1 TSEC-BIOSYS: Theme 1.4 Role of International Bioenergy Trade for the UK Miles Perry Centre for...

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TSEC-BIOSYS: Theme 1.4 Role of International Bioenergy Trade for the UK

www.tsec-biosys.ac.uk

Miles PerryCentre for Environmental Policy

Imperial College, London

Biomass role in the UK energy futures The Royal Society, London: 28th & 29th July 2009

TSEC BiosysTSEC Biosys

TSEC BiosysTSEC BiosysIntroduction

Biomass imports in UK energy– 2000-present

Biomass imports looking to 2020 – analysis using Biosys-MARKAL

Imported Biomass

Total Biomass(plant&animal)

Total Biomass (all)**

Total Renewable*

3.15% 9.89% 8.83% 9.97% 7.21% Biomass Imports asShare of Primary RE

Source: DUKES

**inc. waste and tyres. excl. liquid biofuels. ‘Primary’ wind counted as electricity generated** Total biomass = plant-&-animal-based + wood, wood waste, landfill methane and sewage sludge

2000 2001 2002 2003 2004 2005 2006 20070

Sewage and landfillup 38% 2000-07

Biomass Imports go from 0%-10% ofRE in 2 years

Domestic biomassdevelops more slowly

2000 -> 2007More renewables (inc. biomass) enter energy system

Source: DUKES. % refers to energy content of biomass input

2000 -> 2007Growth Driven by Co-firing Market

(Destination of 2002 2003 2004 2005 2006 2007Plant & animal biomass)- for electricity generation 44% 51% 57% 70% 68% 63%- for co-firing 11% 20% 30% 52% 51% 41%

2002 2003 2004 2005 2006 20070

Biomass -> Electricityexcl. sewage, landfill gas, MSW

Co-firing All conversion routes

Advantages of Co-firing:

- Low-cost, low-risk & rapid deployment at the margin

Relative to other technologies

- Technological neutrality of Renewables Obligation

Source: DUKES & DECC. % of co-firing feedstock refers to mass (tonnes)

2000 -> 2007Co-firing & Imports

2002 2003 2004 2005 2006 20070

Biomass -> Electricity & Imports

Co-firingAll plant&animal (excl. sewage, LFG, MSW)Imported Biomass (all energy uses)

Biomass imports crucial in bioenergy growth from 2002-2003

More domestic biomass co-fired since 2005?Not so sure…

Likely Imports as % of Co-firing feedstock

2005 2007Palm, olive & shea 52% 47%Wood pellet 12% 14%Sunflower pellet 1% 10%Tall Oil 9% 5%Total 74% 76%

* - co-firing of energy crops &/or in CHP units is exempt from this cap

Bioelectricity & imports 2007

- Imports for co-firing less attractive due to successive RO reforms- ≤12.5% of ROCs can come from co-firing*

(=> uncertainty at the margin)- Dedicated biomass plants receive 3 × more ROCs / MWh

- 2006-07:Ratio falls for the first time

Includes 50% year-on-year increase in combustion of biomass of animal origin

- Imports helpful as bridge towards larger UK biomass exploitation?

ictherElectrBiomassToO

firedBiomassCo

Source: Hawkins Wright, Forest Energy Monitor. OFGEM RO Accreditation Statistics

Bioelectricity & imports post-2007

Dedicated PlantCapacity 30/06/09 197 MW

of which 2007-08additions 78 MW

Capacity of additionalplants proposed 1,975 MW

Assume:Load Factor 80%Avg. Efficiency 30%

Annual FeedstockRequirement 183 PJ

UK Existing Supply(Biomass Strategy, 2007 234-282 PJexcl. mass energy crop planting)

Source: DECC (Renewable Energy Strategy Consultation), Pellet@las Project

Renewable Heat & UK Wood Pellet Market

- Renewable Sources account for <1% of UK heat generation- UK imports of pellet for industrial applications represent significant share of European pellet trade

~750,000 tonnes consumed (2008)~150,000 tonnes used for co-firing (2007)

- 600,000 tonnes (~8.5 PJ heat generation) is equivalent to ~1/3 of UK renewable heat consumption in 2007

- UK consumption of high-grade (residential) pellets almost uniquely low in W. Europe

Source: RFA Monthly Reports

Biofuels in TransportRTFO year 1 target: 2.5% of road fuel by volume

Source: RFA Monthly Reports, European Biodiesel Board, European Bioethanol Industry Association

Biofuels in TransportRTFO year 1 target: 2.5% of road fuel by volume

Biodiesel from UK oilseed rape 26 Ml.[UK feedstock claimed under RTFO 08/09] from UK tallow 5 Ml.

from UK used cooking oil 34 Ml.65 Ml.

[UK production – all feedstocks] (EBB) 2008 212 Ml.

Bioethanol[UK feedstock claimed under RTFO 08/09] from sugar beet 37 Ml.

[UK production – all feedstocks] Bioethanol 2008 75 Ml.

UK Biofuels Sector is Trade-oriented- Imported feedstocks are processed in the UK (vegetable oils, tallow)&/or- UK biofuels not produced exclusively for UK road transport market

UK Biomass Resources: a snapshot

Imports account for:11% - 43% of biomass used in heat & power(depending on how you define ‘biomass’)

& the vast majority of biofuel feedstocks in transport

even though UK resources are not fully utilised

Wood w

Cellulosic

energy

Oilseed ra

pe (non-fo

Landfill m

Poultry litt

manure

Food w

Sewage

Used 2007 Unutilised Potential

Source: various reports cited in Perry & Rosillio-Calle. UK Country Report for IEA Task 40. www.bioenergytrade.org

UK Bioenergy Trade: Summary

Biomass -> electricity & transport pathways - initially dominated by imports- and integration with existing production and distribution infrastructure

Substantial planned capacity – irrespective of feedstock origin

Electricity: ~2,000 MW dedicated plant planned + co-firingTransport Fuels: 671 Ml. biodiesel production capacity in 2009

820 Ml. bioethanol capacity under construction

What does this mean?

Imports prevent realisation of UK supply potential?

Imports phased-out as UK supply chains develop?

Imports increase size and penetration of bioenergy in the UK?

What about other renewables?Source: European Biodiesel Board, European Bioethanol Industry Association

UK Bioenergy Trade: looking forward with MARKAL

Using BIOSYS_MARKAL:

- we can examine the competing merits of imported biomass, domestic biomass and other renewables

- in a realistic energy policy context

The recipe:

1.) Take Biosys_MARKAL (developed by Jablonski et al.) & adjust for short-term analysis (2010-2020)

2.) Create 2 short-term policy scenariosi) business-as-usualii) Renewable Energy Directive

3.) Examine role of imported biomass

BIOSYS_MARKAL recap:

Objective:

Minimise discounted total system cost of UK energy provision

subject to:

• Satisfaction of energy service demands (GJ of heat, km of travel etc.)

• Compliance with technical constraints and policy constraints

UK biomass resource & technology detail from TSEC_Biosys

Biomass import costs & quantities from literature

review and consultation with industry experts

2 Resource Scenarios:

- Domestic Pessimism:

UK Biomass available to energy system cannot exceed 2007-09 levels (DUKES, RFA)

- Domestic Optimism:

Potential 2020 resource fully availableas per TSEC analysis and latest literature

2 Policy Scenarios:

- Business-as-usual: Renewables encouraged by RO and RTFO

- Renewable Energy Directive: 15% renewables in final energy consumption

(electricity, heat and transport collectively)10% renewables in transport

2 Policy Scenarios ctd.

- Business-as-usual:

RO as per RO Order 2009 but only partially banded (by technology but not by biomass crop type)

RTFO fully flexible between biofuels≥ 5% liquid biofuel or biogas per litre of road transport fuel

- Renewable Energy Directive (RED):

RED requirements applied literally

15% renewables in final energy consumption (electricity, heat and transport collectively)

10% renewables in transport

in addition to BAU policies

BAU Policies, Domestic Pessimism

2020 demand Unutilised Potential

PJ –

Agri. Resid

Wood ch

Wood pelle

Bioethanol

Biodiesel

FT liq

2020 Imports Unutilised Potential

Domestic Imported

Renewable Energy Directive, Domestic PessimismDomestic Imported

PJ –

Agri. Resid

Wood ch

Wood pelle

Bioethanol

Biodiesel

FT liq

PJ –

Renewable Energy Directive – UK Biomass Supply 2020Domestic - Pessimism Domestic - Optimism

Renewable Energy Directive – Biomass Imports 2020Imported - Domestic Pessimism Imported - Domestic Optimism

Agri. Resid

Wood ch

Wood pelle

Bioethanol

Biodiesel

FT liq

PJ –

Agri. Resid

Wood ch

Wood pelle

Bioethanol

Biodiesel

FT liq

Renewable Energy Directive: Transport Markets 2020

Biodiesel; 64

Ethanol; 14

FT Diesel; 25

FT Kerosene; 57

Biogas; 11

Renewable Electricity; 37 Total Renewable Transport Energy

Domestic Pessimism: 207 PJ

Biodiesel; 61

Ethanol; 14

FT Diesel; 28

FT Kerosene,

Biogas; 22

Renewable Electricity; 7

Total Renewable Transport EnergyDomestic Optimism: 193 PJ

UK Bioenergy Trade: looking forward with MARKALRenewable Energy Directive: Electricity Markets

2010 2015 20200

Non-renewable Other RenewableWind Biomass

2010 2015 20200

Non-renewable Other RenewableWind Biomass

Domestic Pessimism: Domestic Optimism:

- RED scenarios have very little biomass -> electricity (only landfill gas in 2020)- Presence of imports + full domestic supply -> less pressure on electricity market to meet RED target

UK Bioenergy Trade: looking forward with MARKALRenewable Energy Directive:

Biomass Destination (Primary Energy – feedstock equivalent)

Domestic Pessimism: Domestic Optimism:

Electricity (inc CHP)11%

Transport50%

Heat39%

Electricity (inc CHP)12%

Transport31%Heat

Total: 509 PJ Total: 924 PJ

UK Bioenergy Trade: looking forward with MARKALRenewable Energy Directive:

How much biomass is that?

PJ (feedstock) Pessimism Optimism

Domestic 145 596

Imported 364 328

Total 509 924

Compared to UK potential:

DEFRA Biomass Strategy 346

Compared to present-day use (UK & Imported):

Heat & Power (DUKES 2007) 127Transport (RTFO year 1) 64

UK Bioenergy Trade: looking forward with MARKALCan we really import >300 PJ of biomass?

- Biosys_MARKAL upper bounds based on literature review.

Assuming either:

- UK able to maintain global import share (biodiesel, bioethanol)OR- A ‘fair share’ of a global product is available to the UK(based on UK share of Global Primary Energy Supplyor global of an equivalent fossil product)

- But will this supply actually be realised?valid question for both UK and import markets

UK Bioenergy Trade: looking forward with MARKALCan we really import >300 PJ of biomass?

- Biosys_MARKAL has a number of upper bounds for biomass imports.

Which of them are binding constraints in RED 2020?

Dom. Pessimism Dom. Optimism

Palm & Olive Ethanol (cane, starch & cellulosic)BiodieselFT liquids Wood-derived Biomass (higher level constraint)Wood pellet

In both scenarios, imports are dominated by biodiesel & wood (chip, pellet)- Potential biodiesel imports are not fully taken-up- Potential wood imports fully taken-up only when domestic wood is scarce

Conclusions

- Imported biomass has been crucial to the development of bioenergy in the UK (by volume at least)

- Imported biomass must be viewed in an energy-wide context(it’s linked to the UK biomass sector

but capable of developing on its own)

- UK biomass if exploited would be competitive with imports at current prices. (cellulosic -> heat: waste -> AD)

- Even if UK biomass exploited, imports can be complementary

- Imports can reduce reliance on other renewables for RED

- Biodiesel imports dominate regardless

- But how sustainable can imports be at this scale?

Thank you for your attention!

www.tsec-biosys.ac.ukmiles.perry@imperial.ac.uk

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