Feedstock supply and economics for commercial scale facilities Julia Allen Analyst Prepared for: BIO Pacific Rim 8 Dec 2014
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Agenda Biofuels and biochemicals are all about the feedstock Finding affordable feedstocks Finding available feedstocks Analyzing cellulosic ethanol producers feedstock strategies 3
344 million MT of intermediate feedstock are consumed to produce fuels and chemicals 57 million MT of vegetable oils consumed 265 million MT of sugar feedstocks consumed 4
MT of intermediate feedstock North and South America are straining their sugar crops to make ethanol 350,000,000 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 Africa ASEAN Europe North America North Asia South America South Asia Maize Wheat Sugar cane Cassava Potatoes Sugar beet Sorghum Sweet potatoes Other Sugar consumption for bioproducts Globally, 16% of sugar crops are used to make biofuels and biochemicals This number rises to 37% in North America and 39% in South America 5
MT of intermediate feedstock Europe would need to import oilseeds to fulfill all production capacity 100,000,000 90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 Africa ASEAN Europe North America North Asia South America South Asia Palm Rapeseed Castor oil seed Oilseed consumption for bioproducts Soybeans Sunflower seed Globally, 29% of oil produced from these key crops are consumed to make fuels and chemicals In Europe the consumption is higher than supply Europe will have to import vegetable oils to reach full capacity or much of the capacity will be underutilized Other 6
Next-generation fuel producers will try anything as feedstock
Next-generation fuel producers will try anything as feedstock Affordable Available Affordable Available
Agenda Biofuels and biochemicals are all about the feedstock Finding affordable feedstocks Finding available feedstocks Analyzing cellulosic ethanol producers feedstock strategies 9
Expected feedstock price $/dry MT Early stage producers are naïve about the real costs of cellulosic biomass Cellulosic biomass price expectations by company s stage of development $180 $160 $140 $120 $100 $80 Estimated Price Average $60 $40 $20 $- 1 2 3 4 5 Lab Concept Development Introduction Scale Company Maturity 10
$/MT dry weight Finding the most affordable feedstocks $120 $100 $80 $60 $40 $20 $- EFB = empty fruit bunch $(20) $(40) $(60) Corn Stover Sugarcane bagasse Palm EFB Palm OPF Wood Wheat straw Rice Straw MSW OPF = oil palm fronds MSW = municipal solid waste 11
$/dry MT Examining the costs of corn stover $100 $90 $80 $70 Storage Currently left in the field for nutrients and to protect against erosion 15% moisture U.S., China Example companies: POET-DSM, Abengoa, DuPont Danisco, Shandong Longlive $60 $50 $40 $30 $20 $10 $- Corn Stover Transportation/ handling Aggregation/ harvest Replacement value (fertilizer) Farmer/grower payment 12
Enerkem s MSW gasification facility in Edmonton enjoys $45/MT tipping fee MSW to ethanol process features bubbling fluidized bed gasification, methanol synthesis, and conversion to ethanol Building 10 MGY MSW to ethanol plant in Edmonton, Canada; targeting ethanol production by the end of 2015 City of Edmonton is providing Enerkem with 100,000 MT a year of waste, and providing a $45/MT tipping fee 13
Agenda Biofuels and biochemicals are all about the feedstock Finding affordable feedstocks Finding available feedstocks Analyzing cellulosic ethanol producers feedstock strategies 14
Biomass available in 50 km radius* Finding the most available feedstocks 1,400,000 1,200,000 1,000,000 Already aggregated at a central facility 800,000 600,000 400,000 25 MGY 200,000 0 Corn Stover Sugarcane bagasse Palm EFB Palm OPF Wood Wheat straw Rice Straw MSW Biomass availability (dry MT) *Feedstock available within 50 km radius of potential site; or feedstock availability at the plant for aggregated feedstock 15
Availability in 50 KM radius* $/ dry MT Finding feedstocks that are both affordable and available 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $- $(20.00) $(40.00) $(60.00) Biomass avalability (dry MT) $/dry MT 16
Agenda Biofuels and biochemicals are all about the feedstock Finding affordable feedstocks Finding available feedstocks Analyzing cellulosic ethanol producers feedstock strategies 17
Likely facility: DuPont Danisco 30 MGY, Iowa, U.S. expected to start producing in Q4 2014 Feedstock collection program where DuPont contracts growers within a 30 mile radius of Nevada, Iowa facility DuPont harvests the corn stover itself, from the fields of growers Working with Iowa State University and the USDA to reduce the economics of corn stover harvest 18
Possible facility: Canergy 25 MGY, California, U.S.; expected start date pushed back from Q1 2016 to Q4 2016 Using PROESA steam explosion pretreatment licensed from Beta Creating partnerships with farmers in the Imperial Valley to grow energy cane, growers paid per acre, and retain equity in the Canergy project Farmers may be unwilling to devote acreage to energy cane, given cellulosic ethanol s technical and market risk 19
Conclusions Existing, first generation feedstock sources are showing signs of strain Cellulosic biomass is leading the transition to next-generation biofuels, but feedstock issues will continue to lead to project failures For profitable cellulosic fuels and chemicals, feedstock must be affordable and locally available Local relationships with growers, or co-location, are necessary for supply chain success 20
Thank you Julia Allen Analyst Julia.allen@luxresearchinc.com +1 617 502 5308 Lux Research Inc. 100 Franklin Street, 8th Floor Boston, MA 02110 USA Phone: +1 617 502 5300 Fax: +1 617 502 5301 www.luxresearchinc.com