eu biomass supply: potential to replace gas? konf/workshop/07... · eu biomass supply: realistic...

EU BIOMASS SUPPLY: POTENTIAL TO REPLACE GAS?WBA Workshop:“Reducing dependence on Russian natural gas with bioenergy”

Silvio Mergner, Pöyry Management Consulting12 May 2014

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AGENDA

12 MAY 2014EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 2

1. Pöyry intro2. The situation: EU biomass market complexity3. Energy and natural gas market dynamics4. EU biomass supply estimation and mobilisation barriers5. Conclusions

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PÖYRY’S BUSINESS SECTORS


Energy

Forest Industry

Chemicals & Biorefining

Mining & Metals

Transportation

Water

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SERVICES FOR CLIENT’S ENTIRE BUSINESS LIFECYCLE

12 MAY 20144

OperationalImprovement

SiteSupervision

EPCM

EPS/EPC

TechnicalConsulting

Detailed Engineering

BasicEngineering

Project / ConstructionManagement

OutsourcedOperations

ConceptualDesign

O&MManagement

EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS

ManagementConsulting

OperationalExcellence

StrategicAdvisory

EngineeringServices

OperationsSupport

ProjectImplementation

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BIOMASS SUPPLY IN THE EU: A COMPLEX ISSUE (1/2)


Many feedstocks, processes and ‚bioproducts‘

Value added

Feed

stoc

k

Agro

Wood

Waste

Bio-CHP Torrefied pellets Biodiesel Bio-basedintermediates

Bio-basedspecialty chemicals

Pellets Ethanol Biobased platformchemicals

Biobasedmaterials

Advanced biobasedmaterials from

carbon fibres onwards

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BIOMASS SUPPLY IN THE EU: A COMPLEX ISSUE (2/2)


Large numbers of stakeholders and development goals affect EU biomass markets

Transport

Consumer

Industry

Resource-efficiency

EnvironmentBiobasedproducts

Innovation

Resource ownersStable energysupply

….and many more

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EU BIOMASS SUPPLY: REALISTIC POTENTIAL TO REPLACE NATURAL GAS 7

EUROPE’S ENERGY POLICY CHALLENGES

The EU energy policy challenge is to take into account the competitiveness,security of energy supply and emission reductions all at the same time

1x2

x3

Securityof supply

Emissionsreduction

Cost foreconomy

Price of gasproportional toUS shale gasprice (2014)

Gas 65% Oil 85%

Imports

EU 2020 & 2030 Climateand Energy Policy



Net imports of natural gas Import dependency

EU NATURAL GAS IMPORTS: CORE COUNTRIES TO FOCUS ON

Imports of natural gas in the EU are dominated by five countries: Italy, Germany,France, the UK, and Spain; import dependency in general is large

-69-66

44

8690

101

103

NL

ATFRANCE

SKLV

CZ

IESI

LUEESEEL

FIBELT

SPAINPT

DKHRRO

UNITED KINGDOMHUPL

BGGERMANY

ITALY

Rest of EU58

Spain 34

United Kingdom36

France44

Germany67

Italy68

Top five importers account for >80%:net import of 249 Mtoe in 2011

(Mtoe) (%)

source: Eurostat

Net importNet export

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GAS MARKET DYNAMICS: IMPACT OF SHALE GAS


Shale gas production could have a significant impact on the European economyand energy system; Without EU28 additional substitution or reductions in gasdemand, import dependency may increase further

No shale gas in EU Some shale Shale boom

Source: Pöyry

2020 2025 2030

LNG NorwayNorth Africa Russia ConventionalUnconventional

2025 20302020 2020 20302025

(%)(%) (%)100

0



Scenario-based assumptionsUpper limit

Production & logistics capacityOwnership and sector behaviourReliable statistics & transparency

Environmental policy & legal frameworkCertification standards (e.g. FSC)

Cost of productionCost of supplyEconomics of consumption

Technicalpotential

Environmentalconstraints

Commercialconstraints

Practicalconstraints

REALISTIC BIOMASS SUPPLY PROJECTION: HOW?

Realistic potential must consider relevant constraintsDegree of difficulty

in estimating?

LOW

LOW - MEDIUM

HIGH

HIGH



OUTLOOK: EU BIOMASS SUPPLY AND DEMAND 2020 / 2030

Views on the EU biomass supply potential going forward vary widely; how much ofthe potential can be supplied sustainably from domestic sources, at what price?

Maxsupply

Minsupply

250211

118

0

100

200

300

400

(Mtoe)

110

2030Demand

2020SupplyNREAP(2020)

140

2010

Combined biomassconsumption in EU 250 Mtoeby 2030 (WBA position paper)

Sector studies address EUbiomass supply potentials:90 to 340 Mtoe

Questions

How big is the gap / surplusreally?

Which technology mix is best topromote within a 2030 policytarget?

EU Biomass Supply and Demand

Combined demand (primary energy)*Forestry

AgricultureWaste

* WBA position paper (5/2014): The future contribution ofBioenergy to the European Energy System

Lines represent supply potentials (range)identified in select studies (EEA, IE, BTG)



EU28 forest growing stock EU28 removals vs. increment

ADDITIONAL BIOMASS SUPPLY IN THE EU: IS THIS DOABLE?

Sustainable supply potential in European forests is growing; for a realistic pictureon biomass availability three main questions need to be answered1) Are statistics reliable?2) Can the surplus be mobilised directly?3) How will industrial processing capacity develop, impacting cascaded use?

source: Eurostat; calculations by Pöyry

4.4053.957

3.555

+1,1%

2000 20101990

158155144

999581

1990 2000

+0,5%

2010

increment removal

Mtoe equivalent Mtoe equivalent



FORESTS AGRICULTURE WASTE IMPORTS

22 Mtoe 19 Mtoe(by-products)40 Mtoe(energy crops)

10 Mtoe 22 Mtoe (pellets)12 Mtoe(liquid fuels)

WBA POSITION PAPER: EU BIOMASS SUPPLY INCREASE

The current policy, legal and market situation in the EU is not promoting anincreased use of biomass as formulated by WBA

WB

Apo

sitio

nB

arrie

rs

Significant share of biomass supply increase at risk tomaterialise under current policy, legal and market conditionsP

öyry

FragmentedownershipBiomass notdriving forestmanagement!

Energy cropsoften unattractivefor farmersFragmentedsupply

Only few really! Lower demandfrom heat / powerSupply capacitynot establishedFunding limited

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THE COST OF BIOMASS


A realistic view on cost of biomass supply chains is key to mobilise1. Untapped domestic supply potential2. Import potential

Biomass atthe source(cellulosic)

Refining(Chips/Bales/Pellets)

Transport(road, rail,ship)

STEP DRIVERS COST RANGE(EUR/odt)

• Distance• Bulk density• Transport mode

• Refining process• Economies of scale• Energy & labour cost

• Crop mgmt & yields• Harvesting efficiency• Market forces

10 - 25

10 - 75

(0) - 100

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BIOMASS CASCADE AND MARKET COMPLEXITY


Any influence (e.g. subsidies) in the market will affect other streams and shiftpowers: Opposition by key consumers may be strong!

SUST

AIN

ABLE

ANN

UAL

SUPP

LY(F

OR

ESTR

Y)

Sawnwood

Sawlogs & Veneerlogs

SawmillResidues

Pulplogs & otherroundwood

Harvesting Residues

“Un-mobilised supply”

suitableassortments

Otherassortments

Pulp & Paper

Panels

Pellets

Energy

HouseholdHeating

“Un-mobilised”

Waste Wood

SUPPLY UTILISATION “CASCADE” END-USE

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EXAMPLE: THEORETICAL BIOMASS IMPORT POTENTIAL


Even tight emissions savings targets leave room for a substantial (theoretical!)biomass import potential; how will the regional competitive landscape develop?

Biomass supplypotential within

specified emissions

2.000

0

1.000

1.500

500

(Mtoe)

Withinthreshold

refinedraw

Abovethreshold

Note: outlook 2030-2050 for all biomass sources; emissions savings threshold set to >60% against current fossil fuel comparator (savings200kg CO2eq/MWh); source and calculations: Pöyry

EU

Maximum distances to achieve CO2 emissions savings limitOrange: ‚Raw‘ biomassBlue: ‚Refined‘ biomass



EU biomass: not easily measurable / potential to increase /requires significant imports

Complex matrix of stakeholders

Financial incentives & stable framework: right balance challenging

Replacement of gas: allocation in highest value segment needed

Realising the potential: Mobilisation of untapped biomass

EU commitment to raise domestic biomass supply pre-requisiteSUPPLY CONSTRAINT

Trust in demand development necessary to build import chainsDEMAND CONSTRAINT

Biomass supply

Conclusions

Challenges

SUMMARY AND CONCLUSIONS

Whatever the potential….how do you get it moving?

eu biomass supply: potential to replace gas? konf/workshop/07... · eu biomass supply: realistic...

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