innovating in biofuels - oecd · 2016-03-29 · nexoctane technology to replace mtbe • early...
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INNOVATING IN BIOFUELSWorkshop on environmental innovation and global marketsSeptember 20-21, 2007Harri TurpeinenVP Corporate Stakeholder [email protected]
1
Neste Oil in Brief
• Oil refining & marketing company with focus on high quality refined petroleum products with reduced environmental impact
• Four businesses with complementary roles
• Listed in the Helsinki StockExchange under the symbolNES1V
• Approximately 4,600 employees• Market capitalization approximately
EUR 7 billion
2006 SALES EBITDA 1)
€ 12,734MM € 1,037 MM
Oil Refining€776 MM
Oil Retail€165 MM
Shipping €96 MM
1) Excludes “Oil Other” EBITDA of EUR -30 MM (including eliminations)
2
Four Business Divisions
• Oil Refining– Two complex refineries in Finland, with an annual output
of some 14 million t/a of petroleum products
• Biodiesel– High quality second generation renewable diesel from
variety of feedstocks
• Oil Retail– Market leader in Finland and a significant player
in the St. Petersburg area in Russia, Estonia, Latvia,Lithuania, and Poland
– Approx. 1,100 retail outlets
• Shipping– Operates around 30 modern crude and product tankers
3
Operational excellence
• One of the most flexible refineries in Europe
• Produce any required qualities of middle distillates and gasoline (e.g. Californian grade )
• Reaction speed and agility: ‘Just in time’ product dispatch
• Create innovative solutions quickly in cross-organizational efforts
• Combine business and technical expertise for a leading position in niche markets
• Cavern system enables contango plays
• Logistics flexibility allows reactivity to short-term market shifts
• Very large storage capacity and deep sea harbor allow loading of large vessels
4
Strong in technology
Early 1990s
Mid-1990s
Early 2000 2006
NExTAME Technology
Synthetic Base Oils (PAO)
NExETHERS Technology
Introduce Futura City Diesel
Next Generation BiodieselNExBTL
NExOctane Technology to replace MTBE
• Early adaptation of new technology• Sophisticated process modelling
• Extensive pilot scale testing
• Catalyst R&D
• Emerging know-how in processing heavy fractions
• In-house engineering capability
Neste Oil's key technologies
Areas of expertise
VHVI Technology
5
Biodiesel
Strategy is based on two growth pillars
Refining
Complementary businesses( Base oils, Gasoline components )
Supporting businesses ( Retail & Shipping )
Refining the future
Excellent operational and financial performance
The leading provider of cleaner traffic fuels
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Leveraging refining
excellence
Increasing the range of
feedstocks
Delivering high-quality products for cleaner traffic
We reinforce the key elements of our strategy
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Strategy Implementation
NExBTL Renewable DieselStart-up of the first plant has proceededThe second plant is scheduled to be commissioned at the end of '08Planning work and Environmental Impact Assessmenton a jointly owned plant with OMV in Austria continuesCompany is progressing in planning phase with a number of other plant projectsAim to utilize a wider range of renewable raw materialsin the future
9
Biofuels agenda is driven by three elements
Biofuels set to gain considerable share in transportation fuels
market
Climate change
Security of supply
Domestic agricultureand
EU is seeking for competitive technology
advantage
10
Government policies will boost demand further -moving towards mandated use
Tax break Obligation No policy or no information
EU biofuel regimes 2006
Source: Neste Oil
EU biofuel regimes 2008
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Strong growth outlook in EU demand
2,0 3,2
12,120,0
55,0
0102030
405060
2004 2005 2010 2020 2030
Mt
Note: Assumes that both gasoline and diesel have 5.75% biocontent in 2010Sources: European Biodiesel Board, EU Commission
Key implications
• Need for high quality biomass derived diesel
• Need for a wide variety of different feedstocks to meet EU target and vision
• Need for products that are compatible with vehicle population in use and with the logistical system
Historical and targeted EU biomass based diesel production
1 M t pa increase in production required to achieve EU
target
2,5 M tpa increase in
production required to achieve EU
vision
14 September, 200712
BTL
Vegetable oils
Esterification
FAME
In
Out
Mineral Oil
Gasoline
Jet
Diesel
CnH2n+2
CnH2
AromaticsPolyaromatics
MARPOL Annex I MARPOL Annex II** MARPOL Annex ?Goal
MARPOL Annex I* MARPOL Annex I* (Oil ;mineral oil based)
MARPOL Annex II**(Chemicals)
BTL GTL
Biomass
GasificationFischer-Tropsch
CnH2n+2
Vegetable oils
Animal fats
Hydrotreating
NExBTL
CnH2n+2
Natural gas
GasreformingFischer-Tropsch
CnH2n+2
Refinig
Sugar
Corn
Fermentation
EthanolGasoline
Jet
Diesel
C2H5OH
Gasoline
Jet
Diesel
Gasoline
Jet
Diesel
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Next Steps - Get out from the food chain!
• Food should not be used as fuel, but– that is all we have currently– all feedstock should have equal treatment
• Long-term solutions include– use of non-edible vegetable oils (Jatropha, Castor etc.)– new feedstock as algae and bacteria– 3rd generation solutions (wood gasification FT etc.)
• Extensive R&D needed
14
Large units provide economies of scale –Globalisation offers opportunities
• We have a global ambition to move to large scale plants– Significant scale-up from Porvoo
NExBTL plant– Plants can be constructed in Europe,
Asia and North America
• We enjoy economies of scale whereas first generation plants have limited economies of scale– Limited feedstock availability– Logistics constraints
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Considerable growth potential exists in biofuels
US: 4.6 %by 2012
US: 4.6 %by 2012
EU: 5.75 % by 201010 % by 2020
EU: 5.75 % by 201010 % by 2020
China: Decided to opt for 2nd
generation solutions
China: Decided to opt for 2nd
generation solutions
India:
20% of diesel by
2012
India:
20% of diesel by
2012
Notes:1) EU target: 5.75% (energy content) biocomponent penetration in road fuels by 2010, 10% alternative fuels in road transport by 20202) US target: 4.6% of 2012 gasoline demand to come from renewable fuel components (i.e. 7.5 billion gallons)3) India target: 20% of diesel pool from biocomponents by 2012, 10% ethanol in gasoline by 2010
Sources: European Biodiesel Board; Federal Renewable Fuel Standard (Energy Bill); EU commission
Brazil: 2 % by 2012, 5 % >2013
Brazil: 2 % by 2012, 5 % >2013
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Biodiesel Generations - Market Share Evolvement
0
2
4
6
8
10
12
2006 2010 2015 2020
% o
f die
sel p
ool
3rd Generation2nd Generation1st Generation
illustrative
2% 5.75% 8% 10%
FAME = 1st generationBio hydrocarbons from bio oils = 2nd generationBio hydrocarbons from biomass = 3rd generation
2020: Equal to 25 Mton
Rapid development of ALGAE and/or other non-food
feedstock
2% 5.75% 8% 10%
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Neste Oil expectations from policymakers on biofuels
Technology Neutrality– legislation not to choose technology winners
Performance Driven– legislation to set standards for outcome
Sustainable Feedstock– criteria for feedstock sustainability– based on sound sciece, not to be used as trade barriers
Cost-Efficiency And Energy-Efficiency– industrial scale solutions– "well-to-wheel" energy-efficiency
Maintain Fuel Quality– no backsliding in performance standards or emissions
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Neste Oil’s view on the role of governments and the financial sector
• Predictability and consistency of policies
• Sustainability based performance criteria by regulator
• Challenging and realistic target setting in the complexcontext
• Public financial tools to support R&D&D of new solutions
• The financial sector to provide acid testing of the sustainability of the business concept
• The financial sector to provide capital