FY 2014 Project for Promoting the Spread of Technologies to Counter

Global Warming (Feasibility Study of Biocoke technology JCM

project in Thailand)

Report

March, 2015

Mizuho Information and Research Institute, Inc.

Contents 1. What is Bio-coke? ..................................................................................................... 1

1.1 What is Bio-coke? ............................................................................................... 1 1.2 Track Record of Bio-coke Production and Use .................................................. 7

2. Feasibility of Manufacturing and Sales of Bio-coke in Thailand ........................ 13 2.1 Assessment of Local Demand for Bio-coke ...................................................... 13 2.2 Feasibility Assessment ..................................................................................... 24 2.3 Economic Effects of the Plan ........................................................................... 35

3. Exploration of Methodology to Evaluate Emission Reductions and Estimation of Emission Reductions Using the Methodology ........................................................... 38

3.1 Exploration of methodology to evaluate emission reductions ........................ 38 3.2 Estimation of emission reductions expected in the project ............................ 45 3.3 Regarding the estimation results .................................................................... 48

4. Proposal of JCM-related Policies for the Diffusion of Bio-coke Technology ........ 49 Issues with material procurement ......................................................................... 49 Issues with the securement of distribution channels ............................................ 50 Issues with the protection of intellectual property ............................................... 51 Issues with research and development .................................................................. 51

1. What is Bio-coke?

1.1 What is Bio-coke? 1.1.1 Biomass Utilization Technologies

For use as fuel, biomass can not only be directly combusted but also be processed so that its properties are changed as shown below:

Gas (by way of such means as methane fermentation under anaerobic conditions, and gasification at high temperature)

Liquid (in such forms as bioethanol through fermentation) Solid (by way of such means as carbonization under low oxygen conditions)

Bio-coke has a major advantage that it can be stored and combusted in ways different from the biomass it derives from, thanks to property transformation through these processing processes. It has a major disadvantage as well: it cannot utilize all the energy the original biomass contained because part of the carbon is consumed or released in the process of processing the raw material. This disadvantage has highlighted the need for increased yield.

Table 1: Major Uses and Utilization Technologies of Biomass

Energy use

Direct combustion (power generation, thermal utilization)

Into gaseous fuel

Methane fermentation (power generation, thermal utilization) Gasification (power generation, thermal utilization)

Into liquid fuel

BDF BTL Ethanol

Into solid fuel Chips Pellets/briquettes Bio-coke

Material use

Wood chips Feed Fertilizer Soil conditioner (carbonization)

1.1.2 Bio-coke: Overview

Bio-coke is a type of solid fuel that is produced by applying heat and compression; it is a new biomass fuel developed by Dr. Tamio IDA, Professor, the Research Institute of Biocoke, Kinki University, Japan. Bio-coke features high strength and long combustion duration--two of the properties that have been deemed difficult to achieve with traditional biomass fuels. It has also a major advantage that it can be produced from almost all kinds of plant biomass, including those that have rarely been utilized to date. Biocoke is recognized as a trailblazing technology of using biomass as energy from these characteristics.

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It may be worth adding that bio-coke won the New Energy Foundation’s Director-General Prize of Agency of Natural Resources and Energy in the new energy category in FY2011, as well as the Environment Minister’s Award for Global Warming Prevention Activity in FY2012.

Figure 1: Bio-coke Production Process

Source: Kinki University

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Table 2: Characteristics of Bio-coke

Characteristic 1

It can substitute for coal-coke (due to its high compressive strength and long combustion duration at high temperature)

Bio-coke is best characterized by its high compressive strength and long combustion time at high temperature--the two of the properties that have been difficult to achieve with conventional technologies of processing biomass into solid fuel, including pelletization and dry distillation.

This characteristic has unleashed the potential of biomass in areas where it is difficult to put conventional biomass to good use.

In fact, various demonstration trials and research have been underway in Japan and other countries on the possibility of bio-coke substituting for coal-coke in cupola furnaces, blast furnaces, and gasification and direct melting furnaces.

Its high strength makes bio-coke widely applicable as a material.

Characteristic 2

It can use almost all kinds of biomass as the raw material.

Bio-coke can be produced from almost all kinds of plant biomass.

Production demonstration trials have shown that applicable raw materials include used tea leaves, used ground coffee, rice husk, swine manure, wood waste (konara oak, cherry tree), sawdust, tree bark, apple peel, banana peel, distillery waste, soymeal, and reeds.

It can make use of raw materials that usually have not been used because they cannot be used with other biomass utilization technologies as well as residue from materials that have been used with other biomass utilization technologies.

Characteristic 3

It can make effective use of all the energy contained in the raw material.

All the amount of the raw material that is put into bio-coke production unit is processed as bio-coke, meaning that the weight of the input material weight equals that of the product.

In other words, unlike charcoal, this process of converting the raw material to solid fuel does not release its volatile components such as methane, leaving all the energy contained in it in the bio-coke produced.

In addition, the fact that the input raw material is all converted to the product means that bio-coke is a zero-emission fuel that does not generate byproducts in the production process.

Source: Compiled by MHIR from various sources. 1.1.3 Raw materials of bio-coke

Bio-coke can be produced from almost all kinds of plant-derived waste. Many other biomass utilization technologies focus on the carbohydrates that account for 70-80% of wood biomass, including cellulose and hemicellulose; but they do not make effective use of lignin, which makes up for the remaining 20-30%.

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With its ability to utilize lignin, bio-coke can make use of raw materials that usually have not been used because they cannot be used with other biomass utilization technologies as well as residue from materials that have been used with other biomass utilization technologies. Production demonstration trials have shown that applicable raw materials include used tea leaves, used ground coffee, rice husks, swine manure, wood waste (konara oak, cherry tree), sawdust, tree bark, apple peel, banana peel, distillery waste, soymeal, and reeds.

Figure 2: Some Kinds of Biomass That Have been Used for the Raw Material

Source: Kinki University 1.1.4 Advantages of the Bio-coke Production Process and Products

The bio-coke production process features semi-carbonized forward reaction at 180 deg C (approx. 450 K). This reaction prevents carbon from being converted to methane or other gases. No reduction in the amount of carbon means a yield of almost 100% on a weight base. (For example, one kilogram of dry raw material is converted to one kilogram of bio-coke.) Because it is produced at a temperature lower than the gasification temperature range, bio-coke can utilize the volatile biomass components that cannot be put to good use in the case of charcoal. No residue in the production process is another characteristic of bio-coke since all the raw material is converted to bio-coke, as shown by its nearly 100% yield on a weight basis.

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Figure 3: The Temperature Range Where Bio-coke Can be Produced (for Used Tea Leaves)

Source: Kinki University The high strength of bio-coke comes from two factors. One is high density as a result of physical compression (20 MPa). The other is the structural change in which, as a result of heating, pyrolyzed hemicellulose serves as an adhesive and lignin is cross-linked. Because of its high density as a result of compression, bio-coke burns steadily for an extended period of time. The cross-linked structure of lignin allows bio-coke to continue to burn within a high temperature range of 1,300-1,500 deg C.

Figure 4: Cross-sections of the Raw Material (Biomass) and Bio-coke

Source: Kinki University

Bio

-cok

e te

mpe

ratu

re r

ange

Gas

ifica

tion

tem

pera

ture

ra

nge

Car

boni

zatio

n te

mpe

ratu

re

rang

e

Temperature [K]

Bio-coke is generated in this temperature range

Used tea leaves

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Figure 5: Carbonization Degree and Strength of Fuels

Source: Kinki University These features point to the high potential of bio-coke as a substitute for coal-coke. Property comparison among different types of coke is shown below:

Table 3: Comparisons of Major Properties of Selected Types of Coke

Functional criteria Coal-coke Bio-coke Ogalite charcoal (biomass coke) Data source/Unit

Calorific value 7000 4000-6000 8000 kcal/kg Cold strength 20 MPa 40-100 MPa 1-3 MPa Compression test

Hot strength n/a High Average Pressurized combustion test

Apparent specific gravity 1.1 1.4 0.3? Actual measurement Drop strength High Very high Average No test conducted

Rotational strength High Very high Average No test conducted Porosity - 0 - No test conducted

Thermal fluidity 1,000-20,000 n/d - JIS fluidity test Ash fusibility - - - No test conducted

Combustibility 0 40-50 20-30 Charcoal = 100 Solubility 100 40-50 70-80 Coal-coke = 100

Source: Kinki University Note that bio-coke is different from wood pellets though the two are often mixed up. The former is the product of a chemical reaction induced by simultaneous compression and heating, while the latter is the product of physical compression of biomass. The difference in the production process translates into significant differences in strength, combustion temperature range, and combustion time between bio-coke and biomass pellets. Comparison between bio-coke and conventional solid fuels is shown below:

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Table 4: Comparison between Bio-coke and Conventional Solid Fuels

Criteria Bio-coke Wood pellets Wood chips Ignitability Low High High Combustion temperature

range 1,300-1,500 deg C

(In a melting furnace) 600-800 deg C 410 deg C (In a stove)

Combustion time Long Short Short Clinker

generations Almost none Much Much

1.2 Track Record of Bio-coke Production and Use Many cases in Japan and other countries have already shown that bio-coke can serve primarily as a substitute heat source for coal-coke in a range of applications, including metalworking such as casting and forging, as well as waste incineration. Bio-coke is used in the context of putting locally-generated biomass to good use as well. In some cases, bio-coke is produced from municipal solid waste (MSW) and fallen leaves from roadside trees for road heating in cold climate areas. In other cases, bio-coke is produced from agricultural residues such as rice husks, vegetable scraps, and used mushroom beds for greenhouse heating. Demonstration trials on bio-coke production have also been conducted in many places. A case in point is the project in Malaysia that has been conducted since 2013 jointly by Kinki University and Osaka Gas Engineering Co., Ltd. under the Next Generation Technology Transfer Program (NexTEP) of the Japan Science and Technology Agency (JST). In this project, bio-coke is made from the shells of oil palm kernels from which oil has been extracted. This project is to explore the possibility of mass-producing such bio-coke and export it to Japan.

Table 5: History of Bio-coke Production and Use

Date Event April 2010 Kinki University and Naniwa Roki Co., Ltd. jointly developed a practical type of

bio-coke production unit with an output capacity of one ton per 24 hours. April 2011 The Osaka Prefecture Forest Owners Association constructed the world’s first

commercial bio-coke plant in Takatsuki City, Osaka Prefecture. The plant still manufactures bio-coke primarily from forest thinnings for sale.

September 2011 Kinki University, JFE Engineering Corporation, Naniwa Roki Co., Ltd., and Nihon Kouken Co., Ltd. jointly conducted demonstration trials, successfully replacing 56.5% of the coal-coke in a gasification and direct melting furnace.

2012 Kinki University successfully developed continuous manufacturing unit with an output capacity about four times higher than the conventional unit in 2012, which was incapable of continuous production of bio-coke. This project was funded under the Project for Regional Innovation Creation and R&D within the framework of the supplementary national budget for FY2010.

January 2012 Bio-coke won the New Energy Award (Director-General Prize of Agency of Natural Resources and Energy) for FY2011

December 2012 Kinki University, Toyota Industries Corporation, Naniwa Roki Co., Ltd., and the Osaka Prefecture Forest Owners Association jointly won the Environment Minister’s Award for Global Warming Prevention Activity for FY2012.

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2013 Naniwa Roki Co., Ltd. performed demonstration trials of bio-coke as a heat source for cupola furnaces as part of the project it conducted under contract to the Ministry of Economy, Trade and Industry (METI), which is known as the “technical cooperation project concerning the technical application of bio-coke that is consistent with the industrial policy of the Ministry of Industry of Thailand.”

August 2013 As part of the Japan International Cooperation Agency (JICA)’s Preparatory Surveys for BOP Business Promotion, demonstration trials were performed in Laos in which sawdust from sawmills was used for the raw material of bio-coke.

March 2014 Kinki University and Osaka Gas Engineering Co., Ltd. launched a pilot project to produce bio-coke from palm trees in Malaysia under the JST’s Next Generation Technology Transfer Program (NexTEP).

Source: Compiled by MHIR from press releases from Kinki University. 1.2.1 Production of Bio-coke

<Takatsuki Bio-coke Processing Plant of the Osaka Prefecture Forest Owners Association> Takatsuki Bio-coke Processing Plant of the Osaka Prefecture Forest Owners Association, completed in April 2011, is the world’s first commercial bio-coke manufacturing plant. This is the result of a project designed jointly by the Osaka Prefecture Forest Owners Association, Kinki University, Naniwa Roki Co., Ltd., and Takatsuki City to produce bio-coke from locally sourced forest thinnings as a fuel for melting iron. This fully-automatic processing plant includes a crusher and dryer for the raw materials and 36 bio-coke molders. It started operations in June 2011. Now the plant manufactures about 1,800 tons of bio-coke a year.

Figure 6: Takatsuki Bio-coke Processing Plant

Source: MHIR

Raw material (Chips)

Storage

Finished product

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Figure 7: Molding plant

Source: Kinki University <Thailand> A bio-coke production unit is also seen in the campus of the Thai-Nichi Institute of Technology in Thailand, with which Kinki University has signed a memorandum of understanding (MOU) on academic exchange and cooperation. This unit was installed in December 2013 as part of the “technical cooperation project concerning the technical application of bio-coke that is consistent with the industrial policy of the Ministry of Industry of Thailand” under METI’s trade and investment promotion program for FY2013. The unit is an upgraded version of the Takatsuki Bio-coke Processing Plant of the Osaka Prefecture Forest Owners Association. (This is a single unit as it is for research purposes only.)

[Photos] Above: Plant exterior, Below: Plant interior, Upper right: Conveyor carrying the ground raw material to the dryer, Middle right: Upper part of the reactors (cylinder), Lower right: Middle part of the reactors (cylinder)

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Figure 8: The Bio-coke Production Unit in Thailand

Source: MHIR <Malaysia> In July 2014, a bio-coke pilot plant was installed in Malaysia. This plant, made up of a few upgraded production units like the one in Thailand, is designed to produce sample bio-coke on a trial basis for about two years. If it proves successful, the plant will be developed into a commercial plant for full-fledged commercial production with a view to mass-producing bio-coke, especially for melting furnaces in Japan.

Figure 9: The Pilot Plant in Malaysia

Source: Osaka Gas Engineering Co., Ltd. 1.2.2 Use of Bio-coke

This section introduces some of the cases in which bio-coke can be put to practical use.

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<Casting> Casting refers to the process of producing the intended product by pouring melted metal into a mold with specific dimensions and taking it out from the mold after it is solidified. Applicable metals include pig iron and aluminum alloys. Pig iron castings account for the majority of casting products on a production volume basis. Pig iron castings constitute important Sokeizai [formed and fabricated materials such as castings and forgings] in the machine industry; they are used as key parts of automobiles and industrial machinery. At a foundry, bare metals (iron scraps generated in-house or in press shops) are melted in a melting furnace at a temperature of approximately 1,500 deg C. A melting furnace can be a cupola furnace (explained later), which primarily uses coal-coke for the heat source or an induction furnace (electric furnace). Bio-coke can substitute for coal-coke as the heat source for cupola furnaces. Theoretically, it can completely replace coal-coke. Demonstration trials conducted by Kinki University have shown that up to 20% of the coal-coke can be replaced on a calorie basis without a major problem. The trials tested up to 30% replacement. The substitutability of bio-coke for coal-coke in the melting process for casting has been corroborated by separate trials that a Thai foundry conducted in 2013 in cooperation with the Thai-Nichi Institute of Technology, with which Kinki University had signed an MOU on academic exchange and cooperation. Thailand is the target country for this study. Demonstration trials have also been performed on the use of bio-coke as a recarburiser in induction furnaces. A recarburiser is a carbon substance added to the molten iron in order to increase the carbon content of the product. A recarburiser is essential in the casting process in which steel scraps were melted. Demonstration trials by Kinki University’s Research Institute of Bio-coke have shown that bio-coke can serve as a recarburiser in such a process.1 <Forging> Forging refers to the process of plastically deforming the metal material into a given shape with given dimensions by compressing it with a machine or tool. The products of this process, that is, forgings outstrip castings, sinters and sheet-metal products in terms of toughness and reliability. They are often used as key parts that support the safety of the finished product. Forgings come in many forms, which are largely divided into open die forgings and closed die forgings, depending on how the flow of the material is bound with a die. Steel forging includes hot forging at a temperature of 1,000-1,200 deg C, cold forging at room temperature, and warm forging at a temperature between, that is, 600-850 deg C. Today, the mainstream hot source for heating furnaces is electricity or gas. In the past, however, coal-coke was widely used for this purpose. Some forges still use coal-coke. Kinki University’s Research Institute of Bio-coke has demonstrated that bio-coke can substitute for coal-coke at such forges. <Waste incineration (in a gasification and direct melting furnace)> Gasification and direct melting furnaces are incinerators that gasify the components and extract the ash content as slugs and metals through high-temperature pyrolysis. As the pyrolysis of waste requires external energy, coal-coke is used in the conventional incineration process where waste itself is burnt. Kinki University’s Research Institute of Bio-coke has demonstrated that up to 50% of such coal-coke can be replaced with bio-coke. In this way, bio-coke has proved to be applicable to various uses in Japan and other countries. At the moment, bio-coke can replace only a fraction of such coal-coke. This is due in part to the differences in combustion properties in terms of temperature and other factors between bio-coke and coal-coke, which in turn will not allow furnaces designed for conventional coal-coke to completely replace it with bio-coke.

1 Tomita, Yoshihiro, “Koshuha Yudo Yokairo wo Mochiita Chuzo ni okeru Mareshia-san Yashi Baiokokusu no Katansei no Hyoka [evaluation of the recarburising property of bio-coke produced from palm trees in Malaysia in the casting process using a high frequency induction melting furnace]”

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It is deemed theoretically possible to use bio-coke in industrial processes where coal-coke is used in large quantities as well, including the process involving a blast furnace in the steel industry, although demonstration trials have yet to be conducted for such processes. There should be many other industrial processes for which bio-coke has not been even tried due to its limited availability. The new fuel is not yet mass-produced after all. This suggests that bio-coke has vast potential for such industrial processes.

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2. Feasibility of Manufacturing and Sales of Bio-coke in Thailand

2.1 Assessment of Local Demand for Bio-coke 2.1.1 Demand for Coke in Thailand

Thailand is relatively endowed with coal resources. The open-pit mine in Mae Moh in Northern Thailand, for example, produces coal that is used for coal-fired power plants. Almost all the coal produced in Thailand, however, is lignite, which is unsuitable for coke production.2 The country imports almost all the coal-coke it uses. A look at the changes in imports of coal-coke in recent years shows a quadruple increase from 53,000 tons in 2008 to 209,000 tons in 2010, followed by a sharp drop to 36,000 tons in 2012, the lowest level in 10 years. Coal-coke imports edged up to 39,000 tons in 2013.

Figure 11: Changes in Thailand’s Imports of Coal-coke

Note: Coal-coke is defined as the range of products that are classified as HS Code No. 2704 (Coke & semicoke of coal, lignite, peat; retort carbon).

Source: WTO, International Trade Center Database (http://www.intracen.org/trade-support/trade-statistics/) Compiled by MHIR

A comparison in imports of coal-coke in 2013 with other major ASEAN countries shows Thailand’s imports were less than one-third of those of Indonesia, or less than a half of those of Malaysia or Vietnam. For reference, Thailand’s imports represented about one fortieth of those of Japan, which also depends largely on imported coal-coke. In this regard, Thailand’s dependence on China was relatively high, standing at more than 80%, compared with less than 60% for Indonesia and around 10% for Malaysia.

2 See, for example, Japan Petroleum Energy Center, “Kaigai Shigen Kaihatsu to Sekiyu Seisei Jigyo ni Katsuro wo Miidasu Tai [Thailand explores opportunities in natural resources development overseas and oil refining”], JPEC Report, November 28, 2014.

66,385 70,95853,672

66,31752,593

117,544

208,729

108,164

36,019 39,090

0

50,000

100,000

150,000

200,000

250,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

（トン）(In tons)

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Figure 12: Imports of Coal-coke by Major ASEAN Countries (2013)

Note: Coal-coke is defined as the range of products that are classified as HS Code No. 2704 (Coke & semicoke of coal, lignite, peat; retort carbon).

Source: WTO, International Trade Center Database (http://www.intracen.org/trade-support/trade-statistics/) Compiled by MHIR

In Thailand, what are the major uses of coal-coke, for which it depends almost completely on imports, over 80% of which comes from China? Globally speaking, coke is used for metallurgy in such as the steel industry and the casting industry. In Thailand, the steel industry does not use a blast furnace. Casting is thus the primary use of coal-coke there. The next section overviews coal-coke demand in the casting industry, studies the substitutability of bio-coke, and explores other industries that are potential users of bio-coke in Thailand. Exploring Prospective Users of Bio-coke

(In tons) (cf.) Japan Total imports: 1,532,198 tons Imports from China: 1,030,258 tons

Other countries China

Thailand Indonesia Malaysia Philippines Vietnam

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2.1.2 Exploring Prospective Users of Bio-coke

(1) Casting a Overview of cupola furnaces and foundry coke A cupola furnace is a kind of shaft furnace designed to melt bare metals. Metals and coke are alternately fed into the steel cylindrical shaft with a firebrick lining. Air is provided from the tuyere to burn the coke. Note that coke not only provides the heat but also serves as a recarburiser for the molten metals, albeit in a small quantity. Table 6 shows the major advantages and disadvantages of cupola furnaces. The figure below shows the basic structure of a cupola furnace.

Table 6: Major Advantages and Disadvantages of Cupola Furnaces

Advantages Disadvantages

Cupola furnaces can mass-produce high-quality molten metals steadily at a low cost.

For the iron source, cupola furnaces can use galvanized steel sheets, which are generally not applicable for use in an induction furnace.

While induction furnaces are relatively easy to operate automatically, cupola furnaces demand much manpower for melting operations, pushing up labor costs.

Cupola furnaces, if they are small in size, require manual repairing every time they are used.

Cupola furnaces generate much dust, making it difficult to keep the surrounding environment clean.

Cupola furnaces emit more CO2 than induction furnaces or gas furnaces.

Source: MHIR, “Imonoyo Genzairyo Mondai he no Taio ni Kansuru Chosa Kenkyu [A study on how to address issues concerning raw materials for castings],” April 2005 (This study was commissioned by METI.)

Figure 13: Structure of a Cupola Furnace

Source: Nihon Kouken Co., Ltd., “Baiokokusu Jigyoka Kanosei Chosa Hokokusho [A study report on the feasibility of bio-coke business]”

(This study was commissioned by Aomori Prefecture within the framework of the Ministry of Health, Labor and Welfare’s special fund program for stimulating hometown employment.)

Cupola furnaces use foundry coke, which is distinctive from metallurgical coke, which is used for blast furnaces. Unlike metallurgical coke, foundry coke is not primarily used for reduction; it is needed both to serve as a heat source and a recarburiser and to physically support metals in the furnace. Foundry coke thus needs to meet a number of strict requirements, including high strength that can withstand the impact of incoming metals and bear their load, a grain size appropriate for the suitable the diameter of the furnace, and a low reactivity, as well as lower ash and sulfur contents than metallurgical coke. The production of foundry coke with such characteristics has recently been on the decline in Japan, which has no choice but to depend on coke imported from China.

Molten metal

Coke

Bed coke

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Figure 14: Examples of Foundry Coke

Table 7: Major Characteristics of Foundry Coke

Foundry coke Metallurgical coke Remarks (on foundry coke)

Ash content 6-10% 10-12% Low ash content coke boosts the absorption of carbon by the molten iron, thereby increasing its temperature.

Sulfur content 0.6-0.7% Around 0.7%

When the molten iron contacts with coke, the sulfur content of the coke is absorbed into the molten iron, which often has adverse effects.

Drop strength 93% or higher ―

This is important because the coke needs to bear the load pressure of the material in the furnace at high temperatures.

Porosity 30-40% 45-50% A higher porosity is undesirable because it is more reactive (and therefore more combustible).

Grain size

Normally 60 mm or larger (depending on the

dimension of the cupola furnace)

Normally 25-75 mm; 50 mm on average

The grain size should be small enough to maintain the voids in the furnace and thus facilitate the dripping of the molten iron and ventilation. Generally, it should be 1/6-1/12 of the inside diameter of the furnace.

Source: MHIR, “Imonoyo Genzairyo Mondai he no Taio ni Kansuru Chosa Kenkyu [A study on how to address issues concerning raw materials for castings],” April 2005 (This study was commissioned by METI.)

Separate demonstration trials have already been carried out in Japan to assess the feasibility of substituting bio-coke for foundry coke as the heat source of melting metals in a cupola furnace. These trials have shown that part of such foundry coke can be replaced.

Table 8: Selected Demonstration Trials on the Substitution of Bio-coke for Foundry Coke for Melting Bare Metals in a Cupola Furnace

Period Partner Description and outcomes

Apr.-Jul. 2008 Car parts manufacturer Demonstration trials in a cupola furnace for manufacturing car engine parts confirmed an effective substitution rate of 11.4%.

Oct.-Nov. 2013 Cast iron pipe manufacturer

Demonstration trials tested substitution rates of 5%, 10%, 15%, and 20% on a calorific value basis. They showed that bio-coke can replace up to 20% of the foundry coke without causing major practical problems.

Source: Research Institute of Bio-coke, Kinki University

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b Overview of the Casting Industry in Thailand 1) Production An article on the 48th Census of World Casting Production for 2013 carried in the February 2015 issue of Chuzo Janaru [journal of casting], published by the Japan Foundry Society, Inc. shows that Thailand produced 316,000 tons of castings--a total of iron castings, steel castings and nonferrous castings--in 2013, ranking the country 22nd on the list of the economies surveyed. Thailand is severely outranked by five major economies in Asia: China with 44,500,000 tons, India with 9,810,000 tons, Japan with 5,538,000 tons, ROK with 2,562,000 tons, and Taiwan 1,158,000 tons. Still, Thailand is among the largest casting producers among the developing countries. By type, Thailand produced 131,000 tons of iron castings, 30,000 tons of steel castings, and 156,000 tons of nonferrous castings, which accounted for a large share of the total.

Table 9: Casting Production of Major Economies in the World (2013)

(1,000 tons)

Rank Economies Iron castings Steel castings Nonferrous castings

Castings in total

1 China 32,750 5,500 6,250 44,500 2 US 8,416 1,423 2,411 12,250 3 India 7,760 1,100 950 9,810 4 Japan 3,864 182 1,492 5,538 5 Germany 3,953 208 1,026 5,187 6 Russia 2,800 700 600 4,100 7 Brazil 2,571 233 268 3,071 8 ROK 1,798 164 600 2,562 9 Italy 1,077 70 825 1,971

10 France 1,339 81 329 1,748 11 Mexico 831 79 742 1,652 12 Turkey 1,108 135 300 1,543 13 Ukraine 515 470 380 1,365 14 Poland 857 55 354 1,266 15 Taiwan 752 76 330 1,158 16 Spain 906 75 131 1,112 17 Canada 378 92 235 705 18 UK 297 64 123 484 19 Czech 226 76 106 408 20 South Africa 220 118 37 375 21 Austria 158 13 146 317 22 Thailand 131 30 156 316

Note: “Pig iron castings” include gray iron, ductile iron and malleable iron castings. Source: Compiled by MHIR from Japan Foundry Society, Inc., Chuzo Janaru [journal of casting], February 2015

issue. (Original source: American Foundry Society, Modern Casting, December 2014 issue.) The automobile industry is a key custmer of the casting industry in most countries. And Thailand is no exception. The casting industry in Thailand has been developing in step with the country’s automobile industry, the largest in ASEAN. Yet, production of ferrous castings in June 2014 fell 12% from the same month a year earlier as a result of a significant drop in the number of automobile units manufactured due to the sluggish economy following the political confusion in 2014.3

3 Interviews with officials at Company J, a trading house specializing casting materials

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Figure 15: Changes in the Number of Automobile Units Manufactured

in Three Major Economies in ASEAN Source: Compiled by MHIR from OICA, Production Statistics.

2) Number of Foundries and Product Shipment Unit Prices As of 2013, there were a total of 580 foundries in Thailand. They included 280 iron foundries, 40 steel foundries, and 260 nonferrous foundries. The average production per foundry was 467 tons for iron castings, 745 tons for steel castings, and 600 tons for nonferrous castings. These figures roughly represent 1/10, 1/3, and 1/2 of the Japanese counterparts, respectively. The unit shipment price of products per tons in the same year was 1,599 dollars for iron castings, 1,935 dollars for steel castings, and 2,399 dollars for nonferrous castings. Likewise, these figures roughly represented 80%, 30%, and 40% of the Japanese counterparts, respectively.

Table 10: Comparison between Thailand and Japan in the Number of Foundries, Production per Foundry, and Unit Shipment Price (2013)

Iron castings Steel castings

Nonferrous castings

Castings in total

Thailand

No. of foundries 280 40 260 580 Production per

foundry (t) 467 745 600 546

Unit shipment price (US$/t) 1,599 1,935 2,399 2,025

Japan

No. of foundries 817 75 1,193 2,085 Production per

foundry (t) 4,730 2,422 1,251 2,656

Unit shipment price (US$/t) 2,122 6,418 6,702 3,497

Note: “Iron castings” include gray iron, ductile iron and malleable iron castings. Source: Compiled by MHIR from Japan Foundry Society, Inc., Chuzo Janaru [journal of casting], February 2015

issue. (Original source: American Foundry Society, Modern Casting, December 2014 issue.) 3) Geographical Distribution of Foundries According to the 2013 directory of the Thai Foundry Association, there are 158 member companies--including foreign-affiliated foundries such as Japanese ones--as of 2013. Of them, 72 are ferrous foundries while 34 are nonferrous foundries. Geographically, these 72 companies concentrate in the Central region, especially the capital city of Bangkok, Samut Sakorn, and Samut Prakarn.

(1,000 units)

Indonesia Malaysia Thailand

18

Figure 16: Geographical Distribution of Ferrous Foundries in Thailand

(members of the Thai Foundry Association only) Source: Compiled by MHIR from the Directory of Thai Foundry Association 2013.

c Foundries that Use a Cupola Furnace to Melt Metals There are about 50 foundries that use a cupola furnace for melting metals in Thailand. All of them are small- and medium-sized local companies. Geographically, they are concentrated in Samut Sakorn (the province that is traditionally known for its casting production), which is located immediately southwest of Bangkok.4 They produce mainly agricultural machinery, manholes, pumps and the like; they do not produce items that require a large manufacturing scale and advanced technology such as car parts. Large foundries that mass-produce such items use an induction furnace, not a cupola furnace.5

4 Interviews with officials at Company J, a trading house specializing in casting materials 5 In Japan, on the other hand, foundries that mass-produce such items as car parts and cast iron pipes (straight pipes) usually use a cupola furnace for melting metals since they enjoys comparative advantage in mass production.

11 foundries or more 6-10 foundries 5 foundries or less

Northern region

Central region

Northeastern region

Total

19

Figure 17: A Foundry That Uses a Cupola Furnace to Melt Metals (Company H, in Samut Prakarn)

Figure 18: Another Foundry That Uses a Cupola Furnace to Melt Metals

(Company I, in Samut Sakorn)

In the casting industry in Thailand, there has been a shift in use in the melting process from cupola furnaces to induction furnaces. One major factor behind the shift is said to be a spike in the price of coke about a decade ago. Another factor may be that increasingly strict environmental regulations in Thailand make it more and more difficult to operate cupola furnaces.6 It is thus unlikely that demand for foundry coke will increase significantly in Thailand. The coke price surge a decade ago refers to the sudden rise in the price of China-made foundry coke around 2004. Back then, the Chinese government significantly restricted the issuance of export permits to foundry coke manufacturers as part of its efforts to secure coal resources for the country and conserve the environment; these manufacturers were problematic from the environmental point of view. As a result, the price of Chinese foundry coke for export shot up sharply. Because of its already heavy dependence on Chinese foundry coke, the Japanese casting industry temporarily suffered a serious shortage of coke. A serious dearth of coke also hit small-sized foundries in Thailand, which depended on cupola furnace for metal melting. This must have precipitated a shift from cupola furnaces to induction furnaces.

6 MHIR, “Sokeizai Sangyo no Tai tono Renkei (Shinshutu) no Arikata ni Kansuru Misshon Haken ni Yoru Chosa Kenkyu [A study based on the study mission for exploring ways to work with the Thai Sokeizai industry (including operations there by the Japanese counterparts)], “February 2009. (This study was commissioned by METI.)

20

Figure 19: Changes in the Price of Foundry Coke in Japan (from 1994 to September 2004)

Source: MHIR, “Imonoyo Genzairyo Mondai he no Taio ni Kansuru Chosa Kenkyu [A study on how to address issues concerning raw materials for castings],” April 2005 (This study was commissioned by METI.)

We conducted an interview survey on two foundries in Thailand that still used cupola furnaces for metal melting. Special focus was placed on how they used them and what advantages they had for them. The findings of the interviews are summarized below:

Table 11: The Use of Advantages of Cupola Furnaces

Company profile Use of cupola furnace Advantages, etc. Company H Production of parts of gas ovens and small arms Monthly output capacity: 200 tons

Uses a cupola furnace that was introduced more than 20 years ago (with a melting capacity of 2 tons), as well an induction furnace for melting purposes.

Uses the cupola furnace during the day and the induction furnace at night (from 10:00 p.m. to 9:00 a.m.) when electric power rates are lower.

Uses the cupola furnace for melting purposes only three days a week due to the need for regular repairing.

Advantages include a small initial investment and the ability to produce high quality molten iron.

Hopes to continue using the cupola furnace, though its maintenance requires experience and skill.

The cupola furnace generate some dust, but no complaints from the neighborhoods.

Company I Production of cast iron water pipes Monthly production: 400-500 tons

Uses 2 cupola furnaces (with a melting capacity of 4 tons) and 5 induction furnaces for melting metals.

Melts FC in a cupola furnace during the day and FCD in an induction furnace at night.

The cupola furnaces are equipped with an instrument to reduce dust emissions. Little complaints from the neighborhoods.

Uses the cupola furnaces to curtail costs. They are more cost-effective when melting metals in large quantities.

Source: Interview survey on selected Thai foundries in October 2014. d Foundry Coke: Demand and Price Our interviews with officials at Company J, a Thai trading house specializing in casting materials, showed that the monthly demand for foundry coke in Thailand usually hovers around 500 tons although it reached 1,000 tons in a few occasions in the past.

21

We also asked Company J and the above-mentioned foundries about the price of foundry coke. They said that Thai trading companies purchase foundry coke for roughly 52,800-54,000 yen per ton and sell it to foundries for 60,000-70,000 yen per ton. This selling price is not so different from that in Japan. Officials at a Japanese foundry told us that the price is now less than 70,000 yen in Japan.

Table 12: Price of Foundry Coke

Foundry Company H

Foundry Company I

Specialized trading house Company J

cf. Japanese foundry (Anonymous)

Purchases 70 tons monthly at the price of 17,000 bahts (approx. 59,500 yen) per ton.

Procures around 50 tons a month. They are all made in China. The price is 20,000 bahts (approx. 70,000 yen) or less.

Foundry coke is all imported from China via five importers in Thailand.

Buys foundry coke at the price range from approx. 440 dollars (approx. 52,800 yen) to 450 dollars (approx. 54,000 yen).

The price per ton used to be on the order of 90,000 yen but now less than 70,000 yen.

The price is an important factor for the application of bio-coke. It should be at least on the order of 60,000 yen.

Note: Calculations are based on the exchange rates of 120 yen to the US dollar and 3.5 yen to the baht. Source: Interview survey of some foundries and a trading house specializing in casting materials in October 2014. e Potential Partners for Securing Distribution Channels If we are to produce bio-coke in Thailand and sell it to local foundries, it is important to gain cooperation from a local trading house. Our interview survey in Thailand of a Japanese trading house specializing in casting materials and a local counterpart has shown that the latter is in a far better position than the former to deliver bio-coke to local foundries due to the latter’s overwhelming track record. Because only local foundries use cupola furnaces for melting metals, we should preferably select a local trading house as a partner for securing distribution channels.

Table 13: Transactions with Local Foundries in Thailand by Trading Houses Specializing in Casting Materials

Local trading house J Company

Japanese trading house Company K

Company J has business relationship with some 90% of the foundries in Thailand.

It does business with those that use cupola furnaces for melting metals, including selling foundry coke to them.

Company K’s head office in Japan deals in coke that is produced in China. Company K does not deal in coke as Japanese foundries in Thailand do not use coke for a heat source.

It tends to shy away from doing business with local foundries because it is often troublesome to collect accounts receivable from them.

Source: Interview survey of trading houses specializing in casting materials in October 2014. (2) Other Potential Applications Applications of coke are diverse, including the heat source of metallurgy (blast furnace ironmaking and sintering as well as casting, etc.), carbon materials (carbide, for electrodes etc.), and fuel (for the fired body of limes, ceramics, etc.).7 Focusing on casting using an induction furnace, we asked local businesses in Thailand about the usage of coal-coke and potential applications of bio-coke. We also asked relevant industrial associations in Japan. The Thai Foundry Association showed interest in the use of bio-coke as a recarburiser (a subsidiary material to add carbon to the product) in the casting process in an induction furnace. At the same time, TFA also pointed out some issues concerning the components and cost-effectiveness.We also learned

7 Japan Institute of Energy, Coke Note, 2004

22

that gasification and direct melting furnaces can help solve the waste management problem in Thailand that is resulting from its rapid economic growth. Bio-coke made from biomass or municipal waste can take the place of coal-coke as the heat source for gasification and direct melting. It is important to take such potential applications into account.

Table 14: Usage of Coal-coke at Nonferrous Smelters and Other Companies and Potential Application of Bio-coke

Industrial sector

Potential applications of

bio-coke Usage of coke Interviewee

Nonferrous smelting None

There is only one nonferrous smelter in Thailand, that is, Company L, which is a zinc smelter.

Yet Company L uses chemical agents, not coke, for zinc smelting.

Company L (zinc smelter)

Steel (induction furnace) None

There is no opportunity to use coke as a heat source in the process of producing steel materials in an induction furnace.

Non-Integrated Steel Producers’ Association

Casting (melting in an induction furnace)

Could serve as a recarburiser. Yet the components must meet strict requirements. The pulverization process is costly.

None

Thai Foundry Association Company K (Japanese trading house)

Forging None

Even in China, only some foundries use coke as the heat source for heat furnaces for forging. Globally, electric power or gas is generally used for the heat source to address environmental concerns and ensure stable quality.

Japan Forging Association

Cement

It is unlikely that bio-coke will be used as the heat source as it may not be so cost-effective compared with coal.

Coal is the primary heat source in the cement production process. This is because coal is inexpensive and the ash content can be used as a cement material.

Some cement plants mix petroleum coke with coal to boost the calorific value, but they constitute only a minority. Globally only a minority of cement plants use petroleum coke as the heat source.

More and more efforts have recently been made to use biomass as a source or a material. Cost-effectiveness is the key.

Japan Cement Association

Food processing, etc. None

(We were told that coke is used as a heat source in the food processing industry. We found out later, however, that food processors use coal, not coke.)

Industrial Waste Management Bureau, Department of Industrial Works

Waste incineration (gasification and direct melting furnaces)

None

Currently direct landfilling is the mainstream in waste management.

In the face of a limited land fill capacity, however, the government has recently begun to construct waste incineration facilities.

There is a chance that gasification and direct melting furnaces will be introduced in the future.

Industrial Waste Management Bureau, Department of Industrial Works Company M, Company N (waste management)

Source: Interview survey from October to December 2014

23

2.2 Feasibility Assessment We conducted a feasibility study to assess the commercial viability of the plan to manufacture bio-coke from domestic biomass resources in Thailand and selling it on the domestic and Japanese markets. We focused on oil palm EFB (Empty Fruit Bunches) and rice husks as biomass resources. We also calculated the amount of investment in equipment needed to process the materials into bio-coke, as well as physical distribution costs and running costs such as electric power costs and labor costs. We assumed that the casting industry is the buyer as it is the most promising market. We also set the sales price while taking into account the price of coal-coke, the main competitor. Calculations were made on a yen basis. Values expressed in the local currency (baht) were converted into those in the Japanese yen at the uniform exchange rate of 3.5 yen to the baht. 2.2.1 Selecting Raw Materials

In this feasibility study, we selected EFB and rice husks. We selected EFB for three major reasons. First, it is underexploited at palm oil mills. Second, it is possible to procure EFB from more than one mill on a steady basis. Third, the procurement price is not so high. We selected rice husks because we decided that the facility cost would be low. Because of their low water content, rice husks do not need drying before converting them to bio-coke, although their procurement price is higher than EFB as they are much in demand for power generation purposes. Originally we also considered cassava peels as a candidate material, but we eventually screened out this option because an 80% water content, this means a higher drying cost, and because its price is not so low on a dried weight basis. We assumed that EFB costs 350 bahts/dry-t (procurement price) and includes a 50% water content. These are the average values based on our survey. As for rice husks, we assumed the procurement price of 1,500 bahts/dry-t and a water content of 12%, both of which are also the average values based on our survey. 2.2.2 Production Volume and Sales Price of Bio-coke

For the purpose of feasibility assessment, we assumed that the casting industry in Thailand and Japan is the buyer of bio-coke products as it is the most promising market. Based on the survey findings described in 2.1.2(1)d. (annual consumption of foundry coke in Thailand: 6,000-12,000 tons), we assumed the annual sales of 1,000 tons in Thailand, roughly 10% of the domestic sales of foundry coke. We also assumed that 2,330 tons of bio-coke produced in Thailand will be sold in Japan annually. In sum, the annual production of 3,330 tons (or daily production of 10 tons with 333 days of operation) is assumed for the feasibility assessment. For the purpose of feasibility assessment, we set the sales price of bio-coke so that it will be equal to that of foundry coke per unit calorie. Specifically, on the assumption that the unit-weight calorie of bio-coke is 70% of that of foundry coke, the sales price was set at 42,000 yen/t for Thailand (on the assumption that the sales price of foundry coke is 60,000 yen/t) and 49,000 yen/t for Japan (on the assumption that the sales price of foundry coke is 70,000 yen/t). 2.2.3 Bio-coke Production Facility

We assumed that a bio-coke production facility will be installed besides each mill that generates biomass resources (palm oil mills for EFB and rice mills for rice husks) to curtail the cost of transporting the biomass materials. We studied the production flow and the facility cost of a biomass production plant with a daily output of 10 tons as discussed earlier. The results of the study for the EFB and rice husks types are as follows. (1) Bio-coke Production Flow The assumed process of producing bio-coke from EFB is described below. Figure 20 shows a summary production flow. To produce 10 tons of bio-coke a day, 18.4 tons of EFB is needed a day.

24

1) Put the material to primary crushing so that it will be broken into pieces 30-50 mm long in each dimension.

2) Put the crushed material to the sieving machine to remove impurities. 3) Put the sieved material so that it will be broken (secondary crushing) into pieces up to 10 mm

long in each dimension. 4) Put the material to the dryer so that its water content will be reduced to 8%. 5) Convert the material to bio-coke with bio-coke production unit. In the case of using rice husks, the drying is unnecessary. To produce 10 tons of bio-coke a day, 10 tons of rice husks is needed a day. The assumed production process is described below. Figure 21 shows a summary production flow. 1) Put the material to primary crushing so that it will be broken into pieces up to 10 mm long in each

dimension. 2) Put the crushed material to the sieving machine to remove impurities. 3) Convert the material to bio-coke with bio-coke production unit.

Figure 20: Production Process Flow (EFB type)

Source: Osaka Gas Engineering

1) Primary crusher

2) Sieving machine

3) Secondary crusher 4) Dryer

5) Dried material feeder

6) Bio-coke production

unit

25

Table 15: Facility Specifications (EFB type) 1) Primary crusher Primary crushing of the moist

material No. of Units/

sets Material feeder Capacity 4 m3 1 Unit Feeder conveyor to crusher I 500 W × 7.5 mL; centralizer belt; legs 1 Unit Feeder conveyor to crusher II 500 W × 4 mL; centralizer belt; legs 1 Unit Primary crusher 1 t/h; equipped with hammer mill and dedicated

control panel 1 Unit

2) Sieving machine Removal of impurities Feeder conveyor to sieving machine

500 W × 7.5 mL; centralizer belt; legs 1 Unit

Sieving machine 1 t/h; equipped with hammer mill and dedicated control panel

1 Unit

3) Secondary crusher Secondary crushing of most material

Feeder conveyor to crusher 500 W × 7.5 mL; centralizer belt; legs 1 Unit Secondary crusher 1 t/h, equipped with dedicated control panel 1 Unit

4) Dryer Feeder conveyor to dryer 500 W × 7.5 mL Centralizer belt; legs 1 Unit Feeder to dryer Equipped with hopper; twin screw 1 Unit Dryer Three-pass rotary dryer; 2.75 m x 10 mL;

equipped with emergency open valve 1 Set

Suction equipment Suction fan; multi-cyclone 1 Set 5) Dried material feeder Traversing screw cut-out; capacity: 30 m3 2 Units 6) Bio-coke production

unit Dry material conveyor I S-shaped flight conveyor 2 Units Dry material conveyor II 500 W × 20 mL; centralizer belt; legs 2 Units Dry material conveyor III 500 W × 10 mL; centralizer belt; mobile 2 Units Production unit Horizontal continuous type 20 Units Bio-coke conveyor 500 W × 20 mL; centralizer belt; legs 1 Unit

Source: Osaka Gas Engineering

Figure 21: Production Process Flow (rice husks type)

Source: Osaka Gas Engineering

1) Crusher 2) Sieving machine

3) Dried material feeder

4) Bio-coke production

unit

26

Table 16: Facility Specifications (rice husks type) 1) Primary crusher Primary crushing of the moist

material No. of Units/

sets Material feeder Capacity 4 m3 1 Unit Feeder conveyor to crusher I 500 W × 7.5 mL; centralizer belt; legs 1 Unit Feeder conveyor to crusher II 500 W × 4 mL; centralizer belt; legs 1 Unit Primary crusher 2 t/h; equipped with hammer mill and

dedicated control panel 1 Unit

2) Sieving machine Removal of impurities Feeder conveyor to sieving machine

500 W × 7.5 mL Centralizer belt; legs 1 Unit

Sieving machine 2 t/h; equipped with hammer mill and dedicated control panel

1 Unit

Suction equipment Suction fan; multi-cyclone 1 Set 3) Dried material

feeder Traversing screw cut-out; capacity: 30 m3

Traversing screw cut-out; capacity: 30 m3 2 Units

4) Bio-coke production unit

Dry material conveyor I S-shaped flight conveyor 2 Unit Dry material conveyor II 500 W x 20 mL; centralizer belt; legs 2 Units Dry material conveyor III 500 W x 10 mL; centralizer belt; mobile 2 Units Production unit Horizontal continuous type 20 Units Bio-coke conveyor 500 W x 20 mL; centralizer belt; legs 1 Unit

Source: Osaka Gas Engineering

27

(2) Plot Plan of a Bio-coke Production Facility We have prepared a plot plan of a bio-coke production facility for the EFB or rice husks types. Figures 22 and 23 show plot plans for the EFB and rice husks types, respectively. We have learned that an area of approx. 3,230 m2 is needed for the site for either facility.

Figure 22: Plot Plan of a Production Facility for EFB

Source: Osaka Gas Engineering

①

（Ｄ） （Ｃ）

（Ａ）

（Ｂ）（Ｅ）

（Ｆ）

② ③

④

⑤⑤

⑥ ⑥

工場敷地面積 ㎡ （３８ｍ×８５ｍ）

（Ａ） トラックスケール ㎡ （３ｍ×１０ｍ）

（Ｂ） 原料（湿）受け入れヤード ㎡ （３０ｍ×１０ｍ）

（Ｃ） 製品保管庫 ㎡ （２５ｍ×１０ｍ）

（Ｄ） 管理棟 ㎡ （５ｍ×１０ｍ）

（Ｅ） 保全エリア ㎡ （６ｍ×１０ｍ）

バイオコークス製造工場 ㎡ （３０ｍ×４２ｍ）

① 1次破砕機 ㎡ （１０ｍ×５ｍ）

② ふるい機 ㎡ （１０ｍ×５ｍ）

③ 2次破砕機 ㎡ （１０ｍ×５ｍ）

④ 乾燥機 ㎡ （３０ｍ×６ｍ）

⑤ 乾燥原料供給装置 ㎡ （１０ｍ×５ｍ×２基）

⑥ バイオコークス製造装置 ㎡ （２ｍ×８ｍ×２０基）

（Ｆ） メンテナンスエリア ㎡ （３ｍ×９７ｍ）

60

3,230

30

300

250

50

320

291

1,260

50

50

50

180

100

Facility site area 3,230 m2 (38 m × 85 m)

(A) Truck scale 30 m2 (3 m × 10 m)

(B) Material (moist) reception yard 300 m2 (30 m × 10 m)

(C) Product storage warehouse 250 m2 (25 m × 10 m)

(D) Administration building 50 m2 (5 m × 10 m)

(E) Conservation area 60 m2 (6 m × 10 m)

Bio-coke production plant 1,260 m2 (30 m × 42 m)

1) Primary crusher 50 m2 (10 m × 5 m)

2) Sieving machine 50 m2 (10 m × 5 m)

3) Secondary crusher 50 m2 (10 m × 5 m)

4) Dryer 180 m2 (30 m × 6 m)

5) Dried material feeder 100 m2 (10 m × 5 m × 2 units)

6) Bio-coke production unit 320 m2 (2 m × 8 m × 20 units)

(F) Maintenance area 291 m2 (3 m × 97 m)

28

Figure 23: Plot Plan of a Production Facility for rice husks

Source: Osaka Gas Engineering (3) Bio-coke Production Facility Cost Table 17 shows the estimated cost of a bio-coke production facility that uses EFB or rice husks for the raw material. The cost of the buildings and foundation works is estimated to be 30% of the total facility case, although it may differ greatly depending on the site. The total facility cost is estimated at approx. 310 million yen for the EFB type and approx. 230 million yen for the rice husks type.

Table 17: Facility Cost for Each Type of Facility

(Unit: 1 million yen) For EFB For rice husks Total 307 226

Source: Osaka Gas Engineering

工場敷地面積 ㎡ （３８ｍ×８５ｍ）

（Ａ） トラックスケール ㎡ （３ｍ×１０ｍ）

（Ｂ） 原料（湿）受け入れヤード ㎡ （３０ｍ×１０ｍ）

（Ｃ） 製品保管庫 ㎡ （２５ｍ×１０ｍ）

（Ｄ） 管理棟 ㎡ （５ｍ×１０ｍ）

（Ｅ） 保全エリア ㎡ （６ｍ×１０ｍ）

バイオコークス製造工場 ㎡ （３０ｍ×３６ｍ）

① 1次破砕機 ㎡ （１３ｍ×５ｍ）

② ふるい機 ㎡ （１３ｍ×５ｍ）

③ 乾燥原料供給装置 ㎡ （１０ｍ×５ｍ×２基）

④ バイオコークス製造装置 ㎡ （２ｍ×８ｍ×２０基）

（Ｆ） メンテナンスエリア ㎡ （３ｍ×９１ｍ）

60

3,230

30

300

250

50

320

273

1,080

65

65

100

①

（Ｄ） （Ｃ）

（Ａ）

（Ｂ）（Ｅ）

（Ｆ）

②

③

④④

③

Facility site area 3,230 m2 (38 m × 85 m)

(A) Truck scale 30 m2 (3 m × 10 m)

(B) Material (moist) reception yard 300 m2 (30 m × 10 m)

(C) Product storage warehouse 250 m2 (25 m × 10 m)

(D) Administration building 50 m2 (5 m × 10 m)

(E) Conservation area 60 m2 (6 m × 10 m)

Bio-coke production plant 1,080 m2 (30 m × 36 m)

1) Primary crusher 65 m2 (13 m × 5 m)

2) Sieving machine 65 m2 (13 m × 5 m)

3) Dried material feeder 100 m2 (10 m × 5 m × 2 units)

4) Bio-coke production unit 320 m2 (2 m × 8 m × 20 units)

(F) Maintenance area 273 m2 (3 m × 91 m)

29

2.2.4 Running Cost

(1) Power Consumption and Unit Power Rates Table 35 shows estimated electric power consumption for each type of facility.

Table 18: Electric Power Consumption for Each Type

(Unit: kW) For EFB For rice husks Primary crusher 48 39 Sieving machine 7 26 Secondary crusher 45 – Dryer 31 – Dried material feeder 11 11 Bio-coke production unit 159 159 Total 301 234

Source: Osaka Gas Engineering The unit power purchase rates per week are calculated on the assumption that the facility operates 24/7: Unit power rates during the day (13 hours) = 4.58 bahts/kWh Unit power rates at night (11 hours) and on Saturday and Sunday = 2.15 bahts/kWh (4.58 bahts/kWh × 13 hrs. × 5 days + 2.15 bahts/kWh × 11 hrs. × 5 days + 2.15 bahts/kWh × 24 hrs. × 2 days / 24 hrs. × 7 days) × 3.5 yen/bahts = 10.8 yen/kWh (2) Staffing Plan and Labor Costs The following staffing plan is envisaged for this plan: 24/7 operation Four-team two-shift (daytime/nighttime) system (Each team consists of three employees.) Another three employees work daytime shift only. 15 employees in total: One mid-level manager (daytime shift only), five engineers (one in each

team and one for daytime shift only), and nine general workers (two in each team and one for daytime shift only)

Wages for each type of employee are set as follows based on the survey findings

Table 19: Unit Labor Cost

Mid-level manager 2,058,840 yen/year Engineer 915,978 yen/year General worker (unit) 479,388 yen/year

Source: Osaka Gas Engineering (3) Transportation costs for bio-coke The bio-coke produced at palm oil mills and rice mills needs to be transported to Bangkok and its surrounding areas where foundries are concentrated. The product also needs to be transported on land to Bangkok, by sea to Japanese ports, and then again on land to local foundries in Japan. Table 20 shows some of the estimated parameters for estimating the transportation cost.

30

Table 20: Selected Parameters for Estimating the Transportation Costs

EFB type Rice husks type Land transportation distance (From plant to Bangkok)

800 km 600 km

Unit land transportation cost (in Thailand)

3.5 bahts/km/t (1 baht = 3.5 yen)

Marine transportation (From Bangkok to Japan)

37,311 bahts/40ft container (36 t): 3,627 yen/t

Land transportation distance (From Japanese ports to local foundries)

50 km

Unit land transportation cost (in Japan)

100 yen/km/t

Source: Osaka Gas Engineering (4) Other Parameters Other parameters for feasibility assessment are set as follows: Land costs: 100 bahts/m2/month on the assumption that the land is rented. This figure represents

50% of the average rent in industrial parks. Maintenance costs: 3% of the facility cost Administrative costs: 5% of sales Effective tax rate: 20% Operation period: 20 years Depreciation period: 7 years 2.2.5 Results of the Feasibility Assessment

Table 21 shows the results of the feasibility assessment in the cases of EFB and rice husks each. They are a profit-and-loss plan and the projected internal rate of return (IRR) for the operation period of 20 years. The assessment has found that bio-coke production from rice husks is more commercially viable

than that from EFB. Rice husks contains so low a content of water that they do not need drying, resulting in lower facility costs, electric power costs and maintenance costs; although material purchase costs are higher. Nevertheless, rice husks are largely used for power generation. More accurate and detailed analysis would thus be needed regarding their availability and purchase price.

In contrast, the assessment has found that bio-coke production from EFB is not so attractive commercially. A higher content of water means a higher cost of drying equipment and the energy it uses; although it is readily available because there are few other applications.

31

Table 21: Business Profit-and-Loss Plan (20 years)

Item EFB Rice husks Sales 3,123 million yen 3,123 million yen Cost of goods sold 2,768 million yen 2,626 million yen Ordinary profit 356 million yen 497 million yen Corporate taxes 86 million yen 99 million yen Net profit 269 million yen 398 million yen IRR (20 years) 7% 13%

Source: Osaka Gas Engineering In relation to the results of the feasibility assessment as shown in Table 21, we also assessed the impact of the unit material cost, the sales price of bio-coke and the like will have on the commercial viability of this plan (in terms of IRR). For the purpose of analyzing this impact assessment, we focused only on the case of EFB because the case of rice husks is no different in this regard. Table 22 shows selected parameters, including the maximum and minimum values.

Table 22: Major Parameters for Sensitivity Analysis (for EFB)

Parameter Unit For EFB

Basis for setting the range Base Maximum Minimum

Price of raw material Bahts/dry-t 350 640 73 Survey findings

Unit sales price of bio-coke

(Thailand) In 10,000 yen/t 4.2 4.9 4.93.5

This price is set so that it will be equal to the price of coking coal per unit calorie. The price range of coking coal is 50,000-70,000

yen/t in Thailand.

(Japan) In 10,000 yen/t 4.9 5.6 4.2

This price is set so that it will be equal to the price of coking coal per unit calorie. The price range of coking coal is 60,000-80,000

yen/t in Japan.

Facility cost In million yen 307 +30％ -30% The range reflects the margin of error in estimating facility costs.

Transportation cost

(Within Thailand)

Yen/t 9,800 +50% -50% Provisional (±50%)

Land rent Yen/m2/yr. 4,200 +50% -50% Provisional (±50%) Source: Osaka Gas Engineering

Figure 24 shows the results of the sensitivity analysis. It illustrates to what extent IRR will change when each parameter changes in the set range (from the minimum value to the maximum) as shown in Table 22. Taking the transportation cost within Thailand, for example, when it is 4,900 yen/t (-50%), IRR will be approx. 14.5%, and when it is 14,700 yen/t (+50%), IRR will be approx. 0.3%. In this way, Figure 24 shows how each parameter will affect the commercial viability of this plan. Specifically, the parameters that will greatly affect the commercial viability include the transportation cost within Thailand, the production cost of bio-coke (BIC) for export to Japan, and the construction cost of the facility. Land rent and the production cost of bio-coke (BIC) for domestic consumption will also affect business viability to some extent. These findings show that a lower transportation cost, a higher sales price, and a lower construction cost in particular will help boost the commercial viability.

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Figure 24: Results of the Sensitivity Analysis (tornado chart)

Source: Osaka Gas Engineering 2.2.6 Conclusion

We have focused on EFB and rice husks among other domestically available biomass resources to assess the feasibility of the plan to manufacture bio-coke in Thailand. The feasibility assessment has found that bio-coke production from rice husks may be

commercially viable because no need to dry this material in the production process will mean lower facility costs, electric power costs, and maintenance costs. Nevertheless, rice husks are largely used for power generation. More accurate and detailed analysis would thus be needed regarding their availability and purchase price.

Bio-coke production from EFB is not so attractive commercially because facility costs, power costs, and maintenance costs will all be higher. Yet this option may be advantageous when it comes to procuring the raw material; EFB is underexploited and therefore readily available in Thailand.

Sensitivity analysis has suggested that product transportation costs, the unit sales prices, and construction costs will greatly affect the commercial viability of this plan.

The following actions may also boost the commercial viability of this plan: 1) Increasing the sales volume: Bio-coke has proved to be effective in facilitating waste incineration

in gasification and direct melting furnaces in Japan. Thailand has been slow in introducing waste incineration itself. Nevertheless, if the country introduces gasification and direct melting furnaces to address the growing waste problem in Greater Bangkok and elsewhere, more and more bio-coke will be sold, which in turn may the commercial viability of this plan.

IRP (20 years)

Transportation cost within Thailand

Unit price of BIC (for Japan)

Construction cost of BIC production unit

Land rent

Unit price of BIC (for Thailand)

Unit price of raw material (bahts/dry ton)

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Table 23: Solid Waste Generations

Unit: ton/day 2010 2011 2012

Greater Bangkok1 8,766 9,237 9,750 Central region2 9,563 10,835 10,663 Northern region 6,659 7,275 6,901

Northeastern region 11,428 11,252 10,800 Southern region 5,116 5,180 5,319

Notes: 1. “Greater Bangkok” here refers to Bangkok and the three provinces of Nonthaburi, Pathum Thani, and

Samut Prakarn. 2. The “central region” here includes the provinces in the “eastern region” and the “western region.” Source: Compiled by MHIR from National Statistical Office, “Statistical Yearbook Thailand 2013.”

2) Reducing manufacturing costs: We will explore feasible processes for reducing the costs of bio-coke production facilities as

well as power consumption there in the ongoing pilot project. We will reduce the running costs by meeting the energy need for the drying process through

energy sharing with the contiguous mills (palm oil mills for EFB and rice mills for rice husks), including gaining access to the surplus heat generated from them.

We will reduce transportation costs by such means as locating production plants near consumption regions and optimizing transportation means (replacing land transport with marine transport, shifting to more efficient ports in Thailand for exports to Japan, etc.).

We will also opt for sites and partners that will make it possible to reduce land rents. 3) Policy support (incentives): Producing bio-coke from biomass resources and partially substitute it

for fossil fuels will contribute to the effective use of waste and help reduce CO2 emissions. The government can provide policy support for these environmental advantages of bio-coke. Specific measures may include subsidies for facility costs, preferential tax treatment, and CO2 credits. Such policy support will help improve the commercial viability of this plan.

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2.3 Economic Effects of the Plan The plan as detailed in 3.3 envisages annually producing 3,330 tons of bio-coke, which can substitute for foundry coke, in Thailand. It is estimated that the plan, which will produce bio-coke from biomass (EFB from palm oil mills or rice husks from rice mills), will need an initial investment of 310 million yen (in the case of EFB) or 230 million yen (in the case of rice husks) as well as a total of 15 employees in either case. Of the annual output of 3,330 tons, 1,000 tons will be sold to foundries in Thailand and the remaining 2,330 tons will be exported to Japan for local foundries. Annual sales will be 2,770 million yen in the case of EFB or 2,630 million yen in the case of rice husks. These figures, including the initial investment, the number of employees, and annual sales, are small for a fast-growing economy like Thailand. Yet the plan’s economic benefits for the local communities will be not small as discussed in the following paragraphs. It should also be significant in that it will decrease Thailand’s dependence on China for its imports of foundry coke, thereby reducing risks associated with procuring heat sources. Moreover, exports of bio-coke to Japan and other developed countries will increase significantly, and the plan’s economic impact on Thailand will be quite large. 2.3.1 Economic Benefits for the Local Economy

For convenience in procuring and transporting raw materials, this planned plant should preferably be built adjacent to a palm oil mill or a rice mill. In the case of the former, a most promising candidate is Thailand’s southern region, where because palm oil mills are concentrated and EFB is widely underexploited. This region is at a disadvantageous positon in terms of transport to Greater Bangkok, which is a large consuming region and key seaports from which Thai products are exported to Japan are located. Average household income is about 60% of that in Bangkok. The number of factories and the investment scale are both much smaller than in other regions. Therefore, the construction and operation of a manufacturing plant equipped with cutting-edge technology will likely be greatly welcome. Local palm oil mills can benefit from such a plant, which will be a steady buyer of EFB, because they have long had difficulty disposing of. This plan is thus expected to help promote local palm-related industries, which play a key role in the region. There are more candidate regions for a plant that produces bio-coke from rice husks. One such candidate is the northeastern region, where we sent a fact-finding study mission. It is the poorest region in Thailand. Although there are many factories, their investment scales are small. Therefore, the construction of a bio-coke plant will have a good chance of being warming accepted as in the southern region.

Table 24: Average Household Income in Thailand (2013)

Region Bahts/month Greater Bangkok1 43,058

Central region2 26,114 Northern region 19,267

Northeastern region 19,181 Southern region 27,504

Notes: 1. “Greater Bangkok” here refers to Bangkok and the three provinces of Nonthaburi, Pathum Thani, and

Samut Prakarn. 2. The “central region” here includes the provinces in the “eastern region” and the “western region.” Source: Compiled by MHIR from data from National Statistical Office

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Table 25: Overview of Factories Approved by the Ministry of Industry of Thailand (2012)

Number of factories Investment Number of

employees cf. Population

Factories % 1,000,000 bahts % Employees % Employees %

Greater Bangkok1 39,778 29.5 1,479,040 27.9 1,880,242 47.4 10,455,800 16.2 Central region 5,850 4.3 703,618 13.3 364,432 9.2 3,007,527 4.7 Eastern region 11,175 8.3 1,923,183 36.3 639,450 16.1 4,720,951 7.3 Western region 6,073 4.5 231,044 4.4 161,000 4.1 3,712,174 5.8 Northern region 17,307 12.8 275,452 5.2 289,590 7.3 11,802,566 18.3

Northeastern region 43,301 32.1 451,235 8.5 411,176 10.4 21,697,488 33.7 Southern region 11,346 8.4 234,994 4.4 223,294 5.6 9,060,189 14.1

Total 134,830 100.0 5,298,566 100.0 3,969,184 100.0 64,456,695 100.0 Note: “Greater Bangkok” here refers to Bangkok and the three provinces of Nonthaburi, Pathum Thani, and Samut

Prakarn. Source: Compiled by MHIR from National Statistical Office, “Statistical Yearbook Thailand 2013.” 2.3.2 Reducing Thailand’s Dependency on Imported Foundry Coke

As discussed in 2.1.1, Thailand is not endowed with coal resources suitable for coke production, making the country heavily dependent on imports from China to meet its demand for coke. And such coke is thought to be largely used for casting. Recoverable reserves of coking coal (strongly caking coal) account for only 11% of those of coal. To make matters worse, they are concentrated in a few areas such as Shanxi Province in China and Queensland State in Australia.8 Since May 2012, coal prices have been on the decline due to oversupply, and coking coal is no exception.9 The fact remains, however, that coking coal is a precious resource. If Thailand is to increase its self-sufficiency in coke to a certain level by successfully producing bio-coke from biomass that is readily available within its territory, then it will be able to offer a sense of relief to local foundries that use cupola furnaces to melt metals. They will feel that risks associated with procuring heat sources are reduced and that they can continue their operations steadily. 2.3.3 Establishing the National Status as a “Bio Power” by Developing Markets in

Industrialized Countries

Globally many foundries have been shifting from cupola furnaces to induction furnaces because the former are labor intensive, meaning a higher labor cost. In Japan and other developed countries that enjoy comparative advantage in mass production, however, many foundries continue to use a cupola furnace for melting metals as far as such items as car parts and cast iron pipes (straight pipes) are concerned. Such foundries in developed countries use far more foundry coke than Thai counterparts. Annual demand for foundry coke in Japan is estimated at 230,000 tons.10 If 10% of this estimate, that is, 23,000 tons of foundry coke is to be replaced by bio-coke produced in Thailand, the envisaged bio-plant will need to have an output capacity ten times as large as the figure estimated in 2.2. In Japan, demonstration trials have been underway on the use of bio-coke in gasification and direct melting furnaces for waste incineration. The potential demand for bio-coke in such furnaces is estimated at 200,000-300,000 tons a year.11 If this demand is to be met only with bio-coke from Thailand as well, the envisaged plant will have to have an overall output capacity some 20 times as large, if the demand for foundry coke in Japan is to be met with Thai-made bio-coke as discussed above.

8 Agency for Natural Resources and Energy, Sekitan wo Meguru Saikin no Doko [recent trends in coal],” November 2011. 9 JOGMEC, Sekai no Sekitan Jijo Chosa--2013 Nendo--[research on coal affairs in the world for FY2013] 10 Estimates by Osaka Gas Engineering Co., Ltd. 11 Op. cit.

36

If the output capacity of the envisaged bio-coke plant is to increase twentyfold, the plant will definitely have a substantial economic impact on the local community, although the twentyfold increase would not mean that plant investment and the number of employees need to increase twentyfold.

Table 26: Usage of Cupola furnaces and Demand for Foundry Coke in Developed Countries

Japan Germany US cf. Thailand Annual demand for

foundry coke is 230,000 tons (2010)1

Large plants with a monthly output capacity of 3,000 tons account for 80% of the total demand for foundry coke2

70% of foundry coke is imported from China3

The price is less than 70,000 yen per ton (2014).

85 out of the 268 foundries use cupola furnaces. Coke is 100% imported. Total imports stand at 450,000 ton (2010).4

The price of foundry coke in Europe hovers around 400 euros per ton (2013)5

Cupola furnaces account for 9.8% of all the melting furnaces for casting in terms of the number of units (1997)6.

Demand for foundry coke is 1,30,000 tons (1999).7

Around 50 foundries use cupola furnaces to melt metals. They are all SMEs.

Foundry coke is imported from China.

Monthly demand is 500-1,000 tons.

The price is 17,000-19,000 bahts (2014)

Sources: 1: Estimates by Osaka Gas Engineering Co., Ltd. 2. MHIR, “Imonoyo Genzairyo Mondai he no Taio ni Kansuru Chosa Kenkyu [A study on how to address issues concerning

raw materials for castings],” April 2005 3. Kanamori Co., Ltd. (http://www.k-tobei.co.jp/division/metal/pop02.html) 4: M.Schulter, G. Pena Chipatecua, P. Quicker, “ Investigations on the Application of Biochar as an Alternative for Foundry

Coke” RWTH Aachen University (http://www.teer.rwth-aachen.de/cms/upload/Votrge_und_allgemeine_PDS/2013_Schulten_Investigations_on_the_Application_of_Biochar_as_an_Alternative_for_Foundry_Coke_21st_European_Biomass_Conference_and_Exhibition.pdf)

5: New World Resources plc, “Annual Report & Accounts 2013” (http://www.newworldresources.eu/~/media/Files/AR%202013/NWR_AR_2013_WEB_FINAL.ashx)

6: U.S. Environmental Protection Agency, “Economic Impact Analysis of Final Iron and Steel Foundries NESHAP” (http://www.epa.gov/ttnatw01/ifoundry/foundry_report.pdf)

7: U.S. International Trade Commission, “Foundry Coke from China” November 2000 (http://www.usitc.gov/publications/701_731/pub3365.pdf)

This bio-coke project in Thailand will become even larger in scale if it envisages exporting the product to the European and US markets as well as the Japanese market. For this to happen, it is essential to gather information on the latest market developments. Because the price of foundry coke is generally lower in Europe than in Asia, any attempt to enter the European market will entail efforts to cut cost. Thailand is a hub for global agribusiness and a large exporter of agricultural products and processed food. And Thailand has been leading the world in the use of biomass generated from these industries. On top of that, bio-coke produced in Thailand will be able to help developed countries to reduce greenhouse gas emissions. This will allow Thailand to establish an honored status in the international community, which is in dire need to achieve a sustainable world.

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3. Exploration of Methodology to Evaluate Emission Reductions and Estimation of Emission Reductions Using the Methodology

3.1 Exploration of methodology to evaluate emission reductions This chapter explores the methodology used to evaluate greenhouse gas emissions to be reduced by introducing bio-coke technology. To be specific, a project for bio-coke production using biomass in Thailand in order to use the bio-coke in domestic cupola furnaces was examined in terms of the applicable condition, the reference scenario, and formulas for evaluating emission reductions. 3.1.1 Setting of the applicable condition

The methodology is presented in the form of its applicable condition by specifying project types to which the methodology can be applied to calculate emission reductions. For the methodology to be applied as extensively as possible, the following applicable condition has been set:

Applicable condition: To use bio-coke in place of coal-coke in cupola furnaces in Thailand. In the casting industry, two types of furnaces are used: “cupola furnaces,” which use coal-coke, and “induction furnaces,” which use electricity. However, since bio-coke is solid fuel and not supposed to be used in induction furnaces, the methodology excludes its application to induction furnaces. In general, fuel includes not only coal-coke but also liquid fuel, gas fuel and electricity. However, only solid fuel can be used in cupola furnaces due to their shape. Moreover, coal and biomass, though they are solid fuel, lack calories per unit quantity and are therefore inadequate as the heat source for a cupola furnace. Thus, energy that can be replaced by using bio-coke in cupola furnaces is limited to coal-coke. 3.1.2 Setting of the promising reference scenario

The situation expected if bio-coke technology was not introduced was explored with regard to the following two elements:

1) The energy source to be used (From what should the heat source for casting be obtained?) 2) The utilication of biomass (In what way should biomass be used or landfilled?)

(1) The energy source As specified in the applicable condition, the methodology targets projects that replace coal-coke with bio-coke. That is, the energy source will be coal-coke if bio-coke is not used. (2) The utilication of biomass Biomass decomposes naturally and emits methane when it is left unused as well as when it is landfilled. For the evaluation of greenhouse gas emissions to be reduced by the bio-coke project, it is important to examine whether the biomass to be used as a raw material for bio-coke production is unused biomass (whether it is used for other purposes if not used for the production). Here in Thailand, there are commonly used biomass, such as rice husks, and relatively uncommon biomass, such as rice straw and EFB. Thus, the methodology is applicable both to projects that discard biomass and projects that effectively use it for other purposes. 3.1.3 Setting of the boundary and identification of emission sources

Coal-coke to be replaced with bio-coke is all produced outside Thailand. Therefore, energy consumption and concomitant CO2 emission actually occur when coal-coke is produced outside the country.

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However, JCM is a scheme between two countries and targets emissions in the partner country (Thailand) in its evaluation of emission reductions. That is, CO2 emissions associated with coal-coke production outside Thailand and its import should be considered outside the boundary of JCM. Meanwhile, since bio-coke is produced in Thailand, collection of biomass materials and bio-coke production are within the boundary. As mentioned earlier, biomass, if not used in case there is no bio-coke project, emits methane as it decomposes. Therefore, methane emissions from biomass decomposition are counted in the reference scenario. In the real project, on the other hand, biomass is used as a raw material for bio-coke, preventing methane emission. That is, methane emissions from biomass decomposition are not counted in the project.

Fig. 25: Boundary and emission sources

Thailand

decomposition

Coal Mining& Coking（in China）

Combustion

Combustion

CO2,CH4 CO2 CO2

CO2 CO2 CO2

Reference Scenario（RS）

Project（PJ）

CH4

CO2

Biomass

CH4

Transport of biomass

Bio-cokeproduction

decompositionBiomass

Thailand

Transport of coke

（China→Thailand）

Transport of biomass

Boundary

Boundary

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Table 27: Identification of emission sources

Emission source Gas Included? Justification / Explanation Reference Coal-coke

combustion CO2 Yes Major emission source CH4 No No emission N2O No No emission

Biomass decomposition CO2 No Excluded for simplification

(conservative evaluation) CH4 Yes Major emission source

N2O No Excluded for simplification (conservative evaluation)

Project Electricity consumption due to bio-coke production

CO2 Yes Major emission source CH4 No No emission NO2 No No emission

Fuel consumption due to biomass transport

CO2 Yes Major emission source CH4 No No emission NO2 No No emission

Fuel consumption due to bio-coke transport

CO2 Yes Major emission source CH4 No No emission NO2 No No emission

3.1.4 Leakage

In Thailand, power generation using rice husks and other biomass is actively performed on the back of a state-run system of purchasing electricity generated from renewable energy sources. Under such circumstances, there may be a concern that if biomass used for biomass power generation begins to be used as a raw material for bio-coke, resource competition might occur, making it difficult for the operators of biomass power generation to obtain enough biomass materials, or that the resulting decrease in electricity generated at biomass power plants might be offset by an increase in electricity generated from fossil fuel, which would increase CO2 emissions. However, rice husks and other biomass used for biomass power generation are traded by many parties and their trading volumes are enormous. On the other hand, the quantity expected to be used by the bio-coke project, 10 tons/day, is not as significant as affecting their supply-demand relations. Even if 10 tons/day of rice husks are used for bio-coke production, it is expected not to have any impact on biomass power generation because the same quantity of rice husks can be easily procured from other trading firms. According to a survey by the DEDE (Biomass Database Potential in Thailand, Department of Alternative Energy Development and Efficiency), the quantity of rice husks generated in entire Thailand is about 1.26 million tons/day, of which some 20%, or about 2500 tons/day, is unused. 3.1.5 Setting of formulas for evaluating emission reductions

Formulas for evaluating emission reductions are explored based on the reference scenario, boundary, and emission sources discussed above. Estimation of emission reductions specifically expected in this project is addressed later.

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(1) Project emissions Project emissions are the sum of CO2 emissions from biomass transport, bio-coke production and bio-coke transport.

ytransportbiocokeyproductionbiocokeytransportbiomassy PEPEPEPE ,,,,,, ++= Symbol Description Unit

PEy Project emissions ton-CO2e/y PEbiomass,transport,y Project emissions (from biomass transport) ton-CO2e/y PEbiocoke,production,y Project emissions (from bio-coke production) ton-CO2e/y PEbiocoke,transport,y Project emissions (from bio-coke transport) ton-CO2e/y CO2 emissions from biomass transport can be calculated by determining the transport distance of each biomass material by multiplying the number of trips by transport distance (round-trip) for each biomass material, and then multiplying the result by the CO2 emission factor for a truck. For the purpose of conservatively evaluating emission reductions, CO2 emissions not only during biomass transport to the bio-coke plant but also during the return of an empty truck to its original location are calculated by doubling the distance between the biomass generation site and the bio-coke plant. The CO2 emission factor for a truck will be determined easily by using the IPCC default value (the details are described later).

kmCOi

ibiomassyibiomassytransportbiocoke EFDNPE ,2,,,,, )2( ×××=∑

Symbol Description Unit PEbiomass,transport,y Project emissions (from biomass transport) ton-CO2e/y Nbiomass,i,y Number of trips of biomass transport from the point i trip/y Dbiomass,i Transport distance from the point i to the bio-coke plant km EFCO2,km CO2 emission factor for a truck t-CO2/km Energy used in bio-coke production is nothing but electricity, and other fossil fuel is not used. That is, CO2 emissions from bio-coke production can be calculated by multiplying the amount of electricity used for bio-coke production by the CO2 emission factor for an electricity system.

yCOyyproductionbiocoke EFECPE ,2,, ×= Symbol Description Unit

PEbiocoke,production,y Project emissions (from bio-coke production) ton-CO2e/y ECy Electricity consumption in bio-coke production MWh/y EFCO2,y CO2 emission factor for an electricity system ton-CO2/MWh CO2 emissions from bio-coke transport can be calculated, as with those from biomass transport, by multiplying the number of trips by transport distance (round-trip) for each destination of bio-coke transport and then multiplying the result by the CO2 emission factor for a truck.

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kmCOj

jbiocokeyjbiocokeytransportbiocoke EFDNPE ,2,,,,, )2( ×××=∑

Symbol Description Unit PEbiocoke,transport,y Project emissions (from bio-coke transport) ton-CO2e/y Nbiocoke,j,y Number of trips of bio-coke transport to the point j trip/y Dbiocoke,j Transport distance from the bio-coke plant to the point j km EFCO2,km CO2 emission factor for a truck t-CO2/km (2) Reference emissions As mentioned earlier, the bio-coke project leads to a reduction in CO2 emissions from coal-coke combustion. Additionally, if biomass is expected to be left intact in case it is not used as a raw material for bio-coke, the amount of methane emitted by biomass decomposition can also be included in reference emissions. That is, reference emissions are the sum of CO2 emissions from coal-coke combustion and methane emissions (in CO2 equivalent) from biomass decomposition.

ydecayycokey RERERE ,, += Symbol Description Unit

REy Reference emissions ton-CO2e/y REcoke,y Reference emissions (from coal-coke combustion) ton-CO2e/y REdecay,y Reference emissions (from biomass decomposition) ton-CO2e/y CO2 emissions from coal-coke combustion can be calculated by multiplying the quantity of coal-coke to be replaced with bio-coke by the CO2 emission factor for coal-coke. Since bio-coke and coal-coke differ in calories per unit quantity, the quantity of coal-coke to be replaced with bio-coke must be calculated on a calorie basis. To be specific, the quantity of bio-coke (i.e., the quantity of biomass) is multiplied by the unit calorie of bio-coke to calculate total calories to be replaced, which are then multiplied by the CO2 emission factor for coal-coke per unit calorie to determine CO2 emissions from coal-coke combustion.

cokeyycoke EFHBRRE ××=, Symbol Description Unit

REcoke,y Reference emissions (from coal-coke combustion) ton-CO2e/y BRy Quantity of biomass materials ton/y H Calories of bio-coke MJ/ton-biocoke EFcoke CO2 emission factor for coal-coke ton-CO2/MJ Methane emissions (in CO2 equivalent) from biomass decomposition can be calculated by multiplying the quantity of biomass materials by the factor of methane emission from biomass and the global warming potentials for methane. The factor of methane emission from biomass will be determined easily by using, for example, the default value in the CDM methodology ACM0006 (the details are described later). In addition, the amount of methane emitted by biomass decomposition may be excluded from calculation if, for instance, the methods of biomass disposal cannot be identified. (The resulting evaluation of emission reductions will be more conservative.)

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44, CHCHyydecay GWPEFBRRE ××= Symbol Description Unit

REdecay,y Reference emissions (from biomass decomposition) ton-CO2e/y BRy Quantity of biomass materials ton/y EFCH4 Factor of methane emission from biomass ton-CH4/ton-biomass GWPCH4 Global warming potentials for methane ton-CO2e/ton-CH4 (3) Emission reductions Emission reductions are determined by subtracting project emissions from reference emissions.

yyy PEREER −= (4) Items to be determined before the project starts Factors listed below must be determined before the project starts. To make the methodology more convenient, values published by the IPCC, TGO, etc. should be set as the default values.

Data parameter EFCO2,km Unit t-CO2/km Description CO2 emission factor for a truck How to determine Adopt the default value (1.097 x 10-6 tCO2/km) in Table 1-32,

IPCC 1996.

Data parameter EFCO2,y Unit ton-CO2/MWh Description CO2 emission factor for an electricity system How to determine Adopt the latest value (0.5113) for the CM emission factor for the

grid issued by the Thailand Greenhouse Gas Management Organization (TGO). (Source: The Thai study of emission factor for an electricity system in Thailand 2010)

Data parameter EFcoke Unit ton-CO2/MJ Description CO2 emission factor for coal-coke How to determine Calculate from the amount of carbon per calorie for coal-coke

(29.5 tC/TJ) in IPCC’s “CO2 emissions from stationary combustion of fossil fuels”.

Data parameter EFCH4 Unit ton-CH4/ton-biomass Description Factor of methane emission from biomass How to determine Adopt the default value for methane emissions from the anaerobic

decomposition or spontaneous combustion of a biomass residue (0.001971) in the CDM methodology ACM0006.

Data parameter GWPCH4 Unit ton-CO2e/ton-CH4 Description Global warming potentials for methane How to determine Adopt the latest value specified in an institutional document of

JCM.

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(5) Monitoring items Items listed below must be monitored in the project. The monitoring method and frequency are presented as examples, not preventing operators using the methodology from finding out the monitoring method/frequency more suitable for their operations.

Data parameter Nbiomass,i,y Unit time/y Description Number of trips of biomass transport from the point i Monitoring method (example) Record the number of trucks from each supplier of

biomass materials. Monitoring frequency (example) Every month

Data parameter Dbiomass,i Unit km Description Transport distance from the point i to the bio-coke plant Monitoring method (example) Estimate, on the map, transport distance to the plant for

each supplier of biomass materials. Monitoring frequency (example) Every month

Data parameter ECy Unit MWh/y Description Electricity consumption in bio-coke production Monitoring method (example) Measure on site using a wattmeter. Monitoring frequency (example) Continuous measurement

Data parameter Nbiocoke,j,y Unit time/y Description Number of trips of bio-coke transport to the point j Monitoring method (example) Record the number of trips for each bio-coke buyer. Monitoring frequency (example) Every month

Data parameter Dbiomass,i Unit km Description Transport distance from the bio-coke plant to the point j Monitoring method (example) Estimate, on the map, transport distance from the plant for

each bio-coke buyer. Monitoring frequency (example) Every month

Data parameter BRy Unit ton/y Description Quantity of biomass materials Monitoring method (example) Sum up the delivery slips, etc. of biomass materials. Monitoring frequency (example) Every month

Data parameter H Unit MJ/ton-biocoke Description Calories of bio-coke Monitoring method (example) Estimate from the elemental analysis results of bio-coke

or biomass. Monitoring frequency (example) For each type of biomass material

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3.2 Estimation of emission reductions expected in the project Using the methodology discussed above, this section estimates greenhouse gas emissions expected to be reduced by the project assessed in the feasibility study. As in the feasibility study, estimation is made in two cases: one using rice husks and the other using EFB as the raw material for bio-coke. However, since JCM only addresses greenhouse gas emission reductions in the partner country (Thailand), estimation is made for 1,000 tons/year of bio-coke expected to be sold in Thailand. (In either case, CO2 emissions from bio-coke production or transport are estimated for a 1,000 tons/year portion of the total bio-coke production [3,330 tons/year].) <Prerequisites for estimation>

Estimating emission reductions for 1,000 tons/year of bio-coke expected to be sold in Thailand under the project assessed in the feasibility study

Assuming bio-coke plants to be set up at biomass generation sites (This will eliminate the possibility of greenhouse gas emissions associated with biomass collection.)

Assuming the calories of dried biomass to be 70% of those of coal-coke in either case There are three differences between the case using rice husks and the case using EFB:

Electricity consumption in preprocessing, etc. in bio-coke production Transport distance from bio-coke plants (located at biomass generation sites) to the

buyer in Bangkok Whether methane is emitted by biomass decomposition in case there is no bio-coke

project (Methane is emitted when the biomass is EFB.) 3.2.1 Rice husks

The following shows the reference and project scenarios for carrying out the bio-coke project using rice husks as the raw material for the production:

Fig. 26: Conceptual diagram of the reference and project scenarios (using rice husks)

The estimation resulted in annual CO2 emission reductions of 1,708 tons (about 1.7 tons per ton of bio-coke) in the case of using rice husks.

Thailand

Coal Mining& Coking（in China）

Combustion

Combustion

CO2,CH4 CO2 CO2

CO2 CO2 CO2

Reference Scenario（RS）

Project（PJ）

CO2

Rice husk

Transport of biomass

Bio-cokeproduction

Rice husk

Thailand

Transport of coke

（China→Thailand）

Transport of biomass

45

Table 28: Results of the estimation of emission reductions (in the case of using rice husks)

3.2.2 EFB

The following shows the reference and project scenarios for carrying out the bio-coke project using EFB as the raw material for the production:

Fig. 27: Conceptual diagram of the reference and project scenarios (using EFB)

EFB is also used for power generation, but a large quantity of EFB remains unused because EFB needs to be dried and crushed before use and because it occurs in abundance in the first place. For instance, while the amount of biomass to be used in the bio-coke project is 10 tons/day, the amount of

Rice huskProject emissions 412 tCO2/y

Biomass transport PEbiomass,transport,y 0 tCO2/yBio-coke production PEbiocoke,production,y 324 tCO2/yBio-coke transport PEbiocoke,transport,y 88 tCO2/y

Reference emissions 2,120 tCO2/yCoal-coke combustion REcoke,y 2,120 tCO2/yBiomass decomposition REdecay ,y 0 tCO2/y

Leakage emissions 0 tCO2/yEmission reductions 1,708 tCO2/y

[Project emissions]Bio-coke production Electricity consumption in bio-coke production ECy 634 MWh/y Per 1,000 tons of bio-coke

CO2 emission factor for an electricity system EFCO2,y 0.5113 tCO2/MWh TGO

Project emissions (from bio-coke production) PEbiocoke,production,y 324 tCO2/y -

Bio-coke transport Number of trips of bio-coke transport to the point j (using a 15 ton truck) Ny 67 trip/y Assuming use of a 15 ton truck

Transport distance from the bio-coke plant to the point j (one way) D 600 km/trip -

CO2 emission factor for a truck EFCO2,km 0.001097 tCO2/km Table 1-32, IPCC 1996

Project emissions (from bio-coke transport) PEbiocoke,transport,y 87.8 tCO2/y -

[Reference emissions]Coal-coke combustion Biomass materials BRy 1,000 t-biomass(dry)/y -

Calories of bio-coke H 19.6 GJ/t-biocoke Set at 70% of coal-coke calories

CO2 emission factor for coal-coke Efcoke 0.108 tCO2/GJ IPCC

Reference emissions (from coal-coke combustion) REcoke,y 2,120 tCO2/y -

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unused EFB at a palm oil plant we visited recently is 150 tons/day, suggesting that a sufficient quantity of EFB exists unused. In view of this, for EFB, the amount of methane emitted by biomass decomposition was also included in reference emissions. The method of calculating methane emissions from biomass decomposition is an area that has long been discussed in CDM, and we have just received a comment at a hearing with TGO that it is reasonable to follow the method of CDM. Thus, the default value (0.001971 tCH4/t-biomass) for the factor of methane emission from biomass specified in the CDM methodology for biomass (ACM0006) was used for estimation. The results showed that methane emissions (in CO2 equivalent) from biomass decomposition were 41 tCO2e, or only 2% of CO2 emissions from coal-coke combustion (2,120 tCO2). (The small value of estimated methane emissions is also attributable to the fact that the default value is set conservatively due to uncertainty over the conditions of biomass decomposition and other factors. Therefore, if the conditions under which biomass materials decompose in case they are not used in this project can be explained in more detail, it may be possible to estimate a greater effect of reducing methane emissions than the current estimate.) The estimation resulted in annual CO2 emission reductions of 1,647 tons (about 1.6 tons per ton of bio-coke) in the case of using EFB. Unlike rice husks, EFB allows considering the effect of reducing methane emissions from biomass decomposition in the estimation of emission reductions. However, since EFB requires more energy than rice husks for the crushing process, the overall CO2 emission reductions were estimated to be smaller with EFB than with rice husks (CO2 emission reductions per ton of bio-coke: 1.6 tons with EFB, 1.7 tons with rice husks).

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Table 29: Results of the estimation of emission reductions (in the case of EFB)

3.3 Regarding the estimation results In this chapter, methodology to evaluate greenhouse gas emissions to be reduced by introducing bio-coke technology was explored, and evaluation was made using the methodology. As a result, CO2 emission reductions by the bio-coke project were estimated at 1,600 to 1,700 tons per year (1.6 to 1.7 tCO2 per ton of bio-coke). Since this estimation is based on current bio-coke production unit, the effect of reducing emissions may become even greater with the enhancement of efficiency of the unit and improvements in bio-coke transport methods. It should also be noted that this estimation excludes CO2 emissions from coal-coke production and its import to Thailand, not comparing bio-coke with coal-coke from an LCA perspective. (That is, CO2 emissions from bio-coke production are included in the estimation, while CO2 emissions from coal-coke production are excluded from the estimation.)

EFBProject emissions 515 tCO2/y

Biomass transport PEbiomass,transport,y 0 tCO2/yBio-coke production PEbiocoke,production,y 398 tCO2/yBio-coke transport PEbiocoke,transport,y 117 tCO2/y

Reference emissions 2,161 tCO2/yCoal-coke combustion REcoke,y 2,120 tCO2/yBiomass decomposition REdecay ,y 41 tCO2/y

Leakage emissions 0 tCO2/yEmission reductions 1,647 tCO2/y

[Project emissions]Bio-coke production Electricity consumption in bio-coke production ECy 777 MWh/y Per 1,000 tons of bio-coke

CO2 emission factor for an electricity system EFCO2,y 0.5113 tCO2/MWh TGO

Project emissions (from bio-coke production) PEbiocoke,production,y 398 tCO2/y -

Bio-coke transport Number of trips of bio-coke transport to the point j (using a 15 ton truck) Ny 66.7 trip/y Assuming use of a 15 ton truck

Transport distance from the bio-coke plant to the point j (one way) D 800 km/trip -

CO2 emission factor for a truck EFCO2,km 0.001097 tCO2/km Table 1-32, IPCC 1996

Project emissions (from bio-coke transport) PEbiocoke,transport,y 117 tCO2/y -

[Reference emissions]Biomass materials BRy 1,000 t-biomass(dry)/y -

Calories of bio-coke H 19.6 GJ/t-biocoke Set at 70% of coal-coke calories

CO2 emission factor for coal-coke Efcoke 0.108 tCO2/GJ IPCC

Reference emissions (from coal-coke combustion) REcoke,y 2,120 tCO2/y -

Biomass materials BRy 1,000 t-biomass(dry)/y -

Factor of methane emission from biomass (aerobic decomposition orspontaneous combustion)

EFCH4 0.001971

tCH4/t-biomass(dry) CDM methodology ACM0006

Global warming potentials for methane GWPCH4 21 tCO2/tCH4 IPCC

Reference emissions (from biomass decomposition) REdecay ,y 41 tCO2/y -

Biomassdecomposition

Coal-coke combustion

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4. Proposal of JCM-related Policies for the Diffusion of Bio-coke

Technology

As discussed above, the production and distribution of bio-coke will greatly benefit Thailand, which is active in utilizing biomass energy. Since promising plant sites are located in the southern and northeastern parts of the country given conditions for material procurement, the bio-coke project is expected to become an important measure for industrial development in those relatively poor areas. Furthermore, if the bio-coke project is adopted as a bilateral project under a bilateral agreement on the joint crediting mechanism (JCM) between Japan and Thailand expected to be concluded in the future (as of March 2015), Thailand will be able to obtain various assistance from Japan in the transfer of facilities and technology for bio-coke production. However, there are actually many hurdles for private companies to establish the production and distribution of bio-coke as a business in Thailand. For private companies to overcome those hurdles, it is hoped that they will make efforts naturally expected of private companies, such as product cost reduction, while the Thai government will take measures to support them. Draft policies for this purpose are proposed below. 4.1 Issues with material procurement 4.1.1 Utilization of agricultural residue

(1) Issues The feasibility study assumed that biomass materials could be procured stably over the coming 20 years at prices of 350 baht/dry-t (EFB) and 1,500 baht/dry-t (rice husks). Actually, however, these price levels will, of course, vary with changes in the economic situation. Since these biomass materials are easy to collect and therefore highly demanded as fuel for power generation, it is necessary to consider the possibility of their procurement being hampered depending on trends in oil prices. To reduce this risk in material procurement, bio-coke producers and distributors (collectively “bio-coke plants”) should take measures to collect and use biomass materials that have been practically unused due to their difficulty in collection, along with EFB and rice husks, as raw materials for bio-coke. Such biomass materials may include rice straw, cassava rootstalks, and oil palm leaves and branches. Such unused biomass materials are currently plowed in as a fertilizer or left intact on farmland because of their low economic values. Under such circumstances, the operators of bio-coke plants will have to visit individual farmers and collect such biomass materials on their own if they want to use them as raw materials for bio-coke. They will spend considerable time and costs in doing so, leading bio-coke prices to be unaffordable. (2) Policy support Policy support to raise the rate of using rice straw and other biomass as raw materials for bio-coke may include: Conduct of demonstration projects on the collection of rice straw and other unused biomass Development of educational activities for farmers (to inform them that biomass such as rice straw

can be exchanged with cash as raw materials for bio-coke) Setup of unused biomass collecting stations along main roads Institutionalization of fair trades between farmers and bio-coke plants

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4.1.2 Utilization of other waste

(1) Issues With the rapid economic growth, waste disposal has become a big problem even in Thailand. Especially, the problem is getting serious in Greater Bangkok. While almost all amount of municipal waste massively generated is currently landfilled, it is possible to produce bio-coke from municipal waste and industrial waste to utilize them as a heat source for waste disposal. To achieve this, it is necessary to separate incombustible and/or hazardous waste, which hampers bio-coke production, from combustible waste. (2) Policy support Policy support to raise the rate of using waste as raw materials for bio-coke may include: Research composition of waste and material flow of waste Development of educational activities for urban residents and industries (to inform them that

waste can be raw materials for bio-coke and about the importance of the separate collection of waste)

Enhancement of the separate collection of waste 4.2 Issues with the securement of distribution channels 4.2.1 Support for the bio-coke use of iron foundries performing melting in cupola furnaces

(1) Issues Iron foundries using cupola furnaces for melting have recently been operating in an increasingly harsh environment due to complaints from residents about smoke and dust. Substituting bio-coke for part of coal-coke (foundry coke) as the heat source for cupola furnaces is expected to allow these iron foundries to concurrently (1) impress outside society as an “environmentally-friendly” company by actively using bio-coke, a renewable energy source, and (2) lower import risks by partially replacing coal-coke imported exclusively from China with bio-coke produced 100% in Thailand. (2) Policy support Whether to choose bio-coke as a substitute for foundry coke should be left to the discretion of each iron foundry. Yet, it is desirable to take certain measures to support the bio-coke use of those foundries by, for example, permitting them to apply PR labels to their products manufactured by using bio-coke as the heat source. 4.2.2 Research energy demand and unutilized waste heat in Thailand

(1) Issues Thailand have target about biomass utilization as heat source. But to achieve the target it seems to need additional measures to promote biomass utilization. For example, developing of new utilization way of biomass is important. Bio-coke realizes high compressive strength and long combustion time at high temperature. So by using this technology, biomass can be used in a new way. And, bio-coke is the technology that compresses biomass. So by using this technology, transportation cost of biomass can be decreased. To consider these new biomass utilizations, it is helpful to know about heat demand. However, there is no information about the heat demand in Thailand.

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(2) Policy support In Thailand, energy-intensive company reports its energy consumption amount to DEDE every year. In addition to that, Thai government is considering introducing “Energy Performance Certification scheme” which set energy intensity target for each facility and certify the achievement. To start this new scheme, the government will collect detail information about energy consuming to set the benchmark of each sector. The government should collect not only energy consumption amount data, but also data about heat demand (temperature and heat amount) and unutilized waste heat (temperature and heat amount) of each facility. This information is very helpful for the private company to consider the energy business including bio-coke. For example, bio-coke can burn high temperature for a long time. If there is a facility that needs long and high temperature heat, bio-coke can be a solution. And if there is a facility who has unutilized waste heat, the heat can be utilized for production of bio-coke. DEDE have already released the report “Biomass Database Potential in Thailand” which represents the amount of biomass used and unused in Thailand. This report is very helpful for the private company to consider biomass business in Thailand. If Thai government released similar report about heat demand, it will promote biomass utilization as heat source and CO2 emission reduction. 4.3 Issues with the protection of intellectual property 4.3.1 Preservation of intellectual property rights related to “bio-coke”

(1) Issues Using inexpensive waste as the raw material, “bio-coke” is produced through the apparently simple process of compressing dried, crushed waste at high temperatures. This may give rise to similar products of poor quality claiming to be “bio-coke” without permission. (2) Policy support To prevent the distribution of similar products of poor quality, it is hoped that patent application for the trademarks and production methods of “bio-coke” and their standardization by the Thai Industrial Standards Institute (TISI) will be supported by relevant ministries and agencies jointly with the Japanese authorities. 4.4 Issues with research and development 4.4.1 Raw materials

(1) Issues In the production of bio-coke, how to procure inexpensive raw materials stably in large quantity and crush and dry them at low cost is essential. Although rice husks are an excellent raw material because it does not require crushing and drying, thereby enabling a reduction in production costs, it is relatively expensive as a large portion has already been used for power generation. On the other hand, while EFB exists unused in quantities in Thailand, costs for drying and crushing EFB push up its production costs. With this in mind, it is important to use waste heat from neighboring plants as well as sunlight for drying EFB and develop a technology to crush EFB inexpensively. Additionally, for the purpose of encouraging the use of practically unused biomass, such as rice straw, it is necessary to identify effective methods for drying and crushing such biomass and analyze its component to determine whether it is suitable as a raw material for bio-coke.

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(2) Policy support It is hoped that the Thai government will take measures to extend facilities and secure funds for research institutions engaged in studies on bio-coke, to obtain analysis samples and procure experiment equipment. 4.4.2 User reclamation

(1) Issues In Thailand, while use as an alternative to foundry coke is the most promising application of bio-coke, it will also be used as a recarburiser, which is used during the foundry process in induction furnaces, once problems with its components and costs are cleared. It has also been found that if waste incineration in gasification and direct melting furnaces is realized in the future, bio-coke is likely to be used as the heat source for those furnaces. Although this study could not find any demand for bio-coke as a heat source for nonferrous smelting, it is considered meaningful to conduct research to explore other bio-coke applications. Applications to be explored in such research may include the heat source for lime firing and ceramics. In Thailand, where steel industry does not use blast furnace, demand for bio-coke as an alternative to coke for blast furnaces cannot be expected. On a global basis, however, the demand for coke for blast furnaces is far greater than the demand for foundry coke. In view of this, it is also important to proceed with research on such matters as component conditions for bio-coke to be adopted for blast furnaces. (2) Policy support It is hoped that the Thai government will take measures to extend facilities and secure funds for research institutions engaged in studies on bio-coke, to obtain analysis samples and procure experiment equipment. And R&D activities which study how to use bio-coke in a blast furnace are very important. So, it is also hoped that Thai government will secure funds for such research and request cooperation to Japanese steel industry. 4.4.3 Application development

(1) Issues Since cupola furnaces used in the foundry industry are melting furnaces designed on the premise of using coal-coke (foundry coke) as the heat source, bio-coke, whose unit calorie is lower than that of coal-coke, cannot be used so effectively as coal-coke in cupola furnaces. Moreover, not a few foundries will soon need a renewal of their cupola furnaces because they are using a lot of older models of cupola furnaces. Thus, if a cupola furnace optimized for use with bio-coke (tentatively called an “eco-cupola” furnace) is successfully developed in a joint effort of Japan and Thailand, an expansion of bio-coke customers can be expected through sales promotion of “eco-cupola” furnaces to foundries considering a renewal of their cupola furnaces. Meanwhile, as measures to address the increasingly serious problems with waste disposal in Thailand, it is promising to use some of the waste as a raw material for bio-coke and use bio-coke as the heat source for waste incineration. This can be achieved by using gasification and direct melting furnaces, which are able to turn even incineration ash into slag and are in practical use at waste incineration plants in Japan and other developed countries. If an “eco-” version of gasification and direct melting furnaces that is optimized for the use of bio-coke as the heat source is also successfully developed by Japan and Thailand in cooperation, a further expansion of bio-coke customers will be feasible. (2) Policy support It is hoped that the Thai government will take measures to extend facilities and secure funds for research institutions engaged in studies on furnace for bio-coke, to obtain analysis samples and procure experiment equipment. It is very important that to consider waste issues in Thailand. And it is

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hoped that to consider introducing gasification and direct melting furnaces, use of bio-coke, and “eco-” version of them. 4.5 Issues with investment 4.5.1 Clarification of positioning in the List of Investment Promotion Industries

(1) Issues Bio-coke plants are considered to be a project eligible as an investment promotion industry, because they meet the policy “to promote industries that are environmentally-friendly and save energy or use renewable energy for sustainable and well-balanced growth” in Article 4.2 of the investment promotion policies established in the No. 2/2014 Decree (Subject: Policies and Criteria for Investment Promotion) of the Board of Investment (BOI) of Thailand. However, it is not clear which industry bio-coke plants belong to between 1.16.2 “production of fuel from agricultural products including crop scraps, garbage and other waste (e.g., biomass to liquid (BTL), natural gas from wastewater) and 1.16.3 “production of compressed biomass fuel” in the List of Investment Promotion Industries. As the privilege, A2 (corporate tax exemption for 8 years for up to 100% of the investment amount) applies to the former while A3 (corporate tax exemption for 5 years) applies to the latter. Given the significance of the 3-year difference in the corporate tax exemption period, it is desirable to clearly position bio-coke plants in the List of Investment Promotion Industries. (2) Policy support For business operators considering investment in bio-coke plants in Thailand, The BOI should clearly position bio-coke plants in the List of Investment Promotion Industries. Since bio-coke is produced not by simply compressing biomass but through the value-adding technology of semi-carbonization, classification into 1.16.2 “production of fuel from agricultural products including crop scraps, garbage and other waste” is considered more appropriate. 4.5.2 Clarification of positioning in the ENCON fund

(1) Issues Bio-coke technology seems to be able to apply to ENCON fund. However it is not clarify.

(2) Policy support

DEDE should clarify about the applicability of bio-coke technology in ENCON fund. 4.5.3 Cooperation to Thai domestic market mechanism

(1) Issues Bio-coke can contribute CO2 emission reduction but it hasn't got enough policy support. It is necessary to enhance policy support for renewable heat, as same as renewable electricity. (2) Policy support T-VER has the methodology for renewable heat project. But it hasn't been applied to actual project. Some methodologies have already started demonstration projects. So, Thai government should start demonstration project for renewable heat project. And bio-coke project may be a candidate for application. In addition to that, if energy consumption amount from biomass resources is regarded as zero count on “Energy Performance Certification scheme” biomass utilization will be promoted.

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