Ramko Rolland Associates 12 Gotlieb Street, Tel Aviv Israel

This Document is Confidential and Proprietary August/Sept. 2010 Prepared by Haim R. Branisteanu Page 1

September 13, 2010

Mitigation of emission of Greenhouse gases (GHG) inducing Global Warming

One of the hot topics today on which wide consensus is achieved is the fact, that the earth

atmosphere is warming and in general the blame is put on human activities from intense agriculture

activities, farm animal husbandry, transportation activities and the power generation from fossil fuel

like coal etc. One of the aspects that are missing in those assumptions is the evidence of the

decreasing earth magnetic field and changes in solar activity and heat transport belts within the sun

which increase unwanted solar radiation. Even if those aspects of sun activity would be the main

reason for the fact of global warming it would not negate the need to invest substantial efforts and

money to lower the earth atmosphere temperature to levels of 20 to 25 years ago. Fact is, that

excessive use of coal for electricity generation in China has many negative side effects as reflected in

the air quality, smog and draughts, recently reoccurring with persistency, within China.

Bill Gates interesting and simplistic explanation related to the need to save on CO2 emissions can be

found at this link; ( http://www.ted.com/talks/view/id/767)

One very important aspect of global warming and as a result of the thawing of glaciers around the

world is the thawing of the permafrost in the Northern Hemisphere in Alaska, Canadian Northern

Territories and Siberia. Similar situation is on the Antarctic continent.

Proposed solutions to lower world consumption of coal for power generation is the building of nuclear

power plants. Unfortunately as explained later, this solution even if implemented is around 15 years

away. Solar and wind as energy sources are in most cases carbon neutral and are intermittent energy

solution which is highly dependable on weather or the strength of winds, and could be very useful as a

complimentary source of energy within the concept of a smart grid.

The more simplistic and immediate solution is to find a renewable substitute for coal for the already

build electrical power stations and co-fire those “coal substitutes” with coal. The renewable coal

substitute is mostly based on organic matter or biomass, gathering its energy from the sun radiation.

My project proposal, the biomass-refinery, includes the use of agricultural waste, energy grasses of

the type C4 and forestry/woody residuals that will be processed into coal substitute to be co-fired

with coal with similar energy content per ton of product as coal (I don’t recommend the use of whole

trees). There are already several power plants around the world that use co-firing biomass with coal if

it is energy grasses as presented in my 2007 business plan or outright wood chips or wood pellets. To

mitigate GHG emission from agricultural activity and crop husbandry, a second product of the biomass

refinery will be produced, which will be used as soil enhancement in agriculture and forestry.

Pending Legislation and Regulations - Within the EU and US there are legal efforts that will impose

mandatory restriction on the amount of coal used in electrical power station. A law proposing a

reduction of up to 15% by 2021 within the US, and restrictions starting in 2012 may be introduced

within the next months (http://www.eenews.net/assets/2010/09/21/document_pm_01.pdf) and within the

EU a reduction of 20% by 2022 is contemplated. Within the EU starting in 2013, the power sector will

have to buy CO2-allowances for some €15 ($21) billion a year at current CO2-prices. Discussion on the

Ramko Rolland Associates 12 Gotlieb Street, Tel Aviv Israel

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EU directive can be found at; (http://www.europeanenergyreview.eu/index.php?id=2412), and the recent

energy needs analysis of Exxon Mobil and BP at (http://www.europeanenergyreview.eu/index.php?id=2719 )

In case the proposed Bingaman law passes, in the US alone, the amount of coals substitute will be well

above the range of 155 million ton/year as it must contain the same energy content as the bituminous

coal it replaces. At present prices the US market of coal substitutes is around $15 to $16 billion a year.

Very important for Russia – Russia will be one of the biggest losers from the global warming. The

global warming will slowly remove the permafrost from Northern Siberia and natural gas will start to

percolate (permeate) out of the underground reservoirs into the atmosphere and that will increase

even more the global warming. More so the frozen peat bogs and frozen marshes of Northern Russia

are huge depositories of methane gas that is 20 times more potent than CO2 as a GHG. If the

permafrost is gone substantial amounts of natural gas will be lost and you cannot turn back the

switch. When people will notice that natural gas is escaping from the underground reservoirs it will be

way too late.

The viability of CO-FIRING OF BIOMASS WITH COAL was established by the EU in a study summary

from 2006 and also by the US DOE and UK in various summarizing reports about the same time. As

mentioned before the co-firing with coal is practiced around the world in various programs that in

most cases are subsidized by the country governments. Furthermore long term agreements where

executed between local farmers and the utilities to supply biomass for co-firing with coal which in

most instances use energy grasses, but also wood chips and wood pellets.

Recent known efforts to secure Coal Substitute sources from utilities in the US and EU.

1. One of the biggest utilities within the EU is investing over 115 million in S.E. US to establish a

processing facility with a capacity of over 740,000 ton /year coal substitute which in all

likelihood will produce wood pellets.

2. One of the biggest utilities within the EU is investing over 14 million EUR within the EU to

produce 60,000 ton/year of coal substitute similar to the one proposed in the project

3. One of the biggest utilities within the EU entered into research agreement to produce coal

substitute and is presently targeting British Columbia Canada as a woody waste resource to

process into coal substitute at a rate of 250,000 ton/year per plant employing 30 to 40

employees in several locations and advertised an outstanding yearly demand of 10 million

ton/year

4. Other utilities within the EU UK and US are converting and establishing co-firing systems of

coal with energy grasses (see my 2007 business plan) or wood chips and wood pellets.

5. Within the first half of September 2010 the construction started on a processing plant for coal

substitute within N. America at an advertised cost of $30 million to produce over 110,000 ton

of coal substitute and employing 60 to 70 direct and indirect workers

The above efforts can be used as an indication of the investment needed for each plant. To add

and double capacity of a plant as mentioned in #2 around $12 million would be needed.

The economies of wood chips and pellets - woodchips and wood pellets were not economically viable

5 to 7 years ago due to the historical pricing of coal as reflected on the website of the World Coal

Institute at http://www.globalcoal.com/ .

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At the time the valuation for wood pellets economic viability was made in 2003/4 the price of a short

ton of coal was in the $30 to $35 range. More recently the price of coal is around $90 to $96 - ARA

Rotterdam. As I mentioned in the past wood pellets are easy to manufacture and aside from capital

investments the logistics are the main issue that define the CIF price to the electrical power station.

The same would apply for wood chips and energy grasses, all of which will need changes in the

feeding lines at the power station interested in co-firing the biomass. The heat content of the above

mentioned biomass is similar to wood in the 14MJ/kg to 17MJ/kg. The main drawback of using wood

pellets is the fact that they are machined wood particles that absorb moisture and degrade with time

if by rot or by infestation with wood consuming insects and emit flammable volatile organic

compounds (VOC’s). The main ingredients of emitted VOC’s from wood pellets are unsaturated fatty

acids of aldehydes, (such as pentanal and hexanal) and ketones. Other VOC’s emissions from wood

pellets have been reported to be CO and other one-carbon compounds, such as methane, methanol,

ethylene, formic acid and formaldehyde etc.,. Those toxic VOC’s can be lethal in closed spaces during

ocean or rail transportation or storage. In contrast, the proposed coal substitute does not emit such

VOC’s rendering a less dangerous and less expensive cost of storage, of the product, if compared to

“live” wood pellets (see relevant references below).

The proposed biomass refinery end product, has higher energy per ton than that of wood pellets and

is similar to the energy content of bituminous coal, is hydrophobic – repels water and can be stored

the same way as coal. As for the electrical power station the proposed product does not have many of

the chemicals that wood chips or wood pellets contain and pose a contamination problem to the

power stations, is brittle like coal and can be feed to the steam boiler by being mixed with coal.

Furthermore at the time 7 years ago the Kyoto protocol was not ratified by many countries and the EU

only started to establish a formal exchange for Carbon Credits and the other financial rules and

regulations for the offset of Carbon Credits. Presently the EUX Carbon Credits are priced around €15.5

per ton. Burning one tone of carbon results in 3.66 tons of CO2 (12 mol +2x16 mol=44 mol Carbon

molecular weight is 12 mol). As bituminous coal is only about 75% to 80% coal the equivalent CO2

emission is around 2.7 to 2.9 ton of CO2 for each ton of bituminous coal burned depending on the coal

quality and energy density.

Today the carbon credits that go along with one ton of the proposed substitute of coal are in the

range of €44 if calculated based on Carbon Credits prices and under €38, by the various CDM

allowances. Therefore the maximum economic value of the product CIF power station is €44+$96 or

over $157 in Europe. At present time $157 per ton of coal substitute, is the benchmark for the

calculation of economic viability of the biomass refinery. As those commodities are traded on public

exchanges, this price can be hedged in the future up to 5 years whereby the economic price rises to

around $190 to $200 per ton. See the pricing of coal and Carbon Credits on the Intercontinental

Exchange of ICE https://www.theice.com/marketdata/reports/ReportCenter.shtml?reportId=10

If compared to the wood pellets on an energy content basis per weight the proposed coal substitute

can be sold at a premium of around $25 to $30 per ton. The energy density in wood pellets is 10 GJ/m3

vs. 14.8 GJ/m3 of the propsed product. Certain utilities will accept the non-pelletized product due to

its brittle structure which enables pulverization by grinding, and that will further increase the

economic value of the product depending on increased transportation cost, due to its lower weight.

Ramko Rolland Associates 12 Gotlieb Street, Tel Aviv Israel

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Based on various historical information, during the period of 2002-2008, the CIF price of wood pellets

ARA Rotterdam was around $155 ± $10 per ton, and that price included around $50 ± $5 in ocean

shipping cost from North America to Europe.

Soil enhancement bio-refinery products from agricultural, forestry/woody waste

The soil enhancement product is chemically and physically different from the coal substitute as its use

is very different. The product induces enhanced soil microbial activity, which leads to the increased

soil nutrients availability, catalyzes cations (ion) mobility and CEC, lowers pH, decreases soil bulk

density, and increases water/moisture holding capacity, due to the capillary structure of the product.

The soil enhancement product also has indirect effects on mycorrhizae (AMF) through its effects on

other soil microbes, such as mycorrhization helper bacteria, resulting in more furan/ flavonoids

beneficial to germination of fungal spores and provides improved microbial habitat. Further it

positively influences the soil sorption/desorption of soil GHG and nutrients.

Technology of processing forestry/woody waste and paper mill woody waste is based on research that

started around year 2002 and the results of academic research as new as 2010, done by well-known

universities in the US, Germany Brazil and Australia and in all likelihood in other places. The process is

also occurring naturally and the equipment and planning will be the most modern and will include

scientific development in biology and microbial genetic engineering with the support of various

academic institutions if needed (see my August 19th, 2010 letter to the Irkutsk Oblast).

Additionally, it has been shown that the soil enhancement product decrease N2O (Nitrous oxide) up to

80% and CH4 (methane) emissions from soil, thus further reducing GHG emissions. In fact the more

research is done related to this product, the more positive qualities are discovered.

The cost of a processing facility for soil enhancement is similar to the processing facility of the coal

substitute. The bio-refinery processing units will be within the same facility in order to take advantage

of the heat resulting from the processes and whose resulting gasses will be used for heat, steam and

electricity where warranted. It is anticipated that the market value of this product will compete with

various fertilizers used today in agriculture. It is anticipated that the market value of the processes soil

enhancement product will be around $200 to $250 per ton and the raw soil enhancement product

well over $150 per ton, not including Offset Carbon Credits values at around €38 ($53) per ton.

The markets for the soil enhancement products are; depleted soils from intensive agriculture,

(http://online.wsj.com/article/SB10001424052748703846604575447592896761732.html?) agricultural

regions in China, the Volga basin and west of Volga, Japan, S. Korea, and reclamation of marginal soil

or desert void of nutrients and organic soil humus like the projects in the ME

(http://www.reuters.com/article/idUSTRE64G4SU20100517?feedType=nl&feedName=usmorningdigest ), the

Sinai peninsula (http://www.mwri.gov.eg/En/project_sinai.html) and the Toshka project in Egypt

(http://www.mwri.gov.eg/En/project_toshka%20.html).

Raw processed soil enhancement will affect plant growth yield, but only for plants that love high

potash and elevated pH, improve water quality, reduce soil emissions of GHGs, reduce leaching of

nutrients, reduce soil acidity, and reduce irrigation and fertilizer requirements. The project intention is

not only to produce raw soil enhancement but also to adapt the product to various soils where the

Ramko Rolland Associates 12 Gotlieb Street, Tel Aviv Israel

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product will be used by adding the required nutrients. One important aspect not to be lost is the fact

that various trees have various chemical compositions and as a result the project will produce a

variety of soil enhancement products adaptable for various soils.

Justification for the business model for a biomass refinery for processing agricultural,

forestry/woody waste.

For more information on this 28 page white paper report kindly contact me via e-mail

Flammability and Toxicity of “live” wood products

Formation of Toxic Gases following Sea Transportation of Logs and Wood Chips

(http://annhyg.oxfordjournals.org/content/53/8/779.abstract) The mean CO2 and CO levels were

7.5% (n = 26) and 46 p.p.m. (n = 28), respectively. More than 90% of the hydrocarbons were explained

by monoterpenes, mainly α-pinene (mean 41 p.p.m., (n = 26). In conclusion, the measurements show

that transport of logs and wood chips in confined spaces may result in rapid and severe oxygen

depletion and CO2 formation. Thus, apparently harmless cargoes may create potentially life-

threatening conditions. The oxygen depletion and CO2 formation are seemingly primarily caused by

microbiological activity, in contrast to the oxidative processes with higher CO formation that

predominate in cargoes of wood pellets.

Hazardous Off-Gassing of Carbon Monoxide and Oxygen Depletion during Ocean Transportation of

Wood Pellets (http://annhyg.oxfordjournals.org/content/52/4/259.short)

The conclusions are that ocean transportation of wood pellets in confined spaces may produce an

oxygen deficient atmosphere and lethal levels of CO which may leak into adjacent access spaces. The

dangerous combination of extremely high levels of CO and reduced oxygen produces a fast-acting

toxic combination. The following compounds and ranges were detected in samples from the five ships:

carbon monoxide (CO) 1460–14650 ppm, carbon dioxide (CO2) 2960–21570 ppm, methane 79.9–956

ppm, butane equivalents 63–842 ppm, ethylene 2–21.2 ppm, propylene 5.3–36 ppm, ethane 0–25

ppm and aldehydes 2.3–35 ppm.

Gas Emissions from Wood Pellets during Marine Transportation.

(http://annhyg.oxfordjournals.org/content/54/7/833.abstract)

After a fatal accident during the discharge of wood pellets at Helsingborg, emissions from pellets

during marine transportation became a concern for the safe handling and storage of wood pellets

Concentrations of Off-Gas Emissions in Stored Wood Pellets

(http://annhyg.oxfordjournals.org/content/53/8/789.abstract)

Wood pellets emit CO, CO2, CH4, and other volatiles during storage. Increased concentration of these

gases in a sealed storage causes depletion of concentration of oxygen. The storage environment

becomes toxic to those who operate in and around these storages

US Wood residue pricings – which represents around 45% of wood pellet production costs

In the first quarter of 2009, bark-free, in-wood pine chips, excluding transport costs, were quoted in

the range of $31–$39 per green tone ($28–$35 per green short ton (1 ton =0.907 tone)) (Timber Mart-

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South 2009). Delivered residue fiber costs in 2008 among our respondents ranged from $56/ton

(green weight) in the U.S. West to $38/ton in the U.S. Northeast. We received too few Canadian

responses to estimate fiber costs in Canada. Responses on round-wood prices were also too few to

generalize. Delivered pulpwood prices in the U.S. south in 2008 averaged $30/green tone (Timber

Mart-South 2009) but, from the viewpoint of a pellet operation, costs for debarking, chipping, and

drying would increase that amount. Delivered pulpwood prices in the U.S. south in 2008 averaged

$30/green tone (Timber Mart-South 2009) but, from the viewpoint of a pellet operation, costs for

debarking, chipping, and drying would increase that amount.