BioMass IndustriesBioMass Industries

Prepared by Tim Castleman

To Promote a Renewable Resource System

Using Fibrous Crops such as Hemp and Kenaf

Copyright 2002, Tim Castleman, Arizona Fuel and Fiber Copyright 2002, Tim Castleman, Arizona Fuel and Fiber Company, LLC 1058 N. Higley Rd. Suite #108-160, Mesa, Company, LLC 1058 N. Higley Rd. Suite #108-160, Mesa,

Arizona 85205Arizona 85205 480-804-9555 Fax: 208-979-9846480-804-9555 Fax: 208-979-9846

Purpose of presentationPurpose of presentation

• To describe BioMass IndustriesTo describe BioMass Industries

• Describe their productsDescribe their products

• Describe profitable business models Describe profitable business models for BioMass Industryfor BioMass Industry

• Discuss how to develop a BioMass Discuss how to develop a BioMass industry industry

BioMass DefinedBioMass Defined• Biomass is any plant or tree matter in Biomass is any plant or tree matter in

large quantity. It is used in a variety of large quantity. It is used in a variety of ways as a feedstock for numerous ways as a feedstock for numerous industrial processes now. These include industrial processes now. These include food processing, papermaking, food processing, papermaking, electricity generation, building materials electricity generation, building materials and pharmaceuticals to name a few.and pharmaceuticals to name a few.

The Biobased Products and Bioenergy The Biobased Products and Bioenergy VisionVisionBiomass resources — Biomass resources — naturally abundant throughout our nation — will be a naturally abundant throughout our nation — will be a

cornerstone of a new energy economy in the United States. An integrated cornerstone of a new energy economy in the United States. An integrated biobased products and bioenergy industry will produce power, fuels, chemicals, biobased products and bioenergy industry will produce power, fuels, chemicals, and materials from crops, trees, and wastes, helping to grow the U.S. economy, and materials from crops, trees, and wastes, helping to grow the U.S. economy, strengthen U.S. energy security, protect the environment, reduce greenhouse gas strengthen U.S. energy security, protect the environment, reduce greenhouse gas emissions, and revitalize rural America.emissions, and revitalize rural America.

Visionary GoalsVisionary Goals• By 2010, increase the use of biobased products and bioenergy in the U.S. by 3-By 2010, increase the use of biobased products and bioenergy in the U.S. by 3-

fold over 2000 levels.fold over 2000 levels.• By 2020, increase the use of biobased products and bioenergy in the U.S. by 10-By 2020, increase the use of biobased products and bioenergy in the U.S. by 10-

fold over 2000 levels.fold over 2000 levels.• With this significant increase, biomass would account for 25 percent of our With this significant increase, biomass would account for 25 percent of our

nation’s total energy consumption (including feedstocks). The U.S. would create nation’s total energy consumption (including feedstocks). The U.S. would create the foundation for a secure energy future and establish its worldwide leadership in the foundation for a secure energy future and establish its worldwide leadership in biobased products and bioenergy technologies.biobased products and bioenergy technologies.

• By 2050, increase the use of biobased products and bioenergy in the U.S. by By 2050, increase the use of biobased products and bioenergy in the U.S. by another 2-fold to 3-fold over 2020 levels. At this level, biomass would account for another 2-fold to 3-fold over 2020 levels. At this level, biomass would account for as much as 50 percent of our nation’s total energy consumption (including as much as 50 percent of our nation’s total energy consumption (including feedstocks). The U.S. would have the capacity to be fully energy-independent, and feedstocks). The U.S. would have the capacity to be fully energy-independent, and U.S. companies would be dominant players in substantial worldwide markets for U.S. companies would be dominant players in substantial worldwide markets for systems and servicessystems and servicesrelated to biobased products and bioenergy.related to biobased products and bioenergy.

US DOE US DOE BIOBASED PRODUCTS AND BIOENERGY VISION – July, 2001

What are some BioMass What are some BioMass Industries?Industries?• BioMass FuelBioMass Fuel

– Gasification/PyrolysisGasification/Pyrolysis• Producer gasProducer gas• MethanolMethanol

– EthanolEthanol• Acid HydrolysisAcid Hydrolysis• Cellulosic Hydrolysis Cellulosic Hydrolysis

– DieselDiesel• Oilseed cropsOilseed crops• Oil producing trees and cropsOil producing trees and crops

– MethaneMethane• Anaerobic digestionAnaerobic digestion• Municipal Waste Treatment Municipal Waste Treatment

What are some BioMass What are some BioMass Industries?Industries?– ElectricityElectricity

• Use methane produced by anaerobic digesterUse methane produced by anaerobic digester– Right now, Right now, ONSI CorporationONSI Corporation in Windsor, Conn., a subsidiary of in Windsor, Conn., a subsidiary of

International Fuel Cells, is the only International Fuel Cells, is the only commercial manufacturer of fuel cellscommercial manufacturer of fuel cells. Seventy-four of its units, . Seventy-four of its units, each the size of a minivan, are now in operation, often in each the size of a minivan, are now in operation, often in locations such as hospitals and remote hotels where grid power is locations such as hospitals and remote hotels where grid power is expensive and reliability is worth a premium. (An ONSI installation expensive and reliability is worth a premium. (An ONSI installation in Groton, Conn., is consuming in Groton, Conn., is consuming methanemethane from a landfill, thereby from a landfill, thereby both generating power and siphoning off an explosive waste gas; both generating power and siphoning off an explosive waste gas; the U.S. Department of Energy is supporting a similar project.) the U.S. Department of Energy is supporting a similar project.) Each cell provides 200 kilowatts of power; the heat each produces Each cell provides 200 kilowatts of power; the heat each produces can also be used to warm buildings, an approach known as can also be used to warm buildings, an approach known as cogeneration. ONSI's marketing manager, Gregory J. Sandelli, cogeneration. ONSI's marketing manager, Gregory J. Sandelli, states that in 1.25 million hours of total use, his company's cells states that in 1.25 million hours of total use, his company's cells have remained in operation 95 percent of the time--a figure that have remained in operation 95 percent of the time--a figure that bests on-site, diesel-powered generators. The units, which use bests on-site, diesel-powered generators. The units, which use phosphoric acidphosphoric acid as an electrolyte, are designed to last 20 years.* as an electrolyte, are designed to last 20 years.*

– Co-fire with coal to reduce stack gas emissionsCo-fire with coal to reduce stack gas emissions– Direct combustion for heat & powerDirect combustion for heat & power

* Source: www.webconx.com

More BioMass IndustriesMore BioMass Industries• TextilesTextiles

• Technical & Industrial fabricsTechnical & Industrial fabrics• Geo-textilesGeo-textiles• CordageCordage

• CompositesComposites• Building materialsBuilding materials• Injection molded (Automotive parts)Injection molded (Automotive parts)• Polymers or binders, biodegradable plastic Polymers or binders, biodegradable plastic

• Absorbents Absorbents • Oil absorbent can then be combusted with coal to make Oil absorbent can then be combusted with coal to make

powerpower• Bioremediation of contaminated soilsBioremediation of contaminated soils

• Paper productsPaper products• High quality paper – high value pulpHigh quality paper – high value pulp• Newsprint and other high volume papersNewsprint and other high volume papers• Add fiber to recycled paper to extend lifeAdd fiber to recycled paper to extend life

The Technology Exists But The Technology Exists But Why Few Viable Industries?Why Few Viable Industries?

• Individually BioMass products cannot compete Individually BioMass products cannot compete price wise with timber/petroleum based products. price wise with timber/petroleum based products. – Artificial price is supported by government subsidies Artificial price is supported by government subsidies

that have continued long past intended time period. that have continued long past intended time period. – Financial planning, analysis and forecasting fail to Financial planning, analysis and forecasting fail to

include social and environmental costs. include social and environmental costs. – Bankers reluctant to invest capital into infrastructureBankers reluctant to invest capital into infrastructure

• Cannot compete with government subsidized Cannot compete with government subsidized forestry and petroleum productsforestry and petroleum products

Full Life Cycle AnalysisFull Life Cycle Analysis

Cost to manufacture, market, distributeand use a product

Cost to Dispose of product

Effect of toxic materials in disposal facilities

Initial cost to environmentUse of natural resources

Defense Budget

Effect of Full Life Cycle Effect of Full Life Cycle AnalysisAnalysisA new [1993] report from the respected Environment and Forecasting Institute in Heidelberg, Germany puts the car right back at the centre of the transport debate and raises fundamental questions about a society increasingly adapting itself to the car. The German analysts take a medium-sized car and assume that it is driven for 13,000 km a year for 10 years. They then compute its financial, environmental and health impacts "from cradle to grave".

Long before the car has got to the showroom, they find it has produced significant amounts of damage to air, water and land ecosystems. Each car produced in Germany (where environmental standards are among the world's highest), produces 25,000 kg of waste and 422 million cubic metres of polluted air in the extraction of raw materials alone, say the Heidelberg researchers.

Each car is moreover responsible for 1,016 million cubic metres of polluted air and a number of abrasion products from tyres, brakes and road surfaces;

• 17,500 grams of road surface abrasion products;• 750 grams of tyre abrasion products;• 150 grams of brake abrasion products.• Each car also pollutes soils and groundwater and this calculated for oil, cadmium, chrome, lead, copper and zinc.

The environmental impact continues beyond the end of the car's useful life. Disposal of the vehicle produces a further 102 million cubic metres of polluted air and quantities of PCBs and hydrocarbons.

The sum of these different life cycle stages produces some insights into the penalties societies must face if they become car dependent. In total, each car produces 59.7 tonnes of carbon dioxide and 2,040 million cubic metres of polluted air. Each car, say the Germans, produces 26.5 tonnes of rubbish to add to the enormous problems of disposal and landfill management faced by most local authorities.

While this detail is impressive (and wholly absent from the environmental claims of motor vehicle manufacturers and motoring organisations), it is still not complete. Some of the more startling revelations are in the researchers' wider analysis of social and environmental costs.

Germany suffers from extensive forest damage attributed to acid rain and vehicle exhaust emissions. The Heidelberg researchers calculate that each car in its lifetime is responsible for three dead trees and 30 "sick" trees. [...]

The Heidelberg researchers say that over its lifetime, each car is responsible for 820 hours of life lost through a road traffic accident fatality and 2,800 hours of life damaged by a road traffic accident. Statistically, they suggest, one individual in every 100 will be killed in a road traffic accident and two out of every three injured. Translated into vehicle numbers, this means:

• Every 450 cars are responsible for one fatality;• Every 100 cars are responsible for one handicapped person;• Every 7 cars are responsible for one injured person;

And into production data:

- Every 50 minutes a new car is produced that will kill someone;- Every 50 seconds a new car is produced that will injure someone.

Land use data are also brought into the equation to show that Germany's cars, if one includes driving and parking requirements, commandeer 3,700 sq km of land~60% more than is allocated to housing. Every German car is responsible for 200 sq metres of tarmac and concrete.

The total impact of the car over all the stages of its life cycle also produces a quantifiable financial cost. The Heidelberg researchers estimate this to be 6,000 DM per annum per car (about $5,000) and covers the external costs of all forms of pollution, accidents and noise after income taxation are taken into account.

This is a state subsidy equivalent to giving each car user a free pass for the whole year for all public transport, a new bike every five years and 15,000 km of first class rail travel.

The car is thus revealed as an environmental, fiscal and social disaster that would not pass any value-for-money test. More importantly, the car can now be seen as a disaster in itself. It is ownership as well as use that is the problem of the car and a car used sensitively (if that is possible) is still a problem for energy, pollution, space and waste. The balance sheet's bottom line is enormous societal deficits and penalties and an assumption that we will all continue to pay the bill.

Reference:

Oeko-bilanz eines autolebens. Umwelt-und Prognose- Institut Heidelberg. Landstrasse 118a, D69121, Heidelberg, Germany.

*John Whitelegg is head of the Geography Department at Lancaster University and director of the Environmental Research Unit, Lancaster University. (Oct 93)

John Whitelegg, Eco-Logica Ltd., Transport and Environment Consultancy, 713 Cameron House, White Cross, Lancaster, LA1 4XQ (0524) 842655, Fax: 0524-842678

How to realize the benefitsHow to realize the benefits• Direct Social Investment Direct Social Investment

– Research & DevelopmentResearch & Development• Immediate redirection of petroleum and timber subsidies to bio-Immediate redirection of petroleum and timber subsidies to bio-

productsproducts• Open government records to public scrutiny Open government records to public scrutiny • Modification of patent lawsModification of patent laws

– Market planning & development Market planning & development • Localized support by university and public/private institutionsLocalized support by university and public/private institutions

– Support localized value adding business assistanceSupport localized value adding business assistance• Creation of producer co-op’s to achieve economies of scaleCreation of producer co-op’s to achieve economies of scale• Encourage local value adding business unitsEncourage local value adding business units• Open membership in regional co-op’sOpen membership in regional co-op’s

– Centralized raw material processingCentralized raw material processing• Co-op members use raw material produced by the main processing Co-op members use raw material produced by the main processing

facilityfacility

• Increased taxes on harmful, non-environmentally friendly Increased taxes on harmful, non-environmentally friendly productsproducts

• Government restrictions on use of harmful, non-Government restrictions on use of harmful, non-environmentally friendly productsenvironmentally friendly products

An additional way to make An additional way to make BioMass Industries BioMass Industries ProfitableProfitable• Become more efficient in the use of Become more efficient in the use of

BioMass to produce additional BioMass to produce additional products from the same source.products from the same source.

• Characteristics of KenafCharacteristics of Kenaf

• What are its productsWhat are its products

• Current Issues in the Kenaf industryCurrent Issues in the Kenaf industry

Why grow Kenaf (Hibiscus cannabinus)? It can be a replacement for many forest products, including wood for paper pulp, building materials, cooking fuel and will relieve the pressure to cut our old growth and ancient forests here and around the world.

Does kenaf require heavy use of pesticides? No, pesticides are used to protect the growing plant from insects or disease; however, a pre-merge herbicide is used to establish a stand.

How much water does kenaf require to produce a crop? Kenaf requires less water than traditional crops, cotton, and uses the same farm equipment to plant and cultivate the crop. Kenaf will use about 3 acre feet and >100 lbs of nitrogen.

What kind of equipment does it take to process kenaf? Many of the products have been prototyped along with equipment to produce the products. Mississippi State University has led the way in this field. University of Arizona and US Department of Agriculture have been heavily involved but have been unable to become directly involved in commercialization because of regulatory constraints

FREQUENTLY ASKED QUESTIONS ABOUT KENAF:

What are some other uses of kenaf? It can be used as a high quality animal feed, as geotextiles, clothing, building material, automotive plastics fill for enhanced strength and durability, absorbents used in oil spill and hazardous materials cleanup and as a high performance animal bedding. Only your imagination is the limit. Why grow kenaf in Arizona? It thrives in our desert heat and can produce a consistent yield under our growing conditions making it a suitable candidate as an industrial crop. It can use moderately saline water including sewage effluent and is an easy crop to produce.

How much does kenaf grow in a year? It will produce 10-14 tons dry matter per acre and grow 12-14 feet in a single season. It will produce 20X the amount of oxygen as a comparable stand of yellow pine and 5 times the fiber in a 150 day growing season. Why hasn’t kenaf succeeded as crop and product? Lack of funding and insufficient local supply to support an industry have combined to keep kenaf from becoming a success. Our network of experts can fulfill any need for statistics, test data, lab analysis, history and more.

Kenaf productsKenaf products• Short fiber productsShort fiber products

– AbsorbentsAbsorbents• Cat / Poultry LitterCat / Poultry Litter

• Horse BeddingHorse Bedding

• Industrial absorbent Industrial absorbent

• Feminine Products Feminine Products

• Diapers Diapers

– Paper Products Paper Products • Whole stalk can be efficiently made into paperWhole stalk can be efficiently made into paper

• Use as filler with other celluloseUse as filler with other cellulose

Kenaf productsKenaf products• Long fiber products -- High Strength) Long fiber products -- High Strength)

– High Quality Paper PulpHigh Quality Paper Pulp• Bible paperBible paper• Cigarette paperCigarette paper• Archive grade paperArchive grade paper• Filtration paperFiltration paper

– Automotive Panels & ComponentsAutomotive Panels & Components• Substitute for Carbon, Glass and other mineral fibersSubstitute for Carbon, Glass and other mineral fibers• Offers weight, strength and environmental advantagesOffers weight, strength and environmental advantages

– Cordage, Rope and Twine Cordage, Rope and Twine – TextilesTextiles

• Industrial fabrics & lay-up composite materialsIndustrial fabrics & lay-up composite materials• Geo-TextilesGeo-Textiles• Commercial fabricCommercial fabric

– Fibrous Reinforcement of Plaster, cement and other bindersFibrous Reinforcement of Plaster, cement and other binders• Structural support building materialsStructural support building materials• Lightweight, insulated building blocks using local binderLightweight, insulated building blocks using local binder• Blend in slurry with gypsum for a wall board productBlend in slurry with gypsum for a wall board product

Current Issues Current Issues

• Accurate accounting methodAccurate accounting method

• Mechanical vs. chemical separationMechanical vs. chemical separation

• Genetic modification of plants and Genetic modification of plants and enzymesenzymes

• Adequate R&D time & fundingAdequate R&D time & funding

• Difficult political environmentDifficult political environment

R&D GoalsR&D GoalsTo identify those opportunities with the To identify those opportunities with the

greatest likelihood of success greatest likelihood of success requires in depth, localized analysis requires in depth, localized analysis and planning:and planning:

• Growing Kenaf Growing Kenaf – Technology IssuesTechnology Issues– Capital RequirementsCapital Requirements– Market RequirementsMarket Requirements– Investor RequirementsInvestor Requirements– Employee RequirementsEmployee Requirements

R&D GoalsR&D Goals• Processing KenafProcessing Kenaf

– Mechanical separation vs. chemical Mechanical separation vs. chemical separationseparation

– Technology IssuesTechnology Issues– Capital RequirementsCapital Requirements– Market RequirementsMarket Requirements– Investor RequirementsInvestor Requirements– Employee RequirementsEmployee Requirements

• Producing Kenaf based productsProducing Kenaf based products– Retrofitting existing plantsRetrofitting existing plants– New plantsNew plants

Kenaf Production costs

Kenaf Production Bast Core

50 Gallons per ton

Total Production -- tons 302,400 99,792 199,584 9,979,200

Yield per acre -- tons 10

Total Acres required 30,240

Cost per acre to grow $ 500

Total Cost To Grow $ 15,120,000

Kenaf processing costs per ton $ 56

Total Processing Costs $ 16,934,400

Total Kenaf Costs $ 32,054,400

Fiber/Ethanol Plant Capital Costs

Buildings & Land $1,980,000

Fiber separation and receiving $4,100,000

Material handling & Storage $2,125,000

Total, Land Buildings and Equipment $8,205,000

3 months operating expenses $ 2,317,200

Ethanol plant $18,000,000

General Administrative $300,000

Office Equipment $50,000

Rolling Stock $100,000

Total Capital Costs $37,177,200

Unit Costs

Production capacities

Per Mo. Per Year

Production

Fiber -- tons 8,316 99,792

Ethanol gallons 831,600 9,979,200

Unit Costs

Fiber $/ton $ 275 $ 2,286,900 $27,442,800

Ethanol $/gallon $ 1.37 $ 1,139,292 $13,671,504

Annual Return

Unit Pricing

Fiber -- per ton $ 400 $ 3,326,400 $39,916,800

Ethanol - per gallon $ 1.00 $ 831,600 $9,979,200

Unit Profit/Loss

Fiber -- per ton $ 125 $ 1,039,500 $ 12,474,000

Ethanol - per gallon $ (0.37) $ (307,692) $ (3,692,304)

Net Plant Profit/Loss $ 731,808 $ 8,781,696

Cash on Cash Annual Return 24%

Annual ROI

Value of bast fiberValue of bast fiber20% to 33% of biomass is high quality 20% to 33% of biomass is high quality

bast fiber which ranges in value bast fiber which ranges in value according to end use. May be according to end use. May be compared to cotton at $0.50 lb/ $1,000 compared to cotton at $0.50 lb/ $1,000 TonTon

In Composite applications it may be In Composite applications it may be compared to carbon and glass at $3 to compared to carbon and glass at $3 to $5 lb., but with improved qualities.$5 lb., but with improved qualities.

As feedstock for a specialty pulp mill, As feedstock for a specialty pulp mill, $400 ton (US)$400 ton (US)

Key Success Factors for a Kenaf Key Success Factors for a Kenaf industryindustry• Market for Kenaf productsMarket for Kenaf products

• Sufficient investment capitalSufficient investment capital

• Technical and management Technical and management expertiseexpertise

• Political WillPolitical Will

• Business climate acceptanceBusiness climate acceptance

• Intellectual property resource accessIntellectual property resource access

• Human resourcesHuman resources

Proposal for starting a Kenaf Proposal for starting a Kenaf industryindustry• Obtain capital from interested parties to prepare Business Obtain capital from interested parties to prepare Business

Plan & Action Plan Plan & Action Plan • Prepare Business Plan & Action PlanPrepare Business Plan & Action Plan

– Engage professional assistanceEngage professional assistance• Get commitments on key strategic relationshipsGet commitments on key strategic relationships

– Purchase commitmentsPurchase commitments• Market evaluation Market evaluation

– Investor commitmentsInvestor commitments• Land resourcesLand resources• Capital requirementsCapital requirements• Human resourcesHuman resources

– Technology commitments Technology commitments • Seed & variety development supportSeed & variety development support• Processing & handling equipment & systemsProcessing & handling equipment & systems• Conversion methodsConversion methods