a low-carbon roadmap for belgium · analyses definition of the value chain analyses of growth and...

A Low-carbon roadmap for Belgium Study realised for the FPS Health, Food Chain Safety and Environment

Industry sector – pulp & paper document

This document is based on content development by the consultant team as well as expert workshops that were held on the 12-07-2012 and 14-09-2012

Content – Industry sector – pulp & paper

2

▪ Summary p. 2

▪ Context and historical trends p. 4

▪ Details of the ambition levels and costs per lever p. 15

▪ Resulting trajectories p. 29

▪ Backup p. 37

Executive summary for the pulp & paper sector

3

• 3 trajectories for pulp & paper production in Belgium have been defined, which include a range between ~+60% to ~-30% of 2010 production levels in 2050

− The high growth trajectory assumes growth mainly in paper production for hygienic and packaging applications.

− The low growth trajectory assumes less paper is used for graphical applications.

− The Belgian pulp & paper industry is under pressure: recovered paper & wood raw material cost (because of the subsidized use of biomass as an energy source), costs of energy, environmental regulation and foreign competition. A shift towards products with higher added value is expected.

Construction of different

trajectories w.r.t. future

production

• GHG reduction potential (at constant production) ranges between 26% and 104% (level 3 & 4 ambition)

− Energy efficiency can be improved and reduce emissions by 20% to 25% (CHP potential is already fully realised)

− A fuel switch from liquid fuels to gas can be expected to be completed by 2025, leading to 3% of additional emission reductions.

− The substitution of fossil fuels by biomass in Kraft pulp production allows for an additional 3% of emission reductions.

− CCS is applied in combination with black liquor gasification in Kraft pulp production starting from ambition level 4. The application of black liquor gasification + CCS reduces GHG emissions by an additional 73%, effectively turning pulp & paper production into a carbon sink. This finding underlines the need for funding of breakthrough technologies in the pulp & paper sector.

Estimation of GHG reduction

potential

NOTES Reduction potentials are for are ambition levels 3 and 4, expressed as a % of the 2010 GHG emission level except where explicitly mentioned otherwise. The reduction in each step represents the additional reduction percentage after all the previous levers have been applied. This is why : (1) The reductions of the actions add up to the total reduction of the sector (levers are applied in the sequential order represented here) (2) Level 4 ambition can therefore be smaller in cases where more potential has been achieved with the previous levers There is a double counting between the biomass potentials mentioned here and in the supply section, it is removed in the OPE²RA model


4

▪ Summary p. 2




▪ Backup p. 37

Understanding the industry Modelling demand trajectories

Modelling trajectories with intensity levels + CCS

Analyses Definition of the value chain Analyses of growth and competitivity Potential of CO2 reduction incl. costs

Results Modelling the emissions tree Demand trajectories Trajectories with different intensity levels + CCS

A detailed analysis is performed for each industrial sector, the methodology is detailed in the general industry document (and not repeated in each sector document)

5 SOURCE: Climact

Paper represents 2% of emissions for 5% of the energy consumption

6

13%11%

1%

1%

4%8%

2%

100%

Emissions

37

3% 6%

36%

19% 26%

33%

11%

7% 1%

5%

5%

119

Energy

2%

5% Non-Ferrous metals

Construction (Bricks and ceramics)

Food, drinks and tobacco Industry

Pulp & Paper Industry

Chemicals Industry

Steel Industry

Refineries (in chemicals)

Cement Industry

Minerals Industry (glass)

Lime Industry

Other

GHG emissions and energy consumption in Belgium 2010 (MtCO2e, TWh, %)

MtCO2e TWh

NOTE: (1) Excluding electricity emissions and consumption

(2) Amongst solid fuels, coke use in steel industry has two function (raw material and energy) Both are included in the analysis but only the 2nd creates emissions in the atmosphere

SOURCE: NIR CRF v1.4

• Paper represents 2% of emissions for 5% of the energy

• Non metallic minerals (Cement, Lime and Glass) have high process emissions

• In steel, there would be less TWh if the coke used as reducing agent was not included in the analysis (cfr with the IEA data)

~85% covered by workshops

Wallonia datasets

Paper emissions decrease while consumption increases because of a switch to biomass

7

Pulp & paper energy consumption and emissions (TWh, MtonCO2e electricity excluded)

0

1

2

3

4

5

6

7

8

0,0

0,2

0,4

0,6

0,8

4,3

1990

4,3

2010

6,0

2005

5,6

2000

4,6

1995

Emissions

Other Fuels

Biomass

Gaseous Fuels

Solid Fuels

Liquid Fuels

TWh MtonCO2e

SOURCE: NIR CRF v1.4

GHG emissions have decreased significantly since 1990

8 NOTE: ‘Other fuels’ in NIR CRF modelled as ‘solid fuels’ in OPE²RA (NIR reports 594 kton CO2 eq emissions). Model results include all CHP (autoproduction + partnership)

SOURCE: NIR CRF 1.4, Atlas énergétique wallon, ETS registry, MIRA kernset milieudata

GHG emissions in pulp & paper sector (1990-2010) (ktonCO2e)

769

641700

824+10%

-23%

2010 ETS 2009 ETS 2008 ETS 2010 Model

2008

503

219

283

2007

506

220

286

2006

566

260

306

2005

609

282

327

2000

657

261

396

1995

625

243

382

1990

650

236

414

Wallonia

Total

Flanders

▪ All GHG emissions covered by ETS

▪ ETS registry covers all CHP (autoproduction + partnership), regional energy balances only cover autoproduction

ETS data (Combustion emissions)

Data from energy balances (Combustion emissions, electricity excluded)

Model

Technology

Definition of value chain for each technology

9

Recycled (only in Flanders)

Virgin material

Extraction of primary material

Preparation Pulp Paper Application

Wood Mix Paper production

Treatment

Used paper

Mix

SOURCE: Analyse Climact

Sub-products of forestry

Wood sub-products

Graphical

Hygiene

De-inking

Waste

70% recycled

30% new fibres (not added in Belgium)

100 % new fibres

Pulp

Black liquor Packages Alcalin,…

(e.g. ClO2)

Kraft process

Steam

Elec

1 Mixing fibres-water

2 Paper machine - Wet part - Dry part

3 Finishing

Starch & coatings

CTMP

10

Emissions tree

Pulp emissions

GHG emissions pulp &paper

or

Paper emissions

Emissions Virgin material

Emissions Recycled paper process

SOURCE: Cobelpa data

Emissions Drying

Emissions Preparation

Emissions Finishing

498kt pulp 1974kt paper 0,315 tCO2e/t product

Growth prospects At the European level, growth is expected to occur in hygienic and packaging applications, graphical applications are expected to decline

11

2010 2015 2020 2025 2030 2035 2040 2045 2050

100

0

Graphical applications

Packaging

Hygiene

Forecasts (base 100 in 2010) Illustrative

NOTE: No quantitative forecast are available at this stage

SOURCE: BREF document Pulp & Paper industry; Cobelpa interview

75% of volume produced in Belgium

Growth prospects Belgium Importance of wood scarcity

12

12

Gap

-1

Demand

2

13

11

Supply

Belgian demand & supply 2005 Belgian demand & supply 2020

13

38

24

13

Supply Demand Gap

-25 Energy demand

Industrial demand

Supply

Gap

SOURCE: UNECE study 2007

Growth prospects Belgium Trends apparent at world, EU and Belgian level

13

World (3)

• Strong correlation between demographics and paper demand means paper production worldwide will increase

• Strong Asian demand for primary material and used products

• Contraction of European market for graphical paper

• Growth of pulp production in Latin America

EU (1, 2, 3)

• Competitiveness under pressure • Wood prices go up (with

market distortion caused by subsidies for energetic applications);

• Price of used paper rises; • Energy prices rise; • Costs of environmental

regulation rise

• Switch to high value-added products is probably necessary

• Market for paper for packaging and hygienic use will probably grow

Belgium (1,3)

• Pulp • International competition • Pressure from Latin America

• Graphical applications • Contracting market

• Packaging and hygienic applications • Stable growth but some

converting delocalisation to Eastern Europe

SOURCE: (1) CAN Europe 2010 , (2) BREF document (3) Cobelpa consultation

Growth prospects EU New markets on the long term

14 SOURCE: CEPI roadmap, consultation Cobelpa/CEPI

New markets

Bio-refineries

Bio-substitutes for petroleum derivates, green chemistry, biofuels, bioplastics

Paper

Bio-substitutes for non renewable materials

Nanotechnology applications

In Belgium, specialization will be an important factor

Evolution towards niches with higher added value


15

▪ Summary p. 2




▪ Backup p. 37

Parameters influencing demand in 2050

16

Parameter Hygiene Graphics

(incl. pulp) Packaging

• Growth prospects • CAGR European population towards 2050: 1% • CAGR GNP: 1,6% (1)

• CAGR paper industry (2010-2050) : 1,1% (2)

• Potential for growth in volume(3)

• Expected contraction(3) • Potential for growth in volume (3)

• Probability of creation of new infrastructure

• Proximity of markets • High labour cost

• Correlation to Belgian production • Well developed market which will remain more or less stable(3)

• Virgin material • Forestry potential is important but already heavily sollicited (BE, LU, North FR) (3)

• Paper for recycling • Potentiel already largely tapped (3)

• Modification expected in mix of products

• Partial shift to high added-value products(3)

SOURCE: (1) Federal Planning bureau, (2) GEM-E3 projection, physical production output (kton) (used in TUMATIM study), (3) Cobelpa/CEPI

17

3 trajectories influencing energy demand will be modelled

Trajectory 1

Trajectory 2

Trajectory 3

Pulp and paper

• CAGR +1,2% (+61% by 2050) • High growth assumption ≈ GEM-E3 • No distinction between pulp and paper

• CAGR 0% • Transposition of stable European output to

Belgium • No distinction between pulp and paper

• CAGR -0,8% (-27% by 2050) • Equivalent to closing down one integrated

pulp & paper mill in Belgium • No distinction between pulp and paper

Possible growth scenarios European population: 1% GNP: 1,6% (1)

GEM-E3 (2010-2050) • 1,1% (2)

Cobelpa/CEPI • Growth in paper for packaging

and hygienic use, decline in graphical applications (3)

• Stable physical output most likely on European level

SOURCE: (1) Federal Planning bureau, (2) GEM-E3 projection, physical production output (kton) (used in TUMATIM study), (3) Cobelpa/CEPI

What if people behaved

differently? (e.g. more

electronics)

18

Production of pulp & paper (ktons)

Growth prospects Belgium Production according to trajectories 1, 2 et 3

2010 2020 2030 2040 2050

4,000

3,000

2,000

1,000

Trajectory 3

Trajectory 2

Trajectory 1

0

+3%

+61%

+44%

-27%

Delta 10-50,%

19

Reduction potential Reduction levers are additional and applied in the following order

Product mix

• Augmenting the proportion of product which require less CO2 for production (not applied here)

Energy efficiency

• Reduce mechanical and thermal losses

• Recuperate thermal energy (CHP)

Fuel switching

• Towards fuels which emit less CO2

Process improvement

End of pipe

• Carbon capture and storage

Methodology

[Beyond scope] Sustainability of

biomass

Recycled paper (max. potential already tapped)

Energy efficiency

CHP

BAT application

Switch liquid fuel to gas

Black liquor gasification

CCS on black liquor

gasification

Switch fossil fuels to biomass

Biorefineries (not modelled)

Drying innovations

Other cellulose sources

(speculative)

•Modification of processes

20

Energy efficiency (1/3) Reduce mechanical and thermal losses

SOURCE: (1) SERPEC study, (2) CEPI roadmap, (3) consultation Cobelpa/CEPI , (4) CAN Europe, (5) Carbon Trust (UK)

Energy efficiency potential along several sources

Type of energy efficiency gain Reduction %

Cross-cutting measures (across industry) (1) ~10%

Energy performance of chemical pulping(1) already close to BAT

By applying BAT in 2050(2)

25%

Efficiency gains in the Belgian paper industry (taking into account the fact it is more efficient than European average

5 – 10 %(3)

Advanced drying technologies in paper production (waterless paper, superheated steam drying) : pre-pilot phase application uncertain in paper industry(4)

/

Applying ‘good practices’ and ‘innovative opportunities’ in UK pulp and paper sector, by 2030(5)

22,5%

Level 4 Level 3 Level 2

21

Level 1

• Minimum effort (following current regulation)

• 10% efficiency improvement

• Moderate effort easily reached according to most experts


• Significant effort requiring cultural change and/or important financial investments


• Maximum effort to reach results close to technical and physical constraints


Energy efficiency (2/3) Reduce mechanical and thermal losses

NOTE: Assumption: Capex + Fuel savings = O Euro (capital expenditures are repaid by fuel savings over the lifetime of the energy efficiency investment)

SOURCE: Carbon Trust study


22

Level 1


• Full potential already realised







Energy efficiency (3/3) CHP potential

SOURCE: Consultation Cobelpa


23

Level 1


• No additional shift to gas


• 100% switch to gas completed in 2025





Fuel switching (1/2) Switch from liquid fuel to gas

NOTE : All boilers replaced by 2025 (assumption); cost = cost of fuels



24

Level 1


• No additional biomass in integrated mills in 2050


• 70% biomass in integrated KRAFT mills in 2050





Fuel switching (2/2) 95% switch to biomass in integrated KRAFT mills is realistic

NOTE : Some start-up fuel still required; cost = cost of fuel


25

• KRAFT process used in Burgo Ardennes (360 kton pulp/yr)

• Black liquor contains more than half of energy content of wood fed into digester

• Possibility of syngas production with precombustion CO2 capture

• Pulp production process becomes net carbon sink !

• Market deployment starting from 2015-2020

SOURCE: CAN Europe

Process improvement (KRAFT process) (1/3) Black liquor gasification with CCS

26

Process improvement (KRAFT process) (2/3) Industrial costs of CCS

USD/tCO2e

SOURCE: IEA


27

Level 1


• Not applied


• Not applied


• Not applied


• Applied starting from 2035

• 1,4 ton of CO2 captured and stored per ton of KRAFT pulp produced

Process improvement (KRAFT process) (3/3) Black liquor gasification with CCS

NOTE: Capex black liquor gasification = 4,25 Meuro/Mton paper.yr ; cost CCS = 45 Euro/ton CO2

SOURCE: consultation Cobelpa/CEPI, CAN Europe

28

Reduction potential: Maximum reduction potential for different levers, horizon 2050

NOTE: Assuming all regions of the world perform a similar effort

SOURCE : Consultation Cobelpa/CEPI, CAN Europe study, CEPI roadmap, Carbon Trust (UK)

Type of lever Improvement Reduction potential (2050) in %

Cost Description Application

1 2 3 4 Kraft pulp

CTMP pulp

Graphic Hygiene Packaging

Product mix Increase of recycled paper N/A N/A N/A N/A / Maximum potential already reached

Energy efficiency

Energy efficiency measures (audits, environmental management systems, drying innovations)

-10% -15% -20% -25%

0, large capex

expected for drying

Cfr discussion

CHP N/A N/A N/A N/A / Maximum potential already reached

Alternative combustibles

Switch liquid fuels towards gas 0%

100% in

2025

100% in 2025

100% in 2025

Cost of combusti-

bles All boilers replaced by 2025

Switch fossil fuels towards biomass 0% 70% in KRAFT

mills

85% in KRAFT

mills

95% in KRAFT

mills

Cost of combusti-

bles

Not included in total because biomass availability is limited by central offer

Process improvement

Black liquor gasification + CCS 0% 0% 0%

100% in KRAFT pulp production starting in 2035

Capex= 4.25

€/ton.yr

For CCS: €45/tCO2e

Considered to be a ‘breakthrough’ technology

End of pipe Biorefineries 1% Mainly on kraft production (not modelled)

Pulp & Paper sector


29

▪ Summary p. 2




▪ Backup p. 37

30

Trajectory 1 (high growth) GHG emissions for different ambition levels (MtonCO2e)

-0,2

0,0

0,2

0,4

0,6

0,8

1,0

1,2

4

3

2

1

2050 2045 2040 2035 2030 2025 2020 2015 2010

SOURCE: OPE²RA model

Reduction potential Emissions according to different trajectories

Delta 10-50,%

+45%

+29%

+21%

-106%

31

Trajectory 2 (medium growth) GHG emissions for different ambition levels (MtonCO2e)

-0,1

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

4

3

2

1

2050 2045 2040 2035 2030 2025 2020 2015 2010



Delta 10-50,%

-10%

-20%

-25%

-104%

32

-0,1

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

2015 2010

4

3

2

1

2050 2045 2040 2035 2030 2025 2020

Delta 10-50,%

-35%

-42%

-46%

-103%


Trajectory 3 (low growth) GHG emissions for different ambition levels (MtonCO2e)


33

GHG emissions for different trajectories and ambition levels (MtonCO2e and % change in % of 2010 level)

Reduction potential Black liquor gasification is needed to reach European targets

-0,2

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

-83 à -87%

-76%

+61% -27% 0%

-104%

-167%

EU target Industry

2050

Levels on Trajectory 3



Baseline 2010

MtCO2e


Level 4

Level 3

Level 2

Level 1

34

GHG emissions in 2050 using different levers (% of 2010)

0,82

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

+29%

Residual Black liquor with CCS

Switch biomass Switch gas Energy efficiency 2050 BAU 2010 baseline

Reduction potential Details for trajectory 1 with ambition level 2

+61%

-24% -5%

-4%

NOTE: Percentage reductions are calculated vs the 2010 baseline SOURCE: OPE²RA model

-0%

35

CO2 emissions in 2050 using different levers (% of 2010)

0,82

-0,2

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

-106%

Black liquor with CCS

Switch biomass Switch gas Energy efficiency 2050 BAU 2010 baseline

Reduction potential Details for trajectory 1 with ambition level 4

+61% -40%

-4% -4% -118%

NOTE: Percentage reductions are calculated vs the 2010 baseline SOURCE: OPE²RA model

36

Cost Marginal cost and abatement potential for different levers under trajectory 1 with ambition level 4 GHG abatement curve for the year 2050 (trajectory 1, ambition 4) €/tCO2e, % emission abatement in 2050 (% of 2010 level)

NOTE: Hypothesis of cost neutral energy efficiency measures , cost of biomass generic across all sectors SOURCE: OPE²RA model

100

50

0

-50

-100

-150

220% 200% 180%

160% 140% 120%

-250

100% 80% 60% 40% 20%

-300

-200

€/tCO2e Energy efficiency

Black liquor gasification + CCS

Switch to biomass

Fuel to gas

% emission abatement in 2050 (% of 2010 level)


37

▪ Summary p. 2




▪ Backup p. 37

38

Paper from wood

Paper from paper

NOTE: Flows are simplified for clarity purposes (e.g. transport and packaging are not shown)

SOURCE: Cobelpa 2010 figures, within Climact framework

Emissions of recycled paper are similar to the ones of sustainable forests

CO2 emissions along key steps of the paper life cycle

Certified sources

Recycling

Origin Process Use End of Life

CO2emissions

0,315 tCO2e/ton paper for the production

0,315 tCO2e/ton paper for the production

Scope

Non-certified sources Sustainability of biomass has to be taken into account

Details for production sites (ETS registry)

39 SOURCE: ETS registry, Belgium

Category Production site

GHG emissions (tCO2 eq)

Comment 2008 2009 2010

Integrated/partly integrated production

Burgo Ardennes Harnoncourt 96.708 102.581 112.437 Kraft pulp and graphic paper

Oudegem Papier 203.760 207.442 204.179 Packaging from recycled paper

Sappi 193.951 161.786 206.439 CTMP pulp (fully integrated) and graphic paper

Stora Enso Langerbrugge 50.323 43.082 120.201 Graphic paper from recycled paper

Non-integrated production (buy pulp)

Gruppo Cordenons Malmedy 19.988 7.627 0 Graphic paper

Idempapers Nivelles 3.136 2.484 2.089 Co products for Virginal

Idempapers Virginal 54.288 47.320 56.864 Graphic paper

LPC Belgium 30.894 30.408 30.163 Sanitary paper

Ahlstrom Malmedy 11.277 7.797 9.076 Technical paper

SCA hygiene products Stembert 28.699 28.497 27.340 Sanitary paper

Total / 693.024 639.024 768.788 /

Production of pulp & paper is rising

40 SOURCE : Cobelpa website

Total production and apparent consumption of paper & boards (kton product)

498

1,974

Pulp Paper and board

Production per product in 2010 (thousand tons)

Geographical distribution of production sites

41 SOURCE: Cobelpa

• Recycled paper used mostly in Flanders

• No decision centres or R&D located in Belgium

Growth prospects 45 % of pulp is of Belgian origin; 83% is of European origin

42

Origin of pulp used in Belgian paper industry (2010)

SOURCE: Cobelpa data

4%

12%

42%

3%

38%

1%

Purchase of Belgian pulp

Belgian

European

Integrated Belgian production

Rest of Europe

Latin America

Others North America

45%

83%

SOURCE: Pöyry Consulting, Green-X data, McKinsey/Pöyry team analysis

Demand-supply gap 2020, percentage of demand

Growth prospects Belgium Belgium is one of the most seriously affected countries by 2020

43

44

Technical detail pulp production

SOURCE: Ekbom, 2003

Flux of the chemical process

45

Technical details paper production

1 2 3

SOURCE: Cobelpa

Flux of the chemical process

Thank you.

Erik Laes – 014 335909 – [email protected]

Pieter Lodewijks – 014 335926 – [email protected]

Michel Cornet – 0486 92 06 37 – [email protected]

mailto:[email protected]



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