (Hoffmann 2008) ESOF, 21-07-2008 25

Light interception of oil seed rape PAR: 400-700 nm, Göttingen 1952-2004; absorption according to LAI 300 250 200 150 100 50 Photosynth. aktive Strahlung (MJ m -2 Monat -1 ) 0 PAR Oil seed rape Jan. Feb. März April Mai Juni Juli Aug. Sept. Okt. Nov. Dez. (Hoffmann 2008) ESOF, 21-07-2008 26

Radiation use efficiency conversion of light energy into dry matter: Biosynthesis of various compounds from glucose carbo hydrates proteins lipids sugar beet (% DM) 94 0.04 0 wheat (% DM) 75 14 3 rape seeds (% DM) 25 25 45 (g g -1 glucose)* 0.83 0.40 0.33 * Specht et al. (1999), after Penning de Vries et al. (1974) and McDermitt & Loomis (1981) energy gained/ha: beet: 100 % wheat ~ 50 % rape seeds ~ 30 % (Hoffmann 2008) ESOF, 21-07-2008 27

Development of amino-n-content in sugar beets (Südzucker AG 1982 2003: 3-years-average) 40 30 20 10 0 33,4 26,4 23,6 24,9 20,1 18,3 17,2 15,5 Amino-N (mmol 1000 ḡ 1 roots) 1982 1983-1985 1986-1988 1989-1991 1992-1994 1995-1997 1998-2000 2001-2003 ESOF, 21-07-2008 29

Amounts of nitrogen- phosphor- and potassium- commercial fertilizer used in sugar beet cultivation 1980-2005 (Trials within Verband Süddeutscher Zuckerrübenanbauer e.v., Würzburg ) kg ha -1 300 250 200 150 100 50 0 N P2O5 K2O 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 ESOF, 21-07-2008 30 30 25 20 15 10 5 0 kg fertilizer / t sugar yield N P2O5 K2O 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Bio-energy from European crops (e. g. bio-ethanol) Uses only the fixed carbon All valuable parts of the bio-mass are further used in the traditional chain e. g. as Feed and/or Fertilizer The menure of feed usage following state of the art technology can be processed to Bio-gas (again consuming the fixed carbon) The residues incl. all NPK will be recycled as fertilizer. ESOF, 21-07-2008 31

Breeding the crops More towards carbohydrate yield/ha Accepting a slight decrease in protein yield/ha and Accepting a decrease in oil yield/ha Could result - as proven for beets - in A strong increase in energy yield and In case of using these crops as e. g. raw material for bio-ethanol an excellent energy yield besides a balanced feed production and an optimized fertilizer recycling. ESOF, 21-07-2008 32

Expections towards plant bio-tech (1) Crop management (examples) Weed management Protection against deseases Protection against parasites Improved harvestability ESOF, 21-07-2008 33

Expectations towards plant bio-tech (2) Plant optimization (examples) Improved water efficiency e. g. Lower respiration vs higher bio-mass formation Improved stress tolerance vs e. g. Heat and cold Draught Improved sink loading Higher capacity Improved tolerance vs premature ripeness Higher dry substance content at harvesting and lower losses during storage period ESOF, 21-07-2008 34

Meat production and GHG emissions More meat means more GHG emissions? Today s meat production in large regions of the world works with very extensive methods Grazing fodder high in fibres low in easily accessible energy No state of the art menure treatment The Commission has decided to reduce meat production in Europe and to import more meat from regions with extensive production. ESOF, 21-07-2008 35

EU-25: Imports and exports (2006) 20.1 mn t cereals (14.5 mn t wheat and wheat flours) 17.2 mn t oil seeds (14 mn t soybeans) 35.5 mn t animal feed (22.1 mn t soy protein feed) Source: ACTI (Oct. 2007) ESOF, 21-07-2008 36

Meat production and GHG-emissions Extensive meat production causes intensive GHG-emissions esp. CH4 which is 25 times more GH efficient than CO 2 and N2O which is 298 times more GH efficient than CO 2 Exchange of extensive meat production with feed high in fibre by a more starch based feed incl. state of the art menure treatment with bio-gas production will result in reduced CH4 and N2O emissions A more industrial agro-crop feed production instead of pasture will help to reduce the negative emissions of meat production. ESOF, 21-07-2008 37

Price of straw free processing site Fertilizing value: 25 /t Sales bonus 20 /t (Straw drying 10 /t) Pressing 10 /t Storage 10 /t Transport to factory 15 /t Total 80 to 90 /t ESOF, 21-07-2008 40

Characteristics of different raw materials Straw Wood pellets Wheat Yield t/ha FM 6 (4-8) 10 (5-15) (farmed wood) 8 (6-10) Water content % 15 (12-25) < 10 15 (12-25) Density kg/m³ 180-220 650 700 800 Value determining components Market price ex producer Material per se, celluloses and lignin Material per se, celluloses and lignin Protein, starch /t 50-120 170-230 120 250 ESOF, 21-07-2008 41

Cost comparison of high pressure boiler in relation to fuels Gas / fuel oil Hard coal Crude soft coal Bran Straw Wood Standard burner Travelling grate Circul. fluidized bed Vibrating grate Vibrating grate Circul. fluidized bed mn mn mn mn mn mn Boiler 7.5 35.0 42.1 37.1 54.3 44.2 Storage 0.3 0.5 0.5 1.3 6.0 2.0 Turbines 7.3 7.3 7.3 7.3 7.3 7.3 Other 1.5 1.5 1.5 1.5 1.5 1.5 Total 16.5 44.3 51.4 47.2 69.1 55.0 Boiler data: 100 t/h, 90 bar, 520 C Turbine data: 15 MW el. ESOF, 21-07-2008 42

Provision costs for usable energy (without tax effects) Cent / kwh usable energy 15 Provision costs of usable energy in energy sector 10 solid fuel gaseous fuel 9,0 5 3,1 3,8 4,4 4,6 0 hard coal wood chips 1) wood pellets1) natural gas biogas 1) Market availability? ESOF, 21-07-2008 43

CO 2 abatement costs in energy sector / t CO 2eq 250 200 vs. natural gas vs. hard coal 220 150 100 50 20 40 0 wood chips1) wood pellets1) biogas 1) Market availability? ESOF, 21-07-2008 44

Legal obligations for emissions to air (Germany) Small & medium sized furnaces (1. BImSchV) large furnaces (TA Luft / 13. BImSchV) Dust up to 150 mg/m³ 20 mg/m³ NO x no limit up to 400 mg/m³ SO x no limit up to 850 mg/m³ CO up to 4.000 mg/m³ up to 200 mg/m³ + limits for heavy metals & PCDD/F ESOF, 21-07-2008 45

Price evolution gasoline & ethanol: January 2005 June 2008 800 700 600 500 400 /m³ 300 200 100 0 Jan. 05 Apr. 05 Jul. 05 Okt. 05 Jan. 06 Apr. 06 Jul. 06 Okt. 06 Jan. 07 Apr. 07 Jul. 07 Okt. 07 Jan. 08 Apr. 08 Jul. 08 ICIS Fuel Ethanol /m³ PLATTS Unleaded 98 RON /m³ ESOF, 21-07-2008 47

Provision costs for usable energy (without tax effects) Energy provision costs in transport sector 1) Cent / kwh fuel 15 10 gasoline market 10,4 11,4 12,5 diesel market 10,6 11,8 6,9 7,8 5 ESOF, 21-07-2008 0 gasoline EU EtOH, 50 % GHG savings EU EtOH, 75 % GHG savings EU EtOH, 90 % GHG savings diesel oil EU biodiesel, 50 % GHG savings EU biodiesel, 90 % GHG savings 1) Fuel prices ex tank farm: gasoline: 530 /m³ (ICIS, June 2008); EU ethanol: 50 % GHG savings: 530 /m³ (ICIS, June 2008); 75 % GHG savings: 580 /m³ (estimation); 90 % GHG savings: 657 /m³ (meo / FNR, July 2008) Diesel oil: 780 /m³ (1,49 /l minus taxes); EU biodiesel: 50 % GHG savings: 1000 /m³ (meo / FNR, July 2008); 90 % GHG savings: 1115 /m³ (meo / FNR, July 2008) + transport & blending costs + filling station margin 4 Cent/l 48

Crude oil production costs 25,0 20,0 $/bbl 15,0 10,0 Bio-ethanol prod. costs Brazil: about 25 ct/l Europe: about 35-50 ct/l 5,0 0,0 Near East Central and Latin America Africa Europe USA Source: MWV (2006) ESOF, 21-07-2008 49

Fossil reference "well to wheel" emissions of gasoline with different crude oil origin 300 250 g CO 2 /MJ gasoline 241 200 150 100 85 Gasoline use Refining & transport Crude oil production & transport 50 0 Arabiancrude" crude Nicht-konventionelles Non-conventional oil Öl Crude oil origin ESOF, 21-07-2008 50

Effective efficiency under full load* 40 effective efficiency [%] 35 30 25 RON 95 E 10 E 85 7 % 20 The engine efficiency at full load is augmented up to 7% with E 85 as fuel. 0 1000 2000 3000 4000 5000 6000 7000 engine speed [rpm] *: Source 11. Meetomg: Der Arbeitsprozess des Verbrennungsmotors (Graz) Potenzial von Ethanol Blends in modernen Ottomotoren P. Hofmann, F. Holub, R. List, S. Winter, M. Urbanek, B. Geringer ESOF, 21-07-2008 51

CO 2 abatement costs in transport sector / t CO 2eq 1.000 E 10 1) vs. constructive measures 2) 800 750 500 250 0 70 80 90 EU EtOH, 50 % GHG savings EU EtOH, 75 % GHG savings EU EtOH, 90 % GHG savings constructive measures 1) Including TTW effects: only 50 % higher volumetric consumption for E10 compared to theoretical LHV comparison EtOH - gasoline (TU Vienna, 2008) 2) investigation of the consequences of meeting a new car fleet target of 120 g/km by 2012 (Arthur D. Little AB, 2003) ESOF, 21-07-2008 52

Land use effects: wheat grain to ethanol wheat cultivation fallow / set aside grain soy oil technical (fossil) oil ethanol plant DDGS soy meal soy bean cultivation ethanol gasoline ha wheat cultivation 1,0 avoided soy bean cultivation -1,3 total land use -0,3 ESOF, 21-07-2008 53

Land use effects: sugar beet to ethanol sugar beet cultivation fallow / set aside sugar beet sugar factory beet pulp barley barley cultivation ha sugar beet cultivation 1,0 avoided barley cultivation -0,6 avoided soy bean cultivation -0,7 total land use -0,3 juice soy oil technical (fossil) oil ethanol plant vinasses soy meal soy bean cultivation ethanol gasoline ESOF, 21-07-2008 54

Net land use hectares / hectare cultivated with biofuel crop 1,0 1 1 0,5 0,0 1 2 3 4-0,5-0,28-0,33 wheat grain to EtOH sugar beet to EtOH sugar cane to EtOH farmed wood to BtL ESOF, 21-07-2008 55

Conclusions (1) Worldwide, there is a lot of potential future arable land, however, due to possible liberation of bound CO 2 deforesting (esp. rain forest) has to be avoided and is not necessary. Huge yield increase in the past, however, esp. the last 10 % of the increase often has an unfavourable cost to income ratio. If breeding progress is focused on fixed carbon (for bio-energy) as successfully proven for beets, future success for cereals seems to be probable while retaining the feed/fertilizer value of the by-products and optimum energy yield. GHG emissions in meat production could be reduced using more industrially intensive methods by exchange of fibre rich fodder (grazing) through a more starchy one and state of the art menure treatment (incl. biogas production) and resources recycling as fertilizer. This combines optimized energy yield with lowest land use and optimized resources saving. ESOF, 21-07-2008 57

Conclusions (2) Comparison of different bio-mass based energy uses shows Lowest CO 2 saving cost for wood burning producing heat and power (however availability??) followed by bio-ethanol used as fuel in low blends. Power production via bio-gas seems to be the most costly solution. Land use is not easy to judge All additional bio-mass production for bio-energy use is competing with the available area, however, the net effect incl. optimized bio-fuels by-products use as feed and fertilizer has to be integrated into the calculations. ESOF, 21-07-2008 58

An optimized bio-mass production to Feed the world and Contribute best to the energy problem needs an industrial agrarian bio-mass supply with optimized meat production (incl. by-products use) and resources recycling using all available technologies from breeding over processing to consumption. ESOF, 21-07-2008 59

Thank you very much for your attention! ESOF, 21-07-2008 60