Copyright © 2008 Lumina Decision Systems, Inc.

Biomass, Biofuels, and Hydrogen Modules:

SEDS ReviewMax Henrion & Surya Swamy

May 7 and 8th 2009

Biomass, Biofuels and Hydrogen Sectors in Context

of SEDS

Macroeconomics

Biomass

Coal

Natural Gas

Oil

Biofuels

Electricity

Hydrogen

Liquid Fuels

Buildings

Heavy Transportation

Industry

Light Vehicles

Macroeconomics Converted EnergyPrimary Energy End-Use

Biomass Sector Data Flow

Electricity

BiomassBiomass Demand

Biomass Price

Incoming Data Outgoing Data

Biofuels

Hydrogen

Electricity

Biofuels

Hydrogen

Max Biomass Supply

Biomass: Major Assumptions

• Biomass supply curves • from runs of Polysys 2006 aggregated from region to national level• Includes Agricultural residues, Forest residues, Energy crops,

excludes Soy and Corn. • SEDS uses total biomass (excluding soy and corn) for• Energy crops increase from 0 in 2007 to by2030:

• 291 Mdt/y for Baseline and • 609 Mdt/y for High scenario

• It also offers AEO Biomass supply curves as an optional alternative.

• Biomass consumed by• Biofuels (cellulosic ethanol)• Biomass to electricity, and • Biomass to hydrogen.

Projected maximum biomass:

AEO & SEDS Baseline and High

• 2006 max biomass supply is 270 Mdt/y (Million dry tons/year) (NEMS used 347 Mdt/y)

• SEDS projects increase by 2030 to 633 Mdt/y for Baseline or 944 Mdt/y for High scenario with increase in energy crops (NEMS projects 388 Mdt/y)

SEDS PolySys High

AEO

SEDS PolySys Base

Biomass supply curves

• Price of biomass ($/biomass dry ton) as a function of demand level (million dry tons/year)

• Based on SEDS/Polysys High scenario

Biomass demand by sector

• For High oil price scenario – ramps to $245/bbl in 2030, no carbon cap or RPS

Biomass: Issues and planned work

• It is not currently clear whether EERE Biomass program will support further work. We hope they will support:

• Expert risk assessment of biomass supply curves, including uncertainties about:

Land availability for energy cropsYield of new energy crop cultivars (R&D effects)Changes (reduction?) in costs for cultivation, harvesting, and transport of high-volume e-crops to production plants

Biofuels Sector Data FlowIncoming Data Outgoing Data

BiofuelsBiomass Price

Biomass Demand

Max Ethanol SupplyLiquid Fuels

Liquid Fuels

Ethanol Demand

Biomass

Biomass

Ethanol Price

Biofuels: Major assumptions

• Expert risk assessments of performance for biochemical Cellulosic ethanol production

Uses projections from a pilot risk assessment conducted in Spring 2008 by Bob WallaceCombination of expert assessments on TPMs combined from four experts and 27 runs of ASPEN+ on model of production plant for yield and costsGoal years 2030, 2050 Base, Target, and Overtarget programsZero Learning by doingFor illustration we assume Target and Overtarget R&D Programs accelerate performance by 2 and 4 years respectively, relative to the Base Program

• Default assumes $0.50/gal subsidy for ethanol for corn and cellulosic.

Projected cost of cellulosic ethanol

• Green lines are 10, 50, 90th percentiles of biochemical cellulosic ethanol costs, based on pilot risk analysis in 2008, Target R&D Program.

• Compared with corn ethanol and gasoline (high oil cost scenario), $0.50 ethanol subsidy, no carbon cap or carbon tax.

Corn ethanol

Gasoline

Cellulosic ethanol

10, 50, 90%iles

Effect of DOE R&D Programs on cellulosic

ethanol costs

• Cellulosic ethanol costs for Base Program, Target DOE R&D program, and Overtarget R&D Program (accelerating results by 3 years and 6 years relative to Base industry-only R&D.

Corn ethanol

Gasoline: High oil scenario

Cellulosic ethanol

Base, target, & overtarget R&D

programs

Cellulosic ethanol cost breakdown

• Cellulosic ethanol costs for Target DOE R&D program broken down to capital, O&M, and Fuel (biomass) costs – assuming modest biomass costs.

Fuel consumption of gasoline and ethanol

• Consumption of liquid fuels for vehicles.• High oil scenario $240/bbl by 2030. No RPS or

Carbon• Target cellulosic ethanol program, medium

cost.

Corn ethanol

Gasoline

Cellulosic ethanol

Consumption by vehicle fuel type

• Units G gge/y = billion gallons gasoline equivalent per year• Assumes DOE Target program, high oil cost, $0.50 ethanol

subsidy, no carbon tax.

Hydrogen

Gasoline

E85

CNG/LPG

Biofuels: Issues and planned work

• Add Renewable Fuel Standard (RFS) policies• Extend biofuels module, using expert risk

assessments of other technologies:Redo biochemical cellulosic ethanol with improved structure and assessment protocolThermochemical methods with gasification/pyrolysis for cellulosic ethanolExpand modeling of corn ethanol cost and supplyAdd other transportation fuels from cellulosic biomass, such as methanol or butanol via Fischer-Tropsch process, and methane (biogas)

Hydrogen Sector Data Flow

Biomass

Natural Gas

Light Vehicles

Hydrogen

Light Vehicles

Biomass

Natural Gas

Biomass Price

Nat. Gas Commercial Price

Hydrogen Demand

Nat. Gas Electric Price

Biomass Demand

Hydrogen Price

Nat. Gas Commercial Dmd

Nat. Gas Electric Dmd

Incoming Data Outgoing Data

Electricity Electricity

Nat. Gas Industrial PriceNat. Gas Industrial Dmd

Hydrogen: Major assumptions

• 2008 expert risk assessmentsCentral biomass to hydrogenCentral natural gas reformingDistributed natural gas reforming (at fueling station)Base program (no DOE R&D) assumes no progress Target Program for Goal years: 2015, 2025No overtarget programZero learning by doing after 2025

• Delivery costs Developed with Frances Wood, Onlocation, Inc.based on a reduced form of the H2 module from NEMScosts reducing over time, and as a function of market penetration

Levelized cost of delivered hydrogen by

technology

Costs for central station biomass and SMR (reforming natural gas) include hydrogen delivery costs.

Breakdown of levelized costs for Central biomass

to H

• Distribution (delivery) costs dominate, but reduce over time

Hydrogen distribution costs

• Costs reduce over time from 2007 to 2017

• Costs reduce as a function of market penetration (hydrogen as a percent of total liquid automotive fuel by GGE)

• Costs are estimated separately for urban and rural areas

Consumption by fuel type for light vehicles

• Units G gge/y = billion gallons gasoline equivalent per year• Assumes DOE Target program, high oil cost, $0.50 ethanol

subsidy, no carbon cap.

Hydrogen

Gasoline

E85

CNG/LPG

Hydrogen: Issues and planned work

• Expert risk assessments in 2009Redo central station biomass to hydrogenAdd central wind turbine electrolysisAdd distributed ethanol reformerAdd learning by doing (LBD) post 2025

• Expand model of delivery costsWorking with Frances WoodBased on more detailed distribution cost modelsDisaggregate rural vs. urban more carefully based on quantities availableAdd simple uncertainty in delivery costs, based on interviews, but not formal expert elicitation