Bioenergy opportunities in Australia – a European perspective 18 September 2014

What has driven the use of biomass for energy in Europe?

Bioenergy represented 68%1 of the total gross inland consumption of renewables in 2011 - 115 Mtoe was biomass and renewable waste.

Biomass accounted for 8.4 % of the total final energy consumption in Europe in 2011. In some countries such as Estonia, Latvia, Finland and Sweden this is above 25%. Compared to 4%2 of total primary energy supplies in Australia (predominantly firewood?) 95.5% of the final heat consumption from renewables is biomass for heat. More than 50% of biomass for heat is consumed by households. The EU pellet consumption for heating has grown by more than one million tons per year since 2010, amounting to 8 million tons in 2012.

1. AEBIOM – European Bioenergy Outlook 2013 2. Bioenergy in Australia – Status and Opportunities, 2012, Stucley et al

What has driven the use of biomass for energy in Europe?

1. Fossil Fuel prices 1. Imported coal – pellets 2. Natural gas, LPG, Heating Oil – biogas, woodchips, pellets

2. Demand for ambient heating 3. Climate change / security of supply - regulation 4. Integrated forestry industry creates feedstock and infrastructure 5. Quantity of feedstock / Proximity of Feedstock to demand 6. Preponderance of SMEs and manufacturing – industrial heat loads 7. Smaller towns/cities

8. DISCUSSION – Where does Australia compare favourably? Where not? What

does this mean for the future development of bioenergy projects in Australia 1. Scale 2. Development expertise / commitment 3. Innovative technologies / business models

Fuel Cost Comparison

Heating fuel costs in Germany Vs Australian Gas:

Source: http://www.depi.de/media/filebase/files/infothek/images/Heizkostenentwicklung-Deutschland.jpg

Note European Energy Portal reports Heating Oil in Germany at 8.5c/kWh in January 2014

Aust Res. Nat. Gas 4.0ct/kWh

Demand for Ambient Heating

-

50

100

150

200

250

300

350

400

450

500

1 2 3 4 5 6 7 8 9 10 11 12

Heating Degree Days

Munich Melbourne London

A longer and more intense heating season facilitates investment in biomass boilers and stoves

Government support for renewables, including heat…

Source: IHS Emerging Energy Research

Government support for renewables, including heat…

Co-firing Dedicated

Biomass

CHP / Heat Biogas Carbon Tax

UK £90/MWh e £115/MWh e £135/MWh e

OR

2-12p/kWh

thermal

£135/MWh e

equivalent

£18/tonne

CO2 floor

Germany €110/MWh e

FIT

€140-

160/MWh

€8/tonne

CO2

Netherlands €116/MWh e

FIT and now

a RET

€90-

150/MWh

€8/tonne

CO2

Belgium

(Flanders)

€90/MWh e €110/MWh €8/tonne

CO2

Denmark €70/MWh e Agreements

with local

municipalities

for renewable

heat

production

€100/MWh €8/tonne

CO2

Note: Amounts are effective revenue from Feed in Tariffs or RECs plus wholesale electricity price

Policies also address Security of Supply issues e.g. Gas from Russia!

Demand for pellets is not so seasonal…

10% discount in prices during late Winter / Spring drives round year deliveries

Source: ProPellets Austria

200

205

210

215

220

225

230

235

240

245

0

5

10

15

20

25

30

35

40

1 2 3 4 5 6 7 8 9 10 11 12

€/t

on

ne

Pe

lle

t to

nn

es

'0

00

s

Austria - Monthly Sales Volume and Price Volatility average since 2000

Pelletsales

J F M A M J J A S O N D

EU Forestry Production

0

200

400

600

800

1000

1200

2010 2020 2030

Energy

Wood based panels

Paper and paperboard

Sawnwood

EU Wood Demand m3

Source: The European Forest Sector Outlook Study II 2010-2030, UNECE and FAO

Integrated forest products industry ensures competitive feedstock and infrastructure availability

Distribution of productive forests

Productive forests are widespread and usually located close to demand centres

Productive forests are normally a long way from demand centres

Role of Manufacturing and SMEs

% of GDP Manufacturin

g

SMEs

Australia 8% 33%

Germany 22% 53%

Finland 15% 57%

Sweden 16% 57%

Italy 16% 68%

UK 10% 50%

EU 58%

Germany’s Mittelstand companies (SMEs) contribute around 30% of GDP. It is estimated that about 1500 German companies occupy a top three position in their respective market segment worldwide. Major industries include automobiles, machinery, electrical equipment and chemicals. All of which generally require large quantities of heat and electricity.

Source: European Commission, ATO

Demand centres have easy access to feedstock

• In Germany the top 10 cities make up 9% of population. There are 100 cities with >100,000 people.

• In Australia they make up 75% of the population. In Australia 16 cities have >100,000 people.

How does Australia compare?

Now? Future?

Fossil Fuels

Ambient Heating

Regulatory Support

Forestry Industry

Feedstock Quantity /

Proximity

Manufacturing / SME

City Size

DISCUSSION – What does this mean for the future development of bioenergy projects in Australia?

1. Number of projects 2. Scale 3. Development expertise / commitment 4. Innovative technologies / business models

Darren Giri Managing Director Tel. +61 432 020 632 darrengiri@phoenix-bio.com phoenix-bio.com Phoenix Bio Pty Ltd ABN 55 168 267 436 Suite 504, 365 Little Collins Street Melbourne VIC 3000 Australia