Development of Malaysia Biomass Industry Linking to …biomass-sp.net/wp-content/uploads/2011/11/Biomass-S… · · 2011-12-02Development of Malaysia Biomass Industry Linking to

Development of Malaysia Biomass Industry

Linking to Global Value ChainTang Kok Mun, Technical Coach

EU-Malaysia Biomass Sustainable Production Initiative (Biomass-SP)

Briefing Session to Financial Institution on Green Technology Financing

26 September 2011, Cyberjaya

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Presentation Outline

• Introduction to Biomass-SP

• Biomass Resource Potential in Malaysia

• Benchmarking the Economic Values of Biomass

• Waste to Wealth Initiative

• Incentives for biomass as energy Funding Opportunities for Biomass Commercialisation

• Innovative SMEs

26 September 2011Briefing Session to Financial Institutions on Green Technology Financing

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The Project

• A development cooperation initiative of the European Union (EU) under the SWITCH-Asia Programme – to promote implementation of sustainable production practices in small and medium enterprises (SMEs) who are involved in biomass utilisation and production

• Nurturing 40-50 Malaysian biomass SMEs for commercialisation in line with sustainable production principles

Co-funded by: Synergised stakeholders

26 September 2011Briefing Session to Financial Institutions on Green Technology Financing

30 June 2011Training Seminar on Renewable Energy

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Biomass resource potential

94%

4%

1% 1%

Biomass resource potential

Oil palm

Wood

Rice

Sugarcane

• 4.7 million ha cultivated with oil palm (13.6% of the country’s total land area)

• 421 mills operation – only 20% crude palm oil and 3% palm kernel oil and 3% palm kernel cake, 74% by-products (wet biomass)

• Wood residues aplenty – but a lot of competing uses e.g. furniture-making & particleboard.

• Average rice production is 3.95 t/ha/season, 5 seasons in 2 years cultivation.

• Paddy : straw output is 1:1.4 (80% burnt, 10-20% compost/geomat).

• Rice husk production 19.75 mil tonne/year

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Values of biomass residues and their availability in Malaysia

Source: Compiled by Biomass-SP from MPOB, MARDI,& MTIB

CATEGORIES OF BIOMASS PRICE (RM/TONNE)

PRODUCTION (MILLION MT/YEAR)

Oil palm waste

Mesocarp fiber 45 7.73

Palm kernel shell 170-178 4.46

EFB 10-30 21.34

OPF 65 45

Timber waste

Sawdust (ex-factory price) 80-120 37

Wood chips 90-130

Wood residues 30-50

Rubberwood 90

Agricultural waste

Rice husk 40 19.75

Coconut fiber 40-100 0.25

Sugarcane bagasse 45 0.3

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Oil palm biomass in 2010


Source: Malaysian Energy Commissions (2007)

No. Biomass Amount (dry weight)

1. OPF (from pruning activity)OPF (from replanting activity)

42.21 million tonnes3.28 million tonnes

2. OPT (~5% replanting rate) 33,299,000 trunks 17.5 million tonnes

3. From the 421 palm oil mills operating at total capacity of 97.40 million tonnes of FFB,~ Estimated EFB = 22% x 92 million tonnes

21.34 million tonnes

4. Mesocarp fibers 7.73 million tonnes

5. Palm kernel shells 4.46 million tonnes

6. POME generated from per tone of FFB is about 67%.

62 million tonnes **** (million M3)

Source: Anis Mokhtar et al (2010), Oil Palm Biomass Products and Comemrcialisation, MPOB

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The way forward


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High demand for biomass fuels – pellets, briquettes, PKS

• By 2015, global pellet demand is projected to be at 25 million tonne

• At present, 97% of the global pellet demand is met by Europe and North America

• EU Renewable Energy Directive 20-20-20– 20% reduction in energy consumption

– 20% consumption from RE

– 20% reduction of GHG emission

– 10% consumption of biofuels in transport

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Scenarios for European pellet consumption 1980 - 2019

Latest statistics for European consumption:•2009 - ~8.5 million tonnes•2010 - Probably around 10

Source: Danish Technological Institute & Propellets 2008, and Junginger 2011

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Individual EU countries to come up with own nREAP

• Under the EU Renewable Energy Directive (RED), every Member State is requested to provide a National Renewable Energy Action Plan (nREAP)

– By 2020,19.1% of electricity should come from biomass

– Solid biomass contributes 69.2% towards heating and cooling

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Denmark nREAP projection

2005 2010

2015 2020

Biomass heat

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Biomass market development around the world

Biomass Fuel Price (USD/t)

PKS 60-75

Palm Briquette 50 (preliminary price) – 100

Wood Pellet 160-180

AS OF JUNE 2011…

GERMANY

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AS OF JUNE 2011…

UK

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AS OF JUNE 2011…

ITALY

Biomass market development around the world

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MALAYSIA:SREP Projects with REPPA

No Pemaju Lokasi ProjekKapasiti

(MW)Jenis Bahanapi

1 MHES Asia Sdn BhdHS(D) 12572, Lot PT No. 3226, Mukim Serting, Negeri Sembilan

10 EFB

2 Sunquest Sdn BhdLot 227, Mukim Of Jimah District of Port Dickson Negeri Sembilan

5 EFB

3 Bell Eco Power Sdn. Bhd. Parit Ju, Batu Pahat, Johor 1.7 Biogas

4 Felda Palm Industries Sdn BhdKilang Sawit Serting Hilir, Jempol NegeriSembilan

0.5 Biogas

5 Sediaplas Sdn Bhd Daerah Rompin, Pahang 10Biogas (sisa ubi

kayu)

6 Achi Jaya Plantation Sdn. Bhd. Segamat,Johor 1.25 Biogas

7 Bell Bio Power Sdn. Bhd. KKS Bell-KSL,Linggi,N Sembilan 1.4 Biogas

8 Bell Green Power Sdn. Bhd. KKS Bell Sri Lingga,Melaka 1 Biogas

9Maju Intan Biomass Power Sdn Bhd

Teluk Intan, Perak 10 Biomass (EFB)

10 Agni Power Sdn Bhd Jln Gugusan Bera,Bera,Pahang 10 Biomass (EFB)

11 Garisan Etika Sdn Bhd Bandar Tenggara,Kota Tinggi, Johor 10 Biomass (EFB)

12 TSH Bioenergy Sdn. Bhd. Kunak, Sabah 10 EFB

13 Seguntor Bioenergy Sdn Bhd Jalan Seguntor, Sandakan Sabah 10 EFB

14 Kina Biopower Sdn BhdLot 2, Jalan Seguntor, Batu 11 Labuk Road

Sandakan Sabah10 EFB

15Kalansa Energy Corporation SdnBhd

Lot NT, 08301544, KM 3, Jalan Beluran, BeluranSandakan Sabah

5 Tangkai sawit (EFB)

Source: Energy Commissions Malaysia (2010), Personal Communication

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Feed-in-Tariff System

• Guaranteeing access to the grid and setting a favourable price per unit of renewable electricity – make RE viable and sound long-term investment


Type of RE Capacity Rate (RM/kWh)

Biogas Up to 4 MW 0.32

Up to 10 MW 0.3

Up to 30 MW 0.28

Biomass Up to 10 MW 0.31

Up to 20 MW 0.29

Up to 30 MW 0.27

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Value-adding bioenergyventures with CDM/VCS

• Indirectly supports IRR/ROI of RE development projects – reduction of carbon emissions are registered and verified as certified emission reductions (CERs) under Clean Development Mechanism (CDM) or Verified Emission Reductions (VERs) under voluntary carbon market– CER price (as of August 2011) - €9.09

– VER price (Q2 2011) - US$3-4


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Financing your CDM projects

• Model A

Project owner to come up with all costs involved in CDM, then sell the CERs at a premium market price. No management interference from CER buyer. Project of any size is possible, as long as the project owner to bear the project costs.

• Model B

Investor comes up with technology and bear all costs for CDM project, but project owner gets minority share from CERs sales until project costs are covered. For large CDM projects, e.g. landfills, biomass power plant, POME biogas.


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Financing your CDM projects

• Model C

Investor to pay upfront for 10 years CERs at agreed price in exchange of 30% equity for the CDM project. Less financial burden to project owner, but may take long time to start because due diligence is required.

26 September 2011Briefing Session to Financial Institution

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How Biomass-SP can help?

• Expert consultancy services for the development of CDM (from PIN to PDD)/VCS projects; major costs funded by Biomass-SP

– Biomass utilisation RE generation

– Biogas

– Biocomposting project

• Business partnership opportunities with CDM investors in terms of equity participation and carbon credits trading

26 September 2011Briefing Session to Financial Institution

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Challenges of usingbiomass as energy

• Uncertainties of long term biomass supply & pricing mechanism, logistic and transportation cost

• Inconsistency of biomass fuel quality –EFB requires pre-treatment to increase efficiency

• Technical & financial issues related to grid connection


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• Survey by MPOB/Greentech Malaysia in 2007/2008 on 100 mills

Competitive use of biomass


Source: Malaysian Palm Oil Board & Ministry of Plantation Industries & Commodities

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Benchmarking the value of biomass & their utilisation

• Assessment of the biomass resources base and its availability for commercialization has to be made.

• To evaluate the sustainability of present consumption and the feasibility of higher value biomass utilizations.

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Benchmarking the values of biomass products

Source: Compiled by Biomass-SP from MPOB, MARDI, Biotechcorp, etc.

Product Raw material

Feedstock Availability

(million MT/year)

Value RM/MT

Resource Efficiency(1:1)

Sugar derivatives EFB 42.0 1000-10000

Activated carbon EFB / PKS

42.0 / 7.3 3000-14000 10% from wet EFB

Pulp EFB 42.0 1500-2000 78%

Animal feed OPF 65.0 425 1.5:1

Particleboards OPT 34.0 600/m3 1.5:1

Compost/Fertiliser EFB + POME

42.0 + 45 550-600 50% (100% EFB), 80% (80% EFB, 20% Chicken Manure)

Pellets EFB 42.0 300-400 15:1

Briquette EFB + PKS

42.0 + 7.3 185-215 3:1 (70% EFB, 30% PKS)

POFF EFB 42.0 67 2:1

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Waste-to-wealth initiative

• Oil Palm Biomass Roadmap that will streamline efforts to convert oil palm waste into wealth-generating industries

• To contribute to the nation’s economy through production of high value chemicals such as ethanol or lactic acid from biomass resources

• To convert agricultural by-products through bio-processing technologies into bio-based products (biofuels, biochemicals, biomaterials, and biosugar)

• Malaysian BiotechCorp• MiGHT• Agensi Inovasi M’sia (AIM)


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Biomass energy incentives

• Economic Transformation Programme – commercialisation of oil palm biomass into high value products as part of the National Key Economic Area (NKEA)

• Under MIDA, incentives for the use of renewable energy resources –biomass/undertaking waste recycling activities/energy conservation activities– Pioneer Status (PS) with a tax exemption of 100% for 10 years– Investment Tax Allowance (ITA) of 100% on qualifying capital

expenditure within a period of 5 years

• Green Lane facility under SME Corp for innovative SMEs – 2% interest rebate for approved loans and tax deduction to get 1-innoCERT

• Green Technology Financing Scheme for producers and users of green technology – The Government will bear 2% of the total interest rate, and guarantee

60% of the financing amount


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Biomass refinery?


Source: Biomass Opportunities & Biotechnology Funding (2011) Malaysian Biotechnology Corporation

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Biomass refinery?

Source: Biomass Opportunities & Biotechnology Funding (2011) Malaysian Biotechnology Corporation

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Funding for biomass commercialisation

• TechnoFund (MOSTI) – a bridging fund to address the funding gap between earlier basic research and commercialisation. Up to RM 1.5 million

• Commercialisation of R&D Fund (MTDC) –Comemercialisation of R&D output from public and private universities up to RM 500k – RM 4 million

• Business Start-Up Fund (MTDC) – to fund new startup technology-based company up to a maximum of RM 5 million


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• Cradle Investment Programme (Cradle Fund) –funds development of prototype to facilitate commercialisation - CIP Catalyst (pre-seed fund: RM500k), CIP 500 (commercialisation fund:RM500k, 2 applications/company)

• 1-InnoCERT (SME Corp) – innovation certification to develop innovative SMEs; opportunities for innovation coaching programme and SME Innovation Award which offers RM1 million to the Top Most Innovative SME


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• Green Technology Financing Programme (MDV) – contract financing for green certified companies from RM250k to RM2mil

• Machinery loan by OCBC (4%), Project financing (Bank Pembangunan, CIMB), Soft Loan Schemes for SMEs by MIDF (4%)


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E.g. Current R&D projects

Research Institutions Feedstock Product

Universiti Putra Malaysia Oil palm decanter cake Sugar

Empty fruit bunch Lactic acid & PHA

Universiti Kebangsaan

Malaysia

Empty fruit bunch Phenolic resin/adhesive

Universiti Sains Malaysia Lignocellulosic biomass Bioethanol

Forest Research Institute

Malaysia

Empty fruit bunch Pulp and paper products

Rice husk Solid biofuel

Malaysian Palm Oil Board Oil palm trunk Particleboard & MDF


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SMEs: Agriwaste into lactic acid/PLA


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SMEs: EFB into fibre and pulp


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Development of Malaysia Biomass Industry Linking to …biomass-sp.net/wp-content/uploads/2011/11/Biomass-S… · · 2011-12-02Development of Malaysia Biomass Industry Linking to