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© 2012 AUM Business Creations Pte. Ltd.
Turning Oil Palm Biomass into Bio-Ethanol
Overview about the Prospects and Challenges in deploying 2G ethanol technology in Malaysia using Palm Biomass as the feedstock.
Per Dahlen
23 January 2011
Version 1.0
Copyright and disclaimer
AUM Business Creations Pte. Ltd. (aumbiz) is happy to let anyone use and redistribute the information in this presentation without any restrictions, as long as you add aumbiz (www.aumbiz.com) as the source of your information. Thank you.
The information in this document is for informative purposes only, AUM Business Creations Pte. Ltd. should not be held responsible for the accuracy of the data presented in this document.
The purpose of this document is to share our view about the future market potential of Advanced Biofuels and other Bio-renewable products in Southeast Asia and to serve as a platform for discussions with potential clients, partners and other parties interested in this tremendous business opportunity.
The information described in this document may be protected by one or more U.S. patents, foreign patents, or pending applications. Aumbiz is a registered trademark of AUM Business Creations Pte. Ltd. Product and brand
© 2012 AUM Business Creations Pte. Ltd.
pending applications. Aumbiz is a registered trademark of AUM Business Creations Pte. Ltd. Product and brand names used in the document may be trademarks or registered trademarks of their respective owners. Any such trademarks or registered trademarks are the sole property of their respective owners.
The information in this document is provided “as is” without warranty of any kind, either express or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement.
This document could include technical inaccuracies or typographical errors.
All strategic and product statements in this document are subject to change at AUM Business Creations Pte. Ltd.’ssole discretion, including the right to alter or cancel features, functionality, or release dates.
Changes to this document may be made at any time without notice.
© 2012 AUM Business Creations Pte. Ltd.
Page: 2
The key to cheap ethanol production
Second Generation Ethanol – Biomass based
Hemi-Cellulose
Cellulose
Lignin
• First generation (1G) ethanol production uses either sugars (sugar cane, sugar beet, etc.) or starch (cassava, corn, etc.) for production of ethanol.
• Second generation (2G) ethanol technology uses renewable and abundant non-edible biomass as the feedstock.
• Biomass consist of three major components; cellulose, hemi-cellulose and lignin. Depending on the type of biomass the distribution is roughly one third of each.
© 2012 AUM Business Creations Pte. Ltd.
A biomass fiber
distribution is roughly one third of each.
• Cellulose and Hemi-cellulose are long chain polymer sugars and can be broken down to simple fermentable sugars by using specially developed enzymes.
• For the enzymes to work efficiently, biomass must first be pre-treated to open up the fibres, enabling enzymatic attack. Various pre-treatment methods exist.
• Once fermentable sugars are obtained, enzymes are used to convert the sugars into ethanol, in a similar way as first generation ethanol production.
It takes years to become an over-night success…
2G ethanol developed for more then a decade
2000-2005 2005-2007 2007-2009 2009-2012 2013-
© 2012 AUM Business Creations Pte. Ltd.
Research
- COMPLETED -
Lab Scale
- COMPLETED -
Pilot Plant
- COMPLETED -
Demo-plant Commercial
- Expected 2013/14 -
Various 2G ethanol technology suppliers are has already built, or is in the process of completing their Demonstration Plants. The first 2G commercial scale ethanol plants in Southeast Asia expected to be operational by 2013/14.
- COMPLETED -
Vinod Khosla:
"It's happening much faster than I would've guessed,“
© 2012 AUM Business Creations Pte. Ltd.
than I would've guessed,“
Wall Street Journal – March 2011
Cheap and abundant feedstock is the key to sustainable production of Bio-Ethanol
2G technologies can convert most feedstock into Ethanol
EFB Palm Trunks Fibre Rice Husks Cane Bagasse Sweet Sorghum Energy Grass
Other Biomass Energy CropsPalm Biomass
© 2012 AUM Business Creations Pte. Ltd.
C5 + C6 Sugars
Ethanol Lignin
H2O CO2
Co-products
2G EthanolTechnologies
2,000,000
2,500,000
3,000,000
First generation ethanol has impacted the price of food
The raging Food for Fuel debate is the result of 1G biofuel production using food crops as feedstock.
47% of all sugar harvested was used for fuel
Source: FAO, IEA, data elaborated by Aumbiz
� Ethanol and Biodiesel together provided 1.8% of the world’s transport fuel by energy value in 2007.
� Primarily driven by government policies, world ethanol production for transport fuel tripled between
Comparing the worldwide consumption of Food vs. Fuel for food-based feedstock – Sugars and Vegetable Oil. (Barrel per day equivalent)
© 2012 AUM Business Creations Pte. Ltd.
-
500,000
1,000,000
1,500,000
Sugar Vegetable Oil
Oil for Fuel
Oil for Food
Sugar for Fuel
Sugar For Food
for transport fuel tripled between 2000 and 2007 from 17 billion to more than 52 billion litres.
� The equivalent of 47% of all harvested sugars was converted into ethanol, not used for food.
� Biodiesel expanded eleven-fold from less than 1 billion to almost 11 billion litres.
� 7% of the harvested vegetable oil was converted into BioDiesel.
Food vs. Fuel
Using Sugar for Fuel has clearly impacted the price of Sugar
$400.00
$500.00
$600.00
$700.00
50,000,000
60,000,000
70,000,000
80,000,000
� Ethanol has been produced for decades, but it is not until year 2005 when volumes drastically increases.
� Since 2005 the production volumes has increased 23% per year on average going from an annual volume of less
Correlating the price of Sugar to the annual production of Ethanol. Since 2005 a clear trend to more expensive food.
Source: Indexmundi, AgMRC, data elaborated by Aumbiz
© 2012 AUM Business Creations Pte. Ltd.
$-
$100.00
$200.00
$300.00
-
10,000,000
20,000,000
30,000,000
40,000,000
Ethanol Production tpy Average Annual Price Of Sugar USD/ton
going from an annual volume of less than 20 million ton per year to more then 70 million ton in 2011.
� The price of Sugar has been strongly correlated with the increased production of ethanol.
� In 2005 only 29% of the world’s harvested Sugar was used for Fuel Ethanol production, by 2012 we will use more sugar for Fuel then what we use for Food.
60,000,000
70,000,000
80,000,000
90,000,000
Crude Oil for Other
Food crops will not be the solution for replacing oil
We must find other alternatives
Total Sugars, Vegetable Oil and Biofuels production, compared to Crude Oil demand. (Barrel per day equivalent)
� If all sugars currently harvested for food consumption were to be converted into Ethanol – this would be equivalent to 1.1% of current crude oil consumption.
Source: FAO, IEA, data elaborated by Aumbiz
© 2012 AUM Business Creations Pte. Ltd.
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
Sugar Vegetable Oil Crude Oil
Crude Oil for Transportation
Oil for Fuel
Oil for Food
Sugar for Fuel
Sugar For Food
crude oil consumption.
� If all Vegetable Oils currently used for food consumption were to be converted into BioDiesel – this would be equivalent to 2.7% of current crude oil consumption.
� With a 5% yield increase per year (additional hectares + yield per Ha) food crops would be able to supply current demand by 2099.
Less then 3.8% of the current crude oil demand could be derived from using all sugars and all vegetable oil
Available waste biomass is more than sufficient
11-12% of annual waste biomass is enough to replace all crude oil consumption!!!
Sugar , Vegetable Oil and Biofuels, compared to Crude Oil and the carbohydrate content of Biomass. (Barrel per day equivalent)
� Globally the annual biomass production is estimated to 170bn tons per year of which 75% is carbohydrates which can be used to produce bio-fuels and other bio-renewable products.
500,000,000
600,000,000
700,000,000
800,000,000
Biomass C6+C5
Crude Oil for Other
Source: FAO, IEA, data elaborated by Aumbiz
© 2012 AUM Business Creations Pte. Ltd.
� Currently 3.7bn (2.2%) is used for human food use, 2.0bn (1.2%) for wood-energy, paper and construction, and 300M (0.2%) is used for clothing, detergents and chemicals.
� The potential for bio-fuels derived from the remaining biomass is estimated at 700 million barrels per day – more then 8 times the current consumption.
-
100,000,000
200,000,000
300,000,000
400,000,000
Sugar Vegetable Oil
Crude Oil Biomass C6+C5
Crude Oil for Other
Crude Oil for Transportation
Oil for Fuel
Oil for Food
Sugar for Fuel
Sugar For Food11.5% of annual biomass would be enough to
replace crude oil
Very ambitions Ethanol blending requirements
Worldwide a total of 226 million kiloliters are mandated by 2022
USA
Legislated:
20% by 2022
Market:
136M Kiloliters by 2022
EU-27
Legislated:
10% by 2020
Market:
25.3M Kiloliters by 2022
China
Target:
15% by 2020
Market:
11M Kiloliters by 2020
© 2012 AUM Business Creations Pte. Ltd.
Brazil
Targets:
20% by 2020
Market:
30.2M Kiloliters by 2022
India
Target:
20% by 2017
Market:
25.7M Kiloliters by 2022
Source: aumbiz, calculation + Biofuel Digest 21-JUL-2011 (Link)
SEA/AU/NZ
Target:
5-10% by 2020
Market:
3.0M Kiloliters by 2020
Expected Biofuel mandates by 2020 - Implications
Tremendous potential in second generation biofuels
� 160Mtpy of world-wide Sugar harvest would produce 32Mtpy of Ethanol (E100).
� 130Mtpy of world-wide Vegetable Oil harvest would produce 117Mtpy of BioDiesel (B100).
� Legislated and target renewable transportation fuels mandates world-wide by 2020 requires 175Mtpy of Biofuels.120
140
160
180
200
Millio
ns
2nd gen. 2020
2nd gen. 2015
2020 EU (RED)
Source: FAO, IEA, Biofuels Digest, Natixis, data elaborated by Aumbiz
Sugar to Ethanol, Vegetable Oils to BioDiesel compared to Biofuel mandates 2020 and Advanced Biofuels capacity. (Mtpy - Millions of tons per year)
© 2012 AUM Business Creations Pte. Ltd.
175Mtpy of Biofuels.
� Current announced capacity by 2015 of 2nd generation advanced biofuels equal to 22.5Mpty.
� An additional 190M kiloliters capacity is required to meet mandates and targets between 2015 and 2020.
� Estimated total CapEx required USD 185-200 billion and 6 to 7 million hectares of energy crops with a yield in the tropics of ~100 ton per Ha per year.
-
20
40
60
80
100
120
Sugar to Ethanol
Vegetable Oil to BioDiesel
WW Mandates 2020
Advanced Biofuels 2015
2020 EU (RED)
2020 US (RFS2)
2020 Asia
Vegetable Oil
BioDiesel
Sugar
Ethanol
Access to cheap Biomass = 2G production economics
Deployment in low cost regions equals un-paralleled investment opportunity
$600.00
$700.00
$800.00
$900.00
Profit before tax
� For 2G ethanol, with an average feedstock price of EUR105 per ton (or USD136/t), translates into a total feedstock cost of USD470 per ton ethanol or 60% of an estimated competitive sales price of USD782 per ton ethanol.
� Given the high investments in processing plants and higher operating costs required for 2G
Source: SEKAB, Accenture, McKinsey, MPOB, Novozymes, Poyry, data elaborated by Aumbiz
Second generation ethanol production comparing production in Europe to Southeast Asia (USD/ton ethanol in Rotterdam)
© 2012 AUM Business Creations Pte. Ltd.
$-
$100.00
$200.00
$300.00
$400.00
$500.00
EU SEA
Profit before tax
Shipment to EU
CapEx
OpEx
Enzymes
Feedstock
operating costs required for 2G ethanol production (enzymes), any large-scale deployment may not be feasible without some subsidies.
� The UK is proposing a EUR0.30 per litre subsidy which would make the business an interesting investment opportunity, but only with subsidies.
� Deploying 2G ethanol production in Asia fundamentally alters production economics … huge savings in feedstock costs, almost 4 times lower in Asia.
Challenge 1:Price of Biomass?
$250.00
$300.00
$350.00
$400.00
Logistics
Profit Margin
CapEx (10yrs)
Potential value which can be generated from one ton of dry biomass waste. Liquid fuels clearly offers the highest potential (USD/ton dry mass)
Value of one ton of Biomass for various uses
Each BioRenewable project needs to carefully evaluate the usage of the Biomass
� Fresh Biomass in Southeast Asia sells in the open market for up to USD10-40 per ton wet biomass.
� Using the biomass for energy generation, either in a boiler or in a biogas digester can generate extra
Source: Various, data elaborated by Aumbiz
© 2012 AUM Business Creations Pte. Ltd.
$-
$50.00
$100.00
$150.00
$200.00
Pellet/DM Ethanol/DM Intermediary/DM
CapEx (10yrs)
Processing
Drying
In-bound Logistics
Biomass Cost (USD 35/ton_wet)
biogas digester can generate extra value of USD10 to 22 per ton.
� Substituting expensive industrial grid-electricity supply with self-generated biogas electricity would generate savings of up to USD125 per ton dry biomass.
� Converting biomass into cellulosic ethanol can generate USD182 per ton, USD162 more than for direct biomass sale (810 % increase).
2G Ethanol Yields
World’s best yields are 285-320 Liter per ton dry biomass.
200.00
250.00
300.00
350.00
400.00
Lit
er
per
ton
feed
sto
ck
� The actual yields are determined by the cellulose and hemi-cellulose content in the biomass.
� The over-all efficiency of the 2G technologies results in 80-85%
Source: ESI, USDE, USDA, Novozymes, Danisco, DSM
Second generation ethanol production depends to a large amount on the type of feedstock used. (Litre/ton DM)
World-class Ethanol yields
© 2012 AUM Business Creations Pte. Ltd.
-
50.00
100.00
150.00
200.00
Eth
an
ol Y
ield
s -
Lit
er
per
ton
feed
sto
ck
technologies results in 80-85% compared to theoretical yields.
� Depending on the choice of feedstock the world’s best yields are 285-320 Liter per ton dry biomass.
Primary Feedstock Target – Agricultural Waste
Southeast Asia alone has more the 450 million tons agri-waste per year
Rice, paddy, 180,242,944 ,
26%
Other Primary Crops,
221,914,259 , 31%
Top-3 Primary Crops in Southeast AsiaTotal: 705,390,483 tons
Agriculture in Southeast Asia is dominated by three Primary Crops – Oil Palm, Rice Paddy and Sugarcane together representing 69% of the total yields. (ton/yr)
� The Primary Crop production in Southeast Asia is dominated by three major crops: Oil Palm, Sugarcane and Rice … 69% of total agricultural production.
� Oil Palm industry’s primary waste … EFB (Empty Fruit Bunch) and Fibers are both suitable feedstock. Trunks
© 2012 AUM Business Creations Pte. Ltd.
Oil palm fruit, 163,727,598 ,
23%
Sugar cane, 139,505,682 ,
20%
Source: Aumbiz analysis based upon data from FAO
are both suitable feedstock. Trunks from replanting is another major source of feedstock.
� Sugarcane industry’s primary waste is bagasse … ideal feedstock.
� Rice Industry the main crop residue is rice husks at the mill and rice straws from the fields.
� Total available agri-waste biomass estimates to 450 million ton per year, sufficient for the production of 75 million tons of ethanol!
2G ethanol yields from Palm Biomass
Large potential – but can it be realized?
EFB Fibre Shell Trunks Fronds
C6-sugar Kg/ton DM 430 230 70 650 470
C5-sugar Kg/ton DM 260 180 400 120 240
Theoretic Ethanol Kg/ton DM 306 178 175 367 319
Theoretic Ethanol L/ton DM 388 226 222 465 404
© 2012 AUM Business Creations Pte. Ltd.
Theoretic Ethanol L/ton DM 388 226 222 465 404
Availability DM (ton/year) 4.0M 7.0M 7.0M 14.0M 46.0M
MY Palm Ethanol Potential (KL/year) 1.55 1.58 1.54 6.51 18.58
Theoretic Ethanol production for Palm Biomass in Malaysia:30M KL/year equal to USD 24bn/year
Source: Aumbiz, Malaysian - Danish Environmental Cooperation Programme
Challenge 2:What is easily available?
Challenge 3:Can it be collected?
2G Ethanol – potential location in Malaysia
25M ton of Biomass (DM) can be mobilized at competitive cost
© 2012 AUM Business Creations Pte. Ltd. Page: 18
Source: National Biomass Strategy 2020
Aumbiz – Project Development Framework
All parts of a project must be considered and contracted before the project starts
Project Financing
Investor
Investment Project
ManagementLocal Project Developer
Logistics
PROJECT DEVELOPMENT FRAMEWORK
• Specifically developed for demanding, highly complex projects which uses biomass as feedstock.
• Holistic approach, which includes both the core elements of feedstock supply and off-take agreements and finance
© 2012 AUM Business Creations Pte. Ltd.
Feedstock Off-take
People
Profit
Planet
Tech-nology
Utilities
SPV
and off-take agreements and finance and technology, and the project impact on the People, Planet and Profit.
• The Aumbiz Project Development Framework is used through out our project development process, but also used in the design of support systems and software development.
About aumbiz
Your trusted partner in Southeast Asia
� Market/Business Intelligence
� Competitive Analysis
� Partner Development
� Business Development
� Project Development
� Distribution Strategies
� Due Diligence of Technologies
Your trusted partner in Southeast Asia:Since 2007 aumbiz has actively been advising SMEs andmultinationals from Europe as well as from the US in theirinternationalization efforts in Southeast Asia. We have an un-paralleled experience, knowledge and network combined with an in-depth domain expertise and experience of Advanced Biofuel andBiobased Chemical technologies and processing solutions.
We do offer our Market Introduction Services to establishedtechnology companies with unique and protected technologies andwith a proven track record from their home markets.
© 2012 AUM Business Creations Pte. Ltd. Page: 20
� Due Diligence of Technologies
� Establishment of Foreign Operations
� Interim/Project Management
with a proven track record from their home markets.
Through our office in Singapore, our objective is to provide world-classinternationalization service for the Southeast Asia region.
We focus on the full value chain from the plantation to the distributionof the final product. We are engaging in establishing local R&D officesas well as supporting in project development and partnershipcreations.
Contact us today to explore how we together can grow your business inSoutheast Asia, call: +65-8223.5356 and talk to Mr. Per Dahlen
© 2012 AUM Business Creations Pte. Ltd.
AUM Business Creations Pte. Ltd27 Changi Village Road
Unit: #01-23Singapore 509925
Singapore
Tel: +65-68223.5356Email: [email protected]
Web: www.aumbiz.com
Contact: Mr. Per Dahlen
21