c7-aumbiz.pdf

© 2012 AUM Business Creations Pte. Ltd.

Turning Oil Palm Biomass into Bio-Ethanol

Overview about the Prospects and Challenges in deploying 2G ethanol technology in Malaysia using Palm Biomass as the feedstock.

Per Dahlen

23 January 2011

Version 1.0

Copyright and disclaimer

AUM Business Creations Pte. Ltd. (aumbiz) is happy to let anyone use and redistribute the information in this presentation without any restrictions, as long as you add aumbiz (www.aumbiz.com) as the source of your information. Thank you.

The information in this document is for informative purposes only, AUM Business Creations Pte. Ltd. should not be held responsible for the accuracy of the data presented in this document.

The purpose of this document is to share our view about the future market potential of Advanced Biofuels and other Bio-renewable products in Southeast Asia and to serve as a platform for discussions with potential clients, partners and other parties interested in this tremendous business opportunity.

The information described in this document may be protected by one or more U.S. patents, foreign patents, or pending applications. Aumbiz is a registered trademark of AUM Business Creations Pte. Ltd. Product and brand


pending applications. Aumbiz is a registered trademark of AUM Business Creations Pte. Ltd. Product and brand names used in the document may be trademarks or registered trademarks of their respective owners. Any such trademarks or registered trademarks are the sole property of their respective owners.

The information in this document is provided “as is” without warranty of any kind, either express or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement.

This document could include technical inaccuracies or typographical errors.

All strategic and product statements in this document are subject to change at AUM Business Creations Pte. Ltd.’ssole discretion, including the right to alter or cancel features, functionality, or release dates.

Changes to this document may be made at any time without notice.


Page: 2

The key to cheap ethanol production

Second Generation Ethanol – Biomass based

Hemi-Cellulose

Cellulose

Lignin

• First generation (1G) ethanol production uses either sugars (sugar cane, sugar beet, etc.) or starch (cassava, corn, etc.) for production of ethanol.

• Second generation (2G) ethanol technology uses renewable and abundant non-edible biomass as the feedstock.

• Biomass consist of three major components; cellulose, hemi-cellulose and lignin. Depending on the type of biomass the distribution is roughly one third of each.


A biomass fiber

distribution is roughly one third of each.

• Cellulose and Hemi-cellulose are long chain polymer sugars and can be broken down to simple fermentable sugars by using specially developed enzymes.

• For the enzymes to work efficiently, biomass must first be pre-treated to open up the fibres, enabling enzymatic attack. Various pre-treatment methods exist.

• Once fermentable sugars are obtained, enzymes are used to convert the sugars into ethanol, in a similar way as first generation ethanol production.

It takes years to become an over-night success…

2G ethanol developed for more then a decade

2000-2005 2005-2007 2007-2009 2009-2012 2013-


Research

- COMPLETED -

Lab Scale

- COMPLETED -

Pilot Plant

- COMPLETED -

Demo-plant Commercial

- Expected 2013/14 -

Various 2G ethanol technology suppliers are has already built, or is in the process of completing their Demonstration Plants. The first 2G commercial scale ethanol plants in Southeast Asia expected to be operational by 2013/14.

- COMPLETED -

Vinod Khosla:

"It's happening much faster than I would've guessed,“


than I would've guessed,“

Wall Street Journal – March 2011

Cheap and abundant feedstock is the key to sustainable production of Bio-Ethanol

2G technologies can convert most feedstock into Ethanol

EFB Palm Trunks Fibre Rice Husks Cane Bagasse Sweet Sorghum Energy Grass

Other Biomass Energy CropsPalm Biomass


C5 + C6 Sugars

Ethanol Lignin

H2O CO2

Co-products

2G EthanolTechnologies

2,000,000

2,500,000

3,000,000

First generation ethanol has impacted the price of food

The raging Food for Fuel debate is the result of 1G biofuel production using food crops as feedstock.

47% of all sugar harvested was used for fuel

Source: FAO, IEA, data elaborated by Aumbiz

� Ethanol and Biodiesel together provided 1.8% of the world’s transport fuel by energy value in 2007.

� Primarily driven by government policies, world ethanol production for transport fuel tripled between

Comparing the worldwide consumption of Food vs. Fuel for food-based feedstock – Sugars and Vegetable Oil. (Barrel per day equivalent)


-

500,000

1,000,000

1,500,000

Sugar Vegetable Oil

Oil for Fuel

Oil for Food

Sugar for Fuel

Sugar For Food

for transport fuel tripled between 2000 and 2007 from 17 billion to more than 52 billion litres.

� The equivalent of 47% of all harvested sugars was converted into ethanol, not used for food.

� Biodiesel expanded eleven-fold from less than 1 billion to almost 11 billion litres.

� 7% of the harvested vegetable oil was converted into BioDiesel.

Food vs. Fuel

Using Sugar for Fuel has clearly impacted the price of Sugar

$400.00

$500.00

$600.00

$700.00

50,000,000

60,000,000

70,000,000

80,000,000

� Ethanol has been produced for decades, but it is not until year 2005 when volumes drastically increases.

� Since 2005 the production volumes has increased 23% per year on average going from an annual volume of less

Correlating the price of Sugar to the annual production of Ethanol. Since 2005 a clear trend to more expensive food.

Source: Indexmundi, AgMRC, data elaborated by Aumbiz


$-

$100.00

$200.00

$300.00

-

10,000,000

20,000,000

30,000,000

40,000,000

Ethanol Production tpy Average Annual Price Of Sugar USD/ton

going from an annual volume of less than 20 million ton per year to more then 70 million ton in 2011.

� The price of Sugar has been strongly correlated with the increased production of ethanol.

� In 2005 only 29% of the world’s harvested Sugar was used for Fuel Ethanol production, by 2012 we will use more sugar for Fuel then what we use for Food.

60,000,000

70,000,000

80,000,000

90,000,000

Crude Oil for Other

Food crops will not be the solution for replacing oil

We must find other alternatives

Total Sugars, Vegetable Oil and Biofuels production, compared to Crude Oil demand. (Barrel per day equivalent)

� If all sugars currently harvested for food consumption were to be converted into Ethanol – this would be equivalent to 1.1% of current crude oil consumption.



-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

Sugar Vegetable Oil Crude Oil

Crude Oil for Transportation

Oil for Fuel

Oil for Food

Sugar for Fuel

Sugar For Food

crude oil consumption.

� If all Vegetable Oils currently used for food consumption were to be converted into BioDiesel – this would be equivalent to 2.7% of current crude oil consumption.

� With a 5% yield increase per year (additional hectares + yield per Ha) food crops would be able to supply current demand by 2099.

Less then 3.8% of the current crude oil demand could be derived from using all sugars and all vegetable oil

Available waste biomass is more than sufficient

11-12% of annual waste biomass is enough to replace all crude oil consumption!!!

Sugar , Vegetable Oil and Biofuels, compared to Crude Oil and the carbohydrate content of Biomass. (Barrel per day equivalent)

� Globally the annual biomass production is estimated to 170bn tons per year of which 75% is carbohydrates which can be used to produce bio-fuels and other bio-renewable products.

500,000,000

600,000,000

700,000,000

800,000,000

Biomass C6+C5

Crude Oil for Other



� Currently 3.7bn (2.2%) is used for human food use, 2.0bn (1.2%) for wood-energy, paper and construction, and 300M (0.2%) is used for clothing, detergents and chemicals.

� The potential for bio-fuels derived from the remaining biomass is estimated at 700 million barrels per day – more then 8 times the current consumption.

-

100,000,000

200,000,000

300,000,000

400,000,000

Sugar Vegetable Oil

Crude Oil Biomass C6+C5

Crude Oil for Other

Crude Oil for Transportation

Oil for Fuel

Oil for Food

Sugar for Fuel

Sugar For Food11.5% of annual biomass would be enough to

replace crude oil

Very ambitions Ethanol blending requirements

Worldwide a total of 226 million kiloliters are mandated by 2022

USA

Legislated:

20% by 2022

Market:

136M Kiloliters by 2022

EU-27

Legislated:

10% by 2020

Market:

25.3M Kiloliters by 2022

China

Target:

15% by 2020

Market:

11M Kiloliters by 2020


Brazil

Targets:

20% by 2020

Market:


India

Target:

20% by 2017

Market:


Source: aumbiz, calculation + Biofuel Digest 21-JUL-2011 (Link)

SEA/AU/NZ

Target:

5-10% by 2020

Market:


Expected Biofuel mandates by 2020 - Implications

Tremendous potential in second generation biofuels

� 160Mtpy of world-wide Sugar harvest would produce 32Mtpy of Ethanol (E100).

� 130Mtpy of world-wide Vegetable Oil harvest would produce 117Mtpy of BioDiesel (B100).

� Legislated and target renewable transportation fuels mandates world-wide by 2020 requires 175Mtpy of Biofuels.120

140

160

180

200

Millio

ns

2nd gen. 2020

2nd gen. 2015

2020 EU (RED)

Source: FAO, IEA, Biofuels Digest, Natixis, data elaborated by Aumbiz

Sugar to Ethanol, Vegetable Oils to BioDiesel compared to Biofuel mandates 2020 and Advanced Biofuels capacity. (Mtpy - Millions of tons per year)


175Mtpy of Biofuels.

� Current announced capacity by 2015 of 2nd generation advanced biofuels equal to 22.5Mpty.

� An additional 190M kiloliters capacity is required to meet mandates and targets between 2015 and 2020.

� Estimated total CapEx required USD 185-200 billion and 6 to 7 million hectares of energy crops with a yield in the tropics of ~100 ton per Ha per year.

-

20

40

60

80

100

120

Sugar to Ethanol

Vegetable Oil to BioDiesel

WW Mandates 2020

Advanced Biofuels 2015

2020 EU (RED)

2020 US (RFS2)

2020 Asia

Vegetable Oil

BioDiesel

Sugar

Ethanol

Access to cheap Biomass = 2G production economics

Deployment in low cost regions equals un-paralleled investment opportunity

$600.00

$700.00

$800.00

$900.00

Profit before tax

� For 2G ethanol, with an average feedstock price of EUR105 per ton (or USD136/t), translates into a total feedstock cost of USD470 per ton ethanol or 60% of an estimated competitive sales price of USD782 per ton ethanol.

� Given the high investments in processing plants and higher operating costs required for 2G

Source: SEKAB, Accenture, McKinsey, MPOB, Novozymes, Poyry, data elaborated by Aumbiz

Second generation ethanol production comparing production in Europe to Southeast Asia (USD/ton ethanol in Rotterdam)


$-

$100.00

$200.00

$300.00

$400.00

$500.00

EU SEA

Profit before tax

Shipment to EU

CapEx

OpEx

Enzymes

Feedstock

operating costs required for 2G ethanol production (enzymes), any large-scale deployment may not be feasible without some subsidies.

� The UK is proposing a EUR0.30 per litre subsidy which would make the business an interesting investment opportunity, but only with subsidies.

� Deploying 2G ethanol production in Asia fundamentally alters production economics … huge savings in feedstock costs, almost 4 times lower in Asia.

Challenge 1:Price of Biomass?

$250.00

$300.00

$350.00

$400.00

Logistics

Profit Margin

CapEx (10yrs)

Potential value which can be generated from one ton of dry biomass waste. Liquid fuels clearly offers the highest potential (USD/ton dry mass)

Value of one ton of Biomass for various uses

Each BioRenewable project needs to carefully evaluate the usage of the Biomass

� Fresh Biomass in Southeast Asia sells in the open market for up to USD10-40 per ton wet biomass.

� Using the biomass for energy generation, either in a boiler or in a biogas digester can generate extra

Source: Various, data elaborated by Aumbiz


$-

$50.00

$100.00

$150.00

$200.00

Pellet/DM Ethanol/DM Intermediary/DM

CapEx (10yrs)

Processing

Drying

In-bound Logistics

Biomass Cost (USD 35/ton_wet)

biogas digester can generate extra value of USD10 to 22 per ton.

� Substituting expensive industrial grid-electricity supply with self-generated biogas electricity would generate savings of up to USD125 per ton dry biomass.

� Converting biomass into cellulosic ethanol can generate USD182 per ton, USD162 more than for direct biomass sale (810 % increase).

2G Ethanol Yields

World’s best yields are 285-320 Liter per ton dry biomass.

200.00

250.00

300.00

350.00

400.00

Lit

er

per

ton

feed

sto

ck

� The actual yields are determined by the cellulose and hemi-cellulose content in the biomass.

� The over-all efficiency of the 2G technologies results in 80-85%

Source: ESI, USDE, USDA, Novozymes, Danisco, DSM

Second generation ethanol production depends to a large amount on the type of feedstock used. (Litre/ton DM)

World-class Ethanol yields


-

50.00

100.00

150.00

200.00

Eth

an

ol Y

ield

s -

Lit

er

per

ton

feed

sto

ck

technologies results in 80-85% compared to theoretical yields.

� Depending on the choice of feedstock the world’s best yields are 285-320 Liter per ton dry biomass.

Primary Feedstock Target – Agricultural Waste

Southeast Asia alone has more the 450 million tons agri-waste per year

Rice, paddy, 180,242,944 ,

26%

Other Primary Crops,

221,914,259 , 31%

Top-3 Primary Crops in Southeast AsiaTotal: 705,390,483 tons

Agriculture in Southeast Asia is dominated by three Primary Crops – Oil Palm, Rice Paddy and Sugarcane together representing 69% of the total yields. (ton/yr)

� The Primary Crop production in Southeast Asia is dominated by three major crops: Oil Palm, Sugarcane and Rice … 69% of total agricultural production.

� Oil Palm industry’s primary waste … EFB (Empty Fruit Bunch) and Fibers are both suitable feedstock. Trunks


Oil palm fruit, 163,727,598 ,

23%

Sugar cane, 139,505,682 ,

20%

Source: Aumbiz analysis based upon data from FAO

are both suitable feedstock. Trunks from replanting is another major source of feedstock.

� Sugarcane industry’s primary waste is bagasse … ideal feedstock.

� Rice Industry the main crop residue is rice husks at the mill and rice straws from the fields.

� Total available agri-waste biomass estimates to 450 million ton per year, sufficient for the production of 75 million tons of ethanol!

2G ethanol yields from Palm Biomass

Large potential – but can it be realized?

EFB Fibre Shell Trunks Fronds

C6-sugar Kg/ton DM 430 230 70 650 470

C5-sugar Kg/ton DM 260 180 400 120 240

Theoretic Ethanol Kg/ton DM 306 178 175 367 319

Theoretic Ethanol L/ton DM 388 226 222 465 404


Theoretic Ethanol L/ton DM 388 226 222 465 404

Availability DM (ton/year) 4.0M 7.0M 7.0M 14.0M 46.0M

MY Palm Ethanol Potential (KL/year) 1.55 1.58 1.54 6.51 18.58

Theoretic Ethanol production for Palm Biomass in Malaysia:30M KL/year equal to USD 24bn/year

Source: Aumbiz, Malaysian - Danish Environmental Cooperation Programme

Challenge 2:What is easily available?

Challenge 3:Can it be collected?

2G Ethanol – potential location in Malaysia

25M ton of Biomass (DM) can be mobilized at competitive cost

© 2012 AUM Business Creations Pte. Ltd. Page: 18

Source: National Biomass Strategy 2020

Aumbiz – Project Development Framework

All parts of a project must be considered and contracted before the project starts

Project Financing

Investor

Investment Project

ManagementLocal Project Developer

Logistics

PROJECT DEVELOPMENT FRAMEWORK

• Specifically developed for demanding, highly complex projects which uses biomass as feedstock.

• Holistic approach, which includes both the core elements of feedstock supply and off-take agreements and finance


Feedstock Off-take

People

Profit

Planet

Tech-nology

Utilities

SPV

and off-take agreements and finance and technology, and the project impact on the People, Planet and Profit.

• The Aumbiz Project Development Framework is used through out our project development process, but also used in the design of support systems and software development.

About aumbiz

Your trusted partner in Southeast Asia

� Market/Business Intelligence

� Competitive Analysis

� Partner Development

� Business Development

� Project Development

� Distribution Strategies

� Due Diligence of Technologies

Your trusted partner in Southeast Asia:Since 2007 aumbiz has actively been advising SMEs andmultinationals from Europe as well as from the US in theirinternationalization efforts in Southeast Asia. We have an un-paralleled experience, knowledge and network combined with an in-depth domain expertise and experience of Advanced Biofuel andBiobased Chemical technologies and processing solutions.

We do offer our Market Introduction Services to establishedtechnology companies with unique and protected technologies andwith a proven track record from their home markets.

© 2012 AUM Business Creations Pte. Ltd. Page: 20

� Due Diligence of Technologies

� Establishment of Foreign Operations

� Interim/Project Management

with a proven track record from their home markets.

Through our office in Singapore, our objective is to provide world-classinternationalization service for the Southeast Asia region.

We focus on the full value chain from the plantation to the distributionof the final product. We are engaging in establishing local R&D officesas well as supporting in project development and partnershipcreations.

Contact us today to explore how we together can grow your business inSoutheast Asia, call: +65-8223.5356 and talk to Mr. Per Dahlen


AUM Business Creations Pte. Ltd27 Changi Village Road

Unit: #01-23Singapore 509925

Singapore

Tel: +65-68223.5356Email: [email protected]

Web: www.aumbiz.com

Contact: Mr. Per Dahlen

21

c7-aumbiz.pdf

Documents

ton dry biomass

vegetable oil

southeast asia

crude oil

palm biomass

vegetable oils

transportation oil

fuel oil