Development of

the Biorefinery

Concept

(Give it time!)

Jack Saddler

FPB/Bioenergy Group, UBC

IEA Bioenergy

Jack.Saddler@ubc.ca

Changing Directions;

Market Outlook

PwC 24th Annual Global Forest and Paper

Industry Conference, 11 May 2011

University of British Columbia

UBC

Campus

Forestry Sector needs Transformation

Source: PriceWaterhouse coopers, CIBC World Markets

Traditional business models

result in low ROCEs globally

Kyoto

ProtocolY2K 9/11 Iraq

WarHurricane

Katrina

Oil Prices and World Events

0

20

40

60

80

100

120

140

1996 2000 2004 2008 2012

Quarterly Imported Crude Oil Price

Dollars per barrel

EIA Short-Term Energy Outlook, April 2011

April 2011 Forecast

Apr 2010

Forecast

Economic

Downturn

Present

Biorefinery: 7 Generations

Great-grandparents hoped for housing, furniture, basic

energy and sometimes “luxuries” (car, TV, fridge, washing

machine, etc)

You expect the same/better as well as packaging,

design/function, facial tissues/sanitary products,

“disposable” clothes/furniture, all at low cost

Great-grandchildren won‟t need the writing or newspaper,

but expect more of the above for less of their income.

Increased energy and “luxuries” (meat instead of rice!)

Generational Per Capita Energy Consumption (US)

Timelines Takes 50-90 years to grow a tree in Pacific North West

A university trained individual should be relevant for at

least 50 years

Interior of BC logging

– Main Activity started in Mid-1900‟s (significantly later than on the

Coast)

– Intensive logging for about 50 years

“Short” rotation forestry has been going for about 40 years

– Increased interest spurred by the 1970s oil crisis

How well do we know what the tree will be used for when

we plant it (Seed-to-solutions)?

The 1960/70’s

Club of Rome

Concerns regarding unlimited resource consumption in an

increasingly interdependent world

"The Limits to Growth“

Reconcile sustainable progress within environmental

constraints

Over-population

Limited potential of agriculture and energy

“Green Revolution”

Unlimited energy; Nuclear and “limitless” oil (Pruteen)

1940’s Increased Energy Output

http://www.craigsams.com/pages/martinradcliffe.html

Faced with labour shortages

and huge demand,

agricultural wages shot up

from 10¢ an hour to $1 an

hour. Industry profits doubled

between 1940 and 1944

EROEI Energy Returned on

Energy Invested -

KiloCalories

• Man with hoe - 20:1

• Organic Farm - 1:5

• Industrial Farm - 1:15

Green Revolution 50’s – 70’s

1930‟s Food Shortages

R&D, technology transfer in

1950s to late 1970s

Increased in agricultural

production around the world

North America could “feed

the world”, if no “politics”

and low meat consumption

Green Revolution

Production/area

increased

dramatically

Most prominent

shift observed in

1960s

1970’s: Potential Protein Sources

Commercial interest in single-cell protein for animal feed

was increasing

– “But major economic, regulatory, and social obstacles still must be

hurdled before this new protein becomes a generally accepted

source of human food”

France, BP operated a 20,000 ton/yr plant that grew the

yeast Candida lipolytica on gas oil

In 1973 UK, Imperial Chemical Industries operated a 1,000

metric-ton-per-year plant growing the bacteria

Pseudomonas methylotropha on methanol and planned to

develop a major production unit by 1978.

The IEA BLUE Map Scenario

Baseline Scenario – business-as-usual; no adoption of new energy and climate

policies

BLUE Map Scenario - energy-related CO2-emissions halved by 2050 through CO2-

price and strong support policies

The BLUE Map Scenario serves as basis for all IEA Technology Roadmaps

IEA Technology Roadmaps

Roadmaps are intended to: Highlight pathway(s) to reach large scale use of low-carbon technologies, consistent with Energy

Technology Perspectives 2010

Focus on the key steps over the next 5-10 years, as well as long-term milestones, including:

Identify barriers and obstacles and how to overcome these

Identify key conversion pathways

Key RD&D gaps and how to fill them while ensuring sustainability

Identify market requirements and policy needs

Define international collaboration needs

For more information: www.iea.org/roadmaps

IEA Technology Roadmap - Biofuels for Transport Developed under consultation of industry, governmental and research institutions as well as NGOs

Workshop on feedstock availability and sustainability feeds also into the upcoming Technology

Roadmap on Bioenergy for Heat and Power (available early 2012)

Concentrated Solar Power Electric & Plug-in Hybrid Vehicles Smart Grids Solar Photovoltaic Energy Wind Energy

Forest Sector Transformation

To succeed globally, Canada‟s forestry sector needs to

transition from commodity-driven markets to

manufacturing, processing and increasing value-add

expertise

Biorefining offers higher Return on

Capital Invested

Energy: High volume, low value

product BUT large market demand

Various routes, but generally require

large facilities, large feedstock

volumes

High-value co-products are

attractive; biomaterials/bioproducts

Wood Pellet Industry

Over the past two years, Canada (& the US) have become a

major supplier of wood pellets to Europe

– E.g. Belgium, Netherlands, Denmark, and UK

– Mostly used in co-firing

– US did not start exporting pellets until 2008 * now 600,000 tons in 2010

Driver: European Union 20-20-20 targets

– Increased use of wood chips and pellets

– In 2010, ~11 million tons of wood pellets were consumed

– Demand outpaces domestic production

2010 – 33 pellet plants,~2 million tonnes capacity

Canadian Wood Pellet Exports

Source: CN 2010

Canada’s Fuel Exports (Million Barrels of Oil equiv.)

Investment into Biofuels WITH

Renewable Chemicals Business models attracting

investment are

increasingly looking to

leverage „biofuels

technologies‟

Companies capable of

producing renewable

chemicals cut across

multiple traditional

technology areas

Examples: Amyris, Green

Biologics, Coskata

Note: Figure for 2010 is

just first half of the year

Source: Cleantech Group

Biorefining = Biofuels + More

Gross Market Opportunities

References:

FPAC, FPInnovations 2010.Markets and Markets. 2009.

Global Renewable Chemicals Market. The Freedonia Group. 2009. World Bioplastics. Industry Study 2548. Lucintel. 2009. Global Glass fibre

Market 2010-2015: Supply, Demand and Opportunity Analysis. Acmite Market Intelligence. 2010. World Carbon fibre Composite Market.

* CAGR for 2010-2015

PRODUCTS Global Market

Potential

(US$ billion)

Compound Annual

Growth Rate

(2009-2015)

Green chemicals 62.3 5.3

Alcohols 62.0 5.3

Bio-plastic and plastic resins 3.6 23.7

Platform chemicals 4.0 12.6

Wood fibre composites 35.0 10.0

Glass fibre market 8.4 6.3*

Carbon fibre 18.6 9.5

Revenues, Canadian forests

product industry

50.0 Neg or 0-2

Maximizing the Value of Wood

Source: Borregaard

20011

Domsjo – Swedish Biorefinery Example of product development strategy

Domsjo marketing material calls operations “Not a Pulp Mill”

– Develops businesss within segments relatively unaffected by oil prices

– Refines several wood based products and creates increased value

– Niche producer

BP Energy Biosciences Institute

Announced Feb. 1, 2007

Headquartered at UC Berkeley,

with partners at University of

Illinois, Lawrence Berkeley

National Labs

$500 million for research plus

DoE and State funding to give

more than $1 billion

Aim: to develop new sources of

energy/chemicals and reduce

the impact of oil consumption

on the environment

Largest Facility in Each Sector

1

10

100

1000

10000

Ethanol Pulp and paper

Electrical generation

Oil refinery

Esti

mat

ed

Fe

ed

sto

ck In

pu

t in

Pet

aJo

ule

s (L

og

scal

e)

Facility Type

Pipeline

Panamax

Rail cars

Trucks

Source: Stephen 2010

Comparison of feedstock energy input transport mechanism

Biorefineries will likely resemble pulp mills, not oil

refineries

1st Generation Biofuels/BiochemicalsLocation: Agriculture-intensive regions

2nd Gen – Biofuels/BiomaterialsLarger scale

Forest based

Coastal Regions

“Advanced” Biorefineries (Algae)TBD

Scale of Facilities & Location

Moving Forward

Emerging technologies are being developed and promoted

by players outside the traditional industry – the traditional

industry is generally responding, not leading.

Forest companies need to develop partnerships with

new players

– Building on the “bio-refinery platform” – imperative to develop and

market higher value products (e.g. biomaterials) that offer a more

sustainable advantage, “energy/plus”

– Need “market knowledge”, gained through partnership

– We know the “seed-to-mill”

– Need to evolve to “seed-to-success”!

– Think mid-to-long term and collaborate!

Acknowledgements

Jana Hanova, Warren Mabee

FPB/Bioenergy Group, UBC

IEA Bioenergy Task 39

IEA HQ Colleagues

Bioenergy & Refining Initiative

(BERI) at UBC

Colleagues and collaborators

Questions?