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WP6: Biofuels and lignocellulosic markets WP6: Biofuels and lignocellulosic markets Göran Berndes Dept of Energy and Environment Chalmers University of Technology Göteborg Sweden Göteborg, Sweden Elobio 5 th progress meeting 100324

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Page 1: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and lignocellulosic markets

Göran BerndesDept of Energy and EnvironmentChalmers University of TechnologyGöteborg SwedenGöteborg, Sweden

Elobio 5th progress meeting 100324

Page 2: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

Overarching questions for WP6

How may biofuel policies – including their specific instruments such as obligatory targets – influence other (stationary) energy markets for lignocellulosic biomass?

Conversely how can stationary energy development influence in positive andConversely, how can stationary energy development influence – in positive and negative ways – the prospects for 2nd generation biofuels?

Can policymakers improve conditions for capturing and enhancingy g gsynergies between biofuels production and stationary energy?

Can stationary energy sector compete with the food sector in the same way as has been seen for biofuels for transport?the same way as has been seen for biofuels for transport?

Page 3: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

The quick-and-dirty summary of findingsq y y g

- How large is the stationary sector? - LARGE!

- How much can it pay for the biomass? A LOT!- A LOT!

- Will it outcompete biofuel producers? - IT DEPENDS...IT DEPENDS...

- Can policy influence how things develop?- OH YES!

Page 4: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

Summary of findings

- Biomass competition may arise between stationary and transport energy uses

modeling indicate that biofuel obligations may distract from the most- modeling indicate that biofuel obligations may distract from the most cost effective biomass use for climate change mitigations

-increasing importance of polygeneration plants that produce a range of products – biofuels, materials, heat and electricity – may place intersectoral biomass competition in a different context (example given later)

- non-bioenergy technology development as well as public acceptance and other non-technical aspects can also influence biomass demand in the two sectors; CCS development may be critical determinant

Page 5: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

- Stationary energy sector may become a large user of bibiomass

800

Demand growth?

600

700

800

m [G

We]

Investment in new generationcapacity is required for replacing old capacity + meeting demand

400

500

600

m p

rese

nt s

yste

m old capacity + meeting demand growth

200

300

400

ty re

mai

ning

from

0

100

200

Cap

aci

02005 2010 2015 2020 2025 2030 2035 2040 2045 2050

YearHydro Nuclear Lignite Hard coal Natural gas Oil Wind (on- and offshore) Biomass & waste Others

Page 6: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

CCS P th f EU 27 ( l N )

WP6: Biofuels and lignocellulosic marketsCCS – Pathway for EU-27 (plus Norway)30% CO2 emission reduction by 2020 and 85% by 2050

5000

4000

4500

5000

3500

4000

[TW

h] New GasHard coal CCS

2500

3000

y ge

nera

tion

Gas

biomass & waste New Hard coal

Lignite CCS

New Nuclear

Wind

1500

2000

Ele

ctric

it

Lignite

Hard coal

New WindNew Biomass & waste

500

1000

Hydro

Nuclear

Hydro replacements

02005 2010 2015 2020 2025 2030 2035 2040 2045 2050Year

Hydro

Page 7: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

N CCS P th f EU 27 ( l N )

WP6: Biofuels and lignocellulosic markets

5000

No CCS – Pathway for EU-27 (plus Norway)30% CO2 emission reduction by 2020 and 85% by 2050

4000

4500 New Nuclear

3000

3500

n [T

Wh]

New Hard coal

New Gas

Wind

2500

3000

ty g

ener

atio

n

Gas

biomass & waste New Biomass & waste

New Hard coalWind

1500

2000

Ele

ctric

it

Lignite

Hard coal

New Wind

500

1000

Hydro

Nuclear

Hydro replacements

02005 2010 2015 2020 2025 2030 2035 2040 2045 2050Year

Hydro

Page 8: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

Magnitude implicationsMagnitude implications…

1000 TWh requires about 9 EJ

4500

5000

New Nuclear

1000 TWh requires about 9 EJ of biomass at 40% conversion efficiency

3000

3500

4000

tion

[TW

h]

New Hard coal

New Gas

Wind

Comparison:- EU25 ind. roundwood: ca. 6 EJ

1500

2000

2500

Ele

ctric

ity g

ener

at

Lignite

Hard coal

Gas

biomass & waste

New Wind

New Biomass & waste- EU 25 cereals: 4-5 EJ- Agri residue pot: 3-4 EJ- 10 ton dm/ha on 60 Mha: 12 EJ

0

500

1000

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Y

Hydro

Nuclear

Hydro replacements

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Year

Page 9: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

Summary of findings

- integration of biofuel production in energy/industry combines can improve overall efficiency and economic performance

- Heat sinks provided by district heating systems can support a largescale establishment of biofuel/heat/power polygeneration plants

- competitiveness against CHP production crucial determinant of prospects for biofuel/heat/power polygeneration plants

restrictions on third party access to district heating networks can- restrictions on third party access to district heating networks can be a barrier against implementation

Page 10: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

- District heating systems are significant heat sinks in EU- the diagram shows heat sink allocation for making productive use of surplus heat from biofuel production corresponding to 10% of projected transport fuel use in 2020

 

400

450PJ

petroleum HOB

natural gas HOB

300

350coal HOB

petroleum CHP

Natural gas CHP

coal CHP

150

200

250 CBH

other

0

50

100

0

A B CZ DK EE FIN F D HU I LV LT L NL PL P SK SI S UK

Page 11: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

- District heating systems are significant heat sinks in EU- an ethanol production plant can also serve the function as heat sink and solid biofuel production plant in energy/industry combines; co-siting with coal power plants suitable for co-firing can be an attractive option

Page 12: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

Summary of findings

- Stationary energy most important near term market for lignocellulosic biomass

- but may contribute to 2nd gen biofuels development by inducing earlier development of the supply infrastructure for 2nd gen biofuel feedstocks

- biomass co-firing appears to be an attractive early option with longer term prospects depending of C price, CCS availability and attainable biomass share in the fuel mix

- in case biomass co-firing cannot remain competitive, expansion of 2nd gen biofuel production can benefit from an established feedstock supply infrastructure

-many power plants can import their biomass: specific instruments may be required for linking co-firing with domestic biomass production

Page 13: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

- Co-firing can be a significant market for li ll l i bi i MS

250(PJ/year)

lignocellulosic biomass in many MS

200

250Case 1: ≤40 years Case 2: ≤30 years

46

139

100

15073

39

0

50

A B BU CZ DK EE FIN F D EL HUIRL I NL PL P RO SK SI E S UK

5 14 56

63

20 23 6 66

88

17 63

3431

13 1716 26 0.3

A B BU CZ DK EE FIN F D EL HUIRL I NL PL P RO SK SI E S UK

Page 14: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

- Co-firing can be a significant market...- co-firing complementary to smaller scale (heat) markets- contrasting business logics: small scale supply vs. large end use

Page 15: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

- Co-firing can be a significant market...and bridging option- 2nd gen biofuel production can exploit the established supply infrastructure as co-firing is phased out

Case 2Case 2

400

500

600

er y

ear

Other MS

UK

Spain

100

200

300

00

J of

bio

mas

s p

Poland

Germany

0

100

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

P J

Page 16: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

Summary of findings

- Paying capacity for biomass can become very high

-food prices may increase due to competition for feedstock as well asfood prices may increase due to competition for feedstock as well as for land

-climate/energy policies affecting stationary energy sector can drive food d l d i i th bli t bi f l t t ifand land prices in the same way as obligatory biofuel targets – if

development is slow for non-bioenergy alternatives in stationary energy

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WP6: Biofuels and lignocellulosic markets

Paying capacity for biomassCO2 charge rising to 150 Euro/ton

20Sellers price (Euro/GJ of biomass)

2 g g

Dashed lines: ”soaring fossil fuel prices”

14

16

18Dashed lines: soaring fossil fuel pricesSolid lines: ”Baseline”

(E&T Trend to 2030 – update 2007)

8

10

12

(Euro/ton)wheat price

2

4

6 Low ambitions: CO2 charge stay roughly at present level (20 Euro/ton)

160100

( )

0

2

2000 2010 2020 2030 2040 2050

Page 18: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

For consideration

- Stimulation of domestic biomass production may need linking to early markets, but it is not obvious that imports should be discouraged

international biofuel trade is also an activity where learning and- international biofuel trade is also an activity where learning and connected institutional development need to take place

- Biofuel companies may not be able to make productive use of theirBiofuel companies may not be able to make productive use of their surplus heat unless rules make it possible for 3rd parties to get access to district heating networks.

- Directive on promotion of cogeneration: promotion of CHP based on useful heat demand is not the only option for saving primary energy, reducing GHG emissions and contributing to the security of energy demand

Page 19: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets

For consideration

- An energy tax on bioenergy can be one way to keep down food prices

A carbon tax on meat/dairy production may make more land available- A carbon tax on meat/dairy production may make more land available for energy crops production

Page 20: WP6: Biofuels and lignocellulosic marketsWP6: Biofuels and ... · WP6: Biofuels and lignocellulosic markets Summary of findings - Stationary energy most important near term market

WP6: Biofuels and lignocellulosic markets