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Presentation to BIO World Congress 2014by Dr Sarah HickingbottomLMC International Philadelphia, 13th May 2014
Second Generation Feedstocks –some comparative considerations
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For well over 30 years LMC has delivered in-depth, specialist analysis to leading international companies & organisations
Our research covers a wide range of industry sectors:
Bio-based Chemicals Oleochemicals & GlycerineGrains Biofuels & BiomassCoffee Oils & Oilseeds Sugar & Sweeteners CocoaFeed Ingredients Starch & Fermentation SugarsFood ingredients Rubber & Tyres
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A brief bio-based chemical overview
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A myriad of bio-based chemicals can be derived from carbohydrate or cellulosic feedstocks via C5/C6 sugar intermediates
Carbohydrates
C3
C4EthanolC2
C6 C5
Xylitol
Isoprene
Glycerine
Furfural
Itaconic acid
Lactic acid
SA
Adipic acid
PDO
Sorbitol
3-HP
2,5-FCDA
PBS
PG
Nylon 6,6
PE
Acrylic acid ECH
PLA
GBL
PP
THF
Ethylene
1,4-BDO
Isosorbide Polyitaconic acid
Polyisoprene
iso-Butene
PEF
iso-Butanol
Polyisobutene
THF
EPDM
PVC
PHA
MA
MEG
PTAPET
Butadiene
n-Butanol
Levulinic acid
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Succinic acid (SA) exemplifies new opportunities: high petro-costs limit market size, but, at scale, the bio-based SA demand could reach several million tonnes if the bio-derived molecule has a lower price point
HOO
OOH
Succinic acid
O
THF
NH
O
2-Pyrrolidone
N
O
N-Methyl-2-pyrrolidone
CH3
NCCN
Succinonitrile
H2NNH2
1,2-Diaminobutane
H2NNH2
SuccindiamideO
O
HOOH
1,4-Butanediol
O
O
-Butyrolactone
H3COOCH3
Dibasic esterO
O
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Selected players operating/building commercial scale bio-based chemical plants, their primary target molecules, feedstocks & capacities
Bio-based chemical Company Feedstock Capacity (tonnes)
Lactic acid, derivatives & PLA
B&G, Galactic, NatureWorks, Purac, Synbra
Corn, sugar, molasses 570,000
Ethylene / polyethylene Braskem, Dow & Mitsui Sugarcane ethanol 550,000Epichlorohydrin Wilmar -Yihai Kerry Group, Jiangsu
Yangnong, Solvay, VinythaiGlycerine 390,000
Methanol BioMCN Glycerine 200,000
Propylene glycol Oleon/BASF, ADM Glycerine, sorbitol 120,0001,3-Propanediol DuPont Tate & Lyle, Metabolic Explorer,
Zhangjianang Glory Biomaterial Corn glucose, glycerine 92,400
Succinic acid BioAmber, Myriant, Reverdia, Succinity Carbohydrate 68,360 Isobutanol Gevo Corn 55,000Farnesene Amyris Sugarcane 40,000Fatty acids, fatty alcohols, FAME & chemicals
REG Life Sciences (LS9) Corn, sugarcane, glycerine 34,000
Butanol Butamax Advanced Biofuels Corn, sugarcane 30,000
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Once the bio-based sector establishes itself, economics will govern which products are successful & which fail – feedstocks especially
• Feedstock requirements will prove key to long term profitability:
Choice of feedstock (or, indeed, feedstock flexibility)
Choice of feedstock entry point along its value chain
Choice of feedstock sourcing strategies, e.g. farmer vs. trader or origin vs. destination
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Summary of logistics governing 1st & 2nd gen. feedstocks & ‘where’ in value chain is the ‘most attractive’ to enter from a chemical player POV
Are there raw material logistical constraints?
Is a co-product off-take market needed or not?
Which is the 'most attractive feedstock' in
the value chain?
Is this 'most attractive feedstock' preferable
at origin or destination?
Sugarcane Perishable — process at origin No Molasses & raw sugar Origin
Sugar beet Perishable — process at origin No Molasses Origin
Corn None Yes Native starch & glucose syrups
Glucose at processing origin; native starch
is either
Wheat None Yes Native starch & glucose syrups
Glucose at processing origin; native starch
is either
Barley None Yes Native starch & glucose syrups
Glucose at processing origin; native starch
is either
Cassava Perishable: – process at origin No Native starch &
glucose syrups Glucose at origin;
native starch is either
Biomass — woody None (once pelletised) No C5/C6 sugars & ethanol
Sugars at processing origin; ethanol is either
Biomass — residues Low density, high bulk: – process at origin No C5/C6 sugars &
ethanol Sugars at processing
origin; ethanol is eitherOilseeds None Yes Vegetable oil Either
Palm FFB Perishable: – process at origin No Vegetable oil Either
Glycerine None (though crude contains ~ 20% water) No Glycerine Either
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So, why switch to second generation? Drivers include: land use; food vs. non-food; feedstock diversification; “green” issues; consumer wants; biofuel experiences; & government policies
-40
-20
0
20
40
60
80
100
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Mill
ion
hect
ares
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Woody biomass: supply & source
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USDA biomass supply forecast illustrates the US’s biofuel & bio-based chemical biomass potential– base case & high yield scenarios out to 2030
0
200
400
600
800
1,000
1,200
1,400
2012 2017 2022 2030
Mill
ion
dry
tonn
es
Energy CropsForest resources currently usedCorn Stover
363
205
127
0
200
400
600
800
1,000
1,200
1,400
2012 2017 2022 2030
Mill
ion
dry
tonn
es
Other agricultural biomassAg resources currently usedForest biomass potential
607
205
245
Base case High yield case
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There are a number of cost components to consider, e.g. the delivered cost of clean chips comprises stumpage (the fee paid to the forest owner), harvesting, transport, chipping & bark loss
Stumpage
HarvestingTransport
Chipping Cost
Bark Loss
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Agricultural residues: supply & source
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By 2030, under the high yield scenario, US corn stover supply could reach as high as 245 million dry tonnes– a strong potential feedstock supply
0%
5%
10%
15%
20%
25%
30%
35%
0
200
400
600
800
1,000
1,200
1,400
2012 2017 2022 2030
Corn stover share of biomass
Mill
ion
dry
tonn
es
Forest biomass potential Ag resources currently usedOther agricultural biomass Corn StoverForest resources currently used Energy CropsCorn stover share
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Potential biomass supply from crop residues in 2011 & 2020 (million tonnes dry matter)
0
50
100
150
200
250
300
350
US EU Canada SouthAmerica
Indonesia Malaysia West Africa
Mill
ion
tonn
es d
ry m
atte
r
2011 2020
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Bagasse’s use in electricity generation (either for internal use or to supply the grid) will underpin price points & supply volumes mills are willing to offer potential cellulosic sugar producers
0
20
40
60
80
100
120
140
2006 2007 2008 2009 2010 2011 2012 2013
US$/
MW
h
Spot Electricity Price Biomass Electricity Auction Price
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Cellulosic ethanol: driving second generation progress
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Global cellulosic ethanol capacity is projected to expand to 1.6 billion litres by 2016 – with North America accounting for ~60% of this growth
2012 2013 2014 2015 2016
billi
on lit
res o
f cel
lulo
sic e
than
ol
Asia Europe North America Oceania South America
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Cellulosic ethanol production costs, for a US stand-alone hydrolysis plant, are projected to fall by ~30% between 2012-2025 – largely based on cheaper enzymes
Note: Based on a fixed price for delivered biomass of $65 per bone dry tonne
2012 2025
US$
real
201
3/lit
re e
than
ol
Biomass Enzymes Other Cash Costs Depreciation
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Cellulosic ethanol demand will be driven initially by policy – this will limit market demand unless discretionary blending proves profitable
• US demand is driven by the Renewable Fuels Standard (RFS2). However, a shortage of cellulosic ethanol resulted in cuts to their mandate & it may need cutting again
– Once mandates are cut, a political question is created over their re-introduction
• Stagnating gasoline consumption in the US has created a ceiling for E10 volumes – compounded by the failure of E-15
• The proposed EU cap on food-based biofuels funnels the market towards second generation biofuels, however this cap has not been made official & the proposal has no specific cellulosic requirement
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Implications for the bio-based chemical sector as the cellulosic ethanol industry commercialises:
• Initial capacity is based primarily on hydrolysis – potentially creating cellulosic sugar volumes which can be diverted towards chemicals, players may find this attractive given:
– Cellulosic ethanol requires a subsidy to compete against gasoline, hence its future is insecure as political support weakens in the US & EU – in contrast with chemicals
– Bio-based chemicals should add value as compared to fuel
• Globally, current data suggests the most promising feedstocks are US corn stover & Brazilian bagasse
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Cellulosic sugars: supply chain & cost profile comparison
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Comparing 1st & 2nd generation fermentable sugar production cost profiles reveals differences, e.g. lignin affords energy self-sufficiency to 2nd gen.
Net Raw Material
67%
Capital14%
Labour6%
Energy8%
Other5%
Raw Material
Cost34%
Capital33%
Labour10%
Enzymes23%
Starch glucose production cost profile (corn wet milling)
C5/C6 biomass sugars production cost profile (corn stover - enzyme hydrolysis)
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Vertical integration in the cellulosic sugar supply chain offers advantages – especially while the merchant market develops – partnerships & joint ventures are alternative options
Biomass
C5/C6 sugars
Bio‐based products
End users
Biomass
C5/C6 sugars
Bio‐based products
End users
Biomass
End users
C5/C6 sugars
Bio‐based products
Biomass
End users
C5/C6 sugars
Bio‐based products
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Companies active in the development of second generation cellulosic sugars include:
SucreSource
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Thank you for your kind attention
[email protected] www.lmc.co.uk
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2nd Generation Bio-based Feedstocks – how viable are they?
Oleochemical Report 2014
Ethanol Market Report
Feedstocks for Bio-based Chemicals – which will be competitive?
Global Crop Outlook 2014
Global Markets for Starch Products
Carbohydrate Outlook: Prices & Processing Costs
Global Sugar Outlook
Oil Palm Report: Indonesia & Malaysia 2014
Oilseeds & Oils Report 2014
Investment Opportunities in South East Asian Agriculture
LMC carries out bespoke consulting projects for bio-based chemical, fuel & material players as well as producing ‘off-the-shelf’ reports, including:
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This presentation and its contents are to be held confidential by the client, and are not to be disclosed, in whole or in part, in any manner, to a third party without the prior written consent of LMC International.
While LMC has endeavoured to ensure the accuracy of the data, estimates and forecasts contained in this presentation, any decisions based on them (including those involving investment and planning) are at the client’s own risk.
LMC International can accept no liability regarding information analysis and forecasts contained in this presentation.
© LMC International, 2014All rights reserved
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