Sustainable Biofuel Production in South East Asia: Mitigating Impacts on Water and Food Security

Transcription

1 Sustainable Biofuel Production in South East Asia: Mitigating Impacts on Water and Food Security SINGAPORE INTERNATIONAL ENERGY WEEK Roundtable on Water Energy Food Nexus 30 th October 2014 Khoo Hock Aun Managing Director, Cosmo Biofuels Group Vice-Chair of the RSB Board of Directors COSMO BIOFUELS GROUP

2 How biofuel production impacts water use and food production in South East Asia PRESENTATION OUTLINE Global and regional trends in biofuel production Regulatory, technology and market drivers Frameworks for sustainable biofuel supply chains Best practice models, plantation versus smallholder approaches Implications for policy makers, project developers and investors

3 GLOBAL AND REGIONAL TRENDS IN BIOFUEL PRODUCTION

4 BIOFUELS PRODUCTION TO GROW 25% TO 2018 INTERNATIONAL ENERGY AGENCY RENEWABLE ENERGY MEDIUM TERM MARKET REPORT 2013

5 ASIAN BIOFUELS PRODUCTION TO GROW 50% 2012 TO 2018 INTERNATIONAL ENERGY AGENCY RENEWABLE ENERGY MEDIUM TERM MARKET REPORT 2013

6 REGULATORY, TECHNOLOGY AND MARKET DRIVERS

7 REGULATORY, TECHNOLOGY AND MARKET DRIVERS Indonesia An on-and-off percent biodiesel mandate, and an E3 ethanol mandate. Last year, we reported that the government is pushing mining companies to introduce biodiesel into their operations with the first mandate of 2% coming into effect on July 1. So far 25 mining operations have signed up to introduce biodiesel into their energy supplies. The plan is meant to help boost domestic demand for palm oil biodiesel as international demand for the fuel falls. Malaysia The country s B5 blending mandate kicked off in June Malaysia will boost its biodiesel blend to 7% in December from 5% currently while Indonesian state-owned oil company just finished a tender to purchase 6 million metric tons of biodiesel. The Philippines Has an E10 ethanol and B2 biodiesel mandate, supporters are asking the biodiesel mandate to be increased to B5. Thailand Has a B5 biodiesel mandate in place, but it has been on and off based on palm oil supplies, and a B3 program has been the fallback. Vietnam Has an E5 ethanol blending mandate..

8 Source: UNEP

9 ADVANCED BIOFUELS PRODUCTION CAPACITY TO DOUBLE BY 2018 INTERNATIONAL ENERGY AGENCY RENEWABLE ENERGY MEDIUM TERM MARKET REPORT 2013

10 Source: UNEP

11 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS

12 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS FOOD AND WATER SECURITY ARE MAJOR CONCERNS _agr_outlook-2014-en

13 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS

14 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS Roundtable on Sustainable Biomaterials (RSB) Vision : Global Sustainable Production, Conversion, And Use Of Biomass. Mission: Provide and promote the global standard. Provide a global platform for multistakeholder dialogue. Ensure that users and producers have access to credible, practical and affordable certification. Support continuous improvement through application of the standard.

15 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS 120+ organizations from 30 countries including 30 NGOs RSB STAKEHOLDERS

16 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS Companies RSB Works With (RSB Members or Certified Companies) Feedstock companies developing novel biomass sources Carinata & Camelina Jatropha Algae COSMO BIOFUELS GROUP Novel industrial biotech companies targeting biochemicals Farnesene Ethanol & 2,3-butanediol Butanol Tailored Oils RSB is a B2B certification program that works with all steps in the supply chain to ensure sustainable feedstocks for the developing biochemical industry.

17 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS RSB Principles & Criteria Legal Social Environmental Management and technical GHG emissions Legality Land rights Human and Labor Rights Rural and Social Development Local Food Security Biodiversity Conservation Soil Water/rights Air Planning, Monitoring and Continuous Improvement Use of Technology, Inputs, and Management of Waste

18 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS Standard for Agricultural and other Residues Specific standard on residues and byproducts Including bagasse, stalks/leaves, stover, used cooking oil Municipal solid waste, forestry operations Upstream verification for agricultural residues Ensure enough residues to maintain soil organic matter GHG emissions limited to transport and conversion to fuel Direct land-use change

19 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS DIVERSITY OF FEEDSTOCKS Algae in the US and Asia Sugar cane in Peru, Sierra Leone, Brazil Wheat residues in Australia Jatropha oil in Mexico and Asia Used cooking oil and animal fats in the US, Europe, Canada, China, South Korea Camelina in Spain Coppice trees Poplar, US; Gliricidia, Sri Lanka Macaúba oil, tobacco, Moringa tree suited for smallholders

20 Aviation Sector Is a Major Partner of the RSB Aviation industry seeks early adoption biofuel 10% replacement by 2030 requires 20.4 Mtoe biofuels. Enormous pressure on land and water requirements Aviation industry requires truly sustainable biofuels Technical Regulations are fierce but in place Airlines prefer 2 nd generation sources such as jatropha, algae and camelina Second generation processes biomass conversion into biofuel Algae is an important candidate

21 Commitment to RSB certification Members: GOL, TAM, Avianca, United, Air France, KLM, Lufthansa, British Airways, Air China, AeroMexico, Air New Zeland, Cathay Pacific, Gulf Air, JAL, Qatar, SAS, Singapore Airlines, etc 32 % of jet fuel demand Associated: Boeing, Embraer, Airbus, among others COSMO BIOFUELS GROUP

22 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS RSB and Water: Identifying the Issues Main direct impacts on water: farm, plantation and processing unit. Overall potential impacts are not specific to biofuels: excessive irrigation, water pollution, infringement of water rights. New challenges: indirect impacts, algae, wastes istock.com/cdascher istock.com/james Harrison Sébastien Haye Sébastien Haye

23 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS RSB and Water: Overview Principle 9: Biofuel operations shall maintain or enhance the quality and quantity of surface and ground water resources, and respect prior formal or customary water rights. Criterion 9b: Develop & Implement a Water Management Plan Criterion 9a: Evaluate and respect water rights of local communities Criterion 9c: Do not contribute to depletion of water resources Criterion 9d: Maintain/enhance the quality of water resources + Specialised Guidelines for evaluation of water impacts!

24 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS RSB and Water: in practice (1) Water-related requirements are for feedstock producers, feedstock processors and biofuel producers (not for biofuel blenders) Evaluation of water rights and baseline situation are parts of the impact assessment process (cf: Principle 2). Complexity of the evaluation depends on the project design and context: irrigation vs rainfed; annual rainfall; occurrence of droughts; possible run-offs; water treatment/recycling; etc. Simplified process and lower costs for low risk operations

25 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS RSB and Water: in practice (2) 1. Screening: Evaluate the water resources used for the project: existing water rights, scarcity, potential runoffs, etc 2. If required during the screening: Specialised impact assessment for water rights, water availability and water quality. 3. Set a water management plan (part of the ESMP defined under Principle 2), which describes practices to achieve compliance with Principle 9 and criteria. 4. Monitor impacts on water rights, water availability and water quality against Principle & Criteria 9. If required, corrective actions.

26 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS Some Key Messages Appropriate water management represents a critical component for biofuel sustainability. Water rights, water depletion and water quality are the key issues to be addressed. It is feasible to address water issues through biofuel standard. The RSB requirements on water aspects carry some legitimacy due to the multi-stakeholder process: they were developed in consultation with experts and achieved consensus among NGOs, civil society, industry actors and the business sector.

27 FRAMEWORK FOR SUSTAINABLE BIOFUEL SUPPLY CHAINS PRINCIPLE 6: LOCAL FOOD SECURITY Biofuel operations shall ensure the human right to adequate food and improve food security in food insecure regions. Criterion 6a: Biofuel operations shall assess risks to food security in the region and locality and shall mitigate any negative impacts that result from biofuel operations. Criterion 6b: In food insecure regions, biofuel operations shall enhance the local food security of the directly affected stakeholders.

28 Criterion 6a Biofuel operations shall assess risks to food security in the region and locality and shall mitigate any negative impacts that result from biofuel operations. Operators who must comply: Feedstock Producer, Feedstock Processor and Biofuel Producer. Minimum requirements Where the screening exercise of the RSB impact assessment process reveals a direct-- impact on food security in food insecure regions, Participating Operators shall conduct a food security assessment in accordance with the RSB Food Security Assessment Guidelines, The scope of the food security assessment shall include additional impacts that the biofuel operations may have on cross cuttingrequirements for food security including land, water, labor, and infrastructure. If the food security assessment indicates a food security risk as a result of biofuel operations, a mitigation plan shall be developed and implemented through the ESMP. Measures developed under Principle 5 that mitigate food insecurity shall be integrated with the measures developed under Criterion 6a. Criterion 6b In food insecure regions, biofuel operations shall enhance the local food security of the directly affected stakeholders. Operators who must comply: Feedstock Producer, Feedstock Processor and Biofuel Producer; small-scale operators are exempt. Minimum requirements In regions where food security is an ongoing risk and concern, operations shall enhance food security of the locally affected community by, for instance, setting aside land for food growing, increasing yields, providing opportunities for workers to carry out household-- level food production, sponsoring agricultural support programs and activities, and/or making value added food byproducts available to the local market. Measures to enhance regional food security shall be integrated with measures that contribute to rural and social development developed under Principle 5.

29 BEST PRACTICE MODELS

30 BEST PRACTICE MODELS 1G TECHNOLOGY, THE MOST WIDELY USED BIOFUEL TECHNOLOGY, REQUIRES FEEDSTOCK THAT INTERFERES WITH THE FOOD CHAIN One of the primary concerns about biofuels has been the raging food versus fuel debate, which highlights the risk of food supply disruption due to increased diversion of land for biofuel feedstock. Other concerns : include soil erosion, increased pressure on water resources, loss of biodiversity, and environmental imbalance caused by largescale clear-cutting of forest land for biofuel production. 2G & 3 G TECHNOLOGY ADDRESSES THESE CONCERNS It uses non-food-based feedstock, namely lignocellulosic material, which is currently used primarily for selfconsumption as fuel or fodder. Typical feedstock includes rice husks and straw, grass, empty fruit bunches (EFBs), palm fronds, wood fuel, and corn stover. The Southeast Asia region has abundant availability of 2G-specific feedstock. For example, Malaysia and Indonesia are the largest palm oil-producing nations in the world, resulting in high quantities of available palm waste (such as palm fronds and EFB). Wood fuel and rice waste are also available in large quantities, which can be leveraged for biofuel production

31 BEST PRACTICE MODELS RUBBER JATROPHA AGROFORESTRY Latex production Timber production Biomass and Bifuel production Integrated with food production Mitigation of production risk/ gestation period Zero waste

32 BEST PRACTICE MODELS BIOENERGY INTEGRATED OPERATING SYSTEM Plantation Agency Management Services Downstream Technology Joint Ventures Final Product Development & Trading Services Contract Farms FFB HIGH FFA CPO/CPKO Plantations Jatropha Oilseed/ Collection Expeller Biodiesel Refinery Distribution/ Tradiing Of Biodiesel CPO MILLS EFB/EF/ ALGAE RES OIL/ SLUDGE/ PFAD POME BIOGAS ELECTRICITY GENERATON BIOFUEL PRODUCTION AND PROCESSING VALUE CHAIN Production and Collection Profits Processing Value Add Profits Distribution & Trading Profits

33 BEST PRACTICE MODELS The new algae production platform has a number of environmental benefits: sequester carbon and reduce emissions; converts Palm Oil Mill Effluent (POME) completely into valued products with zero waste, and eliminates the need for current treatment of POME using ponds and digesters to reduce pollutants.

34 BEST PRACTICE MODELS MULTIPLE FEEDSTOCK PRODUCTION STRATEGIES INTEGRATED WITH FOOD PRODUCTION

35 BEST PRACTICE MODELS RENEWABLE ENERGY TECHNOLOGY REGION FOR ECO-AGRO TOURISM (RETREAT) The Model will encompass the following components: 3-Phase Renewable Energy based- Tourism Resorts For Eco-Agro Tourism; Algae Production Systems; Solar, Wind and Tidal Wave Farms to Harness Renewable Energy Agriculture Based Systems for production of BioEnergy, Biofuels and BioElectricity Wastewater and Waste Management and Conversion to Energy Systems

36 IMPLICATIONS FOR POLICY MAKERS, PROJECT DEVELOPERS AND INVESTORS

37 Regulatory Support for Advanced Biofuels AT Kearney s Recommendations 2014: Robust support would include blending targets to propel production, 2G-specific tax and incentive policies, market-determined and optimal price setting for economically viable production, and subsidies for producers (especially until 2G technology enters specific countries or areas). Constructive policies also can drive financing for capital expenditure on biorefineries, R&D in biofuel technology, and aid in supply chain setup, from harvest points to refineries Tax incentives Federal income tax credits for flex fuel and alternative fuel vehicles Tax credit for cellulosic-biofuels producers. Tax credit for alternative fuels infrastructur.e Subsidies and credit facility 2G biofuel plant depreciation deduction allowance Multiple credits, grants, and loans for development of bio-refineries and research on advanced biofuels.

38 . SUPPLY CHAIN CHALLENGES Supply chain costs can constitute up to 50 percent of feedstock cost. With no established supply chain, intense coordination is required across multiple stakeholders (including farmers, collectors, logistics partners, and producers). The feedstock is dispersed across vast agricultural areas. The geographical spread of some countries, such as the archipelago Indonesia, magnifies the logistical problems. For biofuels to succeed, establishing an efficient feedstock supply chain is one of the key prerequisites. It also will play a major role in determining the economic feasibility of production. Increasing the current supply chain's efficiency and developing alternate means of logistics. Multiple approaches can increase supply chain efficiency.

39 . POTENTIAL SUPPLY CHAIN SOLUTIONS Defining an optimal network for biorefineries, including the number and location of storage facilities and capacity planning; Refining the design of collection, storage, and transportation according to the type of feedstock and storage facilities (such as bale form versus pelletized) is another option; Increasing the energy density of feedstock before transportation may help optimize costs, specifically after weighing the benefits with the additional preprocessing costs that would be incurred. Pipeline transportation of feedstock in land based SE Asia A fleet of ship based platforms for biorefineries for maritime SE Asia

40 Recommendations Provision of long term policy for agricultural biofuel production Integration of biofuel projects with food production and water provision Emphasise agricultural residues and waste recovery and utilisation Development of community based closed loop in-situ projects Meet local demand rather than commoditised exports of biofuels

41 Thank You! Khoo Hock Aun COSMO BIOFUELS GROUP