WORKING GROUP ON

EFFICIENCY AND EQUITY TRADE OFF IN BIOETHANOL SUPPLY CHAIN

Ana-Maria Paizan-Ovidius University of Constanta, Romania

Aggeliki Dimakopoulou- NTUA, Grecee

Luca Amedeo Savoia, “Sapienza” University of Rome, Italy

Antonio Aspromonte- University of Foggia, Italy

Erasmus Intensive Programme “Equi-Agry”, Foggia 2014

Outline of the presentation

Ø Problem presentation Ø State of the art in bioethanol production Ø Efficiency aspects of the bioethanol production Ø Equity aspects for the bioethanol production Ø Methodological approach for the analysis Ø Conclusions

Erasmus Intensive Programme “Equi-Agry”, Foggia 2014

BIOETHANOL

u  An alcohol obtained from fermentation processes, mostly from carbohydrates produced in sugar or starch crops

USES OF BIOETHANOL :

q  Fuel for vehicles in its pure form

q  Gasoline additive to increase octane and improve vehicle emissions

Ethanol is a clean-burning, high octane fuel produced from renewable resources such as wheat straw and corn

WORLD ETHANOL PRODUCTION

STATE OF THE ART IN BIOETHANOL PRODUCTION

Ø  Supply chain for the bioethanol production

Raw material

Ethanol distribution

Raw material logistics

Ethanol Production

Customer

Flow of bioethanol process

Material flow (in quantity and energy content)

Finance Flow (Monetary unit)

Ø Raw Materials Bioethanol production:

1° step : C12H22O11 → C6H12O6 + C6H12O6 sucrose glucose fructose 2 ° step : C6H12O6 → 2CO2 + 2C2H5OΗ Glucose carbon dioxide ethanol Starch can be converted into D-glucose using the enzyme glukoamylase

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u  CORN

§  Is composed of starch : a six carbon carbohydrate, which is broken down to glucose, and then fermented to produce ethanol.

§  If wasted corn could be fully utilized as feedstock for producing bioethanol, then 9,3 GL of bioethanol could reproduced, thereby replacing 6,7 GL of gasoline if bioethanol is used as an alternative vehicle fuel.

The wasted corn could reduce around 0.93% of global gasoline consumption.

u  WHEAT STRAW §  is an abundant agricultural residue with low

commercial value

§  is a complex mixture of cellulose, hemicellulose and lignin, as 3 main components, and a small amount of soluble substrates and ash.

§  Among the agricultural residues, wheat straw is the largest biomass feedstock in Europe and the second largest in the world after rice straw.

§  The utilization of wheat straws and wastes could produce 7:0 GL of bioethanol, replacing 5:0 GL of gasoline when ethanol is used for a midsize passenger vehicle.

Second-generation biofuels are produced from a wide array of different feed stocks but not limited to non-edible lignocellulosic biomass.

TECHNOLOGIES FOR THE PRODUCTION OF BIOETHANOL

§  BIOETHANOL PRODUCTION FROM CORN

ü  Dry milling process ü  Starch gluten separation ü  Starch processing

The entire corn kernel is first grounded into flour and then the flour is slurried with water. In this mix are added: •  enzymes able to convert the starch to dextrose •  a simple sugar •  ammonia for pH control.

The ethanol is concentrated using conventional distillation and then is dehydrated in a molecular sieve system. The stillage is sent through a centrifuge that separates the coarse grain from the solubles. The solubles are then concentrated to about 30% solids by evaporation.

The mix is processed in a high-temperature

cooker Refrigeration Fermentation

(40-50 hours)

Distillation

§  BIOETHANOL PRODUCTION FROM LIGNOCELLULOSIC FEEDSTOCK

§  Break the lignin-hemicellulose-pectin complex §  Disrupt/loosen-up the crystalline structure of cellulose §  Increase the Porosity of the biomass These changes in lignocellulosic materials make it easier for enzymatic saccharification (hydrolysis)

HYDROLYSIS will generate fermentable monomeric sugars from hemicellulose and cellulose content of lignocellulosic biomass. acid hydrolysis enzymatic hydrolysis (endoglucanase , exoglucanase and cellobiase)

Then hexose and pentose sugars are fermented to ethanol under anaerobic/aerobic conditions

Efficiency aspects of the bioethanol production

Ø  From the production point of view the most competitive and less costly ethanol production is the production from corn, as today it is very stable process where the supply chain and the flow diagram is very well known offering the possibility to valuate the by-products obtained for the process.

Economic analysis of the bioethanol production from corn and wheat straws

u  The cost of feedstock and cellulolytic enzymes are two important parameters for low cost ethanol production. Biomass feedstock cost represents around 40% of the ethanol production cost (Hamelinck et al., 2005). At present there is still huge scope to bring down the cost of biomass-to-ethanol conversion.The EU tariff on undenatured ethanol is 192 Euro per thousand liters, while the tariff on denatured ethanol is 102 Euro per thousand liters.

u  The economic performance of the conversion process for bioethanolis determined by three groups of variables: - The capital cost, plant size and level of technological learning attained; - Product yields, associated flows of materials and energy (chemicals, feedstocks, etc.)

and their corresponding unit costs and revenues; - The cost of moving material from the farm to a conversion facility is mainly a

function of the transportation distance, so more related to length of the supply chain; - Cost of finance.

When you establish the total ethanol cost at the pump there are a lot of factors that should be taken into consideration are described in the figure below:

The estimation model used for the economic analysis of the bioethanol

The valuation of the byproducts is very limited as the process do not provides valuable byproducts as in the case of corn, only lignin wastes that can be used for combustion processes.

From the production point of view the most competitive and less costly ethanol production is the production from corn, as today it is very stable process where the supply chain and the flow diagram is very well known offering the possibility to valuate the by-products obtained for the process.

This is the case if we consider the entire supply chain starting with the biomass production until delivering the ethanol to the pump.

Market analysis for bioethanol production from corn and wheat straws

Ø  In the EU, bioethanol is mainly produced from wheat, corn, barley, rye, and sugar beet derivatives. Wheat is mainly used in northwestern Europe, while corn is predominantly used in Central Europe and Spain. When the EU domestic wheat supply is tight, producers in northwestern Europe commonly switch to imported corn.In the EU, the required feedstock for the 2013 production (5,190 million liters of bioethanol) is estimated at nearly 10.6 MMT of cereals and 9.5 MMT of sugar beets.

Ø  Since the inception of the European market, domestic producers have struggled to compete with imported ethanol. Cheaper volumes of, first Brazilian ethanol, and secondly US product, have depressed margins and displaced market share, resulting in underutilization of capacity. Since 2005, when the first indicative target of 2% use of biofuels (EC Directive 93/2003) was implemented, European fuel ethanol demand has grown by over 500% .

Some Datas:

NREL Scenario for the biofuel market development for reaching the RED Target

Ø  Ethanol marketing is much less of an issue in this scenario, although a share of high blend ethanol is also needed. E20 seems to be the most attractive route, as part of a longer term strategy to move from E10 to E20 as base fuel, but a 1% market share of E85 vehicles would also be adequate.

Ø  There are quite a number of routes to increase ethanol volumes beyond E10 levels: the passenger car fleet can gradually convert to E20 or E30, the share of E85 vehicles and fuel can be increased, ethanol can be blended into diesel for the heavy-duty fleet by shifting to a blend of 5% or 10% ethanol

Technological breakthroughs in the bioethanol production from corn and wheat straw

Ø  Even though theoretical ethanol yields from sugar and starch (g ethanol/g substrate) are higher than from lignocellulose, these conventional sources are insufficient for worldwide bioethanol production.

Ø  In that aspect agricultural wastes are renewable, less costly and abundantly available in nature. Agricultural wastes do not demand separate land, water, and energy requirements.

For economically feasible bioethanol production, several hindrances are to be overcome.

These refer to the four major aspects which are feedstock, conversion technology, hydrolysis process, and fermentation configuration.

For assuring a significant breakthrough in the technology production we should take into consideration the following factors described in the figure below:

Other datas… Energy necessities in the bioethanol production from corn and wheat straw

The energetic needs for the energy production of ethanol from corn are summarized below. The conversion of corn and other food/feed crops into ethanol by fermentationis a well-known and established technology.

Energy consumption in the production in ethanol from corn, Unit: GJ/kg Ethanol

Equity aspects for the bioethanol production

Public acceptance of bioethanol varies among different geographical contexts. It could be driven by the fact that there are some advantages that could result from the production and usage of biofuels both forn corn and wheat straw.

Social aspects analysis

u  Advantages:

-  Employment opportunities

-  Renewable energy generation

-  Opportunity to use the wastes (in case of straws)

u  Disvantages for using the corn:

-  Food shortage

-  The increasing competition over arable land, forests and natural reaources

-  Possible evictions of small peasant farmers and indigenous communities

Legislative framework for biofuels at EU level

With directive 2003/30/EC the EU began a long process of promotion the use and production of biofuels. The directive requires the member states to introduce legislation and take the necessary measures to ensure that biofuels account for a minimum proportion of the fuel sold on their territory.

Subsequently, the directive was repealed by directive 2009/28/EC.

One of the most important aspects of the european legislation are the measures to avoid unfair competition between countries. U.S. is the largest producer of bioethanol in the world (2014 à 4 billion liters; forecast for 2021 à 50 billion).

The european institutions have noticed that the price of imports into the EU is lower than that one applied in the U.S. . Looking to this aspect, the European Council published a regulation (2013/157/EC) imposing import duties on U.S. bioethanol.

The duty amounts to 62,3 € per tonne of imported bioethanol from U.S. . It was also established a provisional duty on biodiesel from Argentina (2013/1194/EC). Other importers à Brazil In past years has played a leading role in the importation of bioethanol in Europe, but nowadays the level of imports has decreased significantly. Its market share has dropped from 30.3% to 4,5%. New legislative framework 1) Communication “A policy framework for climate and energy in the period from 2020 to 2030”. 2) “Communication on energy technologies and innovation” 3) “Clean power for transport: A European alternative fuels strategy”

Environmental aspects analysis

Ø  Today ethanol produced from corn results in about a 20% reduction in GHG emissions relative to gasoline. With improved efficiency and use of renewable energy, this reduction could be as much as 52%.

Ø  In the future, ethanol produced from lignocellulosic has the potential to cut life cycle GHG emissions by up to 86% relative to gasoline.

Ø  In October 2012 the Commission published its long awaited proposal on Indirect Land Use Change (ILUC).

Ø  The proposal aims at starting the transition from conventional biofuels to biofuels made from non-food feedstock. The proposal adds these weighting factors to second and third generation biofuel:

1)  Biofuel from used cooking oil, animal fats, non-food cellulosic material, ligno-cellulosic material except saw logs veneer logs will count twice towards the targets

2)  Biofuels from algae, biomass fraction of mixed municipal and industrial waste, straw, manure and sewage sludge, palm oil mill effluent and empty palm fruit bunched, tall oil pitch, crude glycerin, bagasse, grape marcs and wine lees, nut shells, husks, cobs, bark, branches, leaves, saw dust and cutter shavings will count four times towards the targets.

As a conclusion, second generation bioethanol production is more efficient than first generation bioethanol b.e. production and conventional fossil oil systems cause it is low carbon, resource efficient and socially inclusive, according to the green economy

Employment opportunities By contrast to biodiesel, which tends to support the development of small-scale producers, the ethanol industry is usually characterized by centralized, large-scale, export driven production so as to guarantee its economic feasibility

However, with the increasing mechanization of agricultural production that is occurring in most developing countries, the number of agricultural jobs associated with the production of liquid biofuels is likely to decrease over time.

A mixed system in which a machine cuts the crop that is collected and then gathered manually may be more suitable for biofuels production

Barriers in using bioethanol

Renewable fuel associations in Europe and U.S. also emphasize that there is no technical or environmental motive for limiting the use of ethanol in fuels. From the industrial point of view we have identified that this proposal could increase uncertainties and even threatens its viability by discouraging investment for the possible investors.

Also from the point of view of the farmers that produce the biomass the proposal and the 5% cap, can determine them to claim that this will cut them off from an important market for their products if they are not permitted to sell to the bioenergy industry.

There are administrative barriers to the use of bioethanol in the EU. The directive 98/70/EC on the quality of fuels limits the use of ethanol blends in fuel to only 5% without stating any reason for such a decision.

Methodological approach for the analysis

SWOT analysis for bioethanol production from the two selected study cases

Ø  The specific objective of the analysis was to offer a first impression in the decision for selecting a type of raw material in the supply chain, proving a trade-off for the bioethanol production between the efficiency, both technical and economical and the social aspects very important in the decision of selecting one type or another for the production of bioethanol;

Ø  The SWOT analysis was done based on the

members evaluation, but also using the available literature for this analysis naming the source where was the case.

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

STRENGHTS

WEAKNESSES

OPPORTUNITIES

THREATS

Decision making simulation game

Farmers

Bioenergy producers

Finance Research

Evaluation

Ø  The second step in the decision of using one type of another was to use the decision making simulation game by simulating the two situations in using one type of another raw material;

Ø  Every member of the team developing this report had a specific role in order to have more specific and diverse decision according to the background of every member;

Ø  The ranking of the priorities was done individually deciding together with the other team members if there were some very important differences between each member’s opinions regarding the two studies cases.

Results

Decision making criteria   Farmers   Finance   Producer   Researcher   Totals  Total Rank  

Return on Investment   1   1   2   4   8   1,3  Annualrevenues   2   2   1   5   10   1,7  National economy   7   5   8   6   26   4,3  Regional/Local Economy   6   6   7   7   26   4,3  Application of New/Innovative Technologies   3   3   3   2   11   1,8  Employment   4   7   5   3   19   3,2  Environment   8   8   4   1   21   3,5  Political and institutional benefits   5   4   6   8   23   3,8  

Decision making for bioethanol production from corn ranking

Decision making criteria   Farmers   Finance   Producer   Researcher   Totals   Total Rank  

Return on Investment   3   1   1   5   10   1,7  Annual revenues   1   2   2   4   9   1,5  National economy   7   4   8   7   26   4,3  Regional/Local Economy   6   6   7   6   25   4,2  Application of New/Innovative Technologies   4   5   3   1   13   2,2  Employment   2   7       3   12   2,0  Environment   8   8   6   2   24   4,0  Political and institutional benefits   5   3   5   8   21   3,5  

Decision making for bioethanol production from wheat straws ranking

Corn bioethanol production

Efficiency Equity

10% blend limit

EU Directive 2014

Food competition

Economical

Technical

Conclusions Wheat straws

bioethanol production

Equity Efficiency

High costs production

Technical limitations

Wastes valuation

EU support

Gains for farmers

Conclusions

Ø We have identified in this report the production of bioethanol from corn to be more efficient from technical and economic point of view, but without a good social acceptance due to the fact that is competing for food;

Ø  From equity point of view the use of the wheat straws is more acceptable as the farmers could valuate the straws wastes and have supplementary gains;

Ø  The problem for the bioethanol production is the additional costs for the pretreatment phase, that is shifting the entire costs for the production of bioethanol;

Ø  The recommendation of our team as a tradeoff between efficiency and equity is the use of wheat straws even if its high costs, but with the emphasis that more research needs to be done in order to have a stable, sustainable and cost efficient plant for the bioethanol production;

Ø As long as the plantation of the bioethanol feed stocks are done in a sustainable way without compromising native species habitats and endangering the local biodiversity, there is no reason why bioethanol cannot be one of the energy solutions for today.

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