May 1, 2014 Connecting Communities Building Futures Fuels, ChEMS and Composites Kapuskasing, ON Building a Competitive Bioproducts in Ontario s Forestry Jamie Stephen, PhD Managing Director, TorchLight Bioresources Fellow, Queen s Institute for Energy and Environmental Policy Warren Mabee, PhD Canada Research Chair, Renewable Energy Development & Implementation Executive Director, Queen s Institute for Energy and Environmental Policy Queen s Institute for Energy & Environmental Policy
Challenges facing Canada s Forest Sector of Ethanol vs. Other Forest Products with Alternatives a Facility Can Canada Attract the Capital? Ontario s Model of Symbiosis for Successful Bioproducts in Ontario Examples of Bioproduct
Annual Cut in Canada National cut has decreased by 25% since 2000 Ontario cut has decreased by 55% since 2000 BC at record contribution to total cut (46%) - MPB Alberta harvest almost double Ontario oil sands & pulp
Available Volume in Canada BC has rebounded after downturn short lived ON & QC still have large unharvested volume Annualized figures, so unharvested volume building
Canadian Forest Products Lumber had major drop during US housing crisis Pulp and paper in secular decline in Canada Growing products wood pellets @ 1.7 Mt
Chemical Wood Pulp Production US is leading producer (54 Mt in 1994; 43 Mt in 2012) Canada has had largest % decline of top 10 (-44%) Growers: Indonesia (+76%), China (+74%), Chile (+62%), Brazil (+61%)
Are Biofuels and Biochemicals the Answer?
Pulp Vs. Ethanol $1.53 L -1 ethanol *Northern bleached softwood Kraft pulp, 50% yield **Revenue only; does not reflect margins or profit ***Assumes equal value for co-products
Lumber Vs. Ethanol $1.74 L -1 ethanol $1.98 L -1 ethanol *MBF = thousand board feet, random lengths; assume LRF of 60% **Revenue only ($US); does not reflect margins or profit ***Assumes equal value for co-products
Competing with Corn 2009 and future ethanol production costs from U.S. corn, Brazilian sugarcane, and U.S. woody feedstocks Stephen JD, Mabee WE, Saddler JN, 2012. Will second generation ethanol be able to compete with first generation ethanol? 10 for cost reduction. Biofuels, Bioproducts and Biorefining 6: 159-176.
Choosing a Site 800 ML/yr ethanol facility with co-generation (CHP)* 3 different sites, 5 feedstocks: Williams Lake, BC (pine, poplar) Prescott, ON (mixed hardwood, willow) Barra do Riacho port (Vitória), BR (eucalyptus) 2 markets: Vancouver, BC (west coast) Montréal, QC (east) *Scale determined as maximum for truck deliveries from previous analysis Stephen JD, Mabee WE, Saddler JN, 2010. Biomass logistics as a determinant of 2 nd generation biofuel facility scale, location and technology selection. Biofuels, Bioproducts and Biorefining 4: 503-518.
Choosing a Site Minimum ethanol selling price (MESP) for all scenarios Stephen JD, Mabee WE, Saddler JN, 2013. Lignocellulosic ethanol production from woody biomass: The impact of facility siting on competitiveness. Energy Policy 39: 329-340.
What Does an Ontario Look Like?
Not This! Fibria 2.3 Mt Pulp Mill Barra do Riacho, Brazil Fibre consumption of ~ 8 M m 3 /yr Over 60% of Ontario cut at single mill
Clustering Canada s forestry companies create clusters - Eastern 10% diversion to ethanol; 321 L/bdt RESOLUTE - LSJ 1.46 M m 3 production 23.4 ML ethanol equivalent $94/bdt fibre cost IRVING 1.30 M m 3 production 20.9 ML ethanol equivalent $101/bdt fibre cost TEMBEC 1.66 M m 3 production 26.6 ML ethanol equivalent $106/bdt fibre cost RESOLUTE 2.38 M m 3 production 38.2 ML ethanol equivalent $101/bdt fibre cost 15
Clustering Tembec Average US oil refinery is 21 ML PER DAY (7.5 BL/yr) 10% diversion: 83,000 bdt 26.6 ML ethanol 30% diversion: 249,000 bdt 79.9 ML ethanol Lowest cost site: Cochrane $58.23/t Highest cost site: Temiscaming $64.99/t
What are the for Promising Bioproducts from Ontario s Forests?
Bioproduct Ontario is a competitive jurisdiction for production Labour and fibre costs relatively high in ON Sustainable competitive advantage legacy assets Cannot be produced from lower-cost feedstocks Avoid sugar-based products Avoid large-volume fractionated products Moves up the value chain, not down Large feedstock contribution to the final product cost = difficult to compete internationally Limited market access for foreign producers e.g., heat and electricity Costly to transport to U.S. markets Builds upon [unique] properties of Ontario wood Made in Ontario is better than other jurisdictions Creates/maintains a significant number of jobs
Linking Rural and Urban Canada should use the knowledge-based economy to add value to our abundant natural resources Disconnect between rural and urban: forest culture Opportunity: CNC manufacturing, mass customization, and open collaboration Urban: design, creative hubs, markets Rural: resource management & manufacturing Design can occur separately from production Competitive advantages: design, access to large markets (rapid delivery), and mixed wood supply
Examples Trim, doors, and design features Survey of wood products $10,000 to $400,000 per cubic meter of wood Residues used for energy or particle board/mdf
Examples CLT Highly automated production Use of low quality, small dimension lumber Harder to transport than many other products Combine with LVL & Glulam WoodWorks! Pre-fab housing Pop-up designs for local or overseas markets Flat-pack for overseas
Richmond Oval - WoodWave
Open Ikea, Canada-Style Ikea does not have a Canadian facility Swedwood subsidiary Poland, Sweden, Russia, Lithuania, Germany 14 M m 3 /year; expected to be 20 M m 3 by 2018 45% solid wood, 55% wood board 100 million pieces of furniture per year Ikea s competitive advantages Design & Scale Both impact transport and distribution costs Why not allow online customers build custom furniture and objects from standard components? Open collaboration of design community Solid and particle board pieces
The Role of CHP & Pellets CHP and pellets are very LOW value use of the resource However, they provide: Long-term revenue stability (PPA or off-take) Large market for residues CHP is a policy issue $0.40-0.80/kWh for intermittent solar? A competitive price ($0.20-0.25/kWh) for biopower Stability and jobs for the forest sector in Ontario Significant operating jobs, unlike solar and wind Biopower is baseload and deployable The REAL replacement for coal Pellets can provide stability if long-term off-take in place
Canada, particularly Ontario, is struggling to compete Ontario has high feedstock and labour costs, old plants Learn from pulp industry trends Biorefineries in Ontario most likely to be clusters build upon existing infrastructure Technology is not limited by borders developed in Ontario does not mean used in Ontario Need to move UP the value chain, not DOWN Securing competitive advantage requires linking resources and the knowledge economy; Toronto is global design hub Products should build upon strengths of Ontario s forests
May 1, 2014 Connecting Communities Building Futures Fuels, ChEMS and Composites Kapuskasing, ON Thank You! Jamie Stephen, PhD Managing Director, TorchLight Bioresources Fellow, Queen s Institute for Energy and Environmental Policy jstephen@tlbio.com Warren Mabee, PhD Canada Research Chair, Renewable Energy Development & Implementation Executive Director, Queen s Institute for Energy and Environmental Policy Warren.Mabee@queensu.ca Queen s Institute for Energy & Environmental Policy
Consuming Residues Assumes 60% lumber recovery factor Mill residues consumed by others (pulp, pellets, board) Harvest residues equal to 15% of roundwood volume
Margin Volatility Maximum feedstock cost payable by a cellulosic ethanol plant* *Risk-adjusted cost of capital, with gross processing margins (GPM) of $0.57 L -1 (321 L bdt -1 ) and $0.42 L -1 (385 L bdt -1 )
Feedstock Cost and Availability